In a nutshell the Chicago real estate market just treaded water in the last 3 months of 2015 but I think it’s pretty clearly a result of very little inventory on the market as I’ll get into below. December came in with a mere 1.8% gain in sales over 2014 but when the Illinois Association of Realtors reports the numbers in a couple of weeks they are likely to report an even smaller gain of 0.4% for reasons I’ve covered many times before.
The graph below displays Chicago’s home sale activity going back to 1997 with all the December values flagged in red and a blue 12 month moving average line. You can see that the trend has really leveled off in the last few months of 2015 and December was lower than 2013. So basically December ranked as the second highest in the last 9 years, which isn’t bad but we really expected sales to steadily climb higher from here on out – not that I expect it to reach the bubble levels any time soon.
BTW, one thing you’ll notice in the graph below is that December is often higher than November despite the fact that this is the time of year when sales are generally declining. Apparently a lot of buyers and sellers are determined to make a change before the end of the year. Weird that an arbitrary date on which a year ends determines human behavior like this.
Chicago Home Contract Activity
Home sale contract activity was up only 0.6% in December and has basically gone nowhere in years. December was about at the same level it has been for the previous 3 years and those years really weren’t that much higher than the years prior to them. But as you can see from the blue moving average line below December is not much of an indicator for the entire year, though it is an indicator of closings likely to occur in January and, to some extent, February.
Pending Home Sales
An even better indicator of closings likely to come in the next month or two is pending home sales. The graph below shows an overall declining trend, though December was up slightly from last year with a 1.65 month supply vs. last year’s 1.59 month supply.
Distressed Home Sales
What else is new? The share of distressed home sales in Chicago continues to decline. December came in with only 17.9% vs. last year’s 23.6%, which is another record low. As I’ve mentioned before, since we are approaching some kind of bottom the rate of decline is necessarily slowing down.
Chicago Home Inventory
The inventory of homes for sale in Chicago – or the lack thereof – is the real story here. It just keeps getting lower and lower every month. People just aren’t listing their homes like they used to (I actually have data on that). Look at that graph below, though I hate the fact that they truncate the Y scale at 2.5 months, which distorts the presentation. In December detached single family homes (which is what a lot of people refer to as simply single family homes) hit a 3.7 month supply, incredibly down from last year’s 5.0 months supply and condos/ townhomes (attached) hit a mere 2.6 month supply, down from last year’s 3.6 month supply.
Is this bizarre or what? Clearly it’s a seller’s market and you would expect prices to be skyrocketing – but they’re not except in special cases. That’s even more bizarre.
Chicago Home Sale Market Times
So here’s another bizarre factoid. Despite ever lower levels of inventory market times have not come down significantly, which makes absolutely no sense – unless there are just a ton of homes on the market that are overpriced right now. December detached homes sold in an average of 93 days, which is only down slightly from 2014’s 98 days. Meanwhile condos/ townhomes were unchanged from last year at 93 days.
Now, anecdotally I will tell you that many of our recent listings have sold quickly with very few showings – far fewer showings than we’ve seen historically. But that’s anecdotal data and I really don’t know what to make of it. And if I may get on my soapbox for a minute…most realtors would point to this as evidence of their magic powers in real estate but we all know that it’s really the market.
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.