Market Conditions: August Sales Fall 4.5% in Chicago: What’s to Blame?
The Illinois Association of Realtors is out with the August sales data. Yes, sales slowed at the end of the summer.
The city of Chicago saw a 4.5 percent year-over-year home sales decline in August 2017 with 2,716 sales, down from 2,844 in August 2016. The median price of a home in the city of Chicago in August 2017 was $285,000, up 5.2 percent compared to August 2016 when it was $271,000.
August sales since 2007:
- August 2007: 2923 sales
- August 2008: 2078 sales
- August 2009: 1927 sales
- August 2010: 1486 sales
- August 2011: 1787 sales
- August 2012: 2209 sales
- August 2013: 2850 sales
- August 2014: 2414 sales
- August 2015: 2701 sales
- August 2016: 2844 sales
- August 2017: 2716 sales
August median price since 2007:
- August 2007: $305,000
- August 2008: $297,500
- August 2009: $229,900
- August 2010: $200,000
- August 2011: $192,500
- August 2012: $200,000
- August 2013: $245,000
- August 2014: $269,500
- August 2015: $271,000
- August 2016: $271,000
- August 2017: $285,000
“With the improvement in the economy, people decided to enjoy their summer and the disposable income in their pockets,” said Matt Silver, president of the Chicago Association of REALTORS® and partner at Urban Real Estate. “While this contributed to a slight slowdown in year-over-year sales, the market is on track and poised for a strong autumn; days on market continue to decline, and our year-to-date sales are higher than last year’s. Energy and attention is shifting to the housing market and the opportunities therein.”
Statewide market times continued to fall. It was down to 48 days from 55 days a year ago.
Total statewide inventory also continued to shrink, falling 11.4% to 60,462 from 68,240 properties a year ago.
“The uncertainty in the Illinois economy over the last two years has contributed to a dampening of housing demand in contrast to the generally positive outlook in the rest of the country,” said Geoffrey J.D. Hewings, Director of the Regional Economics Applications Laboratory at the University of Illinois. “At the same time, declines in inventory are still exerting upward pressure on housing prices and thus reducing affordability.”
Last year, sales were weak in August as well and lack of inventory was to blame.
This year, it sounds like it was three things: lack of inventory, problems in the state with the budget/pensions that is dampening demand, and people enjoying their summers and buying things other than housing.
There’s no doubt inventory is low, but it had been low all year long even as sales continued to rise.
Was the sales slowdown in August just a blip that will be long forgotten in a hot fall market?
August brings higher Illinois home prices, lower sales amid tight inventory [Illinois Association of Realtors, Press Release, September 20, 2017]
Nothing has changed. We’ve had down months bigger than this going back over a year. And demand is still strong as evidenced by the market times. It’s all about the inventory. Even the SFH inventory on the north side of Chicago is declining again – by large amounts.
And one guy thinks people are enjoying their summers more this year than last year. They just needed to come up with a quote.
Build more affordable housing! And by affordable I don’t mean “low-income”, I mean not $600k 2bd/2bth ikea shoebox specials. There are too many rental towers going up when there is clearly a demand for ownership.
We won’t know if it’s too many rental units until we see the vacancies going a lot higher but it does seem concerning.
“We won’t know if it’s too many rental units”
*Even if* AMZN were to arrive 7/1/18 with 10,000 6-figure employees who *all* want to rent, it is likely that it is too many $3 psf apartments.
It’s not going to be “too many apartments”; it’ll be “too many” $500+ psf apartments. Just like we have “too many” (in a ratio sense) $600k, 1200sf 2/2 condos.
Of course, it’s likely that some of them will go condo, if the for sale inventory stays tight.
Elliot is right that we “need” somewhat more $300 psf new inventory. That will, of course, not be in the loop or river north, but a lot of the new stuff outside 312 is *still* $3+–look at MiCA, in Logan–it’s $3.50+ for studios, and $3+ for 2/1s. Need more ~$2 psf rentals
“we have “too many” (in a ratio sense) $600k, 1200sf 2/2 condos.”
The ratio doesn’t matter. All that matters is if they are selling what they are producing. And they are going to produce more of what makes them a higher profit as long as they can sell them. There are plenty of $400K 2/2s out there but people are picky. They want the latest finishes AND a $400K price tag AND a really nice neighborhood. Ain’t happening.
