Market Conditions: August Chicago Home Sales Jump 20.3% YOY; Median Price Falls Again
The August 2011 home sales data is out from the Illinois Association of Realtors.
Once again, sales rebounded from August of 2010 but remember, last year’s sales data was especially low due to the expiration of the first time homebuyers tax credit at the end of June which had pulled forward sales by several months.
In the city of Chicago, August 2011 home sales (single family and condominiums) totaled 1,787, up 20.3 percent from 1,486 homes sold in August 2010. The city of Chicago median home sale price for single family and condominiums in August 2011 was $192,500, down 3.8 percent compared to August 2010 when it was $200,000.
Here is the data for the last 5 years:
- August 2007: 2923 sales
- August 2008: 2078 sales
- August 2009: 1927 sales
- August 2010: 1486 sales
- August 2011: 1787 sales
Median home prices over the last 5 years:
- August 2007: $305,000
- August 2008: $297,500
- August 2009: $229,900
- August 2010: $200,000
- August 2011: $192,500
For the first time in several months, the median condo price was NOT separated out from the rest of the data. I wonder why?
“August home sales prices in the city of Chicago continue to show positive signs for condo and single family homes,” said Mabel Guzman, president of the Chicago Association of REALTORS®. “With the number of condo units up 22.1 percent over sales from August 2010 and an increase of 17.8 percent of single family homes, respectively, we are seeing increased activity and more buyers making decisions to buy in a competitive market with historically low interest rates and compelling pricing.”
“A strong buyer’s market continues in the Illinois housing market with record low mortgage interest rates and lower home prices although job worries and overall economic uncertainty are holding many back,” said REALTOR® Sheryl Grider Whitehurst, ABR, CRB, GRI, e-PRO, president of the Illinois Association of REALTORS® and a managing broker for Traders Realty in Peoria. “In some local markets prices are firming as homes are selling due to high affordability conditions and pent-up demand; 8.5 percent more homes sold statewide in August compared to the previous month of July.”
Adds Hewings: “Once again the debate has been joined about the appropriate response from the federal government to the lagging economy—attention to the deficit or a second stimulus package—but increasingly consumers are signaling frustration with Washington politics. The uncertainties and lack of a clearly articulated economic recovery strategy combine to dampen prospects for a sustained housing recovery.”
Does this data tell us anything new about Chicago’s housing market?
Or is it just more of the same?
August Illinois Home Sales Up 25.9 Percent from a Year Ago; Statewide Median Price at $149,000 [Illinois Association of Realtors, Press Release, September 21, 2011]
More of the same….
More of the same. It was pretty much as expected. I skimmed the release but didn’t see any mention of the distortion of last year’s numbers. Love the way they position this as positive news. No surprise. But we’re running below 2008 and 2009 levels and the contract activity is below 2009 levels: http://www.chicagonow.com/getting-real/2011/09/dont-let-the-august-home-sales-numbers-fool-you/
I am SHOCKED! Shocked to hear such surprising information!
NOTE: I typically post these numbers early on the prior month’s Market Conditions thread.
Here’s what I wrote last week in the July Market Conditions thread about the Aug sales:
Take the Chicago Aug 2010 closed and replace it with the average of Apr-Aug 2010 closed (1,991) for a better look at the trend. Instead of the 18% Aug YOY increase that the IAR is sure to be heralding in their next release, the reality is more akin to a 9% YOY decline.
Another method for normalizing the 2010 D4D influence for YOY comparison would be to take a look at August’s typical share of YTD sales, as follows:
1997 14.4%
1998 14.4%
1999 14.8%
2000 14.3%
2001 16.6%
2002 14.4%
2003 15.6%
2004 14.6%
2005 15.6%
2006 15.0%
2007 14.5%
2008 13.6%
2009 16.4%
2010 10.7%
2011 14.9%
Taking out the D4D outlier in 2010 results in an average of 14.9%. There were 14,310 closed in 2010 through Aug, so average monthly sales % would indicate Aug 2010 normalizes at about 2,132 closed. Utilizing this result in the YOY comparison indicates a 24% decline from last Aug.
It ain’t perfect, but it appears that YOY Aug 2011 volume for Chicago is down from 9% to 24% when compared to a normalized 2010. This is in line with the YOY YTD decline of 15%.
