One reason for the Chicago area's record-low inventory of homes for sale: A large number of homeowners can’t afford a move.
That’s clear from a new report on the equity homeowners had at the end of 2020.
The report from, Attom Data Solutions, shows that among the nation’s 10 biggest metro areas, Chicago has the largest share of homeowners so far underwater on their mortgage that they couldn’t sell without losing a good deal of money, and the smallest share with enough equity that a move-up buy would be easy.
That is, regardless of whether Chicagoans would like to move to a larger, pandemic-scaled space with room for home offices and classrooms, many of them wouldn’t find it financially feasible.
“It's likely the homeowners in Chicago do have less money to fund a purchase, which could reduce the number of homes put on the market throughout the region,” Todd Teta, chief product officer for Irvine, Calif.-based Attom, said in an email.
The local housing market started the year with the tightest inventory of homes for sale in at least 13 years, which is as far back as the records go. Enough homes were on the market to fuel 1.8 months of sales, while four to six months of inventory is generally considered healthy.
More recent inventory figures are not yet available.
Among the other reasons for super-low inventory are that homeowners might be perfectly content where they are, they might be uncertain about where they will want to live if working conditions do not go back to pre-pandemic ways, or that one or both income earners was thrown out of work by the pandemic and they are struggling financially.
But Attom’s report makes clear that many people can’t afford to move.
At the end of 2020, nearly 9 percent of Chicago-area households with a mortgage were seriously underwater, which Attom defines as owing at least 25 percent more on the mortgage than the home is worth on the market.
In eight of the nine other biggest cities, the share of seriously underwater households is below 5 percent. In Philadelphia, it’s 6 percent.
Nationwide, 5.4 percent of homes were seriously underwater at the end of 2020.
On the other end of the home equity ladder are homeowners who are equity rich, which Attom defines as having a mortgage balance that is 50 percent or less of the home’s value on the current market. These households have a big enough equity stake that taking a step up to a larger, more expensive house would relatively easy to afford out of proceeds on the sale of the present home.
In the Chicago area, a little over 18 percent of households with a mortgage were equity-rich at the end of 2020, according to Attom. In the other nine biggest cities, at least 23 percent of homeowners with a mortgage were equity rich. In Los Angeles, nearly 52 percent were in that position.
Nationwide, about 30 percent of households with a mortgage were equity-rich at the end of 2020.
“Weaker home equity among Chicagoans would mean they have less money available to finance home purchases,” Teta said.
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This might be why you can't find a house to buy - Crain's Chicago Business
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