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Chicago Condos Condominium Sales Down
The real estate market in Chicago has suffered a drastic drop in demand for new and re-sale condominiums and lofts citywide. The affect on sales has been visible in downtown neighborhoods also where they had enjoyed strong demand in recent months. As per the sales data from the MLS, a deal of total 1,445 resalable and new condominiums finalized in August in the city of Chicago. This indicated a 36 percent drop in sales from the previous year, and more than 43 percent less than the total sales seen in August 2006.
There has been a trend of declining sales in the Chicago condominiums market. Sales of units priced at more than $1 million were up by 31 percent during the second quarter. However, it appears that interest rates have increased and the interest in the highest priced units on the market has now reached its peak.
A total of just 40 Chicago condos units were sold for more than $1 million in August, down from 42 units sold in that price range a year ago. This has led to a smaller increase in the average sale price. While prices rose by 15 percent for condominiums sold in Chicago during the second quarter, prices increased at a much slower rate in August. The average sales price was up by more than 4 percent during the month, reaching $383,412.
There was a time when the Chicago condominium market was a very hot investment market for investors but that has also significantly declined. The Loop and the Near North Side both saw sales plunge during the month. Sales of new and resale condos on the Near North Side were off by 41 percent in August, while sales in the Loop plunged by more than 67 percent from a year ago. The last survey shows that the demand was up by 18 percent from the second quarter of 2007.
In spite of this, there is some good news also for the market. After several months of increasing inventory of condominiums on the Chicago market, the number of condominiums for sale has started to drop. There are currently 15,181 Chicago condominiums on the market as of September 14, down from 15,669 units on the market the last time we checked in July. The market supply has come down from more than 11.6 months to 10.5 months, which should take some pressure off developers and condominium owners in the city.
However, with an estimated 13,000 new construction of Chicago condominiums coming on the market over the next two years, combined with declining sales around downtown, the Chicago market could experience an increase in the inventory of unsold condominiums. Buyers could also get a boost from the recent bailout of Freddie Mac and Fannie Mae by the federal government. The government hopes to stabilize the market and bring down interest rates on new mortgages, making it easier for many buyers to get back into the once booming Chicago real estate market.
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