Chicago Condo Sales Plunge 30.9% in April; Median Price Up 10.8%
The Illinois Association of Realtors is out with the April sales numbers.
From Crain’s:
In the city of Chicago, total home sales fell 28.3% to 1,886 in April, according to the release. Condominium sales in the city fell 30.9% to 1,356 in April.
The median sale price in the city was $300,000 in April, up 3.4% from April 2007. The median price for a condo in the city was $327,000, up 10.8% from April 2007.
The median means that half the homes sold for more, and half sold for less. The figures include both new AND existing homes.
The Illinois Association of Realtors is optimistic:
“Compared to states along the coasts and Nevada and Arizona, where the housing boom was so elevated, Illinois is now reaping the benefits of our more stable economy and less dramatic run-up in sales and prices. We didn’t grow as rapidly and we’re not declining as much with prices still increasing in some areas and very modest declines of just above six percent statewide,” said REALTOR Kay Wirth, president of the Illinois Association of REALTORS.
“Conditions are ideal for buyers with prices moderating, low interest rates and a good supply of homes available. Buying a home in Illinois remains a solid long-term investment.”
And the Chicago Association of Realtors is positive as well:
“The city of Chicago market continues to show promise as average home
prices in April are reflective of a 6.9 percent increase over the same
period in 2007, bringing the average home price in Chicago to $368,769,” said David Hanna, President-Elect, Chicago Association of REALTORS(R).“The median home price in the city has appreciated a healthy 3.4 percent boost, as well, year-over-year.”
Chicago Area Home Sales Down 30% in April [Crain’s]
The low end buyers and first timers have been knocked out. Only people with money are buying.
Notice that Streeterville has remained stable and high, while other areas are swamped with unsold inventory and mounting foreclosures.
With year over year condo transaction volume down over 80% in the downtown area, I think the mean and median are quite misleading.
Can anyone provide the lastest average or median INCOME for Chicagoans?
Good. Hope the sales plummit more. Put those responsible for the housing bubble out of a job.
stuckinthecity – apparently not enough to justify the high priced condos and city residential units….
A – Who is responsible for for the easy lending requirements and lack of regulation that casued the nation wide bubble? Realtors? Oh that’s right, it was the government that forced Fannie Mae and Freddie Mac to insure loans to unqualified applicants. Then it was the unregulated big banks that looked the other way while stated loans were pooled and sold to pension funds.
I think it was called “Housing for every American” in the state of the union. Don’t blame the realtors as they were just doing their jobs.
The realtors are so full of it.
These stats mimic the trend that has already occurred in places like So Cal and SE FL. Next, the upper end will stop buying and there will be no disguising the price collapse.
We aren’t different, just later to the return of affordability.
I love the taste of Kool-Aid in the morning!
Justgot a blackberry now I can post comments from the field !
I’m in SE Florida now…you have no idea how bad it is…good thing I am renting for now!
See:
http://online.wsj.com/article/SB121155568660617563.html?mod=googlenews_wsj
Chicago won’t be as bad, but it will still be a bust for many, Florida is in a serious residential real estate depression with Money magazine projecting a 24.9% further price decline over the next 12 months for the Miami area.
Fannie & Freddie would be insolvent months ago without the implicit backing of our taxpayer dollars.
Why is our government playing in the home ownership space again? Oh wait thats right: ma, Don Mclean, apple pie and home ownership.. and real estate depression.
Steven Heitman: Where in my post did I use the word realtors? I said those responsible in the whole process.
All of those responsible can bear the brunt of it, as well as those not smart enough to realize they cant afford this or that. I have no sympathy for all of those involved. Out of a home? That sucks, move in with your family and recover.
Here’s hoping there isnt a dime for the bailout from the govt.
A – The only people who really suffer from low volume are realtors. I just assumed you were thinking the same. Careful what you wish for. W/o the gov bailing out Bear Sterns our entire financial integrity may have failed. Also, the government is responsible for part of the mess and will assist in cleaning it up.
Bear Stearn’s CEO recently admitted that the integrity of our financial system would not seriously have been endangered by their collapse, or at least not any more than by the collapse of the credit markets in general.
These are the very same people who screamed for all reasonable regulations to be lifted on the grounds that it “limited growth”. Well, and the Glass Steagall Act was repealed, and other reasonable regulations promulgated during the Great Depression to prevent the kind of credit bubble that collapsed and caused that debacle.
