Crain’s has the numbers from Tracy Cross & Associates on the new home sales in the second quarter in Chicago and the Chicagoland area.
Given the strength in the resale market, you might have guessed that it is shaping up to be the best year for the homebuilders since the bust.
In the second quarter, 1,343 new homes sold in the Chicagoland area, up 40% from a year ago. That puts the sales on pace to be about 5,025 by the end of the year which is 46% higher than a year ago.
This is still well below the “normal” market years of 2000-2003 but is a vast improvement over the last few years.
The surge in city sales can be attributed mostly to the strong performance of two failed South Loop condo towers rebooted by a joint venture including developer Related Cos. The venture sold 154 condos in the second quarter, accounting for nearly half of the city’s new-home sales, according to Tracy Cross.
Though demand for new homes has been strong this year, supply has waned. There were 320 active housing developments in the Chicago area at the end of the second quarter, down from 394 at the same time last year and a peak of 1,285 in 2007, according to Tracy Cross.
High-rise condo development still isn’t palatable to many lenders, and though home prices are rising, prices haven’t risen to the point to justify buying large pieces of land to build from scratch.
Jeff Benach, co-principal of Chicago-based Lexington Homes, said more than 5,000 new homes would sell this year if “builders had inventory.”
Mr. Benach has sold 49 homes this year and just launched sales of two town home developments in suburban Palatine totaling 56 units, 41 of them part of a stalled project Lexington bought out of distress.
He said he is “guardedly optimistic” about housing’s momentum, but many factors, including the tepid broader economic recovery ,could impede the comeback. Mr. Benach said he is searching for raw land development sites, but not for projects larger than 50 or 60 lots.
“I don’t see a lot of jumping on major, big pieces” of land, Mr. Benach said. “Nobody’s quite comfortable yet to commit to a long-term thing, at least at this point.”
With demand growing, will 2014 be the return of significant new construction in the city?
Homebuilders on track for best year since the crash [Crain's Chicago Business, David Lee Matthews, August 8, 2013]