Neighborhood Update – South Loop

South Loop has seen vast amounts of development over the past couple years.  That coupled with the slowing of condo sales as a whole has resulted in the South Loop functioning as a paradigm of over development and unsold inventory.

This does not denote problems with the developments themselves, but simply that the base of buyers has not been strong enough or consistent enough to keep pace with the quickly accumulating inventory.  Quite to the contrary, the South Loop is home to some of the most innovative developments in the entire city and moreover, the most affordable in the downtown area.  I’ll get into more detail there in a moment.  But for now, we’ll get to the numbers.

 Absorption rate indicates how long it would take for the current inventory in an area to be purchased if the rate of consumption continued at a steady pace.  In order to determine that pace I’ll use the number of closed units in the last thirty days.

Hence, there were 3 closings of  condos in the South Loop over the last 30 days. (ranging from $165,000 – $997,500)

There are 357 units currently on the market (ranging from $149,500- $4,250,000)

Therefore, it would take just under ten years to absorb the current inventory.   While that appears to be a dire circumstance, I think here it is crucial to discuss a couple other figures in order to place things in perspective.

Tracking sales in the South Loop over the last three months the following is true.

68 units closed over the last three months 

25 units closed over the last two months

3 units closed over the last month

These figures are indicative of the slow market as well as the general trend of slowing sales for this time of year.  If absorption rate is calculated based on the last three months instead of just the past month it drops drastically to 1.31 years of inventory.

 I prefer to use solely the month by month absorption rate so that readers can track the market in a given area over time, however, when a single month becomes this skewed I feel it is important to offer a longer range perspective as well.

Meaning for Sellers:

If you can wait to sell, do so.  There is just too much competition and much of it is new, priced well, and further bolstered by developer incentives.  If you must sell be sure your Realtor is familiar with the area and that you are willing to price appropriately.  The longer your home sits on the market the tougher it becomes to get showings as it slips into the abundance of current and coming inventory.

Meaning for Buyers:

As evidenced by the figures above you have a wealth of options available to you at every price point.  Perfect time to look for a first purchase, a second home for city sabbaticals, or an investment for a child attending college in or near the city.

As for buildings that stood out during my previewing this week, I chose to highlight two.

1. Library Tower 511 S. Plymouth – Expected delivery in summer 2008.  Units are priced at about $340 per sq ft making it one of the most affordable in the downtown area.  Loft style building with much larger units than generally found in larger developments.  You can find more details at www.librarytower.com.

2. The Lofts at Roosevelt Collection – Expected delivery in 2009.  One of the most innovative concepts I have seen for a development.  The goal is in essence to create a secondary city center for the south loop including 1.2 million sq ft of retail space figure-headed by a 16 screen movie theater.  Additionally, there will be two 170 unit residential buildings.  Each unit has outdoor space and the buildings will be separated by green space and a boulevard contained by, but stretching the length of the development.  You can find more details at www.loftsRC.com

Lastly, if 2008 and 2009 delivery is too long to wait there are a couple other developments available for immediate delivery and certainly worth a look.

1. 1720 S. Michigan – www.1720michigan.com

2. Vision on State – www.visiononstate.com

If you have further questions about any of the properties mentioned here or would like to schedule a showing please feel free to contact me.  If you would like to see a neighborhood update for another area leave a comment mentioning that neighborhood.  If I receive enough requests I’ll do the research and post an update for that area.

Best,

JLC

Personal Flair + Local Flavor

As we approach the middle of the fourth quarter of 2007 I thought it appropriate to address a conflict that I have repeatedly run into in my three years in the business of selling real estate.

Inherently, a discrepancy exists between national media coverage and market/industry specific information sources.  This is in large part due to a broad base of viewers which influences large media outlets to release overarching statements.  Unfortunately, when applied to a specific markets these statements may hold true, but often do not, leaving even an informed reader in a quandary. 

In order to help bridge this gap, I would like to provide you with a couple alternative information sources to either compliment or supplant your current ones.

The first is a blog written by a mortgage lender.  I have been a loyal reader for a while now and am consistently impressed by the content and poignance.

www.themortgagereports.com.

The second is of course this very blog, which addresses guidance for first time buyers, strategies for real estate investors, as well as specific neighborhood market updates.  Last, but certainly not least, I’ve been sure to incorporate some of my own person flair as well as local Chicago flavor.  Please remember, feedback is always more than welcome.

The following articles are of a more general nature, but are indicative of the current market in Chicago.

Dare We Hope: Housing Conditions are Improving

By Blanche Evans

http://realtytimes.com/rtapages/20071012_conditionsimpr.htm

 

Something New to tell your Reluctant Home Buyers

By Blanche Evans

http://realtytimes.com/rtapages/20070921_reluctant.htm

Please feel free to contact me with any questions or to clarify any points made in the articles.

 Best,

JLC

Neighborhood Update – Lincoln Park

 The goal of these neighborhood updates is to highlight specific properties that I have viewed this week in addition to addressing some neighborhood market trends.  Here I’ll specifically cover two bedroom condos in Lincoln Park.

 Like most areas, Lincoln Park is saturated with inventory.  To illustrate this point I will be using absorption rate.  Absorption rate indicates how long it would take for the current inventory in an area to be purchased if the rate of consumption continued at a steady pace.  In order to determine that pace I’ll use the number of closed units in the last thirty days.

Hence, there were 5 closings of two bedroom condos in Lincoln Park over the last 30 days. (ranging from $270,000 to $748,000)

There are 241 units currently on the market (ranging from $359,000 to $599,000)

 Therefore, it would take just over four years to absorb the current inventory. 

Meaning for Sellers:

 If you’re selling a two bedroom condo in Lincoln Park, ideally you should hold off listing it until some of the current inventory is sold.  If waiting is not an option, it is of utmost importance that a seller understand the general amount of competition out there and moreover, have the willingness to price your property according to market conditions and the direct competition to your unit.  A good realtor is crucial to effectively marketing a property under these circumstances, perhaps someone that understands absorption rates and how they effect not only the market as a whole, but also buyers and sellers specifically. 

Meaning for Buyers:

 From the purchasing side, four years of inventory on the market provides a buyer a unique opportunity.  The chance to search out a good deal in an area where they are generally hard to come by.

 I would like to highlight a couple buildings I visited last week: 

 1.  The Altgeld Club at 1350 W. Fullerton – There are currently 2 units available in this 60 unit loft building.  Like most loft buildings altgeld boasts high ceilings and spacious floorplans, however, the bedrooms are enclosed with either a full wall, or glass block.  This goes a long way in providing solace to those who are turned off by lofts because of the lack of privacy.

2. Sono at 1454 N. Dayton is in essence sandwiched between Old Town and Lincoln Park.  This building is currently under construction and delivery is expected by fall of 2008.  As far as virtues to extol, location, walls of windows, and quality marble, granite, and appliance standards top the list.

 If you have further questions about any of the properties mentioned here, or would like a neighborhood update for another area please feel free to contact me.

Best,

JLC