Market Conditions: The Sales Recovery Continues As September Jumped 23.2% YOY
It’s that time of the month when we get the sales update from the Illinois Association of Realtors. As many of you predicted, the year over year housing data continues to show improvement.
From the Illinois Association of Realtors:
The city of Chicago saw a 23.2 percent year-over-year home sales increase in September 2012 with 1,845 sales, up from 1,498 in September 2011. The condo market in the city of Chicago showed a sales increase of 32.2 percent, going from 855 units sold in September 2011 to 1,130 sales in September 2012.
The median price of a home in the city of Chicago in September 2012 was $188,900, off 0.6 percent compared to September 2011 when it was $190,000.
September sales for the last 5 years:
- 2007: 2172 sales
- 2008: 1816 sales
- 2009: 1918 sales
- 2010: 1403 sales
- 2011: 1498 sales
- 2012: 1845 sales
Median prices for the last 5 years:
- 2007: $267,750
- 2008: $268,600
- 2009: $225,000
- 2010: $180,000
- 2011: $190,000
- 2012: $188,900
Thanks to G we also have a longer history of the September condo/townhouse sales. While sales were up year over year, they still trail the Great Recession years of 2008 and 2009:
Year/Sales/Median
1996 757 $127,000
1997 959 $142,900
1998 1,158 $158,950
1999 1,195 $180,000
2000 1,255 $219,900
2001 1,249 $223,000
2002 1,621 $245,000
2003 2,114 $255,500
2004 1,960 $269,450
2005 2,344 $276,538
2006 2,006 $285,000
2007 1,650 $310,200
2008 1,188 $311,750
2009 1,159 $270,000
2010 820 $240,000
2011 863 $234,600
2012 1130 (don’t have median price data)
“On one hand we’re having great success because we’re seeing many more sales come to close, but the price points are lagging behind where we’d like to see them,” said REALTOR® Zeke Morris, president of the Chicago Association of REALTORS® and Operating Principal and Managing Broker, Keller Williams Realty, CCG. “Prices are in line with the amount of distressed product that’s still out there; we have to work through that inventory. We should continue to try to stabilize the lower half of the market, particularly the condo market in the city, which to a large extent is a function of consumer confidence and jobs.”
Median price is stuck (but, as we know, that is a result of the sales mix). Sales, while up, still lag prior years.
Is this a good- but not great- report?
Sales, median prices show gains in September in Illinois [Illinois Association of Realtors Press Release, October 19, 2012]
What I found interesting was that when you look at the PMSA data it’s the highest in 6 years: http://www.chicagonow.com/getting-real/2012/10/chicago-area-home-sales-reach-highest-level-in-6-years/
Real estate is hot hot hot!
More transactions equals more realtors and mortgage brokers getting paid. Also more transfer taxes generated too for local government. Why is everyone so concerned with prices needing to increase?
I wanted to share this listing for some Friday entertainment.
Shot #4 is my favorite:
http://www.redfin.com/IL/Chicago/5171-W-Montrose-Ave-60641/home/13477395
LMAO Milkster!
I’m not sure, but it looks like someone is passed out on the couch in Photos #3 and #4.
Milkster,
You know, for once I actually think photos that bad are appropriate. This will save a lot of people from having to go there to see how bad it is.
Why is this such a shock? It was obvious that real estate was going to come back – please tell me (HD and G) that you really didn’t believe it was going to keep going down forever for the next decade, right?
I don’t want to call anyone knucklehead but look at those numbers again before you claim real estate has stopped going down
Clio, seriusly, everyone knows that real estate always goes down down down!!!
“Back” is a relative term. Many people have no memory of a normal real estate market since it was so abnormal for so long. A normal market would be something like the 1990s, which is kind of what we’re seeing now. The boom and bust of the 2000s market was nothing like historical norms. A healthy market would be one where appreciation is small but steady, and new construction is at a moderate pace. Also, loan approvals are traditionally very hard for people with no savings and/or blemished credit.
