Market Conditions: November Sales Fall 38.5% in Chicago YOY; Median Price Continues to Decline
The Illinois Association of Realtors is out with the November sales data.
As predicted, sales continue to be challenging.
In the city of Chicago, year-to-date total home sales (single-family and condominiums) remain up 0.1 percent January through November 2010 with 17,645 sales compared to 17,631 home sales for the same period in 2009; November home sales were down 38.5 percent to 1,144 sales compared to 1,859 homes sold in November 2009.
November’s year over year comparisons were influenced, however, by the surge in sales last year due to the first home buyers tax credit which expired at the end of November 2009. Remember, for that first credit, you had to be closed by the end of November to get it. This pushed a lot of closings into November.
December will be the first month where we’ll get data that isn’t influenced by the tax credit.
Here is the November data for the past 4 years:
- November 2007: 1801 sales and median price of $290,000
- November 2008: 1094 sales and median price of $222,500
- November 2009: 1859 sales and median price of $215,000
- November 2010: 1144 sales and median price of $206,000
The year to date median price is down 7.6% to $208,000 from $225,000 in 2009.
“The decrease in units sold in November 2010 over November 2009 is expected given the spike of sales at the end of 2009 as buyers made their purchases pending a then-anticipated federal tax credit expiration. Median home prices remain steady with just under a three-percent drop in condo pricing showing a stabilization in the marketplace,” said Mabel Guzman, president of the Chicago Association of REALTORS® and a REALTOR® with Envision Real Estate LLC, Chicago. “REALTORS® still remain concerned, however, with the issues related to lack of condo financing available to qualified borrowers, ultimately offering fewer home options to buyers or perhaps buyers not making a purchase at all.”
For the second month in a row, the IAR really didn’t find much to spin in the report.
Illinois Median Home Price Remains Stable Three Straight Months; Sales Down from a Year Ago [Illinois Association of Realtors Press Release, December 22, 2010]
Frankly, it’s hard to analyze the YOY % change given the government intervention in the market this time last year. It’s an apples and oranges comparison. Comparing 2010 to 2008 makes more sense. But that shows little change over 2 years.
The lowering of the median price just shows that foreclosures and short sales continue to dominate the market. No surprise there. It’s going to be a while before we see medians back up in the upper 200’s again.
“December will be the first month where we’ll get data that isn’t influenced by the tax credit.”
That’s not quite right, though. As you say, the tax credits “pushed a lot of closings into November.” In 2009, the tax credit likely decreased the number of December closings, as people who would have closed in December did so in November instead. Thus, December 2009 likely had significantly fewer closings because of the tax credits than it otherwise would have had.
So comparing December 2010 (presumably no effect from the tax credit) to December 2009 (artificially depressed because of the tax credit) could lead people, such as the IAR, to see a year-over-year increase (or smaller decrease) that’s still the result of the tax credit decreasing closings in December 2009.
Actually, I think this December was so bad that things might Be flat. Look at the trend. December 2010 numbers are going to be on par with december 2008 stats which were abysmal. My office had two closings this month. Its more than seasonality, its that few people actually want to buy these days.
Have prices gone down every month since Clio started posting? Just wondering.
“its that few people actually want to buy these days”
people want to buy, no one wants to pay for what is currently available
I agree. There are plenty of people ready to buy, but right now all that is available is short sale and foreclosure property that has been neglected and abused, and then the assessments – $1K plus per month on a 2 bed that costs $500K might seem reasonable but when it’s on a $200K place it’s just unthinkable for most.
The stats say one thing for sure, but try to buy a house that you want to live in for the long haul, in a neighborhood you want to be in, on a street that you can deal with, and the prices have not changed that much in the past few years.
I continue to see new condos being built and sold right on my street or a few blocks over, for the same prices as 2-3 years ago. And this is Wicker Park, not fancy pants Lincoln Park or Lakeview or Old Town.
If you bought in 2004-2006 and you want to sell now, you will take a hit no matter where you are. But if you bought before 2004 or after 2008 then your value will be flat for the most part, unless there is something wrong with your property.
That’s my view of the market today from the ground in Wicker Park.
What’s going to happen to Fannie and Freddie? Are they being dismantled, or are they going to remain a constant source of gvt. financing/involvement in housing?
Until the public finally understands (it may take 2 years psychologically for this to sink in) that we’re back to 20% down payments, qualifications, and no Fannie/Freddie subsidies, etc. we won’t know where the bottom is.
