Chicago is a vibrant exciting city, but after twelve consecutive months of falling sales and rising inventories There are some important issues that need to be addressed.
Here are three issues that are adversely affecting home sales in the City of Chicago:
1. Rising Taxes and Financial Instability
It is no secret that the City & State have major financial problems, the biggest being the pension deficit that is now in the billions of dollars. These issues are going to have to be addressed and in the past they has been put on the backs of home owners in the form of increased property taxes.
The fear of significant property tax increases is making some existing home owners consider a move to the suburbs and many first time home buyers considering renting vs owning.
2. Perception Of Rising Crime
With all of the negative publicity that Chicago receives about crime, the reality of the situation is that crime has dropped in 2018 in 7 of the 8 categories that the Chicago Police Department tracks. Murder and shootings, for example, have declined 15% from 2017 (although current levels are outrageously unacceptable).
It is the perception that crime is rising, that is having an adverse affect on real estate. I think that it would be fair to say that few Chicagoans feel safer today than in the past.
Concern for personal safety combined with the the economic problems mentioned above are making some families consider a move out of the city.
The instability of the current mayoral elections is also causing buyers and sellers concern for the future.
3. Influx Of New Construction Rental Homes
Chicago is experiencing an explosion of thousands of new construction luxury rentals, with many more coming on line in the next few years. While this is transforming the city into a fantastic rental market, it is also luring many first time home buyers to consider renting as opposed to buying. - READ MORE
In addition to new construction and luxury amenities, these rentals offer tenants flexibility for the future and a soft buffer against the economic instability mentioned above.
The bad news is that the move to rentals may cut into sales of homes to first time home buyers and other demographics.
The numbers below represent in part, a natural leveling out of the market from the boom years of the post recession; however, city and state leaders have to get serious about finding answers to the problems that are causing some people to reconsider investing in this great city through home ownership.
November 2018 vs 2017 – Cumulative Home Sales dropped 8.1%
NEAR NORTH - Down 9.4%
LINCOLN PARK - Up 12.4%
LAKEVIEW - Down 14.7%
NORTH CENTER - Down 22.4%
Sales of luxury homes (priced over $1,000,000) decreased 4.1% .
Sales of homes priced from $500,000 to $1,000,000 increased 13.3%.
Sales of homes priced under $500,000 decreased 18.7%.
HOMES UNDER CONTRACT
November 2018 vs 2017 – Cumulative Homes Under Contract decreased 13.1%
NEAR NORTH - Down 2.5%
LINCOLN PARK -Down 21.4%
LAKEVIEW - Down 4.5%
NORTH CENTER - Down 43.3%
Noteworthy – Most home sales that closed in November went under contract in a previous month. Units Under Contract can reflect a more accurate picture of the current month, although not every home that goes under contract closes.
HOMES FOR SALE
November 2018 vs 2017 – Cumulative Inventories of homes rose 10.0%
NEAR NORTH - Up 7.7%
LINCOLN PARK - Up 20.1%
LAKEVIEW - Up 8.4%
NORTH CENTER - Up 14.7%
Luxury home inventories (priced over $1,000,000) increased 2.1%.
Inventories of homes priced between $500,000 to $1,000,000 rose 11.1%.
Homes priced under $500,000 saw inventory levels increase by 18.0%.
MONTHS OF SUPPLY OF INVENTORY
November 2018 vs 2017 – Cumulative Months of Supply of Inventories rose 21.6% to 4.5 MSI
NEAR NORTH - Up 14.3% to 5.6 MSI
LINCOLN PARK - Up 27.8% to 4.6 MSI
LAKEVIEW - Up 16.1% to 3.6 MSI
NORTH CENTER - Up 28.1% to 4.1 MSI
Traditionally, MSI over 6.0 designates a buyer’s market and under 6.0 a seller’s market.
MSI of luxury homes priced over $1,000,000 rose for the first time in 12 months to 8.1 MSI (7.7 MSI last year).
MSI of homes priced between $500,000 and $1,000,000 increased 12.5% to 4.5 MSI.
MSI of homes priced under $500,000 rose 32.0% to 3.3 MSI.
November 2018 vs 2017 – Cumulative Median Prices decreased by 2.0%
NEAR NORTH - Down 5.4%
LINCOLN PARK - Down 4.2%
LAKEVIEW - Up 27.1%
NORTH CENTER - Down 1.3%
Median prices of luxury homes priced over $1,000,000 increased 4.0%.
Median prices of homes priced from $500,000 to $1,000,000 decreased 11.3%.
Homes priced under $500,000 decreased 5.4%.
DAYS ON THE MARKET
November 2018 vs 2017 – Cumulative Average Days On The Market increased 13.1% to 95 Days
NEAR NORTH - Up 28.0% to 137 days
LINCOLN PARK - Down 5.3% to 71 days
LAKEVIEW - Up 27.1% to 75 days
NORTH CENTER - Up 4.3% to 97 days
Market time for luxury homes priced over $1,000,000 increased 14.2% to 161 days.
Homes priced between $500,000 and $1,000,000 posted market time increased 13.9% to 90 days.
Market times for homes priced under $500,000 rose 13% to 82 days.