Pritzker’s and Lightfoot’s Plan Is Working

Crain’s Chicago Business is reporting a glut of homes on the market in Chicago’s Loop and adjacent areas, on the Gold Coast, and River North neighborhoods of Chicago:

In the 60601 ZIP code, covering Lakeshore East and the northern part of the Loop, there are enough homes on the market to fuel 15 months of sales, according to Crain’s research using Midwest Real Estate Data’s listings. Immediately across the Chicago River in 60611, Streeterville up to Oak Street Beach, there’s 11.5 months worth of inventory on the market.

That’s compared to 3.1 months of inventory on the market now citywide, and to less than three months in, among others, ZIP codes in Logan Square, Bucktown, Andersonville, Rogers Park and Albany Park. In Lincoln Park and Lakeview ZIP codes, inventory is around three and a half months.

Four to six months of inventory is generally considered a balanced, healthy market.

Matt Laricy, managing partner with Americorp Real Estate, said that in recent weeks, he’s been meeting with five new sellers a day, while he’d usually be seeing one a day in late summer.

“Since the second round of looting, it’s been like the Hoover Dam broke and the water is gushing through,” Laricy said. “My phone does not stop ringing with people who say they love Chicago but they’ve had enough.”

There’s a little more than eight months’ inventory on the market in 60610 (Near North, Gold Coast) and 60654 (River North).

In the neighborhoods immediately west and south of the Loop, the excess of inventory is less pronounced: roughly five months in ZIPs in the West and South Loop.

As noted the rule of thumb is that four to six months of inventory is healthy. 15 months is a disaster.

The clock is ticking. Here’s another rule of thumb: a third of sellers reduce their asking prices after three months (it probably should be after two) while by six months on the market nearly 85% of sellers have, shall we say, improved their asking prices.

That’s important to the city. Those neighborhoods are some of the priciest in town. When selling prices tumble assessments won’t be far behind and property taxes are based on assessments. The city is heavily dependent on property taxes for revenue. And you can only raise taxes so far before that itself starts depressing prices. Since we purchased this home our taxes have multiplied tenfold while its reasonable asking price has only risen fourfold (it’s the same now as it would have been twenty years ago).