If the logical consequences of the financial abuses of the past five years will indeed collapse this country financially, then it behooves us to reinstate every single bank reg that was repealed in the 80s and 90s, for our financial industry has proven that when you let it run rampant, it will collapse us. In the meantime, we should consider that the interventions made thus far by way of propping up our markets in the face of the credit collapse, are probably doing this country at least as much financial damage.
IF we bail out this mess and IF we also do not re-instate the regulations that would have prevented it from occurring to begin with, we are just begging for another recurrence down the road, followed by another taxpayer-funded bailout.
Steven,
I know you were trying to make a point with A,but there are alot of other people who are suffering along with realtors also.
What about the mortgage brokers,title company people,lawyers,the construction trades,the retail sales people who work in furniture,home depot,etc,etc.
I think you get my drift,there are many people suffering,and no matter who’s fault everyone believes it is,this real estate situation affects most everyone in one way or another.
Having empty houses and people foreclosed on is not a good situation,and it is hitting every race,every neighborhood,and all income levels.
TomB – Those people who are suffering probably profit, some by fraud, from the bubble. Oh well I guess a lot of Realtors® will go back to dog grooming.
“Don’t blame the realtors as they were just doing their jobs..”
Dear Steven,
Allow me to call your BS. National association of realtors is one of the biggest lobby groups in washington, your realtor friends have deep tentacles into both senate and congress.
The goverment did not look the other way on lose lending standards, give tax deductions on mortgages and allow capital gains exemption on prinicipal residence sale out of goodness of its heart. We all know how this game is played so don’t act coy.
In addition, please remind me – at what point did your friends in real estate business warn buyers that housing prices may be getting over inflated and it may not be a good time to buy? No, the standard party line from NAR is-“Its always a good time to buy”. Tell that to people who are now getting foreclosed. The self appointed advisors of the biggest financial decision for most people have no fiduciary responsibility-thats what I call a scam.
Realtors are going away like the travel agents. Getting 6% of each transaction and mouthing off whatever without any fiduciary responsibility is quite a scam but its about to end.
G: You are right- these stats are mirroring other parts of the country where sales fell off a cliff but median prices continued to rise (because the high end was still buying.)
But sales drops like this always mean one thing: prices will be declining in the near future.
I wish someone would publish the numbers on the inventories. Those have not been disseminated as widely (except on the new home construction.)
How many condo units are on the market in, say, LP and Lakeview and how does it compare to the years past?
Anyone know?
That is the kind of info that really tells you what is going on out there.
Also dear Steven, please remind me who coined the terms “Buy now or be priced out forever” and “Real estate never goes down”. Lets admit the fact that too many carpet baggers arrived into the profession during the boom years. The cleansing will be painful but is nessecary.
Two comments:
It’s interesting that the realtors publish the MEDIAN and not the MEAN prices. One or two big sales can push the median up compared to last year. I strongly suspect the mean is way down. But, they want to put a positive spin on the subject so you’ll buy, buy, buy.
The real unfortunate truth to all of this debacle: Guess who’s buying up all our American debt and shoring up the financial institutions in jeopardy? The same people who are making billions off the increase in petroleum prices – the Saudis. So now, not only do we pay them at the pump, your mortgage interest is going in their pocket too. Americans need to quit living beyond their means and save, save, save. It’s going to be very hard for our population as a whole to buy our country back.
Don’t focus on the median prices. They are totally irrelevant because they are affected by the mix of units sold. The Case-Shiller price index is more accurate. The CAR, IAR, and NAR just love to put a positive spin on whatever numbers they can get their hands on.
In answer to a few questions posed here:
To give you an example, in the South Loop alone there are currently 1100 condos on the market and they are building more.
As for the income levels in Chicago relative to housing prices, this is the key issue. It’s very dependent upon neighborhood and in some neighborhoods it’s way out of whack. A normal ratio is for housing to cost ~3X income but in neighborhoods like Lincoln Park it can be 5X.
Nice site, Gary. You are the reason that there will always be a market for a certain kind of real estate agent (straight-talking, number crunching, better-than-doing-it-yourself). I have you bookmarked now.
Ditto on Kenworthey’s praise of your site Gary. I think any potential homeowner would be wise to check it out.
What site?
Click on Gary’s name and its a link to his website.
Discount Realtors!
“TomB on May 24th, 2008 at 6:49 pm
Steven,
I know you were trying to make a point with A,but there are alot of other people who are suffering along with realtors also.
