Market Conditions: Chicago Sales Rise Just 1.2% in June But Median Price Kept Rising
The June sales data is out and as expected the slowdown in sales continued as the median kept rising.
From the Illinois Association of Realtors:
“The city of Chicago saw a 1.2 percent year-over-year increase in home sales in June 2014 with 2,761 sales, up from 2,729 in June 2013. The median price rose to $275,000 versus $252,500 in June 2013, an annual increase of 8.9 percent.”
Thanks to G for the historical sales data:
[unordered_list style=”bullet”]
- June 2014: 2761 sales
- June 2013: 2729
- June 2012: 2246
- June 2011: 1841
- June 2010: 2526 (tax credit sales)
- June 2009: 1981
- June 2008: 2282
- June 2007: 3,127
- June 2006: 3,557
- June 2005: 3,850
- June 2004: 3,752
- June 2003: 2,891
- June 2002: 2,590
- June 2001: 2,451
- June 2000: 2,513
- June 1999: 2,435
- June 1998: 2,214
- June 1997: 1,817
[/unordered_list]
Here is the monthly median price data:
[unordered_list style=”bullet”]
- June 2014: $275,000
- June 2013: $254,900
- June 2012: $216,700
- June 2011: $207,000
- June 2010: $234,250
- June 2009: $242,050
- June 2008: $309,945
[/unordered_list]
“Home sales traditionally pick up in the summer months, and June was no exception. Chicago buyers helped reverse a year-over-year sales trend by buying more homes than last June,” said Matt Farrell, president of the Chicago Association of REALTORS® and managing partner of Urban Real Estate. “Demand continues to outpace home supply, and buyers are finding the home they want in a shorter amount of time. This continued to push median prices higher, putting sellers in a strong position.”
“The volume of sales over the next three months (July, August and September) is forecast to match those recorded in 2013. In addition, median prices are continuing to climb while the REAL Housing Price Index suggests a slightly more optimistic growth rate when housing characteristics are taken into account,” noted Geoffrey J.D. Hewings, Director of the Regional Economics Applications Laboratory of the University of Illinois.
“Further good news may be found in the Chicago foreclosure inventory; the average inventory change rates were -24.2 percent in the past 6 months, -14.3 percent in the last 12 months and -8.2 percent in the last 24 months. Given these rates of change, the foreclosure inventory would return to the pre-bubble levels by Oct 2014, Dec 2014 and May 2015 respectively,” he said.
Last year, July, August and September sales volumes fell due to rising mortgage rates so the year over year change in sales isn’t expected to be as dramatic as the first half of this year.
Purchase mortgage applications remain at 15-year lows. And all cash buyers remain at an usually high level. Historically, nationally, cash buyers make up about 5-10% of the market. Right now, it is still around 30%.
DR Horton, one of the largest home builders, reported earnings this week and blamed its weak results on the Chicagoland area saying:
“The third quarter results included $54.7 million in pre-tax charges to cost of sales for inventory impairments, primarily related to active communities in the Midwest region in Chicago that were purchased from 2004 to 2007 and had been previously impaired. The Chicago housing market remains weak, with sales absorptions and returns in these communities performing below management’s expectations. During the quarter, the Company took actions to increase sales pace, reduce inventories and improve cash flows and returns in these communities which resulted in these impairment charges.”
Is the glass half full (as the IAR sees it) or half empty (as DR Horton see it)?
Illinois home sales see slight uptick in June; Prices continue annual upward trend [Illinois Association of Realtors, Press Release, July 22, 2014]
Slim pickins out there in all neighborhoods.
But look! I suppose you could buy this jail:
http://www.redfin.com/IL/Chicago/3611-S-Paulina-St-60609/home/14075458/mred-08681849
DR Horton’s developments are in:
Elgin (1)
Huntley (1)
Johnsburg (1)
Naperville (1)
New Lenox (2)
Oswego (1)
Pingree Grove (2)
Volo (1)
The one in Naperville is a 55+ community. Other than that, the locations are more Rockford than Chicago. I’m totally unsurprised that those developments are not doing well.
“I suppose you could buy this jail:”
Listing canceled. I’m guessing Bobbo jumped on it.
Yes- DR Horton is NOT in the city. But everyone is talking about how the entire housing market is “back” and it’s doing so well when that is a HUGE myth.
Outside of select downtown neighborhoods that are back to peak pricing, the housing market in Chicago has weakened this year and will likely weaken further as mortgage rates move higher. You can’t get blood from a stone.
It’s about affordability. Wages aren’t increasing. Housing has gone up double digits (again). No one can afford it except for the top 1% (which is why LP is the best performing neighborhood.) Even even STILL, in LP, there are sellers losing money at the lower price points.
