Downtown Chicago Condo Market Slimming Down
At a presentation for the Chicago Association of Realtors last month, it was discussed that the pipeline of new construction condos in downtown Chicago is drying up and that by 2012 there will be no more large-scale residential projects breaking ground in the city center. A handful of condo buildings will be finished this year and then only one development is scheduled for delivery next year, according to VP of Appraisal Research Counselors Gail Lissner. That makes for a total of 900 – 1200+ units coming on the market in 2010 and 2011 – a considerable slowdown from the 18,000 units completed in the last four-year period.
The building hiatus in downtown Chicago will help reduce the inventory of unsold condos, which currently sits at around 3,000 properties. As a buyer who wants a brand new, never-been-lived-in property in the heart of the city, this can be a crucial time to get in while the supply is still plentiful. Many developers have cut prices to attract buyers and get units moving. They are also applying for FHA approval upfront so purchases can easily be made with as little as 3.5% down. And some builders have even revived the rent-to-own deal as a way to get occupants into their condos and secure a bit of cash flow.
What does that mean for today’s condo buyer? For one, a number of units are available for 15% – 35% off the original price in prime downtown locations. But those types of price drops are meant to entice buyers and move properties off the market. So the selection will be increasingly limited and not many new condos will be replacing those options. That means the window of opportunity to purchase new construction in downtown Chicago is gradually closing and will basically be shut and locked in 2011.
How will this affect condo owners who want to sell their units in the near future? They won’t have to compete with new construction listings. And as supply diminishes, demand will start to bump prices back up. Resales will become the norm in neighborhoods like the Loop, South Loop and the New Eastside where the real estate market was previously dominated by newly-built condominiums and residential high-rises.
Want to learn more about what’s for sale in downtown Chicago and other parts of the city? Contact a Chicago real estate agent here