Chicago-based developers Capri Capital Partners LLC and Judson Investment Co. plan to erect a new 1 million square-foot mixed-use condo/retail building in Bronzeville, which is slated to begin construction in early 2008. The building, called The Metropolis, will feature over 320,000 sq. ft. of retail space along with 102 luxury condominiums, 20 of which are reserved for lower-income buyers and priced very reasonably at around $160,000. A similar condo nearby would probably go for around $350,000. Other condominiums in the complex are planned to sell between $250,000 and $400,000.

Technorati Tags: Chicago Condos, The Metropolis, Bronzeville Condos

Condo sales in Chicago fell in 2006 compared with 2005, but proved to be one of strongest markets nationwide, compared to the many regions that saw far more extreme drops.

On January 16, The New York Times reported that:

Since the middle of 2006, the frenzied condominium market [in New York] and in several other big cities like Las Vegas, Miami and Boston has collapsed. Once roaring sales have slowed to a trickle, sparse inventory has mushroomed into a glut and soaring prices have flattened out and started falling.

Preliminary year-end figures from the Illinois Association of Realtors show that 2006 condo sales in metropolitan Chicago fell 8.2 percent—50,488 units sold, compared with 54,989 units in 2005. Meanwhile, across the nation, condo sales for 2006 fell 10.4 percent to 803,000 units, after 10 straight years of gains.

Chicago area brokers and real estate developers say that it has become harder to sell condo units, but still characterize the market as “normal”—despite the glut of new condo inventory.

“I think buyers are still cautious,” said Michael Maier, vice president of sales and marketing at Chicago-based MCL Companies, a developer. What was once a three to four-week conversion period on a condo or townhouse takes close to 17 weeks now, he added.

“There are still buyers; there just aren’t so many investors,” said Maier. “We don’t have investors … making the prices go up.”

A bright spot in the outlook for Chicago condos was that their median price actually went up 0.8 percent year over year—from $245,000 to $247,000. This was less than the increase seen nationally, which was 1.1 percent—from $219,600 to $222,000.

However, these price increases came nowhere near to matching the overall national inflation rate for last year, which was 3.4%.

The majority of sales reported by the Illinois Association of Realtors represent existing condos. The figures released recently are expected to be revised upward.

Dr. Lawrence Yun, senior economist at the National Association of Realtors, said at a January 19 conference of Realtors in Chicago that there was nothing for Illinois to worry about, according to the Illinois Association of Realtors.

“Those [other] markets that took off faster than others are struggling now more than others,” said Yun. “The Midwest is stable and mortgage debt ratio is healthy.”

Many local real estate brokers predict that sales are going to pick up after the glacially slow pace set in the last months of 2006. “I think the indication on the street is that the activity has increased. I had more activity in the first 30 days of the year than I did in the previous two months combined,” said Alex Chaparro, president of the Chicago Association of Realtors.

Chaparro said that sellers must be keenly aware of what customers want in order to attract qualified buyers.

“Where is the person going to eat? Where are they going to sit on the couch?” he said. “If there are properties that have sold out, someone has sat down and thought of these things.”

Park Place Tower Condos

There’s a lot of talk about perhaps the Chicago market picking up, But so far, there’s no sign of it. Now, I’m looking at actual closing numbers here in Chicago as reported by the Chicago Association of Realtors.

Week of March 7 – March 13th

103 Chicago Single family home closings - down 38% from the same week a year ago when 165 homes closed.

231 Condos and townhomes closed, down 23% from the same week in 2006.

I’ve been keeping close track of the closing numbers since last April and there have only been two weeks where the numbers weren’t down.

The average time homes are sitting on the market has increased from 84 days in March 2006 to an average of 131 days now.

Today there area about 15,175 active listings for homes for sale in Chicago…up from about 12,000 in March 2006.

There are 7,100 active condo and townhome listings for sale…up from just about 5,000 last year.

Looks like we have a pretty big supply-demand imbalance here. What do you think?

Prices haven’t tanked… but there are signs that sellers are going to have to start slashing prices to sell.

The Sunday papers are filled with Condo Developers and home builders offering incentives… “Six months free mortgage payments,” “free upgrades,” “plasma TV,” in an effort to spur sales.

The big news in the past couple of weeks has been the sub prime mortgage meltdown. In a nutshell, this means that a lot of potential buyers will now be squeezed out of the market. People who could have bought a home last year cannot today because of stricter mortgage financing terms. Some estimates are that this could knock 20% of the buyers out of the pool.

Now, Chicago is still booming. This is not a gloom and doom situation whatsoever, just as long as you’re not looking to buy a condo for investment purposes. Downtown Chicago luxury condos are being built as never before…later this week, probably Thursday, I’ll have my special report on pre construction Chicago condos ready…watch for it.