But those rental towers are filling up! With who I have no clue, I know one person who lives in linea, and while its an awesome building with nice amenities and units, she was the only one to live in there for a while two months ago, now her entire floor is full
Even these less prime buildings like Next and Niche905 and the Xavier are filling up with yuppies
only building that isn’t doing well from what I understand is the Exhibit, and that’s because the units are insanely fuckin tiny
Chicago is full of very affordable housing. The affordable housing is not in areas where I would want to live, but it exists.
There are too many people who want to live in the same neighborhoods and pay very little for their places. I want a sub-$500,000 townhouse within a 15 minute drive from downtown. Every so often such a place comes on the market, but it’s rare. There’s a lot of competition for places at that price point in areas where I would want to live.
This is the only townhouse on the market that I would consider: http://www.estately.com/listings/info/916-north-howe-street
Its a nice area jenny, welcome to the hood, perhaps our dogs could be friends LOL
“But those rental towers are filling up!”
More new apartment units to be completed in the next 24 months than the last 36. We’ll see in Fall-19.
People with money and education continue to pour into the City. Yet the loss of lower income folks is picking up.
Will be very interesting to see what happens in the next few years.
“Chicago is full of very affordable housing. The affordable housing is not in areas where I would want to live, but it exists.”
i may have asked this on another thread here or somewhere else, but when people say that rent and housing is too high in Manhattan, Seattle and San Francisco, are they literally talking about every place available or are they not including the Belmont-Craigins, Hermosas and Schorsch Villages (the equivalent in those cities)?
Every city has a range of housing options of different quality at different prices. The more expensive the city the more expensive all those options become. In general in the more expensive cities salaries are higher but people also spend a higher percentage of their income on housing also.
When people talk about affordability it’s all relative to what they are comfortable with, which relates to crime, which relates to median household income in the area.
No real estate is cheap in SF. 2 BDs in outlier, isolated areas go for $4,000+. Something similar in Chicago would be $1500 or even less.
Seattle is not as high, but it’s very expensive.
My guess is you will find NYC to have bigger swings of high to low, but still much more expensive.
“when people say that rent and housing is too high in Manhattan, Seattle and San Francisco, are they literally talking about every place available”
w/r/t Manhattan, the Belmont-Craigins, Hermosas and Schorsch Villages are in the outer boroughs, so yes and no.
w/r/t SF, part of the problem is that a lot of the rental housing stock has been (relatively) expensive crap for 50+ years; $3000/month for a 2/1 in outer sunset that is utterly uncharming and basically un-updated since the mid-60s sucks, even (or especially!) with a $150k income.
Icarus,
Every place available is the reference. I lived in SF for a year in a very very grimy area around mid market / edge of soma. This would be the equivalent of living on Chicago and western, maybe. I had a 500 square foot unit and paid 3500 with parking. If you wanted a nice 1 bedroom in prime soma, an area that is comparable to river north, you would be looking at around 5-6k a month…in comparison you could probably get a pretty insane 2 bedroom in a luxury building for 6k a month in Chicago. I have a friend renting a 1 bed in that fancy Lincoln park building (2520?) and he’s paying 3500 with parking. The building, amenities, neighborhood, and his views are about as good as possible. I’d think a comp in sf or NYC would be in the 10k range easily. (He’s a startup transplant guy from the Bay Area. He thinks Chicago rent is a joke…he’s been here 1 year.)
This is a nice, quiet neighborhood in SF. Not super trendy or anything. Walkable to some nice restaurants and grocer stores. Very dated finishes. $4000/ month https://www.zillow.com/b/1588-Guerrero-St-San-Francisco-CA/37.745829,-122.422557_ll/
Funny thing is that if you look up Tenderloin it’s not that much cheaper but it’s supposed to be a pretty bad area. I was surprised to find some nicely finished units available there. I’m sure you can find crap there much cheaper.
And anything that is priced cheaply has like 20 offers within a few days. Many landlords want to pick their tenants from a large pool. Weird.
“No real estate is cheap in SF..” I checked rents on Trulia for updated 60 yr old (+/-) apts in Albany, which reminds me of Oak Pk. IL – Albany’s across bay from SF on east shore, BART runs thru it, it’s adj to Berkeley etc. While Albany’s apt rents are higher than Chicago I saw: 1 bed/1 ba. @ $2K-$2100/mo. (ie: $2-$3.81 psf). 2 bed/1 ba @ $2000-$2700/mo. ($2-$3.18 psf.) And 2 bed/2 ba. were $2550-$2700/mo. ($2.03-? psf). Fwiw
“While Albany’s apt rents are higher than Chicago”
Well, yes, because, as you note, it’s a suburb–so you should compare to Chicago suburbs with easy train access. Oak Park seems to be mostly around $1.50 psf for the not-brand-new stuff.
