Market Conditions: Red-Hot Market Continued as January Sales Rise 6.1% YOY
We already knew from Gary’s blog that January was going to be another strong month. (Thanks for all the great info Gary.)
You can read his blog here.
Chicago’s housing market remains red hot with sales still rising and inventory falling. There’s no doubt, it’s a seller’s market.
From the Illinois Association of Realtors:
In the city of Chicago, home sales (single-family and condominiums) in January 2022 totaled 1,801 homes sold, up 6.1 percent from January 2021 sales of 1,698 homes.
The median price of a home in Chicago in January 2022 was $310,000, the same as it was in January 2021.
Sales Data Since 2006 (thanks to G for the older data):
- January 2006: 2009 sales and median price of $258,000
- January 2007: 1850 sales and median price of $279,900
- January 2008: 1203 sales and median price of $290,000
- January 2009: 918 sales and median price of $205,000
- January 2010: 1237 sales and median price of $195,000
- January 2011: 1034 sales and median price of $150,000
- January 2012: 1123 sales and median price of $149,000
- January 2013: 1521 sales and median price of $157,000
- January 2014: 1383 sales and median price of $200,750
- January 2015: 1348 sales and median price of $220,000
- January 2016: 1398 sales and median price of $227,750
- January 2017: 1574 sales and median price of $255,000
- January 2018: 1444 sales and median price of $265,000
- January 2019: 1347 sales and median price of $255,000
- January 2020: 1462 sales and median price of $267,500
- January 2021: 1698 sales and median price of $310,000
- January 2022: 1801 sales and median price of $310,000
“For a variety of reasons, there are typically fewer homes for sale in January,” said Ezekiel “Zeke” Morris, president of Illinois REALTORS® and designated managing broker of EXIT Strategy Realty/EMA Management on the South Side of Chicago. “But for many of those who put their homes up for sale last month, they sold very fast and at favorable prices. Now is the perfect time to sell because of the low inventory.”
The average 30-year fixed rate mortgage rose to 3.45% from 3.1% in December 2021. It’s also up considerably from a year ago, when it averaged just 2.74%.
“The real estate market remained solid in January, with increased home sales and prices holding steady,” said Antje Gehrken, president of the Chicago Association of REALTORS® and president and designated managing broker of A.R.E. Partners. “Continued inventory declines are impacting market time, as buyers are slowing from the heightened pace of 2021 and taking the time to find the home of their dreams.”
Inventory continues to be the story, as it plunged again. Here’s the 3 year trends.
Illinois inventory down 36.4% year-over-year.
- 2020: 47,052
- 2021: 29,093
- 2022: 18,510
Chicago metro inventory down 37% year-over-year.
- 2020: 30,570
- 2021: 19,955
- 2022: 12,574
Chicago inventory finally joined in, falling 33.9% year-over-year after not budging much in 2021 as the city still struggled due to the pandemic.
- 2020: 7,784
- 2021: 8,288
- 2022: 5,482
The number of days on the market fell sharply statewide to 38 days from 47 days last year. But in Chicago, it was up 2 days to 47 from 45 days in 2021.
As Gary has pointed out on his blog, the under contract/pending numbers have weakened which indicates that we could finally see a year-over-year decline in sales in the coming months in Chicago after posting 15 year highs in 2021.
Will rising rates be the thing that finally slows this market?
Illinois homes sold fast in January as demand remains high [Illinois Association of Realtors, press release, by Bill Kozar, February 18, 2022]
Inventory is always low in January, but it’s shocking to see how low it was this year.
The spring buying season is in full swing. If you have something to sell, now is the time to list it.
Properties are going under contract within days if priced correctly and if they’re updated.
I still feel like Chicago buyers will not purchase “older” condo properties where you need to do real renovations like new kitchens and baths. They want to just move in and be done with it. Single family home inventory is even lower, however, so there isn’t as much choice there.
Take it or leave it.
“If you have something to sell, now is the time to list it.”
Unless, of course, if you’re a boomer. Because for the next 5 – 15 years or so, before your time comes to move into any sort of senior living setting, under no circumstances could you rent anything other than brand new luxury units in a downtown area, and inflation is going to devour the jackpot premium you never even imagined getting by selling your home. But everyone else, list now!
“Properties are going under contract within days if priced correctly and if they’re updated.”