What about the mortgage brokers,title company people,lawyers,the construction trades,the retail sales people who work in furniture,home depot,etc,etc.”
Hey, leave lawyers out of the picture. I’m an attorney working at a firm with a foreclosure department, and business has never been better. We estimate that the foreclosure crisis will continue through at least 2012 or 2013, after the last remaining option ARMS have reset.
This blog should focus on the southside, which is foreclosure ground zero. The number of foreclosures in the ghetto will blow your mind.
Discount Brokers get you discount services. Discount brokers work for volume. Working for volume allows you less time to dedicate to individual clinets.
Steve,
Not true. There are massive inefficiencies in the real estate industry and they have nothing to do with the amount of time spent with clients. As much as 50% of an agent’s time is wasted on activities that have nothing to do with serving clients. By addressing these inefficiencies it is possible to discount the service without spending any less time with clients.
Ask people their thoughts on Zip Realty. They refund a portion of the commission and their service is aweful. Their agents have no real understanding of the market and simply offer MLS access, appointment set up,and a ride to the properties. These are the services that really add no value to the purchase process. Understanding fair market value and supply vs. demand is the key to buying in this market. This takes an intelligent agent who can offer dilligent analysis. The best of breed agents will never work in a discounted environment.
“The best of breed agents will never work in a discounted environment.” Yep, the Realtors® stick together as best they can to protect their commissions and collude against discount firms. However, the erosion has already begun and in this environment people don’t want to pay 6% or more.
I studied Zip Realty extensively prior to opening my own brokerage. They are publicly traded and as such they have public filings with the SEC. I also interviewed there and received an offer from them in order to learn more about their business model. Their concept is good but their execution, as you point out, is terrible. They don’t even make money because of a bloated overhead structure.
In my opinion, one of the biggest problems with the real estate industry is that success is only loosely correlated with the quality of the agent. I agree that buyers and sellers need intelligent agents but there are many intelligent agents that can’t succeed for reasons that have nothing to do with their capabilities. If a broker knows how to find these people and help them succeed then it’s a win-win for everyone – except the entrenched agents that have a lock on the market.
I know that I can employ quality agents who will work at a discount and make more money than they would working for full commission at a traditional broker.
SH reminds me of the full service brokers such as the Merrills and Morgans of the world who, back in the 1990s, scoffed at the idea of discount brokerages ever being a good competitor simply because they followed a different model. Yet today Schwab and E-trade probably trade more shares for individual investors than many of the old line brokers.
Not every customer is similar: there are many different tranches of customers with different service level requirements and differing needs.
Good point Bob. There are different types of customers. Someone selling a $2 million unit has different needs than someone selling a $200,000 unit.
Although, in this kind of market with sales down dramatically, both are in need of good marketing (no matter who is doing the marketing, either the seller or the seller’s agent.)
I agree with you Gary that it all comes down to the quality of the agent. I was quick to sterotype “Discount Brokers” as being “Discount Service”. I agree with Sabrina that different people require different services. I don’t think you can compare buying a stock with buying a property. Discount equity brokers make sense. Why pay a Smith Barney broker $50 to buy a stock for you when you can use etrade and do it your self for $5. Buying real estate is a little different. Typically a person purchasing real estate is making their signle largest investment of their lifetime. Now there are a select few people out there that can successuly analyze the market on their own. The vast majoity have no idea what they are doing and fully depend on a qualified broker to analyze the fair market value of a property. My point being you will (9 time out of 10) find this qualified broker not working for a discount company.
Taking the adage from Warren Buffett: don’t buy what you don’t know, most people will not research and analyze on their own and will rely upon the advice handed out by their stock brokers. And most of the time, people do not know what they are buying.
Same case with real estate, most brokers will issue optimistic opinions to generate the sales. Look at equity research, its mostly optimistic most of the time. Independent research is difficult and thats why most people will rely upon their agents to do the research.
“Now there are a select few people out there that can successuly analyze the market on their own.”
So Steven, what’s your current recommendation to someoone considering buying a south loop condo, based on your analysis of the market? Good time to buy? Pick any unit highlighted on this site, if you like.
Don’t buy in the south loop. The carnage hsn’t even begun. Free advice. Offer 40% lower than asking!
I also have a high quality realtor i anyone needs one.
Jason, I would probably need one but not until late 2009. I need someone who is willing to take lowball offers to the seller/bank.