Market Conditions: Sales Fall Again in May- Is Chicago’s Housing Market in Trouble?
The Illinois Association of Realtors is out with the May sales and they fell again.
The city of Chicago saw year-over-year home sales decrease 5.0 percent with 2,895 sales in May, compared to 3,047 a year ago. The median price of a home in the city of Chicago in May was $315,000 up 3.3 percent compared to May 2018 when it was $305,000.
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: 2895 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
While this was the 10th straight month of housing sales declines, May of 2018 was the highest in 11 years.
“While closed sales have fallen, there’s reason for both buyers and sellers to be encouraged,” said Tommy Choi, president of the Chicago Association of REALTORS® and broker at Keller Williams Chicago – Lincoln Park. “Prices are still affordable and interest rates are historically low, as the market remains competitive, but stable. Buyers are gaining some breathing room in the transaction and sellers are having to be more measured in their approach.”
The average 30-year fixed mortgage payment fell to an average of 4.07%, down from 4.14% in April and down from 4.6% in May of last year.
It’s likely mortgage rates continued to fall into June, as well as the 10-year treasury sank further.
Statewide, the time it took to sell a home remained the same, at 49 days.
“While consumer sentiment has become more broadly positive nationally, Illinois consumers appear to be responding a little more conservatively,” said Geoffrey J.D. Hewings, director of the Regional Economics Applications Laboratory at the University of Illinois. “Housing sales continue to grow more slowly compared to prior years’ experience at this time of the year.”
No one is really talking about a tight inventory in the market anymore even though market times remain low.
Has the market simply reached peak sales for this cycle or is the 10-month year-over-year sales decline signaling other trouble for the housing market?
Illinois home sales moderate in May; median home prices post another gain [Illinois Association of Realtors, Press Release, June 21, 2019]
4.4 month supply of condos, which is higher than last year but still pretty average. But there is a 3.7 month supply of detached homes, which is the lowest level in 11 years of data that I have access to. So you don’t think inventory is an issue? Market times are fine. No negative trend in sale to list ratio. And there are actually fewer showings to get a contract.
The market is fine. If you can’t sell it’s not the market’s fault. The buyers are out there.
mortgage rates are down quite a bit in the month of may too, they have decreased significantly since November of last year, would not surprise me to see sub 4% 30 year fixed this week
While living at Demming and Lakeview Ave and out strolling our first baby around,I popped into the Elks memorial. Fast forward a decade or so, and due to both of our go-to pool options being closed for updates this summer, we bought a summer pool pass at the local Elks club. Not optimal, but very reasonable, nice enough, and not too inconvenient of a drive. Assuming you don’t send your kids away to camp all summer, what do folks in the city do for a daily swim option? When we lived in ELP and kids were around 4 and 1.5, hitting North Ave beach a few times a week, a neighborhood playground in LP with a big water feature maybe a day or two a week, the Wilmette pool maybe two or three times a month, and an occasional run through the Millennium Park fountains, was great. But I don’t know if that program would work as well for us these days.
“Assuming you don’t send your kids away to camp all summer, what do folks in the city do for a daily swim option?”
What kind of folks?
There are the EBC (etc) folks, the Park pool folks, the beach folks, and the Lincolnwood (etc) pool pass folks. And, also, the backyard above-ground pool folks, but I prefer to believe they don’t really exist.
“There are the EBC (etc) folks, the Park pool folks, the beach folks, and the Lincolnwood (etc) pool pass folks. And, also, the backyard above-ground pool folks, but I prefer to believe they don’t really exist.”
We do Lincolnwood bc it’s convenient to us. Used to have a neighbor with BYAGP, which was kinda perfect. You can use it and then choose to deny its existence.
Is there a Lincolnwood-ish option for the nortcenter folks?
We did Lincolnwood pool for years. I won’t say how we used a resident pass, as non-residents, but it was pretty nice. Nice party room for birthday pool parties.
“So you don’t think inventory is an issue?”
If demand was that strong there would be multiple offers on nearly every single family home, right?
But there isn’t.
So inventory isn’t the problem. This isn’t 2015 when if you didn’t go out to look at a home it was under contract in the first 24 hours.
I’m not sure what kind of market it is. But it’s not healthy.
“If demand was that strong there would be multiple offers on nearly every single family home, right?”
Absolutely not! Price matters. You think a tight market allows sellers to get whatever they want?
“If demand was that strong there would be multiple offers on nearly every single family home, right?
But there isn’t.
. . .
I’m not sure what kind of market it is. But it’s not healthy.”
———————————
Since when was a market in equilibirum (sp) unhealthy?
“This isn’t 2015 when if you didn’t go out to look at a home it was under contract in the first 24 hours.”
