LINCOLN PARK — A key February real estate statistic indicates home prices on the North Side are in position to begin increasing as the supply of available homes has dropped.
That price increase has yet to take effect for the neighborhoods of Lakeview, Lincoln Park and the Loop, as the combined prices of home sales for those neighborhoods fell slightly in February. Median home sales increased by 23 percent in February in the Near North.
The real story behind the February real estate numbers is the dwindling inventory of homes on the market.
In February 2012, 4,306 homes were for sale in those neighborhoods, compared to just 2,611 in February 2013, a nearly 40 percent drop — according to Chicago Multiple Listing Service data.
The key statistic Irwin is keeping an eye on — months supply of inventory — measures how long it would take to sell the inventory of homes on the market at the current rate of sales.
This February's rate is 2.3 months, meaning it would take just more than two months to deplete the supply, compared to 6.8 in February 2012.
The National Association of Realtors considers anything under six months a sellers market.
"What we are seeing year over year ... those numbers are trending down," real estate agent Mike McIntyre said.
Said Irwin: "The sellers are now starting to understand that the market is opening up for them. I think they are pricing their units more aggressively."
Lakeview in particular had 718 homes for sale in February, compared to 1,147 in February 2012. In that neighborhood, 240 homes went under contract in February, a 55 percent increase from 2012.
In Lincoln Park, 157 homes went under contract in February 2013, up from 104 in February 2012.
The median home price for units sold in Lincoln Park in February dropped 14.9 percent from February a year earlier, and in Lakeview the median price dropped 1.9 percent.
In the Loop, 338 homes were on the market in February, 223 less than February 2012. The median home price for the Loop declined 6.8 percent from last year.
"Prices are usually the last thing to go up. Sales go up first, as sales go up inventories go down, but prices can take longer," Irwin said. "Prices are a little bit more subjective."
McIntyre, of Baird & Warner, agreed, but cautioned that as the market rebounds off the bottom, bank-owned and distressed properties may reenter the market.
"In the past six to eight weeks, a lot of inventory has dissipated, and now what you have is sellers who are in a situation where they are under water in certain cases, and they are looking to see which way the market is going to go," McIntyre said.