1. The neighborhood has very high incomes for Chicago ... over $45,000 per capita, like the fifth highest in Chicago. Neighborhoods with higher incomes have generally more stable households. (Good.)Interesting stuff.
2. This was one of the hottest neighborhoods in the city for a while, but it didn't experience lurches up or down because of the new construction. The fact that so much was new actually helped smooth things because those sales are all pretty high and developers don't panic-sell the way some existing home owners do. (Good.)
3. Along similar lines, the loan-to-value ratio in the neighborhood averaged 77%, one of the lowest in the city. This is good because people will in general be less susceptible to default if they have more equity. It basically signals a buyer who's got a strong handle on his or her finances. (Good.)
4. The development cycle for a high rise is very long. So when there are signs of trouble somewhere near where I live (northwest side), a developer can call off a condo conversion. You live with your decisions for like a year in the northwest side, but a high rise new construction could take two or three years to complete the development cycle. (This is bad.)
5. The key question marks that I don't have access to are, How many condo's are on the market currently and how many are coming online in 2009? You may have a better idea of that. It could well be there is a long backlog of homes left to be sold and more coming online -- that doesn't necessarily mean lower median prices, but it does portend a difficult time for an existing owner if they want to sell and move. The early evidence is that the number of existing homes sold has been increasing every year -- people are still able to sell their homes -- so I would guess that existing owners have escaped some of the pain so far. (This is mixed.)
For more information on the greater Chicago real estate market check out their website. Also they're providing a $10 discount for Sloopin readers who are interested in purchasing their entire report, The Neighborhood Report 2009 (simply type in "SLOOPIN" when purchasing). Check it out, we found it interesting.
The inventory of new homes coming to market have been on sale for more than 3 years. Those contracts were signed long ago and the developer has no reason to re-negotiate prices.
ReplyDeleteTherefore, the south loop will continue to show higher than average numbers on new home sales because of "pre-depression" sales contracts.
The properties least likely to suffer price deflation are the ones with lakefront/waterfront views. They will continue to sell at a premium because there are so few of them available.