Market Conditions: November Sales Plummet 41.3% Year Over Year
Chicago home sales continue to plunge, as November recorded the sharpest year-over-year decline in the city in 2008.
Sales of single family homes and condominiums in the city fell 41.3% in November compared to a year ago. Only 1,057 sales closed compared with 1,801 in November 2007.
The median price declined 23.3% to $222,500 compared to $290,000 in November 2007.
“The REALTOR® Association is calling upon the federal government and mortgage industry to address continuing problems that are impeding the delivery of mortgage credit to potential homebuyers.” said David Hanna, president of the Chicago Association of REALTORS®.
“Mortgage insurers need to make sure they have not over-corrected and added unnecessarily strict underwriting standards preventing people from qualifying for a mortgage. The lack of practical and affordable loans will continue to stymie the recovery effort.”
Sales also fell 32.3% in the 9-county Chicagoland area. Year-to-date, sales are down 26.5% in the 9-county Chicagoland area compared to the first 11 months of 2007.
64,445 homes sold through November 2008 compared to 87,624 in the same 11-month period in 2007.
Prices also declined in the 9-county Chicagoland area. Year-to-date, median price fell 4.9% to $242,000 from $254,500 in the 11-month period in 2007.
For the month of November, prices fell 15.9% to $207,745 from $247,000 in November 2007.
Are price declines accelerating?
“The housing market was stalled in November due to a deepening recession which hit our economy with blunt force this fall. No one should be surprised at these figures given what happened with the financial markets in the past few months,” said Pat Callan, broker-owner of Realty Executives Premiere in Wheaton and President of the Illinois Association of Realtors.
“Looking ahead, we are encouraged by the Federal Reserve Board’s action last week to get our economy moving again with the announcement to lower the federal funds rate.”
“The REALTOR® Association has been calling for mortgage rate reductions and recent action to drive down interest rates should be attractive to homebuyers who have been waiting on the sidelines to enter the market. With interest rates the best they have been in 50 years and peak inventory levels, there are unique buying opportunities,” he said.
Sharp Drop in Mortgage Rates Encouraging Sign for Housing Market November Illinois Home Sales Decline Statewide [Illinois Association of Realtors Press Release, Dec 23, 2008]
Scary stuff. The median home price fell to $222,500 in the City. This means half of all homes sold were priced below this amount. My question is what does $222,500 purchase in the city of chicago? How many properties featured on CribChatter are listed for less than $222,500? Only 528 sales in the city occurred above $222,500…And probably half of those are distressed sales or REOs.
“Sales of single family homes and condominiums in the city fell 41.3% in November compared to a year ago. Only 1,057 sales closed compared with 1,801 in November 2007. The median price declined 23.3% to $222,500 compared to $290,000 in November 2007.”
The bubble was scary. The correction has always been inevitable and is the only way out of this mess.
It’s just too bad it didn’t occur years ago so as to minimize the impact on the non-participants. Oh well, at least the ponzi schemers will pay dearly.
Mortgage insurers need to make sure they have not over-corrected and added unnecessarily strict underwriting standards preventing people from qualifying for a mortgage.
Realtor groups amaze me. They continually show a desire to destroy their own future just to get a few extra dollars right now.
HD- Home prices didn’t drop to 222K in the City. I believe the data was pulled for the 9 county Chicagoland area. 222K can get you quite a bit in all but Cook County.
“The lack of practical and affordable loans will continue to stymie the recovery effort.”
I think they mean the lack of practical and affordable homes will continue to stymie the recovery effort.
The nine county area dropped to $207,745.
“Prices also declined in the 9-county Chicagoland area. Year-to-date, median price fell 4.9% to $242,000 from $254,500 in the 11-month period in 2007.
For the month of November, prices fell 15.9% to $207,745 from $247,000 in November 2007.”
Welcome to the party Chicagoland….a little late, but you made it! The South Florida area has already been through this big, steep decline and is looking for another 23% decline for Miami in 2009 then tappering off. Chicago probably has 2009 and 2010 for major declines as it lags other areas of the country. It is scary. As I told someone in mid-2006 about to buy a house at 20%+ off peak pricing, what is the worst case scenario…you lose 50% and if that happens we’re all in trouble and that may be the least of your worries. Well their home is off about 20% from their purchase price….still a big problem just hope like heck it stops.
