When we did our bi-monthly update of market time data a couple of weeks ago for 2 - 3 bedroom condos in the city of Chicago I noticed a huge drop off in June, which I knew couldn't be real. Eventually I figured out that this was due to a single event that occurred in this time frame that now allows for a much more accurate picture of how long condos are sitting on the market.
Before I explain it let me clarify that I look at market times a bit differently than everyone else. Yeah, I'm a maverick. Anyway, what you usually see reported is how long it takes properties that DO SELL TO SELL. Well, that's kind of a biased sample isn't it? Like what about all the properties that didn't sell? So, I look at an alternative statistic that is readily available but usually ignored that looks at all the properties that were listed during a month, whether or not they actually sold. As you would expect this number is higher than the usually reported number.
If you look at the graph below you can see how this metric has trended over the last 4 years, fluctuating between 200 and 250 days, peaking during the winter months, and trending up ever so slightly. Until June and July when it plummeted to 134 - 136 days.
So what happened to drive this number down in just one month? Back in this timeframe a real estate developer named Related Midwest bought about 500 unsold condo units in One Museum Park West, 1600 Museum Park, and Museum Park Place South, 320 of which had been on the market for over 2000 days. When Related Midwest bought these units, they were all taken off the market, which just about accounts for the drop in market times. These units have not been put back on the MLS.
If you look at the impact that this event had on market times for the Near South Side, where these units reside, it's even more dramatic. Average market times fell off a cliff, going from around 1300 days to 126 days.
This is a great example of why it's dangerous to pay too much attention to averages. Unfortunately, there is no way to go back and redo these numbers without these museum park condos included so we'll never know what the important data really looked like. But it's clear that the market times were never anywhere near as long as the data suggested.