Market Conditions: Sales Jump 30% in the Best May Since the Boom
The May sales data is out. It’s still red hot out there.
From the Illinois Association of Realtors:
The city of Chicago saw a 30 percent year-over-year home sales increase in May 2013 with 2,762 sales, up from 2,125 in May 2012.
The median price of a home in the city of Chicago in May 2013 was $234,000 up 17 percent compared to May 2012 when it was $200,000. Chicago condo prices also saw double-digit gains for the month, posting a 10.8 percent jump to $274,000. Average time on market in the city was 53 days, down 32.1 percent compared to 78 days last May.
May sales:
- May 2008: 2119 sales
- May 2009: 1557 sales
- May 2010: 2057 sales
- May 2011: 1705 sales
- May 2012: 2037 sales (not sure why the IAR has a higher number for 2012)
- May 2013: 2762 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 market data continues to affirm that we are on the right track, and excitement is growing within the real estate industry,” said REALTOR® Zeke Morris, president of the Chicago Association of REALTORS® and Operating Principal and Managing Broker, Keller Williams Realty, CCG. “Recovery is uneven citywide, however. We still have concerns about some underperforming areas in Chicago. Home owners considering selling their homes should assess if today’s market is right for them. It could be a very good time to sell; in some communities, shorter market times paired with multiple offers make the climate ideal.”
“Another strong month for the housing market that, in some parts of the state, is showing very robust activity,” noted Geoffrey J.D. Hewings, Director of the Regional Economics Applications Laboratory of the University of Illinois. “All the indicators point to a strong three-month period of growth, even in median prices. Mortgage rates are starting to inch upwards but the rates are still attractive enough not to dampen the momentum.”
Will the hot market last until the fall or will higher mortgage rates put the damper on it later this summer?
May home sales up 24.4 percent from a year ago; Statewide median price at $155,000 [Illinois Association of Realtors, Press Release, June 20, 2013]
The next couple of months are a lock, though maybe not 30%. Contract activity continues to be strong and there were 6933 pending sales when I pulled the data on the 7th.
In reality May was more like 34.8% above last year.
10 year up 86 basis points, gold dropping like a rock, home builder stocks getting hammered. All funny money. Realtors should start looking for an SRO now, call it home for the next 5 years.
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Rents are at a high and mortgage rates are still incredibly low. If anything, rising mortgage rates make people want to buy immediately rather than wait since they know rates will be higher in the future.
“The next couple of months are a lock, though maybe not 30%.”
It’ll be interesting to see if the higher rates have any impact Gary. If they do, it won’t show up in the data until August. Most people looking/in contract right now have already locked in rates. Also- the rates may not stay this high which will also be a factor. We’ll have to see.
What’s inventory doing Gary? It is on the rise nationally. Most analysts believe we’ve seen the low in inventory. So as more inventory comes on, at least the pricing pressures will abate.
“If anything, rising mortgage rates make people want to buy immediately rather than wait since they know rates will be higher in the future.”
Mike HG: I agree with you- at least initially. Those who were thinking about buying might get off the fence because they fear the rising rates (which is kind of funny because if you could only afford a property at 3.25% and not at 4.25%- you have other problems.) But if rates stabilize above 4% for awhile it takes away the urgency. So we may see an initial rush over the next few weeks but if rates stay at these levels, then it dies off.
This is off topic, but I just saw it on Yahoo. It’s a 1-bedroom house in the Los Feliz neighborhood of LA for $449,000. The comments are what is most interesting. If someone doesn’t live in or near one of the major metropolitan areas, they just can’t understand housing prices.
http://homes.yahoo.com/blogs/spaces/half-million-dollars-480-square-feet-191001747.html
Shilling: Housing Recovery is “Precarious”
http://finance.yahoo.com/blogs/daily-ticker/housing-recovery-precarious-says-economist-gary-shilling-111451505.html
Lake Titi are you Clio?
No, Miumiu, Clio is/was a douche, supposed doctor living on an estate, correct? Wanted to tell you how much dough he had and how great Oak Brook is. Been replced apparently by a disgruntled librarian intent on showing how much she knows and corresponds w/ the anonymous host on a supposed personal basis; flaming libs wanting to blame the SS crisis on boomers, when in fact the problems started in the 1930’s post depression era; lib jackasses unbale to face the failed dem social and fiscal policies; and, realtor touts who should admit their entire industry is based on payoffs and consists mailny of 40+ year old hags grinking gin and smoking ciggies at Yvette’s.
