Though the headlines will likely highlight Chicagoland’s drop in home sales, that decline is actually a good thing.
We’ll get the disappointing news out of the way: in May, home sales in the nine-county Chicagoland area fell 12.2 percent year-over-year to 11,171 homes, according to the latest analysis by the Illinois Association of Realtors, while in the city of Chicago sales were down 15.7 percent.
We know, it seems like a pretty nasty fall, but the key – as with everything else in this housing market – is to scratch below the surface, and doing so reveals a much more encouraging scenario.
The Slow but Sure Death of Distressed Sales
Simply, there were less sales in May because there were much less distressed sales, which have had an outsized impact on Chicagoland’s housing market in the post-bubble era:
- According to more specific numbers from MRED, REO sales in May were down 6.2 percent from a year earlier, while short sales were down a whopping 39.9 percent.
- Traditional sales, by comparison, were down just 2.4 percent.
- Even more encouraging, traditional sales made up 73.2 percent of all sales in May, a higher share than at any time in 2013.
Geoffrey J.D. Hewings, the director of the Regional Economics Applications Laboratory of the University of Illinois, said that Chicagoland’s market continues to normalize.
“The housing market continues to provide evidence of a return to more normal conditions,” he said. “The impact of foreclosures continues to decrease with the expectation that the numbers of foreclosed properties on the market will return to pre-recession levels sometime in the next 6-12 months.”
Interestingly, one area in Chicagoland’s market continues to see increases – median sales price, which rose 13.1 percent for the entire nine-county area, 14.9 percent in the city and 12.1 percent in the suburbs.