chicago-condos & Chicago Real Estate pcherry on 05 Jan 2009 12:36 pm
2,147 Condos Due To Be Completed in the South Loop For 2009
January 5, 2009 - The latest news figures released from Appraisal Research Counselors pertaining to South Loop condos isn’t exactly great for Chicago real estate developers. The South Loop has been prime property for new high-rise construction for several years now. A winning combination of the close proximity of the Lake, cultural attractions, parks and transportation access are a natural draw for home builders and buyers. But with a huge backlog of inventory sitting unsold and more coming online this year, that winning combination may backfire.
According to figures from ARC that were published in Crain’s, there will be a 66% increase in 2009 of the number of new condos ready for delivery compared to what there was in 2008. A total of 2,147 condos will be completed in the South Loop alone, which amounts to almost half of the downtown condos to be built this year. The number of those condos that are currently unsold are 932, which is 43%. Not good news for developers.
Another factor adding to the increase in unsold units is the growing trend of buyers who are walking away from deposits and contracts. Rather than close on a unit they bought at pre-construction prices two or three years ago, more buyers are deciding to take a hit on their deposit rather than get stuck with a unit that might not be able to pay for or resell any time soon. The increasing difficulty some buyers are facing when trying to secure a loan is another factor. According to ARC, contracts for South Loop condos actually fell by 47% during the first nine months of 2008, and buyers walking away from contracts was one of the main reasons for that increase. The overall surplus inventory of Condos In Chicago will have to reduce before prices can rebound.
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