To many, the 2014 Chicago real estate market is firing on all cylinders and there is reason to celebrate. Given the abundance of positive housing statistics, it may seem hard to argue that point. Yet, when opening up the real estate purse to peer inside, a few important statistics are hiding from first sight behind the obvious accessories.
Those accessories show up as eager buyers. Yes, there are many eager buyers in the market right now and a lot of realtors have little black books detailing waiting lists of clients standing anxiously, even impatiently, outside the glass doors for the right opportunity to submit a purchase offer, or several subsequent offers. No matter how many purchase offers a realtor may be carrying around, the lack of inventory is driving bidding wars which have not been observed since the prior peak in the market.
The good news is that the lack of real estate inventory in 2014 has not dampened the dollar volume of sales in Chicago. According to MRED LLC, the realtor and broker owned and controlled real estate data listing aggregator for Northern Illinois, through the first five and a half months of 2014, there have been $3.3 billion in sales of detached and attached properties in Chicago.
For the same period in 2013, there were $3.2 billion in sales. This is all the more impressive given the talk of limited supply and inability to satisfy buyer demand. Hidden deeper in the real estate purse out of sight from most people’s view is this little known statistic that there have actually been 8.5 percent fewer sales in 2014, 10,457 versus 11,427 in 2013.
Given the facts that sales volume in Chicago declined and the total dollar value of Chicago real estate sales increased, there must be something else happening. Clearly, there is only one way for the dollar volume of real estate sales of detached and attached properties in Chicago to marginally improve as volume decreases. That way is through an 11.5 percent increase in average Chicago sales prices from $282,239 in 2013 to $314,896 in 2014. Indeed, the Chicago-area real estate market is strong and improving, but it isn’t time to break out the sassy sequin celebration purse or clutch just yet.
Celebration was in 2007. Compared to 2007, 2014 year to date average Chicago sales prices are lagging, $314,896 in 2014 compared to $346,436 in 2007. That difference seems small compared to the significant difference in transaction volume. In 2014, there have been 10,457 real estate sales of detached and attached properties in Chicago which is 22 percent less than the 13,433 sales in 2007. So, no matter how strong the current Chicago real estate market may seem, there are still many more stairs to climb before ascending to 2007 heights and donning that smashing celebration outfit with accompanying designer handbag.
While we are not back to the future just yet, the Chicago real estate market’s resurgence is cause for many sellers and Realtors to raise a toast to the vastly improved conditions.
Guest Blogger Michael Hobbs, SRA, RAA, LEED GA, president, PahRoo Appraisal & Consultancy is covering the ‘State of Chicago Real Estate’ in a series of posts. For more information, he can be reached at 773.388.0003 or Appraisal@PahRoo.com.