Market Conditions: October Sales Soft Again as YOY Sales Decline 2.8%
The Illinois Association of Realtors is out with the October sales.
As predicted, the Chicago market remains soft.
The city of Chicago saw year-over-year home sales decrease 2.8 percent with 2,048 sales in October, compared to 2,108 a year ago. The median price of a home in the city of Chicago in October was $275,356 up 1.4 percent compared to October 2018 when it was $271,500.
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: 2,048 $275,356
“Despite some local political uncertainty, Chicago’s housing market remains active,” said Maurice Hampton, president of the Chicago Association of REALTORS® and owner of Centered International Realty. “We’re welcoming in a new generation of homebuyers incentivized by rates and sales prices that have grown but remain reasonable. Sellers and buyers alike should be encouraged as we enter the holiday season, and there continues to be opportunities on both ends of the deal. Work with a REALTOR® to price smart and negotiate.”
The 30-year fixed mortgage rate continued to remain low in October at 3.69%, although that was up from 3.61% in September.
It was 4.83% in October 2018.
Except for the housing bubble years, October has never been a gangbuster month for sales.
“Continuing a pattern of the last several months, median prices have increased. Sales declined year-over-year in October,” said Geoffrey J.D. Hewings, director of the Regional Economics Applications Laboratory at the University of Illinois. “Affordable inventory remains a problem even with low interest rates tempting potential buyers back into the market.”
Statewide, market time averaged 53 days, up 1.9% from last year.
Yet inventory DID continue to slide, falling 5.5% year-over-year statewide to 58,561 properties down from 61,992 properties.
Market time had been on the decline nearly every month the last several years. Until now.
Has market time finally bottomed? And what does that mean if market times are going up even as inventory continues to fall?
Illinois median home prices increase in October; sales lower [Illinois Association of Realtors, Press Release, November 21, 2019]
considering rates are down over 100 bp’s this is a terrible number
also love how they say ““Despite some local political uncertainty”
just come out and say, TAX uncertainty you losers, maybe then your idiot politicians might do something about it! haha oh wait, this is Chicago, so yeah, people love more and more taxes there. Always the solution!
This is normal market behavior, some ups and downs over the years. There’s still more than 2000 closings. 1,500 closings would be worrisome or god forbid 1,200 in like 2010.
Also, I like the picture of the scary ghost above, as if you’re trying to say the market is spooked!
Speaking of decline, brought in from Lou Malnati’s last night. Time to go back to Gino’s.
“This is normal market behavior” Lagging far behind the rest of the country isn’t what I’d consider normal market behavior. Put these numbers aside every other decent sized city and it’s much more concerning.
Are you out of your mind? This is completely normal behavior as compared to other cities:
“The (August, most recent data) for the S&P CoreLogic Case-Shiller U.S. National Home Price ….10-City Composite annual increase came in at 1.5%, down from 1.6% in the previous month. The 20-City Composite posted a 2.0% year-over-year gain, no change from the previous month.”
Chicago is at 1.4% YOY so slightly below average for the 10 and 20 city. Chicago is higher than NY, LA, SF and Seattle. As for MOM (July to August), Chicago is still growing at .1 and higher than Denver, LV, San Diego, SF and Seattle which all lost price MOM.
So unless October in Chicago is some *crazy* anomaly from comparable cities (which you claim – without evidence), we’re actually performing on par with our peers, unless you want to call Detroit at 3.8% a comparable city.
https://us.spindices.com/documents/indexnews/announcements/20191029-1022765/1022765_cshomeprice-release-1029.pdf?force_download=true
Sorry for annoying file format….
“unless you want to call Detroit at 3.8% a comparable city.”
I would totally not call Detroit a comp.
I would expect it to be doing much better than Chicago, as it has the hottest hotel in the country, and a British magazine featured it as a travel destination once.
“considering rates are down over 100 bp’s this is a terrible number”
The lower rates should have lit a fire under the housing market (as they did in 2016.) But prices are even higher now so they didn’t.
Is it affordability issues?
Maybe prices have peaked. Or maybe Millennials, who are moving into peak buying years, simply can’t save the downpayment so they aren’t buying.
Yeah, I don’t think the market is doing poorly at all but with interest rates down you would think it would be taking off. It has to be some kind of demographic/ lifestyle choice thing – e.g. a preference for renting. So I tried to break October down real quick and dirty. Condo sales definitely down more than SFHs. It think it was like 5% vs. 1%…in that range. So then I looked at price points. Above $1 MM -8%, 500K – 1 MM +11%, 200K – 500K +2.5%, and <200K -10%.
