New Condo Market Dismal (Chicago: sales, real estate, apartments)

[Irishtom29]

Interesting article. Kind'a scary.

Downtown condo sales show net loss in 4Q - Chicago Real Estate Daily


Good for renters though.

[soulful]

Yes. As the article mentions, the supply is especially high in the South and West Loop. The South Loop in particular looks very overbuilt. Too many buildings way too fast.

[via chicago]

I think anyone with a working pair of eyes could have told you the South Loop got built up way too fast. Hell, theres projects still under construction and coming on-line.

But wherever theres a loser, theres a winner. If you have a stable job and a down payment saved up looking to make a purchase, you couldnt ask for a better environment.

[coldwine]

Originally Posted by dsimicata

Yes. As the article mentions, the supply is especially high in the South and West Loop. The South Loop in particular looks very overbuilt. Too many buildings way too fast.

There's no such thing as "overbuilt" except for the extreme short-term perspective.

Who knows what building prices may be in the future? Or the associated costs of construction materials, et cetera. We need every giant building we can get.

[oakparkdude]

Originally Posted by coldwine

There's no such thing as "overbuilt" except for the extreme short-term perspective.

Who knows what building prices may be in the future? Or the associated costs of construction materials, et cetera. We need every giant building we can get.

That kind of thinking is partly responsible for the economic crisis we are in.

[via chicago]

Originally Posted by coldwine

There's no such thing as "overbuilt" except for the extreme short-term perspective.

Who knows what building prices may be in the future? Or the associated costs of construction materials, et cetera. We need every giant building we can get.

Thats pretty whacked thinking. We should just build with abandon because maybe in 50 or 100 years we will need it?

[SloopyJ]

Originally Posted by via chicago

If you have a stable job and a down payment saved up looking to make a purchase, you couldnt ask for a better environment.

Unfortunately, I disagree. For a single-family house in a good neighborhood, this may be true. But for a condo in a large building, the current environment still presents a lot of risks. What happens if major construction issues arise, and the developer is bankrupt and/or nowhere to be found? How does the building fund any kind of reserve if the building is half-full or less? What happens to common area maintenance if only half the units are paying assessments? And if something does go wrong that requires a special assessment, do the occupants end up paying for all the vacant units' shares (um, probably so)?

Again, for buildings with a longer history of success, the current environment may present some opportunities, but prices in such buildings will reflect the reduced risks. A lot of newer buildings were planned to be built with marginal construction, had to be scaled BACK in quality to reflect economic realities, and are likely to go to sh*t rather than appreciate in any major way in the foreseeable future.

I'd stay away from the downtown condo market for a while...stick to the walkups in the neighborhoods and single family homes near transit.

[Basekamp]

yes, and way, way to many 1BR condos in the downtown supply = no good 1br market outside of downtown either. 1 BR condos are the crux of the problem, also look out for merged 1 BR units, that seem like they have tons of space. Developers that realize they are about to get kicked in the teeth are trying to knock down the walls and merge 1BR units into 2 or 3 BR units, but when they do, but they don't have the big bathrooms or living rooms of a 3 BR, or 2BR that you would otherwise get...

This also kills the unit..

Originally Posted by SloopyJ

Unfortunately, I disagree. For a single-family house in a good neighborhood, this may be true. But for a condo in a large building, the current environment still presents a lot of risks. What happens if major construction issues arise, and the developer is bankrupt and/or nowhere to be found? How does the building fund any kind of reserve if the building is half-full or less? What happens to common area maintenance if only half the units are paying assessments? And if something does go wrong that requires a special assessment, do the occupants end up paying for all the vacant units' shares (um, probably so)?

Again, for buildings with a longer history of success, the current environment may present some opportunities, but prices in such buildings will reflect the reduced risks. A lot of newer buildings were planned to be built with marginal construction, had to be scaled BACK in quality to reflect economic realities, and are likely to go to sh*t rather than appreciate in any major way in the foreseeable future.

I'd stay away from the downtown condo market for a while...stick to the walkups in the neighborhoods and single family homes near transit.

[Irishtom29]

The other night I counted 15 lit apartments showing on the north and east sides of that huge building at the end of Roosevelt, Museum Park.

[chet everett]

This happens pretty frequently in the condo market. There are basic problems with how easy it is for a developer (and even the City) to say "heck, instead of building a 20 story building with a hundred units I could throw about a 40 story with twice as many units for only about 25% more". When that happens that swamp the market, stretch building trades and City inspectors too thin and have a world of yuck to deal with.

I fear that too many of these building are going to be a very poor investment, and may even by a burden to the City, though a bonanza for law firms...