Market Conditions: December Ends With Lowest Inventory in 13 Years in Chicagoland
We’ve been chattering about the low inventory in parts of Chicago for a couple of months.
But now, Dennis Rodkin at Crain’s, is reporting that Chicagoland inventory is just 1.8 months, which is the lowest in 13 years.
From Crain’s:
The market is so tight now that “the only homes that aren’t selling are overpriced or quirky places with a limited audience,” said Susan Maman, an @properties agent based in Glencoe. “Some of us have never seen a market like this.” Inventory was in the range of three to seven months from January 2013 through October 2020, when the year’s booming market cut the stock of homes on the market to 2.8 months.
But these numbers are for the entire Chicago area.
As we know, in the city, while single family home inventory remains tight, the downtown condo market is flooded with supply.
“It’s kind of a tale of two cities,” said Jenny Ames, a partner in the Engel & Volkers Chicago brokerage. “The market is definitely tighter on single-family homes outside downtown, where you see a lot of inventory and longer market times.”
What are the implications for the upcoming spring home buying season?
Will prices soar this spring?
Or will this big COVID outbreak delay sellers from listing in February and March for the second year in a row?
Home shoppers find slimmest pickings in 13 years [Crain’s Chicago Business, by Dennis Rodkin, January 7, 2021]
“The 1.8-month figure for December compares to inventory of at least three months in each of the four prior Decembers and inventory over four months in each of the three Decembers before that.“
Where’s the demand? Good properties, in good hoods, priced correctly are moving. But that’s always been the case. If the demand was there, shouldn’t flippers be grabbing anything and start remodeling?
CTU latest stunt isn’t going to help demand
Where’s the demand? Good properties, in good hoods, priced correctly are moving. But that’s always been the case.
I wouldn’t dismiss the market state like this. In the burbs its been bad forever. There was plenty of stuff in good hoods, good hands, priced correctly (cheaper than rent) that sat and sat. At the moment, that’s over. Saying there’s no flipping- so there’s no demand- misses how sick the patient is/was. Spring will be interesting.
The inventory story is way more nuanced than this. In my December update that I just posted I did my own months of supply calculation using contracts written in the denominator. Yes, condo inventory is higher than SFH inventory but it’s actually lower than last year. Lots more condos on the market than last year but lots more contract activity as well. And of course it’s neighborhood by neighborhood. http://www.chicagonow.com/getting-real/2021/01/chicago-real-estate-market-update-2020-ends-with-a-burst/
1.8 months of inventory based on what sales pace? November closings? December contracts? What?
Numbers by themselves are just numbers–they need context to be informative.
“Numbers by themselves are just numbers–they need context to be informative.”
This
Comparing this year to previous is like using 2008 as your baseline
“Saying there’s no flipping- so there’s no demand- misses how sick the patient is/was. Spring will be interesting.”
Good stuff moves no matter the market. If demand was high (Across the board – not just good properties), it would drive flippers/wannabe developers into buying poorer positioned properties. It doesnt look like were seeing that based on the DoM for many properties
I also took a cursory look at Bronzeville – The Properties >$400k have been languishing on the market. This area was deemed HAWT ™ but it appears that there’s plenty supply
“I also took a cursory look at Bronzeville ”
As noted, I’m not a believer either, but the number of pending properties over $350k is rather surprising.
“Will prices soar this spring?”
What’s the definition of soar? At the end of the day will Chicago be higher than 18th or 19th out of 20 on the Case Shiller Index – No.
Did you see the jobs report today?
The 10 year is up 20 bps in the past week. Mortgage rates ain’t going lower.
Guess this is good news for me as owner of an SFH in the suburbs. I love my house but I’m tired of suburban life. Not ready to sell yet.
“1.8 months of inventory based on what sales pace? November closings? December contracts? What?”
December contracts – unadjusted for contracts which will likely fall apart
“The 10 year is up 20 bps in the past week. Mortgage rates ain’t going lower.”
Mortgage rates hit a new low last week. But that being said, yes, the direction is clearly going to be going higher.
But how much higher will it go to hurt sales? It used to be it would have to rise a point. That would put them back at 3.65%. Will that really stop someone who has decided they are tired of renting and just want to buy in Chicago?
We’ll see.
Homebuilders still reporting red hot national home sales in December. The holidays, and this big outbreak, have NOT slowed demand.
Record stock market should help too. A lot of people feeling rich looking at their investment accounts.
“I also took a cursory look at Bronzeville ”
As noted, I’m not a believer either, but the number of pending properties over $350k is rather surprising.
Why do you have to be a “believer” anon(tfo)?
The facts are the facts, right?
There have been more permits issued for vacant lots in Bronzeville over the last 12 months than in any other neighborhood in the city. Mostly for multi-unit properties like 3 and 4 units.
“I also took a cursory look at Bronzeville – The Properties >$400k have been languishing on the market. This area was deemed HAWT ™ but it appears that there’s plenty supply”
All the new construction is selling out there. Developers have really dove in.
It’s about time.
It’s simply too close to the downtown and prices are still “affordable.”
