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Market Update

Updated: Feb 21, 2023

I’ve spent the last few years frustrated by the real estate headlines in the news. Statistics skewed to create frenzy or desperation in a market that otherwise is on its own growth pattern. One of my favorite’s was in late summer of 2021... I turned on the TV to hear “the downtown markets have improved 100% since the start of the pandemic”. I laughed audibly and turned off the TV. The statistic was analyzed correctly, just not shared. Once the pandemic hit in full swing, the downtown market had become a shell of itself. Let’s use the following numbers as an example. June 2020 - The high-rise downtown Chicago market was transacting 20% of its pre-pandemic self. 100% improvement of 20% is 40%. The news station was correct. The market was now transacting at 40% of its pre- pandemic self. But relatively speaking a 4/10 is nothing to get excited about and there is still a long road of recovery ahead which was completely ignored in the headline. I explain this story to say, news can be

incredibly deceiving if not investigated.



This week an article came out in Crain’s Chicago with the title “Chicago Lags in Equity Rich Homeowners”. Well, that sounds terrible! Isn’t the point of homeownership, to build equity? Isn’t the American Dream to be a homeowner?

Should we all start running elsewhere?! According to this title, Chicago is failing, miserably. Now, let’s take a lesson out of our 100% improvement story and figure this one out. The article defines “equity rich” as a homeowner that owes less than 50% of their home’s value on their mortgage. Cities in Utah, the Carolina’s and Florida have all seen double digit percentage value increases in the last year (from 2021 to 2022 Q2). Let’s say you bought a home for $400kin Myrtle Beach a year ago and put 20% down = 80k. Your home’s value has increased by 28.5% (referenced by NAR data) over the last year. Your 400k home is now worth 514,000 making your equity $194 (80+114). Another 6k and you are “equity rich”. Congratulations!!


What does this mean? It means Chicago’s market is incredibly stable and a safe bet. No, you won’t make $114,000 in equity in one year in most cases (although you absolutely could in certain areas). Your investment is a long-term gain. Markets with high highs, have low lows. Ever heard the phrase, what comes up must come down? I’d like to avoid the bruises and scrapes on the way down from that mountain top, thank you. Chicago’s housing market promises to give you a much smoother ride. One more thing to note, the average Chicago condo switches ownership in less than 5 years. If becoming “equity rich” is important to you as an owner, hold your product longer and that equity will build up nice and steadily. That’s the kind of bet I’m willing to take every time!




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