Why would this matter if the market is so HAWT(tm)? Granted these units will get a premium due the investment.
“I still feel like Chicago buyers will not purchase “older” condo properties where you need to do real renovations like new kitchens and baths. They want to just move in and be done with it.”
Its not just not having a waterfall edge, its because most of these properties are complete crap and sellers cant or wont make the correct pricing adjustments.
“Will rising rates be the thing that finally slows this market”
Add it the Fed tapering MBS.
Just out of curiosity, what is the lowest rate on a 30 year fixed that anybody you know personally locked in last year?
I feel bad for people buying the crap that’s on the market right now. They are forcing themselves into properties out of fear of not being able to afford a home in the future.
This was expected though, we saw the same thing in 2013 with interest rate panic except prices were significantly lower, and real wage growth was in a much better position.
“I feel bad for people buying the crap that’s on the market right now.”
I’m seeing a fair amount of nice properties for sale.
“I still feel like Chicago buyers will not purchase “older” condo properties where you need to do real renovations like new kitchens and baths. They want to just move in and be done with it.”
That was my experience when I was looking last month. If it was updated and priced correctly it moved. If a bathroom/kitchen needed to be updated it sat and buyers could get a decent deal.
If it was updated but overpriced it generally sits until priced correctly.
What’s interesting in the inventory numbers is the increase in percentage of Chicago inventory relative to Statewide or Chicago Metro inventory.
January 2020 Chicago Inventory represented 16.5% and 25.5% of the total statewide and Chicago Metro inventory whereas January 2022 Chicago inventory represents 29.6% and 43.6% of Statewide and Chicago Metro inventory.
The burbs and most of the state compared to Chicago is a much tougher market for buyers.
“Unless, of course, if you’re a boomer. Because for the next 5 – 15 years or so, before your time comes to move into any sort of senior living setting,”
10,000 baby boomers are retiring every day. Very few move into a “senior living setting” unless you’re including the Villages in that. Lol. Under 5% of all Americans will end up in a nursing home, for instance.
” a “senior living setting” unless you’re including the Villages in that.”
Who doesn’t count any 55+ community as a “senior living setting”? That would be bonkers.
Interesting. Is Streeterville not seeing the same kind of upward price activity as other areas? I still see a lot of very inexpensive 1- and 2-bedrooms on the market in my neighborhood near the Hancock. Why do you suppose?
“I still see a lot of very inexpensive 1- and 2-bedrooms on the market in my neighborhood near the Hancock. Why do you suppose?”
Are they in old buildings that don’t have:
1. Central Air
2. W/D
3. Parking
4. Exercise rooms/amenities
Like I’ve been saying for months. Give the buyers what they want. If you remodel it will sell. Make it look like one of the expensive apartments and it will sell.
1-bedrooms are selling in River North again. Even ugly ones.
“If you remodel it will sell.”
How do you accomplish half your list by remodeling?
1. Central Air
2. W/D
3. Parking
4. Exercise rooms/amenities
This is HAWT(tm) – https://www.waterlootower.com/floor-plans/the-ivy
Just posted my February update. Looks like a 17 year record for closings despite incredibly low inventory levels. Sales up 15.4% though the IAR will report it as a 13.1% increase. https://www.chicagonow.com/getting-real/2022/03/chicago-real-estate-market-update-february-sets-a-17-year-sales-record/
Thanks for posting the monthly update Gary. I was eagerly awaiting this month. I thought we might see a lower yoy sales rate but NO.
Wow.
I can’t believe we’re doing these kinds of levels without hardly ANY new construction. We have a few luxury buildings that are doing closings but nothing like the thousands of new condos that were selling to investors in 2005 and 2006. How are we able to do these kinds of numbers without the new condos and record low inventory?
It just shows that this market is basically the hottest Chicago housing market ever. Even hotter than the housing bubble. Because those sales centers made it really easy 17 years ago. But now, not so much. Not only are buyer qualifications tighter but buyers are competing for the product with some properties selling within 48 hours.
As I’ve been saying, if you want to buy in a certain building, you might have trouble finding a property. Even in a building like the John Hancock with 700 units.
Certainly, if you are looking for a SFH in certain neighborhoods you may be out of luck. And when something is listed, you may have to pay over ask.