“If the demand was there, shouldn’t flippers be grabbing anything and start remodeling?”
They are.
“Homebuilders still reporting red hot national home sales in December. The holidays, and this big outbreak, have NOT slowed demand”
I’m not sure where you are getting your information from….
https://www.cnbc.com/2021/01/06/mortgage-demand-from-homebuyers-pulled-back-sharply.html
https://www.cnbc.com/2020/12/22/existing-home-sales-fell-for-the-first-time-in-5-months-in-november.html
https://www.cnbc.com/2021/01/07/buyers-and-sellers-increasingly-pessimistic-about-the-housing-market.html
“But how much higher will it go to hurt sales? It used to be it would have to rise a point. That would put them back at 3.65%. Will that really stop someone who has decided they are tired of renting and just want to buy in Chicago?”
If affordability is already slowing down the buying process I’m sure rising rates only make things more affordable… snark.
https://www.bloomberg.com/opinion/articles/2021-01-10/rising-u-s-treasury-yields-flash-a-warning-sign?srnd=opinion&sref=FaOy0k4N
“December contracts – unadjusted for contracts which will likely fall apart”
So, comparing two different stats. What’s the history of MOI based on contracts? Is 1.8 actually the lowest in 13 years?
[rhetorical, only]
“There have been more permits issued for vacant lots in Bronzeville over the last 12 months than in any other neighborhood in the city.”
Cite, please!
“So, comparing two different stats. What’s the history of MOI based on contracts? Is 1.8 actually the lowest in 13 years?”
Not sure what you mean by two different stats but I have it graphed in my post and it’s probably the lowest in more than 13 years.
I think he wants you to do something like compare December inventory numbers with February sales — where failed contracts have presumably gone away, and use that as a “Months of Inventory” comparison. Knowing that some contracts were turkeys (just didn’t know which ones at the time), what would the “real” inventory be?
Problem is, even will-fail contracts affect the market, so I’m not sure what anon(tfo) would get from the numbers.
“Not sure what you mean by two different stats”
Rodkin just wrote an article about MOI in the loop based on November *closed sales*.
Now he’s writing one based on December *signed contracts*.
He doesn’t make clear whether his comparison to prior periods is based on closings or contracts, and those are different data sets.
I am also amused by the ‘correction’ on the article:
“This story and the headline have been corrected to reflect that the Chicago area has the lowest inventory of homes for sale in at least 13 years, not the lowest number.”
The correction needs a correction, as it is lowest MONTHS OF inventory, not merely inventory, as “inventory” = “number of homes for sale”.
and, johnc, I wouldn’t necessarily get anything from the numbers being used consistently except maybe a better feeling that the story is being told with some emphasis on accuracy.
“Cite, please!”
The City of Chicago.
“I’m not sure where you are getting your information from….”
Um…the home builders themselves.
Duh.
They’re coming in WAY hotter than they were saying it was in late October, early November. Blowing by the analyst expectations for the quarter which means that November and December were red hot.
For one home builder, analysts had sales up only 10% due to the normal seasonal slowdown that happens in December. Instead, they did 72% for the quarter.
My god.
Crushing it.
The problem will be executing and getting the homes built. Land prices continue to rise. They cannot meet the demand in many cities.
“Rodkin just wrote an article about MOI in the loop based on November *closed sales*.
Now he’s writing one based on December *signed contracts*.”
My graph is based on my own data. I don’t have those problems 🙂 But I can say from my data that the months of supply of SFHs is the lowest in at least 13 years.
“The City of Chicago.”
Doofus response.
Source: JohnnyU
“my data that the months of supply of SFHs is the lowest in at least 13 years”
Fair. Thanks, Gary.
“Um…the home builders themselves”
Look at the HMI, Sentiment has gone south in December. Got about a week till we see January
So I guess you’re levered to the hilt on NAIL since you’re so confident?
“So I guess you’re levered to the hilt on NAIL since you’re so confident?”
Obviously you have no clue JohnnyU about the housing market. I’m glad you’re here on this site so that you can learn.
The home builders are reporting earnings RIGHT NOW. They have literally said, in just the last 72 hours, that they’ve never seen a market like this in their entire lives. That there was no seasonality like they normally get when buyers stay home from Thanksgiving through January. And that there will be no spring home buying season which begins after the super bowl, because that’s already happening right now.
It really IS different this time.
The pandemic has caused changes in consumer behavior regarding housing. The record low mortgage rates have also pushed people to make different decisions.
Most of us are still on lockdown. We still want outdoor space. Baby boomers are quitting jobs and deciding to retire now and moving to the sunbelt. Heck, we’ve all seen the Illinois population decline numbers.
Yes, housing is as hot as ever and there’s simply not enough inventory to meet the demand. The home builders were not building enough to house the largest generation in US history, which is now buying.
Oh- they also said they no longer are seeing a rush out of the cities to the suburbs. Much of the buying is suburb to suburb. It’s simply people making different decisions about their housing. Single family homes remain the most heavily in demand, over condos. People want their own space.
Wake up. This is the hottest market since the housing bubble but it has strong underlying fundamentals.