In about a week and a half the Illinois Association of Realtors will be releasing the home sale statistics for Chicago, the region, and the state. Once again the actual closings will be abysmal relative to last November. I estimate that they will report sales down about 40% from last year – with their usual extremely creative positive spin.
But in all fairness last year’s home sales were goosed by that tax credit fiasco and this year is suffering from the vacuum left behind by that same tax credit.
Oh, BTW, 39% of those November home sales were distressed properties – either short sales or foreclosures. Pretty much the same as previous months.
So where are the early signs of improvement that I promised you? It’s in the home sale contract numbers graphed below.
As you can see from the graph, normally at this time of year contract activity falls off. But not this year. It’s been pretty flat and it’s actually running slightly ahead of last year and well ahead of 2008 – finally. In addition, as I’ve mentioned in prior posts, contract activity has not fallen off as much as closings – i.e. there is some evidence that a backlog of contracts is building. Just to give you an idea…compare the roughly 1350 contracts written in November to the 4010 contracts currently either contingent or pending. I suspect those are a lot of short sales waiting for bank approval, which admittedly may never come. In that case we will see these contract numbers fall off retroactively. But so far there is no evidence of this happening. So when these contracts start to close we should see a significant uptick in closings.
Note: As I’ve explained in previous posts I whacked the most recent month’s contracts to allow for at least a 10% cancellation rate.