On the one hand the Chicago real estate market just had it's strongest home sale month in 10 years but on the other hand it really looks like the air has been let out of the real estate market. June home sales were up a measly 1.7% over last year which was just enough to set that record. However, that growth rate is nothing to write home about compared to some of the super strong sales growth numbers clocked earlier this year and late last year.
And you're going to look at the graph below with its red dotted June comparisons and ask yourself "What in the heck is he talking about? Sales are down from last year!" Well, that's because the graph below has final numbers from last year and preliminary numbers from this year. That's how the Illinois Association of Realtors does their comparisons and that's why they are going to report a 1.7% decrease in sales in a little more than 2 weeks. However, when I compare preliminary numbers to preliminary numbers I come up with a 1.7% increase and that's the right way to do the comparisons!
Chicago Home Contract Activity
We see the slowdown foreshadowed in the contract activity which also continues to disappoint. I'm estimating that June contracts written will be down from last year by 8.2%. You can see how the market is losing energy in the graph below - both in the June comparisons and in the lighter blue moving average line. And BTW, this is the third month in a row where contract activity was down from last year.
Pending Home Sales
The pending home sales numbers are not encouraging either. It looks like we had to actually draw down the pipeline of homes under contract in order to get the sales that we did. We went from a 1.80 months of supply of pending sales last year to only a 1.65 month supply this June. Eventually this well runs dry and we can no longer scrape sales from the bottom of this barrel.
Distressed Home Sales
The percentage of home sales that were distressed hit yet another low in June. Well, actually it was the same as it was in May but it's a bit lower than last June - 7.2% vs. 9.8%. As you can sorta tell in the graph below the drops from the previous year have been shrinking a bit and this is probably the smallest decline we've seen. Well, heck, you can't go below zero so this is inevitable.
Chicago Home Inventory
The inventory level of homes available for sale in Chicago is the real story here as it has been for quite some time. There just isn't that much for sale and each time we look at the numbers it gets lower. This is most likely what is keeping sales from really soaring. Like they used to tell me at Circuit City when I was lowering their inventory (they had way too much) "You can't sell what you don't have."
So in June the inventory of attached homes declined to a 3.1 month supply, down from a 3.4 month supply last year. The inventory of detached homes went down to a 4.4 month supply from 5.0 months last year. These are both exceptionally low levels for this time of year and you can see that in historic perspective in the graph below.
Chicago Home Sale Market Times
As you might expect with extremely low inventory levels the market times have also shrunk with attached homes that sell doing so on average in only 50 days, which is significantly down from 59 days last year. Meanwhile, detached homes sold in only 81 days which is just a smidgen above last year's average of 79 days.
Yeah, it doesn't make much sense that detached homes didn't sell faster with so much less inventory available but the detached segment is having issues right now. There are large and prosperous areas of the city that are actually seeing high and increasing inventory levels of detached homes so it's difficult to say what makes sense.
Gary Lucido is the President of Lucid Realty, the Chicago area's full service discount real estate brokerage. If you want to keep up to date on the Chicago real estate market, get an insider's view of the seamy underbelly of the real estate industry, or you just think he's the next Kurt Vonnegut you can Subscribe to Getting Real by Email using the form below. Please be sure to verify your email address when you receive the verification notice.