Market Conditions: June 2023 Sales Plunge 25.1% YOY on Low Inventory
Two years ago, June sales were at new highs. It was so hot, that June 2021 was better than even the bubble year Junes.
But last year, mortgage rates spiked over 5% in June and that pushed down sales. In 2023, mortgage rates were even higher, over 6%. And June sales fell again.
It was the slowest June since June 2020, when the pandemic spooked the real estate industry and froze many buyers and sellers.
From the Illinois Association of Realtors:
The city of Chicago saw a 25.1 percent year-over-year home sales decrease in June 2023 with 2,541 sales, down from 3,393 in June 2022.
The median price of a home in the city of Chicago in June 2023 was $355,000, down 3.3 percent compared to June 2022 when it was $367,000.
Thanks to G for the historical sales data:
- June 1997: 1,817
- June 1998: 2,214
- June 1999: 2,435
- June 2000: 2,513
- June 2001: 2,451
- June 2002: 2,590
- June 2003: 2,891
- June 2004: 3,752
- June 2005: 3,850
- June 2006: 3,557
- June 2007: 3,127
- June 2008: 2282
- June 2009: 1981
- June 2010: 2526 (tax credit sales)
- June 2011: 1841
- June 2012: 2246
- June 2013: 2729
- June 2014: 2846
- June 2015: 3202
- June 2016: 3321
- June 2017: 3380
- June 2018: 3191
- June 2019: 2850
- June 2020: 2072
- June 2021: 3908
- June 2022: 3393
- June 2023: 2541
Here is the monthly median price data:
- June 2008: $309,945
- June 2009: $242,050
- June 2010: $234,250
- June 2011: $207,000
- June 2012: $216,700
- June 2013: $254,900
- June 2014: $275,000
- June 2015: $288,250
- June 2016: $299,900
- June 2017: $306,750
- June 2018: $314,900
- June 2019: $319,000
- June 2020: $329,000
- June 2021: $350,500
- June 2022: $367,000
- June 2023: $355,000
“Compared to May, the June data shows market activity is increasing, as summertime in Chicago continues to be a popular time of year to buy and sell,” said Sarah Ware, president of the Chicago Association of REALTORS® and principal and designated managing broker for Ware Realty Group in Chicago.
“Buyers and sellers are realizing that mortgage rates likely won’t hit the all-time lows we saw a few years ago and are making moves when they’re ready.”
The 30-year fixed rate mortgage was 6.71% in June 2023 up from May 2023 which was 6.43% and definitely higher than June 2022 which was 5.52%.
“The trend of rising prices and declining sales continued during June,” said Dr. Daniel McMillen, head of the Stuart Handler Department of Real Estate (SHDRE) at the University of Illinois at Chicago College of Business Administration.
“Our forecasts indicate that prices will begin their expected seasonal decline over the next three months, while the number of sales continues to decline. Surveys suggest that consumer confidence in the economy has begun to increase again, which may moderate these trends toward declining prices and sales.”
Statewide, Illinois inventory declined 33.2% to 18,886 properties from 28,265 in June 2022. The IAR said it was the 4th lowest monthly average for inventory since 2008, which was when IAR started keeping the data.
In Chicago, inventory fell 32.2% to 5344 properties from 7883 a year ago. That continues the trend of declining inventory as the inventory was 9008 in June 2021.
- June 2021: 9008
- June 2022: 7883
- June 2023: 5344
The number of days on the market was up in Chicago by 7.7% to 28 days from 26 days last year.
On the price decline, most of it came from single family homes which fell 6.2% to $332,500. Condo prices were flat year-over-year at $375,000.
As we’ve seen the last few months, in Chicago June sales, it was condos which fell the most, at 29.4%, to 1607 while single family home sales fell 16.3% to 934.
Inventory remains tight and mortgage rates have remained elevated in July. But we are now coming up on better year-over-year comps. A year ago, the slowdown was already hitting.
Can monthly sales turn it around with inventory this low?
Illinois’ statewide home sales and housing inventory dipped in June [Illinois Association of Realtors Press Release, by Bill Kozar, July 20, 2023]
While interest rates suck Vs the recent term, I thinks student loan forebearance being ended is going to have a fairly significant effect on buyers, especially 1st timers and those that bought 2/2s with the intent of using it as a ladder.