You really can’t talk about affordable housing without talking about the average income of the neighborhood.
The official definition is: “When a household pays more than 30 percent of its monthly income towards housing, their housing expense is considered unaffordable. That household may have difficulty affording necessities such as food, clothing, transportation and medical care.”
But this definition is based on low income. At higher incomes, a household could spend, for example, 50 percent of its monthly income towards housing and still have plenty left for necessities such as farm-to-table food, designer clothing, luxury cars and private medical care.”
“i may have asked this on another thread here or somewhere else, but when people say that rent and housing is too high in Manhattan, Seattle and San Francisco, are they literally talking about every place available or are they not including the Belmont-Craigins, Hermosas and Schorsch Villages (the equivalent in those cities)?”
In San Francisco, I second what everyone has already said. You can be in the ghetto and still pay $3000+ a month. So how does anyone live there who earns a middle class salary? They are in rent controlled apartments that they rented like 10 years ago. And yes, rents were much cheaper just 10 years ago.
But the housing stock sucks in the entire city. Landlords in rent controlled buildings have no incentive to update. And with so many people moving there, supply and demand dictates they don’t need to. I had friends with 1950s stoves.
In NYC, it depends on where you are. A friend rented an okay 2/1 in Queens for $1800 a month. It didn’t have laundry. She had to go to the laundry mat. She was priced out of Brooklyn except crappy garden apartments (this was 2 years ago.)
“More new apartment units to be completed in the next 24 months than the last 36. We’ll see in Fall-19.”
Occupancy in those Class A buildings is falling now. They are building too many units. There are concessions all over the place. 2 months free rent etc. It will be interesting to get the third quarter update on occupancy.
But they keep announcing new buildings.
On an anecdotal note, the new apartment building at Lincoln and Roscoe right next to the Paulina brown line stop (we chattered about it last year) had two units in the front of the building, with the balconies empty, when I walked by. This opened to renters just a year ago. Already, those renters have moved out and no one else has moved in.
There’s also a sign on the outside of the building which says something like “leasing now.”
Interesting side note on rent control. I always thought landlords would hate it. But I met a long time NYC investor/ landlord recently and he said the old investors love it because they know exactly how to take advantage of the system (I did not press him on details but gathered that there were tricks for either living with it or getting around it) but more importantly it makes teardowns scarce and drives up the value of real estate.
“On an anecdotal note, the new apartment building at Lincoln and Roscoe right next to the Paulina brown line stop (we chattered about it last year) had two units in the front of the building, with the balconies empty, when I walked by. This opened to renters just a year ago. Already, those renters have moved out and no one else has moved in.”
or maybe it sucks living on a train station for longer than a year?
Occupancy in downtown luxury buildings is down a little with all the new units hitting the market. What’s interesting is, the number of units absorbed was a record in the 1st half of the year as well.
I’ve said this countless times, but the number of luxury high rises in RN is oversaturated. In my circle of friends (low 30s professionals), only a few live in some of these new buildings and they are still for the most part empty (and had to offer 2 months off). With 4000+ new units coming each year, they are going to cannibalize themselves a bit. I wish one would turn into condos as I prefer an amenity-rich building.
If you want to get a relatively new building in RN with in-unit WD and a balcony with a reasonable HOA for low 300s, it’s rough. 10E Ontario (great gym, decent pool, parking, no in-unit though), 340W Superior (area getting better with new 1M+ condos, cardio-level gym, sundeck, parking, but low-income tenants), 33W ontario (no balcony, shit pool & gym), 2E Erie (blocked views, limited amenities), Sterling (decent, but would need side gym membership, have to deal with Moe’s crowd), 435 W erie (ok in general, but far), 600 Dearborn (low amenities, small building), Silver Tower (too expensive for what you get, shit gym for how new it is), 630 Franklin (small, two clubs downstairs, train / onramp noise), 757 Orleans (on the edge, small pool, terrible gym, low HOA tho), 70 Huron (old / ugly), 150W Superior (small, no amenities, yet high HOA), 30E Huron (old heating/cooling units, no balconies), 440 Wabash (old building, overall meh)… ugh the list goes on. Venting hard, but I’m looking to buy in 3-4 months and it’s not as pretty as I’d like.