“its that few people actually want to buy these days”
people want to buy but are stuck with a current property. Even if they are not ridiculously underwater, no one wants to bring several thousands of dollars from their savings/downpayment just to be rid of a property.
FYI i bought my condo in 2003 — was this during the bubble?
“FYI i bought my condo in 2003 — was this during the bubble?”
Yes. Easy to demonstrate (note: *not* “prove”) the bubble started in 98. No question it was full steam ahead by 2001, esp. with rate cuts post-9/11.
I’m sure there are a lot of people who want to buy. They just aren’t buying. And Sales dropped off a cliff. Those that wanted to buy, who still could buy, all bought last November before the tax credit expired.
Well, the IAR did manage to spin the median prices and they focused more on the YTD sales numbers than the numbers from last month. I think the contract data is pretty interesting at this point. It’s showing some signs of improving: http://www.chicagonow.com/blogs/chicago-real-estate-getting-real/2010/12/chicago-real-estate-market-early-signs-of-improvement-in-november.html
“I’m sure there are a lot of people who want to buy. They just aren’t buying. ”
I want to buy clio’s lambo. But I’m just not buying it either.
Something to do with the whole economic constraints thing..
“Those that wanted to buy, who still could buy, all bought last November before the tax credit expired.”
Not true
“according to an estimate by the National Association of Realtors, of the 2 million new homebuyers since the credit was instituted, just 350,000 say they would not have bought a house without the tax break.”
I’d love to buy an intown condo, but not in this climate. There is just too much uncertainty with condo assessments and potential specials, … at any price. Also, I don’t want to be stuck anywhere, life is too short now.
My money can buy a lot of hotel nights or pay friends for use of their condos. Renting is also a better option, because there is just less to deal with (condo associations, no thanks).
anon(tfo)
I’m pretty sure of when this bubble was punctured (Dec. 06 is my candidate, when subprime lenders first began filing bk). But I’m much less sure of when the bubble was born.
So, what “Easy to demonstrate” means/evidence have you for believing “the bubble started in 98“?
Couldn’t one argue the bubble was born in . . . say, 91 or 92, the nadir of the most recent previous RE bubble? What happened in 98 that warrants its title to ‘birth year of the bubble’?
http://calculatedriskimages.blogspot.com/2010/08/case-shiller-home-prices-june-2010.html
97, 98 and 99 are all good answers as to when the bubble started.
Another reason for fewer closings, if my own experience is typical, is that lenders are dragging their feet.
I should have had 3 closings this month. I’ll probably have only one. In one case the bank reneged on its promise to give a quick approval to a short sale. (Yes I know, live and learn…) In the other, the lender keeps asking for ever-more paperwork, etc. to complete the loan package for underwriting.
I can’t imagine that my experiences are all that unique!
Lenders are wary of the potential for short sale fraud. They are also concerned about lending on a declining asset.
G,
Are you saying that maybe lenders know something that ChiTownGal’s eager beavers possibly don’t?
“Couldn’t one argue the bubble was born in . . . say, 91 or 92, the nadir of the most recent previous RE bubble? What happened in 98 that warrants its title to ‘birth year of the bubble’?”
You want to argue for 91 or 92, that’s fine too. I don’t think it would be as easy to demonstrate, especially given that real dollar prices continued to fall into the mid-90s (depending on the particular market in question).
It’s easy to demonstrate (again *not* easy to “prove”) that 98 was the start of the bubble, and that was in response to Icarus’s question of whether 2003 was during the bubble–it *clearly* was, as was any time after Oct-01, with the sharp decrease in rates. No one can make a reasonable, persuasive argument that the bubble started *later* than Oct-01 (note: I do think it began earlier), and it’s really easy to show a bubble starting in 99 or 98, tho I’m less sanguine than HD about easily demonstrating 97, as that looks more like a reasonably normal recovery/inflation driven year.
If you want a more solid response, ask a question that doesn’t involve putting words in my mouth.
Yours is a fine response. thanks.
