Although the Illinois Stay At Home order went into effect just a bit over one week ago this is my third update on what the coronavirus pandemic is doing to the Chicago real estate market. Many of us were hunkered down before the order went into effect – either out of common sense or because employees were told to work from home where possible. So I’ve been looking for signs of what is going on for 3 weeks now.
Let’s start with some of the hard facts from the Chicago Association of Realtors, comparing the most recent week available (ending March 21) to the corresponding week one year ago. Keep in mind that normally at this time of year activity would be picking up. Timing could not be worse.
Let’s start with single family homes:
- New listings were down 33% from last year to only 330
- Contracts written were down 22% to 245
- Available inventory was down 10% to 2816 units
As for condos and townhomes:
- New listings were down 34% to 565
- Contracts written were down 33% to 314
- But available inventory was essentially unchanged from last year at 5057 units
So it looks like people are starting to hesitate from taking new actions but – for the time being at least – homes already on the market are staying there. Early next week I’ll be doing my normal monthly update instead of a weekly update and we’ll be able to see the impact of this mess on the entire month of March.
One aspect of the pandemic we have not explored is how many deals are falling apart. I suspect we’ll get a much better sense of that with next week’s monthly update when we look at pending home sales. I’m expecting we’ll see a significant decline in that number which will not be good. Marc Cervantes, one of our favorite attorneys, posted this video with his observations from the past week and mentions how 8 of his 11 scheduled closings got cancelled at the last minute in one week. If this is being repeated throughout the industry it’s not good at all.
This may explain why real estate related stocks are still in the toilet. In the last week there hasn’t been much change in the already depressed prices of the publicly traded firms.
Real Estate Searches Seem To Be Almost Normal
I checked in on the Google Trends data again and was actually surprised to see no apparent impact on people looking for a realtor. It could be that potential home buyers and sellers still want the opinion of a realtor right now – perhaps more than ever. However, there does seem to be some evidence of a drop off in searches for homes for sale in Chicago. The searches in the most recent week appear to be at the low end of the range, though there is a lot of variation in the data.
Mortgage Rates Are All Over The Map
Take a look at the mortgage rate graph below from NerdWallet. It’s totally crazy with wild gyrations from one day to the next. I’ve heard about extensive liquidity problems in the mortgage backed securities market so I assume that’s the effect that we are seeing here. This is certainly not helping the market, though you would think that once rates settle down – and I assume at a lower level – we will see a boost in demand for homes financed at cheap rates. However, as Marc Cervantes mentioned in his video above, jumbo loans are now very difficult, if not impossible, to get which could hit the higher end of the market pretty hard.
#RealEstate #ChicagoRealEstate #Coronavirus
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.