Market Conditions: Just 586 New Construction Homes Sold In Chicago In 2012
We’ve been chattering about quite a few new construction 3 and 6 flat projects around the north and west sides of the city in the last six months.
But those projects appear to be an anomaly in the new home market as new home sales in Chicago rose just 4.6% in 2012 to 586 properties.
From Crain’s:
A lack of supply in the city may tell part of the story. Though the city condo market has come back — Chicago condo sales jumped nearly 18 percent in December over the year-earlier period — developers have yet to start building high-rises again. Because condo prices have dropped so much the past several years and construction costs have not, it’s still hard to justify a new tower, Mr. Cross said. As a result, buyers have fewer new projects from which to choose.
In the entire metropolitan Chicago area, 3445 new construction properties sold in 2012. That was up 18% from 2011 and was the first year over year increase since 2005.
But sales are also coming off of record lows. At the peak, in 2005, 33,000 homes, condos and townhouses were sold in the Chicago metropolitan area.
The good news is that the pick-up in building is creating jobs.
The recovery is good news for the carpenters, electricians and plumbers who logged overtime during the boom but have struggled to find work since the bust.
“I did more houses last year than I did in the past four years combined,” said Jim Venhuizen, owner and president of Cimarron Construction Inc., a New Lenox-based carpentry contractor that employs about 10 carpenters now, down from as many as 80 before the crash.
Cimarron worked on about 25 homes in 2012, several for the Neighborhood Stabilization Program, a federally funded program to rehabilitate homes in struggling neighborhoods, he said. But the firm, which used to rely on residential construction for 99 percent of its business, has survived by diversifying into commercial construction. Mr. Venhuizen will take more residential work if he can get it, but he’s wary of getting too exposed to the market.
“Even if residential were to come back, we’re going to stay here and not put all our eggs in one basket,” he said.
Will it take the construction of new condo towers to really perk up Chicago’s new construction market?
Local new home sales jump 18 percent [Crain’s Chicago Business, Alby Gallun, February 5, 2013]- be sure to check out the great historic home sales chart in the article.
I’m not sure that this data is that relevant, it’s really just cherry-picking something. It’s significant for the new house sales market, which explains the Crain’s focus, but it doesn’t say that much about the strength of the broader market.
This hardly is a ringing endorsement of a “pick up” in building. He’s relying on government spending:
“I did more houses last year than I did in the past four years combined,” said Jim Venhuizen, owner and president of Cimarron Construction Inc., a New Lenox-based carpentry contractor that employs about 10 carpenters now, down from as many as 80 before the crash.
Cimarron worked on about 25 homes in 2012, several for the Neighborhood Stabilization Program, a federally funded program to rehabilitate homes in struggling neighborhoods, he said. But the firm, which used to rely on residential construction for 99 percent of its business, has survived by diversifying into commercial construction. Mr. Venhuizen will take more residential work if he can get it, but he’s wary of getting too exposed to the market.
PS the chart on the Crain’s link, shows the patient as flat-lined!! almost dead…what recovery? The headline is misleading, when you look at that chart.
Also, given the demand for “new, new, new” as Sabrina puts it, who cares if prices are down and hard costs are the same from the boom? You’d think that land and lot prices could be purchased more cheaply to offset the price decreases. If the price of a SFH house has come down by $250K, let’s say….and during the boom lots were selling for $600K, then why can’t builders find lots for $350K? Etc. etc.
Weren’t lots in Park Ridge selling for over $400K, and can’t you buy one of HD’s non-renovated 1,400 sf dumps for under $200K? So why aren’t they knocking those down, building new, and selling for $600K whereas during the boom they sold for $800K? The difference of $200K is all in the land.
reporting in from Park Ridge; I am finally seeing a number of old, outdated homes that have sat on the market forever sell cheaply. They are then torn down with large, new homes going up. My parents live in the country club area and there are four homes within their two block area that fit this scenario.
Just curious if this scenario counts as ‘new home construction’.
“Weren’t lots in Park Ridge selling for over $400K, and can’t you buy one of HD’s non-renovated 1,400 sf dumps for under $200K? So why aren’t they knocking those down, building new, and selling for $600K whereas during the boom they sold for $800K? The difference of $200K is all in the land.”
Who says’s they are not doing that? I don’t know Park Ridge but it’s hapenning in Hinsdale. I knows its a different market but teardowns are up a good clip over last year. Smaller lots are being sold in the 3-500 range and new homes being built.