Used to be set on a high floor 02 tier at 340W Superior until I heard about the low-income allowance (https://www.redfin.com/IL/Chicago/340-W-Superior-St-60654/unit-1502/home/12681808)
Now I’m back to the original plan to buy a 10 tier (900sqft with office nook, 2 big walks in’s, very open concept, and incredible views off a huge balcony) at my current building–545 N Dearborn, aka the new murder capital of RN after the stabbing. The HOA will be $700 but I save $1K on free booze, have an amazing gym, killer pool deck, and most importantly a great social scene. But ya, wish I had more options.
I would imagine that these brand new rentals even if they converted to condos would be selling at ridiculous price per square foot (because, new) so your 900 sqft even with a good layout would likely cost in the 500k+ range rather than your preferred low 300k range
Rob – I hear you. My fiancee (wife starting in October) will be looking to buy in RN or Fulton Market/East Bank area in the next few months. Looking for a 1bd with parking and not really liking the options or buildings.
Love the location and dog friendliness of 660 Wayman/Trio Lofts but units can be very cramped or awkward. Had no idea about the low income situation in 340 W Superior. It’s in a great location and they just opened a Starbucks right near it on Chicago. Equis in Old Town seems promising but 1bds are more like glorified studios. Is it me or does it seem like most of the rental towers have way better amenities than the condo buildings?
$1k on free booze at 545 Dearborn? Is that per month or annualized? Nevertheless, I’m intrigued! Any HOA that can subsidize a stiff one after a long day of work has my vote.
Equis is next to literal projects, err the Marshall Field Garden Apartments. Forgot where it was posted, but I recall others mocking the developer trying to sell $1M penthouses when drug deals were happening on Sedgwick. If it was 3 blocks east, things would be much different (and more $$$).
$1K/yr of booze is basically 5 $7 beers at 30 happy hours I get. I’ve also filled up three growlers before (even more $ saved), the building pays for 3 kegs and they’re often (somehow) not finished. We all tip of course though, but the convenience of having it in your building in either the atrium or on the amazing deck is almost priceless.
90% of the new rentals blow away the condos with amenities. I believe our gym is the only one aside from 10 E (which used to be a private gym) to have 100lb dumbells and olympic bars. Aqua has a good gym but doesn’t even have that (likely for insurance reasons). 111 Maple has the FFC but that doesn’t count (and it’s not even directly connected I believe). Outside of gyms those some of these building have some more niche bogus amenities (golf sim, game rooms, wine cellars, etc. I prefer the basics–great gym, free coffee (in a little lounge area), deck with a view/grilling, and some social space optionality). Pools add to the HOA, but if one existed, I would prefer either a fitness lap pool or frat party pool (ours is the later, this weekend will be intensely fun). These kiddie style pools with no chair space (33E, 757, etc. are a waste).
Elliot–
Thanks for the heads up on Trio. I had kind of blown it off as I thought it was only basic apartments. It is very much like GP in several ways–both have a Jewel, both have condo’s & rentals, etc. Looks like they redid the gym (weights are still weak, but decent for 90% of lifters) and common area (love the shuffleboard table and general style). My biggest issue would be the location still. It’s okay for a lot, but the immediate area is meh imo. You’ve got Alta & K station for other professionals, but lots of parking lots and an SRO close. You can walk to the Mid, AuCheval, the Grand & Clinton stops, and a bit longer to Hubbard bars though. Fit and finish is 10x what the developer units were at GP, but after almost 15 years almost everyone remodeled (you better yet, you can customize it yourself).
My friend just moved to a new apartment complex in Minneapolis. They have doggy treadmills and a doggy bathing station. She also gets texts when packages are delivered and instead of having to talk to the doorman to get her package, each unit has a large individual package locker that can be unlocked with her phone. I am jealous. She’s paying $1200/month for a studio. I can only imagine what that would cost here…
anyone have an idea of what the insurance rates for a gym are for a building?
“She’s paying $1200/month for a studio. I can only imagine what that would cost here…”
A studio?
You can get a studio in a “luxury” building in Chicago for like $1600. Some of the brand new buildings are more expensive. Not sure they’re building that many of those these days though. They call them “junior 1-bedrooms” now. But they’re about 600 square feet.
