In early 2008, specifically March, the south loop has seen an increase in market activity above that of the fourth quarter of 2007.  Market statistics indicate an increase in buyers entering the market which has reduced market times and the excess 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, assuming no new units come onto the market.  In order to determine that pace I will use the number of closed units in the month of February. 

Hence, there were 156 closings of condos in the South Loop during March. (ranging in sales price from $128,000 – $1,900,000)

There are 1254 condos currently on the market (ranging from $144,900 – $4,250,000)

 Therefore, it would take approximately 8 months to absorb the current inventory. 

Meaning for Sellers:

Absorption rates were much higher in 2007.  Eight months of inventory demonstrates a return toward normalcy in the South Loop.  At about 6 months of inventory the market is said to be balanced.  Any lower than four months and you can call it a seller’s market.  I would still suggest that if you’re selling a condo in South Loop, you should hold off listing it until some of the current inventory is sold, the new construction inventory will make your task all the more daunting.  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. 

Meaning for Buyers:

 From the purchasing side, eight months of inventory still allows a buyer to be selective in their purchases by searching out the best prices, terms, and conditions.  Whether purchasing new construction or a resale unit, opportunity abounds.

I would like to highlight a couple listings I saw this week while previewing property: 

1. Eco 18 at 1818 S. Wabash - New Green Development featuring geothermal heating and cooling, solar hot water, energy recovery systems and a rooftop garden.  Standards include bamboo flooring, stainless steel appliances, and all the modern touches you would expect from a new construction development.  Floorplans range from 1 bedroom 1 bath to 2 bed 2 bath and a den.  Prices range from $279,900 to $659,900. For further details visit: www.eco18.com

2. Lakeside Lofts 1025 – 1035 S. Indiana - Developer Close Out.  1 bedroom, 1 bedroom + den and two bedroom floorplans still available.  Prices range from $245,800 to $395,800. Incentives include a free Garage Parking spot

If you would like to see any of the properties mentioned here, or would like a neighborhood update for another area please feel free to contact me. justin.conner@tregchicago.com

Best,

JLC

In early 2008, specifically February, the south loop has seen an increase in market activity above that of the fourth quarter of 2007.  Market statistics indicate an increase in buyers entering the market which should reduce market times and begin to reduce the excess 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, assuming no new units come onto the market.  In order to determine that pace I will use the number of closed units in the month of February. 

Hence, there were 102 closings of condos in the South Loop during February. (ranging in sales price from $178,000 – $1,550,000)

There are 1226 condos currently on the market (ranging from $146,000 – $4,250,000)

 Therefore, it would take approximately 12 months to absorb the current inventory. 

Meaning for Sellers:

Absorption rates were much higher in 2007.  While a little over a year of inventory is still quite a bit, the drop off from last year bodes well for the market leveling in 2008.  If you’re selling a condo in South Loop, ideally you should hold off listing it until some of the current inventory is sold, the new construction inventory will make your task all the more daunting.  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.  In February there were instances of listing a property and accepting an offer within a month.  It can be done, but a good realtor is crucial to effectively marketing a property under these circumstances.

Meaning for Buyers:

 From the purchasing side, a year of inventory still allows a buyer to be selective in their purchases by searching out the best prices, terms, and conditions.  Whether purchasing new construction or a resale unit, opportunity abounds.

I would like to highlight a couple listings I saw this week while previewing property: 

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. 1111 S. Wabash #2602- North East corner unit with views of Chicago Skyline, Lake Michigan, and park.  Three bedrooms, two and a half baths and 2600 square feet provide all the space you will require.  Plus two parking spaces.  55 x 20 terrace includes a built in Viking grill.  Fully upgraded in full amenity building, listing for $1,349,000. 

 If you have 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

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

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