Market Conditions: February Sales Slide for the Second Year in a Row
Sales declined in February as inventory remained tight.
It was the second year in a row that February sales declined, however.
From the Illinois Association of Realtors:
The city of Chicago saw year-over-year home sales decline in February 2018 with 1,490 sales, compared to 1,529 in February 2017. The median price of a home in the city of Chicago in February 2018 was $272,000, up 10.6 percent compared to February 2017 when it was $246,000.
Here is the sales data for February going back to 1997 (courtesy of G).
- 1997: 881 sales
- 1998: 991
- 2000: 1383
- 2001: 1151
- 2002: 1677
- 2003: 1566
- 2004: 1814
- 2005: 2228
- 2006: 1855
- 2007: 1703
- 2008: 1454
- 2009: 870
- 2010: 1257
- 2011: 1092
- 2012: 1250
- 2013: 1411
- 2014: 1361
- 2015: 1497
- 2016: 1567
- 2017: 1529
- 2018: 1490
Here is the Median Price Data also going back to 1997 (thanks G!):
- 1997: $117,000
- 1998: $132,000
- 1999: $143,750
- 2000: $161,500
- 2001: $180,200
- 2002: $212,000
- 2003: $215,000
- 2004: $229,900
- 2005: $268,900
- 2006: $267,500
- 2007: $270,000
- 2008: $290,000
- 2009: $218,125 (with 31% being REO/Short Sales)
- 2010: $176,000 (with 46% being REO/Short Sales)
- 2011: $150,250 (with 50% being REO/Short Sales)
- 2012: $140,300 (with 52% being REO/Short Sales)
- 2013: $158,000
- 2014 $175,000
- 2015: $212,000
- 2016: $236,000
- 2017: $246,000
- 2018: $272,000
One thing of interest is that this was the highest February median price since 2007.
Yes, median price can be skewed based on what is selling. But the 10% year-over-year gain in prices could indicate that more properties are selling in the higher brackets.
“Buyers must be proactive in this market,” said Rebecca Thomson, president of the Chicago Association of REALTORS® and vice president of agent development at @properties. “With inventory tightening, buyers may need to account for a longer search. In that same vein, prospective sellers may delay listing their homes until after they’ve identified where they plan to go. Fewer homes on the market make this a catch-22. When the right opportunity arises, buyers will need to act quickly.”
“With the Fannie Mae Home Purchase Sentiment Index decreasing, consumers seem to be apprehensive about future increases in interest rates and some uncertainties about the impact of the tax reform legislation,” said Geoffrey J.D. Hewings, director of the Regional Economics Applications Laboratory at the University of Illinois. “In combination with shrinking inventory and concerns about affordability at the lower end of the price scale, year-over-year sales numbers are forecast to be lower than in 2017.”
February was the month when the rising mortgage rates actually showed up in the data. The average 30-year fixed rate mortgage averaged 4.33% up from 4.03% in January and up from 4.17% in February of 2017.
However, it seems unlikely that this slight uptick would keep home owners on the sidelines.
February has never been a big sales month in Chicago. The winter weather in December and January can skew the closings in the month.
But should we be concerned that February sales appeared to have peaked 3 years ago?
Illinois home prices climb higher in February; sales shift lower [Illinois Association of Realtors, Press Release, March 21, 2018]
So prices are increasing rather quickly with low inventory and steady sales. Sounds like a functioning RE market.
Yeah, it’s inventory related. Anecdotally we are seeing strong demand when something is priced right but that does NOT mean that buyers are willing to bid prices up by much – even in multiple bid situations. Yeah, there are plenty of stories of properties going above list price but that happens when they are underpriced – and unfortunately we see many examples of that.
“Anecdotally we are seeing strong demand when something is priced right but that does NOT mean that buyers are willing to bid prices up by much”
But what is priced right? Some areas have almost no comps, like near west side by Taylor Street, I was looking for comps for a condo, 3 bd new construction and only found 1 building built in the last 4 years. There were comps for old stuff or new stuff in West Loop but thats not apples to apples. I think there are a lot of areas without decent comps and low volume right now making price discovery tricky.
You are absolutely correct. I guess I was talking about those cases where you can figure it out. But there are plenty of cases where you can’t.
Small Sample size and all (N=3), but I’m starting to see the beginning of panic in some first time home buyers.
Not sure if its an expectation that rates will rise, low inventory, Buy now or be priced out of the market forever, leases coming up or what but there’s a lot of aggressiveness.
Based on the Median pricing, looks like most people that were underwater should be clear. Wonder if that will increase the listings
“Based on the Median pricing, looks like most people that were underwater should be clear.”
As Sabrina correctly pointed out in her post the median prices tell you very little about how much prices are rising and whether or not people are underwater on their mortgages. In a rapidly gentrifying area you could theoretically have 0 price appreciation and still have rising median sales prices because of all the flips and teardowns. The Case Shiller index has been telling us for some time that Chicago price appreciation is like 3% per year. I think it’s way higher than that in some hot Chicago neighborhoods like the West Loop but there are plenty of neighborhoods where that’s not the case.
@ Gary – BTW I always look forward to your blog posts, insightful stuff!
Crain’s has a great article on how sluggish economic growth, high taxes, declining population, and negative outlook on the metro area’s health has taken a big chunk out of potential demand.
http://www.chicagobusiness.com/article/20180330/ISSUE01/180329888/why-chicago-home-prices-lag-poor-job-growth-high-taxes
“So prices are increasing rather quickly”
Still below 2002 + CPI. =$296,880.
I was looking at houses on the north side. From Old Town to Ravenswood/Lincoln Square. There is almost NOTHING out there. And not for a lack of price either. Pickings are exceedingly slim.
There was literally nothing I found remotely interesting even all the way up to 1.5 million. Where the hell are all the houses?
a, plus prices are still reasonable.
Is anyone else noticing a change in the market?
There seems to be a lot more properties coming on the market, at least in condos. And many of them are units that haven’t been listed in like 15 years.
I’m also seeing a lot of renovated older condo units. Basically, professionally flipped type of renovated units.
I know those trying to buy a single family home are finding it tough though.
I’m going to be posting my monthly update on Monday. Preliminary data is showing the same story. Sales down. Condo inventory and listings about the same. SFH inventory and listings down.
I don’t really pay attention to the condo market, but it seems like very little SFH inventory still.
Here is my March update. Sales were down pretty significantly from last year but last year was pretty strong. And inventory continues to shrink – at least for SFHs. http://www.chicagonow.com/getting-real/2018/04/chicago-real-estate-market-worst-home-sales-decline-in-20-months/