Downtown Chicago condos under development closed 229 sales during the 3rd quarter. That is better than 2nd quarter 2011 sales (which hit 196) but is a decrease from the 251 deals closed during the 3rd quarter of 2010, according to a report from Appraisal Research Counselors, a consulting firm based out of Chicago. According to an article in a November issue of Crain’s, psychology plays a huge factor in what is working against developers of Chicago condos with potential buyers. Consumers fear prices falling and many are noticeably waiting out the market.
Developers of Chicago real estate who slashed prices to attract sales were selling leaders during the third quarter. Pricing is a decisive motivating factor regarding resistant consumers. For example, one-bedroom Chicago condos previously priced at $259,000 were lowered to $155,040 and included free parking; two-bedroom units fell from $369,900 to $229,500. Additionally, many first-time buyers of Chicago condos have stepped into the market, mostly due to locale, price points and incentives such as a grant from the city of Chicago for $10,000.
First-time purchasers of downtown Chicago condos were most helpful to raise sales during the third quarter, especially for developments such as 757 Orleans, 200 N. Dearborn, Silver Tower, Quincy 565, 235 West Van Buren and Parkside of Old Town on Division Street, a redevelopment of what was previously Cabrini Green public housing.
Parkside Old Town had the most closings during this quarter, after slashing prices 30-40%. The number of Chicago condos sold in this development reached 26 units, out of a total 161. Parkside of Old Town, constructed by Holsten Real Estate Development Corporation, worked with lenders in the Chicago Housing Authority to produce a new pricing schedule. The undertaking incorporated Chicago condos with market-rate and market-rate inexpensive units, as well as CHA replacement housing in townhomes and two mid-rise properties.
Some high-end downtown Chicago condos sold reasonably well during the 3rd quarter, even though they aren’t the most attractive to first-time buyers. A few of these Chicago condos include the Trump International Tower, the Aqua and the Legacy at Millennium Park.
According to the article from Crain’s, there will not be any newly constructed units placed on the Chicago condo market this year. Chicago real estate that is currently under construction and scheduled to open in 2012 includes the residences at the Ritz Carlton and Lincoln Park 2520. Even though demand for downtown Chicago condos has been weak, supply is recovering, primarily because a lot of Chicago condos have become rental units.
The number of Chicago condos and townhomes that remain unsold fell to 2,198 during the 3rd quarter of 2011–it was as high as 7,689 in 2007’s 2nd quarter. Developers of downtown Chicago condos closed on 614 condos and townhomes during the first nine months of 2011, compared to 1,431 in 2010.