“which is kind of funny because if you could only afford a property at 3.25% and not at 4.25%- you have other problems”
it’s the same mentality that thinks you can only sell your property if you can recoup every penny you spent on it
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
I really wish we could carve out the GZ from the overall Chicago stats. I’d love to know how far 2013 GZ prices are from the peak. I suppose they’re closer to the 2006-2008 levels than the overall Chicago total as per above.
“10 year up 86 basis points, gold dropping like a rock, home builder stocks getting hammered. All funny money. ”
It would appear that either the markets are taking Bernanke seriously re the so-called tapering or that regardless of what they say the powers that be are losing control over interest rates. If the latter is true and they cannot regain control of interest rates and they continue to soar the consequences will be catastrophic. Debts are now so huge that the system will come apart at the seams. Everyone with any high level of debt, business or personal, will BE BANKRUPT and unable to refinance or service it!!!!!!!
The result of soaring interest rates would be a devastating collapse of world stockmarkets and a slump into depression. Most economies, especially in Europe, never really recovered after 2008, and are already in a fragile state, with the so-called economic recovery being largely a mirage created by money printing that has gone into driving stockmarkets higher. So a market collapse at this juncture would be very bad news indeed.
It has to be said that many long-term charts do not look good at all. The US stockmarket looks like it is finally burning out and going into reverse, copper has looked terrible for a long time and could be close to breaking down and going into freefall, the Chinese market is plain depressed, and after a long recovery European indices look like they are going into reverse. Oil, which tried to break higher just a few days ago, plunged yestereday, and after not just months, but years of boring sideways movement could really get taken down in a broad market slump. Bonds look terrible.
Today’s unemployment numbers came out: Illinois dropped .2% to 9.1%, and is now tied with Mississipi for second to last–surpassed only by Nevada.
Illinois, Tennessee and North Dakota have one dubious distinction, however: their unemployment levels are 0.2% HIGHER than a year ago, the only states to report an increase. But Illinois unemployment is now 9.1%, whereas Tennessee is 8.3% while North Dakota leads the nation in employment at 3.2%.
Lets talk about 700k lofts in the greenzone. Nothing bad could ever possibly happen with such a wise, prudent investment.
“Debts are now so huge that the system will come apart at the seams. ”
I remember last year in a speech Obama mentioned that low interest rates were something to be desired, positioning them as some sort of entitlement.
And more recently look at the student interest rate negotiations being conducted on the hill. Obama has his chief of staff involved in this it is so prominent on the radar. Because today’s graduates are coming out of school with MASSIVE amounts of debt, amounts so massive every bip counts and debt levels that make servicing that debt at 6.8% (what current rates are set to rise to with no compromise) untenable with recent grads dim employment prospects.
Everything is great.
http://www.welovetheiraqiinformationminister.com/images/07-minister.jpg
Fact: Wells Fargo is at 4.5%, up from 4.13 one June 18 and 3.88 on May 22. Rates are going up.
Opinion: The best time to buy is up and has been for a couple months. Places in the GZ will still continue to sell at bubble prices for a few months with people wanting to lock in rates in the 4’s. Rates will hit at least 6%, maybe higher. That will drive prices down significantly. A 2% rise in interest rates decreases a buyer’s purchasing power by about 18%. More of an increase than 2% and you get the picture.
rates are still low and people feel like the bottom of housing is in. They have a much better outlook on it and that is driving sales as well.
“a 1-bedroom house in the Los Feliz neighborhood of LA for $449,000.”
I’m only surprised that it was such a tragic dump in ’03 that it sold for only $185k. Crack dens in horrible areas were selling for that much then. Must have been barely standing.
AIMloan.com rates spiked again today intraday. 30yr mortgage now at 3.875% with points. An interest rate 41% higher than the bottom and significant higher than even two weeks ago. 15yr at 3% vs. 2.25% at the bottom, 33% higher than the bottom (but let’s be honest, these greenzone debtmonkeys don’t utilize 15yr mortgages).
This is the beginning of the next leg down in housing valuations.
Don’t underestimate the Fed, they will come in and rescue the day. Obama now has to pick a “dove” for the next head of the Fed. If Obama doesn’t pick a dove, then the crash happens on his watch, and that’s not something he wants!!
As has been stated time and time again – rising rates don’t necessarily mean lower housing prices. Why are rates rising? Because the economy is getting better and the Fed is stepping back? That is positive to neutral. Because people lost faith in the US govt? That is likely bad. Because inflation has come back? That could be good / bad / neutral. The sell off in equity markets and spreads is very strange. Most sell offs are due to bad economic news. Here we are selling off because the Fed sees good economic news and is going to reduce QE. That is counter intuitive – good news is bad news!
