Market Conditions: Inventory Dips to New Lows in October 2023 as Sales Fall 7.5%
Anyone who is out looking to buy a home in the Chicagoland area knows just how low the inventory is.
Meanwhile, prices continue to hold up even as sales declined again year-over-year in October. It was the lowest October for sales since 2011, which was during the housing bust.
From the Illinois Association of Realtors:
The city of Chicago saw a 7.5 percent year-over-year home sales decrease in October 2023 with 1,610 sales, down from 1,740 in October 2022.
The median price of a home in the city of Chicago in October 2023 was $320,000, the same as in October 2022 when it was $320,000.
Thanks to G for all the data on October sales going back to 1997:
October Chicago sfh/condo/th sales and median
- 1997 1,731 $129,900
- 1998 1,855 $138,000
- 1999 1,978 $159,500
- 2000 2,106 $174,710
- 2001 2,177 $200,000
- 2002 2,503 $215,000
- 2003 2,996 $236,000
- 2004 2,651 $241,000
- 2005 2,846 $268,500
- 2006 2,630 $278,000
- 2007 2,007 $285,000
- 2008 1,564 $261,000
- 2009 2,068 $215,000
- 2010 1,225 $183,000
- 2011 1,324 $162,000 (44% short/REO sales)
- 2012 2,009 $175,000
- 2013: 2,231 $218,500
- 2014: 2,128 $236,000
- 2015: 2,173 $240,000
- 2016: 2,046 $260,100
- 2017: 2,109 $260,000
- 2018: 2,108 $271,500
- 2019: 2,084 $275,000
- 2020: 2,568 $315,000
- 2021: 2,469 $313,000
- 2022: 1,740 $320,000
- 2023: 1,610 $320,000
“In October, median sales price remained steady and market time nominally decreased,” said Drussy Hernandez, president of the Chicago Association of REALTORS® and vice president of brokerage services for Coldwell Banker Realty in Chicago. “This shows that, at the core of our market, there is a steady stream of people who need to buy and sellers who are motivated to sell. Inventory shortages continue to be one of the biggest challenges for buyers in the market.”
Statewide inventory plunged 25.5% to 21,287 from 28,564. By comparison, statewide inventory was 31,445 in October 2021.
In Chicago, inventory looked similarly challenged. Inventory fell 24% year-over-year to 5785 from 7609. It was at 8898 in October 2021.
Days on the market, in Chicago, fell 2 days to 32 from 34 last year and 35 days in 2021.
In Chicago sales, single family homes were down 4.4% to 695 while condos fell 9.7% to 915.
The average 30 year fixed rate mortgage was 7.62% up from 7.2% in September. Last year, in October 2022, the average was 6.9% and we all thought that was high.
“The number of sales continues to decline throughout Illinois while prices continue to increase,” said Dr. Daniel McMillen, professor of real estate and associate dean for faculty affairs at the University of Illinois Chicago College of Business Administration. “Our forecasts indicate that these trends will continue over the next three months throughout the state.”
Are high mortgage rates the problem in the Chicago housing market or is it the lack of inventory?
October home sales and inventory continue to fall in Illinois [Illinois Association of Realtors, Press Release, by Bill Kozar, November 21, 2023]
Imagine buying a house in the fall of 2020 and it gaining all of $5k when you could have bought a house in Denver, Phoenix, Nashville, Tampa, Miami, Austin, etc. and gained $150k in value. Not to mention that property taxes have gone up here faster than those areas. Chicago is not the place to buy a home if you ever plan on getting equity out of it. Buy anywhere else but Chicago. What is going to happen in future years when inventory shoots up?
“property taxes have gone up here faster than those areas”
Cite, please. Especially w/r/t Austin–before the change in the Texas constitution.
“Chicago is not the place to buy a home if you ever plan on getting equity out of it.”
So, Chicago real estate is going to zero? That’s your prediction? ‘Ever’ is a long time!
I wonder if Boomers sit around coming up with new and interesting ways to fuck everyone over.
Has anyone done an analysis on the effects of higher borrowing rates and lower Commercial property tax receipts on Chicago’s financial health?
