Market Conditions: Chicago Sales Down 22.9% Year over Year in August; Price Declines Continued
The Illinois Association of Realtors just released the August city and statewide sales data and, as expected, sales plunged for the second month in a row primarily due to the expiration of the tax credits.
In the city of Chicago, August total home sales (single-family and condominiums) were down 22.9 percent to 1,486 sales compared to 1,927 homes sold in August 2009. The city of Chicago median price in August 2010 was $200,000, down 13.0 percent compared to $229,900 a year ago in August 2009.
Here is the data for the last 4 years:
- August 2010: 1486 sales
- August 2009: 1927 sales
- August 2008: 2078 sales
- August 2007: 2923 sales
“The market year-to-date in the city of Chicago reflects an increase in the number of units sold by more than 17 percent over the same period in 2009,” said REALTOR® Genie Birch, president of the Chicago Association of REALTORS® and a broker associate with Koenig & Strey Real Living, Chicago. “Consumers continue to find Chicago real estate worthy of their investment, and are making sound decisions regarding how they spend their money and plan for their future.”
Sales were also down year over year in the Chicagoland area and statewide.
“The housing market is waging an epic battle to maintain some hard-earned stability gained in the first half of the year. On one side we have the combination of record low mortgage interest rates and lower home prices making very compelling affordability conditions for buyers,” said REALTOR® Mike Onorato, GRI, president of the Illinois Association of REALTORS® and broker-owner of Onorato Real Estate in Coal City. “On the other, we are entering a slower season in fall and winter when activity is typically soft. A healthy housing market depends on a healthy Illinois economy, especially in the area of job creation and stability.”
He adds: “Pricing remains the number one issue for sellers. To sell quickly the price must be competitive relative to homes for sale in the area and this becomes even more of a challenge in markets where foreclosures and short sales dominate.”
“Once again the economy has provided little or no inspiration for the housing market,” said Geoffrey J.D. Hewings, the Director of the Regional Economics Applications Laboratory at the University of Illinois. “Private sector employment gains continue to be far short of the pace needed to accommodate labor force and population growth.”
Illinois Home Sales in August Improve from July; Year-to-Date Sales Up 9.2 Percent Statewide, 15.8 Percent Chicagoland [Illinois Association of Realtors Press Release, September 23, 2010]
I don’t think this is very surprising – I guess the only good thing is that it might serve as a “low data point” in 2011, 2012, 2013 when the headlines will likely read “Home sales increase 30% (or 40/50%)”. It is obvious that the media likes capitalizing on the general fears and mood of the country – when everything turns around, you will see these headlines change.
While the tax credits did persuade a small percentage of potential buyers to invest in their own, long term homes, this is not the primary reason the market has not experienced more of a recovery.
I like how the realtors always report a change from the prior month when the seasonality effects are positive and not when they’re negative.
The YoY decline is less for Aug than Jul. I don’t see how you can make much of these data at the moment. Will take at least the next few months, and probably into the selling season next year to figure where prices are going.
It will be interesting to see in 2012-2014 the volume numbers… Don’t most people typically live somewhere for 5-7 years before moving? those 2007 numbers are crazy high, and if all those people wind up moving that could really increase volume a lot
“and if all those people wind up moving that could really increase volume a lot”
How is that possible? Think they’re going to have accumulated enough equity to cover the depreciation from 2007 to 2012? I doubt it: remember this was the era of low downpayment loans and the CS index has fallen substantially since then.
Who’s more of a joke, and remember death is not an option:
A REALTOR® or the ACLU?
“very compelling affordability conditions for buyers”
Just try to find a 4 bedroom, single family house, in a top notch suburb, under $350K, built in the last 10 years. They are not out there. The type of house that buyers would gobble up are not available.
“in a top notch suburb”
Yeah genius because your criteria is too stringent. You sound like an employer bemoaning they can’t find people skilled enough to do a job but you want the 160k candidate for 80k.
As someone looking for a place on a tight budget it is pretty hard to find something that isn’t crap out there. Although it is nice that things are actually beginning to list in a more affordable range, makes it a little easier than people who think their small bungalow with no upgrades and neglected finishes in portage park is worth 350k.