“As has been stated time and time again – rising rates don’t necessarily mean lower housing prices.”
The difference in rates that I cited in my previous posts makes the consumer with a $2000/ month mortgage budget go from being able to afford a 425K house to a $395k home. Thats a 7% drop in one month’s time. So to put that in cribchatter terminology, that 2/2 in River North for 425k that buyer A was looking at, he can no longer afford. The seller, still in the mindset that anything listed will go into a bidding war and command a sale price over list, isnt willing to sell for the $395k the buyer can now afford. Now, that 2/2 for 425 is being bought buy someone who was originally in the 460-470 price range. Eventually, this reaches a point where someone says, this place for 425 isnt worth 425, its worth 400, or less. Keep in mind, this is just with the change in rates in the last month. Dare I do the math for if/when they creep up to 6 or even 7%.
“Because the economy is getting better and the Fed is stepping back” During the US’s best times of growth (91-02), rates averaged around 8%. What happens then?
yoss: The Fed said they won’t move short term Fed funds rates until 2015!!
They can’t stop buying USTs because there’s nobody else to fill the gap, at these price-fixed (low) prices! There’s no hope the UST can reduce the monthly deficits because more than 50% of the country thinks the Tea Party are a bunch of fascists and racists. There’s no chance the Fed will stop printing and price-fixing the markets. Obama won’t appoint a fiscal hawk, he’s going to appoint a money-printer because he doesn’t want a crash on his hands. Kicking the can is going to continue, so bonds should rally and the recent turmoil is just a blip. Rates are not increasing because of the economy, they have been increasing because of fear. When Obama and the Fed convince people that they’re going to continue on, which they will, because they have no choice….then we’ll get the status quo again.
None this stuff actually helps increase real economic activity however, it’s all just price-fixing and keeping the patient alive in the short term.
PS It’s been 5 years since 2008, and all the Obama/Bernanke policies have done is produce an additional $5 trillion in debt, with no significant increase in economic activity to show for it. It’s almost a GIVEN that this will continue until the end of Obama’s term. Why would he change now? It would be an admission that everything that’s been done for 5 years was wrong and basically worthless economically.
So, by the end of Obama’s second term, we’ll likely have another $5 trillion in debt, and not much more economic improvement. His legacy will be 8 years, stagnant economic levels, and an additional $10 trillion in UST debt. Paul Krugman will then have to answer for what he’s done to future generations, because all this debt is not getting the US economy to escape velocity. We’ll never get out of this stuck orbit with the current scheme and the debt is all we will have to show for it.
The TP was right, we should have let the free market forces reset all the markets and prices in 2008, we’d be further along….and we’d have less debt, not more. Obama is going to set up the next president with the crash. We can all assume we’ll have status quo stagnation, Fed-induced low interest rates, until the end of his term.
“It has to be said that many long-term charts do not look good at all. The US stockmarket looks like it is finally burning out and going into reverse..
I say, be a man and step in and buy it here..
“William D. (June 21, 2013, 2:22 pm)
The difference in rates that I cited in my previous posts makes the consumer with a $2000/ month mortgage budget go from being able to afford a 425K house to a $395k home. Thats a 7% drop in one month’s time. So to put that in cribchatter terminology, that 2/2 in River North for 425k that buyer A was looking at, he can no longer afford. The seller, still in the mindset that anything listed will go into a bidding war and command a sale price over list, isnt willing to sell for the $395k the buyer can now afford. Now, that 2/2 for 425 is being bought buy someone who was originally in the 460-470 price range. Eventually, this reaches a point where someone says, this place for 425 isnt worth 425, its worth 400, or less. Keep in mind, this is just with the change in rates in the last month. Dare I do the math for if/when they creep up to 6 or even 7%.”
I don’t think you understand – if rates rise because the economy is doing better the reduced buying power from the rate rise could be offset by increased income and / or net worth.
“Because the economy is getting better and the Fed is stepping back” During the US’s best times of growth (91-02), rates averaged around 8%. What happens then?”
It is not clear.
“What’s inventory doing Gary? It is on the rise nationally. Most analysts believe we’ve seen the low in inventory. So as more inventory comes on, at least the pricing pressures will abate.
Last graph: http://www.chicagonow.com/getting-real/2013/06/chicago-real-estate-market-update-may-2013/
As of the 7th it was still trending downward. Plenty of properties coming on the market. They just get snapped up so fast.