‘Tis the Season (November Insider)

Redfin’s monthly Chicago-area real estate insider report draws from our proprietary database of information on homes for sale and that just sold, along with insight from our agents to get a sense of what’s going on in the market right now. If you’d like to receive the report via email, just sign up.

Happy Holidays Chicagoland Redfinnians!

Here at Redfin, we just launched a big upgrade to the website this week that allows folks to log-in using their Facebook account. We also give our own customers an online Deal Room for tracking the escrow process and — tell your friends! — we opened the Dallas market. Plus, we upgraded our iPhone app to include the ability to run saved searches. For all the detail on the market, read on!

Old man winter has arrived early in Chicagoland this year, and Redfin is delivering a mixed bag of insight. Sales volume is significantly down in November, both versus the same month last year and October of this year. Of course, some of last year’s levels can be attributed to the tax credit deadline of November 30, 2009.

Contracts Signed, But Not Very Sticky

County Compared to Oct. 2010 Compared to Oct. 2010 Adjusted for # Weekdays Compared to November 2009 Compared to November 2009 Adjusted for # Weekdays
Cook County -8.4% -12.6% -31.8% -34.9%
DuPage County -9.6% -13.7% -34.9% -37.8%
Kane County -3.0% -7.4% -24.8% -28.2%
Lake County -9.0% -13.1% -22.8% -26.3%
McHenry County -10.7% -14.7% -18.9% -22.6%
Will County -19.5% -23.1% -42.7% -45.3%

Change in # of Houses That Sold in November 2010

On the plus side, the number of units under contract, at the end of each month, has more than held steady since May. In fact, Jim Carollo, a Redfin agent specializing in the Northwest Suburbs, has run into more multiple offer situations. While there are still a lot of homes on the market, “many are not really market ready, or at least not priced for their condition.” Buyers are attracted to the same homes which are “priced right and in good condition.” He believes, “many buyers may be sick of ‘shopping’ and are starting to pull the trigger,” only to find competition from other buyers doing the same.

Another impetus for pulling the trigger now seems to be the uptick in interest rates. Just as buyers became accustomed to the extraordinarily low rates, the recent uptick has awakened some folks to the fact that they can, in fact, rise. As a result, many buyers have decided to take the plunge before risking another increase.

But, alas, every silver lining seems to have a cloud, when it comes to real estate these days. More of these deals seem to be falling apart than before, and the percentage of cancelled contracts in the market has increased. Chicago agent, Greg Whelan, sees that “buyers are more willing to walk away from problems or issues they encounter at the inspection.” He suspects “higher inventory levels are the culprit. Buyers who walk away from a deal are confident they will find an even better deal later.”

This is demonstrated on the graph below, which covers Cook, DuPage and Lake Counties. The green bars (closings) normally track several weeks behind the blue bars (pending contracts). However, over the past two months, we see the number of closings falling, relative to the stable number of signed contracts.

Market Dynamics 2010

Another increasing issue with these tenuous contracts is financing, especially in many condo buildings. Even for well-qualified buyers, financing can be difficult, if not impossible, in more and more buildings with their own financial difficulties because of budget issues or delinquent assessments. This has added another area where many buyers are ready and willing, but not necessarily able to buy, at least where they’d like to.

Digging into Median Prices

The median price has continued to fall, though not quite as fast as previous months. Cook County bucked the trend with a bump of 1.6%.

County Median Price in
November 2010
Median $/SqFt Change
since Oct. 2010
Median $/SqFt Change
since November 2009
Cook County $168,000 +1.6% -9.3%
DuPage County $260,000 0.0% -5.3%
Kane County $170,000 -1.0% -12.8%
Lake County $180,000 -14.0% -15.4%
McHenry County $177,750 -4.2% -7.1%
Will County $187,000 -8.0% -11.5%

Change in Median Price of Houses That Sold in November 2010

Redfin agent, Dave Yocum, is seeing “more short sale contracts, which take much longer, as the price seems right and buyers are more willing and able to wait for the banks to make a decision. Also, buyers or sellers are delaying closings because they don’t want to close before the holidays.”

This is evidenced by the number of Redfin contracts signed in October and November, which aren’t scheduled to close until January and February. So, maybe some of that gap will close in early 2011.

In the meantime, the lower sales volumes, along with a still-high inventory, despite many sellers closing up shop for the holidays, has kept the Months Supply of Inventory at approximately 15.3, a number which indicates continued downward pressure on the market (a “normal” market is considered to have a 6-10 month supply). As a result, prices have continued to slide.

That’s it for the last Chicago report of 2010! Want to dig into the raw data? Just download our spreadsheet. Questions or comments? Just post ‘em below. Thanks as always for your Redfin support, and happy holidays!

Best,
Mark Reitman
Chicago Market Manager

  • Khalid Rahman

    Good Report. Just wanted to know why Kendall County is not included and what is the trend there .

    • Mark Reitman

      Hi Khalid,
      The linked spreadsheet will provide raw county-level data, including Kendall. If you're looking for the Market Dynamics-type graph, email me at mark.reitman@redfin.com and I will be happy to produce and send one to you.

  • Ryan Siebert

    Very interesting article. As many loops as buyers have to jump though to get approved for a loan they seem to be putting sellers through just a many to accomidate their repair requests and seller concessions to sell the property. Even investors are leary to purchase property because of the fact that when they go to sell a buyer may not purchase unless property is in “perfect” condition. – Ryan – Chicagolandrto.com

  • shortsalesuperman

    I think we're going to see a lot more short sale in the spring too. There have been a lot of people I've talked to holding out hope that things will stabilize. I think your article is accurate in that there will continued downward pressure on housing prices in the region, which doesn't bode well for those homeowners. In the end many homeowners have to move on for all sorts of reasons, but I believe many of the homeowners who do decide to move on and sell are going to have to go the short sale route.