On Friday I posted my September update on the Chicago real estate market which showed continued drops in inventory despite sales which were weaker than last year. Aside from slightly lower sales the overall market in the city is strong. However, the same is not true for the Lake View Real Estate Market and some of the adjoining areas on the north side where the inventory of single family homes has been rising for several years now.
I first posted about this phenomenon in March: Chicago Real Estate Market: Inventory Rising In Lake View And North Center. But since then the situation has gotten worse – at least for sellers – as indicated in the graph below. In September the inventory of single family homes hit a 5 year high of 8.7 months, which is up from 6.8 months a year ago. That’s a pretty hefty increase and oddly enough it’s a phenomenon limited to the single family home market. We don’t see this happening with condos and townhomes.
Since this is a ratio of homes available for sale and the sales of homes either or both of those metrics can be driving this months of supply number higher. I don’t want to overwhelm you with graphs so I’ll just tell you that it’s both. In the last year the number of homes for sale has increased from 94 to 110, which is just part of a longer term trend. And meanwhile the sales of homes, on a rolling twelve month total basis, has declined from 169 to 146. That’s not good. That’s not good at all.
But here is another graph I will share with you because it’s another key metric in measuring the health of the Lake View real estate market. It’s the market time graph which captures how long it took to sell the homes that did manage to sell. I created it as a 12 month average to smooth out the noise.
Unfortunately, it’s not a pretty picture. The situation has further deteriorated since I looked at this in March. In September it took 116 days, up from 98 days a year ago, and that’s the highest it has been since March 2013.
And just to put icing on the cake let me throw some other disturbing numbers at you. In September there were 69 new listings of single family homes in Lake View, compared to only 54 last year. Now, to put that in perspective consider that only 5 deals closed in September vs. 13 last year at this time and I’m estimating that only 10 contracts were written compared to 12 last year.
OK. That sounds pretty bad BUT 48 listings either expired or were cancelled during September so those vanishing listings keep the available inventory from exploding. In fact, many of these listings get reincarnated as part of the 69 new listings during the month. The only thing is that the reason these listings are expiring and getting cancelled is that they aren’t selling so that’s not good news either.
Various price metrics like average sales price and average list price are also heading down in Lake View but I don’t want to overemphasize these metrics because they are easily misinterpreted. While these are probably negative indications you can not conclude that this means that home values are dropping. It could just as easily mean that the mix of what is selling is skewing more towards the lower end now – possibly because fewer of the uber rich are moving into the area.
Is There A Mass Exodus From Lake View?
So what exactly is going on? Clearly more people are trying to sell single family homes in Lake View over the past few years than there are people buying them but why? And why aren’t we seeing this with condos?
The fact that it’s single family homes and not condos suggests that this is definitely some kind of demographic shift. Established, richer people with families are leaving and there is no shortage of potential culprits to blame: rising crime, rising property taxes, a city with increasing financial problems, and public schools with a very uncertain future.
To the latter point this year has seen a very messy, public, and protracted battle with Troy LaRaviere, the former principal of Blaine school (the #1 neighborhood school in Chicago according to Chicago Magazine), that ended with Troy being suspended and then resigning. I have no idea who was right and who was wrong but these kinds of shenanigans are not good for a neighborhood. And of course now we have the specter of a teacher’s strike.
What do you think is going on?
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.