Market Conditions: Chicago Sales Plunge YOY Again But Still Above 2011 Levels
With rates moving back towards 7% early this summer, that slowed Chicago housing sales once again. July sales plunged to their lowest since the housing bust in 2011.
The city of Chicago saw a 20.0 percent year-over-year home sales decrease in July 2023 with 1,986 sales, down from 2,481 in July 2022.
The median price of a home in the city of Chicago in July 2023 was $342,500, down 2.1 percent compared to July 2022 when it was $350,000.
Here’s the July data since 1997 (thanks, once again, to G for the historic info):
- 1997: 1,694
- 1998: 2,139
- 1999: 2,186
- 2000: 2,013
- 2001: 2,410
- 2002: 2,661
- 2003: 3,105
- 2004: 3,429
- 2005: 3,487
- 2006: 3,088
- 2007: 2,819
- 2008: 2,200
- 2009: 2,040
- 2010: 1,631
- 2011: 1,666
- 2012: 2,088
- 2013: 2,902
- 2014: 2,725
- 2015: 3,082
- 2016: 2,780
- 2017: 2,698
- 2018: 2,803
- 2019: 2,708
- 2020: 2,793
- 2021: 3,350
- 2022: 2,481
- 2023: 1,986
Interestingly, in the Chicago metro area and statewide, median home prices rose. Only in Chicago did the median price fall year-over-year. However, nothing is as clear cut as it seems because even the condo and single family home markets in Chicago were bifurcated.
Condo prices were up in Chicago by 2.8% to $365,000 median price while single family homes dropped 8.6% to $315,000.
In the Chicago metro median price rose 5.3% to $340,000 from $323,000. Statewide they rose 5.6% to $285,000 from $270,000.
“While median prices rose in the Chicago suburbs during July, they began their usual seasonal decline elsewhere in the state,” said Dr. Daniel McMillen, head of the Stuart Handler Department of Real Estate (SHDRE) at the University of Illinois at Chicago College of Business Administration. “Our forecasts indicate that prices will continue to decline over the next three months, although they will remain higher than at this time last year. The number of sales remains low and is forecast to decline further over the next three months. Surveys suggest that consumer confidence in the economy has increased markedly over the last few months.”
Inventory continued to drop statewide, plunging 34.1% year-over-year to just 19,432 homes down from 29,774 in July 2022. Compare that to July 2021, when inventory was 34,518 or July 2019 when it was 59,600.
As we know too well, inventory in Chicago also declined again, falling 33.5% to 5,476 from 8,238. For comparison, it was 9,392 homes in 2021.
However, the number of days it took to sell a home statewide finally reversed course and actually rose by 2 days.
Statewide market times:
- 2016: 53 days
- 2017: 47 days
- 2018: 44 days
- 2019: 43 days
- 2020: 50 days
- 2021: 25 days
- 2022: 20 days
- 2023: 22 days
In Chicago, days on the market also rose, by 12% to 28 days from 25 days last year.
“The real estate market in July showed decreases in activity while median sales price held steady, which is typical of market ebbs and flows,” said Sarah Ware, president of the Chicago Association of REALTORS® and principal and designated managing broker for Ware Realty Group in Chicago. “We’re seeing buyers and sellers in a holding pattern due to student loan payments restarting, the school year beginning and a workforce returning to their offices.”
The average 30-year fixed rate mortgage was 6.84% in July 2023, up from 6.71% in June and well above the rates last year, when it seemed like the world was ending as rates spiked higher, at 5.81%.
How low will monthly home sales go this fall with rates now hovering around 7.5%?
Will sales plunge under even the housing bust lows of 2011?
July Illinois’ home sales and inventory fall while statewide median prices rise [Illinois Association of Realtors, by Bill Kozar, Press Release, August 22, 2023]
Anecdotal, seems like those that dont have to buy are waiting until next year. Those that were swayed by the Realator speak of “Marry the house, buy the rate” are pretty much done.
The apartment market is really screwy, LL are trying to push thru pretty substantial rent increases but seem to be backing down when tenants threaten to move.
“We’re seeing buyers and sellers in a holding pattern due to student loan payments restarting”
I was told that this would not have an effect on the housing market, Hmmmmm…
“Anecdotal, seems like those that dont have to buy are waiting until next year.”
An anecdote that unfortunately seems to be gaining traction in the commercial RE world is “survive until ’25.”
Talk about a non functioning housing market. Median sales price down, number of homes sold dallas off a cliff, and rising time to sell.
Although this is a nationwide problem so not a Chicago specific thing. Meanwhile, property taxes are going up.
“An anecdote that unfortunately seems to be gaining traction in the commercial RE world is “survive until ’25.”
Class A office is going to be an interesting between the RTO Vs Convert to residential crowds. I dont see a great financial reason today to convert.
Office Whse/Showroom mkt seems to be strong
It is pretty dead… I’ve had a few move up buyers going to North Shore.
People aren’t buying unless they have to… and budgets are blown out with high rates which is causing an issue as well. Existing sellers are choosing to sit tight and make their current homes work which is causing a shortage of inventory causing prices to remain elevated. FTHB are dead too.
Fed is raising rates to stave off inflation, but they appear to be making it worse…. at least in the housing market. Probably didn’t anticipate how people would respond.
Something has to give at some point… as long as job market remains decent the standoff will probably continue.
“Something has to give at some point… as long as job market remains decent the standoff will probably continue.”
I think most Chicagoans can stay in their homes a LONG time if need be. Maybe they will stop checking the Redfin and Zillow apps all the time and move on to something constructive in their lives?