“Looking for a 1bd with parking and not really liking the options or buildings.”
Elliot: You don’t state your price range. Obviously, that’s probably the controlling factor.
“In my circle of friends (low 30s professionals), only a few live in some of these new buildings and they are still for the most part empty (and had to offer 2 months off).”
While there ARE concessions being offered at most buildings right now, they actually are mostly occupied. They’re not “empty.” Last I saw, I think class A occupancy was around 94%. But that was last quarter.
With all the new buildings closing, I expect it to go lower as those units come on the market.
Also, the reason most of the condo buildings don’t have the same amenities, is that they were built 15-20 years ago (mostly as apartment buildings, actually) and, back then, no one cared about amenities in the same way. But with all the competition in luxury apartments, they started putting in the bocce courts and the rock climbing walls etc in order to compete with each other.
If any of those buildings DO go condo, you can bet you’ll pay a hefty HOA fee for some of those amenities. All have to be maintained.
“or maybe it sucks living on a train station for longer than a year?”
Maybe. But this is only the brown line, which stops running at night.
Also, they put in double pane windows when they built it.
Additionally, these two units face AWAY from the El tracks (some units on the back side, however, look out onto the El station.)
But I don’t dispute, sonies, that the location could be the reason they moved so quickly. Or maybe the price. As I believe those were priced over $3000 a month originally.
Maybe. But this is only the brown line, which stops running at night.
It’s only Belmont to the Loop that stops running at night (and even that is only closed from 1:30 to 4:00 AM); between Kimball and Belmont is 24 hrs.
“It’s only Belmont to the Loop that stops running at night (and even that is only closed from 1:30 to 4:00 AM); between Kimball and Belmont is 24 hrs.”
Thank Madeline. I’ve never lived that far north so I had no idea that it ran 24 hours to Belmont. I’ve always just taken cabs/uber that late if I’m up in that neighborhood.
“You can get a studio in a “luxury” building in Chicago for like $1600. Some of the brand new buildings are more expensive. Not sure they’re building that many of those these days though. They call them “junior 1-bedrooms” now. But they’re about 600 square feet.”
Do any of the new apartment buildings have dog amenities? I’m really intrigued by the dog washing station and doggy treadmill at my friend’s building. I think they have a dog park too. I know some buildings here have dog park areas.
The $1200 my friend is paying in MSP also includes parking.
“double pane windows”
I think that means “windows”. Haven’t seen anything new with single pane–unless it’s a cheap manufactured home.
“between Kimball and Belmont is 24 hrs.”
If you go at 2am, the frequency is one train every two hours (3:30 on Sunday); I guess that counts:
http://www.transitchicago.com/brownline/
“The $1200 my friend is paying in MSP also includes parking.”
$3 psf. In St Paul!!
https://raysmartliving.wpengine.com/
That said, it’s damn near equidistant bt the downtowns, and close to the university.
“Do any of the new apartment buildings have dog amenities?”
Yes- there was a building in Streeterville that was marketing specifically to dog owners. Had a dog in the ad. I can’t remember the name of the building or address and I don’t know if they have studios.
I found it Jenny.
It’s “Moment” in Streeterville.
Although, now that I look, it appears it just has a grooming room. Does that count?
“WAGGING TAIL Pet Spa
Your furry friends need pampering and a place to play, too. The grooming room is just steps away from the 600 square foot outdoor dog run.”
They have 1-month free rent if you sign by September 30th.
Cheapest studio is $1766 for 506 square feet. With 1-month free rent, it’s a bit cheaper though. Not as cheap as Minneapolis though.
Just posted my Septebmer update. Pretty much the same story. Tight inventory and sales down 1.2%, though the IAR will report it down 3.8%. http://www.chicagonow.com/getting-real/2017/10/chicago-real-estate-market-update-tight-inventory-keeps-sales-flat/
“Just posted my Septebmer update. Pretty much the same story. Tight inventory and sales down 1.2%, though the IAR will report it down 3.8%.”
Anecdotally, it seems a lot slower than last spring depending on the price point, of course.
There are too many properties now over $500,000. Entry level is still really tight.
“There are too many properties now over $500,000. Entry level is still really tight.”
There is a 5.8 month supply of stuff over 500K and that is only up slightly from 5.7 months last year.