While it’s true that the Chicago real estate market just had its highest August sales in 14 years there are a few caveats that go with that statement. First, you won’t be able to tell that from the graph below (all the August points are in red and there is a green, 12 month moving average line) because the August numbers aren’t yet finalized. When they are it will be more apparent but in the meantime we should compare 7th of the month numbers to previous 7th of the month numbers. On that basis August was 0.6% higher than last year, despite the fact that the Illinois Association of Realtors will report a 1.4% decline from last year because they no longer compare this the right way.
Second, last year is not really a great comparison because it got really weird with the pandemic. Therefore, it’s better to compare August to 2019 and on that basis sales were up 8.7%. That clearly bucked the downward trend we were on pre-pandemic but it’s more like a normal growth rate instead of the torrid growth pace we were on for a while. It looks like the real estate market is slowly returning to normal.
It also looks like condos continue to drive the growth in the market with attached home sales rising 13.5% from 2019 and detached home sales rising only 1%. I’m sure it’s the lack of inventory holding back detached home sales.
Chicago Home Contract Activity
You can get an early sense of where the Chicago real estate market is heading by tracking contract activity. In the graph below you can see that August activity was slightly lower than last year but still higher than all previous years – 14.5% higher than 2019. So we probably have at least one more month of fairly strong sales growth since contracts lead sales by a month or two.
Pending Home Sales
The number of homes under contract waiting to close gives us another indicator of what future sales might look like. Dropping 490 units in the last year, the pending home sales numbers are definitely pulling back from their recent highs but are still higher than 2018 and 2019. So, this source is not likely to fuel much in the way of future sales growth.
Distressed Home Sales
When you put in place a moratorium on foreclosures it should be no surprise that the number of foreclosures plummets. Consequently, the decline in the percentage of home sales that are distressed has continued to levels that probably would not have been possible otherwise. August only had 1.4% distressed sales compared to 3.4% last year.
Chicago Home Inventory
Inventory remains a challenge for home buyers. The graph below is still based upon my own calculations of months of supply of homes for sale. Both attached and detached home inventory is tight but it’s not as tight as it has been and the normal seasonal patterns have totally disintegrated with the pandemic. We’re actually seeing more detached homes coming on the market right now when, normally, there would be fewer. There are in fact fewer condos on the market lately though. The net result was a 2.1 month supply of detached homes and a 3.6 month supply of attached homes. Those are record lows for August.
Chicago Home Sale Market Times
And homes are selling incredibly fast still. You can see how the average market time for detached homes hit a record low of only 39 days with half the homes selling in 14 days or less. Attached homes sold on average in 68 days, which is the same as last year, but half of those homes sold in 30 days or less. Interestingly, last August half the attached homes sold in only 23 days.
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Gary Lucido is the President of Lucid Realty, the Chicago area’s full service real estate brokerage that offers home buyer rebates and discount commissions. If you want to keep up to date on the Chicago real estate market or get an insider’s view of the seamy underbelly of the real estate industry 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.