“ “Our forecasts indicate that prices will begin their expected seasonal decline over the next three months, while the number of sales continues to decline. Surveys suggest that consumer confidence in the economy has begun to increase again, which may moderate these trends toward declining prices and sales.””
LOL, What?!?
“LOL, What?!?”
Late summer and fall is always when sales decline. Spring and early summer is peak sales in Illinois. Except, the pandemic wiped away the seasonality of home sales nationwide. That appears to be over now though and we’ve gone back to seasonality.
He’s saying that consumer confidence is moving higher again, so that may mute the normal seasonal decline. Will it? We shall see.
The thing that will really make sales pop is mortgage rates falling back below 6%. For now, it appears they will remain elevated, probably through the end of the year. The last thing the Fed wants is for the speculation and frenzy to return to housing.
Meanwhile Toll Brothers, Pulte, etc laughing to the bank selling 500-600k town homes and particleboard zero lot crapshacks on the outskirts of IL suburbs.
“While interest rates suck Vs the recent term, I thinks student loan forebearance being ended is going to have a fairly significant effect on buyers, especially 1st timers and those that bought 2/2s with the intent of using it as a ladder.”
Why will student loans have ANY impact? Mortgage lenders included the loan payment when making the loans and they certainly will include them for any first-time buyers going forward.
The thing it will have an impact on is consumer spending, not home buying. Maybe you don’t renovate that bathroom now because you are paying $400 a month again. Maybe you don’t buy a new couch. Maybe you don’t take that expensive European vacation. It will act like a tax. Just have less free cash flow.
However, wages are up 4.6% over the last year which should go towards negating some of the pain.
“Meanwhile Toll Brothers, Pulte, etc laughing to the bank selling 500-600k town homes and particleboard zero lot crapshacks on the outskirts of IL suburbs.”
Good for them. Great time to be a homebuilder. What do you think is getting built in the city of Chicago? Are they building $500k homes in all brick?
“Why will student loans have ANY impact? Mortgage lenders included the loan payment when making the loans and they certainly will include them for any first-time buyers going forward.”
Not material to the point I made
“The thing it will have an impact on is consumer spending, not home buying. Maybe you don’t renovate that bathroom now because you are paying $400 a month again. Maybe you don’t buy a new couch. Maybe you don’t take that expensive European vacation. It will act like a tax. Just have less free cash flow.”
What do the first 2 have to do with 1st time home buyers?
Why do you assume this preference? I am not as sure as you that discretionary spending will take a back seat to home buying.
“However, wages are up 4.6% over the last year which should go towards negating some of the pain.”
Good thing there was no inflation…
“What do the first 2 have to do with 1st time home buyers?”
Nothing. Just like the forbearance had nothing to do with first time buyers the last 3 years because it was included in the loan. What it DID allow, was for first time buyers to have more free cash flow so they could buy new furniture, paint the place, get that lawn mower, go on that trip to Europe etc. That’s what I said. It’s going to impact consumer spending. NOT buyers of homes.
Just fyi housing bears, student loans have been around for decades. People have been buying homes with student loans for decades too. It’s not going to matter to home sales. The mortgage rate matters more than having a student loan.
Yep, there’s been inflation JohnnyU. A lot of it. Wages have soared and will likely continue to rise due to labor shortages. Nothing the Fed can do about that part of the inflation picture. It’s going to be difficult for the Fed to get it back down to 2%.
“Nothing. Just like the forbearance had nothing to do with first time buyers the last 3 years because it was included in the loan. What it DID allow, was for first time buyers to have more free cash flow so they could buy new furniture, paint the place, get that lawn mower, go on that trip to Europe etc. That’s what I said. It’s going to impact consumer spending. NOT buyers of homes.
Just fyi housing bears, student loans have been around for decades. People have been buying homes with student loans for decades too. It’s not going to matter to home sales. The mortgage rate matters more than having a student loan.”
You should have stopped after the first word.
The rest is a soup sandwich of meaningless drivel that has nothing to do with people that havent purchased yet
Just fyi for window licking housing bulls. We havent had a student loan forbearance program in recent memory (ever?). We dont understand what the effects of these programs will be on spending habits and consumer preferences. Sure some folks will tell you they know exactly what will happen but if their past results are any indication, they’re talking out their ass.
