Chicago Housing Bubble

Single family homes through 2009!

Single-family homes are a little less interesting and predictable than condos from a numbers perspective. This is due mainly to the fact they don't exist in large closing numbers. The turnaround time for families in a single-family home is longer. And they take up more overall space. This leads to fewer transactions on a yearly basis.

Regardless, it's nice to look at the data and spot some trends. You'll notice I pulled out some of the neighborhoods that aren't really "single family" neighborhoods. South Loop, Near North, and West Loop are missing on purpose. Uptown really should have been pulled as well.

First, the sales numbers...

The only notable thing I can spot is the Irving Park numbers having gone up 18% in 2009. What you can't see is that 46 of those 139 were short-sales, foreclosures or court-approved sales. So while the transactions were up 18% from the year before, if you take out the distressed properties, it was actually down 21%. More on distressed properties next week...

 

Prices get even weirder in the numbers (especially without digging into the number of bedrooms). From cutting data obsessively for the past 18 months in all the northside neighborhoods, I can say (with confidence) that if you bought a home in 2005, it's worth less today than it was then. The numbers in every neighborhood here reflect it. And hey - Uptownites - don't read too much into your neighborhood's "positive" numbers - 21 total sales is too small a sample to get an accurate read.

Meanwhile, my favorite head shaker is Lincoln Park. No matter how I cut the data, how far I go back, how many bedrooms I use - LINCOLN PARK single family homes will not quit! The Lincoln Park SFH market just keeps going in the right direction.

Post comments if you have them. Meanwhile, there's more to come this week and next.

Condo numbers through 2009!

DAMN! 5 full years of data to play with!!! I always say New Year's is my favorite holiday...

I'm going to post condo numbers today and single-family home numbers tomorrow. I have some other changes coming up on the blog too. But as I said yesterday, I'm not going to make any promises I can't keep. So I'll save those announcements for when I can actually deliver them.

On to the numbers...

We knew transactions were going to be down in 2009 from 2008. In fact, at halftime, we were predicting transactions in the condo market to be down as much as 43%. But then a little thing called the Obama Tax Credit (that's not the technical name) came along. And Q4 of 2009 turned the transactions on a dime. In fact, December of 2009 boasted almost TRIPLE the number of transactions (in our "watch" neighborhoods) as December of 2008. 

(P.S. I knew that credit would do something funny to the market, but that triple-December shit threw me for a loop.)

(P.P.S. Is it "threw" or "through"? I think it's "threw", but I'm not sure. I'm trying to stay focused on the numbers.)

Prices in the neighborhoods did what they were supposed to - they followed suit. If demand falls out of the market, prices naturally have to adjust (or people will simply stop buying homes). And since people didn't stop buying homes, prices made their adjustments.

There is some correlation here. The neighborhoods with big drops in sold listings also saw some of the biggest reductions in prices. In short - the South Loop got its ass kicked.

So what's up in 2010? With an overall reduction in transactions of 24%, that should translate to even lower prices in 2010. But it will take some numbers from all of Q1 to really see what's going to happen. And here's the wrench in the prediction engine - that credit was extended through 04/30/2010. So expect some craziness.

We'll keep our eye on it though.

How are prices doing?

OK, we're back in the game here. I have a bunch of stuff coming. First things first: How are prices doing?

As you might remember from my posts, I use 2 bed, 2 bath condos (for the condo market) to determine what's happening with prices. Why? Because 2/2's are a common sales point for entrance into the market. More of them sell than anything else, and with big numbers, you get accurate trending.

Here's what we have:

It doesn't come as any shock that we have prices being down from the peaks of the market. But the thing I'm paying attention to is where are from the previous year.

You can see that every neighborhood has seen a drop (except North Center) since 2008. So yes - if you bought last year, your condo is worth less today than it was a year ago. That means you lost money. That means the market won't pay the same amount you paid for the same place. Please read this paragraph back a few times.

Where is the bottom? This is what I'm trying to figure out. Next up: prices for single-family homes. Then transaction closings and contracts for both categories. After that I have some other nerdy analysis to share that I think you'll like. Really, I mean it this time - stay tuned.

Single family homes... recovering?

As usual, I've been wondering. Wondering about how many contracts are getting written out there in the market compared to previous years.

No one ever talks about contracts written. I like to call it the "decisions made" index.

These results are from the northside. For sake of speed, I didn't include Bucktown/Wicker Park as I normally would (I have to pull those separately and just didn't feel like it this time - get over it):

There's only one thing notable here - and it's a BIG NOTE - June and July "decisions made" are UP (UP?!) from 2008. I'll be keeping my eye on this.

