New condo sales slow and market gets crowded in downtown Chicago

The latest market analysis from housing analyst, Appraisal Research Counselors: Condo sales in new buildings fell to about 700 in the third quarter, from 1,200 in the second quarter and 1,600 in the first quarter in downtown Chicago (bounded by the lake, North Avenue, Cermak Road and Ashland Avenue). Sales were down 26 percent this quarter from the same period last year, although admittedly last year was a bumper year.

Appraisal Research’s Gail Lissner told the Chicagoland Apartment Association‘s industry outlook meeting that “Some projects might not get built,” according to a story in Crain’s Chicago Business. The number of new condos marketed in the first nine months of 2006 was 5,700, up from the 4,700 marketed for the 12 months of 2005. Of the 5,700, contracts have been signed on about 3,500 units, according to Lissner.
Lissner told Yo that overall, new condo sales for the first nine months of 2006 are down only 5 percent from the sales volume for the same period in 2005 – that is, down to 3,500 from 3,700. The real story, according to Lissner, is the amount of new inventory and the competition it will create. Lissner projects that the total number of new units to be announced for the 12 months of 2006 will be between 6,200 and 6,500. The figure of 5,700 units doesn’t include new projects such as X / O, The Lofts at Roosevelt Collection or Azure Tower, Lissner said.

What can buyers expect from such a crowded market? “Any time there’s diminished demand it can have a flattening effect on prices, but who knows?” Lissner said. The resale market also could execute a little downward pressure on prices, she said.

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