Chicago homes are selling faster than hotcakes
The Chicago real estate market keeps setting new records even when I think it’s not possible. Last month I thought I saw early evidence that the sales strength was weakening a bit. However, February Chicago home sales were up 15.4% over last year, which was already a multi-year record. So, comparing the numbers to 2020, which was basically pre-pandemic, sales were up 25.4%, which is a huge number. It was the highest sales level in 17 years.
You can see this in the monthly sales graph below which flags all the February numbers in red and also has a green moving average line. The increase was driven by increases in both attached and detached home sales but detached home sales were the stronger of the two.
Note that when the Illinois Association of Realtors reports these results in a couple of weeks they will only report a 13.1% increase due to their methodology.
Once again the contract numbers look weak compared to last year, down 8.9%. But if you look at the graph below you’ll see that February beat all other years. In particular, contracts written last month were 12.8% higher than in 2020.
Nevertheless, given the decline in contracts written, I would expect a softening in future closings relative to last year. In fact, February was the third consecutive month with an expected decline in contract activity.
The graph below shows a continued trend of lower pending home sales. February dropped by 650 units from a year ago and is now more in line with the pre-pandemic lower values. This drop helped fuel the sales gains in February.
A lower pipeline of closings also does not bode well for future closings.
We remain near the bottom of the downward trend in the percentage of home sales that are distressed, without much room for further declines. Only 2.4% of February’s sales were distressed compared to 3.1% a year ago. Initially it was believed that the pandemic foreclosure moratorium was keeping a lid on these percentages but even with the moratorium lifted we are not seeing an increase in foreclosure activity.
The home inventory levels have just gotten ridiculously low. New records were set in both attached and detached homes. We are now down to only a 2.1 month supply of attached homes and a mere 1.8 month supply of detached homes. Both of these numbers are well into “sellers’ market” territory.
It’s pretty obvious from the graph below that detached homes are selling like hotcakes – on average in only 61 days, down from 89 days last year. That looks like a record. Attached homes actually took a bit longer to sell than last year – 111 days on average vs. 105. However, the median time to sell an attached home actually dropped to 77 days from 83 days. What that means is that the average market time is being inflated by a lot of condos that are sitting on the market for too long.
In case you are wondering…the median time to sell a detached home dropped to 29 days from 35 days.
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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.