I wanted to share a quick insight into what I see in the northwest suburbs as a bifurcated housing market. The upper end of the market* appears to be oversupplied while the lower end** is in balance and getting close to being undersupplied or having a shortage of inventory.
The following charts illustrate this point. I looked at 3 northwest Chicago suburbs (Park Ridge, Glenview, and Northbrook). In this first chart, you can see the lower end of the market has supply of inventory of around 3-4 months. This is why it is not uncommon to see multiple offer situations when we appraise homes in this price range ($300,000-$400,000).
In this chart, you can see the upper end of the market has supply of inventory of around 9 months. Due to the increased competition, the average market times for homes in this price range ($700,000+) is around 160 days vs. 75 days on the lower end.
Key Takeaway
In the past, supply has been a leading indicator of where prices may be heading. If that continues to be the case, we could see what is the beginning of a correction at the upper end, and may see continued price increases and multiple offer situations at the lower end.
Bonus Takeaway – Attn: Real Estate Agents – If you are in a multiple offer situation, “Tell the Appraiser!” (Click for more information on why you should alert the appraiser to multiple offers).
** – The lower end of the market was defined as 3 bedrooms or less and 2 baths or less.
Definition of Months Supply per Infosparks – The inventory of homes for sale at the end of a given month, divided by the average monthly Pending Sales from the last 12 months. Also known as absorption rate.