Communities That Had Fewer Closings in 2021 Than in 2022

At the end of March we pointed out that there are 9 communities out of the official 77 in Chicago that did not see a growth in closed sales for the years 2021 or 2022. Are those communities stable or shrinking? If the latter is there something that might be driving the home sales down? Below is the list. Lets see what we can learn.

Every one of these neighborhoods saw fewer sales in 2022 than in 2021. However, two of them had 0 change in the number of sales between 2020 and 2021. Six of the communities saw a difference of 8 or less. Three of the communities saw between 20-33 fewer sales. Those three communities were Avalon Park, Lower West Side, and Washington Heights.

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For a more complete story we should look at how many homes were listed between these years. If fewer people are selling, fewer people can buy.

This chart shows that Archer Heights, Brighton Park, Jefferson Park, and West Elsdon had the same number or fewer listings in 2022 than in 2021. West Elsdon was pretty much the same each year. The already extremely low months supply of inventory in these neighborhoods has either stayed about the same or gone down. These properties are likely getting multiple offers. Whereas the other neighborhoods had a much higher number of new listings in 2022 than 2021 and the months supply of inventory has increased by over a month in most cases.

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Before we get too excited over this market change I want to point out that all of these neighborhoods are still in a seller’s market. Here’s a quick cheat sheet to understanding months supply of inventory.

Even the five neighborhoods that we are watching shift still have only 4 or less months supply of inventory. But we can still ask, why did these five areas have so many new listings in 2022? Are neighbors leaving or are new residences being built? ​​​​​​​

Unfortunately some questions are easier to ask than to answer. The City of Chicago does not require a certificate of occupancy for 1-3 unit buildings. Which means we can’t pull a simple list of what new construction has been completed. We can piece together some information to get a sense of where developers are building. The chart above shows how many closings of new construction and redeveloped homes there were in both sales and rentals listed on the MLS during 2022. It also shows how many new construction permits were pulled during that year. Just because a permit was pulled does not mean the construction has been completed, but it does show what kind of movement is happening in an area.

Clearly the Lower West Side is seeing a lot of activity. It should come as no surprise. The Lower West Side is directly south of the Near West Side which includes the West Loop, University Village, and the Tri-Taylor neighborhoods. Just South of the Lower West Side is Armour Square, including Chinatown, Bridgeport, and McKinley Park. The neighborhoods that make up the Lower West Side are Heart of Chicago and Pilsen, which was ranked as one of the world’s coolest neighborhoods in the 2018 Forbes list.

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Please let me know if you want to try to dig deeper into any of this data for these neighborhoods. In the coming months we will explore each of the nine areas of the city that saw an increase in closings in both 2021 and in 2022.