The Baby Boomers have a lot of money and their homes paid off. They will continue to make decisions based on their needs (retirement). Millennials have been renters and can remain renters.
Rates aren’t going to stay elevated for forever.
“Meanwhile, property taxes are going up.”
Not if you live in downtown Chicago. Lol.
I feel sorry for those in Texas though. I know they have limited the amount to 10% but can’t that go up every year like that for years? Yikes.
“We’re seeing buyers and sellers in a holding pattern due to student loan payments restarting”
“I was told that this would not have an effect on the housing market, Hmmmmm…”
Mortgage brokers already counted it when approving loans. Many Millennials have bought the last few years, and some GenZers too. If others didn’t get into the market “in time” then they will keep renting. Older Millennials mostly own and have been paying on their loans for a decade or more.
“Median sales price down, number of homes sold dallas off a cliff, and rising time to sell.”
MikeHG, you do know that median price is just the mix right? Last year, had some big luxury high rises doing closings like Tribune Tower. When you only have 2,000 sales, a couple dozen in a luxury tower can really skew the data.
This year, there aren’t any new luxury towers doing closings en mass.
I also think we could see sales hit a new low this fall/winter. Everyone has moved to the sidelines. It’s going to be tough times for the realtors, attorneys, appraisers, inspectors etc.
It is rare that a buyer is qualifying on the edge so whether lender counts the student loan payment or not really isn’t an issue. However, that same buyer may not buy because they feel they can’t afford the $500/mo student loan obligation and house payment regardless if bank will approve the mortgage.
“When you only have 2,000 sales, a couple dozen in a luxury tower can really skew the data.”
That’s not really how it works if you have something like a normal curve–even if it’s bimodal, if both mode curves are basically normal, adding 1% more data points on either tail isn’t going to move the median that much.
“However, that same buyer may not buy because they feel they can’t afford the $500/mo student loan obligation and house payment regardless if bank will approve the mortgage.”
You’re wasting your time, she’s unable or unwilling to grasp this simple concept
“That’s not really how it works if you have something like a normal curve–even if it’s bimodal, if both mode curves are basically normal, adding 1% more data points on either tail isn’t going to move the median that much.”
Mean/Median, its just a number
“You’re wasting your time, she’s unable or unwilling to grasp this simple concept”
You mean, like the concept that when the mortgage freeze was lifted everyone would be foreclosed on? Oh wait…
No, I have kids in their 20s, so I’m very familiar with the student loan situation. Let’s think about who is buying right now. Millennials, right? Most Millennials were already paying on their loans when the pandemic hit. It was a nice 3 year reprieve. But they are familiar with paying on it month after month, for many years (with the caveat of the youngest who are about 26 years old.) But the 26 year old isn’t buying a house right now either. So the mortgage payment starting up isn’t going to hit them.
Those it would “hit” are 30+ who paid for a number of years before the reprieve. But they just had 3 years to buy, and with some of the lowest rates ever. And we saw this as home sales soared to 15 year highs in Chicago.
So, will student loan payments starting up really impact the November, December or January market? Maybe it will be like Russ said and some may “wait” and see what it is like paying that payment again before buying this spring.
But just like the 6%+ rates that “everyone” said would crush home prices, it just took some time for buyers to get used to it.
Buyers have had student loans for forever. Decades. Houses still sold. The thing it might impact is general consumer spending. They’ll buy the house but not go on the expensive vacation for a few years.
^
So sad
“But they are familiar with paying on it month after month, for many years (with the caveat of the youngest who are about 26 years old.) But the 26 year old isn’t buying a house right now either. So the mortgage payment starting up isn’t going to hit them.”
I think most in the Psych community would tend to disagree. Most people get used to a standard of living and are loath to cut back. Its the same psychology as to why people recommend 401k, you never get used to spending money thats not on your paycheck
“Buyers have had student loans for forever. Decades. Houses still sold. The thing it might impact is general consumer spending. They’ll buy the house but not go on the expensive vacation for a few years.”
The first part is completely immaterial to the topic being discussed, not sure why you keep bring it up other than you are highly confused.
As to the latter, do you have a link supporting this? Interesting that a generation that valued experiences over possessions, would just flip a switch
“Most people get used to a standard of living and are loath to cut back.”
Why would they need to “cut back”? Are you living in the same world the rest of us are?
Wages are up dramatically the last 3 years. If a college graduate didn’t get a $500 a month pay increase the last 3 years, and possibly EVERY year, then they are idiots. My 20-something kids did. Quit rate was at all time high because you could go somewhere else and get $20k to $50k more a year.
The age group most impacted by the resumption of student loans are those who have not yet had to pay on them. For them, it will be shocking to suddenly have that extra payment. Yeah, they’re likely going to cut back on other spending while they “adjust” to having that extra $300 a month being taken out. But, as I said, the under 25 year old crowd is not the target home buyer. GenZ makes up only about 5% of all mortgages.
“Interesting that a generation that valued experiences over possessions, would just flip a switch”
Millennials make up 50%+ of all homebuyers right now. Clearly, they are interested in buying homes. No one ever said they weren’t going to buy homes but only go on vacations. The oldest Millennials are 43. Have they “valued” experiences over possessions? You must be thinking solely of the 28 year olds.
“Wages are up dramatically the last 3 years. If a college graduate didn’t get a $500 a month pay increase the last 3 years, and possibly EVERY year, then they are idiots. My 20-something kids did. Quit rate was at all time high because you could go somewhere else and get $20k to $50k more a year.”
in what world does $500/mo or even $1500/mo Pre Tax = $2500/mo post tax?
So are so drunk the arguments you make contradict your thesis
So Sad