Why did the Chicago residential real estate market slow down sooner in Chicago? (sales, apartment)

[dinandriver]

First of all I want to say hi to everyone since I'm new to the forum and this is my first post here.

Anyway, I found it interesting that the real estate market seemed to slow down about 2004 or so in Chicago and I was wondering why, when the rest of the nation for the most part, kept going for a couple more years?

Thanks in advance!

[Lookout Kid]

It absolutely did not. Prices rose like crazy into the end of 2005, and didn't start to soften until early 2006. We bought a place in April of 2005 and saw two similar places in our building sell for $40,000 more just six months later.

Of course, this is the city market, and the inner burbs were about the same. I can't speak for the ex-urbs, since I'm less familiar with the market out there.

[Frank the Tank]

Originally Posted by Lookout Kid

It absolutely did not. Prices rose like crazy into the end of 2005, and didn't start to soften until early 2006. We bought a place in April of 2005 and saw two similar places in our building sell for $40,000 more just six months later.

Of course, this is the city market, and the inner burbs were about the same. I can't speak for the ex-urbs, since I'm less familiar with the market out there.

I'd agree with this - the real estate slowdown here tracked closely with the rest of the nation. If anything, the Chicago area slowdown came a bit after the slowdowns in places such as Florida, California and Nevada.

[dinandriver]

Well, I don't know why I had that notion... Could it have been just condos? Or maybe even higher priced condos? For some reason, I thought that Chicago had an oversupply of inventory right around 2005...

[Lookout Kid]

Originally Posted by dinandriver

Well, I don't know why I had that notion... Could it have been just condos? Or maybe even higher priced condos? For some reason, I thought that Chicago had an oversupply of inventory right around 2005...

It's possible that there was an oversupply due to overbuilding, but the slowdown in terms of sales numbers and home prices didn't hit us until 2006--and even since then, it hasn't been a huge drop like has been seen in formerly hot markets like Las Vegas, Miami, and the Bay Area. 2006 was sort of a leveling out of the market, and any drop occured in 2007. I saw yesterday on NBC 5 that the year-over-year price drop in Chicago was only about 2%. That's not going to send anyone into a panic any time soon. But I do expect a bigger price drop to show up in the data for the coming year. It's anyone's guess at this point. Usually by the time an economic trend is recognized conditions have already changed due to the delay in data reporting and analysis.

[dinandriver]

That's good news. Thanks for clearing up the issue for me!

[Chicago60614]

Originally Posted by dinandriver

Well, I don't know why I had that notion... Could it have been just condos? Or maybe even higher priced condos? For some reason, I thought that Chicago had an oversupply of inventory right around 2005...

The Chicago condo market is set to reach an all time high delivery number in 2008. The 2nd all time high was last year, the 3rd all time high was the year before.

There is a growing inventory though, but the market here definitely was booming in 2004; all the way up until this past year when it started to cool down.

[Lookout Kid]

Originally Posted by Chicago60614

The Chicago condo market is set to reach an all time high delivery number in 2008. The 2nd all time high was last year, the 3rd all time high was the year before.

There is a growing inventory though, but the market here definitely was booming in 2004; all the way up until this past year when it started to cool down.

I'm kind of scared of this... I know most of the pent up inventory is downtown, but if there is a firesale it would have a ripple effect through the neighborhoods.

[Avengerfire]

Originally Posted by Lookout Kid

I'm kind of scared of this... I know most of the pent up inventory is downtown, but if there is a firesale it would have a ripple effect through the neighborhoods.

I cant wait. I am going to jump on it. It is all timing...

[Humboldt1]

Avengerfire,

We may be shopping for a condo at the same time. I am looking get another apartment building, probably in logan square or westtown, but am also looking at buying a condo in a more gentrified area.

I hold a better opinion of my part of humboldt park (north of grand and east of pulaski) but still consider it the hood. I am looking to get a new car but have waited as they seem to leave my 7 year old car alone and I don't need the headache if the neighbors do something to a fancy new car.

We should definitely compare notes as we both look at condos for firesale prices.