“Or maybe Millennials, who are moving into peak buying years, simply can’t save the downpayment so they aren’t buying.”
if you can’t save up a down payment in this economy, its probably never going to happen
“So then I looked at price points. Above $1 MM -8%, 500K – 1 MM +11%, 200K – 500K +2.5%, and <200K -10%."
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Surprised <200K down so much. I guess people don't want to put sweat equity into a place anymore.
Be interesting to see how much of the 500K – 1MM is new construction.
“I guess people don’t want to put sweat equity into a place anymore.”
Sweat equity is totally overrated. Often it is unpermitted, code violating, terrible craftsmanship work from a novice who attempted hard labor after their 8 hour day job. Sure, there are some people that can do it, but for the rest of us…it mean home inspections that find Romex (if you’re lucky, maybe even extension cords) instead of conduit, uneven flooring, incorrectly installed tiles, blotchy painted walls and so on. And the older the home, the more likely the insane sweat equity.
“Sweat equity is totally overrated. . . . ”
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True, but I’m including simply the disruption of having the trades come in and do things right as opposed to only doing it myself. Buying a dump and upgrading is a heck of a lot cheaper than buying new construction two blocks over.
Given the amount of yammer that you hear about there being a shortage of starter homes these days, I’m simply surprised that we don’t see homesteaders buying at $175k, putting $125k into it, and having the moral equivalent of a $400k new construction
“Given the amount of yammer that you hear about there being a shortage of starter homes these days, I’m simply surprised that we don’t see homesteaders buying at $175k, putting $125k into it, and having the moral equivalent of a $400k new construction.”
There’s three reason why people don’t do this. The first reason is:
1. Fixer-uppper starter homes for $175,000 in areas with decent schools are few and far between. And when they do come available, like the property I was involved with last year, there were 35 all cash bids in the first three days up. It sold $50,000 over ask. 35 all cash bids. It closed in two weeks – unlike the 45 days it takes for Guaranteed Rate to do a simple conventional loan.
2. The home and neighborhood has to justify the investment. A $175,000 home in Maywood, Stone Park, Palatine, with $125,000 investment doesn’t turn it into a $400,000 home. It’s a $225,000 home that should have been bought for less than $100,000.
3. Most buyer can barely scrape together a decent a down payment, they would have to borrow money to put in the sweat equity. I’ve personally gotten rehab loans – it was half a dozen years ago – but the interest rate is higher, the paperwork is a nightmare, the contractors screw up the escrows, the property must appraise out AFTER the rehab work is completed, the down payment is based on the AFTER appraised price, not the purchase price, and you must have near perfect credit to do it. And that was a $100k+ private construction loan…..The FHA rehab loan maxes out at only $35,000, which is nothing when it comes to renovating a home.
And then, even when you see legitimate ‘sweat equity’ non-contractor work, the interior ends up looking….unique and individualized (eurotrashed) with stupid columns, bad designs in flooring, weird fixture, bad layouts….Sabrina has featured dozens of these properties over the years. This kind of stuff is best left to the professionals.
“Surprised <200K down so much. I guess people don't want to put sweat equity into a place anymore."
Me too. A Millennial friend of mine recently bought. He wanted to buy under $200K and fix it up, but he couldn't find anything acceptable in that market (meaning in a neighborhood he would consider, and he wasn't that picky). He eventually decided to go up to $250K and several of the places he looked at for that price were either selling before he got a change to look at them or having bidding wars (and it was hard to find anything below $200K — he looked at some over the price that in his view were not worth the money, including places that were just about in East Garfield Park or less appealing parts of Humboldt Park). He ended up finding something nice (but with no parking and needing a little work) in one of the acceptable (in his view and mine) parts of Uptown, for just under $250K.
If there are decent places under $200K, I'd be surprised if they aren't being snapped up.
“….I’m simply surprised that we don’t see homesteaders buying at $175k, putting $125k into it, and having the moral equivalent of a $400k new construction.”
“….There’s three reason why people don’t do this”
Imo commenter missed the main reason – property purchasers (particularly parents in dual income households) value their own ‘spare time’ far higher than past generations did & are willing instead to pay a sizable premium for a residence that is virtually 100% move in ready.
