Glut Of Higher Priced Condos/ Townhomes Developing In Chicago
In my monthly update on Monday I pointed out how we continue to see a significant divergence between the inventory of attached homes vs. the inventory of detached homes. Whereas we consistently had lower attached home inventory than detached home inventory for years that pattern has recently flipped and for the month of September attached home inventory reached a recent high of 4.7 months of supply vs. a 4.0 month supply of detached homes.
However, at a gut level it didn’t seem like the inventory of average condos had risen that much so I decided to break the inventory trend down by price point. The result is shown in the graph below and sure enough the rise in inventory is pretty much driven by the higher price points. So, for instance, the inventory of condos and townhomes below $500K hasn’t really risen that much while the inventory of condos and townhomes between $500 K and $1 MM just hit a recent high of a 6.3 month supply for this time of year compared to a low of a 4.1 month supply in September 2013. The picture is even gloomier for condos priced above $1 MM, which dropped to an 8.5 month supply in September of 2013 only to rise to a whopping 13.5 month supply last month. From the history it’s clear that condos above $1 MM are much more sensitive to Chicago’s real estate market conditions.
As you might expect the time it takes to sell a condo roughly parallels these inventory trends. In September the average condo that sold above $1 MM took 158 days to go under contract. That compares to only 54 days for condos under $200 K. It’s just not a good time to be trying to unload higher priced condos.
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Gary Lucido is the President of Lucid Realty, the Chicago area’s full service real estate brokerage that offers home buyer rebates and discount commissions. If you want to keep up to date on the Chicago real estate market or get an insider’s view of the seamy underbelly of the real estate industry you can Subscribe to Getting Real by Email using the form below. Please be sure to verify your email address when you receive the verification notice.