Well, it looks like the Chicago real estate market had another slow month of home sales - an 8.1% decline from last year, which is the biggest decline in the last 5 months. We've been getting these larger declines every 4 - 6 months, punctuated by a few months of < 5% drops. In fact, September and October only fell by about 1/2%, which was giving me a false sense of security.
When the Illinois Association of Realtors reports these numbers in about 2 weeks they are going to show sales declining by 11% because of the strange methodology they use.
The graph below puts Chicago's monthly home sales figures in historic perspective with all November values flagged in red and a light blue 12 month moving average line. This November had the lowest home sales in 4 years as you can see and it wasn't too much higher than the two lowest years in the last 8. And our moving average line shows just how much sales have been falling for the last 12 months.
Chicago Home Contract Activity
If you want to see where sales are heading you have to look at contract activity. I've summarized it in the graph below going back to 2008. As you would expect this graph has much the same shape as its close relative that we just discussed. However, November actually had the first annual increase in the last 19 months so that could be a positive sign for the housing market. Unfortunately, it was only a 3.7% increase.
Pending Home Sales
We did see some modest increase in the number of homes under contract waiting to close. There were 159 more homes in the backlog than last year. And if you look at the moving average in the graph below you will also see that maybe the downward trend is finally leveling off.
The backlog only increases when sales slow down relative to contracts written and it only decreases when sales speed up. The fact that the backlog increased in November could partly explain why sales were down so much - i.e. some of the homes under contract got held up and will close later. And the general decline in pending home sales that we have been experiencing for several years now has probably been helping to pump up closings until now.
Distressed Home Sales
In November distressed home sales in Chicago fell below 100 units for the first time since I've been tracking this, which brought the percentage of distressed sales to 6.0% from 8.9%. That's a much bigger drop than I expected - especially given how close to the bottom we are.
Chicago Home Inventory
The inventory of detached and attached (condos/ townhomes) homes for sale continues to move in opposite directions. Attached inventory rose to a 3.9 month supply, up slightly from 3.8 months last year. Detached inventory remains below attached inventory, falling to a 3.6 month supply from a 4.2 month supply a year ago.
That's actually pretty tight - even for this time of year - and might also be contributing to lower sales figures. And, on a separate note...if people were really fleeing the city, as often comes up in conversation, wouldn't inventory be higher?
Chicago Home Sale Market Times
And homes seem to be selling pretty quickly also. The average market time on attached homes rose ever so slightly to 83 days on the market from 82 days a year ago while the market time on detached homes actually fell from 79 days to 76. That's not bad so don't let anyone tell you that the Chicago real estate market is "slow". Home sales might be low but they are not slow. The demand is there.
If you look at the graph below you'll see that for the longest time condos sold faster than single family houses. But that flipped recently, along with the relative inventory levels of the two property types, and it now takes longer for condos to sell.
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.