First, let me be clear that closings in the Chicago real estate market were not depressed in March of last year. In fact, sales were up 2.8% over the previous year because those contracts had been written mostly in February and earlier, before things got ugly. So, when I tell you that closings this March were up 38.3% that’s a real significant gain that you can see in historical perspective in the graph below. In fact this was the second highest March sales on record (within the 25 years of data I’ve been tracking). The previous record was in 2006 at the height of the housing bubble.
And a 38.3% increase is the largest percentage gain in about 8 1/2 years. To the folks on Cribchatter I would say that that’s a hot market. I would also point out to them that, once again, the bulk of the growth was in attached homes, which were up 44.7% while detached homes were up 19.6%. Detached home sales are almost certainly depressed by lack of supply, which we will get into later.
In about 2 weeks the Illinois Association of Realtors will give their version of events and will announce a 35.7% pop over last year. Still impressive.
Chicago Home Contract Activity
Sure, contract activity was depressed last year so that takes some of the wind from the sails of bragging about a 72.7% increase this year. However, if you look at the graph below you can clearly see that we set another 13 year record in contract activity this year, beating previous years by a lot. This was also the 10th straight month of year over year increases.
Pending Home Sales
And it’s not like we hit the record closings by drawing down pending home sales because that metric hit an 8 year high in March with a 1522 unit increase over last year. In other words we had more than enough contracts written in March to feed same-month closings and the leftovers are stockpiled for future months. And to put the increase in pending home sales in perspective, it’s a little less than half of what might close in April so it gives us a lot of cushion.
Distressed Home Sales
The perpetually extended foreclosure moratorium continues to put a lid on distressed home sales. As a percentage of all sales they continue to find new lows, hitting 2.2% this year, compared to 4.7% last year.
Chicago Home Inventory
In order to capture the weird dynamics of home inventory in this market I continue to do my own inventory calculation based on homes for sale compared to contracts written during that month. My calculation shows that the inventory situation is exceptionally bad if you are a detached home buyer. We hit another record low of only 1.1 months of supply, which is put in stark historic perspective in the graph below.
However, attached inventory is also starting to drop precipitously, hitting a 2.3 month supply – at the lower end of the range for other March attached inventory levels. That’s because of the dramatic increase in condo sales despite more condos actually being on the market.
Chicago Home Sale Market Times
Higher sales and lower inventory levels are nice but if you really want to know how hot a market is you need to look at how fast stuff is selling and how prices are trending. I deal with pricing in my monthly Case Shiller posts and it’s been trending nicely with high single digit growth rates lately. But the graph below looks at market times and that is also flashing HOT.
For attached homes the average market time was only down slightly in March – from 103 days last year to 99 days this year. On the other hand detached homes sold much faster on average this year, dropping from 105 days to 73 days. What’s even more impressive is that median market times for detached homes dropped from 69 days last year to only 26 days this year. In other words half of the homes that sold in March went under contract in less than 27 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.