Yesterday, Governor Pritzker announced a 30 day extension of the stay-at-home order for Illinoisans, meaning we are in this predicament until at least May 30th. While this is worrisome and frustrating for everyone, they are seeing positive outcomes from this order and hopefully we can start to resume some normalcy come June.
As for the local real estate market, there is still plenty of activity going on. Personally, I have buyers interested in properties they want to see, and sellers are either keeping their home on the market or waiting to list until the stay-at-home order is lifted. I’m talking with multiple agents per day, and many are still having properties go under contract, curbside closings are taking place, and the new way of business is ever adapting.
Showings are being done virtually or with proper protection like facemasks, gloves, and hand sanitizer. While the number of showings has drastically decreased, I’m always considering the supply/demand picture as the true indicator of where the market is going. So with that, let’s look into the data a bit:
This pie chart is an overview of market activity in the areas I specialize in. It gives me a good indicator to the health of the market for any given time. The neighborhoods included here are: Lake View, Lincoln Park, Jefferson Park, Avondale, Near South Side, Albany Park, West Town, Uptown, Near West Side, Logan Square, Near North Side, Lincoln Square, North Center, and Humboldt Park.
In the past 30 days, we’ve still seen a solid amount of inventory come on the market new, not that much in the way of price changes, and over 800 homes going under contract. Overall, these numbers are lower than a standard spring market, but this shows that despite the order from the state, we are still moving in the real estate market; however, supply is growing.
Since we are still in April, we don’t have those numbers yet, which will tell us a lot about the state of the market. But we can look at March numbers to start to get an idea. If you look at the number of places under contract, there was a significant dip in March for Chicago as a whole.
Normally we see a 25% increase in number of properties under contract from February to March in the city, but we saw about a 10% decrease this year. Understandable given the stay at home order came in mid-March and many people decided or had to back out of a contract. March numbers are like late summer or late winter numbers. I expect April numbers to be similar to a December.
Now if we look at number of homes for sale in Chicago on a monthly basis, we can see from February to March was completely flat.
Normally inventory builds through the spring, hits a peak, and then less people are putting their homes on the market in the summer while the existing inventory finds their buyers, rent out their homes, or take off the market til the following year or after. Then we see that drastic drop in total number of homes for sale in the winter.
This can mean a few things. One is that no activity happened: no new listings, nothing came off the market, no contracts written. That obviously didn’t happen. We just saw the delta between new homes coming on the market and an equal number of buyers buying that number. We should’ve seen about 5-10% build in inventory, or about 500 homes.
So we saw a flat level of supply from February to March, and a 10% decrease in demand. This means prices should have to come down a bit, but nothing too drastic. If we just considered that the demand delta was 35%, that would be a darker picture. But since supply is lower than it should be, we aren’t seeing as dire of a picture for the market. In other words, the relative difference between supply and demand in a healthy market vs. this market is not drastically dissimilar.
April numbers will paint an even better picture of where we are at. If supply and demand are both low, prices won’t change that much over the next 3-6 months. If supply grows considerably and demand tanks, then we will be in for some hurt. However, on the brighter side, if we are able to resume our daily lives at a gradual pace, we will see a rush of inventory come back to the market, and probably a lesser rush of buyers. It’s hard to predict what will happen. We just use the data to show us what we know now and extrapolate that into the future.
If you’re looking for more information, feel free to call me at 847.373.8114 or email at firstname.lastname@example.org. I’m always wanting to help as many people as possible find their home in Chicago, so share my contact info with someone you know looking to get into the market.