Market Conditions: Sales Continued to Plunge in May 2023, Falling 29% YOY
It’s time to talk about the May sales data. It’s been trending the same for most of this year with sales down sharply year-over-year, median price coming down and inventory continuing to fall.
It was the slowest May since May 2020 which got hit as the market froze up when COVID hit and the lock downs started in March 2020. Before COVID, it was the slowest May since 2012, which was the bottom of the housing bust.
From the Illinois Association of Realtors:
The city of Chicago saw a 29.0 percent year-over-year home sales decrease in May 2023 with 2,397 sales, down from 3,374 in May 2022.
The median price of a home in the city of Chicago in May 2023 was $335,000, down 4.4 percent compared to May 2022 when it was $350,500.
May Sales:
- May 2008: 2119 sales
- May 2009: 1557 sales
- May 2010: 2057 sales
- May 2011: 1705 sales
- May 2012: 2037 sales
- May 2013: 2834 sales
- May 2014: 2453 sales
- May 2015: 2750 sales
- May 2016: 2980 sales
- May 2017: 3046 sales
- May 2018: 3047 sales
- May 2019: 2952 sales
- May 2020: 1701 sales
- May 2021: 3453 sales
- May 2022: 3374 sales
- May 2023: 2397 sales
Median Price Data:
- May 2008: $319,500
- May 2009: $225,000
- May 2010: $230,000
- May 2011: $190,000
- May 2012: $203,000
- May 2013: $234,000
- May 2014: $269,250
- May 2015: $281,000
- May 2016: $290,750
- May 2017: $305,600
- May 2018: $305,000
- May 2019: $315,000
- May 2020: $313,000
- May 2021: $350,000
- May 2022: $350,500
- May 2023: $335,000
“In May, we saw a tempering of the market compared to last month. An increase in closed sales compared to April is a sign of a summer market rife with opportunities,” said Sarah Ware, president of the Chicago Association of REALTORS® and principal and designated managing broker for Ware Realty Group in Chicago. “As always, eyes are on mortgage rates as they creep down.”
The average 30-year fixed rate mortgage was 6.43% up from April’s 6.34% and also up from May 2022 when it was 5.23%.
Across the state, inventory continues to remain tight. Statewide inventory fell 27.3% to 17,649 from 24,268 last year. That was the second lowest monthly average of homes for sale since 2008, which was when the IAR started keeping this data.
In Chicago, inventory fell 28% to 5125 homes from 7115 homes a year ago. For comparison purposes, in May 2019, before COVID, May inventory was 10,096, or nearly double 2023’s inventory.
“The number of home sales is significantly lower than at this time last year,” 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.
“Interest rates remain high, and homeowners who bought their properties at a time of low interest rates are reluctant to move to a new home that would need to be financed at a much higher rate. Although we predict home prices to follow the usual seasonal pattern and peak in June, we predict the decline in prices to be lower in July and August than was the case in 2021 or 2022. Our forecasts indicate that the number of sales will remain at about their current levels in July and August.”
In Chicago, the sales decline was more pronounced in condos than single family homes. Condo sales fell 32.6% to 1546 while single family homes fell just 21.2% to 851.
Days on the market also rose 17.2% to 34 from 29 last year.
Mortgage rates have continues to trickle up in June, instead of down.
But do mortgage rates really even matter?
Or is it the lack of inventory that is truly driving this market?
Illinois statewide home sales and housing inventory fell in May [Illinois Association of Realtors, by Bill Kozar, Press Release, June 22, 2023]
“But do mortgage rates really even matter?” Is this really a question.
It is like asking “does the price really even matter.”
Lack of inventory is keeping prices elevated. Every purchase I’ve worked on seems to have multiple bidders and going significantly over ask. Especially in popular suburbs like Northshore. A lot of demand for lower priced homes.
However, high rates are keeping a lot of people out of the market. The lack of inventory is being driven by people not wanting to trade in low rates for higher rates on higher priced homes.
“However, high rates are keeping a lot of people out of the market.”
Definitely some people priced out of their chosen neighborhood. But if rates remain high for another year or more, some may just throw in the towel and start buying in other locations.
“But do mortgage rates really even matter?” Is this really a question.
Yes, it’s the question KK. Homebuilders recently said that the buyers have adjusted to the mortgage rates and 7% is not an issue. They have literally said that the mortgage rates aren’t the real issue. It’s lack of inventory to buy that is keeping people out of the market.
Buyers are doing what I said they would: buying a cheaper property so that it fits in their monthly budget. They are moving down from the $500k house to the $400k (if they can find one.) At least in the areas where move down is possible (aka, not California).
Also the national homebuilders have said that they aren’t needing to do as many mortgage buydowns now and some have even gotten rid of it as a national promotion.
« Buyers are doing what I said they would: buying a cheaper property so that it fits in their monthly budget. They are moving down from the $500k house to the $400k (if they can find one. »
Or more likely, are continuing to rent and save as they are going to quickly grow out of the $400K property.