In 2015, a good friend of mine sold a condo in a 6 unit walk-up in Lincoln Park in one day (after multiple bids) for $477,100.
https://www.realtor.com/realestateandhomes-detail/917-W-Webster-Ave-E3_Chicago_IL_60614_M78262-49323#photo0
I recently noticed that the only other unit in the building that sold since then (one floor below, but bigger usable square footage due to lack of interior staircase) stayed on the market for 8 months before selling for $365,000 in January, which is $8,000 lower than what the sellers bought it for in 2005.
https://www.realtor.com/realestateandhomes-detail/921-W-Webster-Ave-2_Chicago_IL_60614_M70716-26462?cid=eml_ha_rd_ss3_viewlisting_cat2
Yes, my friend’s unit had around $30,000 in kitchen and bathroom upgrades compared to the other one, but over $100,000 difference in price?? I agree that the market is not “healthy”.
Unhealthy market: Prices sky high, low $$ down, speculators pushing prices higher, fear of missing out, buyers needing appreciation to justify their prices, high volumes
Unhealthy market: Prices rock bottom, banks not lending, REO and foreclosures everywhere, very few transactions, high $$ down
Healthy market: somewhere in between
We almost had another unhealthy speculative market (2017ish) but prices came back down a bit while volumes were still robust.
“I’m not sure what kind of market it is. But it’s not healthy.”
i think it’s just a market that reflects changes that have happened here.some are good for prices, some are bad.
-people, particularly affluent people, being willing to rent longer in their lives
-rich people with changing tastes
-really strong employment numbers
-heavy property tax increases over the past half decade
-lots of new high end inventory built over the past half decade
-more high paying jobs located downtown
it seems unhealthy if you own a huge house in a far suburb, and to a large extent a huge house just about anywhere. it seems unhealthy if you have a dated layout.
i think if we saw more normal property tax increases then we’d all be sitting here saying we can’t believe how strong the market is. but outside of the areas that have gentrified over the past decade, the gains people would be seeing are being eaten up by money being spent on property taxes.
“You think a tight market allows sellers to get whatever they want?”
Yes. I’ve lived on both coasts. That’s how it works when 20 people want one house.
But in Chicago, they actually, um, don’t.
I have said this before and I think it goes along with what tay said: The amount of super high end rental property in great locations is hurting the market The days of being able to sell a unit with old carpet or dated appliances and finishes for the same as a highly upgraded unit, are over. Folks who are renting don’t want your stinky old condo for the same as they pay in monthly rent for brand new luxury everything with amenities galore…and they don’t want the uncertainty of the tax hikes. Right now for the first time in awhile, it truly makes no sense to buy a “starter” home, since in Chicago, that starter home will still hit the SALT Cap deduction and having to appeal your taxes constantly and possibly get no relief, just isn’t fun.
““You think a tight market allows sellers to get whatever they want?”
Yes. I’ve lived on both coasts. That’s how it works when 20 people want one house.”
Seriously? That’s preposterous and not the way it works. You cannot ask $1 MM for a $500K home and get it in a hot market. There is always a concept of market value. I’ve had this conversation with a SF realtor recently. He said that because of the culture that is ingrained there they have to underprice the listings to essentially auction off the property. Buyers assume that every property will go above list so if it’s listed too high nobody bids.
We have a condo listed right now that is absolutely not underpriced. We know because of clear comps. 4 days after listing it has multiple offers. Nothing wrong with this market.
The high end rental market is killing the starter condo market imho. There used to be a clear difference between an apartment and a condo. However, now it isn’t the case as rental apartments in many cases are nicer and more updated than existing condos. People no longer feel the need to buy to actually have a place commensurate with their incomes / profession. In a odd way, buying now means a downgrade for many folks.
If I had the rental options available today, I would not have bought our first condo.
Changing tastes and property taxes are killing the burbs. No one wants these massive 5,000+ square foot McMansions with dated architecture and the $30,000/yr tax bills to go with them.
“appeal your taxes constantly and possibly get no relief”
I’d put that at “probably” going forward, unless there is an actual error. A substantial portion of the condos in the GZ are *still* assessed at less than ~85% of FMV.
“Right now for the first time in awhile, it truly makes no sense to buy a “starter” home, since in Chicago, that starter home will still hit the SALT Cap deduction ”
———————
Wrong. Buy a bungalow. Especially on the South side. You can make like Gary and be a magnet for the cool people. 🙂
“You cannot ask $1 MM for a $500K home and get it in a hot market.”
Of course you can Gary.
Again, you just talked with a realtor in SF right? They take that $500,000 home (this doesn’t exist, but we’ll go with it.) And they price it at $450,000. That’s “cheap” right?
Oh my gosh, all the buyers swarm. Something is cheap. The offers are due at 5 PM that day. 20 submit offers.