What a mess
What I’m also seeing in the non-GZ areas of the city, are sellers listing at high prices and waiting it out for 1 to 2 months only to realize it’s not going to happen. That Portage Park bungalow with the old kitchen really isn’t going to sell for $335,000 after all. And then they’re just withdrawing it from the market.
So inventory remains low because sellers aren’t pricing properties correctly (most likely because they’re going to lose money or are underwater.)
Update on the site:
The lag is being caused by spam (of which, in case you didn’t notice, the site just had a massive spam attack as well.) I’m trying to figure out a way to fix it. Bear with me.
I’ve added an extra button that you have to hit when you post that should keep a lot of the computer generated spammers off the site. We’ll see if that helps. If that doesn’t fix it, I’m going to change spam filters. If THAT doesn’t fix it either, then I’m thinking about switching to something like Discus.
Let’s see what works.
I’ve upgraded the server, though, and the site (when spam isn’t an issue) is much faster. Hopefully soon, we’ll be seeing a quick and easy site that is easy to post on again.
Milkster, that is probably one of the most depressing properties I have seen in the U.S.
Think Milkster’s dungeon was cancelled bc they had the address wrong. Can’t quite figure out where that actually is.
“everyone is talking about how the entire housing market is “back” and it’s doing so well”
The cheerleaders are, but they only took of what? 9 months? from talking about how great everything is/was.
I think it’s a *positive* sing for the overall housing market if it’s hard to sell crap in east and west boondocks, like what Horton is trying to sell around here. Might not be a great sign for job growth, and is bad for the municipalities who were banking on continued growth, but that’s not quite the same thing,
The address of the jail was 3611 S Paulina in McKinley Park.
I swear values have doubled there in the past couple of years.
I’m seeing high prices in all locations, not just the blue chip ones.
60629 on the Southside and 60639 on the Northside/Westside are two zips where there should be deals because they’re not prime locations but there just aren’t anymore. I chalk it all up to the foreclosures drying up. You’ve still got the sellers with high list prices no matter what. But now, due to the lack of inventory, they are getting those prices. If it’s still cheaper to own than rent, it’s not like it’s a terrible deal for an owner-occupier buyer who wants to stay put for awhile. But rents are low in Chicago and from an investment standpoint, these deals do not make sense, especially with the multifamilies where the utilities aren’t separated and the landlord has to pay. You’d be paying money out of pocket every month to own and buying purely in the hopes of price-appreciation.
“The address of the jail was 3611 S Paulina in McKinley Park.”
Only if the place was built *after* June 2011, and the neighbors on both sides, too. Check out the streetview for 3611 S Paulina–doesn’t match at all, it’s a 2.5 story frame building with faux stone covering the first floor.
“No one can afford it except for the top 1% ”
OK. That’s just a little bit of an exaggeration. Obviously more than just 1% of the population is buying all these homes. And market times are pretty damn low.
“What I’m also seeing in the non-GZ areas of the city, are sellers listing at high prices and waiting it out for 1 to 2 months only to realize it’s not going to happen… And then they’re just withdrawing it from the market. ”
That much I can agree with.
I don’t get what the big bruha is here. The Gen X and millennial generation is gonna have to – in the words of Sec of State John Kerry – man up and jump in head first into the housing market. They can’t simply live in their parents basements or rent forever. They’re going to have to move out someday and in with the baby momma/life partner/roommate. They’re going to have to pay top dollar for some fixer upper. They’ll go to home depot and do the work themselves. yeah they’ll complain that grandma’s house is too expensive, but they’ll buy, with 5% down and an FHA loan. They’ll just have to suck it up and pay through the nose.
Only then, when that generational inflection point happens – and it happens soon – expect a mad rush to buy real estate among the younger generations to buy out the olds.
I don’t know if the lag is better, but there is def still lag. Can see HD’s comment on side but not when I click on it.
“I don’t know if the lag is better, but there is def still lag”
Concur.
I don’t think its spam bots, I think this site is the sux
“They can’t simply live in their parents basements or rent forever. They’re going to have to move out someday and in with the baby momma/life partner/roommate.”
Or, since parents of Millennials have given their kids everything else in the world, will they move out and give their kids the house too? Will they be given gramma’s house upon her death, keeping them from having to incur massive debt and keeping the house off the market? Will parents just move to FL/AZ/Sun City Huntley or the 2 bed in-town in River North they bought in 2003? There are plenty of scenarios that allow Millenials to avoid ever jumping directly into the housing market.
“I don’t think its spam bots”
Hard to see how spam bots would cause the lag. Perhaps some process to check for spam could be causing it, but seems like a long time. I also hardly ever notice spam (present company aside) on here, which I suppose could be the result of a tremenduosly efficient spam checking algorithm that has to check the millions of pieces of incoming spam. But I’d guess not.
