When the IAR announces September home sales in a week and a half they will be trumpeting the fact that sales were up about 6.9% from last September. But the reality is the same as it has been for the past 4 months: this time last year was not normal. Sales were way depressed by the government’s Cuban style manipulation of the housing market (the homebuyer tax credit). So it’s easy to blow away those numbers and 6.9% is hardly blowing it away. In fact, it's rather anemic.
Take out last year’s aberrant comparison and sales were the lowest they’ve been in 14 years. This year was 24% lower than 2009 and 17% lower than 2008, both of which were pretty bad years.
The only positive sign is that contract activity is actually running a little bit higher than 2008, as you can see in the graph below.
Now you would expect that higher contract activity to eventually lead to higher sales but so far that hasn’t happened. I can’t easily prove it right now but the data sure seems to suggest that the backlog of pending deals is growing. I need to investigate that further.
Chicago Distressed Property Sales Still Running At High Levels
Check out the percentage of property sales that are distressed in Chicago. As the graph below shows we're still running at levels between 2009 and 2010 but, again, 2010 was distorted by the government meddling - depressed in this case. For September almost 39% of all sales were distressed, which is a lot.