They will ALL be over the $450,000 (that’s a given.) But how far over do you go? You don’t know how many other offers there are (they NEVER tell you). Heck, I’ve often wondered if there were even more than just the one offer, but, again, you wouldn’t ever be told. You could be bidding against yourself, essentially.
But let’s say there really was 20 offers. Some realtors in SF will tell you afterwards when there are a gazillion offers because it makes them feel good to tell you how much you were really off in getting it.
For a $450,000 home with 20 offers, the highest offer could literally be $750,000 or maybe even higher if they’ve bid on 10+ homes and just want to “win” one of the bids.
For example, People looking to spend, say, $1 million, will look only at houses priced at $750,000 because they know all of them are in bidding wars and they will have to go “up” to their limit, which is the million. It’s backwards to what people do here in Chicago.
And then you’ll find out they waived inspection (despite the big crack in the concrete foundation you see going into the house that’s on landfill in the mission) and, better yet, they’re paying all cash and can close in a week.
Joy!
So, yes, you CAN ask whatever you want in a tight market.
Didn’t you once say (actually several times) here on this blog, Gary, that if a property is getting multiple offers and there’s a bidding war that it was underpriced? Lol.
And now you’re here saying your property that just got multiple offers is NOT underpriced and everything is fine with the market.
Which is it?
Your sellers are leaving money on the table if there is multiple bids! (or so you’ve always told us.)
Sabrina, cannabis is not legal until next year, just FYI.
@DZ “Is there a Lincolnwood-ish option for the nortcenter folks?”
Yes. Lincolnwood. They don’t sell daily passes to non-residents, only season passes, but I know plenty of northcenter folks that have one. It’s a pretty easy shot from Irving up to Touhy on Lincoln outside of rush hour. Once you pass Hubs it’s 4 lanes the rest of the way.
Sabrina, so many flaws in your story. First you say you can get $1 MM for a $500K home but then your example goes on to say “the highest offer could literally be $750,000” Which is it?
Second the realtor told me that there is a high price for each home and if you list it there you will get no offers. Again, you can’t get anything you want for a home.
Third, I just checked some random properties in SF and didn’t find people paying 50% above the price. If you look long enough you might find them though.
As for getting multiple offers. I actually feel pretty good about my pricing when all the offers come in slightly below my list price. If they go over then I underpriced it.
“First you say you can get $1 MM for a $500K home but then your example goes on to say “the highest offer could literally be $750,000” Which is it?”
There is no such thing as a $500,000 house in San Francisco, so the example is flawed from the get-go.
Are there any $750,000 listings anymore? Probably not but there used to be when I was there and they would list them low like that because they knew they would get offers anywhere from $100,000 to $250,000 over the asking price. The lower you listed it, the crazier it got.
Of course, it all depended on what year you were talking about. Was this all happening in 2010? Not so much. And what is it like in 2019? Now that the average price is over $1 million, there are probably far fewer bidders, depending on the neighborhood.
You really need that group of desperate homebuyers numbering 20 to 30 to get that crazy high price. But the things I’ve seen, year-in and year out, are insane. Sure- the listing agents look at the comps. And then they price it well under so that there is a bidding frenzy. Everyone knows how it works, though.
You really can’t understand the housing market on the coasts unless you live it. Some people literally bid on anywhere from 20 to 50 houses before they finally “get” one. That’s when the desperation sits in. That’s where you don’t get the inspection even though its earthquake country and you could literally lose it all in a quake.
Roll those dice!
Now THAT is low inventory and high demand. We see nothing of sort happening here in Chicago. But why not? Is everyone simply renting instead?
There certainly isn’t a shortage of places to live in Chicago, at least on the condo/apartment side. If you’re desperate for a single family home in a certain neighborhood, it could be more difficult.
Prices should be soaring, though, if we’re at an all time low in SFH inventory. So why aren’t they?
Nobody is going to bid this SFH up to $1m, from $650k. Indeed, it is on its 4th price cut:
https://www.redfin.com/CA/San-Francisco/1357-Brussels-St-94134/home/781685
What’s something like that get in Chicago? It’s about half a standard lot, so maybe $250k, right? In a sort of comparable location.
“anon (tfo) on June 27th, 2019 at 6:36 pm
Nobody is going to bid this SFH up to $1m, from $650k. Indeed, it is on its 4th price cut:
https://www.redfin.com/CA/San-Francisco/1357-Brussels-St-94134/home/781685
What’s something like that get in Chicago? It’s about half a standard lot, so maybe $250k, right? In a sort of comparable location.”