Who knows if this is the bottom for volume, but given the quality of what is coming on the market I don’t see much change for the winter months. You *likely* (there are allways exceptions) wouldn’t list a great place in the worst season in the worst market unless you really are getting hit by one of the 3 D’s (Death, Debt, Divorce).
“How is that possible? Think they’re going to have accumulated enough equity to cover the depreciation from 2007 to 2012? I doubt it: remember this was the era of low downpayment loans and the CS index has fallen substantially since then.”
50% of homeowners own their homes outright so perhaps 4 years of falling prices will lead them to upgrade? I dunno… just an idea of how the market can recover eventually
“50% of homeowners own their homes outright”
I’m pretty sure it’s more like 1/3. Maybe higher if you include rental props owned w/o a mortgage.
“50% of homeowners own their homes outright so perhaps 4 years of falling prices will lead them to upgrade? I dunno… just an idea of how the market can recover eventually”
People who own the homes outright are likely to be in their 60’s 70’s or 80’s. In most cases they prefer to downgrade rather than upgrade.
“The market year-to-date in the city of Chicago reflects an increase in the number of units sold by more than 17 percent over the same period in 2009,” said REALTOR® Genie Birch, president of the Chicago Association of REALTORS® and a broker associate with Koenig & Strey Real Living, Chicago. “Consumers continue to find Chicago real estate worthy of their investment, and are making sound decisions regarding how they spend their money and plan for their future.”
Sales are down 23% and still the REALTORs(R) are able to find a positive way to spin the news!
I wonder if REALTOR® Genie Birch thinks that “now has never been a better time to buy”? And whether she thought similarly in 2004-2008. I suspect so.
Who has egg on their face now?
What I’m seeing on the ground is finally being reflected in the stats.
Things have been even slower in September than August and this month is nearly over.
The latest contract I’ve seen come across my desk is a foreclosure in Gary for $51,000. ergh.
Dan is right, buyers would gobble up four bed sfh in top notch suburbs for $350k. However, I think you should lower your threshhold to three bedroom homes in nicer suburbs…..
Don’t forget there’s always an upper-middle class couple who earns what you do but is willing to pay $1,000 more a month for same house as you. (that’s why I believe Roscoe Village is so expensive – two professional lawyers or accountants making in the high $200,000 or $300,000 will pay $850 or $900 for a house no questions asked).
“50% of homeowners own their homes outright so perhaps 4 years of falling prices will lead them to upgrade? I dunno… just an idea of how the market can recover eventually”
I think this number is a bit high, but even assuming its not what are they going to upgrade to? I would be more concenred about the the volumes of “apartment condos” in the city, the crappy 3/1’s small 2/2’s and 1/1’s that no one is going to want
“Dan is right, buyers would gobble up four bed sfh in top notch suburbs for $350k. However, I think you should lower your threshhold to three bedroom homes in nicer suburbs…..”
*I’d* buy one, and rent it out. And make $$ on it every month. And already own someplace, if there’s a need for HS attendance.
Assuming that “top notch” to Dan means “top notch” to me, which is always an open question here at the CC.
And, on this point HD, you are right, altho I might leave it at 4 BRs in nicer suburbs (meaning, basically not north shore, not hinsdale).
“I would be more concenred about the the volumes of “apartment condos” in the city, the crappy 3/1’s small 2/2’s and 1/1’s that no one is going to want”
Depending on the building (size and # of units available and HOA terms), I expect *many* of them to return to rentals. Nicer rentals than they were, not not worth (in real $$) much more, as their rental value won’t have increased very much.
and I agree with you anon(tfo) nicer suburbs are park ridge, barrington, arlington heights, orland, palos etc. by top notch I think of north shore, hinsdale, oak brook, and a small handful of other places.
My theory is that if you can buy a townhome in an OK suburb (plainfield, des plaines, schaumburb) in the $100’s, and you can buy a sfh in those same suburbs for $200’s, then sfh in the nicer suburbs and nicer city areas should be in the $300’s and $400’s.
“and I agree with you anon(tfo) nicer suburbs are park ridge, barrington, arlington heights, orland, palos etc. by top notch I think of north shore, hinsdale, oak brook, and a small handful of other places.
My theory is that if you can buy a townhome in an OK suburb (plainfield, des plaines, schaumburb) in the $100’s, and you can buy a sfh in those same suburbs for $200’s, then sfh in the nicer suburbs and nicer city areas should be in the $300’s and $400’s.”