YTD Jan-Aug Chicago sfh/condo/th closings:
1997 11,659
1998 13,936
1999 15,241
2000 15,996
2001 16,432
2002 18,769
2003 20,269
2004 23,415
2005 25,582
2006 23,670
2007 20,775
2008 15,278
2009 12,120
2010 14,310
2011 12,141
“For the first time in several months, the median condo price was NOT separated out from the rest of the data. I wonder why?”
Chicago condo sales and medians for August:
2011 1,052 $242,000
2010 876 $270,000
2009 1,239 $271,000
2008 1,489 $320,000
2007 2,246 $315,000
Does that help?
So, G, my guess is that this is the lowest August in like 14 years when you throw out 2010?
Why in blue blazes do people use the numbers the NAR publishes? Bunch of damn liars and cheats…yet the media just regurgitates their press releases.
Why is that a guess, Gary?
Funny, i always thought that lower prices would result in increased sales. Now that prices are lower, sales still suck. Is it that prices are not low enough?
no its that people that the normal would-be-buyers, don’t have downpayments or equity in their current homes, so those that need to sell have to keep lowering their prices
this vicious cycle will persist for quite a while
“Is it that prices are not low enough?”
Or is it that they are TOO low (i.e. people can’t sell at this price, so they just opt to stay. They can afford to stay, they just can’t afford to sell)
“Is it that prices are not low enough?”
Of course.
“They can afford to stay”
Shadow invenstory says no.
“Of course.”
Wrong. What do you think would happen if prices went to $0? There would be 0 listings in the MLS. Or you saying $0 isn’t low enough?
“Shadow invenstory says no.”
It does? Since when does the exception make the rule? There are far more houses where people ARE making payments than aren’t.
HAMP:
1) Lower interest rate to 2% for 5 years, then raise by 1% per year until rate reaches 5%;
2) capitalize all missed payments, late fees, attorneys fees and interest on to the principal balance making the borrower even further underwater;
3) reamortize the loan to 40 years regardless of how seasoned the loan is;
4) defer a portion of the principal balance and make it a balloon payment due at the end of forty years.
There are hundreds of thousands of these; and millions of private loan mods which do the same thing.
“G on September 21st, 2011 at 9:27 am
“They can afford to stay”
Shadow invenstory says no.”
“
Sonies is a good example of what I refer to. His place is under water, but he doesn’t need to sell. He is able to afford the place, so he just stays. Prices are too LOW for him to sell, so his place isn’t on the market. If prices were higher, he might put his place on the market. People wonder why inventory is so bad and volume is so low. It is because selling prices are too LOW.
What other unrealistic hypothetical situations can you conjure up?
“Wrong. What do you think would happen if prices went to $0? There would be 0 listings in the MLS. Or you saying $0 isn’t low enough?”
I have clients who say the same things about tanning beds. They say the selling price for used tanning beds is too low so they put them in storage rather than sell them at market value. Funny how keeping used tanning beds off the market doesn’t seem to raise the prices of used tanning beds….
“chukdotcom on September 21st, 2011 at 9:36 am
Sonies is a good example of what I refer to. His place is under water, but he doesn’t need to sell. He is able to afford the place, so he just stays. Prices are too LOW for him to sell, so his place isn’t on the market. If prices were higher, he might put his place on the market. People wonder why inventory is so bad and volume is so low. It is because selling prices are too LOW.”
“What other unrealistic hypothetical situations can you conjure up?”
I find it helps to use extreme examples to help people that are clueless understand more complicated things in life. So, are you saying there is no such thing as prices that are “too low” that adversely affect volume? If not, at what price do you say is “too low” to adversely affect volume. Your options are between $0 and today’s prices.
“Funny how keeping used tanning beds off the market doesn’t seem to raise the prices of used tanning beds….”
Ha, you’re too clueless to even understand the argument. Let me remind you what you said:
“Now that prices are lower, sales still suck. Is it that prices are not low enough?”
I never said anything about rising prices. I said volume was low because prices were too low. I bet volume of used tanning bed sales is down too.
That seems to defy the laws of economics.
