By Dennis Rodkin
Crain’s Chicago Business
August 27, 2024
Credit: VHT Studios
This house on Park Avenue in Wilmette sold recently for $834,000.
Housing affordability has been shrinking this summer, as prices rise faster than inflation.
Welcome to Crain’s monthly look at the latest data on the Chicago-area housing market. From a three-day run of top-priced sales to the 21st century’s lowest number of suburban subdivisions, here’s what you need to know.
Home prices are running hotter than inflation
While inflation is slowing overall, home prices have been vigorous, running higher than inflation. That’s a worrisome sign of how much households may be having to stretch in order to buy a home.
In Chicago, home prices in June were up 7%, according to data from the S&P CoreLogic Case-Shiller Indices released this morning. That’s more than twice the rate of inflation during the month. Inflation was at 3% that month.
Nationwide, home prices were up 5.4%, according to the index, opening a narrower gap above inflation than Chicago and other cities with high-rising prices. Of the 20 cities the index tracks, four had bigger price increases than Chicago in June: New York (9%), San Diego (8.7%), Las Vegas (8.5%) and Los Angeles (8.2%). Detroit registered the same increase as Chicago.
Cities where prices grew by less than inflation in June were Dallas (2.3%), Minneapolis (2%) Denver (1.9%) and Portland (0.8%).
Home price growth is steady
Despite the concerns about outpacing inflation, steady growth characterized the Chicago-area housing market in July, according to data released Aug. 22 by Illinois Realtors, a statewide professional group.
In the city, the median price of homes sold in July was $360,000, up 5.9% from the same time last year; in the nine-county metro area, the median sale price was $368,000, an 8.3% increase from July 2023.
Neither of these increases is the highest or lowest of recent months, although they’re both higher than the nationwide price increase reported at the same time by the National Association of Realtors. Home prices rose 4.2% nationwide in July.
Number of homes sold has risen from record lows
The volume of home sales is coming up from the record lows it was lingering in, a promising sign for the multiplier effect homebuying has in the economy.
In much of 2023 and part of 2024, monthly home sales figures were hitting new lows for their individual months, lower than any similar month in a decade or more. (That’s not counting 2020, when the chaotic early days of the COVID pandemic killed a lot of deals.)
Sales turned up well in July, according to Illinois Realtors. In Chicago, 2,161 homes sold, an increase of 5.3% from a year earlier; in the nine-county region, 8,943 homes sold, up 5.7% from July 2023.
Both figures were still well below the pre-COVID norm for the month, to say nothing of sales volumes during the halcyon boom years of mid-2020 to mid-2022.
July sales in the city were about 80% of the July figures for 2018 and 2019. In the larger metro area, home sales were about 77% of the comparable month in 2018 and 2019.
The Illinois Realtors data uses the U.S. Census Bureau definition of the Chicago metro area, which comprises Cook, DeKalb, DuPage, Grundy, Kane, Kendall, Lake, McHenry and Will counties.
New-construction sales went flat
Sales of newly built homes in the Chicago area were essentially unchanged this spring from the same time in 2023, according to an August report from Tracy Cross & Associates, a homebuilding consultancy based in Schaumburg.
Builders sold 1,451 homes during the second quarter, down 0.2%, or effectively flat with the same three-month period last year. It’s largely the result of a perpetually low inventory of new homes to sell, says Erik Doersching, president and CEO of Tracy Cross. Those few builders that have supply to sell find that “demand is very good,” he said. “There’s more than they have supply.”
The number of subdivisions actively selling homes during the quarter was the lowest it’s been in Tracy Cross’ records that go back to 2001. In the spring, 239 developments were active, the consultancy found, down 4.8% from a year ago and down more than 75% from the suburban building-boom years of 2004-2009, when the number of active developments was consistently above 1,000 and often over 1,200.
Three of the year’s five highest-priced home sales happened in a three-day span in August
A rare trifecta happened at the upper end of the Chicago-area real estate market in the three-day period of Aug. 19-21, where three of the five highest-priced home sales occurred in that brief span.
That Monday, a Lake Shore Drive co-op sold for $7.7 million, the third-highest price of the year. The next day came the year’s highest-priced sale, at $15.25 million. That Wednesday’s $7.25 million sale of a Glencoe mansion was the fifth-priciest sale of the year.