Chicago Real Estate Market Update: September Home Sales Soar

After telling you for 3 straight months that the Chicago real estate market should be seeing a significant increase in home sales it finally happened. The really strong contract activity of the last 3 months finally flowed through a little bit in August home sales but September jumped 31.6% over last year. If you look at the graph below (all September values flagged in red and a 12 month moving average in green) you’ll also see that this was the highest September in 14 years.
When the Illinois Association of Realtors reports the numbers in about 2 weeks they will show it as only a 28.2% increase because of the squirrely way they do their calculation.
As you can see the moving average is trying to return to its recent trend but hasn’t quite made it. I can tell you that right now the last 12 months have been running about 5.6% below the previous year’s level. That’s better than I expected and it means we might actually be able to end the year at least as well as last year.

Chicago monthly home sales
Chicago home sales have been declining now for several years but the Coronavirus really tanked the market in May and June. The market returned to more normal levels starting in July.

Chicago Home Contract Activity

Speaking of contract activity…take a look at the graph below. September was another record month of contracts written in Chicago – 25.8% higher than last year – as the Chicago real estate market plays catch up. That’s 4 straight months of double digit percentage increases which finally got reflected in September closings. As you can see the moving average line has basically returned to normal. In fact, it’s only 0.1% below where it was last year. So that’s why I’m saying that closings for the year might end up at least flat to last year. In addition, given this strong level of contract activity, I would expect October closings to also be way above last year.

Chicago home sale contract activity
Chicago home sale contract activity hit another record high for this time of year after plummeting to record lows because of Coronavirus issues.

Pending Home Sales

The backlog of written contracts that haven’t yet closed gets reflected in pending home sales. As you can see in the graph below we just hit another 7 year high which was 825 units higher than last year. So that’s going to feed closings over the next month or two.

Chicago pending home sales
After hitting historic lows the backlog of homes likely to close in the next 1 – 2 months has reached the highest levels in 7 years.

Distressed Home Sales

The percentage of home sales that are distressed in Chicago has been on the decline for 10 years now. As it got closer to the bottom I assumed it would start bottoming out. Perhaps that’s what would have happened had it not been for the pandemic which resulted in a moratorium on foreclosures. Without new foreclosures you would expect a significant decline in distressed home sales. September had only 2.8% distressed sales vs. 6.0% last year.

Chicago Distressed Home Sales
Since the housing crisis the percentage of home sales that are distressed has steadily declined, even during the pandemic

Chicago Home Inventory

The Chicago real estate market is so strange this year that I found the standard home inventory reports to be misleading. To avoid boring you to death I’ll just tell you that both inventory and sales got shifted out and when you look at that in the standard reports it exaggerates how high some of the inventory is. On an absolute basis inventory is high but it’s being absorbed almost as quickly as it’s coming on the market. That’s why I’m calculating months of supply based on current month contracts in the graph below.
In that graph you will see a marked divergence between detached homes, which are dropping, and attached homes, which are rising. Detached homes did hit a record low of a mere 2.0 months of supply but attached homes, with a 6.2 month supply, simply ended up matching last year’s level. No big deal and it doesn’t exactly support the narrative that people are bailing on condos. But if you look at the standard reports it appears that attached inventory is skyrocketing.

Chicago home inventory
After a big Coronavirus induced spike in April the inventory of homes for sale dropped back down. Detached inventory hit a record low in August while attached inventory returned to normal levels.

Chicago Home Sale Market Times

As further evidence that the Chicago condo market isn’t doing too poorly…the time it took to sell a Chicago condo/ townhome that closed in September actually fell from 77 days last year to 61 days this year. That would not be happening if the condo market was all verkacken. Meanwhile detached homes also fell slightly from 78 days to 73 days. So both markets seem to be doing OK now despite he pandemic induced disruptions earlier in the year.

How long it takes to sell a home in Chicago
When the pandemic first hit Chicago market times rose but now they are close to being where they were last year.

Our Web site also has some additional Chicago real estate market data which you should check out.
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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.

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