June Chicago Real Estate Market: Home Sales Still Suffering From Covid-19

June Chicago Real Estate Market: Home Sales Still Suffering From Covid-19
The Chicago real estate market is still trying to recover
from a bad case of Covid-19

The good news is that the Chicago real estate market is getting less bad as people learn to just live with Covid-19 all around us. Last month I pointed out that, with significantly better contract activity, we would see improved closings in June. Well, we did, but not as dramatically as I had hoped. June sales were down 27.4% from last year, which still counts as a dramatic improvement from May’s 42.5% decline.

The graph below puts it all in historic perspective with all Junes flagged in red and a light blue 12 month moving average. You can see how this was still the worst June in 9 years, with only 2 of the last 24 years worse. And you can also see how the moving average is dying now that we’ve had 3 consecutive months with large, double digit contractions.

The Illinois Association of Realtors will come out in 2 weeks with their own set of numbers and report a 29.5% decline in June sales. They march to the beat of a different drummer.

Chicago monthly home sales

Chicago home sales have been declining now for several years but the Coronavirus really tanked the market in May and June

Chicago Home Contract Activity

The really good news this month is that contract activity hit an all time high with a 14.4% increase over last year. That’s also the first increase in 4 months and the largest percentage increase in almost 5 years. I’ll probably do another post in a few days about what else is going on in the Chicago real estate market and what that will show is that this year’s home buying season has been pushed out, with a lot of pent up demand surfacing now.

Upon closer examination it appears that the bulk of the increase is happening with detached homes. The evidence is pretty consistent that this segment of the market is doing a lot better than attached homes.

Chicago home sale contract activity

Chicago home sale contract activity spiked to a record high for this time of year after plummeting to record lows because of Coronavirus issues.

Pending Home Sales

Part of the reason that the spike in contracts is not having a bigger impact on closings is that it’s a bit too soon for those to flow through the process. Consequently we’re seeing an increase in pending home sales, contrary to what has been the long term trend. Pending home sales were up by 203 units in June over last year after some pretty big decreases in previous months.

Chicago Pending Home Sales

The backlog of homes likely to close in the next 1 – 2 months has spiked back up after hitting historic lows.

Distressed Home Sales

Distressed home sales as a percentage of the total was essentially flat relative to last year – up only slightly from 4.1% to 4.2%. That’s a pretty low number so there’s not that much room to go lower. As I suggested last month, it’s possible that there is slight upward pressure on this number from the pandemic as regular home sellers are holding back from listing their homes.

Chicago Distressed Home Sales

Since the housing crisis the percentage of home sales that are distressed has steadily declined.

Chicago Home Inventory

The inventory situation is getting interesting with fewer new listings and higher contract activity. This is very good for home sellers but a real challenge for buyers. Detached inventory hit an all time low of a 1.9 month supply of homes based on contract activity. Attached inventory also dropped significantly to a 2.9 month supply, which is the lowest level since March of 2018.

Chicago home inventory

After a big Coronavirus induced spike in April the inventory of homes for sale dropped back down in May and June. Detached inventory hit a record low.

Chicago Home Sale Market Times

How long it takes to sell a home in Chicago right now is a bit surprising. You would think that with the low inventory situation market times would be shrinking pretty dramatically but it’s just the opposite. Detached homes that sold in June took 81 days to go under contract and that’s up from 72 days last year while attached homes took 86 days compared to 65 days last year. The increase in market time for attached homes (condos and townhomes) is significant. Frankly this just doesn’t make sense.

How long it takes to sell a home in Chicago

The Chicago real estate market impact of the Covid-19 pandemic has recently started to manifest in longer market times for both detached and attached homes

You can also find more Chicago real estate market information on our Web site.

#RealEstate #ChicagoRealEstate #Coronavirus

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.

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