Chicago Housing Bubble

Chicago shows 18.6% decline in latest Case-Shiller report

I feel like we just reported on the February numbers. And now March's Case-Shiller index results for the housing market is out.

The link for March above is an article that the NY Times did yesterday (so sue me, I'm a little late). Here's the article from the Trib.

Some additional analysis I did using the raw numbers found on the Case-Shiller site:

• In Chicago - we've lost over 18% in 1 year
• In Chicago - the losses aren't getting smaller, they're getting bigger
• Dallas, Denver, Boston, Charlotte and Cleveland are the only cities that had single-digit declines over a 1-year period
• none of the 20 cities measured by Case-Shiller saw positive returns over a 1-year period

The good news? It's a great time to buy or invest in real estate.

US Home Sales Remain Sluggish

Here's more news that doesn't matter to our local market from the NY Times: They've reported that (what?!) housing sales are down in the US!

Remember - NO MARKET INFORMATION MATTERS unless it's specific to a local market. I think that's the whole reason all 4 of you read this site, right? We're just talking about the Chicago north side condo and single family home market here. You're not buying a home in the US are you? You're not selling a home in the US are you? No. You're buying and/or selling a home in Chicago.

If you want our sales and price projections on the north side, you can see them here every 15 days. Here's the latest.

So why post this? Well, c'mon. I need content.

It's the relationship that matters

If you read the post from yesterday, you should be asking this question next:

"I guess it's interesting that demand is expected to be down 48% this year. But what about supply? If supply comes down, can't that make things easier?"

The answer is: YES! That's why demand doesn't matter. And supply doesn't matter. The only thing that matters is the *relationship* between supply and demand. And here it is through 05/15:

Demand is expected to be down 48% from 2008 (or 70% from 2005)
Supply is expected to be down 15% (or 28% from 2005)

The gap between supply and demand is getting bigger right now. In other words:

We're in an increasingly intense BUYERS MARKET on the north side of Chicago.

2009 Projections through May 15

I've been a little behind in tracking numbers, so I'm catching up with the May 15 numbers. The end of April projection is given in the second chart below. But I never fully reported it because... well... I was selling real estate. Doesn't matter anyway because the latest numbers are the most accurate anyway.

As usual, here are the number of sales over the past 4 years compared to this year's projection:

Condo listings/sales on Chicago North Side through 05/15

Northside = Near North, Lincoln Park, Lakeview, Uptown, Edgewater,
Lincoln Square, North Center, Logan Square, Bucktown/Wicker Park.

The overall facts remain true through 05/15 - demand on the north side is down about 50% from last year. The interesting thing is the relationship between the real estate winter we just went through and the spring that we're in now. The market is always busier in the spring, but it's outpacing previous springs as related to their winters. Here's what I mean...

I've been taking 15-day projections of the market since the end of February. Here are the total-year projections and how they've changed:

What does this mean? Well - the market remains intensely challenging. We're expecting to see a reduction in demand of at least 40% this year (right now we're at 47%). From there, we can expect prices to continue dropping as well. 2010 should be an even better year to buy. But the good news for sellers is that we're having a relatively healthy spring.

It's too early to tell what this means. But for now, the same, boring rule applies - price your home appropriately or you will NOT sell

Case-Schiller history in graphic form

The Case-Schiller report is lots of fun, but it's just an index. You know how you look at the pretty charts when you look at the DOW or the stock market? I wanted to bring that concept to the Case-Schiller report.

Oh yeah - what is the Case-Schiller report? It's the commonly used index of the housing market in the US. When you see a report on CNBC or MSNBC or FOX or whatever about real estate - they're usually reporting on the Case-Schiller numbers.

Enough. Here's the chart:

You can clearly see the bubble begin to inflate in about 2002. For fun I included New York, Los Angeles and the 10 biggest cities indexes as well. We're doing poorly here in Chicago, but not as bad as they are.

March>April and 2009 YTD numbers of condo sales, etc.

These are the numbers that were released by MRED (the entity that owns/controls the MLS in Northern Illinois) about how April 2009 compared to March 2009 and the year-to-date numbers for condo sales. This is really good data because it's local and it's from the MLS (which is going to hold at least 95% of the transactions that occurred):

According to figures released today by MRED, year-to-date sales of Chicago condos are:

• Down 59% in total dollar volume, from $1.6 billion to $668 million

• Down 51% in units closed, from 4,128 to 2,012

• Down 11% in median sales price, to $281,000

•   Up 24% in average market time, to 158 days.

Comparing April sales to March:

• Units closed were up 15%, from 563 to 645

• Dollar volume was up 8%, from $187 million to $202 million

• Median sales price was unchanged, at $280,000

• Average market time was up 3%, from 157 days to 161 days.

The year-to-date numbers are interesting and useful, but I don't know how useful comparing March to April is. March is naturally a slower month than April. In other words, it's reasonable to expect April to be UP over March.

In any case, the 2009 real-estate train keeps on chugging. I'll have the numbers through April up by early next week. I don't expect to see much change.