Market Conditions: July Home Sales Fall 11.9% YOY But Market Times Fall Too
It was a little delayed, due to my vacation, but here is the update on the July market.
From the Illinois Association of Realtors:
The city of Chicago saw an 11.9 percent year-over-year home sales decrease in July 2016 with 2,714 sales, down from 3,082 in July 2015. The median price of a home in the city of Chicago in July 2016 was $290,000, up 1.8 percent compared to July 2015 when it was $285,000
Here’s the July data since 1997 (thanks, once again, to G for the historic info):
- 1997: 1,694
- 1998: 2,139
- 1999: 2,186
- 2000: 2,013
- 2001: 2,410
- 2002: 2,661
- 2003: 3,105
- 2004: 3,429
- 2005: 3,487
- 2006: 3,088
- 2007: 2,819
- 2008: 2,200
- 2009: 2,040
- 2010: 1,631
- 2011: 1,666
- 2012: 2,088
- 2013: 2,902
- 2014: 2,725
- 2015: 3,082
- 2016: 2,714
It’s the first year over year drop in monthly sales we’ve seen all year.
“The drop-off in home sales in July underscores the fact that a continued lack of inventory is plaguing those who are in the market for a new home,”said Mike Drews, GRI, president of Illinois REALTORS® and broker-associate with Charles B. Doss & Co. in Aurora. “These homebuyers face limited choices and higher prices as a result.”
The average 30-year monthly mortgage rate was 3.44%, down from 4.04% a year ago.
“If you have a home on the market, it’s selling at an incredible pace,” said Dan Wagner, president of the Chicago Association of REALTORS® and senior vice president for government relations at the Oakbrook-based Inland Real Estate Group of Companies, Inc. “In Chicago, the time to sell was just 38 days, and when you pair that number with double-digit annual decreases in inventory, it’s a market where sellers are reaping a premium.”
That time to sell number of 38 days is incredible when you realize it is city-wide. That is averaging the time to sell in, say, the South Shore, or in Pullman, with that in the Gold Coast.
The time to sell in the GreenZone must be incredibly fast for the overall number to be down to just 38 days.
Did lack of inventory slow Chicago’s housing market in July?
Or was it the ever increasing prices?
Illinois home prices increase in July; Sales lower amid tight inventory [Illinois Association of Realtors, Press Release, Aug 24, 2016]
“That is averaging the time to sell in, say, the South Shore, or in Pullman”
Maybe this is mere anecdata, but from what I see, the places that close in South Shore and Pullman and the like are the places that have short market times. Of course there are *hundreds* of properties that have multi-year market times, but they don’t affect the average at all until they close–and those aren’t selling.
Also, unless I’m mistaken, the CAR only uses MLS data, and most properties that languish much get their listing cancelled and then that restarts the market time clock.
MARKETS ON FIRE YALL. LETS RAWK!!!!!!!!!!!!!!!!!!
You know…I meant to call CAR on that. 38 days is not right. It was 66 days. There is no way it’s 38.
Most of the places I’m following that stay on the market for long enough to get a price decrease are delisted and relisted at a lower price, rather than just lowering the price.
In the interest of transparency, it would be nice to see a “no list” period where someone who pulls their property from the market would need to wait to relist. No idea if this is logistically feasible, enforceable, etc., but if the current average sales times are reset every time a property is relisted then those stats are basically worthless because it happens all the time.
Random comment: a lot of the places I’m following clearly have had work put into them since the last sale. When you back out the cost of upgrades, maintenance, and property taxes, I’m really not sure many of these owners have seen something resembling a great return in recent years, especially as compared to the stock market. Obviously there are exceptions to this.
I think you just explained the 38/66 day discrepancy. The MLS tracks two numbers – time from the current list date and time from the initial list date. The clock doesn’t reset unless you’ve been off the market for like 90 days. The average market time in Chicago was 66 days in July from initial list date and 38 days from the last list date but who the heck uses the latter? That’s what they reported though I bet.
“When you back out the cost of upgrades, maintenance, and property taxes, I’m really not sure many of these owners have seen something resembling a great return in recent years, especially as compared to the stock market.”
But you need to add in the value of rent saving for a comparable property. You know your not living somewhere for free……
Correct. Mostly I was speaking specifically to the cost of upgrades, which seem to be a really common thing lately, and not considered at all when you look at y/y price increases. 1.8% median year over year price increase probably doesn’t even account for the average amount of recent improvements (not standard maintenance) that have been put into most of these places hitting the market. Or maybe I’m wrong, just guessing here.
Agreed above. Gary: Are the 2000’s places with “42” maple cabinets and granite countertops and light oak floors” really moving quickly?
Anything will move quickly if priced to move quickly.
Hmm, this sounds like RE association BS. Volume dropping, prices dropping. I think there is way too much new construction going on in the City making to hard to sell anything that is not brand new. high property taxes, sales tax, fees everywhere and underfunded pensions creates a little headwind…
Would be interesting to see y/y land only or tear-down only prices and compare to overall numbers. Anyone have that handy or anything anecdotal?
I can tell you I’ve recently seen two deals, one in the city, one in the burbs, that were 95% financed with conventional loans. After factoring in the tax proration and other credits, the buyers are showing up to the closing with only a few thousand dollars, likely an amount smaller than their 2015 tax refund. The underwriting standards are slightly looser too. It’s not 2007 again where unemployed people with 550 credit scores were buying $400k properties and getting cash back, but more likely employed persons with a little savings and 690 credit scores are buying with little money down. When things slow down, the system isn’t going to collapse like it did in 2007, but, it’s going to definitely stall out.
“y/y land only or tear-down only prices”
Anecdotally, it’s been pretty flat the past year in NorthCenter/R’wood/WLV, after having rebounded to slightly (maybe 10-15%–essentially flat in real $$) higher than ’07 by early ’15. From the 09/10 bottom, it’s approximately doubled.
In 2011 teardowns in East Village went as low as $160k. Now they go for as much as $460K.
Just posted my August update: http://www.chicagonow.com/getting-real/2016/09/chicago-real-estate-market-update-nice-recovery-in-august/
Sales up 5.4% but IAR will report 2.6% but contract activity is weak. Inventory remains really low – on average.
Gary, do you still do stats separated out by neighborhood?
Stuff here in Logan Square where I’m at is out-of-their-minds insane.
And once all the 700 units of rental go on-line, I’m dying to see what it’s going to do to the small 2-3 flats, and SFHs (both old teardowns and the brand new $650k+ ones, that are popping up on every block in a 1 mile radius around me).
Yeah, here are my stats for Logan Square: http://lucidrealty.com/logan_square.php The graphs are dynamic but really only change significantly in the first 7 days or so of the month.
Logan Square is pretty hot as you note. You’ve got areas like Lake View, North Center, West Town, Lincoln Square, etc… where inventories are rising…dramatically. Not so in Logan Square.