Nathan Binkley, a West Loop-based Compass agent, has his own data on the trend. At this time in 2021, he and his partner and brother, Kevin Binkley, had one out of 48 canceled deals. In the same period this year, they had seven out of 46 canceled. That’s 15.2%, or at pretty much the same as Redfin reported.
“Ten years in residential (real estate) in the city and I’ve never seen such volatile buyers,” Binkley said. “Buyers enter into contracts and then find any reason to terminate them.”
Baird & Warner agent Jordan Chalmers said buyers might cool their jets specifically because the housing market has been so overheated, with multiple offers and selling prices well above demand.
“They may have felt pressured to make a choice,” Chalmers said. “And when they’re lucky enough to sleep on it, they realize they’ve been caught up in the hype and the house isn’t worth that price to them.”
In the report, Redfin economist Taylor Marr said rapidly rising interest rates could force some buyers to drop their contracts. “If rates were 5% when you made an offer but were up to 5.8% by the time the deal closed, you may not be able to afford that house anymore or you may not be eligible for a loan.”
Among the deals Binkley recently canceled, he said, was one for a Bucktown home priced at around $1.1 million. When the inspection revealed “completely normal inspection issues”, he said, buyers “were left shivering”.
Another deal was for a condo priced at around $600,000. When the buyer, an out-of-town dad buying for his college-aged daughter, heard the town was back to high alert due to a recent spike in infections, “he’s backed down because he’s concerned the city will reinstate warrants this fall and his daughter’s college will go virtual again.”
The COVID response “has been stop and start for almost three years,” Binkley said. “People are wondering if the gym on the corner will still be open” after they complete their purchase.
Chicago’s cancellation rate is higher than the nationwide. In June, 14.9% of open contracts failed to close, Redfin reported.
At 16.7%, Chicago’s vacancy rate is far lower than some of the nation’s real estate markets that have been most bubbly during the pandemic boom. Among the nation’s largest metropolitan areas, Las Vegas had the highest rate of failed contracts in June (27.2%), followed by Phoenix (24.5%) and Tampa (23%).