As we expected, once the tax credit expired the number of contracts being written on Chicago homes plummeted. Consequently, home inventory is back on the rise.
I tend to focus on 2 - 3 bedroom condos as a measure of home inventory since I see that as appealing to the most people. In addition, I calculate the months of supply of inventory based upon contracts written as opposed to closings since the properties really leave the market shortly after the contract is written and well before it closes.
Leading up to the April expiration of the homebuyer tax credit the contracts being written on these condos were running up to 78% above the levels of last year. However, by June they were running 22% below last year. That's quite a flip! When you use those contracts to calculate the months of supply of condos you end up with a 15 month supply in June, up from last June's 13 month supply. Here is the long term trend.
Looking at this graph it seems quite possible
that this could be the third summer in a row of increasing condo
inventory in Chicago - unless contract volume picks up some time soon.
And what about market times? Normally I would provide this
information but I recently pulled all those charts down from my site
after confirming what I've suspected for some time: the underlying data
is really messed up. It turns out that the historic data is overstated
by as much as 150 days or more. I've been working with the company that
processes the underlying Multiple Listing Service data (they do this for
all realtors, not just me) for several months on this and I think we
finally nailed down the problem. Now I have to wait for the problem to
be corrected. In the meantime, no one knows what the historic trend in
market times really is.
However, you can still find the condo inventory trend data above for
several key Chicago neighborhoods here: