What is happening in the Chicago real estate market? I believe the last quarter of the year is the best time to purchase real estate as historically I have found sellers/builders who keep their homes on the market after November 20th are typically very anxious to unload their property.
In addition, the real estate market has the potential to come down even further after the results of the election. If the the election results have a real negative impact on the stock market, I think builders/sellers will be more motivated to convert to cash, therefore, if you are thinking of the optimum time to purchase property in the states, it may be the last quarter of 08 or the first quarter of 09. After the first few months of the year, the spring market will start and historically, I have found prices tend to be higher than during other parts of the year. Please keep in mind this usual trend may not hold up given the current unusual financial crisis of the United States and the world economy.
Although all assets are deflating, financial people I have recently spoken to think that inflation should be kicking in the latter part of 2009 or at least in 2010 which puts purchasers of real estate during 09 in a good position for appreciation of assets when inflation starts up.
Chicago condos have not been hit as badly as other parts of the country, however, new construction has been drastically curtailed. The Spire at $1,200 per square foot has been delayed because of financing and it is believed that it may not happen. Trump Tower has sold approximately 75% to 80% depending on who you speak with, but let’s keep in mind the last 20% of sales in a building is all his profit. The head of Rubloff Residential Properties indicated in one of our “trend meetings” there will no new major construction of residential buildings not already started in Chicago for at least 5 years, until the “overhang of inventory” shows a considerable decrease.
The Chicago single family market is an entire different situation. The inventory for $2 million to $3 million is considerable but they are primarily not in the Gold Coast or in Lincoln Park, they are in Lakeview and are usually on blocks 1200 to 1700 west. Note, Lakeview starts at 2800 north. If a property has been on the market a long time, the developer is more apt to deal.
The upper bracket developers have brought their properties down somewhat on listing sheets but not down $300,000 or $500,000. The builders naturally do not want to show all their cards and know buyers will want to negotiate off the prices shown on paper. They typically work on at least a 20% margin hence they are willing to hold on to the properties or rent them out.
There are situations where a builder really needs to sell. In that case you may be able to get the builder down in price considerably if you offer a fast closing coupled with no financial contingency, namely a cash offer.