Chicago Real Estate Market Trends, Data, Statistics
Case-Shiller Home Price Index For Chicago Metro Area
Home price data for single family homes and condos in the Chicago metro area is reported monthly and goes back to January, 1987. The graph below is current through August, 2014 and includes a trendline, conservatively established for single family homes during a 12 year period of rather reasonable price increases.
Interestingly, it looked like the index for single family homes bottomed in April of 2009, but then it dipped three more times. Much of this repeated dipping is a seasonal effect but recently the seasonal recovery in prices was exceptionally strong. May and June 2012 came along and blew the numbers out of the water – prices were up 4.5% and 4.6% from April and May respectively, which is huge. Even after adjusting for seasonality these were the largest one month increases in 24 years.
As of September 2014 single family home prices were down 0.1% from August and up 2.6% year over year. Single family home prices are now back to the level seen in June 2003, having fallen a total of 22.1% from the peak in September 2006. However, the index is running 20.9% below the trendline, which implies that there is some upward pressure to return prices to the “norm”. But I’ve been saying that for a while.
Condominium prices were also down 0.1% from August . The condo index is now back to June 2003 levels, having fallen a total of 18.7% from their peak in September 2007. However, condominium prices were up on a year over year basis by 2.4%.
Please note that these numbers are based upon a 3 month trailing average of home sales so they are looking back pretty far.
Illinois Association of Realtors Monthly Sales Data (Chicago PMSA)
The IAR tracks monthly units sold for the Chicago Primary Metropolitan Statistical Area (PMSA), which includes a broad area of Chicago and its suburbs. Units sold can be a leading indicator of the direction of housing prices. The graph below shows single family homes plus condominiums sold from January, 2006 through October, 2014, along with a 12 month moving average (to remove seasonality effects). In addition, we have flagged all October data points for comparison purposes.
The graph shows that home sales in the Chicago area have strongly rebounded over the last 5 years, though sales seem to be slowing a bit recently. October actually declined a bit from last year and you can see the moving average losing steam. Nevertheless, October was higher than 7 of the last 8 years.
Chicago Association of Realtors Quarterly Unit Sales for Chicago
CAR tracks quarterly residential units sold for the city of Chicago. The graph below shows single family homes plus condominiums sold from the first quarter of 1992 through the second quarter of 2013. In order to smooth out the seasonal patterns the graph also displays a rolling 4 quarter moving average of the data.
While the first half of 2010 had a significant impact from the homebuyer tax credit the vacuum left behind caused sales to decline in the second half of the year. The market did not begin to return to normal until some time in 2011 and it has been on a tear ever since. In fact, looking back over the last 21 years there have only been 5 years with higher sales volume than 2013. And you know what? Look at that employment graph below and you will see that employment is about where it was in 2006 at the bubble peak. Not sure what to make of that because the outlook back then was certainly more optimistic than it is now.
It’s also interesting to note that Chicago home sales peaked in the last half of 2005 but prices didn’t peak until October, 2006. This reinforces the idea that unit sales are a leading indicator of home prices.
Chicago Condo Inventory And Days On Market
The sales rate impacts the months supply of inventory on the market and how long properties have been on the market. Ultimately, inventory levels impact home prices. In the graphs below we track the months of inventory of condos and single family homes in the city along with the market times for 2 – 3 bedroom condos. Why two separate populations? Long story but let’s just say that our history on 2 – 3 bedroom condos goes way back and we have been calculating these statistics a bit differently than the industry. Our days on market numbers are for all homes listed – not just the ones that sell. We feel that this more accurately reflects what’s on the market.
There is only one problem with these statistics. A fairly significant number of properties that go under contract don’t close – maybe 15%. So, as the data ages and properties come back on the market, the months of supply numbers change retroactively for the last couple of months. This leads to the most recent months of supply numbers being understated.
Home inventories in Chicago had been steadily trending higher until August 2009 when they started to improve. That improving trend continued until January of 2010, when they started to bounce around a bit in the wake of idiotic government interference in the housing market. Since then contract volume started to improve while sellers were holding off so inventory levels improved considerably. Right now we are experiencing the seasonal decrease in inventory but single family home inventory is down slightly from last year while while condos and townhomes are a bit higher but still near all time lows. That is definitely a good sign for home prices as restricted supply supports higher prices.
