Chicago Unsold Inventory Index Indicates Tighter Condo Market

It’s probably just a function of the last minute crunch to take advantage of the expiring tax credit but the supply of 2 – 3 bedroom condos in Chicago at the end of April was at it’s lowest level in 4 years. We just wrapped up our bimonthly analysis of Chicago condo inventory and it shows that not only were the absolute number of condos for sale down slightly from last year but the number of contracts written in April were almost double the previous year. Consequently, we ended April with only an 8 month supply of 2 – 3 bedroom condos, down from more than 16 months last year. 8 months is still a lot but it’s a lot better than last year.

Chicago home inventory

One caveat with these numbers: they are based upon what is listed in the MLS. To the extent that developers are sitting on unsold condos that are not listed in the MLS these inventory levels will be understated.

Our measure of Chicago condo inventory is similar to the Unsold Inventory Index that usually gets reported by the media, with a few exceptions. First, we base our calculation on all condos for sale during the month, even if they were withdrawn from the market. Second, we determine the months of supply from the contracts written, not the closings, since it gives us a more timely measure of what is going on. We also focus our calculation on 2 – 3 bedroom condos since this is a large segment of Chicago’s real estate market and we want to avoid mixing apples, oranges, and watermelons.

These condo inventory numbers are also available for a few neighborhoods along with market time trends. There are some interesting variations between neighborhoods. For instance market conditions are dreadful on the Near South Side but have improved considerably for neighborhoods like Rogers Park:

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