Hey! It’s reasonable HD today. Hoo-ah!
‘course, the problem is that most of the newer houses in nicer ‘burbs and nicer city areas are built to maximum size rather than maximum saleability in the overall metro area housing availability curve.
“50% of homeowners own their homes outright”
While true, I do not think this segment of homeowners are the one’s moving every 5-7 years as you pointed out. More salt-of-the-earthers who have lived in their residence for many years and paid off the mortgage.
Those moving every 5-7 years are mostly those who are moving out of their starter or second homes, and most of these have mortgages. And since the starter home segment is essentially tanking, that flows on up the chain. Most people who bought 5-7 years ago likely did not bring a big enough downpayment so I am indeed very pessimistic on this stat.
Those who own their homes outright are mostly outdated crapshacks. Senior citizens tend not to remodel their homes in the old age. This city and suburbs are rife with mortgage free homes with 90k in deferred maintenance.
And they’re priced in the 300s and 400s based on land value.
“And they’re priced in the 300s and 400s based on land value”
They’ve priced in the 3s and 4s based on *2007* land values. We’re generally at least 1/3 off of the high for land values, more than that if the peak value was premised on new condos being built, and 50%+ if there’s significant comparable land available (as in, say Plainfield).
“90k in deferred maintenance.”
That looks like 90k in acculumated depreciation to me!
“That looks like 90k in acculumated depreciation to me!”
And a house with an asking price $90k too high!
Bingo. But seller probably feels like he is getting f’d because his house didn’t appreciate enough. Go figure.
“Bingo. But seller probably feels like he is getting f’d because his house didn’t appreciate enough. Go figure.”
Of course, in HD’s example, the seller probably doesn’t care b/c she’s dead.
Or retied or very old.
clio wrote: “when everything turns around, you will see these headlines change.”
Wow, really? Next you’ll be telling me water is wet. YOU MUST BE AN ORACLE!
perhaps clio is mrs. cleo the psychic?
“Or retied or very old.”
Sorry, I sort of meant the greedy heirs to the estate more than the old timer.
As an aside, you see a lot of estate sales where I am. It is a good sign, in that old folks stay long into their years. But it is also a little sad to come to the open house.
These homes are often priced ridiculously for no reason. I do think greedy heirs have something to do with it, because these homes sit and sit and sit. I watched one list for $2M only to sell 2 years later for $1.25M. This was a special home with an enormous lot but it was in disrepair*
*lots of accumulated depreciation
JMM – you and I actually agree on something!
There’s an estate sale crapsgack north of irving listed for 300k. The MLS listing says “price is non-negotiable!”. No mortgage and vacant and the heirs force the agent to put non-negotiable for price. Anything for a listing, right? Ill link up the address later when I have the time.
REALTORS!! ATTENTION REALTORS
WHEN YOU ARE SEEN AS Pollyanish , at best you are disrespected!!
WE get that people overpaid and want as much back
We get that your commissions are higher when the price is higher
Do you really get that its NOT ONLY A BUYERS MARKET BUT THAT WE SEE THERE IS STILL SOOOO MUCCHHHH MOREE ROOM FOR THE MARKET TO FALL
We know you laugh at those who buy at the still way too inflated government backed scheming higher prices
BUT WE KNOW YOU LAUGH SO WE WAIT
And we know or better HOPE THAT THOSE WHO DO THE LAUGHING ARE THE ONES WHO GO BY THE WAYSIDE and then when it REALLY IS TIME TO buy we can be dealing mostly with good honest people
http://www.redfin.com/IL/Chicago/4159-N-Kenneth-Ave-60641/home/13482198
“NON-NEGOTIABLE PRICE. SOLD AS IS BUT VERY LIVEABLE-DATED KITCHEN AND BATHROOMS.”
Charming English brick Cape Cod. 3 BRs, hardwood floors under carpeting. Full finished basement. 2 BRs up and one on main floor. GFA and Central Air, and deck off kitchen. Spacious garden and patio access to garage. Easy access to Expressway, Metra and the Blue line. Walk to shops, restaurants, corner lot. Non-negotiable price. Sold as is but very liveable-dated kitchen and bathrooms.
HD,
Do you have a thing for homes right on the highway?