Higher interest rates have yet to filter through the overall economy. RE is getting hit first as it’s immediately apparent with year/year house prices recently registering their first decline.
The Federal Reserve system primed the pump and printed over eight trillion dollars from late 2008-April 2022 and now the clown world interference is being reversed.
Interest rates have risen so rapidly after a ZIRP regime for so long we are going to witness a large number of bank failures in the years ahead, to say nothing of mortgage brokers.
All the money printing and ZIRP regime did was pull demand forward and now we’re at the end of the road. Good luck to all, but if you didn’t sell on top and not double down on RE by buying a bigger place there is going to be pain ahead.
House as ATM was never a viable strategy for the long-term health of the economy but that didn’t stop the central banksters from maintaining the facade for well over a decade.
DuPage County prices are up while Chicago prices are down. People leaving the crime fest. Cook taxes are catching up. Not much appeal left thanks to WFH (or partial WFH). Training in to the city 2 days a week isn’t bad. 5 days wasn’t appealing. Suburban condo and apartment growth around train stations is also evidence that this is happening.
Same phenomena in San Francisco. City languishes while the collar burbs are doing well.
Is there a city that has had worse median price appreciation from May 2019 to May 2023 than Chicago? Maybe Detroit or Cleveland?
In Highland Park a house across the street just sold in less than a week at $750,000. Just a colonial 4 bedroom, nothing special or fancy. Makes me wish we were in the right point of our lives to sell, but we’re not. By the time we are, this boom will be long over, I’m sure.
“Is there a city that has had worse median price appreciation from May 2019 to May 2023 than Chicago? Maybe Detroit or Cleveland?”
Entire metro area or the “city” of Chicago?
Up about 20% in the metro, I believe. In the city, depends on what neighborhood you were in. Gold Coast, River North, Streeterville saw prices decline. It’s been terrible. Most other neighborhoods were up but depended on what neighborhood.
Bronzeville, for instance, up big during that period. Home prices topping a million dollars there now. Amazing to see it ramp up in the last few years. Woodlawn also seeing big appreciation. New homes priced $550k to $750k there now.
Big appreciation in single family homes in the middle class neighborhoods on the north and south sides. You can no longer get the decent 3 bedroom bungalow for $125k on the South Side anymore. Those are $200k or $250k.
Inventory is at record lows all across the city and the suburbs. It’s why Chicago is one of the few markets to see home prices continue to go up this year while other cities are seeing declines.
As I’ve said many times on this blog in the last year: no big boom, no big bust.
“RE is getting hit first as it’s immediately apparent with year/year house prices recently registering their first decline.”
But it’s NOT getting hit. That’s the whole point, right? This is what you keep getting wrong Bob and have since the pandemic started.
First you got the foreclosure “crisis” completely wrong. I see you don’t bring that up anymore. And now you’re getting the entire housing market wrong as well. You can’t have a real estate crash without any inventory. That was true in 2020 and it’s true in 2023. And since it’s not coming from foreclosures, where WILL it come from?
We have had 6%+ mortgage rates for 9 months. Impacts were felt last year when the market froze. But the buyers are doing what I said they would do: trade down. They can still make it work in Chicago. In California, not so much. But that’s their problem, not ours.
Spring buying season is over. 2023 is mostly done as far as real estate is concerned. Bears are going to have to wait until 2024 for their “doom” scenario of millions of job losses to come true.
Going to be really hard to get that with the number of job openings we currently have, the shortages in labor, baby boomers dying or retiring, and a trillion dollar infrastructure program priming the pump.
“Interest rates have risen so rapidly after a ZIRP regime for so long we are going to witness a large number of bank failures in the years ahead, to say nothing of mortgage brokers.”
Jesus, is this gloomy. I don’t know how the bears wake up each day. I guess I should be glad that they’ve always gotten it wrong in the 15 years I’ve been running this blog. Or else America would have collapsed by now. Heck, it didn’t even collapse during a true financial crisis in 2008. And there isn’t even one of those right now.
“As I’ve said many times on this blog in the last year: no big boom, no big bust.”
When nearly every other metropolitan area in the country has real estate prices up 50+% since May 2019, and Chicago’s is up only 6%, id call that a miserable bust.
“Chicago’s is up only 6%”
Median is a fairly useless measure.
Aggregate CPI since May-19 is 18.76%, for comparison.
“When nearly every other metropolitan area in the country has real estate prices up 50+% since May 2019, and Chicago’s is up only 6%, id call that a miserable bust.”
In case you can’t read Mike HG, which it looks like you cannot, I said “no big boom, no big bust.” We didn’t go up 50% and we’re not going to go down 50%.
Chicago is one of the few cities that has seen prices rise since the Fed started raising rates.
I don’t know why you’re on a Chicago blog from Florida trying to convince yourself that Chicago sucks Mike HG. You miss it. The architecture, the food, the beaches, the lovely summers and falls, the Cubs and even the White Sox. It’s okay to admit it.
