COVID-19 Chicago Market update
This week we took a look back at March’s Chicago market data to compare it with February’s and we are now definitely seeing the effects of coronavirus within the data. In this article we will take a close look at a few neighborhoods as benchmarks of the city’s various sub-markets. We will see how inventory has taken a drop-off. And we will discuss how to continue to find opportunity amid the current adversity.
Inventory has taken a hit
As far as inventory goes, everything seems to be down. Inventory of detached homes for sale is down 19.9%, new listings in March 2020 vs. 2019 are down 22.1% and YTD new listings are down 7.9%. This is a very sharp decline on a one-month basis. For condos it’s a similar story. New listings are down 21.9%, under contract down 26.9%, and inventory of homes for sale is down 8.1%. Interestingly, average sales price is up 5.2% and median sales price is up 11.6%.
This tells us that while sellers may be hesitant to list their properties, we haven’t seen any hit to the prices they are getting. In fact, so far sellers are still riding an upward trajectory in home price. We know there was extensive demand for homes going into the Coronavirus pandemic, which could keep average home prices resilient.
We can feel the effects of low inventory within our business and when discussing with our attorneys and other partners who do closings. Some of our lenders and attorneys are seeing less contracts coming across their desks right now, which speaks to continued low numbers of under contract in the future. This would indicate that things may get a little bit worse before they get better.
All Properties
Inventory of homes for sale
New Listings (March)
New Listings (YTD)
Condos
New Listings
Under Contract
Inventory of homes for sale
Average Sales Price
Median Sales Price
Neighborhood Check in: Avondale
New condo listings are down nearly 60%, closed sales are down 26.3%, and median sales price is down 11.6% in March 2020 compared to March 2019. Across all properties new listings are down 34%, closed sales 26.7%, and change in inventory of homes is down 41.1%.
We are definitely seeing a strong hesitancy to bring properties to market in Avondale. If you are a home buyer, we recommend patience, there are less options than we would expect, and we haven’t really seen a drop in prices. If you are a seller, we also recommend you remain patient. Demand seems to be down but not as significantly as supply, and with historic demand going into the crisis we expect buyers are just waiting to make a move.
All Properties
Inventory of homes for sale
New Listings
Closed Sales
Condos
New Listings
Closed Sales
Median Sales Price
Neighborhood Check in: West Town
On all properties inventory of homes are down 18.6%, new listings are down 20.6%, but closed sales are up 16.3%. You might expect to see closed sales being down in relation to the drop in inventory, however it’s important to remember that properties that would have closed in March went under contract likely back in January, before we started to see impacts from COVID-19.
Another bit of data worth looking at: market time for condos is up 16.9% and for detached homes 30.2%. This is telling us that more homes are just sitting on the market. This is an effect we had anticipated, and it’s now being reflected in the data. With impacts reaching far beyond real estate, COVID-19 seems to be leaving many hesitant to make any big commitments.
All Properties
Inventory of homes for sale
New Listings
Closed Sales
Market Time
Condos
Detached Homes
Neighborhood Check in: Near North Side
On all properties inventory of homes is down 5.7%, new listings are down 23.5%. Meanwhile closed sales on all properties are up 7.4% and median sales price for condos is also up 7.4%. It’s a similar story to West Town. Inventory is dropping, and closed sales remain strong since it is a reflection of places going under contract prior to coronavirus.
All Properties
Inventory of homes for sale
New Listings
Just a matter of time
With COVID-19 there are many questions up in the air right now that we all want answers to: When will things go back to normal? What will be the long-term effect of coronavirus on Chicago’s markets? And simply, when will be able to go out and enjoy a meal together?
The answer to these questions and more seems to be: It’s all a matter of time. Lori Lightfoot released a new plan to re-open the city, but it is intentially somewhat vague on the timeline. It will all depend on new cases and data, and for that we need to keep testing and proceed with caution.
So, what are our recommendations for our clients? The number one asset out there right now is patience. Everybody’s life plan is different so patience will look a little bit different for everyone, but here are some general recommendations:
For sellers now is not necessarily a bad time to list your property. Prices haven’t taken a dip yet, and we went into this with demand at an all-time high, but you may need to wait on market a bit longer than under normal market conditions.
For buyers, continue your search. There are certainly less options out there overall, but if the perfect place comes on the market there is also less competition. Also in a typical economic downturn housing prices will come down, so good deals may be on the horizon.
For investors, it is a very interesting time. Interest rates are still at historically low levels, and if you are in a financial position to be able to make moves it’s not a bad idea. We feel especially confident about buy and hold positions in the long term, but quick buy and flip deals that require flawless execution will be more challenging right now.
Market standoff
We see the current market conditions as essentially a standoff. Buyers are still waiting for that perfect deal, and facing increasingly limited options. Sellers are pumping the brakes on listing their property amid the uncertainty. Investors are also taking their time with unemployment and rent abatements on the rise.
In our opinion as the old adage says: Patience is a virtue. If you are lucky enough to be in a position where you can be patient, do. Stay home, enjoy your current place, things will start to pick back up.
If you are in a more difficult position now is the ultimate time for communication. Owners need to communicate with their tenants and with their lenders. Setup payment plans and get on the same page. If you are a tenant who is struggling, communicate with your landlord. There are many case by case negotiations going on across the city and across all property types.
Our expertise is in asset management dating back well beyond the great recession of 2007-09. If you have property and want some more specific advice for you, please get in touch!
Opportunity in adversity
Overall the market seems to be behaving as we had predicted. Lots of hesitancy across the board. Drop in inventory, slowed demand, little movement in pricing so far. While overall things have taken a bit of a dip, we are still seeing opportunity out there.
Every person’s situation is unique, for more direct help planning for future decisions get in touch with us now, we are ready to help.