Chicago-area home sales strengthened in 2016
The Chicago-area housing market continued to strengthen in 2016, according to a year-end sales analysis by RE/MAX.
Home sales in the seven-county metro area totaled 114,569 units, 4.5 percent more than in 2015 and the most sold in any year since 2006 when 117,503 units changed hands. However, sales during the second half of the year weren't quite as strong, rising only 2 percent above the 2015 sales total.
The median home sales price for the metro area in 2016 was $225,000, 6.6 percent more than the prior year result. The pace of sales also increased, with homes sold during 2016 taking an average of 88 days to go under contract after listing, compared to 93 days in 2015.
According to Jack Kreider, executive vice president and regional director of RE/MAX Northern Illinois, the only thing slowing sales down in the local housing market is the relatively thin inventory of houses for sale, especially existing homes.
"New residential construction is increasing, but the total inventory is quite low by historic standards," Kreider said. The inventory for the metro area at the end of December was 27,106 units, a 2.8-month supply based on the average pace of sales in 2016.
"The metro Chicago market has faced this problem since 2013," said Kreider. "At the end of 2012 we had a 4.7-month supply of homes based on the pace of sales that year. By the end of 2013 there was just a 3.2-month supply, and now our supply is even lower. It's somewhat surprising given that the median sales price of a Chicago-area home was 40 percent higher this year than in 2012. You would think a price increase of such magnitude would attract a larger pool of homes into the market, but that hasn't happened yet."
A related factor involves distressed properties, which include foreclosures and short sales. The number of these homes for sale continues to dwindle. Distressed homes accounted for 15.3 percent of all 2016 sales in the metro area, down from 21.5 percent during 2015 and 41 percent in 2012. The decline in total inventory is due in part to the fact that the distressed property crisis that emerged during the Great Recession has considerably abated.
The home sales data used for the RE/MAX analysis is collected by MRED, the regional multiple listing service. It covers detached and attached homes Cook, DuPage, Kane, Kendall, Lake, McHenry and Will counties.
Detached homes are typically stand-alone single-family dwellings. Attached homes include condominiums and cooperative apartments, along with townhouses.
Sales activity and the median sales price rose during 2016 in each of the seven metro counties. However, McHenry and Kendall counties showed the greatest overall improvement. McHenry registered an 11.7 percent increase in home sales, while the median sales price rose 8 percent and average market time fell by 13 days. In Kendall, sales rose 11 percent, the median price gained 8.2 percent and average market time fell by 15 days.
Sales were up 3.6 percent in Cook, 0.6 percent in Will, 6.1 percent in DuPage, 5.5 percent in Lake and 6.2 percent in Kane. Home sales in Chicago gained 2.1 percent. The increases in median sales price were 6.5 percent in Cook, 9.0 percent in Will, 4.5 percent in DuPage, 1.4 percent in Lake and 7.9 percent in Kane, while in Chicago the median was up 4 percent.
Total sales of detached homes in the metro market came in at 72,938 for 2016, up 4.6 percent compared to the prior year. The median sales price was $240,000, which represented a 6.7 percent year-over-year gain.
The largest increase in sales activity was 13.1 percent in McHenry County. As for median prices, the top increase among counties was 8.9 percent in Cook, which included an 11.5 percent gain in Chicago.
There were 41,631 attached home sales in the metro area last year, 4.3 percent more than during 2015. The median sales price rose 4.4 percent to $180,000, while average market time was a swift 73 days, down from 79 days in 2015.
Cook County captured 68.8 percent of all attached-home sales last year, and there the increase in sales activity was 2.8 percent, and the median price rose 3.6 percent to $228,000. The attached market recorded strong gains in several collar counties, especially Kane and Kendall. Sales rose 15.7 percent in Kane, and the median price was up 8.2 percent. In Kendall, sales were up 19 percent, and the median price climbed 11.1 percent.