Falling home sales And Rising inventories in Lincoln Park, Near North, Lakeview and North Center Enter the fifth consecutive month
While there are variations by neighborhood and property type, there is no disputing that 2018 is having a soft first half.
There are many contributing factors, but here are 3 significant reasons for the sluggish start.
1. Sales of homes priced under $500,000 have been dropping since November 2017. While this has been attributed to low inventory levels, inventories actually increased 18.7% in April 2018 vs 2017. It should be noted that 52% of available homes for sale priced under $500,000 are located in the Near North Side, leaving buyers in the other 3 neighborhoods with little to choose from.
2. Rising inventories of homes priced between $500,000 to $1,000,000 seem to be having the most difficult time with sales dropping, inventories and market times rising, and only modest increases in median prices. Pricing homes competitively is one of the keys to selling in a market with rising inventories. The bright spot in this price point are townhomes, that seem to be out performing other property types. With single family home prices rising to unaffordable levels for many families, townhomes are a practical and more realistic option. Land availability has prevented most new construction of town homes and thus demand continues to out pace supply, driving prices upward.
3. Luxury Rentals - The influx of new construction luxury rentals on the North Side and in new trendy neighborhoods such as West Loop, Fulton Market and South Loop, is and will continue to entice potential buyers to rent instead of buy. Thousands of new rental units coming on the market in the next few years should have a significant affect on both rental and sales markets in Chicago.
April 2018 vs 2017 – Cumulative Home Sales dropped 5.8%.
NEAR NORTH - Up 3.7%
LINCOLN PARK - Down 11.6%
LAKEVIEW - Down 11.1%
NORTH CENTER - Down 6.4%
Sales of luxury homes (priced over $1,000,000) increased 1.9% .
Sales of homes homes priced from $500,000 to $1,000,000 dropped 1.9%.
Sales of homes priced under $500,000 dropped 9.5%.
HOMES UNDER CONTRACT
April 2018 vs 2017 – Cumulative Homes Under Contract showed no change from last year.
NEAR NORTH - Up 7.5%
LINCOLN PARK - Up 1.6%
LAKEVIEW - Down 2.8%
NORTH CENTER - Down 14.4%
Noteworthy – Most home sales that closed in March 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
April 2018 vs 2017 – Cumulative Inventories of homes rose 8.0%.
NEAR NORTH - Up 14.2%
LINCOLN PARK - Up 3.1%
LAKEVIEW - Up 6.5%
NORTH CENTER - Up 1.7.0%
While the cumulative inventory levels rose in April, the results varied by price point.
Luxury home inventories decreased for the sixth consecutive month (down 3% in April).
Inventories of homes priced between $500,000 to $1,000,000 increased 11%.
Homes priced under $500,000 saw inventory levels increase by 18.7%.
MONTHS OF SUPPLY OF INVENTORY
April 2018 vs 2017 – Cumulative Months of Supply of Inventories rose 7.5% to 4.3 MSI.
NEAR NORTH - Up 11.8% to 5.7 MSI
LINCOLN PARK - Up 5.1% to 4.1 MSI
LAKEVIEW - Up 9.7% to 3.4 MSI
NORTH CENTER - Up 8.1% to 4.0 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 dropped for the sixth consecutive month to 8.5 MSI (10.4 MSI last year).
MSI of homes priced between $500,000 and $1,000,000 increased 18.4% to 4.5 MSI.
MSI of homes priced under $500,000 rose 21.0% to 2.9 MSI.
While these numbers are still well in the range of a seller's market, MSI of homes priced between $500,000 and $1,000,000 are slowly increasing and having a negative affect on the market.
April 2018 vs 2017 –Cumulative Median Prices increased 4.9%.
NEAR NORTH - Down 2.6%
LINCOLN PARK - Up 15.5%
LAKEVIEW - Down 3.7%
NORTH CENTER - Up 6.4%
Median prices of luxury homes priced over $1,000,000 decreased 2.1%.
Median prices of homes priced from $500,000 to $1,000,000 increased 2.7%.
Homes priced under $500,000 decreased 5.3%.
DAYS ON THE MARKET
April 2018 vs 2017 – Cumulative Average Days On The Market remained at 84 days with no change from last year.
NEAR NORTH - Up 11.8% to 95 days
LINCOLN PARK - Down 4.4% to 86 days
LAKEVIEW - Up 18.8% to 76 days
NORTH CENTER - Down 20.6% to 77 days
Market time for luxury homes priced over $1,000,000 increased 2.1% to 141 days.
Homes priced between $500,000 and $1,000,000 posted market time increases of 15.9% to 95 days.
Market times for homes priced under $500,000 dropped 9% to 61 days.