Hows the casino revenue?
“I wonder if Boomers sit around coming up with new and interesting ways to fuck everyone over.”
Huh? What does any of this have to do with Boomers?
“Hows the casino revenue?”
Casino is temporary. It’s been open just 2 full months. Has to go through a season before we’ll know anything. It’s started off well.
It’s a small building though. Real impact will be once they build the huge casino on the river with the hotel and concert venue attached.
“Imagine buying a house in the fall of 2020 and it gaining all of $5k when you could have bought a house in Denver, Phoenix, Nashville, Tampa, Miami, Austin, etc. and gained $150k in value.”
Don’t know where this happened except right downtown, perhaps. But if you bought in fall of 2020, everyone was TERRIFIED of downtown and you would have gotten a pretty good deal. Lots of investors literally listed to dump their places. Firesales everywhere.
I don’t know anyone who bought in fall 2020 that only made $5k.
“Chicago is not the place to buy a home if you ever plan on getting equity out of it. Buy anywhere else but Chicago.”
Yes. No one has ever made any money buying a home in Chicago. Ever.
Come on. At least say something that makes sense.
By the way, several hundred thousand people in Cook County, including many in Chicago, own their homes outright. Without a mortgage. Do they have “equity”??? Or is it worth zero Mike HG.
“Until more inventory comes on the market, if it ever does, this market is going to stay extremely tight and the multiple offers will continue on attractive properties that are priced correctly.”
The job market is still strong. There are plenty of people looking to buy even at 8% rates. And what happens if they go back into the 6s?
“Casino is temporary. It’s been open just 2 full months. Has to go through a season before we’ll know anything. It’s started off well.
It’s a small building though. Real impact will be once they build the huge casino on the river with the hotel and concert venue attached.”
Oooof must be really bad if you have this many excuses ready
““Until more inventory comes on the market, if it ever does, this market is going to stay extremely tight and the multiple offers will continue on attractive properties that are priced correctly.”
The job market is still strong. There are plenty of people looking to buy even at 8% rates. And what happens if they go back into the 6s?”
Are you making up quotes and replying to them?
“Oooof must be really bad if you have this many excuses ready”
Data is public. Can go look yourself from your far away city.
Sabrina, your equity grows faster anywhere other than Chicago. Stop being a shill for a moment and just acknowledge facts, okay? Gary, please help her; how much did you miss out on by waiting to move to North Carolina than if you had moved there three years earlier?
It is true that Chicago real estate has lagged the rest of the country by a mile until the last year or so. We looked at North Carolina like 3 or 4 years before moving there and prices moved up at least 50% in that time frame. Chicago clearly did not. In fact, for years Chicago ranked like 95th out of 100 metro areas for home price appreciation according to FHFA data. I did this post in 2018 and it shows exactly how badly Chicago sucked. It only got worse after this post – until recently. https://lucidrealty.com/the-sad-story-of-chicago-area-home-prices-in-one-graph/
We made decent money on our Chicago home but we bought at the right time in the right neighborhood, sold at the right time, and made some smart improvements.
“Sabrina, your equity grows faster anywhere other than Chicago”
but none of this really matters to those living here. I really don’t care how Chicago home appreciation has done compared to other cities. It’s not like I’m going to sell my house and chase the next hot market. It’s not like the stock market where you can all of a sudden decide to invest in the QQQ’s because it’s outperforming the Dow.
“but none of this really matters to those living here.”
It mattered to me because I was leaving and it’s important to anyone else leaving.
Yup. It’s not like you could rent here and invest in the market with your down payment and such because real estate in Chicago is such a turd. Sabrina says that’s not an option.
“Sabrina, your equity grows faster anywhere other than Chicago.”
You’re not entirely wrong. After a decades owning a house in Chgo, and now also owning a house and living half the year in Southern CA (I’ll never leave Chgo 100%) the contrasts between the two can be pretty startling. Two things come to mind:
Property taxes: there’s little way to build lasting home equity with the staggering property taxes we pay in IL. What yearly home appreciation we may gain can be eaten up by ever increasing taxes. Being reassessed every 3 years is a lesson in terror – is your value going up 15%, 30%, more? How do I budget? Just because the assessed value increases, that doesn’t mean you’ll actually sell for more. Who wants to take on such a huge tax liability when it will only increase over time? Don’t forget about all the $$ transfer taxes; it’s minimal in CA and no lawyers are needed.