ChiGuy – I think the realtors do focus on finance gimmicks to save the day versus the price itself. Oh well, they played a big part in this mess by pushing clients into homes they couldn’t afford….
john- There’s no “thinking.” we KNOW RE agents focus on gimmicks. Their commission is based on an inflated price so it’s in their best interest to not let prices drop.
At least no one is yet posting that my headling is “misleading” as the numbers pretty much speak for themselves.
Rents don’t even come close to the sale prices- an indicator that prices will be coming down a lot more.
The average city sale price in November is also interesting. What is selling? Foreclosures and short sales and not much else.
“The average city sale price in November is also interesting. What is selling? Foreclosures and short sales and not much else.”
Yeah the realtors(r) will say to their selling clients that those numbers are skewed by the south side.
Which we know is a bunch of crap.
On another note the site I check for wholesale mortgage rates has removed all options other than 15/20/30yr fixed mortgages. It used to be they had a whole menu of mortgages including IOs, ARMs, 40yrs, no docs, etc. The no docs disappeared this summer and now it appears everything else has disappeared as well.
If this site is any proxy for the mortgage market as a whole it looks like sanity might finally be back.
And the really bad is just about to start!!!!!!!!!!!!
About to be expected. I’d be curious to see this broken out geographically by zip or something. I’ve been following listings in various neighborhoods for a few years now, and the more marginal areas that saw a lot of ridiculous speculation, mortgage fraud, or otherwise silly financing (think: Humboldt Park, Pilsen, etc.) have seen price declines of 40+% over the past 12-18 months. Then there’s the question of volume by geographic area. It’s a complicated picture, but in short different people who bought at the same peak time (we’ll call it 2004-2006) are going to get hit by different levels of plummeting value depending on their location.
How low can it go? Will we get to a point where 80% of all existing home sales will be short sales and foreclosures?
Let’s say it IS skewed by the south side sales (which, we’re assuming, are lower prices.)
What does that say about what IS selling?
I know I’m a broken record on this topic but it’s incorrect to say that “prices fell 15.9%”. Median prices fell that much but not prices. And median prices fell because more of the cheaper units are selling (south side or elsewhere). The Case Shiller stats really show a more accurate picture of prices and it hasn’t been that dramatic up until now.
Merry f’ing Christmas. Wow.
Yes Gary but the logical interpretation one can extract from the median being skewed “by cheaper units selling” is to accept that there are no fewer “luxury” units on the market than normal. With that being true the market is screaming out loud that nothing in that category can be sold. What is selling and what is not says quite a bit. Jumbos are still off the charts high.
Gary- that is correct that all prices are not falling by 15%. It’s just the median. But, as I said, it tells you what is (and is not) selling. More expensive properties are not selling in large numbers right now.
It tells you a lot about the market.
I know they don’t teach this in realtor school, but Median price is the middle 50% statistically of homes sold. It is a far better measure than “average” price which could be skewed by very cheap, and very expensive homes. Median pricing dropping by 15% shows that even Joe Schmo middle class home is selling for a lot less than it was a year ago.
Sonies, not necessarily. Look at this list:
10 10 10 100 100 100 100 100
Median is 100. Now,
10 10 10 10 100 100 100
Median is 10.
What has changes is simply the mix of numbers (homes sold). In the first, more expensive homes were selling. In the latter, cheaper homes were selling and more expensive stagnating. Median obvious IS relevant to actual prices paid–no one is trying to claim otherwise–but you don’t know how much the median is being affected as well/instead by the mix.
In other words, you’ve learned something, but not necessarily about prices paid.
Gary –
I’m sure somebody here knows more than me, but Case-Shiller data are released much later than others and their sampling methods probably don’t do a good job of capturing what most people here are interested in (condos and SFHs in more prime areas of the city). For instance, the latest Case-Shiller data available are from September. To me the news release above suggests that we’re seeing a new ‘Lehman shock’ gap downward in the data.
By the way, does anyone know the relative weight of suburban home prices in Case-Shiller?