“Why is this such a shock? It was obvious that real estate was going to come back – please tell me (HD and G) that you really didn’t believe it was going to keep going down forever for the next decade, right?”
Not going down is not the same thing as “going up”.
Last I checked, the Chicago market wasn’t “going up.”
“Why is this such a shock? It was obvious that real estate was going to come back – please tell me (HD and G) that you really didn’t believe it was going to keep going down forever for the next decade, right?”
By the way- this kind of market where we hit bottom and stay there for awhile- isn’t good for 95% of home owners. Just this weekend I talked with numerous homeowners who all wanted to sell. Unfortunately, they’re all underwater by a considerable amount. So they told me they were going to “wait it out.” One had kids at 7 and under. I jokingly told him he’d be able to sell by the time a few of them were in college. But I really wasn’t kidding.
If he’s 25% underwater and prices go up 1% to 2% a year- it will take years and years for him to get out of it (yes- I know he’s paying down the principle too. So he’ll be building some equity eventually.)
This is why we’re seeing really low inventory. It could be like this for years. Homeowners want to move but they simply can’t so they are “waiting it out.”
Truly- if you’re a renter right now- you’re in a perfect position (other than low inventories which makes it difficult to find that “dream” place.)
“If he’s 25% underwater and prices go up 1% to 2% a year”
That “historical” 1-2% has always been in real dollars (but more accurately in the 25-100 bp range). 4 years of “normal, historical” price increases, together with ~5% inflation gets the 25% underwater person out of the hole.
Of course, overall (ie, median or mean) market improvement doesn’t mean that the 07-vintage $800k duplex down is coming off that $600k value at anything like the same rate.
Sabrina (October 21, 2012, 9:52 pm) – “…Truly- if you’re a renter right now- you’re in a perfect position (other than low inventories which makes it difficult to find that “dream” place.)”
Rents are at all time highs and inventories are low making it more likely that renters will spend more time trying to find a place to buy – all the while paying those sky high rents. I wouldn’t call that a perfect position. But if you do find a nice place the pricing will most likely be very attractive.
IAR will report October home sales for the city of Chicago up approximately 53.7% over last year, which is almost a record increase over the previous year. Meanwhile, huge increases in contract activity virtually ensure that this trend will increase into the near future: http://www.chicagonow.com/getting-real/2012/11/chicago-home-sales-skyrocket-in-october/
And, as you all know, inventory levels just keep dropping.
“IAR will report October home sales for the city of Chicago up approximately 53.7% over last year, which is almost a record increase over the previous year.”
Thanks for the update Gary. This is good news. And combined with low inventory – that should mean prices will be pressured to move higher.
This is the scenario many of us have talked about for years on this site.
So then what happens?
Will all the people “stuck” in their houses/condos start listing them for sale?
Will everyone who became an accidental landlord finally try and dump the property?
Or is it more gridlock- with those property owners STILL underwater by 20% or more still trapped so they can’t sell anyway?
“Will all the people “stuck” in their houses/condos start listing them for sale? Will everyone who became an accidental landlord finally try and dump the property?”
yes and yes. the key will be whether or not people list their properties realistically instead of trying to recoup every dollar they sent on their property or thinking that another boom is about to occur.
I think sellers are much more realistic, which is precisely why inventory is so low. I suspect prices won’t rise much. As soon as they start to go up on a year over year basis the sellers will come out of the woodwork and keep the prices from rising any further. But I think it will be tough for prices to go down much further. I’ll call the bottom as soon as I see the year over year increase in prices. We’re getting closer.
“But I think it will be tough for prices to go down much further.”
Gary- I think the wildcards are the economy going into another recession (I’m not saying it is right now- but the business cycle is inevitable) and the interest rates. We’re all used to the low rates. It will be shocking if they go up in any substantial way. But they will have to go up at some point. Right? (or this brings me back to the “we truly are Japan” argument.)