2016 City Real Estate: Higher Prices, Fewer Choices, More Competition

CHICAGO — The city real estate market saw more homes sold, at a faster clip, and at higher prices in 2016 compared to the previous year, according to a report released by the state Realtors group Tuesday.

The annual report by the Illinois Realtors association showed that in the city of Chicago:

• 28,033 homes were sold in 2016, a 1.9 percent increase over 2015. That percentage increase was below the state (3.9 percent) and Chicago area (4.3 percent).

• The median sale price of home in the city was up 4.2 percent, to $272,000. While the median sale price led both the state and Chicago area, it was below those two in percentage increase.

• Homes sold faster in the city: 45 days on the market compared to 50 days in 2015. All three geographic areas were about the same in that regard.

• The city had fewer homes for sale. In 2015, the market had a 3.5 month supply of homes for sale; in 2016, it was down to 2.9 months.

The year-end report did not break out the median sale prices for single-family homes and condos for the year in Chicago. But for homes sold in the city in December of 2016, the median price for a single-family house was $204,000 and condos were pegged at $309,250.

The median price means half sold for more and half sold for less.

In Chicago and elsewhere across the country, the market is tight with home buyers competing for fewer homes for sale.

The National Association of Realtors said 2016 was "the best year in a decade" even as sales declined in December, which it blamed on  "ongoing affordability tensions and historically low supply levels."

People trying to buy their first home are facing a struggle in the United States, said Lawrence Yun, the chief of economics for the national association.

"Constrained inventory in many areas and climbing rents, home prices and mortgage rates means it's not getting any easier to be a first-time buyer," Yun said in a statement.

"It'll take more entry-level supply, continued job gains and even stronger wage growth for first-timers to make up a greater share of the market," Yun said.

Reuters said the number of homes on the market in the U.S. was the lowest in 17 years, with builders complaining of a lack of skilled workers and desirable land.

Speaking about the local market, Matt Silver, president of the Chicago Association of Realtors, predicted that "in January, the homes that were pulled off the market for the holidays will return, and the busy season should begin in earnest."