Market Conditions: New Home Sales Jump 34% in Q1 But They’re Coming Off of the Lows
Crain’s reports that new home sales in Chicago jumped 34% to 691 in the first quarter of the year.
It is the first year over year increase in sales since the housing bust began.
Sales are up but still nowhere near their level at the market’s peak in 2005, when builders sold more than 33,000 homes in the Chicago area.
Though high-rise condo construction has yet to come back, nearly 500 unsold units hit the city market this year when a joint venture including developer Related Cos. rebooted sales at three failed South Loop towers. One of them, Harbor View at 1901 S. Calumet Ave., saw 31 sales alone in the first quarter, according to Tracy Cross.
Large three-bedroom condos in smaller projects are also selling well, as are new condos and town homes in far-flung suburbs such as Huntley, where prices are more attractive, Mr. Doersching said.
There’s a good chart in Crain’s showing just how far new sales have sunk since the boom.
We’ve seen a smattering of new developments announced in the city but compared to even the pre-boom years, it’s almost nil.
Many builders who survived the bust stayed busy in recent years scooping up stalled subdivisions at a discount from lenders who foreclosed on previous builders. Though some builders have started buying raw land to build from scratch, area home prices still haven’t risen to the point to make that play attractive to many builders that still have thousands of vacant, improved lots from which to choose.
One of those builders is John Carroll, president of the Chicago-area division for the Ryland Group Inc., which led all developers with 145 Chicago-area sales in the quarter. Ryland is marketing 15 local developments and aims to open three or four more by the end of the year, Mr. Carroll said.
Though home prices are rising, the market is still “a little ways off” to justify raw land development, he said. Mr. Carroll is encouraged by current conditions but cognizant of the fact the market is still nowhere near the peak of 2005.
“We’re certainly not in a housing boom,” he said. “The combination of pent-up demand and lack of resale inventory is a pretty straight path for an improving market.”
When will we start to see new development on a larger scale?
When will the new building ads return to the Sunday Tribune?
Local new home sales jump 19 percent in the first quarter [Crain’s Chicago Business, David Lee Matthews, May 2, 2013]
By the way, Crain’s also reported in a different article that only 3 units have closed in the new Ritz building. Granted, there was a lawsuit holding up closings for months. But that has been resolved because the new Tommy Bahama is about to open in the base of the building by next week.
So what’s the delay in the condos actually closing? It said 2 out of the 3 were bought by an investor who doesn’t even live in Chicago. Why aren’t more units in that building actually closing? I thought it was 40% sold?
I just bought a 2/2 condo in Fulton river. I got tired of paying $2000 a month at Alta at K Station which is not worthy of that rent price with getting zero equity by renting. The downtown area of the city is booming with new construction high rise apartments, restaurants, entertainment options, and shopping popping up everywhere. The stock market is at all time highs, so we know the rich and upper middle class have money to spend. As long as the Fed is pumping artificial money into the market and keeping mortgages affordable, then homeownership will be much cheaper than renting. I think it is only a matter of time before the working class neighborhoods start to rebound as well. Buy now downtown or be priced out forever.
I will say my neighborhood is really starting to boom like crazy compared to when I first moved to (west)RN, next is river west/west loop with the addition of a few thousand more residents from all the rental towers, as well as jobs from F500 companies moving downtown, commercial will follow and it will be very interesting to see.
I’m very curious to see what the numbers bring in the summer. It seems like a ton of people have been wanting to move for a long time, but haven’t been able to… Maybe this will be the summer when people get to finally move.
Curious as to whether anyone has any insight into the mini-building boom on Armitage between Winchester and Wolcott. Three developments underway, all were tear downs, and there have recently been additional demolitions within a block. The first of the projects, three three-flats ((I think), is sold out and second projects claims to only have one unit left. These projects look like nicer versions of what was built during the boom. Several the units from that era are also currently for sale on the same block. Are people recognizing the convenience of Cybourn Metra stop with its two lines? I love this part of Bucktown but Armitage itself is no great shakes. What gives?