“I said volume was low because prices were too low. ”
What the market lacks is an efficient method to clear excess inventory for less than the principal balance. Retail store lower prices, have sales, etc and take a chargeoff or loss to clear out inventory which won’t sell. houses are differnt because it’s a substantial PITA to a borrower to sell or give away their hoem for less than the principal mortgage balance.
“That seems to defy the laws of economics.”
Only if you are clueless about economics. How many iPads do you think AAPL is willing to sell for $99?
“Since when does the exception make the rule?”
Since RE is priced at the margins, the exception in your example (those selling) is the rule.
“Now that prices are lower, sales still suck. Is it that prices are not low enough?”
Chuk, hd is clearly speaking about now. I disagree with your contention that further lowering of prices today will not result in increased sales. What if they were lowered to $1?
“Why is that a guess, Gary?”
Because I don’t have the actual data that far back and thought you could confirm it.
“How many iPads do you think AAPL is willing to sell for $99?”
They would sell way more; but, the probably get more revenue at the current price compared to $99
I don’t know where yo’ure gonig with this, I got shit to do. adios.
“Because I don’t have the actual data that far back and thought you could confirm it.”
G thought he posted August volume going back 14 years. Looks like it to me, too.
Volume is so low because of the very wide bid/ask spread. It has more to do with the spread than the actual level of prices. It’s like in the stock market. When there is broad agreement on the value then lots of transactions take place.
And the ask in this case is in fact dictated to some extent by the financial position of the sellers and has a lot to do with loss aversion.
“G thought he posted August volume going back 14 years. Looks like it to me, too.”
OK. So I missed it. I don’t spend every waking hour here.
“They would sell way more”
BZZZT. Wrong. Apple is *unwilling* to sell any iPads for $99. So, if the “market price” were $99, Apple would sell ZERO iPads.
A sale takes a willing seller and a willing buyer. Your point is that there aren’t enough willing buyers of houses at current prices. Chuk’s point is that there are not enough willing sellers.
Gee, maybe you’re *both* (at least partly) right?
“What if they were lowered to $1?”
No one would sell. There would be no volume.
“They would sell way more; but, the probably get more revenue at the current price compared to $99”
I didn’t say how many COULD they sell. I said how many are they WILLING to sell at that price. Big difference.
“I don’t know where yo’ure gonig with this”
That doesn’t surprise me at all.
Let me give you all a basic lesson:
Let’s say 10 people want to buy a certain style/size house for 300k.
Now let’s say those 9 of those 10 houses are owned by people that owe more than 350k. One guy has his paid off, and needs to sell today, so he sells for 300k.
Total volume = 1. If there was SUPPLY of houses at 300k, total volume would have been 10. A 10x increase in volume.
If housing values dropped another 10%, it would be extremely unlikely to result in HIGHER volume.
Your wrong, apple isn’t going to go out of business and stop selling Ipads because the market price is $99.
The market price for a previous generation iphone is only $99, andi’m sure soon enough the market price for a 1g ipad will be far less than the 2g, so they ARE willing to sell ipads for less than the current price.
The problem here is the ability of the market to efficiently clear those homes whose market value is less than the principal balance owed. Our system isn’t set up to handle the volume of foreclosures or short sales, and it takes forever to process those methods of clearing the market. and in many cases the bank is unwilling to clear the market at those prices (extend and pretend).
So, if you were to remove the lien obstacle from the selling process, well then, volume would pick up quite nicely I imagine.
REO’s sell like hotcakes in most areas.
{“anon (tfo) on September 21st, 2011 at 9:58 am
“They would sell way more”
BZZZT. Wrong. Apple is *unwilling* to sell any iPads for $99. So, if the “market price” were $99, Apple would sell ZERO iPads.
A sale takes a willing seller and a willing buyer. Your point is that there aren’t enough willing buyers of houses at current prices. Chuk’s point is that there are not enough willing sellers.
Gee, maybe you’re *both* (at least partly) right?”
“
“The market price for a previous generation iphone is only $99”
No, it’s not. Not for a new one. Not directly from Apple.
“in many cases the bank is unwilling to clear the market at those prices”
Wait, are you saying, as part of your argument that chuk is wrong, that chuk is right? Seriously? Do (federal) judges let you get away with that sort of doublespeak?
“REO’s sell like hotcakes in most areas.”
