Sue Fox, @Properties. Direct 773.816.1788
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Condo prices have tumbled 10.4% nationwide in the last year, according to data just released by the National Assn. of Realtors. But the plunge was much worse in the Chicago area, where prices dove 24.1% in the first quarter compared to a year ago.
The region (Chicago-Naperville-Joliet, in terms of the realtor’s association) fared worse than almost every other metro area in the country. Only the Tampa and Sarasota regions in Florida and Barnstable Town, Mass., saw condo prices fall further.
No wonder it’s getting so difficult to sell a condo in Chicago. What was once an active market has become seized and sclerotic, with thousands of condos for sale that just sit and sit and sit. I’m now seeing this troublesome trend in desirable neighborhoods like Andersonville and Lincoln Square, as well as much of Edgewater, Uptown, and even parts of Lakeview. Chicago’s North side seems to be awash in condos, may of them recent rehabs or nicely restored vintage units, that languish on the market for months despite their appeal. For many condos, showings are scarce and open houses attract only a few people, even at the height of the spring market.
What is going on here? Are young people, who traditionally drove the market for first-time condo buyers, deciding that it’s simply better to rent? Or are so many of them unemployed or under-employed that they can’t qualify for a mortgage? There are definitely fewer first-time buyers in the market these days; according to the realtor’s association, first-time buyers purchased 32% of homes in the first quarter, down from 42% last year when a $8,000 tax credit was stimulating sales.
If first-time buyers sit on the sidelines, our market will become paralyzed. First-time buyers drive sales by buying at the lower end, which then frees up those sellers to go buy another home. But if people can’t sell their condos, most of them won’t be able to buy again. They will be stuck. And unfortunately, this year many Chicago sellers are discovering that is exactly where they are.
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