Chicago Housing Bubble

Vacancy rates up

It's a little broad for the market that I study (north side condos and single-family homes), but here's an article from Crain's about the increasing vacancy rate in Chicago.

2009 Projections through May 31

Time to look at the numbers again. Let's start with this:

I posted this chart a few weeks ago when I wrote about the projections through May 15. One of the things you can see as we've gone forward is that the projections have gotten better. That's the good news. So things will likely not end up as dire as they looked when we started tracking the numbers back in February.

At the beginning of April, it looked like condo sales would be down 55%. The market isn't performing as badly as we thought. But don't mistake that for a market that has somehow fixed itself.

For the first time we're seeing some consistency. The projection as of the end of May is the same as it was in the middle of the month. So we can start to make some real predictions.

But - remember that it's the relationship that matters! In other words, what the heck does 4500 condos selling this year have anything to do with anything? Well - you have to look at it compared to previous years:

Bottom line: condo sales are down 47% from last year.

Here's a question for discussion: what would you do if you put your condo on the market and got 97% of your asking price in the first week on the market? I hope your answer is: "take it!"

Case-Shiller has a condo index too

Wow. I learn something new every day. Who knew The S&P Case-Shiller report has a second index for condos? I didn't. Now I'm all excited to start watching that too!

To begin the celebration - here's a visual of the 2 indices for Chicago from 1995 - March 2009. Enjoy!

 

What's the best month to sell real estate?

Seasonality in real estate is a very-real phenomenon. People tend to buy more enthusiastically at specific points in a given year. And I get asked the question all the time: "when is the best time to sell?"

The short answer is always the same: "The best time to sell is now - as long as you're priced appropriately." This holds true especially when you consider we're in a declining market here in Chicago. But lets face it - that's a very sales-y answer. So I decided to look at the same thing I always do when I wonder things - the data.

Here is the result of # of contracts written by month over the past 4 years (it also includes the first 5 months of 2009). It's important to note - this is NOT closings. This is contracts written. Put differently - "in what month do the most buyers DECIDE TO BUY A HOME."

This is for Chicago's north side condo market: Near North, Lincoln Park, Lakeview, Uptown, Edgewater, North Center, Lincoln Square and Logan Square. I omitted Bucktown/Wicker Park because I have to draw boundary lines to get that data and frankly it would have taken me MUCH more time to include the data from those neighborhoods. And lets face it, I'm sure the results would have been the same.

A couple things to note:

• you can clearly see the decline in overall number of sales over the past few years
• the fall doesn't really have a bump (like I've always thought). It really just slows the seasonal decline in August and then drops DRAMATICALLY in September
• it's official - December is the toughest month of the year to sell

I've also ranked the sales that occur each month as a percentage of the total years sales. So what's the best month to sell real estate? MARCH!

Hooray! The housing market is fixed!

Did you hear the news? Regardless of demand being down 45% in Chicago, we can all expect all of our homes to go up in value INSTANTLY after this awesome news about pending home sales!

Let's all start buying Mercedes Benz's and McMansions again!