“that has to check the millions of pieces of incoming spam”
Give or take 6 orders of magnitude. But this site has a lot of hallmarks for spam collection.
“Hard to see how spam bots would cause the lag.”
Akismet is known to have a lag when you’re getting hit hard by spam. So that’s what’s causing it. But how to fix it?
I’m working on it.
“I don’t think its spam bots, I think this site is the sux.
No- it’s spam. I’m going to switch out the spam filter and try another one and see if that fixes it.
“I don’t know if the lag is better, but there is def still lag. Can see HD’s comment on side but not when I click on it.”
Yeah- I thought the recent steps might fix it but it’s not. I’m still working on it with my web designer. It’s a matter of trial and error.
“They’re going to have to pay top dollar for some fixer upper. They’ll go to home depot and do the work themselves. yeah they’ll complain that grandma’s house is too expensive, but they’ll buy, with 5% down and an FHA loan. They’ll just have to suck it up and pay through the nose.”
But HD, they don’t have the money to “pay through the nose.” That’s the problem. Incomes aren’t rising and the younger generation certainly isn’t making what their elders made. Yet housing prices are back at record highs. And when interest rates rise- they’re even more screwed.
Only one solution to this problem- prices will come down.
Or- I suppose- this generation will just rent. It’s not unprecedented. Before WWII, everyone (even rich people) rented. It wasn’t until after the war that the “American Dream” was sold to the masses. Remember, nearly all of the luxury high rises built along the lake before 1940 were built as apartment buildings.
“OK. That’s just a little bit of an exaggeration. Obviously more than just 1% of the population is buying all these homes. And market times are pretty damn low.”
Gary- if you look at the data- the only price point where sales are actually higher than a year ago is the $1 million+. In all other price points, sales are down, especially in anything “affordable” for the middle class (i.e. under $200,000.)
can see sabrina’s 5 posts on main page, but when I click here, nowhere to be found, until well after i post this comment at least.
“can see sabrina’s 5 posts on main page, but when I click here, nowhere to be found, until well after i post this comment at least.”
Yes Sonies. We know that is the problem. Thanks for letting me know it’s still happening though. I thought some of the steps I took this weekend would solve it, but it hasn’t. I’m going to change spam filters and see if that fixes it.
“In all other price points, sales are down, especially in anything “affordable” for the middle class (i.e. under $200,000.)”
Sales in Chicago are down a little bit but regular people are still buying.
“Everyone keeps arguing that if only inventory was higher, we’d see more sales. If that was true, there would be few price reductions because demand would be SO hot that people would buy anything. But they’re not.”
No, not true. Even in a strong market people can overprice.
“Even in a strong market people can overprice.”
Quite likely it is *more* common in a strong market–they see the house down the block that “is not as nice” (usually for taste-specific reasons) sold for $X six months ago, they here how strong the market is, and they price at $1.2X.
I find it telling that DR Horton relates their problems primarily to Chicago communities that had been purchased in “2004 to 2007 and had been previously impaired”. I am quite familiar with that inventory in that I have a home I purchased back in 2004 near at least two of the DR Horton communities they are referring to. (I am renting it out for now). The pricing drop, of course, was devastating, and Horton’s revisions eventually reflected that. While sales cannot be described as brisk by any means, the sales prices in the area have rebounded considerably. If DR Horton experienced recent problems in sales in the Chicago area it would have to be due to prematurely raising prices preceding the rise in fair market values. Had they taken their hit back in 2008 and only raised prices in relation to the actual market, they wouldn’t be taking a second hit in 2014.
Just published my July market update: http://www.chicagonow.com/getting-real/2014/08/july-chicago-real-estate-market-update-home-sales-rapidly-declining/
Sales are down again in August, not quite as much as the IAR will report but the big news is that contract activity is down by quite a bit. Yet, low inventories and fast market times indicate the market is really strong and almost all the decline in sales is attributable to fewer distressed properties being sold. Not at all a big red flag.
So I just wanted to ask…what’s the deal with the swans?
It seems to be a Chicago thing.
I see them everywhere.
I’ve never seen anything like it in NY:
http://www.redfin.com/IL/Chicago/4914-W-Barry-Ave-60641/home/13442159?utm_medium=email&utm_content=home_image&utm_campaign=instant24_listings_update&utm_source=myredfin
“So I just wanted to ask…what’s the deal with the swans?”
Have you driven around wisconsin? Nearly every other home has fake deer in the front yard!
http://www.youtube.com/watch?v=G1PllrfeiVw
Prob has something to do with this:
http://en.wikipedia.org/wiki/%C5%81ab%C4%99d%C5%BA_coat_of_arms
But I’ll wait for Icky to weigh in.
