When the Illinois Association of Realtors releases their home sales report in about 2 weeks what they probably won’t be pointing out is that it looks like the Chicago real estate market will ultimately have the highest September sales in 9 years. The reason I’m using the future tense in that sentence, and the reason the IAR won’t be pointing this out, is that as of right now it doesn’t look that way but it’s really close and not all the sales are reported yet. It takes those lazy realtors weeks and weeks to report all their closings, despite the fact that I think there’s actually an MLS rule about that.
September home sales were up 8.2% over last year, though the IAR will report somewhere around a 5.5% increase. Looking back over the last 19 years, only 5 years had higher sales. You can see the long term history of Chicago home sales below with all the September values flagged in red and a blue 12 month moving average line. Clearly the uptrend has been continuing.

Chicago Home Contract Activity

However, if we try to look ahead at what is coming down the road by monitoring contract activity it doesn’t look so hot. Look at the graph below and you will see what I’m talking about. Contracts written have really been flattening out and September was no exception. In fact, I’m currently estimating that September contracts were down from last year by 2.4%. So that does not portend well for future closings.

Pending Home Sales

In light of stagnating contract activity home sales have been kept afloat partly by drawing down pending home sales. They’ve been on a decline and September dropped to a 1.65 month supply from last year’s 1.8 month supply. But there is some theoretical lower limit to this number just by virtue of the fact that it usually takes at least 30 days from contract to close, unless you’re paying cash.

Distressed Home Sales

The long term decline in distressed sales also seems to be coming to an end. September did hit another record low of 17.5%, down from last year’s 18.8%, but you can clearly see in the graph below that this drop is much less than some of the previous year’s drops.

Chicago Home Inventory

Meanwhile, it’s totally incredible the way home inventory levels continue to plummet. It’s a little difficult to see in the graph below but there was a pretty dramatic drop from last year’s levels. Condos and townhomes hit a mere 3.8 month supply vs. last year’s 4.8 month supply while single family homes hit 4.6 months of inventory, down from 6.0 months. It’s a wonder that prices aren’t moving up more with inventory this tight.

Chicago Home Sale Market Times

You know what else is surprising? The fact that with inventories this low and dropping that market times are basically flat to last year and even rising a bit. Condos and townhomes that sold took 70 days to sell in September, down only slightly from last year’s 72 days. Single family homes actually took a little longer to sell this year – 84 days, up from 78 days.
What gives? Sellers pricing more aggressively this year? It’s definitely possible since I think it took a while for agents and sellers to catch up with the market.

#realestate #chicagorealestate
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. Please be sure to verify your email address when you receive the verification notice.