CA has a 1.25% property tax rate of the sale price, and you aren’t reassessed unless you add square footage to your home. Your taxes (the actual amount you pay each year) can’t increase more than 2% a year. Property is expensive in CA, but taxes are reasonable compared to IL/Chicago. High property taxes hurt property values, no getting around it – tax rate around 2/2.25% here with zero caps, do the math.
Culture: CA tends to be optimistic (even if it’s blindly so), IL tends to be pessimistic (even if things are actually good). Many of my CA friends are in deep house debt, at a level I don’t see in Chgo. The idea is that CA property values only go up, and people at all income levels buy into it – it feeds on itself, whether it’s true or not in the long term.
If it crashes, then like an earthquake they’ll deal with it if/when it happens. Few have earthquake insurance btw. Chgo? Uncertainty never diminishes, think of all those poor pioneering souls who bought near and before the 606 Trail was constructed. Think they can afford the taxes now? It has a citywide effect on how we buy, and it too feeds on itself.
Green grass: CA state income tax is tiered and insane (look it up). IL is at 4.95% regardless of income level. You are taxed at the same tiered level in CA even if you’re living only on retirement income. There’s a reason I’m still an IL resident – no retirement taxes.
Tale of two states. At the end of the day does it matter? If you like where you’re living and can reasonably afford it, then it is what it is. But trust me, as fond as I am of southern CA and as fair as I believe their property tax system is compared to IL, it’s mostly all flash no cash. So there’s that.
“Property taxes: there’s little way to build lasting home equity with the staggering property taxes we pay in IL.”
Someone better tell Texans or those in New Jersey.
“You are taxed at the same tiered level in CA even if you’re living only on retirement income. There’s a reason I’m still an IL resident – no retirement taxes.”
California is not favorable to retirees. Illinois isn’t too bad, actually.
“We made decent money on our Chicago home but we bought at the right time in the right neighborhood, sold at the right time, and made some smart improvements.”
Congrats. But Chicago’s housing market is now one of the healthiest in the nation because of our affordability. I’m a little concerned that the tight inventory is going to propel prices too high. That’s not a good thing. But we’ve run behind so many other places for so long, right now, no one is complaining.
By the way, our inventory is still declining. We’re one of the few regions nationwide still seeing a tightening in inventory. In some cities like Austin and New Orleans, inventory is above 2019 levels. Prices are going to come down in those cities, but they need to.
“It mattered to me because I was leaving and it’s important to anyone else leaving.”
Not many leaving right now. Record low inventory. Chicagoland inventory down 58% compared to 4 years ago. Wow. Among the largest drops in the nation.
“It’s not like you could rent here and invest in the market with your down payment and such because real estate in Chicago is such a turd.”
No one is buying in Chicago Johnc. Yet, Cook County has the highest number of homeowners who own their homes outright among the big population counties in the US. Plenty of housing wealth in Chicago.
“CA has a 1.25% property tax rate of the sale price, and you aren’t reassessed unless you add square footage to your home.”
Prop 13 has created its own mess in California, don’t you agree Jay? And the schools are underfunded which results in some school districts raising extra money on the side to afford a school librarian or sports.
“Congrats. But Chicago’s housing market is now one of the healthiest in the nation because of our affordability”
Made up stats are made up
“one of the healthiest in the nation”
I thought we determined recently that it’s pretty darn unhealthy??
“Prop 13 has created its own mess in California, don’t you agree”
Honestly, nobody really knows. On the one hand, teachers and especially the eduction industrial complex (the numbers of administrators vs actual teachers are staggering), constantly say “we need more money, think of the children”, so they cut a few civilizing programs to prove their point. On the other hand, I never hear them say that lack of funds are due to Prop 13 – they own houses too, and it would negatively impact them if prop 13 was removed.
