Chicago Inventory in the 3rd Quarter of 2020 – The Year of Covid19

 

INVENTORY IN 2020 – THE YEAR OF COVID19

We are now a little bit beyond 6 months since the onset of the COVID19 Global Pandemic and everybody has an opinion on where real estate markets are heading.  There have been many articles and opinions on the impact on the housing market, and the short-term trends are now shaping a long-term perspective. 

Some trends are obvious.  During the 2020 pandemic, America’s workforce has learned how to get the job done remotely and some may never return to an office environment like they used to. But it has been a struggle to find additional space to work at home, not to mention school-aged children attempting to participate in distance learning.  Multiple family members trying to get work and schoolwork done in the same domicile is shaping the way we look at our future housing needs. Small spaces area out, will the demand for McMansions return?  One thing for certain is homes with multiple office spaces are in demand.

Those who live in high-density housing are searching for more spacious properties to distance themselves from their neighbors. This includes those in apartments moving to entry level housing; and those in higher density condominiums (especially high rises and elevator buildings) into larger townhomes and detached homes. 

The newfound ability to work at home, combined with a presidential election, protests and urban unrest, some homeowners are seeking quieter exurban destinations.  (For those wondering what an “exurb” is, it is an area outside the typically denser inner suburban area of a metropolitan area, which has an economic and commuting connection to the metro area, with low housing density and low growth.)

While I do not have a strong opinion, I can share my fact-based observations.  The facts are the raw statistics that are observed at the end of our third quarter of 2020.

The first graph shows the Chicagoland data, this includes all detached homes in our region in the Multiple Listing Service.  It shows a significant drop from the 3^rd quarter of 2019 to the 3^rd quarter of 2020, a -48.5% drop.  This drop in supply may be a result of two factors – one, fewer people marketing their home during the pandemic and secondly, these homes are currently under contract late into the typical selling season (traditionally the Spring market).

The next graph specifically shows attached housing within the City of Chicago.  Attached housing includes condominiums, PUD/Townhomes, Co-Ops and Duplex residences in the Multiple Listing Service.

 This data shows a significant increase from the 3^rd quarter of 2019 to the 3^rd quarter of 2020, a +36.2% increase.  This increase supports the fact that people are trying to sell their high-density homes.

 

The next graph shows Chicagoland data for the Months Supply of Inventory, which is the relationship between the number of active listings currently on the market against those properties that have gone under contract and sold in the past year. This graph shows the detached homes in our region in the Multiple Listing Service.  It shows a significant drop from the 3^rd quarter of 2019 to the 3^rd quarter of 2020, a -53.1% drop. 

 

The final graph shows attached housing in the City of Chicago, and a +41.5% increase in inventory.

 

To summarize, there appears to be a direct relationship to housing types in the Chicago Marketplace.  The detached housing throughout northeastern Illinois is extremely undersupplied, showing record lows for available listings leading to extremely undersupplied inventory levels. The attached housing market in the City of Chicago is showing significantly increasing supply of listings.

    

A.L. Wagner Appraisal Group is a Chicago-area real estate appraisal and consulting firm established in 1970. The firm specializes in residential real estate valuation, relocation appraisals, residential consulting and market studies serving a diverse base of clients including lenders, law firms, government agencies, corporations, relocation companies and other professionals for over 50 years.  Third generation appraiser Chip Wagner leads the company and has been appraising since 1986.  Chip has earned the SRA designation from the Appraisal Institute, the ASA designation from the American Society of Appraisers, the SCRP designation from Worldwide ERC® and is a member of the Relocation Appraisers and Consultants.  Chip is frequently quoted in the press, has authored many articles for national magazines, is a contributing author to the Worldwide ERC® Summary Appraisal Report and the Relocation Appraisal Guide, and is frequent instructor for many organizations.

Contact Chip at Chip@WagnerAppraisal.com or 630/416-6556.