Market Conditions: 2018 Went Out With a Bang as December Sales Jumped 9% YOY
The Illinois Association of Realtors is out with the December sales numbers, which were better than expected.
In the city of Chicago, home sales (single-family and condominiums) in December 2019 totaled 1,861 homes sold, up 9.0 percent from December 2018 sales of 1,708 homes.
The median price of a home in the city of Chicago in December 2019 was $278,500, up 10.7 percent compared to December 2018 when it was $251,500.
Last year, December was a disappointment with a 17% drop in sales as the stock market sold off sharply.
- December 2004: 3719 sales and median price of $267,000
- December 2005: 2847 sales and median price of $283,000
- December 2006: 2241 sales and median price of $279,000
- December 2007: 1629 sales and median price of $287,000
- December 2008: 1263 sales and median price of $235,000
- December 2009: 1820 sales and median price of $208,000 (34% short/REO sales)
- December 2010: 1475 sales and median price of $166,000 (43% short/REO sales)
- December 2011: 1536 sales and median price of $156,000 (44% short/REO sales)
- December 2012: 1806 sales and median price of $185,000 (39.7% short/REO sales- according to Gary Lucido’s data)
- December 2013: 2137 sales and median price of $210,000
- December 2014: 2020 sales and median price of $228,000
- December 2015: 2077 sales and median price of $242,000
- December 2016: 1974 sales and median price of $260,000
- December 2017: 2058 sales and median price of $265,500
- December 2018: 1708 sales and median price of $251,500
- December 2019: 1861 sales and median price of $278,500
2019 was the highest median home price for the month since 2007 which tells you the type of mix in what was selling in the month (hint: the more expensive properties).
Average time on the market statewide was 58 days down from 59 days a year ago.
The average 30-year fixed mortgage was 3.72% up from 3.7% in November, but down from 4.64% a year ago.
“An uptick in closed sales and median sales price is positive,” said Maurice Hampton, president of the Chicago Association of REALTORS® and owner of Centered International Realty. “We continue to see a drop in inventory, which means fewer homes are available. The increase in the median sales price reflects this.”
Inventory continues to be anemic even though the start of spring selling season is just a few weeks away. Where’s all the new listings?
“More temperate December weather and attractive mortgage rates set the state up for a strong finish to a year that has been marked by sales swings,” said Ed Neaves, president of Illinois REALTORS® and designated managing broker of Berkshire Hathaway HomeServices Snyder Real Estate in Bloomington. “Looking ahead, it is possible that 2020 will look a lot like 2019, as many of the same market dynamics, which include low inventories and attractive financing rates, will extend into the new year.”
“December provided one of the few months of 2019 when both sales and prices increased on a monthly and an annual basis, with sales increases reflecting national trends” said Geoffrey J.D. Hewings, director of the Regional Economics Applications Laboratory at the University of Illinois. “While the national forecasts suggest continued growth of housing demand in 2020, the concerns in Illinois center on dampened employment growth and continued net out-migration.”
Old man winter remains in hibernation which is making it easier to shop for properties.
Will the hot December continue into January?
Illinois housing market ends year with December jump in sales, prices [Illinois Association of Realtors, Press Release, January 22, 2020]
I just got off the phone with my realtor. He said there’s never been a better time to buy. I’m glad I have someone like him watching my back.
Wouldn’t December sales be the result of showings from October & November both of which had sub par weather this year? December had great weather so should we expect a great January number?
Century 21 Commercial:
2006
The Debate
https://www.youtube.com/watch?v=20n-cD8ERgs
“The Spot: A title card reads “The Debate.” We fade in on a couple standing in their kitchen, arguing about whether to buy a new house. The wife is the aggressor; the husband has his doubts. “Suzanne researched this,” says the wife in exasperation. As we’re wondering who Suzanne is, the ad cuts to an image of the couple’s kitchen telephone. “This listing is special, John,” says the voice of their real estate agent over the speakerphone. “You guys can do this.” The husband caves. “This is awesome,” says the wife. We see a picture of the agent’s Century 21 business card.”
slate dot com business 2006 04 the-nasty-wife-in-the-century-21-ad dot html
“The Debate”
from the not-quite link:
“This ad shows up at a fearful, uncertain time for real estate agents. It’s not just that the housing market seems poised for a dip. It’s that the real estate agent’s very purpose is coming into question. Home-buyers have discovered they can use the Web to scout out listings on their own. Meanwhile, sellers are demanding flat-rate deals and a la carte services in an attempt to minimize the agent’s cut. People are starting to wonder: Why do I need a real estate agent at all?”
14 years later, and we haven’t gotten rid of them yet, or made a significant, lasting, dent in their vig.
I understand the need for real estate agents to help advertise, do open houses and showings etc…
But dang some of the commissions can get high. Glad there are at least some fixed cost options out there these days.
And that commercial is beyond BIZARRE.
“14 years later, and we haven’t gotten rid of them yet, or made a significant, lasting, dent in their vig.”
There is a place for realtors because even the most rational sellers and buyers become irrational crazy people that need hand holding the moment they list or make an offer. We are paying them to deal with us. And it’s expensive. The proof of this are the few legitimate FSBOs that exist out there, and the fact that most brokers won’t take potential buyers on tours unless the FSBO is paying a commission.
“The proof of this are the few legitimate FSBOs that exist out there, and the fact that most brokers won’t take potential buyers on tours unless the FSBO is paying a commission.”
That may sway a Cook County judge, but it’s not much of a logical conclusion.