“Yep, there’s been inflation JohnnyU. A lot of it. Wages have soared and will likely continue to rise due to labor shortages. Nothing the Fed can do about that part of the inflation picture. It’s going to be difficult for the Fed to get it back down to 2%.”
a 4.6% annual increase is soaring?
The 2 rates just recently inverted, its going to take some time to recoup the “real” losses due to the effect of high inflation
“a 4.6% annual increase is soaring?”
In one year? Yep. Because it was soaring in the year before that too. So, yeah, wages going up 4.6% over the last year has been rough for employers. Most can’t cover that without it seriously eating into margins. Many probably didn’t even get it because their employer can’t afford it. But some probably got more. It’s also why so many changed jobs. You could get the $50k pay increase if you switched. Quitting has cooled now with the tech layoffs. Tech industry was the worst offenders. They were throwing money at anyone who breathed. That has ended, unless you are in “AI.”
What the housing bears just don’t seem to get is that the job market was SO GOOD over the last 3 years, that all of those Millennials and GenZers who were in the workforce with student loans during the pandemic are actually making a lot more money now than they were when the loans were frozen. Heck, even just from normal pay raises they are making way more. 3 years is a LONG time.
Most are far better off. So it’s really not a big deal for the loans to start up again for those who are even remotely thinking about buying a home.
Those it WILL have the biggest impact on are the GenZs who graduated during the pandemic and have NEVER had to make any payment ever at all. For them, suddenly having to start paying will be a bit shocking. But most of them are likely not in the home buying category. My kids have friends for whom this is the scenario (graduated and have never had to pay until now.)
Average loan amount isn’t that high. The big $100k+ loan amounts are mostly from those who went to professional school, as it always has been.
What we DO know from the “freezing” of programs is that the housing bears get it wrong every time. The freezing of foreclosures did not result in a rush of foreclosures. Nor did the freezing of evictions result in a collapse of that market.
It’s amazing what a strong job market will do, right?
Heck, I’d have more respect for the housing bears if they actually argued that high car payments could prevent first time buyers from buying homes. That makes more sense to me as many are now paying $700 a month with those auto loan rates.
Re: student loan payments resuming and impacts on home buyers, from an underwriting and how-much-a-month standing point, yes, the student loan balances are known to the mortgage lenders, and so mortgage borrowers have been in a similar position before the pandemic pause, during it, and will be when it ends. But there are, I think, at lease a couple of other things to keep in mind for when the pause ends. First, those with large student loans who have been saving up down payments have had the ability to save more (yes, they could have also paid down their loans – all principal, with the interest paused – but for a lot of buyers the down can be the biggest obstacle). Second, for a lot of buyers, sometimes there are basic updates needed just to make their prospective home a viable option/livable, and if their student loan payments have resumed, they might not be able to swing paying both those and credit cards/lines of credit they need to use to install working (not fancy, just operating) appliances, replace original aluminum frame single pane windows, replace a furnace that doesn’t work at all, etc. And it’s going to a have a real trickle down effect. Would I have spent $20k on concrete work a year ago if my student loans were on? Maybe, maybe not. Had I not, that’s $20k less that the concrete company (a 35-year old Mexican guy and his younger brothers, with his wife running the home office) would have brought in, which could impact their ability to buy homes, etc.
Student loans should not be forgiven or canceled, and after more than three years, interest accrual and payments should resume, but the Biden admin screwed up in agreeing to waive the ability to pause again. It’s going to have an impact on home purchases, home renovations (and again, those who make a living doing that), and consumer spending (inflation be damned). Had he played hardball and insisted on reserving the right to pause principal payments – and then ordered such a pause through 2024 – he wouldn’t have lost a single vote but would have kept a lot of people highly motivated to go to the trouble of voting for him next November.
“Second, for a lot of buyers, sometimes there are basic updates needed just to make their prospective home a viable option/livable, and if their student loan payments have resumed, they might not be able to swing paying both those and credit cards/lines of credit they need to use to install working (not fancy, just operating) appliances, replace original aluminum frame single pane windows, replace a furnace that doesn’t work at all, etc.”
That’s why buyers aren’t buying those houses. Buyers want move-in ready. They want everything done. That’s also why “new” is so popular.
