Chicago Market Conditions: November Home Sales Buck National Market Trends By Rising

November home sales managed to do in Chicago what most other metropolitan areas haven’t seen: they rose.

From the Illinois Association of Realtors:

The city of Chicago saw a 0.1 percent year-over-year home sales increase in November 2013 with 1,800 sales, up from 1,798 in November 2012. The median price also rose to $200,000 versus $180,000 in November 2012, an 11.1 percent annual increase.

The city of Chicago continues to see a steady increase in median home pricing to $220,500, year-to-date, versus $185,000 January through November 2012.

Here is the November sales data for the last 7 years (thanks to G for some of the data):

  • November 2007: 1859 sales and median price of $290,000
  • November 2008: 1093 sales and median price of $222,500 (16% short/REO sales)
  • November 2009: 1905 sales and median price of $215,000 (29% short/REO sales)
  • November 2010: 1144 sales and median price of $182,500 (39% short/REO sales)
  • November 2011: 1429 sales and median price of $157,000 (43% short/REO sales)
  • November 2012: 1750 sales and median price of $180,000
  • November 2013: 1800 sales and median price of $220,500

“This November was reflective of a typical autumn month of sales in Chicago, the real difference being the inventory of homes available, which was down 27.1 percent from this time last year,” said Matt Farrell, president of the Chicago Association of REALTORS® and managing partner of Urban Real Estate.

“Chicago is continuing to see buyers contemplate their future needs; however, the inventory available in 2014 will ultimately dictate the opportunities available for those looking to make a move,” Farrell added.

No, I really don’t understand why the number was 1750 sales a year ago but in today’s press release it is 48 sales higher.

“As with many other markets, the Chicago and Illinois housing sales dipped into the negative range after 29 months of positive growth, but prices continued to inch forward,” noted Geoffrey J.D. Hewings, Director of the Regional Economics Applications Laboratory of the University of Illinois. “One of the greatest concerns in the housing market is the shrinking inventory of lower-priced homes presenting a challenge to lower income households many of whom are paying upwards of 50 percent of their incomes on rent.”

These are good numbers compared to what is happening in other cities.

With prices having rebounded about 15% in the Chicago metro area year over year, will inventory finally get a boost this spring?

Illinois home prices continue trend of strong annual gains in November despite lower housing inventory statewide [Illinois Association of Realtors Press Release, December 19, 2013]

19 Responses to “Chicago Market Conditions: November Home Sales Buck National Market Trends By Rising”

  1. The 10-year has traded as high as 2.95% today. The 30-year fixed mortgage rate should be around 5% going into 2014.
    It will be a completely different market than what we had just 12 months go.

    If you’re looking to by that $400,000 2/2 in Lakeview, you no longer will qualify for an FHA loan. You’ll need to bring more cash to the closing.

    November national existing home sales fell year over year. In the West, where affordability is awful, sales were down 10% year over year.

    No one should be surprised at the falling sales. Mortgage applications have been falling for the last few months and are now negative year over year.

    VN:F [1.9.22_1171]
    Rating: 0 (from 0 votes)
  2. “No, I really don’t understand why the number was 1750 sales a year ago but in today’s press release it is 48 sales higher.”
    I’ve been preaching this issue ad nauseum. A while ago the IAR changed the way they report the % increase. They used to do it right. They would compare a preliminary 7th of the month number to last year’s preliminary 7th of the month number. Now they compare the preliminary to the final from last year, which always understates the growth. So in my monthly update that I do around the 7th of the month I post both %s. In reality Chicago sales were up around 2.5% over last year.

    VA:F [1.9.22_1171]
    Rating: 0 (from 0 votes)
  3. Prices are continuing to creep up; a totally comparable house on my block just sold for $290 psf. My house appraised in 2012 post-rehab for $210 psf. In theory, my house went up in value $100k in one year. I”m not talking about rehabbing either, I mean, this is $100k after the rehab. That’s pretty ridiculous. These must be the last stragglers of buyers before prices start to drop.

    VA:F [1.9.22_1171]
    Rating: 0 (from 0 votes)
  4. Looks like you were wrong about November as well. Care to try again for December?

    VA:F [1.9.22_1171]
    Rating: 0 (from 0 votes)
  5. “If you’re looking to by that $400,000 2/2 in Lakeview, you no longer will qualify for an FHA loan. You’ll need to bring more cash to the closing.”

    I realize that many might, but of the people I know who have, or would be inclined to, buy a 2/2 in the $400k range, I don’t think many, if any, have relied on FHA loans. Are there statistics as to what sorts of loans are used to buy certain unit types? I do know that there are plenty of buildings that don’t even allow it.

    As for the rate creeping up, sure, that’s a bummer, as we’ll be looking to buy at some point over the winter. But it’s not going to keep us from buying. Not sure how much it will affect our price range either (though it will), given that we’re almost certain to be doing another 5/1.

    VA:F [1.9.22_1171]
    Rating: 0 (from 0 votes)
  6. “Not sure how much it will affect our price range either (though it will), given that we’re almost certain to be doing another 5/1.”

    Can still get a 5/5 for 2.875 today.

