September was another slow sales month for the Chicago real estate market with sales down once again from last year – down 1.2%. In fact, September sales were lower than 3 out of the last 4 years so the real estate market has really stalled. You can see all of this in the graph below with all of the September values highlighted by little red squares and a light blue 12 month moving average line that has really plateaued lately.
This small decline from last year has been extremely typical throughout 2017 so far and I have no reason to believe that it’s going to change any time soon due to the continued extreme shortage of homes for sale which I will get into further below.
In roughly 2 weeks the IAR will come out with the official numbers for Chicago and Illinois but they will report that Chicago sales were down 3.8% from last year due to a flaw in their reporting methodology.
Chicago Home Contract Activity
When you look at the graph of home sale contract activity in Chicago you see a similar pattern of sales not really going anywhere recently. I’m estimating that September was down by 2.4% from last year, which means it was lower than each of the last 3 years.
The thing about home sale contract activity is that closings occur about 1 – 2 months after the contract is written so these numbers foreshadow what closings are going to look like in the next 1 – 2 months. More of the same.
Pending Home Sales
The other indicator that homes sales are not going anywhere any time soon is that pending home sales are down. This is the pipeline that feeds closings and at the end of September there were only enough pending sales to feed about 1.65 months worth of closings, which is down from a 1.81 month supply last year. This sorta implies that we’ve already pulled forward a bit of these contracts in order to get the paltry sales that we got.
Distressed Home Sales
As has been the case for many years now, the percentage of our home sales that are distressed continues to decline. Once again we hit a 9 year low in September – 8.6% vs. 12.1% last year. As you can see in the graph below it once approached 60%, which was incredibly bad.
It shouldn’t be too much longer before we find out what normal is for this market.
Chicago Home Inventory
The available inventory of homes for sale is what is driving the Chicago real estate market and keeping a lid on sales. Once again we’ve hit new record lows since this data has been available to me. Attached homes (condos and townhomes) matched last year’s record low of only a 3.6 month supply, which is extremely low and firmly into seller’s market territory. Detached homes dropped to only a 4.6 month supply compared to last year’s 5.3 month supply. As is typical there is a larger supply of detached homes available than attached homes, mostly because they are more expensive and more expensive homes take longer to sell.
Chicago Home Sale Market Times
Consistent with this low inventory homes are selling fast and generally faster than they have in the recent past. However, market times are not totally consistent as I’ll explain in a minute.
Attached homes do sell faster than detached homes so that much is consistent with the inventory data above. However, in September the attached homes that sold did so in only 55 days, down from 68 days a year ago. That seems a bit inconsistent with the fact that the inventory of attached homes was pretty much unchanged from last year. Then again there were more new listings of attached homes in September of this year. I don’t know.
Detached homes sold in 78 days in September, which is actually slightly higher than last year’s 73 days. And that’s despite significantly lower inventory this year. See…another inconsistency. But so much depends on what sells. You could have a bunch of long in the tooth listings sell and that would pull the average market time up.
For more information such as employment statistics, foreclosure activity, and home prices check out my Chicago real estate market page.
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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.