Whether it was the polar vortex, the uncertainty created by the prospect of a new mayor or something else entirely, activity in Chicago’s residential real estate market slowed noticeably in February continuing a trend that began last year. In fact, February was the fifth consecutive month in which fewer Chicago homes sold than in the same month one year earlier.
February residential sales totaled 1,433, 5.2% less than in February 2018, and the median sales price rose just 0.4% to $273,000. The decline in February sales volume in the city was greater than that in any of the seven Illinois counties, including Cook, that make up the core of the metropolitan area. Yet despite the statistically unimpressive performance, vital signs in the city housing market remain strong. A key indicator is average market time, which is the length of time that a home sold in February was on the market before going under contract. The February average of 108 days was five days more than in February 2018 but identical to the February average for 2006 at the peak of the last housing boom. The lower market times seen in recent years resulted primarily from a shortage of listing inventory, which pressured buyers to act quickly.
These days, however, the inventory of homes for sale has been expanding. At the end of February, 7,178 homes were for sale in Chicago, 6% more than were available 12 months earlier. That means a greater selection and less pressure for buyers.
A more confusing aspect of the market is the direction of home prices. While the median sales price for the total market was nearly unchanged in February, the two major components shaping that result moved in opposite directions.
The median price of single-family homes sold in February rose 7.7% to $225,000, while the median price for attached homes, which are primarily condominium apartments and townhouses, fell -8.4% to $312,500. The decline in the attached segment stems less from a lack of demand than from a shift in it. A growing number of young first-time buyers are entering the market these days as rising rents make buying more financially appealing, and they are typically purchasing condos in the lower half of the price spectrum. At the same time, we are seeing a trend among wealthier people to rent in the sizable number of high-amenity luxury rental buildings that have risen in and around the central business district, and that trend has reduced sales of high-end condos.
There were 572 sales of single-family homes in the city during February, which was 7% less than the prior February. Sales of attached homes totaled 861 units, representing a decline of 3.9%.
While sellers clearly had the upper hand during the spring and summer selling season for the last few years, 2019 appears to be a more favorable environment for buyers as the residential market moves toward a more balanced condition.