Despite some real hopeful signs in January that the Chicago real estate market might be picking up some steam February was basically a dud. Now, technically, February home sales were 5.5% higher than last year but that’s with an extra day in February this year – it’s leap year, remember? If we adjust the sales number down by 28/29 then sales were actually down by about 1.5%.
In 2 weeks the Illinois Association of Realtors will release their figures, which will show a smaller 2.1% increase over last year, not because of leap year but because of the flawed methodology they use to compare sales figures with the previous year.
In the graph below I show the monthly Chicago home sales going back to January 1997 with all the Februaries flagged in red for easy comparison. As you can see there has only been marginal improvement over the last 4 years in the February sales figures, despite the fact that this February had the highest sales in 9 years and was even higher than 2013, which was a really strong year.
And that blue moving average line also shows how sales growth has stagnated.
Chicago Home Contract Activity
Contract activity has similarly experienced little growth over the last few years as shown in the graph below. I’m estimating February up about 4.7% over last year, without adjusting for leap year. 4 of the last 5 months have had contract activity that grew by less than 5% year over year. Since this is the activity that feeds closings over the next couple of months it does not look good for closings.
Pending Home Sales
The bright spot was pending home sales, which did show an increase over last year. That figure rose to a 3.1 month supply of closings in waiting vs. a 2.9 month supply for last February. That pipeline will help feed the March and April closings.
Distressed Home Sales
Distressed home sales in Chicago as a percentage of the total continues to decline, with February coming in at 22.9% vs. 29.9% last year – another 7 year low. As the backlog of distressed homes gets cleared out they are a decreasing share of the total sales, which is good for home prices.
Chicago Home Inventory
Home inventory remains at stupid low levels and must be driving the low sales growth numbers. We hit another record low of a 2.7 month supply of condos and townhomes and a 3.7 month supply of single family homes, which is down from a 3.7 and 4.8 month supply, respectively, last year. Both of these numbers represent what is known as a seller’s market.
Interestingly, not all areas of the city are having the same experience. For instance, the inventory of single family homes in Lake View is actually increasing right now and Lake View has always been a very popular area. Check out the first graph on that page I just linked to. In fact, the market for single family homes there has recently flipped into a buyer’s market with a 7.3 month supply of homes, up from 3.8 months last year and that is the highest level it’s been at since 2011.
Chicago Home Sale Market Times
How long it takes to sell a home in Chicago is one of the great mysteries of our time. Inventory is remarkably low and anecdotally homes appear to be selling fast. Nevertheless, market times are not all that low. Condos and townhomes that sold in February took 101 days to sell, barely down from 104 days last year, and single family homes took 104 days to sell, down only slightly from 113 days.
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.