We don't need to wait for the Illinois Association Of Realtors to release their official August home sale numbers for the city of Chicago in 2 weeks. We already have a pretty good idea, based upon MLS data, that the number of condos and single family homes sold is going to be down about 25% from last year. It should come as no surprise, given that contract activity has been down significantly ever since the government stopped paying people to buy homes a few months earlier than they would have anyway (what a brilliant idea that was).
So if we want to know what the future holds for home sales all we have
to do is look at contract activity, which leads actual closings by about
a month or two. In the graph below we can see that contract activity
during the last 4 months has been down significantly from last year.
Actually, the numbers range from 12 - 22%*.
Ask any realtor and they will confirm that right now the market is
abysmal. But there is no shortage of home inventory and no shortage of
wannabe buyers. So why is activity so low? Because buyers and sellers
can't agree on prices - the bid/ask spread is way too big right now.
Most sellers don't want to sell at the price it will take to sell their
place and buyers are terrified of overpaying. Believe me, I know. We're
on both sides of this debate every day. But in the end it's the buyers
that set the prices, because they're the ones forking over the money,
and they're only jumping at the best deals right now.
*One caveat with this data: The intent is to show contracts that
ultimately result in a closing. However, about 15% of contracts written
in Chicago never close. So when you look at the reported August
contracts in early September about 15% of them will eventually disappear
after a few months - maybe 10% will go away by October and another 5%
by November. Over time the graph will slide down as the legitimate
contract volume firms up. In order to minimize this distortion I whack 10% off the most recent month's numbers.