Market Conditions: May Chicago Home Sales Rebound 32.1%; Median Price Rises
It’s that time of the month again to get the data about the state of the market from the Illinois Association of Realtors.
In the city of Chicago, May total home sales (single-family and condominiums) were up 32.1 percent to 2,057 sales compared to 1,557 homes sold in May 2009, the ninth consecutive month of year-over-year sales gains. Another positive: the city of Chicago median price in May 2010 was $230,000, up 2.2 percent compared to $225,000 a year ago in May 2009.
Just to keep things in perspective, here is the monthly May sales data for the last three years:
- May 2010 sales: 2057
- May 2009 sales: 1557
- May 2008 sales: 2119
Reminder: These are closings that were fueled by the government tax credits.
The real estate industry has been urging an extension of the closing deadline for the credits (which is currently next week- June 30). This would assist those buying new construction homes that will not be completed by the deadline as well as others having trouble completing the closing.
An extension has already been included in at least one Senate bill (closing would be extended by a two months) but it was not passed. It looks like there won’t be time to try again before the expiration but we shall see.
“Buying conditions remain favorable even as the homebuyer tax credit has expired with mortgage interest rates hovering at historic lows combined with affordability conditions that essentially give buyers ‘more bang for their buck’ when purchasing a home in today’s market,” said REALTOR® Mike Onorato, GRI, president of the Illinois Association of REALTORS® and broker-owner of Onorato Real Estate in Coal City. “Clearly in May we saw a high volume of closed home sales transactions generated by the tax credit incentive that ended on April 30. REALTORS® are urging Congress to extend the closing deadline for those who qualified for the tax credit beyond June 30 as some may not be able to close their transaction in time given the number of contracts pending and delays resulting from short sales and the appraisal process.”
“The increase in units sold is a positive indicator that the tax credit created a more positive impact on the Chicago marketplace than the movement we saw in 2009. Additionally, the credit afforded buyers the opportunity to look at higher-priced homes, helping keep their options more affordable,” said REALTOR® Mabel Guzman of Century 21, S.G.R., and president-elect of the Chicago Association of REALTORS®. “For homes to sell, jobs need to be created in order for consumer confidence to escalate, and buyers to jump off the fence without a credit to purchase a home today.”
Given the anemic sales numbers, even with the tax credit, what are the odds that Congress enacts yet another, and possibly larger, tax credit come fall?
Double-Digit Home Sales Gains Continue in Illinois; Statewide Median Price Up 0.6 Percent [Illinois Association of Realtors, Press Release, June 22, 2010]
“Given the anemic sales numbers, even with the tax credit, what are the odds that Congress enacts yet another, and possibly larger, tax credit come fall?”
That would be awesome, but they need to up the income limits.
Data seems to show that closings in May are up and June will be slightly lower, but new contracts signed during May/June are way down, suggesting that July/Aug closings will be extremely anemic. Demand has dried up. Most of the ‘deals’ were ‘snapped’ up in the months before the credit leaving lots of overpriced units languishing on the market. Sellers feel emboldened by the April/May sales figures are refuse to budge on price.
Look up your preferred neighborhood the MLS for price reductions in the last 30 days. The number is generally less than 20%. The other 80% of sellers informally banded together and frozen prices. Maybe they think they’re going to buyers that they mean business – no more price cuts. We’ll see who wins this standoff…
I think this is the last month we are going to see these kind of sales increases. Like I’ve said before, I’ve seen contract activity off 15 – 25% from last year’s levels since April 30 and May contracts will mostly have closed by June 30 since that is the current closing deadline. I’ve got this data graphed going back to 2006 here: http://chicagohousingstats.com See the second graph.
As a tax payer I sure hope they don’t put another one of these tax credits into place. It’s a really dumb idea. As a realtor, I’ll make hay.
In several neighborhoods that I’ve looked at really closely I’m seeing absolutely no activity in 2 – 3 bedrooms lately.
I think that if they are gonna keep extended or renewing or bringing back the tax credit, they may as well make it permanent but please redesign it. Maybe they should just come up with a perminent tax credit that is scalable to income and price of home. Something like if you make less than $50K, you get $8K as long as you don’t purchase anything above $300K. If you make a little more, you can purchase more but you get less back. The idea being to make sure only people who can afford the big ticket homes buy the big ticket homes.
And instead of paying out cash, how about they can only use the money for home improvements or toward their property tax?
“Given the anemic sales numbers, even with the tax credit, what are the odds that Congress enacts yet another, and possibly larger, tax credit come fall?”
That is my big fear.
“I think this is the last month we are going to see these kind of sales increases.”
The second graph you show has a moving average increase, so what you’re saying is you think this moving average will trend downward again? I’m looking to buy in January so I hope it tanks more. 👿
Be carefull of what you wish… After you buy, it might just keep on tanking.
Yes, I believe the moving average will trend downward, probably starting in July – maybe even June.
Sabrina,
Your article suggest the amendment has not passed the Senate and is unlikely to prior to June 30th. The amendment passed through the Senate on June 16th on a 60-37 vote and is now awaiting confirmation from the House as I understand it.
Anyone else heard different?
I mean the amendment extending the closing deadline obviously not the tax credit itself
It is my understanding that what actually passed in the senate was amending a jobs bill to include a provision to extend the tax credit. However, that bill had not actually passed yet.
I had to look this up again to figure it out. The amendment to the bill to add the extension passed in the Senate. But the actual bill has not yet passed and it looks unlikely to before the June 30 deadline.
“In several neighborhoods that I’ve looked at really closely I’m seeing absolutely no activity in 2 – 3 bedrooms lately.”
Gary, you’re saying you see less activity in larger places, than in smaller?
I would have thought that as prices come down, people would go for the larger places. . .
I haven’t looked at the one bedroom activity very closely but the 2 – 3 bedroom activity in a few neighborhoods is non-existent. But these are not the most popular neighborhoods.
I’m new to this market just starting to look for a new place. I’ve been looking at 3 bedroom townhomes and so far all are asking 50K over the sold price from say 2002. Is this reasonable in this market? I know there are many factors, but to me the asking prices seem way too high. From what I see, I think the 2002 prices are more realistic for what you are getting.