| CHICAGO REAL ESTATE POSTS ANOTHER BIG YEAR: CHANGES TOO The Chicago Association of Realtors, in their yearend summary of Chicago 2005 market activity, released numbers which showed a 6.5% increase in sales volume for the year 2005. The Association also reported that annual condo prices in the City increased 10% and home prices were up another 12%. However, the average time that units for sale were on the market increased 5% for homes and 13% for condo units. The Realtor’s numbers are made available to members through the Association’s Fast Stat data base. The numbers are generated from the Multiple Listing Service of Northern Illinois. In the past three years, sales volume for condo units and homes were as follows: The fall off in the number of homes sold, was more than offset by a big increase in the number of condo sales. The number of homes sales was down throughout the City, but especially in single-family areas on both the northwest and south sides. The trend in home and condo prices continued to be positive. Over the past five years the average price of Chicago homes climbed from $223,000 to $336,000. The increase was $113,293, equal to an average annual gain of $28,000! The four year increase for the average Chicago home was 51%. The four year increase in condo prices was also impressive, although in dollar terms, the average condo increase of $61,750, was ‘only’ about half of the increase in home values. The average condo price went from $127,000 to $189,000. The average condo unit increased $15,425 a year for the period! Trend in City Home and Condo Prices (2001-2005) While City-wide numbers were mostly positive, neighborhood differences were pronounced. Although the prices of homes continued to increase virtually everywhere, condo prices fell in some high priced areas, but continued to rise in less expensive markets. Even though long term demand for all types of housing is expected to remain strong due to demographics, immigration, and the return back to center cities, the 2005 differences in Chicago indicate a more profound shift in local lifestyles. PRICE CHANGES IN THE SEVEN LARGEST CONDO MARKETS* (*Combined market share of seven markets is equal to 60% of the City total.) LOCAL MARKET PROFILES Near West Side: this market experienced another year of big gains, with larger units rising in price faster than the starter market. The gap between the average price and the median price widened, indicating that prices were rising faster for the more expensive units. The area is expected to continue to benefit from its proximity to the Loop. Also, prices in the area are only 85% of those found in Lincoln Park. West Town: this diverse market, which includes parts of Buck Town, Ukrainian Village, Wicker Park, and East Village, saw both average and median price gains. Such gains indicate that prices were rising for higher end, as well as less expensive units. Unlike the Near West Side, this market has certain constraints on the availability of land, and housing units tend to be located in rather similar three-unit properties, or in smaller condo buildings. The constraint on larger production, and the area’s proximity to the extremely popular Bucktown market, will continue to effect local prices positively. Edgewater: This area is benefiting from the spillover effects of the housing boom going on in Lake View. Prices in Edgewater are only two-thirds of what they are in the dense, highly developed Lake View area. Condo units in the Edgewater neighborhoods of Andersonville, Edgewater Glen, and Lakewood Balmoral are popular. This market benefits from having a variety of smaller buildings and single-family homes, that are located throughout the western areas of the market. These neighborhood areas are in stark contrast to the high rise corridor located in East Edgewater, along Sheridan Road. Rogers Park: Like the South Shore community on the south lakefront, Rogers Park has always been a high density, big rental building community. In recent years however, the conversion of numerous big (and small) buildings to condo ownership, has brought an increase in home ownership to the area. Rogers Park condo prices are only slightly higher than the city-wide average, and the area is expected to continue to attract value-oriented buyers from other areas on the north side. With an almost unlimited supply of larger, ‘Chicago-style’ apartment units in the area, the trends towards condo ownership will continue. The gap between condo prices and Chicago incomes will continue to be the biggest negative on the affordable homeownership front. Lake View: This is a ‘bellweather” market, due to its younger population, its high density, and its diversity. While bigger and newer units saw price increases last year, older and smaller units tended simply to hold their own. Lake View has experienced substantial new construction in both smaller building condo units and large single family homes. Like other expensive markets, the Lake View price gap, between upscale and traditional condo units is quite wide, with the average price being $33,000 higher than the ‘typical’ (median) price. In other words, sales of expensive and new units are pulling the overall Lake View average price higher, while the statistically more numerous one-bedroom and older high rise units, are pulling the area’s median price down. This is a case of two trends going in the opposite direction. Lincoln Park: This market is split between the traditional lakefront high rise unit and the newer condo unit, which is located somewhere on a typical Chicago side street, closer to shopping and to night life. 2005 prices in Lincoln Park dropped slightly, across the board, with the median area number dropping significantly. This drop indicates that prices on smaller and older units are probably suffering from the phenomenal number of new housing options available in nearby areas, like the West Loop, River North, and in Bucktown. Near North Side: This is a huge (mostly older) market that includes Streeterville, Old Town, River North, and the Gold Coast. This market has a wide diversity of condo styles, from three unit buildings in west Old Town, to expensive new condo units in River North. This is the largest condo market in the City, with nearly one out of every five City condo unit sold being a Near North Side unit. However, the market experienced the biggest price drop in the City, probably due to the limited appeal of condo units with larger assessment costs, and due to the increasing popularity of owning in one of the City’s various upscale neighborhoods. Probably the most striking change in the real estate market in 2005, was the continuing increase in the number of days that all types of units remain on the market. NUMBER OF DAYS LISTED ON THE MARKET SUMMARY Judging by the softness seen in the more expensive condo markets in 2005, when added to the longer number of days for listings, it is clear that 2006 is not going to see a fast remedy to recent market trends. These slightly negative trends however, certainly don’t amount to a ‘bubble.’ That is a concern perhaps, for more speculative markets. Realistically, the more familiar Chicago scenes of construction cranes, congested lakefront streets, and booming neighborhoods, paint a richer picture of the current Chicago real estate market. It is true that new homeowners are increasingly choosing neighborhood settings for their first condo purchases, rather than along the north lakefront. This is not say however, that the downtown, the South Loop, and the expensive high rise boom also aren’t a fact. Call it an embarrassment of riches, but Chicago seems to have TWO condo booms going on: one is in the downtown, because it is a great downtown. The other boom is in the neighborhoods, because they are great neighborhoods. This is a tale of two cities, in one. What these changes mean for lakefront properties is unknown, there is still the Park, and the views. With all of this diversity, from Rogers Park to Bronzeville, from Lincoln Square to University Village, buyers have a terrific choice of options. Buyers who do their homework, are bound to find values in the 2006 market. Sellers of course, will need to market their units, be conscious of the competition, and make sure that an accurate price is the most important feature of their listing. Peter Fugiel © 2006 February Housing Newsletter Property Consultants Lake View Office |
|
