In about 2 1/2 weeks the Illinois Association of Realtors will report on September home sales for Chicago. However, I can tell you right now that September is going to be even uglier than August was. If you will recall, August home sales for Chicago came in 22.9% below the previous year and that was at least a 10 year low. Well, now it looks like September is going to be around 29% below last year and that is also at least a 10 year low.
You can see the story in the contract activity below. I hate to sound like a broken record but right after the government's lame homebuyer tax credit idea expired in April contract activity died. Ever since, contract activity has been running 17 - 25% below last year's levels. So that means we are going to see lower sales figures (which represent closings on these contracts) for several more months into the future.
However, this data is hard to interpret until it's had a chance to season
a bit. The reason is that somewhere around 15% of the contracts written fall
apart - eventually. However, it could take 2 - 3 months or longer for
these deals to fall apart and when they do the contract numbers are
revised downwards. In other words, at this time the June numbers are pretty solid
while the September numbers are fairly soft. I attempt to correct for
this problem by whacking the September contract numbers by about 10%. Nevertheless, the conclusion is still the same: we thought 2009 was bad but now we have 2010 to deal with and it's managed to get even worse. Prices will have to come down.
Oh...and as if this wasn't bad news enough...44% of these sales were distressed properties - either short sales or bank owned. The bargain shopping continues.