Neighborhood Update – South Loop

In this week’s update I will focus solely on two bedroom units in the south Loop.  Prevelent new construction that is reasonably priced and bolstered by buyer incentives has made it difficult for current homeowners to sell their properties in the South Loop.  In order to paint a picture of the current market, 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, assuming no new units come onto the market.  In order to determine that pace, I’ll use the number of closed units in the last thirty days.

Hence, there were 8 sales of two bedroom condos in the South Loop over the last 30 days. (ranging in list price from $285,000 to $513,900)

There are 169 units currently on the market (ranging from $250,000 to $749,500)

 Therefore, it would take approximately 1.76 years to absorb the current inventory.

Meaning for Sellers:

If you are selling a two bedroom condo in the South Loop I would suggest holding on to the property until some of the current inventory has been absorbed, or rent the unit out.  If you must sell, the good news is 1.76 years of inventory, is not as daunting as the 2.5 years of supply in areas like Lakeview and Lincoln Park.  In the current market, getting eyes on your property (read: showings) early on in the listing process is an absolute necessity.  The longer your unit sits on the market, the more it will blend into the already extensive inventory.  In order to achieve this goal, your listing must hold the number one market position in price, location, or condition.  The ideal is to be first in all three.  Since you can not move real estate to improve the location, price and condition become the major factors.  Be prepared to price competitively. Remember, if you are planning to buy up after your home sale, while you might not make as much as you hoped on your sale, you will not have to pay as much for the new buy up property.  Here you must think like an investor, in the long run the appreciation of the new property will outweigh what you had to give up in your sale.

 Meaning for Buyers:

From the purchasing stand point, a 1.76 year supply provides a wealth of options to choose from and this does not fully count the new construction that is currently underway but not yet listed.  Searching through this much inventory can be intimidating for some buyers, specifically those making their first purchase.  Good Realtors should be constantly viewing property.  This expertise, coupled with a proper buyer interview will streamline the search for a buyer and allow them to focus only on the properties that truly fit the needs they have communicated to their agent.

I would like to highlight two new developments I visited this week in the South Loop. 

 1. The Columbian at 1160 S. Michigan - Positioned on Michigan avenue with easy access to everything that Chicago has to offer including Chinatown, Little Italy, Greektown and Pilsen.  This building was designed to maximize views of the Chicago skyline, Grant Park, and Lake Michigan.  Full amenity building with one, two and three bedroom units ranging from $355,000 to $2.5 million for penthouses.  Heated garage parking is available.  Available for immediate delivery.  For more details visit: www.thecolumbian.chicago.com

2. Michigan Avenue Tower 2 at 1400 S. Michigan -  Positioned on Michigan avenue with easy access to shopping, dining, and entertainment.  Full amenity building including a full size pool with sun deck and an urban garden.  One and two bedrooms available from $309,990 to $579,990 with buyer incentive of one parking space included in price. Delivery in fall of 2008. For more details visit: www.1400michigan.com 

 Contact me if you have further questions about any of the properties mentioned here or would like to schedule a showing. If you would like to see a neighborhood update for another area or a different type of home, leave a comment stating your interest.  If any one area garners enough comments, I’ll gladly do the research and provide a post.

Best,

JLC