Sounds more like “brokers” only showing properties where they will get paid–which is certainly rational. You’re not taking contingent percentage fee arrangements on cases not seeking any monetary relief out of the goodness of your heart, either.
” the fact that most brokers won’t take potential buyers on tours unless the FSBO is paying a commission.”
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And every single one of the brokers who would act in such a way is violating his fiduciary duty to his client.
So no, judges — even judges in the circus court of cook county — wouldn’t be swayed.
” judges — even judges in the circus court of cook county — wouldn’t be swayed.”
You have a suspiciously high opinion of the Cook County judiciary. Don’t forget, a huuuuge percentage of them were slated by the (alleged (hahahaha)) grifter Ed Burke.
“You have a suspiciously high opinion of the Cook County judiciary. Don’t forget, a huuuuge percentage of them were slated by the (alleged (hahahaha)) grifter Ed Burke.”
—————————
You forget one of the rules of a viably corrupt outfit — “Don’t be too obvious.”
“Don’t be too obvious.”
Ed forgot that when he threatened his own life in order to get the bodyguard squad.
I mean, a guy who slates judges ends up with his wife on the supreme court? GTFOOH!!
““Don’t be too obvious.”
Ed forgot that when he threatened his own life in order to get the bodyguard squad.
I mean, a guy who slates judges ends up with his wife on the supreme court? GTFOOH!!”
My favorite was when he tried to shake down the Texas based corporate Burger King franchisee. He ‘suggested’ they use his firm to lower their taxes in order to get some help with a driveway permit. He ultimately ‘got’ them their driveway permit but, as an insult, the franchisor did not use Burke’s firm for property tax reduction.
So what does Burke do? He calls up one of his loyal appointees in S&S to give the Burger Kings tickets for, of all things, not having a permit to do the driveway!!! Imagine how that went down, the guy writing tickets to the BK manager, showing him the permit, and the S&S guy being like “I don’t see no freaking permit!” The tickets were eventually dismissed because they had the permits!
I mean, didn’t Burke remember the lesson from the Sopranos when the Patsy and Burt tried to extort/shakedown Starbucks? All shakedowns must go through corporate! He only needed to stream all the Sopranos over the weekend, he could have learned some lessons!
https://www.youtube.com/watch?v=_Gsz7Gu6agA
And their remodeling (for which they had permits) didn’t need a driveway permit.
Like I said, don’t be too obvious. Burke was obvious. Judges know better.
“Judges know better.”
bwahahahaha. They’re all just hoping that Ed loves his wife more than his freedom.
FSBOs don’t sell because most homeowner’s have grandiose opinions of their homes, not because agents aren’t showing them.
Buying and selling isn’t rocket science, but it also isn’t as easy as most people think either. It is very much a game of knowing processes / timing and dealing with irrational / emotional people.
The only reason that realtors are overpaid (And many are but not all. In a market where the average deal size is $150K few are overpaid.) is that buyers and sellers are either unaware of their options or skeptical. There are a whole host of options out there that can save people a ton of money. In my opinion no realtor should get 2.5% on a $1 MM transaction unless they have some magic power. And in 13 years I’ve never met a realtor with magic powers.
So I sorta spend a lot of time thinking about this. Perhaps you are aware of the field of behavioral economics. People engage in all sorts of irrational economic behavior and it’s quantifiable. When it comes to selling a house a seller believes their house is worth more than it is and desperately wants to believe that the right realtor is going to get them the highest price for their home. So they go with really dumb rules of thumb like “____ really knows the neighborhood” or “I see her signs everywhere” or “_____is the #1 realtor in the city” Compare these realtors to other good realtors and you won’t see a difference.
You see slightly less irrational behavior on the buy side but buyers are even less aware of their options than sellers are.
Regarding FSBOs…the correct way to handle this is to 1) Have a conversation with the seller to see if they will pay a reasonable co-op. If not 2) Ask your buyer if they will pay your commission since you do deserve to be paid. You point out that they can factor this into their offer so that the seller de-facto pays. You get this in writing.
If your buyer is not willing to pay you and expects you to work for free (have never had this happen) you should not be working with that buyer.
Gary–hope you know I wasn’t referring to your model, but rather the “standard” model, which still dominates. And I know you think about it a lot (and a lot more than I do).
Of course there will always be realtors/brokers for actual, economically rational, reasons (and also for the hard cases). The comp structure is the enduring problem–particularly in higher priced markets, as you note. The work that typically goes into it from the two sides is certainly worth a few thousand dollars, but it is almost never worth a few tens of thousands of dollars.
anon,
I totally got where you were coming from. I share your bafflement.
Real estate brokers provide zero knowledge of pricing or economics.
I saw a broker post on fb how someone thought the market is in a bubble and won’t buy but pays 4K a month rent. Then came to the conclusion the person could have had 240k in equity built up over 5 years from those rent payments if he had bought. Ya buying means you don’t have imputed interest costs, property taxes, or assessments instead of rent.
Or the broker who told me when I sold my place and was looking to rent that his services were free. Ya just because the building pays you doesn’t make it free. In an efficient market the building should be neutrally between paying a commission to rental broker or giving a free month rent.
I’ve found real estate brokers to offer little financial or economic value that a buyer could use. They can organize attorneys etc and provide a middle man for negotiations but not much else. And at times you can tell their motivated by highest fee path as opposed to best advice.
Yes, it continued into January with a nice increase over last year. Inventory remains low and detached market times are still declining while attached market times are rising. http://www.chicagonow.com/getting-real/2020/02/chicago-real-estate-market-update-home-sales-may-be-turning-corner/