The Chicago real estate market is still setting new
records in home sales
It’s truly amazing. Two years into a pandemic and the Chicago real estate market is still smashing home sale records. December set a 16 year record to be exact and that’s despite the fact that inventory is still tight and last December also set a record. Home sales were 7.7% higher than in 2020 but, to put things in even better perspective, 26.2% higher than in 2019. This is all shown in the monthly sales graph below with all the December points flagged in red.
As usual the Illinois Association of Realtors will report a smaller increase in home sales of only 5.5%.
One thing a bit different about December compared to previous months is that the sales increase was pretty much equally driven by both attached and detached home sales. Up until then attached sales were responsible for most of the recent increases.
However, it does look like this sale surge might be losing some steam. As you can see in the graph below the number of contracts written has come back down to earth a bit. December was 4.9% below last year although it was still higher than every other year that I’ve been tracking. In particular, it was 25.0% above 2019’s number.
After rising through much of the pandemic pending home sales have started to decline. December dropped by a very significant 400 units from a year ago, bringing it back in line with the pre-pandemic lows. This means that December closings were partially fed off this backlog and there won’t be quite as much backlog to contribute to future closings, which could reduce future sales numbers.
The percentage of home sales which are distressed continues to bounce close to zero. December had only 1.9% distressed sales, compared to 3.4% the previous year. The foreclosure moratorium has certainly contributed to this reduction so, now that the moratorium has ended, we might see a bit of an increase in the near future.
I will continue to calculate home inventory levels myself until the canned graphs more accurately reflect the peculiarities of the current environment. The graph below once again shows home inventory levels hitting new record lows, as has been the case for much of the pandemic. Also note that the detached and attached lines flipped once the pandemic hit. Detached inventory came down to a mere 2.4 months of supply in December compared to 2.9 months last year while attached inventory dropped by a much larger amount – from 6.2 months to 3.6 months of supply. Anything below a 4 month supply would be a seller’s market.
The only way you can have high sales with low inventory is if homes sell really fast – and that’s pretty much what has been happening and you can see it in the graph below. And that’s been especially true for detached homes. Again, you can see how the attached and detached lines flipped when the pandemic hit. On average detached homes sold in only 52 days, down from 69 days in 2020. But half the homes sold within 28 days.
Curiously, attached homes are now taking longer to sell than they did in 2020 – 95 days on average, up from 81 days. Half are selling within 53 days. It’s curious because inventory is down. If inventory remains low they may start selling faster.
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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.