EXACTLY. There aren’t enough of them to meet demand. So it’s not that PRICES are too high. It’s that the SUPPLY AT THOSE PRICES is too low. Do you even understand that you are making my point for me?
“The market price for a previous generation iphone is only $99”
Who said anything about an iPhone? Why don’t you give me the market prices for bananas while you are at it?
“Do (federal) judges let you get away with that sort of doublespeak?”
That reads like a white shoe drawing a line in the sand.
“A sale takes a willing seller and a willing buyer. Your point is that there aren’t enough willing buyers of houses at current prices. Chuk’s point is that there are not enough willing sellers.”
if we change “willing” to “able” then we have something there. There is the unrealistic seller who has room to lower asking price versus the one who cannot lower price without the penalties and PITA that HD spoke of above.
There are probably some unrealistic buyers too who want bargain basement discounts for market priced homes as well.
“That reads like a white shoe drawing a line in the sand.”
Separating from the mooks who sometimes inhabit the state court bench. The Illinois judicial appointment and retention system is broken, and I have minimal respect for the least capable of Cook County judges. Wouldn’t surprise me if there were a judge who wouldn’t even catch the doublespeak, and certainly judges who wouldn’t think anything of it.
“if we change “willing” to “able” then we have something there.”
Ability is a component part of willingness. I’m certainly willing to sell your condo, Icarus (for $200! cuz who doesn’t like free money?), but lacking the ability to do so, I cannot be a “willing seller”.
There are PLENTY OF REOS it’s just that they are not on the market. The banks are holding back. The banks fear that if they flood the market with REOs then prices will drop even further…
hum……lower prices = higher volume…I guess I answered my own rhetorical question
god, i feel like clio tell you all that you are dumb
ps i used Ipod because it’s a better example than ipad, there aren’t enough genrations for the ipad to sell for $99)
“chukdotcom on September 21st, 2011 at 10:13 am
“REO’s sell like hotcakes in most areas.”
EXACTLY. There aren’t enough of them to meet demand. So it’s not that PRICES are too high. It’s that the SUPPLY AT THOSE PRICES is too low. Do you even understand that you are making my point for me?”
And why are they unwilling to clear?
that’s the question impeding market forces….extend and pretend…kick the can down the road…artifically inflate asset prices….
those artifical foreces aside….
““in many cases the bank is unwilling to clear the market at those prices””
” impeding market forces”
Um, willing sellers are a market force, too. Just because you’re on one side of the market doesn’t give you license to ignore the other side and not sound silly.
“ps i used Ipod because it’s a better example than ipad, there aren’t enough genrations for the ipad to sell for $99)”
Market price for an old ass piece of shit house with no ac, modern plumbing and electrical is also far lower than its modern equivalent. What a pointless fuckin comparison.
“A sale takes a willing seller and a willing buyer. Your point is that there aren’t enough willing buyers of houses at current prices. Chuk’s point is that there are not enough willing sellers.
Gee, maybe you’re *both* (at least partly) right?”
Maybe, it is just possible that supply curves slope up and demand curves slope down. Shocking! (Granted, it is a little different from a standard industry, as many sellers are also buyers at more or less the same time and sell/buy decisions are linked.)
“Market price for an old ass piece of shit house with no ac, modern plumbing and electrical is also far lower than its modern equivalent. What a pointless fuckin comparison.”
Also, what’s the subsidy that ATT pays Apple for those “$99” 3G iPhones? Over $200, right? So, what is *APPLE* selling those “old ass piece of shit” phones for?
NOT $99.
Y”our wrong, apple isn’t going to go out of business and stop selling Ipads because the market price is $99. ”
um yes it is if it costs apple $200 to produce each one… you guys are all talking past each other and its stupid so lets just stop this and go back to talking about how much the real estate market blows and its all obama and ben bernake’s fault
Isn’t that really just semantics anon? After all, isn’t the phrase “willing and able” not “able and also a component of willing” 😀
Ability is a component part of willingness. I’m certainly willing to sell your condo, Icarus (for $200! cuz who doesn’t like free money?), but lacking the ability to do so, I cannot be a “willing seller”.
“Maybe, it is just possible that supply curves slope up and demand curves slope down. Shocking!”
Don’t try that in any Econ class HD teaches. You’ll get an F.
