Chicago Real Estate Market Update: 2nd Highest April Sales In 17 Years

Chicago Real Estate Market Update: 2nd Highest April Sales In 17 Years

Realtors are probably getting nervous that the Chicago
real estate market may be slowing down.

More than 2 years into the pandemic and the Chicago real estate market keeps chugging along. When you look at the graph below you’ll be reminded that last April we set a record for home sales – maybe even an all time record. So it’s actually quite impressive that this April sales fell by a measly 3.1%. That’s the second highest level in 17 years and the third highest level in the entire history that I have readily available. Also note that the light green moving average is still trending up from its already high levels.

The Illinois Association of Realtors always calculates a slightly lower number than me so in two weeks they will report a 5.4% decline.

Going forward, keep in mind that the recent spike in mortgage rates is making everybody nervous. It could cause people to stay put since they likely have a much lower mortgage rate than they can get today and it could discourage first time home buyers as well. But people have to move for all sorts of reasons that have nothing to do with finances so it’s unclear just how big of an impact this could have.

Chicago home sales had been declining now for several years but the Coronavirus really tanked the market in May and June of 2020. The market returned to more normal levels starting in July 2020 and is now setting new records.

Chicago Home Contract Activity

The number of contracts being written showed a 16.4% decline from last year, which is the third decline in a row. However, it’s still at the upper end of the range but this could be the first signs of the Chicago real estate market slowing down.

Chicago home sale contract activity is still at the high end of the historic range

Pending Chicago Home Sales

Pending home sales fell by 1150 units from last year, which is a very large amount. Those 1150 units basically came out of the pipeline and supplement the contracts being written to culminate in closed sales. That has allowed closings to continue at a fast pace even though contract activity is down. But you can only pull off that trick for so long.

After hitting historic lows the backlog of homes likely to close in the next 1 – 2 months rebounded during the pandemic but is now starting to retreat again

Distressed Chicago Home Sales

The percentage of Chicago home sales that are distressed has been steadily declining. However, April was the first month with a year over year increase in almost 2 years, with 2.2% distressed compared to only 1.5% distressed last year. Now keep in mind that until recently there was a moratorium on foreclosures so this could be a bit of backlog working its way through the system. However, as I said in my most recent foreclosure update, I don’t think we’re going to see a flood of foreclosures coming through.

Since the housing crisis the percentage of home sales that are distressed has steadily declined to almost negligible levels.

Chicago Home Inventory

The inventory of Chicago homes for sale continues to drop from already low to even lower, setting new records. In April the months of supply of detached homes for sale dropped to a mere 1.6 months of supply from last year’s 1.8 months of supply. Attached homes had an even bigger drop, going from 2.6 months last year to 1.9 months. Yeah, it’s a great time to be a seller but then you have to buy something else…unless of course you no longer have use for a home. Then you have bigger problems to worry about.

After a big Coronavirus induced spike in April 2020 the inventory of homes for sale dropped back down. Both detached and attached inventory keep setting new record lows.

Chicago Home Sale Market Times

With tighter inventory comes faster sales and that pattern held true in April. Detached homes sold on average in only 56 days compared to 60 days last year but half of the homes sold in 15 days or less. Attached homes sold in only 64 days, which is down substantially from 80 days last year, and half of the homes sold in 16 days or less. For sure there are plenty of homes that are just sitting – most likely just overpriced for what they have to offer.

When the pandemic first hit Chicago market times rose but they finally recovered with detached homes hitting record lows.

#RealEstate #ChicagoRealEstate

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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After 20 years in the corporate world and running an Internet company, Gary started Lucid Realty with his partner, Sari. The company provides full service, while discounting commissions for sellers and giving buyers rebates.

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