Market Conditions: Chicago 2008 Sales Fall 25.1% From 2007
Sales continued to plunge in December – marking the end of a nasty year in the Chicago housing market. Prices continued to hold up for the full-year however.
How much longer will prices hold? The median price spiked dramatically lower in December 2008 compared to the year ago period.
From the Illinois Association of Realtors:
In the city of
Chicago, December total home sales (single-family and condominiums) were down 23.0 percent to 1,215 sales compared to December 2007 sales of 1,578. The city of Chicago median price in December was $235,000, down 18.2 percent from $287,450 in December 2007.
For the year, home sales in the city reached 20,589 in 2008, down 25.1 percent from 27,503 sales in 2007.
The 2008 median price was $290,000, down 0.5 percent from $291,500.
David Hanna, president of the Chicago Association of REALTORS(R) said: “A lack of consumer confidence and financing continue to prevent the Chicago housing market from maintaining any recovery momentum.”
“Low interest rates and flexible pricing are bringing buyers into the market; the continual lack of reasonable financing requirements and lender adversity to lend to the average consumer thwart our best efforts to see the housing market rebound. Lending conditions must change or the real estate market will not recover,” he said.
Illinois median price down 7.8 percent for the year [Illinois Association of Realtors Press Release, Jan 26, 2009]
See second and third graphs on this page:
http://blog.lucidrealty.com/chicago_real_estate_statistics/
The YOY decline in sales is less in the latter part of 2008. Meanwhile, Chicago PMSA quarterly sales have hit a new low, going back to 1994/1995 levels. It’s the condos.
The fact that prices in Chicago have remained stable, in the face everything across the country crumbling, is not a good omen.
This means the correction here is coming…and it’s going to be NASTY!
I attended an economic forum on Saturday in Washington, next door there was a meeting on, “Foreclosure and the American Economy.”
I wandered in and stayed 25 minutes. The speaker was going through chart on top of chart of how many distressed mortgages each bank owned, in each State. The numbers were in the 10’s of thousands, which is not news.
What blew me away was the whole reason for the meeting taking place in the room, was to decide when to “release” their inventory on the market.
Apparently they are withholding inventory as long as they can to see if buyers will come back, with many in the room grumbling about stress this is putting on their ability to operate.
This explained, at least to me, why you cannot get a jumbo right now. The lenders know prices are not close to leveling. Right before they do level, not at the leveling point, you are going to see a glut of new inventory.
Just saying, this ride is going to be deep. Maybe 2011, hopefully.
thx… maybe it has been stable because it never bubbled up as much either. less of a rise.. less of a fall.
Oh and they are holding inventory because by the way they account they don’t have to take the loss that way. Call it what they want to but that is the reason. Now they will start seeing how long they can hold out til the pain gets to be too much. So much fun to watch…
see previous thread on discussion about median prices.
Heh, Q1 2009 will be worse, the bulk of earnings reports for Q4 2008 are coming out this week. Q4 2008 is the worst performing quarter yet, so the markets will tank, fueling this fire.
There are way more REO in bad neighborhoods than good neigborhoods. My recent realization is that banks will eventually be providing seller financing….i.e. since the bank cannot sell the property for cash per se b/c mortgages are tough to come by, they will be giving equitable title as long as you can make the monthly payments. Walk into the bank, give them full docs, they figure your 28/36 figures and let you choose from their extensive list of properties. The bank gets paid in full when you resell the house.
I think its fantastic they’re trying to play games and manage the inventory. We all know who is going to win in this stalemate. Unfortunately for them its not the side bleeding cash on the carrying costs.
Like I or any intelligent potential buy who witnessed this bubble are going to be lured into buying now due attempted inventory management. These banks are about to collapse its only a matter of time before REO’s FLOOD the market.
Sure REOs will flood the market but how many $30,000 SFH’s in Humboldt do you plan on buying? Foreclosure are everywhere but they’re concentrated in areas I won’t even drive through.
REO’s are houses that are so crappy they don’t sell on the auction market. Stay away unless you feel like playing junior slumlord.
“REO’s are houses that are so crappy they don’t sell on the auction market.”
Maybe right now, but there are plenty that have (and probably will again) go back to the senior lender b/c they think the best cash bid is too low, given the amount of their line (e.g., $750k owed on the mtg, best bid is $375k).
Seems that more banks are realizing the first offer is probably best, but sometimes it’s about timing the loss, rather than saving $10k.
Home delete is right in one sense… most foreclosures are places you wouldn’t want in areas you wouldn’t want.
Yet I am seeing foreclosures in almost every condo up and down Sheridan Road and Lakeshore Drive. There are numerous foreclosures on McMansions in LP and especially on the West Side. There are whole condo developments in RP, and subdivisions in the burbs, where the units never sold and they’re all in foreclosure. My mother’s staid old suburb is full of them- folks who doubled the size of their houses and installed pools and $200K kitchens in the bubble years, and are SO SURPRISED when the loan recasts and their payments triple.
There are a couple of foreclosures I’m tracking in condos, but beware of condo foreclosures, because they usually come with several months of assessment arrears, which you will have to pay in one lump sum when you take possession. Many of the foreclosures I see have been stripped, or otherwise substantially damaged. It is not easy to get a really good deal on a foreclosure.
Foreclosures are popping up everywhere. As homedebtors with alt-a and prime loans default foreclosures in desirable areas will increase.
http://online.wsj.com/public/resources/documents/st_Housing_20090127.html?mod=djemRealEstate
I think this chart reflects what we’ve believed for a while, that Chicago housing is heading toward its precipice soon.
Only two markets on this list (Manhattan & Portland) had a higher % increase in inventory from a year ago than Chicago. Manhattan was behind the curve because of the wealth that was there due to the financial market which is now, obviously, hemorrhaging. I can’t speak for Portland.
Only five markets have a greater pent up supply (Chicago is at 14+ months). Four of them are in Florida. Not even the overheated Vegas, Phoenix or Cali markets have a greater supply.
Only three markets (LA, Sacramento & Detroit) have a higher jobless rate than Chicago (7.8%).
So let’s review. Growing inventory added to an already massive pent up supply combined with a growing jobless rate equals…….
Zejas:
Nothing is rosy, but you’re painting it the most negative light you can, based on that data. Chicago is better than average and median on default rate, they don’t have months supply for LA or San Diego, the inventory number is bogus b/c of single listings for multiple units by developers, shadow REO inventory and realtor manipulations, the price numbers are provided by Zillow. Nothing good to find there, but not as relatively bad as you are protraying.
I’m not painting anything. The #’s are the #’s. 14+ months of supply and growing and one of the highest unemployment rates are hard to spin to the positive.
“I’m not painting anything.”
Uh, then what is “only two markets” “only five markets” and “only three markets” worse than Chicago and ignoring the category where Chciago is above-average? Selective use of data and using rankings rather than rates is framing your argument–i.e., painting. Say you’re being fair, that I’m ignoring reality, but don’t try to claim you aren’t doing something that you obviously are.
I found this blog from 2/07 amusing and horrifying
http://www.burbed.com/2007/02/16/how-the-bay-area-caused-home-prices-to-go-up-nationally/
“…then what is “only two markets” “only five markets” and “only three markets” worse than Chicago…”
They’re called facts.
“They’re called facts.”
They’re called statistics; as in lies, damn lies and statistics. You can “prove” anything you want based on different framing of the stats. You framed ’em, now you’re claiming you didn’t.