Yes but there is a lot more data than 7 homes sold (hopefully lol) so you won’t get wierd results like that.
Sonies, the point does generalize. I used simple data just to make it clearer. Add a ton of prices, and vary them–you can still get the same pattern. It’s why people (should) rely on C-S for prices over time, not median.
Chris, Sonies,
Kenworthey has provided a good example of what I’m talking about. No, I don’t know what the sample is for CS but for Chicago they do have 3 different tiers. Based upon the price ranges for those tiers they do appear to focus on lower priced homes. However, they have a tier labeled “over $341K” so who knows how high that goes. We pretty much know that there are more of the cheaper homes being sold now so that the mix is really throwing off the median numbers. There is no way that prices have fallen 15%.
Gary… Just because a tier is not represented does not mean it has not fallen an equal or greater amount. It just means it is not represented! Argument is the inability to transact and lack of liquidity may make that the worst thing to own at this moment. My bet would be 2009 the high end fares worse.
Ze…I completely agree. I was just responding to Chris’ post regarding what comprises the CS index. My personal view is that there is no evidence YET that prices have dropped significantly in the last few months. However, the inventory builds suggest it’s coming.
Regarding the question about CS Chicago composition, they’re tracking single family homes in Chicago-Naperville-Joliet (8 different counties). There were 1.6MM SF homes in this area as of 2000, per the census, of which I believe 300K (
Sorry.. got cut off for some reason: Regarding the question about CS Chicago composition, they’re tracking single family homes in Chicago-Naperville-Joliet (8 different counties). There were 1.6MM SF homes in this area as of 2000, per the census, of which I believe 300K were in the City of Chicago. Roughly 25% of housing units in the City of Chicago are tracked, I believe. So picture a venn diagram where there is not a ton of overlap between the “CS Chicago housing units” and the “City of Chicago housing units” circles — the index is highly unrepresentative of the types of units discussed here. Please correct me if someone has a different understanding.
S,
Why do you say it’s unrepresentative if 25% of the units are tracked and I would assume it’s a random sample?
They’re not sampling, as far as I know — it’s that the universe as defined is so different from the slice of properties discussed here. a) 80% of the CS Chicago units are not in the City of Chicago (from a huge geography) and b) 75% of City of Chicago units are not in CS Chicago b/c they are not single family homes (what CS tracks).
http://online.wsj.com/article/SB123050988109038295.html?mod=djemRealEstate
A report on home prices out Tuesday is likely to give the incoming Obama administration ammunition to push for additional relief for the housing sector.
The S&P/Case-Shiller index of home prices is expected to reflect the continuing toll exacted by the deflating housing bubble.
Additional relief on housing?
Which part of the relief so far, has been effective???
This relief stuff really needs to stop.
You can’t artificially inflate housing prices forever, despite what the NAR might have you believe. Why can’t we just let a severe correction happen so that we can just get on with the recovery of the broader economy and real estate.
It is always better to just let the bubble pop instead of having it slowly deflate. Think of it like taking off a bandaid.
(And yes, I realize I am probably preaching to the choir.)
The government will become a slumlord now?
What part of “let the market work itself out” doesn’t he understand. More government legislation is going to accomplish nothing but higher taxes for everyone.
Chicago down 10.8% according to Case Shiller
http://blogs.wsj.com/developments/2008/12/30/case-shiller-numbers-by-metro-area/
They can prop up housing prices forever but that won’t increase demand. Right now there is little demand. Buyers have seen the results of high dti ratios and don’t want to repeat the same mistakes. Kind of ironic how artifically high prices artifically decreases demand. The law of unintended consequences.
At least the incoming adminsitration represents the principles of their party. Remember far more Democrats voted for the bailout in both chambers of congress than Republicans (percentagewise and in absolute number).
Unlike our current administration which is certainly the worst in my lifetime and perhaps the past eighty years or more. W essentially wrecked conservatism for the foreseeable future. Can’t wait until that Texas village regains its idiot.
“At least no one is yet posting that my headling is “misleading” as the numbers pretty much speak for themselves.”
Well Sabrina, last month you included the word “another” in front of the year over year decline. This was misleading and would have misleading should you have used it in this post.
