Market Conditions: November Sales Jump 22.5% As Inventory Plunges
It’s time to check in on the monthly home sales report from the Illinois Assocation of Realtors.
We already know, thanks to Gary and some other realtors who track the monthly numbers, that sales have jumped sharply year over year (again).
The city of Chicago saw a 22.5 percent year-over-year home sales increase in November 2012 with 1,750 sales, up from 1,429 in November 2011. The condo market in the city of Chicago showed a sales increase of 36.2 percent to 1,047 units sold in November 2012. The median price of a home in the city of Chicago in November 2012 was $180,000 up 14.6 percent compared to November 2011 when it was $157,000.
Here’s the recent historic sales data (thanks to G for providing the short/REO sales data for the prior years. A historic “normal” level would be 5% to 6% of sales as short/REOs.)
- November 2007: 1859 sales and median price of $290,000
- November 2008: 1093 sales and median price of $222,500 (16% short/REO sales)
- November 2009: 1905 sales and median price of $215,000 (29% short/REO sales)
- November 2010: 1144 sales and median price of $182,500 (39% short/REO sales)
- November 2011: 1429 sales and median price of $157,000 (43% short/REO sales)
- November 2012: 1750 sales and median price of $180,000
For the first time, the statement talked about the huge plunge in inventory.
“We are encouraged by positive trends we’re seeing across the Chicago market,” said REALTOR® Zeke Morris, president of the Chicago Association of REALTORS® and Operating Principal and Managing Broker, Keller Williams Realty, CCG. “Adding to the mix, November saw a 41.2 percent drop in inventory compared to last year, which tells us the big banks are working through their bottleneck of pending financing agreements. We also saw a decrease in market days, signaling greater confidence among buyers who are picking up attractively priced homes while they still can.”
The University of Illinois housing expert also seems to be looking at events outside of the United States as a possible driver of the housing market in 2013.
“The trends have changed from down to up, but as we look ahead to 2013 there are a number of concerns about whether this will be sustained,” said Geoffrey J.D. Hewings, director of the Regional Economics Applications Laboratory at the University of Illinois. “The most obvious one is the potential for the non-resolution of the fiscal cliff, we still have uncertainty about what is happening in Europe and China. If all these have a positive resolution then we can expect 2013 to continue this modest recovery.”
Does Chicago’s housing market really revolve around what happens in China and Europe?
Also- is the inventory drop really the result of the banks working their way through foreclosures or is it simply that homeowners are so far underwater they won’t list their properties?
Sales, median prices show gains in November in Illinois [Illinois Association of Realtors, Press Release, December 20, 2012]
Just got off the phone with the IAR data guy. I noticed a change in the methodology this month that results in an UNDERSTATEMENT of the percentage change. For instance, Chicago’s sales increase was more like the 27.5% that I originally reported because that’s about what you get when you compare the just released numbers to what was reported last year. Basically that’s a preliminary to preliminary number comparison. However, they now compare preliminary numbers to complete numbers from a year ago.
And the drop in inventory is a result of sellers being more realistic about what they can get finally and just deciding to stay put – or become accidental landlords.
One other thing I just noticed…that’s the highest PMSA sales level in at least 7 years (that’s how far back my data set goes).
The inventory really is pretty abysmal.
You will start to see more inventory if prices really have “stabilized”. Also, life moves fast and life events will force more sales in the next 18-24 months than maybe in the past 2 years. I don’t see much in terms of reasonable pricing for what you get for the money in terms of space, schools, safety, etc.
“I don’t see much in terms of reasonable pricing for what you get for the money in terms of space, schools, safety, etc.”
I agree with Dave M…
I’m on the sidelines, locked and loaded with down payment and preapproval, but there is simply just nothing appealing out there at this time. Hoping sideline sellers will put thier place on the market after the new year and we see a bump in listings.
I’m surprised…I’m seeing lots of places going under contract even now at the end of December. Perhaps it is just because nothing is out there but usually it seems the buyers dry up this time of year too.
“I’m surprised…I’m seeing lots of places going under contract even now at the end of December. Perhaps it is just because nothing is out there but usually it seems the buyers dry up this time of year too.”
It’s really incredible. I have never been this busy at this time of the year. That’s why I just haven’t had much time for Cribchatter lately.
“Does Chicago’s housing market really revolve around what happens in China and Europe?”
In a word, “no”.
All I really care about is where I’m going to live.
I never think about China or Europe.
I don’t think any home owner that should have foreclosed their home hasn’t done so after 5 years.
“I don’t think any home owner that should have foreclosed their home hasn’t done so after 5 years.”
2009-2010 buyers are underwater and not 5 years out yet…
“November 2011: 1429 sales and median price of $157,000 (43% short/REO sales)”
But most CC readers are interested in the GZ, and this 43% stat above doesn’t hold true for the GZ, so what good is this data?
In a word, “no”.
All I really care about is where I’m going to live.
I never think about China or Europe.
I would argue that what happens in China and Europe are very relevant to the Chicago home market. People feel wealthier when their investments are doing well, since we live in a global economy even if you buy Coke or Pepsi, you still get exposure to Europe. Also, China specially buys a significant port of US treasury bonds. If the China quits buying our debt, interest rates go up…
“November 2011: 1429 sales and median price of $157,000 (43% short/REO sales)”
“But most CC readers are interested in the GZ, and this 43% stat above doesn’t hold true for the GZ, so what good is this data?”
How many of the overall sales are actually in the GZ either? Yet we look at the total amount of monthly sales. GZ is just a small part of a big, big city.
G has posted the data of short sales/REOs by neighborhoods before. It’s high even in the GZ. Short sales/REOs are selling because they’re actually priced right (usually.)
Here is my December snapshot: http://www.chicagonow.com/getting-real/2013/01/december-chicago-home-sales-another-double-digit-increase/
Another nice increase with sales up 17.1% but as I explain IAR is going to report only a 14.1% increase. They will be understating the sales changes with their new methodology.
Inventories remain dreadfully low – dreadful only if you are a buyer.
Thanks for the update Gary!