I originally thought you were referring to some specific event(s) in 98 that I was unaware of. That doesn’t appear to be the case, but your post prompted me to reconsider if AG’s rate cuts after LTCM’s collapse might not also have fomented an eventual housing bubble. It’s possible. Who knows? Certainly not me, but thinking about such is a fun parlor game.
fyi: this account claims “By the fall of 2006, the housing market was dipping….”, so I may need to move up my date of the puncture still further.
http://www.propublica.org/article/the-subsidy-how-merrill-lynch-traders-helped-blow-up-their-own-firm
“Yes. Easy to demonstrate (note: *not* “prove”) the bubble started in 98. No question it was full steam ahead by 2001, esp. with rate cuts post-9/11.” anon (tfo)
I was afraid you’d say that but hoping that you’d say it was on the low end/start of the bell curve. i.e. you only overpaid 10% on your place versus what many at the height did 🙂
If one ascribes bubbles to Fed activity, the view is that there were two bubbles: the Fed’s easing which found its way into the dotcom bubble — which also ignited real estate in 1996-2000, and then Fed easing #2 which took place after the dotcom crash and 9/11. I’m convinced GWB and the Fed did everything they could to make money freely available to prop up the economy after 9/11/2001 to show the terrorists that they couldn’t take down America’s economy. Most of this monetary and gvt. policy went straight into blowing up the housing bubble. That’s the problem with the Fed, they really can’t control where “easing” ends up.
“97, 98 and 99 are all good answers as to when the bubble started.”
Don’t forget that other countries have been pumping too so now money is flowing into the US Stock market like never before.
http://noir.bloomberg.com/apps/news?pid=20601085&sid=aJxhibQEE_e8
Euro Pain Turns to 23% Gain for Europeans in S&P 500
Icarus –
If you like, e-mail me at oakstbeachgrrl@yahoo.com. I’ll put you in touch with my real estate agent who can run comps for you on your building and area. He also has a program where he guarantees to sell your home or he will buy it himself. Talk to him and see what he says about your condo.
However, although you probably paid more in 2003 than what your apartment would sell for today, I’m assuming that values went up even more from 2006 – 2008, so your scenario is probably not as bad as it could have been.
On the bright side, you’ve been in your place for 8 years now. I’m sure you’ve realized some benefits from owning. Even people who bought from 2006 – 2008 have had some benefits. Hopefully your taxes and assessments have not gone up too much. And you are probably in a much nicer building/unit than if you were renting. And hopefully your mortgage payments are going down? Plus, think of all the time you’ve saved from shovelling snow, mowing grass, doing repairs, etc.
The general vibe I’m getting from CCers is that they seem to like 2001 pricing on the properties Sabrina has profiled. 2003 prices were not too much higher than 2001 prices.
I know from your postings you would like to sell your condo to move to a SFH. However maybe this would be a good opportunity to practice living in the moment. Appreciate what you have. Appreciate today. Appreciate the beautiful home you have. Appreciate the shelter it has provided your family. Appreciate your neighborhood and how much you love it. Today is all you are guaranteed. No one knows what the future will hold. Your situation is really not that bad! Seriously! I live in NY most of the time and Chicago part-time. Do you know how many NYers with families would kill to own a 2 BR apartment? As you probably know from my comments, I have been looking for a good buy – condo, SFH or multi-unit in Chicago. There’s really nothing good out there at the moment at a decent price. I’ve been down the short sale path a few times now over the past 1.5 years, but nothing has worked out yet.
So if you want a SFH, start looking for one and monitor the areas you like. But it’s not the end of the world if you don’t find it. Go home tonight, put your feet up in your condo and have a beer 🙂
thanks Milkster, I may take you up on it, though I’m a bit nervous about connecting with a CCer without my mask LOL
It’s funny I was just thinking the other day that I should be more greatful for what I have (a condo I can afford) than what I want (SFH) and was going to put that pipedream aside for now.
Yeah, my scenario isn’t as bad as many. I’ve paid dillegently, didn’t use my place as an ATM and as luck would have it, was finally able to refi last year to an awesome rate. I think I’m one of the few who benefited from those new appraisal regulations — either that or someone forced their cousin to buy their place in my hood and I benefited from the comp.
I was also thinking how my purchase was the COMP that others in my buidling used when they bought — no wonder they hate me 🙂
Icarus:
Moreover, move-in condition homes are really expensive, still. In many cases, beyond what my budget is willing to pay.
SFH still have got ways more to come down than condos.
Figure $400k for a move-in condition SFH with more modern features; at least in the areas where you and I would want to live. And the $400k houses are few and far between.
For example here’s a $371,750 house that went under contract within days of being listed.
http://www.redfin.com/IL/Chicago/3823-N-Kildare-Ave-60641/home/13457894
Figure 20% down means you need $74,000 to put down; Who has $74,000 sitting around for adown payment? Not many willing to buy houses in the month of november or december, that’s for sure.
A $300k mortgage at 5% – that’s $1,600 per month; plus about $500 a month in taxes; plus say $100 for insurance and maintenance and you’re looking at $2,200 buck a month.
