This is getting ridiculous. My headline for last month’s update on the Chicago real estate market was Lowest October Sales In 5 Years and now look at this month’s headline. I think it’s pretty clear that home sales jump around quite a bit from month to month and, as I pointed out last month, you have to watch pending home sales as well. Clearly there were some deals waiting in the wings to close and they came through in November.
Yeah, November home sales were up a whopping 16.5% over last year, which was the largest year over year gain in 38 months. But look at the graph below and notice a few things. First, last November was pretty weak. Second, sales aren’t that much higher than they were 3 or even 4 years ago. And, finally, let’s start paying more attention to that blue 12 month rolling average line which has totally lost steam over the last 3 years.
The Illinois Association of Realtors will report these numbers in a couple of weeks but they will put the gain at more like 13.9%.
Chicago Home Contract Activity
Contract activity is basically telling us the same story as the closings – it’s gone flat as shown by another blue line in the graph below and 5 red dots in a row that are pretty close to each other. But if you must know I’m estimating that November contract activity was down by 7.0% from last year, which is the biggest drop in 27 months.
Pending Home Sales
As I mentioned last month we were going into November with a pretty large backlog of pending home sales. Well, we worked that backlog down in November, which explains how we were able to close so many deals while not writing that many new contracts. Now we find ourselves at the end of November with an historically low 2.07 month supply of pending homes vs. a 2.31 month supply last year. So that’s going to be a drag on December closings.
Distressed Home Sales
The decline in distressed home sales as a percentage of the total has been going on for 5 years now with little evidence of stopping, though the numbers are getting really low. The November percentage was 15.5% compared to 18.6% last year.
Chicago Home Inventory
And the inventory level just keeps hitting new lows, which makes it much harder for home buyers to find places and that is certainly a damper on sales. In November condo and townhome inventory dropped to a measly 2.9 month supply, down from last year’s 3.5 month supply, while there was only a 4.2 month supply of single family homes compared to a 5.1 month supply last year. That’s quite a drop from the days of an 18.3 month supply.
Chicago Home Sale Market Times
Interestingly the market time for attached homes and detached homes went in opposite directions in November. Condos and townhomes dropped from 81 days a year ago to 70 days this November, which is fairly significant drop. However, the market time on single family homes actually rose from 80 days to 90 days. That’s fairly odd because the inventories for both types of properties dropped from last year as I just indicated.
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.