The Chicago real estate market turned in another disappointing home sales month in August with a 4.0% decline in closings from last year. If you look at the graph below you can also see that it was lower than 5 of the last 6 years, the only exception being 2014. The light blue line in that graph is a 12 month moving average that gives you a really good sense of how this market has been in decline for a while.
In about 2 weeks the Illinois Association of Realtors will release their numbers and they will report August as having a 7.7% decline but that's because of the funky way they do their comparisons.
Chicago Home Contract Activity
Keeping an eye on Chicago's contract activity gives us a preview into how closings will look in the next month or two. As you can clearly see the graph below mirrors the one above and August had the lowest activity level in 7 years, down 3.4% from last year. So, all else being equal, September will probably also be another down month.
Pending Home Sales
The other "all else" that may or may not be equal is pending home sales which represents the backlog of homes waiting to close. When this increases it means that more contracts moved into the pipeline than moved out during the month. Such an increase would likely result in lower closings than we would otherwise expect based on the number of contracts written. The graph below shows that we are in a secular decline of pending home sales - possibly because deals are closing faster? August was no exception with 208 fewer units pending than last year.
Distressed Home Sales
Fortunately, the percentage of Chicago's home sales that are distressed has been steadily declining for most of the time that I've been tracking it, though it exhibits a clear seasonal pattern where it picks up at this time of year. Also, this decline necessarily has to be bottoming out as you can see below. Only 5.1% of August's sales were distressed compared to 6.8% last year.
Chicago Home Inventory
The supply of attached and detached homes continues to move in opposite directions. The inventory of attached homes increased from a 4.1 month supply last year to a 4.5 month supply this year while the inventory of detached homes shrunk from 4.5 months to 4.0 months. 4.5 months of condos on the market is not exorbitantly high but it's certainly better for buyers.
Chicago Home Sale Market Times
The time it takes to sell a home in Chicago is trending consistently with the inventory levels. More condos and townhomes on the market is translating to an increase from a market time of 56 days to 68 days. Conversely the tighter inventory of detached homes means they are selling faster - down to 70 days this year compared to 78 days last year.
Our Web site also contains additional information on the real estate market in Chicago. We have a lot of the above information there, but updated more frequently, and also some additional tidbits you may find interesting.
Gary Lucido is the President of Lucid Realty, the Chicago area's full service real estate brokerage that offers home buyer rebates and discount commissions. If you want to keep up to date on the Chicago real estate market or get an insider's view of the seamy underbelly of the real estate industry 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.