I think it has something to do with blackface-lantern holding-lawn jockeys no longer being pc
“Sales are down again in August, not quite as much as the IAR will report but the big news is that contract activity is down by quite a bit. Yet, low inventories and fast market times indicate the market is really strong and almost all the decline in sales is attributable to fewer distressed properties being sold. Not at all a big red flag.”
Wait a minute. Falling sales are good now?
Ha! ha!
The housing market is dead as a doornail. Multiple properties in my area are sitting and sitting and sitting. Lots of people who can’t sell for their crazy high prices are also taking their properties off the market (sometimes within only a week) because they’re not getting showings.
But I agree that inventory is still low. Too many people are still underwater. I just saw a short sale property in Lakeview on a condo that was bought in 2005. Huh????
Sorry for the site shutdown. As I’ve commented before, it was being attacked by spam. It was so bad I had to shut it down.
I’ve added some new features including some new security features when you post a comment. I’m hoping this helps fix it (and the lag). But we may have to go to a disqus comment system if this doesn’t work. I’ll know more by tomorrow.
Thank you for your patience.
Well it says you posted at 10:14a, and at 10:16a I am able to see your comment, so things are looking better already!
“Well it says you posted at 10:14a, and at 10:16a I am able to see your comment, so things are looking better already!”
Thanks for the update Fred. But I’m not ready to declare victory just yet. If anyone else is checking in on the site out there- please let me know what is going on with the lag (and I know I can always count on you to do so. ha!)
If the lag is fixed, I’ll be posting on some properties shortly. It’s time to get back to talking about housing again. Things are happening out there.
I was worried about you Sabrina! Usually when websites go down suddenly and stay down, they never come back. Glad to see you’re back.
9:45am: “The housing market is dead as a doornail.”
10:20am: “Things are happening out there.”
That changed quickly!
“Wait a minute. Falling sales are good now? ”
I didn’t say that. I said that sales are down almost entirely because of a decline in distressed sales.
BTW, could barely figure out what to put in the box above the comment box because the formatting on the math question is screwed up.
“SABRINA: “Well it says you posted at 10:14a, and at 10:16a I am able to see you…”
I still can’t see this comment, but I have come to realize a site w LAG is better than no site at all.
I was worried the site was done and I’d have no way to get in touch with westloop and his native american sidekick, clio, bob, & dollface, miu or G.
Still have some lag, as there is a CH comment on the side, but not visible to me as I post this.
Anyway to remain ‘logged in’?
“Still have some lag, as there is a CH comment on the side, but not vis…”
Same here, can’t see CH comment (and who he would miss the most) or @fo comment. On positive side, I can put my son on the site to work on his arithmetic.
“westloop and his native american sidekick”
That was former sidekick, no? Still want that looksee at one of his Chicago renos, that he promised and welched on.
“clio”
c’mon, we all know where to find clio.
“bob, & dollface, miu or G”
All the same person, right?
NOTE–math quiz suddenly more readable.
“NOTE–math quiz suddenly more readable.”
Take it back. Not consistently readable in Chrome.
“Take it back. Not consistently readable in Chrome.”
I feel compelled to keep posting just to see if I can crack the code (formatting).
“I feel compelled to keep posting just to see if I can crack the code (formatting).”
Harhar, no consistency. It’s part of the code.
Can’t even see my *own* post.
“c’mon, we all know where to find clio.”
dont know how I’d track him down without the site’s archives. have forgotten the address of his farm. though i recall he was a big fan a new bar on Delaware.
CH is right though. We need a meetup plan for the end times.
I was going to check Icarus’s blog as a last resort to find peeps
“dont know how I’d track him down without the site’s archives”
Icky’s Wiki is separate.
Anyway, you’d forgotten about Rosso Vik? And Oak Brook Uber Alles?
“We need a meetup plan for the end times.”
Indeed. I say we got to HD’s house in Long Grove.
I lived right down the street from clambo in streeterville and never saw his red whip. maybe bc it’s so fast.
please share the link to the wiki, Icky?
“We need a meetup plan for the end times.”
Very good point. There is no doubt that every single follower of this blog will be left behind – except maybe me.
” his red whip”
Not red. Rosso Vik.
I was checking twitter feeds for the word cribchatter.
“bob, & dollface, miu or G”
If these people were all the same person- they had a LOT of IP addresses.
“I was checking twitter feeds for the word cribchatter.”
It’s okay HD, we’ll come to you.
The old layout is awesome!
“If these people were all the same person- they had a LOT of IP addresses.”
bobbo was a ‘consultant’, so at many different offices, who lived in a studio in 4+1. You think he had home intertubez? totally piggybacking off whoever had open wifi.