The Chicago housing market cooled off with an 11% decrease in home sales in September 2023, despite a summer of soaring sales. This coincides with a drop in nationwide home sales throughout spring and summer, driven by escalating mortgage rates and a scarcity of houses for sale, according to the Chicago Tribune.

Reports from the National Association of Realtors show that home sales in September are the lowest recorded since October 2010. This affirms the dire prediction made by Redfin for the year-end number of home sales to be the least since 2008. This development varies greatly from August 2023 when prices rose 9.6% from the previous year, per Hoodline.

As per data from Illinois Realtors, the median home price fell to $324,450 in September from $330,000 and $342,500 in August and July respectively. The shortage of homes for sale due to high mortgage rates and homeowner reluctance affected potential sales, despite a bustling Summer, as reported by Hoodline.

Increasing home prices nationally due to a lack of inventory has led to homes with median prices being less affordable. According to data by ATTOM, a portion totaling to 35% of wages, an all-time high since 2007, is now needed to cover mortgage costs as reported by the Chicago Tribune.

Even with a surge in home prices, the Chicago real estate market remains unstable. Many prospective homeowners are relegated to renting due to unaffordable mortgage rates, complicating the housing market issue further. A study by Apartment List revealed that half of Chicago renters spend over 30% of their income on rent, making them rent-burdened. This figure has been on the rise according to the Chicago Tribune.

To entice potential buyers, interest rate buydowns are currently being used. Julius Barrutia from CrossCountry Mortgage incentive packages that include buydowns for clients interested in new downtown condo buildings. This has attracted a swath of clients who were initially exploring previously owned homes in the suburbs, as reported by the Chicago Tribune.

However, with the Chicago winter months approaching, negotiations and transactions may become increasingly tricky. Experts, including Daniel McMillen from the University of Illinois at Chicago, predict a potential dip in sales and another decline in prices, although remaining higher than last year, as reported by Hoodline.