Prop 13 does exactly what it was intended to do – it keeps people from being taxed out of their homes; perhaps an unintended consequence of Prop 13 was indeed higher home values making it difficult for first time homeowners to buy, but again who knows. MI has caps too (5% vs CA’s 2%), and I never heard a call for its repeal in all the years I had a cottage there, because housing is just way too expensive – in MI(?).
Calls for prop 13’s repeal almost always comes from some type of new-to-the-scene “advocacy” group(ie: another industrial complex) – for renters, homeless, disabled, disadvantaged, etc. Their thought is, there’s no home inventory because selfish homeowners won’t sell and abandon their sweetheart property taxes. Tax them higher, they sell, inventory increases, and now we have the money to pay for in-school ‘healing thru pottery’ classes. It’s not worth explaining what will go wrong if they got their way and repealed a law that has been in effect for nearly 50 years. The one thing to know about southern CA, is that underneath all of the inclusive window dressing is a self serving narrative – much greater than I’ve ever experienced in IL/Chgo.
“I thought we determined recently that it’s pretty darn unhealthy??”
It was till it wasnt, besides that was so last week
“so they cut a few civilizing programs to prove their point. On the other hand, I never hear them say that lack of funds are due to Prop 13 – they own houses too, and it would negatively impact them if prop 13 was removed.”
Every school district in California gets the same amount of money. Doesn’t matter if it’s Beverly Hills or Compton. Was supposed to raise up Compton to the level of BH but we now know after all these decades that it resulted in the rich people raising money to “get” thing that the other school districts didn’t have. Live in Silicon Valley and want that special engineering class, parents “raise” the money to get it for their students.
It’s done a lot of distortion in things. The schools is just one example.
It has also encouraged people to buy and NEVER sell. Similar to what we are seeing nationwide now with rates at 8% when people own at 2.75%. It has created massive distortions in the California housing market.
Should get rid of it but they never will so their market will continue to be unstable.
“Made up stats are made up”
I guess you can’t read the 20 city Case Shiller data JohnnyU.
“It has also encouraged people to buy and NEVER sell.”
Well… maybe. If you’re 55 or older, have owned your home for a minimum of two years, are a CA resident (I wouldn’t qualify on that one), you can swap your current property tax bill for another property as long as the new property is of equal or lesser value. It’s a one time offer, and you have about 10 other counties that participate in the program to choose from. So you own a place in LA that’s currently worth $1.5M and your annual taxes are say $7K due to the caps. You can buy a place in say Palm Springs for $1.5M and your annual property taxes will still be, wait for it, $7K. They would be $19K otherwise. Californians move all the time regardless, the built-up equality they may have is just too irresistible not to spend.
What’s probably the most effective way to free up inventory and keep prices reasonable, is not allowing foreigners to buy American real estate, but that train has already left the station. Chinese ownership in OC is off the charts – all cash. Middle eastern ownership in LA county is the same. A stable county to park their cash. I’m guessing Chicago doesn’t have that problem, yet.
“Californians move all the time regardless, the built-up equality they may have is just too irresistible not to spend.”
No they don’t. The data shows that Prop 13 cuts down on people from moving. The 30-year old homebuyer doesn’t “move up” because they cannot.
“Being reassessed every 3 years is a lesson in terror – is your value going up 15%, 30%, more?”
Temper that fear just a bit. Remember that if all Chicago homes went up by 50% in value by the next re-assessment then nobody’s taxes would go up at all. Where you get burned is if the neighborhood takes off relative to the rest of Chicago. But I don’t have a lot of sympathy for someone whose property taxes went up 25% because their home value went up 25% more than the rest of the city. Don’t like it? Move. Yeah, we’ve had that discussion.
Speaking of moving…we’ve been spending a lot of time in Berkeley lately. We are always blown away by how expensive it is to live there. Not just the housing but groceries and the restaurants also. Oh and their electric rates are ridiculous, which doesn’t bode well for EVs – except gas is stupid high there too. Minimum wage going up to $20/ hour for fast food workers. Anyway, my son-in-law finally convinced my daughter they have to get out of there. Going to move to the Hudson valley. Probably can get a bigger house for half the price.
