Chicago Real Estate
Chicago real estate has certainly been affected by the ongoing turmoil in the housing market, but compared to other states and the nation as a whole, it has fared better than many areas. While the first quarter of 2009 showed a continued decline in sales of new single-family homes and condos, sales were still being made and first time home buyer incentives as well as price reductions by developers lured some into making a purchase.
The faltering economy, rise in unemployment and tightening credit lines have made it difficult for home buyers. Developer incentives such as free upgrades have fallen by the wayside as buyers have become more savvy and demand price reductions instead. Tax credits for first time buyers and low mortgage rates have also helped make some sales, as well as the increase in auctioned homes and short sales by banks.
According to the Illinois Association of Realtors, Chicago area home sales dropped 26% in March 2009 from the same period in March 2008. For sales actually in the city of Chicago, the fall was steeper at 42%. Those numbers are for sales of both new construction and already existing single-family homes and condos. A total of 4,260 single-family homes and condos sold in the 9 county Chicago area in March of this year, down from the 5,759 sold in March of 2008. Just for Chicago alone, there were 1,181 house and condo sales for March '09, compared to 2,044 sales in March '08.
The median sales price for the Chicago area also fell in March '09 to $194,000. That is a 21.8% drop from March '08 when the median area price was $248,000. For in-town Chicago, the median price now is about $220,000 which is a 26.9% drop from March of '08 when the median sales price was $300,980. In the first quarter of 2009, the sale price for an average new home was $327,139. That is a 43% decline from the average sale price of $573,093 in the same quarter of 2008.
Appraisal Research Counselors also reported that downtown Chicago condo developers had a net loss of 253 sales in the last quarter of 2008. And with that in mind, of about 183 condominium and townhome developments in Chicago, 32 of those had more buyers canceling contracts than making new ones in the first quarter of '09. There were also 59 developments that had no sales at all the first three months of this year.
Developers are expected to sell 3,487 single-family homes and condos this year, which is down from the 6,451 sold last year, 592 of which were condos. An estimated 4,734 downtown condos alone will hit the market this year, and around 40% of those are not under contract. The number of new condos to be completed in the next two years falls off dramatically though, with just 656 in 2010 and a mere 86 in 2011.
Only three major developments are delivering in 2010, and those are the Ritz-Carlton Residences, Ten East Delaware and Walton on the Park. Several high profile developments have either been shelved temporarily or scrapped completely, including The Chicago Spire, Canyon Ranch, Park 1000 and Glashaus to name a few. Others such as the Mandarin Oriental, Odyssey Lofts, Waterview Tower, Rainbo Village and more have been hit with foreclosure suits. Two new construction projects, Burnham Point and Mod were converted into rental towers. And still other developments like Vetro, McKinley Park Lofts and Jazz on the Boulevard turned to auctions to thin out unsold inventory. In all, as many as 13 downtown condo projects were abandoned by developers last year.
Chicago commercial real estate is also starting to feel the effects of the housing market and economy. Vacant office space in the suburbs is up to a 5 year high of 19.6%, according to Crain's. More companies are scaling back their workforce and cutting down on any type of expansion, reducing the need for offices. The average Chicago area office vacancy rate is up to 23.9% in the first quarter of 2009. With a national loss of 663,000 jobs in March, many experts predict that rising unemployment rates will cause the Chicago commercial real estate market to continue to show vacancies until at least 2010.
But again, despite the sobering sales numbers for Chicago real estate there is the fact that homes are still selling and homes haven't lost as much value here as in many other market areas. Buyers have an advantage right now in terms of price and selection if financing can be obtained, so the time may be right if you're thinking of purchasing a new Chicago home.
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