Market Conditions: Is Tight Inventory Hurting Sales? April Was Flat YOY
The Illinois Association of Realtors has issued the April monthly sales report:
The city of Chicago saw year-over-year home sales increase 0.1 percent with 2,649 sales in April, compared to 2,647 a year ago. The median price of a home in the city of Chicago in April 2018 was $309,950 up 4.2 percent compared to April 2017 when it was $297,500.
Here are the sales statistics for April since 2007:
- 2007: 2419 sales
- 2008: 1886 sales
- 2009: 1407 sales
- 2010: 1984 sales
- 2011: 1466 sales
- 2012: 1816 sales
- 2013: 2392 sales
- 2014: 2256 sales
- 2015: 2435 sales
- 2016: 2706 sales
- 2017: 2647 sales
- 2018: 2649 sales
Here are the median prices:
- 2007: $289,800
- 2008: $300,000
- 2009: $218,000
- 2010: $225,000
- 2011: $169,000
- 2012: $182,000
- 2013: $223,500
- 2014: $250,000
- 2015: $271,325
- 2016: $286,000
- 2017: $297,500
- 2018: $309,950
“Overall closed sales in April closely mirror last year’s numbers, but the median sales price continues to rise,” said Rebecca Thomson, president of the Chicago Association of REALTORS® and principal of Thomson Real Estate Group. “Buyers need to act quickly with fewer homes to choose from and shorter market times.”
“April traditionally marks the beginning of the spring selling season, and this year we saw sellers reap the benefit of tight housing inventories in many areas of the state,” said Illinois REALTORS® President Matt Difanis, ABR, CIPS, GRI, broker-owner of RE/MAX Realty Associates in Champaign. “Although we saw many more properties on the market in April, the surge is nowhere close to meeting consumer demand.”
Mortgage rates remained elevated in April with the average 30-year mortgage at 4.47% versus 4.44% in March. But that is up from 4.05% in April of 2017.
Are the higher mortgage rates starting to bite?
The experts don’t think so.
“The Illinois and Chicago housing markets continue their modest upward trends,” said Geoffrey J.D. Hewings, director of the Regional Economics Applications Laboratory at the University of Illinois. “While the effect of rising mortgage interest rates has yet to be felt, consumer sentiment remains strong. For Illinois, job growth remains way behind the national rates and this sluggishness is reflected in the more muted growth of housing sales and prices.”
Statewide, the average time on the market continued to plunge, falling to 54 days versus 61 days a year ago.
Inventory also fell 10.4% to 51,527 from 57,537 a year ago.
The conditions are ripe for further home price increases.
But does tight inventory continue to undermine sales?
April brings gains in Illinois home sales and median prices [Illinois Association of Realtors, Press Release, May 24, 2018]
I’m still perplexed by the lack of new construction, especially single family homes. For three years we’ve been told there’s just not enough new inventory, if that’s the case then where are the builders? I’ve heard it’s just too expensive to build anything new anymore, shadow inventory, lending…I’m just feeling a disconnect between the NAR narrative and reality, the truth is probably somewhere in between.
I see a decent amount of properties for sale in my neighborhood, most are pretty well priced with exception of the mixed income condos they are attempting to sell at river north prices, but even some of those are selling!
Even accepting that inventory is low, people aren’t buying properties that seem high, from what I see, and prices don’t seem to be increasing much. I’ve been watching certain neighborhoods (houses in some, 3/2 condos in another), and beyond perhaps a few categories (like brand new construction), prices don’t seem to reflect any sense of shortage. I think it’s that given a choice between not paying above what they think the property is worth and not being able to buy, many people are just not buying.
Stephanie, that’s how I see it too. There is some really strange stuff going on. Some properties end up going quickly and a bit above what I think makes sense yet others languish. In East Village where I live it certainly looks to me like prices have flattened. In fact, I’ve seen some teardowns recently sell for less than they did a couple of years ago.
“For three years we’ve been told there’s just not enough new inventory, if that’s the case then where are the builders?”
In the GreenZone, the builders ARE building now. But because of the cost of land, all they’re building is luxury units.