There are literally two 1 BR/1 Ba SFHs with less than 500 sq ft on the market in all of Chicago. They’re priced at $85k and $15k. Certainly not as nice as the one in SF though – they’re teardowns/rehabs. The highest price home at that sq footage in Chicago is a 2 BR/2 Ba in South Old Irving Park that is contingent at $249k with 480 sq ft. Lot is three times the size though (in addition to the extra bed and bath). Decently nice finishes so comparable to the SF property in that regard.
The SF property sold for $82k in 1996 so even if it sells for $600k, that’s a 700% appreciation. Not bad.
“There is no such thing as a $500,000 house in San Francisco, so the example is flawed from the get-go.”
You’re deflecting. The point is even in SF a seller cannot get “whatever they want” for a home.
And just because supply is tight doesn’t mean that prices should be soaring. It is correct that a tight supply market will have higher prices than it would if supply was not tight but how prices rise or fall and how fast is way more complicated than that. If buyers remain conservative because of concerns about schools, taxes, and crime prices are not going to skyrocket.
And according to Compass data out there SF currently has a 2.5 month supply of homes, same as last year, and median price (which I will be the first to say is not the same as “prices”) is also unchanged from last year.
I think it’s because people aren’t willing to settle and the benefits of buying are diminished.
We had two neighbors in our townhome association relocate and put their identical units on the market within weeks of each other. Unit A was tastefully decorated, the clutter was clear, the photographs professional (the neighbor has her real estate license, but sold FSBO), even though the kitchen was slightly dated it was done in a more timeless way and the appliances were new; the unit went under contract close to asking within a month and sold already.
Unit B listed at a lower price, but hired a realtor who took terrible photographs. The unit is empty and those neighbors made no attempt to stage or replace worn fixtures, bedroom carpet, or appliances. Unit B has now had numerous price cuts and is sitting on the market. If they would have just put a small amount of money into staging and superficially updating, they would have recouped that amount plus received their asking price. Now they’re just sitting on the market, cutting the price every few weeks while doing nothing to improve their chance of selling.
It takes so much effort to get contractors lined up that it’s not worth buying a dated unit unless it is an absolute steal or you really need to move. These days, it seems better to stay where you are until something close to perfect comes along.
“The point is even in SF a seller cannot get “whatever they want” for a home.”
Is the $2 million home getting $5 million? No.
But they can pretty much list it for whatever they want and get well above what the comps say. That’s what a tight market with multiple bids does (oh- and all cash buyers.) The buyers simply don’t care. They want a house in Menlo Park damn it. $3 million, $4 million. Whatever it takes.
Why aren’t we seeing that here in Chicago? Because it’s not tight enough. The buyers here aren’t desperate. They’re willing to rent. They’re looking in other neighborhoods. I don’t know. But it’s nowhere near what a record low inventory market should be. Hell, it’s not even 2014-2015 when we saw “bids due at 5 PM” on many listings.
So what’s happening?
Are buyers truly priced out now? Mortgage rates are near all-time lows again. The mortgage rate isn’t going to help you unless it drops down into the 2s. I guess that’s a possibility.
Higher taxes pricing people out?
It’s not the stock market as that should be helping buyers, not hurting.
Why aren’t prices soaring all over Chicago?
“Nobody is going to bid this SFH up to $1m, from $650k. Indeed, it is on its 4th price cut:”
Normally, they’d sell this for the land but it could be that a developer wouldn’t be able to build much on it. It IS near the highway which is desirable so you can hop on and drive down to Facebook or Google.
“two 1 BR/1 Ba SFHs with less than 500 sq ft on the market in all of Chicago. They’re priced at $85k and $15k.”
I don’t even need to look to know that they are both in the 2/3 of Chicago that is Detroit, not the 1/3 that is San Francisco.
What would they fetch on a half lot in the nice part of town? Depending on the exact location, $200k+ as the land value (and potential rental unit). Best buyer would clearly be the neighbor.
Just posted my monthly update on June: http://www.chicagonow.com/getting-real/2019/07/chicago-real-estate-market-update-home-sales-sink-once-again/
IAR is going to claim sales fell 13.4% from last year but my own estimate puts it at 10.4% – a big decline either way. Inventory is tight for detached homes and not so tight for condos. Bot segments are showing sales declines and sales of condos are definitely slowing down. Maybe more condo buyers are renting now?
“Maybe more condo buyers are renting now?”
Thanks Gary. There’s a definite slowdown going on. They aren’t building any new condos in the “affordable” price points anymore so any inventory that is growing is in the luxury level.
And for buyers who want “new” they’re just going to rent instead. Who wants to buy an old 2/2 for $550,000 with out of date bathrooms and kitchen? They’re not building these in any high rises at this price point. Look at the Tribune Tower pricing? Cheapest 1-bedrooms will be like $700,000.
The new apartment buildings are exciting and in great areas with fantastic amenities.