Do you actually know someone who will buy a house in 2023, anonny, with appliances that aren’t working or are near the end of their lifespan? In Chicago’s greenzone, the buyers have been living in nice apartments, many of which have had remodeled kitchens and baths. They have quartz counter tops already.
national media on redfin migration data
Inflow migration to cheaper housing stock in Vegas and Phoenix (I supposed despite the heat) while outflow migrations from large coastal cities AND Chicago.
https://www.cnbc.com/2023/07/30/1-in-4-us-homebuyers-want-to-move-to-a-new-city.html
Hmmm. I guess people ARE able to leave high cost cities.
From the CNBC story:
“For all cities on this list, the largest number of potential out-of-town homebuyers are from either Los Angeles, Seattle, New York or Chicago”
San Francisco: 28,100
New York City: 24,200
Los Angeles: 20,900
Washington, D.C.: 15,700
Chicago: 4,900
Boston: 4,400
Seattle: 3,900
Those are different measurements, so it’s not apples to apples, but if Seattle and Chicago have large (relative) numbers on the top 10 “move to” locations–ahead of SF and DC–that implies that both Seattle and Chicago have a high *inbound* serach nubmer, too, offsetting high outbound searches to get those not terribly large net numbers.
Also, of course, it matters what Redfin used as a metro for this–if it’s the CSA, that list of 7 outflow metros include the 5 largest, #7 and Seattle. Things ranked by nominal numbers, rather than rate, can be deceiving. #8 on the outflow list is Hartford, CSA pop of 1.48m–so that’s a ‘outflow index’ of 2.36/1,000. Chicago’s is about .5, and Seattle about .79. SF is at least (using CSA) 2.96, and NY, LA & DC all over 1.
“That’s why buyers aren’t buying those houses. Buyers want move-in ready. They want everything done. That’s also why “new” is so popular.”
And yet most cant afford “new”. Interesting paradox
“Do you actually know someone who will buy a house in 2023, anonny, with appliances that aren’t working or are near the end of their lifespan? In Chicago’s greenzone, the buyers have been living in nice apartments, many of which have had remodeled kitchens and baths. They have quartz counter tops already.”
So what you are saying is that you have a generation that is completely ok with renting and doesnt have the need to buy a home unless its completely updated. IOW – They arent willing to exchange lifestyle for “equity”. This is exactly opposite the point you previously attempted to make wrt the effects of student loans going live again.
What happend to mUH DemOGraPHiCs?
“Do you actually know someone who will buy a house in 2023, anonny, with appliances that aren’t working or are near the end of their lifespan? In Chicago’s greenzone, the buyers have been living in nice apartments, many of which have had remodeled kitchens and baths. They have quartz counter tops already.”
Well, other than a very small number of humans on the planet, buyers are constrained by pricing. If a buyer really wants to live in a particular area, and in a home that has at least the minimum number of bedrooms they’d like, plus any other hard to change / impossible to change things (e.g., outdoor space, parking, school attendance area), and the absolute max they can pay at closing is X but all the places with everything “new” are priced at Y, that buyer is out of luck…unless they find a something that’s Z – a place that checks all their boxes but has a wart or two (of the sort that buyers who can pay Y typically don’t want to deal with), and those warts can be addressed post-closing but pre-move in (and doing so would be easier in a student loan paused world). That’s pretty much been the case for us on our three purchases, which has admittedly been driven by us prioritizing location. All three of our places were at our absolute max price (and that was using a risky borrowing strategy), and each had some things that would cause better-heeled buyers to not bother considering the places.
“Inflow migration to cheaper housing stock in Vegas and Phoenix (I supposed despite the heat) while outflow migrations from large coastal cities AND Chicago.”
I wonder how many people are like me on the app? Apparently all you need to do is look at 10 or more properties in another city over the course of 3 months and you’re considered a “migrant.” What if you are someone who is 10 years away from retirement and just like to look around at homes in Napa or Honolulu? What if your best friend is thinking about moving to Seattle so you look at homes there for a couple of weeks to see what is available?
What if you just like looking at Soho lofts? Or Key West cottages?
I’m sure there are some people legitimately looking because they are thinking of making an imminent move. But similar to their data of over 20,000 people having daily searches for Lakeview properties set up- how many are really looking versus lookie-loos?
Those real estate apps can be addicting.
What a pounding bonds have taken this week. Sheesh!
https://twitter.com/biancoresearch/status/1687134537103310848