The numbers at halftime (for condos)

Well, the market seems to be a little warmer than we predicted it would be back in January. I'll just get right to it - here are the condo closing numbers through June 30 (half of 2009).

Quick note: I never posted numbers through 06/15. The rolled up numbers are here...

Rolled-up demand is still down 43% from 2008. This continues to improve from the -55% we saw back in February and March. Clearly the year started off REALLY bad for home sellers. The big question is - if the market ends up down 40% from 2008, what will that do to prices? There's no way we should see anything other than falling prices through 2010. The market looks better than it did in the beginning of the year. But don't confuse that with a sign of recovery.

I like to make the update a little different every time. So this time, I'm going to include closing numbers by neighborhood on the north side. Remember - the 2009 numbers are the latest full-year projections for closings:

More fun on the way. I have numbers for single-family homes now too! Stay tuned...

Bread and butter condos losing steam

(I hate when people don't update their sites. I've become one of those people. And I'm ashamed. I'm sorry fellow nerdy Chicago real estate junkies. This will not happen again. Just kidding - it probably will happen again. I usually wait until I see something interesting to write.)

A client of mine asked me a great question on Thursday night: if we take a loss on our condo in Albany Park (they're on the market right now), and buy in another neighborhood - have those neighborhoods taken AS BIG a loss? In short - he wanted to know that if they're going to get their asses kicked on price that everyone has had an equally painful ass-whopping. So I looked into it.

Here are results on 2 bed, 2 bath condos since 2005 for price (I typically consider the 2/2 to be the bread-and-butter of the Chicago condo market). The peak year for price is shaded in green...

Prices have been going down since the peaks in the northside neighborhoods. And for the first time, NO neighborhood is immune (I'm looking at you Lakeview).

So - to answer the question - has Albany Park fared worse? Yes. Is everything else going to "catch up". Yes - it definitely looks like it.

Albany Park 2008 market results

Albany Park was a booming neighborhood that saw tremendous growth back in 2003-2005. First-time homebuyers, who were unable to purchase the ever-more-expensive condos and houses in Lakeview and Lincoln Park, went there to find prices that more easily fit their budget. Developers flocked too. Tear downs, land, and apartment buildings were all available for cheap.

Now, as the market adjusts down, Albany Park is getting hit hard on prices and shrinking sales numbers.

Here are the numbers for Albany Park for 2008.

The hot neighborhood

"This area is very desirable - I'll have no problem selling"

I’ve heard that a few times from clients as they come to terms with the market. Let's take a look at the reality. I looked at 2 areas on the north side that are typically defined as "desirable". The North/Damen/Milwaukee intersection (ground zero of Bucktown), and the Southport Corridor. Here's what I found.

AREA: "North/Damen/Milwaukee"
I used the half-mile square around the intersection: roughly Schiller to Bloomingdale, Wood to Leavitt.

Type	Listed	Sold/Contract	Median List	Median Sale
Condos	198	95	$452,500	$410,000
Single Fam	80	21	$1,299,000	$1,050,000

48% of condos sold. Those that did were typically 10% below market.
26% of homes sold. Those that did were typically 19% below market.

AREA: "Southport Corridor"
I used the half-mile square from Racine to Ashland, Belmont to Addison.

Type	Listed	Sold/Contract	Median List	Median Sale
Condos	302	141	$439,900	$415,000
Single Fam	51	17	$1,900,000	$1,490,000

47% of condos sold. Those that did were typically 6% below market.
33% of homes sold. Those that did were typically 22% below market.

So that’s what you get in a “desirable” location. How about a neighborhood that isn’t as magnet-y as the Southport Corridor or Bucktown? Let’s take a look at the first half-mile square west of California in Albany Park. Still a beautiful neighborhood, but not typically what people think of first when they think “north side”…

AREA: Albany Park
I used the half mile square from California to Kedzie, Irving Park to Montrose.

Type	Listed	Sold/Contract	Median List	Median Sale
Condos	226	44	$259,000	$236,750
Single Fam	32	7	$351,950	$309,950

19% of condos sold. Those that did were typically 9% below market.
33% of homes sold. Those that did were typically 12% below market.

Moral(s) of the story...

• The 3 L’s of real estate are alive and well
• if you followed the 3 L’s it gives you a 50/50 chance of selling (instead of a 20/80 chance)
• if you’re above market on price, you’re not going to sell anytime soon