The Midwest is home to some of the hottest markets in the country, while other regions face a lackluster year. What gives?
Daniel Close had a listing in Chicago’s Lincoln Park neighborhood on the last day of July.
The three-bed, three-bath condo on Maud Avenue was listed for $455 per square foot, or $999,900 for the unit.
A few days later, he updated the listing with words that were much more common during the heat of the COVID housing market: “HIGHEST AND BEST DUE” Aug. 4.
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“We all coach our clients that as we head out of summer and into the fall, things slow down,” said Close, a Redfin agent in the Windy City. “In past years, it’s been a pretty sharp slowdown. This year, it’s not really quite as sharp.”
Close’s listing closed for $1.13 million, 13.5 percent above the list price.
Chicago is one of the cities defying the recent slowdown that has occurred in once-hot markets across the U.S., as agents grapple with a second consecutive year in which home sales are poised to land at around four million. Many of those markets are centered in the Midwest.
The interest by buyers looking for some semblance of affordability amid high rates and record-high home prices has sent many buyers looking in the region.
“By and large, Americans want to become homeowners if they can afford it,” said Jeff Tucker, principal economist at Windermere Real Estate. “Affordability is the biggest hurdle for folks trying to get their first home.”
Eight of the top 15 markets for home price growth this July compared to last were in the Midwest, according to housing data from Zillow.
Markets like Detroit, Chicago, Minneapolis and St. Louis are seeing fewer new listings and higher price growth than the national averages.
According to Redfin, there are over 500,000 more sellers than buyers in the U.S. But things aren’t as out of balance in markets like Indianapolis, Cincinnati or Milwaukee.
All the action appears to be driving up prices more in Midwest markets than anywhere, including markets that were COVID-era favorites like Austin, Denver, Miami and much of the Sun Belt.
Likewise, among the top 15 markets for homes to go under contract fastest, eight of them were in the Midwest, according to Zillow data.
Many markets now resemble something closer to a buyer’s market after more than a decade of conditions more favorable to sellers.
“We’re likely in the most buyer-friendly housing market since the 2008 financial crisis,” Redfin Senior Economist Asad Khan said in a Redfin report released on Wednesday. “Back then, inventory piled up as foreclosures surged, and demand was weak, meaning buyers had negotiating power.”
Homes are sitting on the market longer in markets across the country, with the typical home sitting on the market for a median of 43 days before going under contract in July. That was the most in a decade.
But that wasn’t the case in markets across the Midwest and parts of the Northeast, where homes were still snapped up at nearly the same rate this year as last.
“National real estate news doesn’t apply to our little pocket,” said Erica Puorro, an agent in Newburyport, Massachusetts, north of Boston. “Demand is still really strong in the greater Newburyport area because of just the lack of inventory.”
Inventory is another factor that might be keeping pressure up in markets in the Midwest and Northeast.
There were 55 percent fewer homes for sale in Chicago in July compared to July 2019, according to Zillow data. Prices are up 3 percent compared to last year.
By contrast, inventory is up 63 percent in Austin, Texas, during the same timeframe. Prices in July were down 3.3 percent compared to a year earlier.
Several markets in the Midwest also haven’t seen home prices increase quite as much since the pandemic as others.
Most markets in the Midwest and Northeast didn’t see much new home construction, Tucker said.
“By and large, when we talk about new home construction and sales, it’s really a story about the Sun Belt,” Tucker said.
Those factors, paired with the reality that some of the hottest Midwest cities are also significant economic and cultural hubs, have kept affordable markets like Chicago more competitive than many other markets.
“It’s far and away the most affordable world-class city to live in in America,” said Close, the Chicago Redfin agent.
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