My wife and I just returned from a 5-day whirlwind trip from SoCal to Chicago. Now that we’re vax’d and hopefully on our way back to a post pandemic normalcy, we took it upon ourselves to go somewhere. We chose The Windy City. It’s a great town with lots of museums, history, music and my favorite, architecture. There were few crowds as the opening there isn’t nearly as vibrant as it is in California, yet still enough was open to make the trip worthwhile. On our journey we marveled at the incredible skyscrapers Chicago is known for. We also hopped on the “L” and went to the suburb of Oak Park. Why Oak Park you ask? Well for starters, my mom’s from there. It’s also the home of early Frank Lloyd Wright and the birthplace of his Prairie Style architecture. It also shares the name of a local unincorporated hamlet here in Ventura County (Contact Tim Here). Once there of course, we explored the local real estate market. I had to know, was the housing situation in Oak Park, IL the same as Oak Park, CA. That is, low inventory and not much for sale. As Tama and I walked the neighborhood surrounding Wright’s home studio, we admired his early work but couldn’t help and notice there weren’t many for sale signs. Could that be true? Is the market as tight there as it is back home? So, I did what I do, and I looked at the numbers.
Being that I am completely unfamiliar with Illinois real estate, the first thing I did was go to Zillow and see how many homes there were for sale in Oak Park, IL to determine if my cursory perception was correct. Well imagine my surprise when I found 70 homes for sale. Wow, says I! That’s a lot more than I thought I’d find. In fact, it sounded like so many that I almost tossed this article all together. But then just out of curiosity I decided to look up the number of solds in the past 6 months. I mean 70 home is a lot if you’re selling say, 15 homes a month right? Remember that the National Association of Realtors considers a balanced market as 6 months inventory. In other words, if it takes 6 months to sell all available properties, the market favors neither buyer nor seller. Less than 6 is a seller’s market while longer than 6 a buyer’s. Now, I have no idea how many homes sell in a month in Oak Park, IL because I have no idea how big it is – I just didn’t see many for sale, but 70 available looked like a lot on the Zillow map (View Our Listings Here). Would you believe if I told you that in the past 6 months Oak Park, IL has recorded over 720 sales! Whaaaat? Yes, Oak Park. IL with it’s 70 homes for sale, has been selling 121 a month. Not 15 not 70, 121! That my friends means that this little suburb of Chicago has about half a month’s worth of inventory. What the…? That’s as tight as little Oak Park, CA which has 9 homes for sale and sells 18 a month!
Real estate pundits and prognosticators have been saying for months now that something has to give; that the market is too crazy with demand far exceeding the available supply of homes for sale. That if prices continue like this, naturally we are headed for a repeat of 2008-2012: A disaster; a major crash; a huge correction. If you accept this premise, it’s easy to understand how one might come to this this conclusion, a conclusion that leaves you saying I’m not buying now. Instead, I’m going to sit tight and wait for the correction and then I’m jumping in. After all, how can prices go up 10% in 6 months? It’s unsustainable. Difficult to argue with that logic, and yet…
In California, we are used to seeing high prices and occasional crazy annual appreciation. I mean you don’t get to a median price of over $800,000 if you don’t have long periods of home price appreciation. The thing is, it’s not just happening here. Phoenix is the hottest market in the country with over 19% YOY appreciation according to Case Shiller. What’s so striking about that is that the last time I checked, Arizona was not a slow growth state nor a place that has few areas of flat buildable land. On the contrary, you can build til the cows come home and still not dent the available desert to build on. But if there’s a crash coming, why are areas with ample future homes, leading the nation in appreciation? Doesn’t it stand to reason they would lag the land challenged areas of SoCal? And why is an old early 20th Century town like Oak Park IL, going so crazy? According to multiple reports, the white-hot market is not just on fire here in Southern California or Oak Park, IL or Phoenix, AZ, rather as my research suggests, it’s hot everywhere. If that’s true, what’s this all mean then and when will it end?
They say you never hear the one that gets ya, but I have to tell you, I see no end in sight. Scary right? I just looked at neighboring Simi Valley with a population of over 100,000 and there are only 66 homes available. A low number for sure, but when you consider that there are 262 in contract… wow. That’s 78% of all available homes, under contract. Neighboring Moorpark, 20 available and 63 under contract, that’s 76%… Ventura 65% are sold. Calabasas where the median priced home is pushing $1.4 it’s still a whopping 56%. The market is sizzling across all communities, cities and states and across all price ranges. Even NYC and SF are on fire and everyone sang the funeral march for those in the big city.
As muddled as this picture isn’t, one thing is absolutely crystal clear, the market is hot everywhere and that suggests this “bubble” ain’t bursting anytime soon.