I’ve spent a fair amount of time in CA (numerous 2-5 night visits to LA/SD/SF/Tahoe areas and a couple of month-long stays in a van), but have never “lived” there. Was watching Glee with the kids the other night (ugh, and we’re now watching the series for a second time – I might prefer a punch in the face over watching another episode), and one of the characters was talking about moving to CA after high school (that was my original plan in like 87), and I literally had an epiphany that I still need to live there. Might only be for a year or two, who knows, but I will.
“Every school district in California gets the same amount of money.”
Hmm.
Palo Alto:
https://nces.ed.gov/ccd/districtsearch/district_detail.asp?ID2=0629610 (click fiscal in the lower section if amounts not showing)
compared to…
INglewood:
https://nces.ed.gov/ccd/districtsearch/district_detail.asp?Search=2&ID2=0618390&DistrictID=0618390&details=4
Yep, completely the same.
“Remember that if all Chicago homes went up by 50% in value by the next re-assessment then nobody’s taxes would go up at all.”
Almost no one remembers that, Gary.
Including people who have never paid a property tax bill outside of Cook County.
$20k Vs $27k, whats the difference, its only a number?
Sabrina, does it ever get tiring being wrong?
“Yep, completely the same.”
There’s a formula based on population and other things. But it’s the same formula used statewide. That’s the whole point anon(tfo). There is no New Trier versus John Marshall High School in Chicago in California where one public school spends $40,000 per pupil and the other spends $10k. (These are made up numbers, I don’t know what it is anymore. I stopped looking at data when my kids became adults.)
But that is why the rich districts do the fundraisers and just raise the money separately to have all the nice things (and advantages) that the other districts can’t have.
It’s a messed up state in many ways BUT it also provides a pretty solid public education, especially through the university system.
“and I literally had an epiphany that I still need to live there. Might only be for a year or two, who knows, but I will.”
As long as you don’t buy anything, rents are fairly affordable in some smaller cities. Do it. It’s a great state to live in. So many options if it’s just short term.
“But I don’t have a lot of sympathy for someone whose property taxes went up 25% because their home value went up 25% more than the rest of the city. Don’t like it? Move. Yeah, we’ve had that discussion.”
Lol.
Downtown taxes actually went DOWN in the last assessment because property values there are still lagging.
“Speaking of moving…we’ve been spending a lot of time in Berkeley lately. We are always blown away by how expensive it is to live there. Not just the housing but groceries and the restaurants also. Oh and their electric rates are ridiculous, which doesn’t bode well for EVs – except gas is stupid high there too. Minimum wage going up to $20/ hour for fast food workers. Anyway, my son-in-law finally convinced my daughter they have to get out of there. Going to move to the Hudson valley. Probably can get a bigger house for half the price.”
But your daughter and son-in-law are the top percent Gary. Don’t they own a home that is worth several million dollars?
If even they think it’s expensive, what does the schoolteacher think?
Berkeley has been expensive for the last 20 years but has gotten much worse in recent years. Same with Rockridge in Oakland. When you live there, you just get used to it. It’s only when you begin to look around at other big metro areas that you realize simply how insane it is. But most people don’t look around, or have no means to actually leave that area. It costs money to move.
Why the Hudson Valley? Seems like an odd choice to leave such a dense large metro to go to the countryside. Just wondering if they know someone there or have lived there in the past. I know it was a popular choice during COVID.
Also, Chicago minimum wage is now $15.80. Doesn’t seem that insane that California would mandate $20 for service workers given the standard of living. No way they can afford housing otherwise.
On Hudson Valley prices:
“Between 2020 and 2022, home sale prices in the county increased 56%.”
I wonder what is happening today with home prices? In March 2023, this article indicates that locals were priced out, even of apartments, and that too many homes were bought as second homes/vacation homes and were being used as STR. As a result, no kids in the schools so some schools were shutting.
I’ve wondered if those that fled the cities during covid have returned now? How many got bored living out in the country and fixing the leaky roof? Not just those that fled to Hudson Valley but also those from Chicago who went to Harbor Country.
https://www.thecity.nyc/2023/03/22/nyc-second-homes-hudson-valley-ulster-decline/
“I’ve wondered if those that fled the cities during covid have returned now?”