The RN and downtown chicago revival is great, it’s nice to see an urban area take off like that. Some of the nicer suburban areas are thriving as there will always be demand for good housing in good school districts for families. Its just the rest of teh metro area that is a dump.
HD, in your estimation what percentage of the metro area is a dump?
Most of the south, southwest side, west side, south suburbs, aurora, joliet, elgin, waukegan, far NW suburbs, far nothern suburbs, collar suburbs (maywood, cicero, oak lawn niles, etc.). I mean really, outside of the GZ, the northwest burbs (half of them excluded schaumburg, palatine, fox river grove etc), and the north shore, and possibly OPRF, most of the metro area is unlivable for the professional class.
” Its just the rest of teh metro area that is a dump.”
Agree whole-heartedly…sadly. The article tells us that suburban fringe homebuilders can buy “improved lots” presumably ready-to-go and they aren’t doing so” “area home prices still haven’t risen to the point to make that play attractive to many builders that still have thousands of vacant, improved lots from which to choose.”
Doesn’t this mean that suburban housing prices are below replacement cost? or even hard construction cost with the cheapest of land costs?
Huntley is livable for the elderly…or so I’ve heard.
It’s probably easier to create a list of livable areas as opposed to dumpy areas.
“Doesn’t this mean that suburban housing prices are below replacement cost? or even hard construction cost with the cheapest of land costs?”
In a lot of areas, yes. And there’s a glut too. Will county probably has more underwater home owners than any other area in the metro area. Far suburban DuPage, Kane too. lots of large homes in subdivisions with mortgages in the 200’s and 300’s with homeowners who can only afford the $100’s. Don’t even get me started on places like maywood, bellwood, cal city, hazel crest, dolton, its very nearly Detroit pricing up in there.
Sales at MP West have started. I wish Sabrina would feature some of those. Unfortunately, Redfin does not have pictures for the units though.
what i find interesting is the 1960’s tri-level that was built all over the chicagoland area. You know the house: 1200 sq ft, walk into the living/dining/kitchen on the main floor; upstairs bed, downstairs den. YOur grandma probably lives in one. They’re basically a commodity but its price is totally dependent on the area. Sometimes I think ‘wow I could get so much more house/yard/garage if I could just live in X’ but then I remind myself that 2,000 sq feet of space (halfgrade or higher) in a decent suburb aint’ come cheap.
all properties under K
http://www.redfin.com/IL/Park-Ridge/644-N-Dee-Rd-60068/home/13647971
$320,000 in park ridge
lake in the hills
http://www.redfin.com/IL/Lake-In-The-Hills/5410-Avalon-Ln-60156/home/17785608
$175,00
http://www.redfin.com/IL/Highland-Park/672-Hyacinth-Pl-60035/home/17630334
$309.000 as a foreclosure in highland park
http://www.redfin.com/IL/Des-Plaines/1403-Danbury-Ln-60018/home/13691036
$204,900 in des plainese
http://www.redfin.com/IL/Dolton/1116-E-152nd-St-60419/home/12931702
$69,900 in Dolton
Not that I live in a tri or a split level, because I don’t, but I’m just using this as an example, but the 1940’s tudor can’t be easily found in nearly every suburb around Chicago but the 1960’s tri level can.
Thats because suburban expansion didn’t really take off until way after the interstates were built
I agree with Mike HG. With prices low and rates low, why pay these crazy rents? If you have the means to get a loan, buying is a good idea
For some reason I can’t explain, those split/tri level homes make me feel sad.
I disagree c. Mike HG says “I just bought a 2/2 condo in Fulton river. I got tired of paying $2000 a month at Alta at K Station which is not worthy of that rent … with getting zero equity… The downtown area .. is booming with new construction … apartments….Buy now downtown or be priced out forever.”
