Chicago Housing Market Shift: Prices Dip as Buyer Leverage Grows

The Chicago housing market is transitioning toward buyers, with November data showing a notable decline in sale prices and a significant increase in inventory. The median home sale price fell 2.2% year-over-year to $225,000, while sales activity plunged by more than 11%. With a 6.5-month supply of homes for sale—the highest level since 2012—buyers are gaining more negotiating power after years of intense competition. However, a disconnect persists as seller asking prices continue to rise, suggesting not all market participants have adjusted to the new conditions.

What Do the Latest Chicago Home Prices Indicate?

The key metric for the market is the median sale price, which dropped to $225,000. This figure represents the midpoint of all home sales, meaning half of the homes sold for more and half for less. Despite this dip in final sale prices, the median asking price for homes listed in November rose nearly 10% to $250,000. This gap indicates that sellers may be pricing homes based on past market peaks, while buyers, faced with higher mortgage rates and more choices, are becoming more resistant to overpay. The typical home still sold relatively quickly, in about 25 days, showing that well-priced properties continue to attract interest.

Why is Buyer Leverage Increasing in Chicago?

The primary factor shifting leverage toward buyers is rising inventory. The supply of homes for sale increased by 3.3% compared to a year earlier, resulting in a 6.5-month supply. Months of supply is a critical indicator of market balance; a reading between 4 and 6 months is generally considered a balanced market. A level above 6 months, as seen now, signals a buyer's market. This means buyers have more homes to choose from and less pressure to engage in bidding wars. Based on our experience assessment, this environment allows buyers more time for due diligence and the opportunity to negotiate contingencies like home inspections and repairs.

Which Chicago Neighborhoods Are Defying the Market Cool-Down?

While the city-wide trend cooled, several neighborhoods experienced robust growth and high demand, highlighting the hyper-local nature of real estate.

• Bucktown remained the most expensive neighborhood by median sale price at $550,000. Strong buyer demand was evident, with 21% of properties selling for more than their list price.
• West Loop was the city's hotspot for competitive offers, with over a third (36%) of homes selling above the asking price.
• River North saw a significant 24.4% jump in sales and a 7% price increase, bringing the median sale price to $409,000. The appeal of newer condominiums with lower homeowners association (HOA) fees—a monthly fee for building maintenance and amenities—combined with proximity to downtown, continues to attract buyers.
• Tri-Taylor recorded a meteoric 129% year-over-year price increase to a median of $309,500, largely driven by new construction in the Eco Square development.
• Logan Square was the fastest-moving market, with homes spending a median of just 9 days on the market. Prices here rose 11% to $345,250, fueled by high demand for single-family homes.

What is the Current Advice for Buyers and Sellers?

The changing market dynamics require adjusted strategies for both parties. Redfin agent Alex Haried noted, "We haven’t seen as many bidding wars recently... I’ve been counseling my buyers to be aggressive by sticking to their price." This approach is now yielding success.

For sellers, realistic pricing is critical. Overpricing a home in a market with growing inventory can lead to extended time on the market and ultimately a lower sale price. For buyers, the increased leverage means it is prudent to conduct thorough inspections and negotiate firmly on price and terms. While the market may become more competitive again in the new year, current conditions offer a window of opportunity for well-prepared buyers.

The key takeaway is that Chicago's market is normalizing. Buyers now have more options and time, but success hinges on realistic expectations from both sides of the transaction.