“In case you can’t read Mike HG, which it looks like you cannot, I said “no big boom, no big bust.” We didn’t go up 50% and we’re not going to go down 50%.”
——————————————–
And they’re still ahead of Chicago
“We didn’t go up 50% and we’re not going to go down 50%.”
So, the prediction is that everyplace else will be down 25% since [2019 or whenever] in the pretty near future? Since 100 + 50% = 150, and 150 – 50% = 75%.
That’s a real crash (especially if in nominal dollars–right now that 100 [May-19] = 119, so 75 = -37% in real dollars) that’s going to have global implications (again).
“So, the prediction is that everyplace else will be down 25% since [2019 or whenever] in the pretty near future? Since 100 + 50% = 150, and 150 – 50% = 75%.”
The “prediction” is that real estate, nationwide, would crash 20%. Some areas would be better, some would be worse.
Maybe we will get that in Boise, Austin, Tampa, Orlando, Phoenix and Charlotte if rates rise to 8%+. Don’t know. But that is one of Chicagoland’s advantages. We have properties at every price point down to $100k or lower. It’s going to be very difficult on buyers if we go back over 7% on the coasts. Housing market will freeze everywhere again this fall if rates approach or exceed 8%.
And, yes, the bears are calling for doom. Good luck to them.
“And they’re still ahead of Chicago”
I don’t live where they live so what do I care? If you want to live in Florida, go there. Be happy. Same with Texas or wherever else your house will double in 5 years. But last I heard, those in Florida are leaving now too because the cost of living is soaring. Property taxes doubling and tripling and insurance costs through the roof.
You have to love where you live johnc. I get to live in Chicago, a world class city with some of the best museums, parks, restaurants in the country, for a relatively cheap price if I’m buying or renting.
If that’s not what you’re looking for, plenty of places to move to around the country. Go find your jam. Life is too short to live in Illinois and hate it.
MuH dEMoGrAPhiCs look troubling
https://twitter.com/cojobrien/status/1677372404090167307/photo/1
HAWT ™
https://www.chicagobusiness.com/commercial-real-estate/downtown-office-vacancy-surge-new-record-high
” I get to live in Chicago, a world class city with some of the best museums, parks, restaurants in the country,”
Again it’s the verbiage that reads like it’s an excerpt from a glossy relocation guide or tourist guide–the kind you can get at the state welcome centers after one crosses state lines on the highways.
Again: how many times does one go to a particular museum, Sabrina? Do you just visit the same museums over and over and over because you need to constantly be reminded of the content?
As for the parks yes the city does have some parks but to pretend they are some utopia I’m not so sure–have you seen how littered and poorly maintained some of the boulevards are? Have you ever seen the Kedzie boulevard park section or the Humboldt Boulevard park section? I don’t see people picnicking in these places because of the littering as well as the grounds do not appear to be actively maintained at all. Yay you get to have a picnic around litter & dandelions
“Again: how many times does one go to a particular museum, Sabrina?”
I’m a member at one and go a lot. I also go to others often. They DO get special exhibits Bob. If you went to one, you’d know. Having museums and other cultural institutions matter in a city. Same with universities, parks, and gardens. Chicago also has great neighborhood associations with a lot going on: house and garden tours. I really recommend people check those out.
Also, I recommend the architecture foundation neighborhood walks. Even if you live in a place, it doesn’t mean you know the history behind it. Additionally, the ghost tours are awesome at learning the history of Chicago too. I really recommend going on one of those.
Bob appears to live a really boring and dull life in his basement apartment. Never goes to parks or museums. How sad.
Chicago has great parks. I recommend trying the restaurants in some of them.
The Chicago market is slowing now as we enter the summer. Inventory is finally on the rise in neighborhoods like Lakeview and Lincoln Park. That could mean that sales are slowing further.
It’s taking longer for some of the properties to sell, especially those that are not pristine and move-in ready. Lakeview now has 285 properties on the market. It hasn’t had that many available in several months. Still incredibly low inventory but up off the 200 properties we had been seeing in that neighborhood during the spring.
” his basement apartment”
G & HD shared the basement studio apartment.
Bobbo rents on the penthouse level of a 4+1.
Crain’s has an update on prices in the first half of the year compared to last year. They only looked at neighborhoods where there were at least 25 sales.
https://www.chicagobusiness.com/residential-real-estate/where-chicago-home-prices-are-up-down
Here’s where the median sale price in the city rose the most in the first half of the year, compared to the same time in 2022:
Bridgeport (houses): +26.8%
Avondale (condos, townhouses): +24.6%
Lincoln Square (condos, townhouses): +24.5%
West Englewood (houses): +24%
Calumet Heights (houses) +19.5%
Here’s where the median sale price dropped the most in the first half of 2023, compared to the same time last year:
South Shore (houses): -38%
Douglas (condos, townhouses): -27%
Roseland (houses): -21.7%
Greater Grand Crossing (houses): -21%
Englewood (houses): -15.8%