Imo the demand justifying construction of so many apt projects downtown results in large part from what Mike’s analysis ignores. Simplistically put, I estimate his condo cost $350K-$400K plus an obligation to pay about $1500/month in real estate tax, property insurance & assessments. While apt renters gain no equity, renters avoid any risk of unexpected repairs or unexpected flatlines (or worse) in condo values. If Mrs Mike decides the family must move to a better school district in 3-5 years, resale costs will eat about the 1st 8%-10% of gross sale price. If their condo’s value didn’t increase more than 3%/ yr., Mike will understand why there were multiple applicants to rent his former apartment for $2000 or $2200/month. Cheap mortgage availability or not, I for one am not worried about being priced out of downtown forever.
HD your postings make less and less sense to me – I hope someone proofs your legal briefs & filings before submission. What does “but then I remind myself 2000 sq ft of space… “ain’t come cheap” mean in this post? Does “all properties ‘under K'”mean under contract?
“What does “but then I remind myself 2000 sq ft of space… “ain’t come cheap” mean in this post?”
Boy, if Southbound is getting into the proofreading biz, I’d better watch out, and Groove better put on the nomex.
“Does “all properties ‘under K’”mean under contract?”
Std abbr. for law-talking-guys. K=contract.
I’ve no interest in proofreading just want to understand what is meant by what I read. I think he wanted to say it only costs a little more to live in a better location but I have no idea since his sentence is like a Rorschach blot:
“Sometimes I think ‘wow I could get so much more house/yard/garage if I could just live in X’ but then I remind myself that 2,000 sq feet of space (halfgrade or higher) in a decent suburb aint’ come cheap.”
“if Southbound is getting into the proofreading biz”
Well, maybe he could start by quoting more precisely. He removed comma from 2,000 and added/moved the apostro in aint. That’s not going to win any blue booking competitions.
I think that that particular sentence/collection of fragments is at least 1 sd above the mean of intertubez comment comprehensibility.
But maybe I spend to much time on the intertubez.
“at least 1 sd above the mean of … comprehensibility…” So please enlighten me – not to quibble but doesn’t it seem “Sometimes I think ‘wow I could get so much more house/yard/garage if I could just live in X’ but then I remind myself that 2,000 sq feet of space (halfgrade or higher) in a decent suburb” would logically be followed by HD concluding “doesn’t cost so much more that I would consider living in Wheeling over Park Ridge” or something like that?
Or has HD been conversing with so many south side & west side borrower/ clients that he is now posting in a version of ebonics at times here?
What did HD intend his post to mean?
I’d rather live in my car than move into any of these tri-levels. A tri-level means your life is over!
“What did HD intend his post to mean?”
“Sometimes I think ‘wow I could get so much more house/yard/garage if I could just live in X’ but then I remind myself that 2,000 sq feet of space (halfgrade or higher) in a decent suburb aint’ come cheap.”
means, roughly:
“Sometimes I think ‘Wow, I could have a huge house if I could deal with living in [Harvey]’, but then I remember that (a) I won’t live in a ‘cesspool’ and (b) in any of the 15 ‘decent’ ‘burbs, even 2000 SF of non-sewage level space [ie, something not *huge*, but still at least average sized for the town] is not-cheap.”
Might make more sens if you just skip every 3d word.
Lowest interest rates ever plus very tight inventory = activity!! This is definitely the time to sell, to take advantage of this equation. I just sold, three interested parties in seven days. Now, going for a condo in the city, you better move fast and with a good offer or it’s gone. Stuff is getting snapped up fast. As more wanna-be sellers catch on, inventory will rise. Right now is the time to sell.
thanks for translating anon. captured it purrrrrrectly.
tri levels aren’t bad. they have flowing floor plans and they’re easy to open up. the bi levels are awful. the staircase at the entryway up or down. those suck
ok if tri levels suck, and bi levels are the worst. what be da acceptable architectural style? McMansion? Tudor? bungalow ( i never liked the floor plans for those) or cape cod? I think those are the worst. small cramped and 2 beds in a slanted ceiling attic? I’d do. four sq over a cape cod any day but id take a tri over a 4 sq but sprawling ranches at 2500+ above grade preferably mid century are da best
now translate dat!