“There are PLENTY OF REOS it’s just that they are not on the market. The banks are holding back. The banks fear that if they flood the market with REOs then prices will drop even further…”
Ha, do you even read what you type?
“ps i used Ipod because it’s a better example than ipad, there aren’t enough genrations for the ipad to sell for $99)”
No, you used it because you are clueless and are unable to grasp the conversation.
“Isn’t that really just semantics anon?”
Maybe.
“An active market is one in which there is sufficient competition between buyers and sellers to prevent individuals from being exploited. Offers and options are only marginal indicators of value and may set a ceiling and floor; however, they are not completed transactions. Often, appraisers consider only what a willing buyer would pay, thereby creating downward pressure on values. The evaluator must also ask what a reasonable seller would be willing to accept. The price a charity would accept for an item donated to it might not represent fair value, since it would constitute a gift at no cost.”
http://www.nysscpa.org/cpajournal/2000/0500/departments/d57400a.htm
And anon is right. The real answer is “both”. I just felt the need to illustrate the other side of the argument since it seemed to completely escape some people. I’m sure there is some magical point of equilibrium where supply and demand meet and both buyers and sellers are perfectly happy and you have “perfect” volume.
“And anon is right. The real answer is “both”. ”
Damn.. I knew to always just pick… d)all of the above
I would throw out a couple additional market forces. First, that falling prices may scare off qualified buyers who do not want to catch a falling knife. Second, that uncertainty is paralyzing the markets–uncertainty regarding employment, future real estate taxes, the value of the stock market (which would affect wealthy buyers), etc. etc.
LOOK AT THE FUCKING FINANCIAL MARKETS – THE SAFEST PLACE TO PARK MONEY RIGHT NOW IS REAL ESTATE (although that is not saying much – it ALSO serves a dual purpose – YOU GET TO USE/ENJOY YOUR INVESTMENT – it is a no-brainer to anyone with money.
I am a willing buyer. My husband and I are looking for a condo in a high rise as a second home. Don’t get the wrong impression. We’re not rich. When we married 11 years ago, I sold my home, invested the money, and now want to purchase a second home with those proceeds.
I started looking on approx. July 1, 2011. Since that day, my investment account has decreased in value approximately 45k, which is half of what I wanted to put down as a down payment. So, now, I’m not such a willing buyer because I don’t feel like I have as much money as I used to. My new game plan is to continue looking (on redfin) and try to grab one of the great deals that come along every now and then.
So the moral of the story is, this terrible economy is hurting alot of people: me as a buyer, the seller, the real estate agents and all other people who make a living in real estate.
Michelle,
If you would have bought in July, I DOUBT your real estate purchase will have decreased 45k in that time period. In addition, you would have been able to enjoy your investment in the meantime. (Oh, and don’t even look at your accounts today – the DJ is down 3%).
if you started looking for a home on july 1st and knew you’d be buying soon, why didn’t you sell your stock and put that in short term securities like money market funds, 3 mo. cd, etc, thats your own fault for being stupid with your money, but it certainly does suck
clio – you are right. I wish I had bought in July, or even last winter. I live in Kansas City and have spent the last three months just learning about the Chicago condo real estate market.
And, GULP, I am poorer today than yesterday and really really poorer today than two days ago. What a bloodbath the market is now a days.
“Since that day, my investment account has decreased in value approximately 45k, which is half of what I wanted to put down as a down payment. So, now, I’m not such a willing buyer because I don’t feel like I have as much money as I used to.”
The only acceptable place for your down payment money is a savings account. I kept six figures in savings and cds for over 3 years waiting to pounce on a deal. Sure, it sometimes pissed me off not being able to properly invest that money, but it was the right thing to do.
Bob 2 – I learned that lesson the hard way this time. Now I’m building up my cash reserves and feel that time is on my side – at least for 2-3 years.
A couple of comments about michelle’s situation: Of course it’s the best practice to keep money you will likely need soon (in less than 1-3 years) in insured accounts, but there’s nothing inherently wrong with investing your savings. You just need to be very smart about the investment mix, consider mixing in some bonds or bond funds to cut the volatility, diversify across sectors, sizes, etc. You also have to follow things closely and consider some conditional orders. So maybe only some can do it, but I don’t think that it’s inherently a bad idea.