    VA:F [1.9.22_1171]
    Rating: 0 (from 0 votes)
  7. btw, had appointments to look at 3 places when I was in town last week. All 3 went under contract before I got to see them. Multiple offers on all 3.

    VA:F [1.9.22_1171]
    Rating: 0 (from 0 votes)
  8. “As for the rate creeping up, sure, that’s a bummer, as we’ll be looking to buy at some point over the winter. But it’s not going to keep us from buying. Not sure how much it will affect our price range either (though it will), given that we’re almost certain to be doing another 5/1.”

    You’ll afford less, that’s all.

    For instance, a year ago someone with a $1000 a month budget could have bought a house at $222,0000. Now, they have to buy at $200,000. Their money doesn’t go as far. It impacts most of the housing market- except for those buying in all cash.

    Instead of buying the $450,000 2/2, someone can now only afford the $400,000 2/2 with the same monthly payment. And since we’re a monthly payment nation (i.e. that’s the only thing that matters)- it means you have to lower expectations in 2014. OR- prices will have to come down to meet those expectations.

    VN:F [1.9.22_1171]
    Rating: 0 (from 0 votes)
  9. “Are there statistics as to what sorts of loans are used to buy certain unit types?”

    I don’t know if Illinois keeps track of it or not. I thought Appraisal Research kept good records of these kinds of things- but you’d have to ask them.

    VN:F [1.9.22_1171]
    Rating: 0 (from 0 votes)
  10. “I realize that many might, but of the people I know who have, or would be inclined to, buy a 2/2 in the $400k range, I don’t think many, if any, have relied on FHA loans.”

    I don’t know what the percentage is in Chicago but here’s some stats:

    “Through the first three quarters of 2013, the FHA insured just over 91,000 loans, according to the agency’s third-quarter report to Congress.”

    VN:F [1.9.22_1171]
    Rating: 0 (from 0 votes)
  11. “btw, had appointments to look at 3 places when I was in town last week. All 3 went under contract before I got to see them. Multiple offers on all 3.”

    So? I live here and down the street is a lovely 3 flat. Been sitting there for 3 months. No takers.

    And?

    Oh- and someone else I know is trying to sell in River North. Been on the market 3 months. Lowered a couple of times. No takers. Took it off the market 2 weeks ago.

    And?

    VN:F [1.9.22_1171]
    Rating: 0 (from 0 votes)
  12. FHA has recently been 17.2% of the total US market so some smaller portion of that will be affected by the cutback.

    VA:F [1.9.22_1171]
    Rating: 0 (from 0 votes)
  13. “For instance, a year ago someone with a $1000 a month budget could have bought a house at $222,0000. Now, they have to buy at $200,000. Their money doesn’t go as far. It impacts most of the housing market- except for those buying in all cash.”

    But the buyers going from 240K to 220K will basically replace the buyers going from 220K to 200K. I don’t think it’s a huge impact.

    VA:F [1.9.22_1171]
    Rating: 0 (from 0 votes)
  14. “and someone else I know is trying to sell in River North. Been on the market 3 months. Lowered a couple of times. No takers. Took it off the market 2 weeks ago.”

    Well, all of this is anecdotal. We just sold a condo in the South Loop for 490K that we helped them buy for $374K in March 2012. But the sellers put 70K of improvements in it, but I can assure you that you never recover 100% of your improvements.

    There can be any number of reasons that something won’t sell but obviously these are overpriced for the current market. At the end of the day you have to look at the aggregate market data and it’s telling us that stuff is selling quickly at higher prices than last year.

    VA:F [1.9.22_1171]
    Rating: 0 (from 0 votes)
  15. “And?”

    “And?”

    Just shows that you will always use the exception to try to prove your rule.

    VA:F [1.9.22_1171]
    Rating: 0 (from 0 votes)
  16. At the end of the day you have to look at the aggregate market data and it’s telling us that stuff is selling quickly at higher prices than last year.

    And anyone who claims otherwise is fucking stupid.

    VA:F [1.9.22_1171]
    Rating: 0 (from 0 votes)
  17. “If you’re looking to by that $400,000 2/2 in Lakeview, you no longer will qualify for an FHA loan. You’ll need to bring more cash to the closing.”

    Or there will be pressure on sellers of properties in the lower $400k range to accept offers that get buyers under the cap. Sellers that wanted to list in the $425-450k range are the potential losers here.

    VA:F [1.9.22_1171]
    Rating: 0 (from 0 votes)
  18. The stock market’s 2013 returns of 30 to 35% should positively impact the market in the $550K to $1M segment. There are still people retiring who want to get a place in the city in a LP, OT, RN, GC location, so those areas will continue to see prices rise irrespective of increasing interest rates.

    VA:F [1.9.22_1171]
    Rating: 0 (from 0 votes)
  19. “There are still people retiring who want to get a place in the city in a LP, OT, RN, GC location, so those areas will continue to see prices rise irrespective of increasing interest rates.”

    Don’t forget all those Chinese buyers too.

    VN:F [1.9.22_1171]
    Rating: 0 (from 0 votes)

Leave a Reply