A blog post on Zillow yesterday claimed that Chicago is the #2 market for buyers in the country, due to longer market times and price cuts. Comparing Chicago to cities across the country makes it seem like Chicago must be enjoying a great buyers market. However, let's try comparing the city with itself, to determine whether it is in a buyers or sellers market.
Zillow is looking at market time and price cuts. Let's also look at month's supply of inventory, remember, that is a quick and simple way to determine whether we are in a buyers or sellers market. Here is a reference chart for what the month's supply of inventory means.
Longer market times and more price cuts mean that homes aren't selling. When there is more inventory than demand the ball is in the buyer's court, but when market times are lower, prices are rising, and there is little inventory the ball is in the seller's court.
Below are year-over-year charts, comparing January 2016 with January 2015 for Chicagoland (Chicago and the surrounding suburbs), the city of Chicago, and the Near North Side (including Streeterville, Magnificent Mile, River North, Goose Island, Old Town, and the Gold Coast).
Results: Sales Price up by 7.7%, Market Time flat, Months Supply down to 4.7 = Seller's Market
City of Chicago
Results: Sales Price up by 5.3%, Market Time flat, Months Supply down to 4.2 = Seller's Market
Near North Side
Results: Sales Price up by 2.6%, Market Time up by 4.7%, Months Supply down to 4.6 = Seller's Market
Now, let's look at the Near North Side a little more carefully. The reason we chose this neighborhood is for it's proximity to downtown and its variety in housing options. Notice how in Chicagoland and in the city of Chicago the difference between the original list price and the final selling price is shrinking, yet in the Near North Side it has gone up by nearly 13% and, as a result, the market time has increased as well. This is a sign of sellers having an unrealistic view of the market, and illustrates the importance of understanding the local data. If sellers continue to overprice their property it will take longer to sell and inventory will go up as more sellers come to the market.
As we mentioned, the Near North Side has a variety of housing options, from small studios to multi-million dollar mansions. These numbers take all of that inventory into account. So what does the market really look like for these homes? We can dig a lot deeper! Let's look at single family homes for this example. If you would like to dig deep into your market let us know.
Single Family Homes in the Near North Side
Currently there are 35 single family homes on the market in this area. The lowest priced one is $1,595,000 and the highest priced one is $17,000,000, with a median of $2,885,000. Since there is such a wide price range among these 35 homes lets just look at $1.5M - $2.5M homes.
Now this paints a very different story! Sales Price up by 6.8%, Market Time down by 2.7%, Months Supply down to 6.9. This is actually a great example of a market that was a buyer's market last year and is heading fast into a seller's market. Look at the list to sell difference! Sales prices are $188,000 over the original asking price, that's what happens when seller's receive multiple offers, a sure sign of a seller's market.
When you see vague stories about how the market is in different cities compared with the rest of the country, remember, there is a lot more digging to be done to understand your specific market. Each one is different, from location, to size of home, and even amenities. Let us know if you would like to learn more about the value of your home and what kind of market it faces.