Ever since I moved to Chicago’s East Village almost 4 years ago I’ve been writing about how hot the neighborhood (including Ukrainian Village) is: Hot Chicago Real Estate Markets: East Village And Ukrainian Village. The way I demonstrated it back then was by looking at the trend in median sales prices and also the amount of new construction taking place.
A couple of months ago Redfin finally joined the party when they came out with their list of the country’s hottest real estate markets and Ukrainian Village landed the top slot. They didn’t actually mention East Village in their top 10 list but when you drill down to the Chicago area it is listed just 2 slots behind Ukrainian Village. The reality is that they are essentially the same neighborhood except that the western portion of Ukrainian Village goes to a different school.
Their methodology appeared a bit vague to me. Throughout the course of the article they reference the following factors without explaining how they quantified these factors or weighted them into an overall measure:
- Proximity to public transportation
- Which homes customers mark as favorites
- Proximity to stores
- Short rides to downtown
- Non-cookie cutter homes
- % of homes that are hot according to Redfin
- Sale to list %
- Median days on the market
Now, don’t get me wrong, we love the neighborhood but frankly it doesn’t rank very high on about 1/3 of these metrics. Proximity to public transportation is not great by most people’s standards, though I can get to Michigan Avenue in about 20 minutes by bus. On the other hand I can drive pretty much anywhere downtown in about 15 minutes.
I think we have passed the point of affordability with most of the new construction single family homes on full sized lots going for about $1.4 MM now. And all the new construction homes are pretty similar.
Oh…and that sale to list % is a meaningless statistic as I’ve often pointed out. That ratio can just as easily be high as a result of low list prices as it can by virtue of high sales prices.
But that’s about 1/3 of the metrics. The neighborhood actually scores pretty well on the other metrics. But was Redfin too late to the party?
As you know I’m a data guy so I prefer to focus on concrete real estate statistics in determining if a neighborhood is hot or not. The three metrics I think are the best indicators are a strong upward trend in average sales prices, low inventory levels, and short market times. So let’s see how the neighborhood is doing in this regard.
Average Sales Price
The trend in the average sales price of detached homes is probably the best indicator that Ukrainian and East Village are hot neighborhoods. In the graph below I’m using a 12 month rolling average to smooth out the noise in the data and it shows average sales prices skyrocketing. From a low in August 2011 to the peak in January of this year the average price of detached homes that have sold in this neighborhood have risen just over 70% while the average sales price of condos has risen just 37%, from a slightly later trough.
Keep in mind that this does NOT mean that home values are going up 70% in the area. What is happening is that the older, smaller homes are being torn down and increasingly more expensive, new homes are being built. When I moved to the neighborhood 4 years ago you could buy a teardown as cheaply as $165K and the larger new construction homes might cost you $800 – 900K. But today teardowns go as high as $460K with new construction being built as high as $1.4MM.There is just not as much new construction of condos in the neighborhood
That’s a hot neighborhood BUT notice in the graph below that the trend in average sales prices has plateaued in the last year. Yeah, Redfin may be late to the party on this one.
As in most of Chicago the inventory level of both detached and attached homes is pretty darn low. In the graph below, which is not using a moving average this time, you can see that the inventory of detached homes have gone from a peak of more than a 2 year supply back in 2008 to a 2 month supply in February. But that number is actually up from a year ago when it was only a 1.6 month supply.
Condo inventory is also at about a 2 month supply (2.1 months to be exact), which is down from 2.6 months last year.
It’s hard to imagine inventory any lower than this so the fact that it has flattened out doesn’t really mean that the neighborhood has lost momentum.
Home Sale Market Time
Both detached and attached homes have become a lot easier to sell in the last few years as illustrated in the graph below – once again using a 12 month average to smooth out the noise. Sales of detached homes once took an average of 239 days but now only take 62 days while condos sell on average in 56 days. Just to remind you that data only counts homes that do sell and not the ones that never sell.
Looking at the graphs it does appear as though the decline in market time has bottomed for now but the neighborhood is still going strong.
#ChicagoRealEstate #UkrainianVillage #EastVillage
Gary Lucido is the President of Lucid Realty, the Chicago area’s full service discount real estate brokerage. If you want to keep up to date on the Chicago real estate market, get an insider’s view of the seamy underbelly of the real estate industry, or you just think he’s the next Kurt Vonnegut you can Subscribe to Getting Real by Email using the form below. Please be sure to verify your email address when you receive the verification notice.