But, THAR BE BARGAINS. So I can see why someone buying in a year would want to be in the market now, but there is risk to it no matter what.
“thats your own fault for being stupid with your money”
Mama always said..life is like a box of chocolates.
“Ability is a component part of willingness. I’m certainly willing to sell your condo, Icarus (for $200! cuz who doesn’t like free money?), but lacking the ability to do so, I cannot be a “willing seller”.”
You can actually sell stuff that isn’t yours. It doesn’t defy the laws of physics like that neutrino that they think might travel faster than light they found yesterday. It’s illegal sure but it’s totally possible and people do it all the time.
“You can actually sell stuff that isn’t yours…It’s illegal sure but it’s totally possible and people do it all the time.”
If you mean “selling real estate you don’t own”, you can either have the authority to enter into a transaction to sell real estate on behalf of the owner, or you can engage in fraud. Neither of them is really “selling stuff you don’t own.”
If you mean securities, I’m not a securities lawyer, but I believe that only certain naked short selling is illegal. Certain naked shorting is even legal, and it’s definitely legal to sell shares you don’t own – that’s the entire idea behind short-selling. It’s just certain types of “abusive” naked short selling which is illegal – can’t recall how they define that, something about failure to deliver with some intent or something like that. Regular-old short-selling is certainly selling stuff you don’t own, pursuant to an agreement to have someone lend you the security in order to sell with the agreement that you have to return it to them at some point and pay them interest (and otherwise act in accordance with the margin agreement and regs).
30year mortgages at 3.5%?
I am becoming less bearish on RE lately. I think current mortgage rates are more a reflection of the gloom and doom going on in Europe now vs. the US economy.
Sure things aren’t great here, but that was already baked into the cards with sub-5% rates.
If I had the downpayment on a sizable place I’d feel comfortable living in for 10+ years I’d be looking to buy right now. And I found a niiiice house that meets these criteria for under 500k.
But I gotta save up that 20% down first.
Chicago sfh/condo/th closings for Sept/Q3/YTD for each year:
1997 1,892 5,262 13,551
1998 2,071 6,214 16,007
1999 2,135 6,577 17,376
2000 2,134 6,432 18,130
2001 2,139 7,280 18,571
2002 2,629 7,986 21,398
2003 3,257 9,520 23,526
2004 3,134 9,970 26,549
2005 3,463 10,929 29,045
2006 2,739 9,367 26,409
2007 2,172 8,009 22,947
2008 1,816 6,097 17,094
2009 1,972 5,995 14,092
2010 1,440 4,609 15,750
2011 1,511 4,986 13,652
“2011 1,511 4,986 13,652”
This is looking like it’s going to be just slightly better than 1997 and the year isn’t even over yet.
So we are “back to normal” then… wow those 2000-2007 numbers are INSANE, like holy crap insane!
“back to normal”
Yes, if one makes the mistake of ignoring all the new supply added since then.
I thought the population of the city decreased the last 14 years?
(note random quotes = sarcasm)
That would compound the increased supply problem, don’t you “think”?
Add in the fact that the majority of the housing built in the city during the boom is not suitable for most middle class families i.e. 2/2 cinderblock flats and luxury 4,000 sq housing with no yard; and that the new housing buyers do want i.e. normal 2,000 sq foot homes are located in the exurbs, makes a recipe for disaster. realistically how many parents raise 2 teenagers in a 2/2 in the ‘green zone’?
“G on October 10th, 2011 at 1:16 pm
That would compound the increased supply problem, don’t you “think”?”
Look at the Census maps. Some areas of the city are hollowing out, while others had double-digit percentage population gains. An empty house far from where I live is of no use to me, even if the address says “Chicago”.
“Chicago sfh/condo/th closings for Sept/Q3/YTD for each year:”
Thanks for the data G. I thought it felt really, really slow out there. We’re still way below 2009, huh?
I thought we might be below last year’s sales as well- given how slow it feels. And that was after all the sales were pulled forward AND interest rates were higher. I’m scared to know what’s going to happen over the winter. I bet a lot of sellers “give up” until the spring.
“That would compound the increased supply problem, don’t you “think”?”
I thought inventory for sale right now was low since nobody is selling at today’s prices 😉