That may be peanuts for some, but that’s a lot of money for a lot of people. And $2,200 per month sustainably for the next 30 years is a long time. You better have a good job to pay that monthly payment.
Plus, the kitchen and baths are older which means they’ll need to be redone soon enough..figure another $40 or $50k to do them ‘right’ unless you want to be cooking in a 30 year old kitchen in the middle of the next decade.
Even if your condo drops in value, it won’t drop as much in value of these houses and you can be thankful you’re not somebody who bought a $500k crapshack in 2001 and is trying to sell after a rehab for $700k today. That market is DEAD.
The house above was one of only a handful move-in ready homes to sell in the blocks between addison and iriving between cicero and western. Everything else that sold was a crapshack or a multi-unit.
$400k or less is the sweet spot for SFH in the nicer NW side areas like old iriving, avondale, kilbourn park, albany park, etc.
And that’s just $400k today – there are so few of them available. EVerything else languishes.
And like I’m saying a $400k home might be peanuts to some but it’s a large monthly payment for a lot of people who are looking to buy.
“SFH still have got ways more to come down than condos. ”
You think they will or you think they should? I mean unless you inherit the home, most of these have some type of mortgage on them and the seller can only go so low.
The house you linked doesn’t even have a garage. Tell me HD, what is a realistic and/or reasonable price in the areas we’d want to live for the following:
updated windows, roof and mechanicals, finished basement, attic and updated kitchen?
$300k-$400k. Requires a $80k down payment. And an $80k to $120k HH income to purchase. Above median income for Chicago. You can’t have it all – so get rid of the finished basement (many of these old victorians you wouldnt’ want to finish the basement anyways or are prevented from doing so b/c code issues), or the attic. Some homes no garage; others have smaller kitchen or no open floor plan. you might not have a shower on the second floor if its an old victorian from the 1890’s. Figure 1500-1800 sq ft of livable finished house for $280-350k and the nicer, larger homes with better layouts and finishes for upper $300’s and lower $400’s up to the $500’s.
LP, LV, these are different markets and the lack of SFH and the plethora of condos make the market different. SFH are so limited in supply they will generally be in the $500’s and $600’s and up and that’s just the way it is. But that’s a lot better than the $800’s they were selling for during the bubble.
http://www.redfin.com/IL/Chicago/4040-N-Kenneth-Ave-60641/home/13480708
$360k last month.
As the houses in the $500,000’s (www_.redfin.com/IL/Chicago/4217-N-Kildare-Ave-60641/home/13456160) – remove the _ fall from their lofty listing prices, reality will hit and there will be a wide variety of homes to buy on teh NW in the $200’s and $300’s. It’s going to be a long wait though. We’ve been waiting since 2006 and things are still frothy.
“The house you linked doesn’t even have a garage. Tell me HD, what is a realistic and/or reasonable price in the areas we’d want to live for the following:
updated windows, roof and mechanicals, finished basement, attic and updated kitchen?”
Regular bungalows and tudors 1200 to 1500 sq ft in portage park should be int the mid-100’s like they were during the late 90’s. I have clients I know very well who each earn about $12.00 an hour bought a tudor in the late 90’s for 160k or so. over the years they borrowed and refi’d unti lthe owed $330k, they had to get second jobs to afford the mortgage with teaser rates before they both just gave up and went into foreclosure. They’re getting a loan mod (isn’t everybody) but at the end of the day, two people making $14.00 an hour is the way to afford a $160k house in portgage park. it’s a nice house, a tudor, pool in the back, 3 beds, an older but finished basement. 25/125 lot.
HD, I think you should do my home searching for me 🙂 I was searching Old Irving Park but switched to Jefferson and Portage thinking I’d find something in a more realistic price range.
Icarus – last week I showed there were 23 properties priced over $500k listed in OIP and only 4 properties over $500k had sold June 2010.
OIP will always be more expensive because of the proximity to the el, the larger lots, larger more architecturally significant houses, a higher household income demographics and the like. But how much more of a premium?
A houshold making $50k a year probably not. A household making $80, or $100k, or $120 or more? Sure. If you’re household is making $140k a year like plenty I know you’re not going to want to buy in an area where your neighbor is an admin asst earning $14.00 an hour in a $160 house. But a $140k HH income does not justify 23 houses priced higher than $500k.
Maybe in LP or LV or Roscoe village where there’s more $200k or $300k households a the $500k+ market is larger, but not on the NW side.