How is the Chicago condo market? (Time: real estate market, apartment, rental)

[esk8mw]

How is the condo market in general doing in Chicago right now? Also, where is it likely headed in the next few years? Specifically, I am looking at 2BR condos in or around the Loop. From what I have heard, there is a ton of new construction. Combined with a breakdown in the real estate market nationally, I would think this could lead to oversupply and falling prices.

Baseless speculation and reasoned opinions are both appreciated.

[Drover]

The real estate market here has cooled off too, but not so much that real estate has all of a sudden become reasonable or affordable.

There is indeed a lot of new construction going on. Another contributor to the condo market is that the rental market here well and truly sucks. I spoke to a property manager a couple of weeks ago who told me that even if you buy an apartment building with 50% down, it still does not carry its own weight. So a lot of apartment buildings are being sold off as individual condo units because they can't find anyone to buy the whole building.

Nonetheless, expect a 2-bedroom in or near the loop to start in the middle to upper 300s.

[oakparkdude]

There's an awful lot of new construction over the past few years in the south and west loop. I've been waiting for the big collapse so I could pick one up cheap, but I don't think its going to happen. They're offering incentives (plasma screen tvs, Vespa-like electric scooters at one development), but I don't see prices dropping dramatically yet. Of course with the ongoing collapse of the sub-prime mortgage market, this may change.

Still, Chicago real estate never got as frothy as the coasts, so there's much less of a bubble to pop. Despite all the thousands of new condo units downtown, there's probably plenty of pent-up demand. I'd be more concerned about outlying suburban real estate than prime central city property.

[BRU67]

I don't think there will be a collapse but I'm not sure how much appreciation there will be either. When I was looking to buy in 2002-03, 900-1000 s.f. lofts in the South Loop were listing for $230-250k. When we looked again in 2006 they were listing for $230-250k, and sellers were very motivated. Made me very glad I bought a house in the inner ring instead. For your first home, you need it to build equity. Otherwise, you may as well rent.

Things that concern me include the massive numbers construction and conversions and the fact that 80% of these things seem to be empty -- owned by speculators or empty nesters who use them as second homes. Plus, it seems every time I turn around, there's a new "hot" neighborhood with condos and townhomes sprouting up like weeds. As the old real estate saying goes "they're not making any more land." Well, that's technically true but Chicago has plenty of blighted neighborhoods just waiting to be revived. So the City for all intents and purposes can make more land.

Of course, on the positive side, Chicago's downtown is undervalued compared to other major cities like NYC, LA, SF and Boston, so it may catch up -- especially if we get the Olympics in 2016.

Time will tell.

[3Series]

Any other insights into the Chicago Condo market? I'm looking to buy in 2br 2bath unit in a 4-flat in old town.

[oakparkdude]

I've been reading yochicago.comhttp://yochicago.com, which is a website/blog dedicated to Chicago real estate. Great way to follow trends, especially regarding new construction developments.

[zapper7]

I deal in real estate on a daily basis and I don't see a collapse in the market even in areas such as the West Loop and the South Loop where there has been a rash of new construction. If people are not buying homes they are renting them and that is where much of the excess housing has gone. I would say that this is the best time to purchase a condo. The market has been artificially deflated by the sensationalized headlines in the press and the market is in the beginning states of returning to normal. Once the press reports the return of a healthy real estate market it is already too late to take advantage of the current situation. You may not see the large appreciation of the early part of the decade but it is still the better alternative to renting if you plan to stay in the property for 4 or more years. Not to mention that rents in Chicago are expected to increase from 3 to 11 percent this year. My suggestion is to buy in an area that is more up and coming where you will make a sizable profit, not in an area like the South Loop that has already arrived. My top pick neighborhoods are Uptown, Edgewater or Bronzeville.

[hotpot]

How about Hyde park?

Originally Posted by zapper7

I deal in real estate on a daily basis and I don't see a collapse in the market even in areas such as the West Loop and the South Loop where there has been a rash of new construction. If people are not buying homes they are renting them and that is where much of the excess housing has gone. I would say that this is the best time to purchase a condo. The market has been artificially deflated by the sensationalized headlines in the press and the market is in the beginning states of returning to normal. Once the press reports the return of a healthy real estate market it is already too late to take advantage of the current situation. You may not see the large appreciation of the early part of the decade but it is still the better alternative to renting if you plan to stay in the property for 4 or more years. Not to mention that rents in Chicago are expected to increase from 3 to 11 percent this year. My suggestion is to buy in an area that is more up and coming where you will make a sizable profit, not in an area like the South Loop that has already arrived. My top pick neighborhoods are Uptown, Edgewater or Bronzeville.