“Imo commenter missed the main reason – property purchasers (particularly parents in dual income households) value their own ‘spare time’ far higher than past generations did & are willing instead to pay a sizable premium for a residence that is virtually 100% move in ready.”
I don’t think generations of times past valued their free time less than we did now, but there was definitely more of a culture of DIY and woodworking. Today the woodworker is a hipster master-craftsman (as opposed my old man father-in-law sawing in the garage), and the DIYer is the cheapskate trolling the Lowes isles to save $300 instead of paying a professional to do it correctly. The online forum boards are filled with DIY’ers asking questions about installing sump pits, rewiring their HVAC, pouring concrete sidewalks and reworking plumbing.
“So then I looked at price points. Above $1 MM -8%, 500K – 1 MM +11%, 200K – 500K +2.5%, and <200K -10%."
Prices are high, inventory is low and the median price has once again ticked up. There's nothing for sale under 200K unless you want to consider a neighborhood with high crime and poorly performing schools.
I'm only worried about two things in Chicago: ridiculously high property taxes and crime. Chicago is a world class city and it is still a bargain compared to New York, San Fran, LA and places like Denver and Austin.
Take Portage Park as an example. Two years ago you could buy a decent single family home which needed some work for around 250K. These days 300K barely buys you a lemon.
I love Portage Park, but there are 2 conflicting forces in play there. One is the nice, professional family type moving further North and West up the Blue Line. The other is the Section 8 renter who has been displaced from areas like Logan Square and brings a very unsavory host of issues with them.
“Take Portage Park as an example. Two years ago you could buy a decent single family home which needed some work for around 250K. These days 300K barely buys you a lemon.”
Thanks for checking in Milkster as I know you have been an active investor in the neighborhoods and would look at those crazy foreclosures with no floors (just a hole in the ground.) I’ll never forget that creepy story.
Lol.
Anyway, I was telling a friend who bought in Irving Park in 2001 for like $185,000 that his house was now worth well over $400,000 and he didn’t believe me. I told him to look at everything on the market in his neighborhood on Redfin and then we’ll talk.
Very little on the north side is “affordable” anymore (i.e. for a middle class family.) Only the low mortgage rates are making a $300,000 home even remotely close to affordable.
I have another friend who is looking for a house in the South Shore. It’s still a pretty rough neighborhood and the public transport isn’t great from there but the middle class is looking to move south because it’s the only area still affordable.
Have you looked down there at all?
“He wanted to buy under $200K and fix it up, but he couldn’t find anything acceptable in that market (meaning in a neighborhood he would consider, and he wasn’t that picky)”
I was looking at some listings in the Western Suburbs recently. These are the smaller unremodeled homes that are considered “bargains” at like $275,000 to $350,000. They are estate sales and need total gut jobs but are near the train lines/downtowns.
But they’re sitting there not selling because they’re frankly not cheap enough to even put $100,000 in to fix them up. On the HGTV show Fixer Upper, a lot of the older nasty homes are like $100,000 and then they put in $150,000 and now it’s “worth” $300,000. That’s more realistic.
Chicago home prices are STILL too high to buy them as fixers.
“if you can’t save up a down payment in this economy, its probably never going to happen”
Sonies, they are paying record high apartment rates and they have big student loans. When can you save if you are paying $1500 to $2000 a month on rent (or more in some cities like LA and SF?)
But thankfully, they can still buy with just 3.5% down. So maybe the down payment isn’t the problem.
Face it, Chicago sucks.
https://www.stlouisfed.org/on-the-economy/2019/november/housing-market-fundamentally-change
I just posted my November update: http://www.chicagonow.com/getting-real/2019/12/chicago-real-estate-market-november-sales-fall-8-from-last-year/
Sales are down 8.1% from last year but IAR will report an 11% decline. Market times are still fine. Some of the decline was caused by/ resulted in an increase in pending home sales so we can get some of those lost sales back down the road.
“Sales are down 8.1% from last year but IAR will report an 11% decline. Market times are still fine. Some of the decline was caused by/ resulted in an increase in pending home sales so we can get some of those lost sales back down the road.”
Thanks for the update Gary.
It’s dead out there. Dead. Dead. Dead.
Usually November and December are really slow but this year feels even slower. Almost no one is listing anything new either, which doesn’t help the buyers.
It’s all really going to come down to what February looks like.
Rates are still low and unemployment is still low so the market conditions are ripe for a good spring market.