You see…when I phrase the headline like that it doesn’t sound so bad that home sales were actually down in December from last year. The Chicago real estate market pretty much ended 2014 the same way it has been running the past few months – overall sales down a bit from last year but non-distressed home sales actually up. Here’s your preview of what the Illinois Association of Realtors is going to report for December in about 2 weeks plus a lot more information.
Let’s start with the top line number: total home sales, which the IAR is going to report as down about 7.1% from last year. As usual, the actual number will be slightly better – more like down 4.6%. This top line number is graphed below going back to 1997, with all the Decembers flagged as red squares. As I mentioned in the headline, last month was the second highest December in 8 years, which is pretty darn good. That’s also somewhere between the sales volume of 2001 and 2002.
However, when you look at just the non-distressed properties that have sold the picture is somewhat brighter, as it has been for several months now. Sales of non-distressed properties were actually up 8.0%. That’s actually very encouraging.
Chicago Home Contract Activity
When you look at contract activity the picture is actually very consistent with the previous two years. I’m estimating that when the dust settles on all the contracts that will fall apart contract activity is going to work out to about 2.6% higher than last year. All else being equal this would bode well for closings over the next month or two.
Pending Home Sales
The other piece of the puzzle (in terms of foreseeing future closings) is what happened to pending home sales. I have that graphed below and it seems to be trending down over the last couple of years. Nevertheless December pending home sales were only down from a 1.74 month supply last year to a 1.62 month supply this year – not very dramatic at all.
But exactly what does this mean for future closings? It means that there aren’t a lot of deals in the pipeline so future sales figures are very dependent upon more contracts being written.
Distressed Home Sales
It should be clear from the graph below that sales of distressed homes as a percentage of the market has been falling like a rock, which is good for everyone except bargain hunters. For December only 23.6% of the sales were distressed, down from 32.5% last year and 45% at the peak in 2011. Note that we are heading towards the peak, which usually falls in February. It will be interesting to see how high it peaks this year.
Chicago Home Inventory
Home inventory levels are still very low in Chicago. In fact, condo/ townhome inventory is at the lowest level for the entire time period that I have data for – 3.1 months supply vs. 3.4 months last year. Those are extremely low numbers. Meanwhile, detached single family homes bottomed out at the same record low of last year – 4.8 months supply.
With inventory levels so low it’s no wonder that sales volume isn’t stronger.
Chicago Home Sale Market Times
Homes continue to sell quickly. Market times remain low, though they have ticked up considerably from the seasonal lows of the summer. Condos and townhomes that did sell sold in only 92 days, which is down from last year’s 97 days. Detached single family homes sold in only 109 days, which is up only slightly from last year’s 106 days.
You can say what you want about the sales level but the fact of the matter is that inventory levels and market times are both flashing that it’s a seller’s market. Of course, that doesn’t mean that anyone can sell anything at any price. Buyers are as picky as they’ve always been. There is no escaping the discount for outdated kitchens and baths.
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