It looks like the Chicago real estate market is still declining – slightly. Compared to last year April home sales in the city were down by 5.5%, making April the 4th month in a row of declining sales. Although the Illinois Association of Realtors will be looking at the same sales numbers as me in about 2 weeks they are going to report about an 7.9% decline for reasons I explained long ago.
April sales are flagged as red squares in the graph below. The blue moving average has turned decidedly downward but this April is still stronger than 5 out of the last 6 years. This April’s sales were somewhere between the 2007 and 2008 levels but also similar to where the market was in 2001 and 2002 as it was taking off.
And then there was the 12.1% increase in median home prices over the last year that the IAR will focus on. Nothing to see there. Let’s move along.
Chicago Home Contract Activity
As you can see by looking at the home contract activity below fewer buyers are going under contract than this time last year also. April actually saw one of the largest estimated drops in contract activity since April 2011, with a 13.6% decline from last year. And the 12 month moving average reflects this change in direction as well. This does not bode well for closings over the next couple of months.
Pending Home Sales
With declines in both contract activity and closings it’s important to keep an eye on the backlog of pending home sales since this is a buffer between the contracts and the closings and can end up temporarily hiding changes in contract activity. Right now we are on par with historical levels at around a 2.4 month supply of potential closings.
Distressed Home Sales
The contribution of distressed home sales to the total is on a steady decline as you can see below. We continue to hit new lows and in April only 27.3% of the sales were distressed. Recently I saw someone point out that this decline in distressed home sales was largely responsible for the overall decline in home sales and it’s almost true for Chicago. Had distressed home sales remained flat to last year in Chicago we would have seen only a 1.7% decline in home sales.
Chicago Home Inventory
While the inventory of single family homes continues to decline, hitting a 4 month supply, condo and townhome inventory is back on the rise over the last few months, back up to a 3.6 month supply from a low of 3.0 months as recently as December. I continue to believe that it is these extremely low inventory levels that are accounting for the decline in sales.
Chicago Home Sale Market Times
The amount of time it takes for properties that do sell to sell is back on the decline after spiking up for several months. Single family homes that sold in April took only 104 days to sell, while condos and townhomes took only 86 days. This makes more sense, given the low inventory levels we are operating with. It was a mystery to me that market times were actually increasing, though I explained it away as the result of the poor quality of inventory remaining on the market after the good stuff was picked over.
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