Tri levels are repulsive. But why are they being discussed here?
Here’s why I bought. Single, no kids, no student loans or cars. I put 30% down to get a 7 year interest only mortgage at 2.5%. Year 8,9,&10 are also interest only but adjusts to whatever the going rate is at that time. My sister is my realtor, so I only pay 1/3 of the normal commission. My mortgage, assessments, and taxes add up to 2k a month and almost all utilities are included. I’m going to rent out the two parking spaces and the second bedroom to a friend for a total of about 1300 a month. That makes my monthly payment about 700 a month. I’m going to try and pay as much as I can towards the mortgage after contributing to my retirement. I no longer go to the bars, so I save more than $1000 a month (ya I had a problem). For my situation, it made sense not to rent anymore. For many others it also makes sense not to rent anymore. If you like the interest only mortgage, you better hurry up and buy because the government thinks we’re too stupid to know our own financial situation.
Cinderblocks 2/2’s are repulsive. You’re repulsive.
homedelete says, “Most of the south, southwest side, west side, south suburbs, aurora, joliet, elgin, waukegan, far NW suburbs, far nothern suburbs, collar suburbs (maywood, cicero, oak lawn niles, etc.). I mean really, outside of the GZ, the northwest burbs (half of them excluded schaumburg, palatine, fox river grove etc), and the north shore, and possibly OPRF, most of the metro area is unlivable for the professional class.”
Most of these areas are unlivable for almost anyone who wants a decent quality of life, with a few exceptions, and places like Schaumburg, Aurora, Elgin, and Fox River Grove are going to be unlivable for any non-professional who wants to be able to have access to jobs and basic necessities once fuel prices increase 40% or more above current levels and stay there forever. The exception will be neighborhoods within them that have the good fortune to be right next to a METRA rail stop. I predict that these areas will become very prime, and suburbs like Palatine and Arlington Heights seem to be anticipating the coming era of tight, expensive fuel and small town revival by building attractive, high-density small-town style urban cores around their METRA stops. I was pleasantly surprised by the new development in Palatine and Arlington Heights when I went out there last year on the METRA to visit someone. Outer suburbs that adapt this way will succeed, but the typical exurb with its cul-de-sac subdivisions and “garden” apartment complexes feeding massive collector roads, will fade, These places seem already to be collapsing, with rapidly falling property values that are not recovering at anything like the rate that prime neighborhoods in the city and prime collar suburbs are, as it becomes impossible for a non-professional family of ordinary means to maintain a lifestyle that includes 3 cars per household and 50-mile-each-direction commutes. As it is, most of the denizens of these places were only maintaining all this by taking on crushing personal debt, which many of them can no longer carry. Most of these people will be forced by economic reality to downsize considerably and move closer to jobs and essential retail and services, even if it means living in much smaller dwellings and unloading a lot of personal possessions- and debt.
Cinder block condos are repulsive as well. But not relevant to new home sales statistics particularly. Are they building tri levels still?
tone: New construction? This is new construction, and it’s AWFUL yet it still sells for $269 psf.
http://www.redfin.com/IL/Park-Ridge/625-Park-Plaine-Ave-60068/home/13647178
People make fun of 60’s housing but the clean lines, the more open floor plans, the separate tv viewing area, attached garage are amenities that ushered in the modern era of living.
http://www.redfin.com/IL/Park-Ridge/811-S-Fairview-Ave-60068/home/13638041
Here’s more new construction from 2012. I think they call this style: ‘big brick behemoth’. It’s a registered architectural style and it’s repulsive. I hear the floor plans come from Moldolva and Bulgaria, with a little Kzakh influence.
