Finally- we have some real data.
Crain’s is reporting that new home sales fell 39% in the city of Chicago to 852 in the second quarter. This includes the entire city- not just the downtown- and presumably includes condos, townhouses and single family homes.
As has been stated several times over the last few months, about 6,000 new condos and townhouses will come on-line in just the downtown alone this year- with, according to Crain’s, 30% of those unsold (and how many of those “sold” will close on those contracts?).
Crain’s sales numbers come from a second quarter report from real estate firm Tracy Cross & Associates in Schaumburg. From Crain’s:
Contracts for new homes in the city totaled 852 units in the quarter, down 39% from the year-earlier period.
“The city’s recovery will take longer,” Mr. Cross says. “A number of projects will be in the troubled zone.”
Some already are. The delinquency rate for construction loans in the Chicago area surged in the first quarter to 8.4%, from 5.5% in fourth-quarter 2007 and 2.8% in first-quarter 2007, according to Foresight Analytics LLC, an Oakland, Calif.-based research firm. Though the data includes both commercial and residential projects, condo developments account for a large share of the delinquencies.
The city isn’t the only area feeling the sting of the housing slowdown. The entire region is seeing a massive slowdown:
At the current rate, contracts for new homes in the Chicago area will total 8,328 units this year, down 75.0% from the market’s peak in 2005 of 33,287, according to Tracy Cross.
“We are at the lowest point we can possibly be,” Mr. Cross says.
If sales don’t pick up, he estimates it would take 99 months to sell the 63,222 new homes built or planned for the Chicago area.
Prices in the Chicagoland area also continue to drop. For new single family homes the average price dropped 10.2% to $316,385 from a year ago. According to the report, for townhouses and condominiums, the average price, excluding the Chicago Spire downtown, declined 10.0%, to $387,423. (Crain’s did not provide City of Chicago-specific average prices.)
“There’s been enough price adjustment in the market” to stimulate sales, Mr. Cross says.
Is this a once in the lifetime event we are witnessing with this housing slowdown?
Take a look at the graph in the article and judge for yourself.
Home Sales Slump Slows [Crain’s Chicago Business- July 21, 2008]