Chicago Condo Buyer’s Market Still Strong
The median sale price for Chicago condos has plummeted $12,000 since the end of October 2005—and there’s no reason to expect that price to come up anytime soon.
This comes amid bad news for sellers of all types of real estate, both in Chicago and the nation as a whole. The NAR (National Association of Realtors) reported last week that, nationwide, the median price for a single-family home in the U.S. fell 2.5% from September last year to $219,800, the sharpest annual drop in 37 years. The median condominium price fell 2.8% to $219,800, the fourth annual decline in a row.
At the same time, the volume of home sales fell for the sixth straight month, tumbling 14% in September compared with a year ago.
Combined single-family and condominium sales in a nine-county area that includes Chicago dropped 23 percent to 9,306 from 12,073 in September 2005. Condo sales for the same area totaled 4,139, down 18.68 percent from 5,090 last year.
"I definitely see a great slowdown and it seems to be accelerating," said Liz Sidorowicz, a RE/MAX associate broker based in Lakeview who also sells properties in the Chicago suburbs. "We are not getting the price we would expect based on our comparables."
Most realtors consider a four-to-six-month supply of homes to be a “normal” market. With a Chicago real-estate inventory hovering at an eight-month supply—a 100% increase since last year—local sellers are understandably worried about the possibility of selling their Chicago homes and condos.
Some sellers are finally waking up to the fact that they can't get anywhere near what their neighbors sold their Chicago homes for last year. So they're grudgingly reducing their asking prices and offering to pay closing costs. Meanwhile, many savvy buyers are using sellers’ fears to their advantage by making low-ball offers . . . and getting deals they couldn’t have imagined a year or two ago.
Sidorowicz described the current Chicago real estate market as the worst she has seen in her twenty years as a realtor. Still, she said, sales can happen if sellers are flexible.
"Everything can be regulated by pricing," she said. "You drop the price, and [the house] will move."
But the biggest threat to individual sellers is large development concerns.
America’s new-home sales are down 16%, and new permits for single-family homes are down 20%. Sales of single-family Chicago homes and Chicago condos are off by 19.5% since last September. This means developers are facing huge numbers of project cancellations. To keep profits up, builders are offering mouth-watering incentives to potential buyers—ranging from plasma TVs and free landscaping to media rooms, vacations, and no-payment-for-12-months mortgages.
The news isn’t all good for Chicago home buyers, however. An increasing number of potential sellers are holding off on putting their Chicago homes on the market, hoping for an upturn in pricing trends. Fewer homes coming on the market will mean a decrease in Chicago’s swollen inventory, and a more rapid end to the Buyer’s Market.
About half of homeowners nationwide who considered selling their homes in the last year have delayed doing so—and about one-third have given up on selling entirely, according to an October USA TODAY/Gallup poll.