Here’s an equally hideous new construction home, three years old, and sells for a price outside the range of most discriminating buyers with any sense of taste..
http://www.redfin.com/IL/Park-Ridge/236-N-Lincoln-Ave-60068/home/13648683
While I’ m not a fan of any of those homes, Eastern Europeans seem to have better taste than you.
I know you don’t honestly believe that.
“most of the metro area is unlivable for the professional class.”
Not unlivable, but not desirable. Why live in the burbs here for crazy cost of living and the inherent corruption tax that comes with when instead there are other metro areas across the midwest where you can get a nice house for 40% less and a 100k income goes FAR, allowing the wife to stay at home and raise the kids if one chooses. 100k doesn’t go so far here when you have city garbagemen making 60k/year.
I guess I have no taste because I don’t see what’s wrong with any of the homes HD posted!
I don’t know what it’s called, but I always thought the homes with the inlaid rock decor were hideous.
Places like this:
http://www.redfin.com/IL/Chicago/5500-W-Higgins-Ave-60630/unit-1N/home/13497849
It’s a detail you see all over Chicago and suburban Toronto and Ottawa too.
““most of the metro area is unlivable for the professional class.”
Not unlivable, but not desirable.”
I’d like to know the guesses about what % of Chicago parks are unusable for GZ types? Do the SWPL types ever notice this?
I would say that in our own city 2/3’d of all Chicago Park district parks are off-limits for the suckers who pay the taxes in this city. You even hear guys like skeptic talking up Humboldt Park, but really how many GZ taxpayers would set foot there? Marquette Park, Riiis Park, you add them all up, I say 2/3 of them are off limits esp, after dark. And people think this is the way to live….yeah we’re really civilized.
“You even hear guys like skeptic talking up Humboldt Park, but really how many GZ taxpayers would set foot there? ”
Some do. Some lesbians called the cops on me once in Humboldt Park for setting off M-80s. I could tell they were you’d look at them on the cell phone they’d be looking at us then look away. Only an idiot GZ type would actually believe the cops were going to respond to that call. Yeah I’m sure they’re going to have six detectives on the case!
The best in Humboldt Park is that PR neighborhood organization that gives away free burgers, hot dogs cake, etc, _only if you’re hispanic_. The SWPLs don’t seem to notice that.
” would say that in our own city 2/3?d of all Chicago Park district parks are off-limits for the suckers who pay the taxes in this city.”
Although overall this is probably true. You won’t see GZ types in Douglas Park, Garfield Park, Columbus Park, Marquette Park, Jackson Park, etc.
You will see them packed in at Wiggley Field. A parcel so small and so packed with dog feces I can’t imagine how anyone could take their dog there and think they’re getting exercise.
The article’s author twice points out that while sales have increased, they are nowhere near the peak of 2005. Seems to imply that a healthy market would approach that level. A market that approaches the level experienced in 2005 would certainly indicate an overheated market, with lax-to-no martgage underwriting standards, fueled by bogus securities. Is 2005 a reasonable benchmark at all?
“Is 2005 a reasonable benchmark at all?”
No its actually quite stupid to compare current times to the peak of the real estate bubble. Its about as relevant as comparing stock indexes today compared to march 2000
“Is 2005 a reasonable benchmark at all?”
Wasn’t the bubble’s peak in late 2006 in Chicago? With rates where they are now compared to 2006, the market is not anywhere close to being better off. The current rates allow buyers to pay quite a bit more per month. I’m igonoring the obvious lack of down payments required back then, but all else equal, the current market is a mirage due to the low rates.
“Is 2005 a reasonable benchmark at all?”
“No its actually quite stupid to compare current times to the peak of the real estate bubble. Its about as relevant as comparing stock indexes today compared to march 2000”
Correct
“No its actually quite stupid to compare current times to the peak of the real estate bubble. Its about as relevant as comparing stock indexes today compared to march 2000”
Think about that statement for a moment. You don’t think the majority of major market players were NOT looking at the top in 2000 and 2007 when the market just broke it. It was VERY relevant.