The Realtor associations have been harping on the message that real estate is local. This is their way to diffuse all the panic about home prices dropping by getting people to ignore the national pricing data. Of course, people will ultimately look at their local data and for most of the nation the answer won’t be much different. And the answer is not much different when it comes to Chicago real estate either.
However, as I have observed in the past some of the Chicago communities have been weathering the real estate storm quite well. So I decided to investigate a few communities in a bit more detail to see exactly what the differences were and confirmed that not only is the Realtor mantra true, but it’s actually true down to the community level in Chicago. This is one of the few times that I actually agree with the industry’s proclamations.
I looked at 2 – 3 bedroom condos in Lakeview, Lincoln Park, and the Near South Side. The first thing I examined was median price trends, which, as I have often pointed out, is a seriously flawed measure. However, it’s the only price measure available to us at the community level. What it shows is that median prices have actually trended up in the last 2 years, which probably means nothing more than the mix of units sold is skewing higher.
The next thing I looked at is how fast homes were moving in the different areas. This is where the real differences became apparent. I have added graphs at the bottom of the following community profiles that show the trends in months of supply and days on the market:
- Lakeview – The real estate market in Lakeview appears to be relatively stable, with homes that go under contract doing so within 60 – 90 days. And as recently as May 2008 there was only a bit over 4 months inventory on the market.
- Lincoln Park -During the past year the number of days to contract has actually drifted down. However, at the same time the months of inventory has increased, with August 2008 at 7.8 months vs. August 2007 at 4.6 months. That indicates that supply and demand are increasingly out of balance at current price levels. It is still possible to sell a home quickly but it’s going to have to be priced correctly or the right buyer is going to have to come along.
- Near South Side – This area has had a very large home inventory over the past 2 years, never dipping below a 10 month supply and a few times spiking to a 3 year supply. In August 2008 home inventory jumped to almost 22 months, which is higher than August 2007’s 19 month supply. At the same time the number of days to contract has been highly variable but recently has hovered around 300 days.
While Lakeview remains unscathed by the real estate crash, Lincoln Park may be turning the corner for the worse, and the Near South Side is already in the doldrums and heading further downhill.