The December numbers will be much worse, even in LP and LV. Sales have dropped even lower while new listings have increased by quite a bit (LP 50%+, LV 25%+).
Those new listings changes are YOY for December.
What are the prelim numbers for the YOY for Dec?
12/1-12/29 YOY sales of attached single-family:
LP -50%
LV -37%
Ouch!
I read earlier today that the financial crisis had not yet shown up in CS index numbers because there is a two month lag time between when closing starts and ends. So today’s figures were for transactions starting in August, effectively before the bottom fell out. Can’t wait to see the horrorshow that November and December data bring.
Bob.. wait til you see Feb and March. Q1 of 09 will be UGLY.
For all it is worth to you nay sayers. The word on the street is that buyers are coming out in record numbers for Jan’s inventory. Lower interest rates and lower prices seem to be the attraction. It will take until March to see how it plays out but it seems like the 4th qrt dissapearance of the buyer is now history. Also remember that we have lower inventory levels than in the past (LP & LV) years. We will see how many buyers follow through but they are out looking right now.
Steve right after they get finished on their big shopping spree down Michigan Ave?
All I see are people not spending, credit not being extended globally and banks hoarding. The only people lending at these rates are the government. Spread to Jumbos are off the chart and I never saw more jumbo tankers sitting idle in my life.
I am disappointed they aren’t cutting the conforming loan limit according to some form of index.
Ever since the gov’t started making the call Fannie and Freddie have a hodgepodge of stupid rules that make little economic sense and have substantial risk too as we have learned.
1) So next year the conforming loan limit stays constant.
2) The jumbo loan limit depends on the county you are in, up to 625k in continental US for SFR. Apparently theres even some county in Wyoming where this is possible!
The hilarity of government intervention: I can’t figure out why Teton, Wyoming, has a conforming loan limit of 625.5k yet Chicago’s is 417k.
With ever more increasingly more ridiculous rules such as these maybe government should get out of the mortgage business?
Bob: The Case Shiller Index out today was down 18% for the 12-months through October. So- not much of the financial downturn has been priced into that yet.
But I’m in agreement- what will the last two months numbers look like? It’s going to be brutal.
I’ll take Sheitman’s “word on the street” as, um… bullsheit
There may be buyers out there, but are they qualified? Doubtful…
No I can see more people stopping into open houses to get out of the cold and how that creates the misconception.
Well off shopping for New Years dinner.
Happy New Years and may 2009 be filled with dank sticky buds to all.
:weed:
“For all it is worth to you nay sayers. The word on the street is that buyers are coming out in record numbers for Jan’s inventory. ”
Are these new buyers, or poor suckers that cannot get out of their two year old contracts without losing the deposit?
T2.. 750 points more by todays close and you were right on part of what you said… looks like a simple blogger got it more right than the trader 🙂
There were large YOY increases in the number of new December attached listings in LV (+25%) and LP (+60%) in the mls.
Consider that fact along with the collapse in sales volume and the number of expired and cancelled listings (at the same prices as current listings) and you can conclude that any comment by a SHill regarding “inventory” is intended to deceive.
Laura, that comment was intended to buy time for the Shills. Note that it went on to say that “It will take until March to see how it plays out.” So just buy, buy, buy and you will see in March that everyone did. Or, perhaps, did not. Then it will be “whocoodanode?”
If anyone wants an example of the SHill actually getting something correct, it is correct that “it seems like the 4th qrt dissapearance of the buyer is now history.” It’s one of those “sun rises in the east” comments that make the SHill boastful.
By the way, I’m willing to bet that the 1st Q disappearance of the buyer will begin tomorrow.
Sorry, I meant to address Linda, not Laura.
Are there interested, qualified buyers who will be out there looking in January? I think so, because I am one of them (a first time homebuyer). However, both I and other friends I have in my position will be looking for STEEP discounts – you saw this in CA and FL – buying activity picked up quite a bit, but only on foreclosures, etc. I didn’t wait on the sidelines for this long to be suckered in just by lower interest rates, I want a much lower price, too. And if I don’t get my price? I’ve got nothing but time to continue waiting, which is more than I can say for those people who have no money down, subprime loans resetting.