Chicago Housing Bubble

The January condo results are in.

What will 2010 hold for us? It's tougher to say right now than it was at this time last year. There are 2 factors that are artificially propping up the market:

• super-low interest rates
• the $8000 closing cost credit

Not until these 2 things are gone will we know how the year will shake out. Until then, here's what we DO know so far:

Analysis: closings were down over 25% in 2009. That is the reason for the continued translation to lower prices. It should stay this way until we see a SUSTAINED improvement in contracts and closings. "Sustained" is the key word. It will be interesting to see what happens to the market when the Fed buyback of bad loans AND their housing credits both expire. Until then, things look artificially good right now.

2010 Chicago real estate (so far)

Are you wondering yet about how the northside market is going to look in 2010? 

Here's the (very) early returns:

Obviously not much to talk about in the SFH box. But condos?

Wow?

Maybe wow. We'll see...

What's the best month to sell a home in Chicago? Stop guessing.

This time of year, the #1 question I get asked is "What's the best time to list my property?" As Mary Umberger wrote in her Trib column the other day, the vague answer is: "don't wait too long".

But I prefer to use data to solve the mysteries of the housing market...

I shared some similar information last year. But now that 2009 has passed, we have the updated full-year numbers for single family homes AND condos. NOTE: These are CONTRACTS WRITTEN (not closings). I like measuring it this way, because it shows you the month in which buyers make the most decisions to purchase...

 

Not surprisingly, the SFH home market comes out a little later (on average) than the condo market. What I find interesting is that 2009's December numbers were the highest in at least 5 years! November was the highest in 3 years!

 

And these numbers are just nuts! The VERY FIRST thing that popped out at me as I was putting this together was that transactions went up every month from Jan-Jun. And Q4 of 2009 outpaced Q4 of 2008 by 81%.

Obviously, Q4 of 2008 was a disaster (stock market, election anxiety, job losses, that horrible Zack and Miri movie etc.), but it's important to note what happened in the later part of 2009's market. Could this be the bottom? We won't know until at least April of 2010. But so far - things are looking up...

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.