Meanwhile, the market times for condos that have not been sold have recently fluctuated between 200 and 250 days depending upon the time of year – higher during the late fall and early winter months – until July 2012. July 2012 took a steep dive below 140 days and I knew that couldn’t be real so I dug into it. It turns out that the drop was caused by a few buildings taking their long in the tooth listings off the market. Since these listings had all been on the market in excess of 2000 days it had a significant impact on the average. Hence the folly of relying on averages.
The troubled buildings responsible for this anomaly were all in the South Loop and apparently old enough to be in museums: One Museum Park West, 1600 Museum Park, and Museum Park Place South. About 500 unsold units were purchased in these buildings in this time frame by Related Midwest and ultimately relisted. But the average market times in Chicago have continued to decline since then and seem to hit new lows every month. We’ve been below 100 days for 4 months now.
Chicago Area Employment
A great indicator of long term demand for housing in any region is the employment statistics. People can’t afford to buy homes if they’re not working. Therefore, we track the employment numbers reported by the Bureau of Labor Statistics for the broad Chicago metropolitan area, which includes such towns as Naperville and Joliet. We track employment instead of the unemployment rate because the latter is strongly affected by estimates of the labor force – and it’s the employed that buy homes. The graph below is current through September 2014.
These numbers had been showing growth until June 2008 when employment started to drop from the previous year. After plumbing 14 year lows, Chicago area employment finally rebounded during 2010 and has been on a general upward trend since. Since the bottom in January 2010 we’ve seen an increase in employment in the area to the tune of 300,000 jobs. But a whopping 155,000 jobs have been lost in total since the peak in July 2007 and that puts us back to May/ June 2000 levels of employment.
The unemployment rate for Chicago is a terrible indicator of the health of the local economy. The rate can vary significantly from month to month as a result of changes in the assumed size of the labor force. Currently it stands at 6.1%, which is the lowest level since September/ October 2008.
Another interesting tidbit to note is that, even though employment declined from 2000 – 2004, home sales continued to rise. Then, despite the fact that employment rose from 2006 – 2008, home sales were in a decline. So clearly employment is surprisingly not totally correlated with home sales.
And when people aren’t working foreclosures happen. The following graph, based upon Realty Trac data, shows the number of properties experiencing “foreclosure activity” by month – which means that the property owners received some kind of official notice pertaining to foreclosure. However, the aggregate statistics overstate the problem somewhat in that they include all follow up notices – i.e. a distressed property will appear in the numbers multiple times as it passes through various stages of foreclosure. For that reason it’s more instructive to look at the individual components of the activity numbers, since a property is only counted once at each stage. While most of 2012 saw higher foreclosure activity than 2011, activity has trended downward since – in particular the number of homes in default.
Even more interesting is the percentage of home sales in the Chicago market that are distressed – either bank owned or short sales. The percentages are clearly seasonal, dropping off during the summer when there is plenty of inventory but rising during the winter when the more desperate sellers tend to be out. 20.2% of November’s sales were distressed, which is the lowest percentage in the last 6 years.
I’ve opted to produce my own data for these distressed sales rather than use RealtyTrac’s foreclosure sale numbers. I’ve seen too many peculiarities with the RealtyTrac numbers to trust them and at least I know that these numbers come from a reliable source. I think RealtyTrac is grossly underestimating the number of foreclosure sales in Chicago.
Chicago Community Real Estate Market Statistics
For each of the following Chicago neighborhoods we provide trend data for condo inventory and the number of days on the market for sold condos as an indicator of the health of the neighborhood real estate market. We update this data approximately every two months.
- Hyde Park
- Lincoln Park
- Lincoln Square
- Logan Square
- Near North Side
- Near South Side
- Near West Side
- North Center
- Rogers Park
- South Shore
- West Town
S&P Homebuilders Index
The stock market has an uncanny ability to predict the future – at least it’s better at it than professional forecasters. Therefore if you want to know what the outlook is for the housing market you would be well advised to look at the trend in the S&P Homebuilders index. Here is an up to date graph for an ETF that tracks this index. Note that the index keeps hitting new highs.
Don’t agree with it? You are free to buy it or short it and attempt to make money on your superior knowledge. But be careful. Smarter people than you have tried and failed to beat the market!