The Real Deal Chicago

Did the government shutdown contribute to decline in Chicago-area home sales?

The 10% drop in January numbers followed a December dip
By John O’Brien | February 21, 2019 11:05AM

(Credit: Getty Images and Pixabay)

UPDATE, March 4, 9:15 a.m.: January was not a kind month for Chicago-area home sales and apart from the usual suspects, industry pros say Washington was partly to blame.

The 10.2 percent drop in sales year over year was the second-straight month of double-digit declines, according to figures from the Illinois Association of Realtors. A total of 5,266 homes sold last month in the nine-county Chicago metro area, down from 5,867 sold in January 2018. The median sale price, meanwhile, was a fraction higher, at $224,900 compared to $223,000 in January 2018.

Industry experts repeatedly have cited low inventory as the reason for falling home sales and rising home prices locally. But what about the month-long partial government shutdown?

Consumer confidence dipped in December and January in part from the government shutdown, said Tommy Choi, president of the Chicago Association of Realtors and broker at Keller Williams Chicago-Lincoln Park. In a statement, Choi added, that contributing factors included “slowing rate of job growth and overall uncertainty about the direction of the economy,” which resulted in declining closed sales in January. He said sellers lowered prices slightly as a result, “to incentivize cautious buyers, who are regaining some power.”

A Chicago Association of Realtors report released last week showed the city had the fewest number of homes for sale on Feb. 2 since at least 2007.

January’s sales numbers followed a December in which 6,865 homes sold in the Chicago area, a 16.5 percent drop year over year. The median sale price in December remained unchanged year over year at $225,000.

The numbers show a continuation of the trend of declining sales and slight increases in prices that marked the overall 2018 residential market.

Geoffrey J.D. Hewings, director of the Regional Economics Applications Laboratory at the University of Illinois, said the phenomenon could lead to addition price cuts in February and March. Illinois Realtors president-elect Ed Neaves agreed.

“Buyers may finally be beginning to gain some advantage as we enter the run-up to the spring market,” Neaves said in a statement. “As inventory declines level off, buyers are likely to find more options to choose from, easing what has been a chronic market challenge in the past few years.”

This story has been updated to reflect corrected numbers sent by the Illinois Association of Realtors.