I recall reading an article or two more than a year ago about NYC people eagerly relocating back to the city from Montana or areas like Hudson Valley. But in addition to the (probably small number of) NYC (and other city folks) people who made their rural move permanent, for those who can afford it, I bet a lot have kept the country house after returning to the city for their primary residence. That’s certainly been the case in many of CO’s mountain towns (some of which have directs from places like Chicago), which really exacerbated the housing shortage/affordability challenges for local workers (which was already bad). Anecdotally, while we’re not in a mountain town, during the early stages of the pandemic, a couple bought the house a few doors from ours (they moved from Westchester; I doubt they viewed it in person before buying). It was already one of the larger houses on our street, and they did an expansion (adding a new primary above the garage) and a full gut reno in and out, and it’s just the two of them living there (kids in or just out of college). That obviously doesn’t have the same impact as someone buying a house in Breck or whatever and only sleeping in it maybe 40 nights a year and/or doing nightly rentals of it, but it does contribute to the the supply/cost challenges facing people with young kids trying to buy into a hood known for its k-12 options. Oh well, maybe I’m just projecting – they should swap houses with us and downsize by a couple thousand sf!
“John Marshall High School in Chicago”
Marshall, with its 174 students, almost certainly has an exorbitant per pupil spend, much above average for CPS. Whose operating budget (no pensions) is $26k per student–basicaly the same as Palo Alto.
New Trier (not an apples to apples comparison, bc HS spend is higher everywhere, and NT is HS only, while CPS is a Unit district) is right around $30k this year.
Which is more even than my example from CA.
“Marshall, with its 174 students, almost certainly has an exorbitant per pupil spend.”
Don’t know, like I said. But the difference between the suburban schools with their indoor pools and big football stadiums and what happens in Chicago and other poorer districts, is huge. That’s my point. California specifically wrote its school funding to try and even the playing field so that you aren’t punished if you live in a lower priced area.
The article talks about what happens when all of the homes are used as second homes/vacation homes. They leave back “home” in the city and now there are no kids to attend the schools, go to community events, or even do things like the local fundraisers. It’s really hard on small towns to be just a bunch of vacation rentals.
I really recommend viewing that new Jennifer Lawrence movie, No Hard Feelings, which is a commentary on this entire topic.
“Why the Hudson Valley?”
Lower Hudson Valley – i.e. Westchester. They have many friends in NYC and some that live in the Westchester area. My daughter might consider publishing at some point so being close to NYC is a plus. Son-in-law is in tech and NYC has lots of job opportunities, though he works from home in his current role. And the schools are good, which is important since we need to get my grandkid on track for a Nobel prize.
“Marshall, with its 174 students, almost certainly has an exorbitant per pupil spend, much above average for CPS. Whose operating budget (no pensions) is $26k per student–basicaly the same as Palo Alto.”
As much as I can remember…Chicago gives schools a certain dollar amount for each student. It varies by grade. Then they throw in extra money for any special needs that a school might have such as students that don’t speak English. Then they give them extra money for the support staff – more or less fixed costs. So if you take the total budget and divide it by the number of students you’ll see differences across schools but it’s kinda apples and oranges.
Ah Westchester. That’s a different matter. People have been moving to that suburb for forever due to the larger lots and the schools. It has some lovely homes.
“Chicago gives schools a certain dollar amount for each student”
They’ve been shifting the balance away from that, in part to protect low enrollment schools (like Marshall) from a death spiral.
A district like CPS cannot afford to support comprehensive HS’s with under 200 kids. I don’t think they should support HS’s with under ~1,000 kids, or elementaries under ~400. Makes it more realistic (cost per student-wise) to provide the “full” non-classroom staff, too.
The district-run (ie, not contract or charter) schools have 235,000 kids in 454 schools.
81 are HS’s, with almost 70,000 kids. 30 schools with over 1,000 kids are 73% of the total. 36 HS’s have enrollment under 500, and are about 12.5% of the total–but they’re all paying principals and other staff where you can’t really reduce below 1 FTE. It’s bananas.