Chicago Condo Sales are Down

The Chicago Tribune recently dug into Chicago area condo sales for August numbers and found that sales in the condo market are much slower than the single family home market.  Condo sales have crashed in several neighborhoods year over year:

• Rogers Park down 13.2%
• Edgewater down 32.9%
• Uptown down 27.1%
• Lakeview down 35.7%
• Lincoln Park down 12.9%
• Near North side down 13.9%
• Near West Side down 10.2%
• West Town down 29.5%
• Loop down 32.8%
• Near South side down 48.7%

Sales are being hampered by tighter credit and falling prices which puts pressure on other sellers to lower prices, which many are unwilling to do.

“Condo sales, until the beginning of this year, were the best part of our market,” said David Hanna, president of the Chicago Association of Realtors. “There aren’t any buyers for this stuff because the lending process is tortuous.”
Also, the condo market for move-up buyers is hampered by the high cost of jumbo mortgages of more than $417,000 and the higher down payments required for those loans. Foreclosures and short sales are bringing down comparable prices within buildings too.
“Prices are a disaster and it’s creating this vacuum in the market where everyone’s prices are pulled down,” Hanna said. “And it’s happening in the best buildings in the city.”

Some sellers whose property has been on the market for months are going to try and become landlords.

Phil Sammarco didn’t think it’d be so hard to sell his two-bedroom, two-bathroom condo in the city’s DePaul neighborhood when he put it on the market in March for $449,000. Now priced at $435,000, he has fielded — and rejected — a few low-ball offers and showed the unit to a lot of first-time buyers who have indicated they have a wealth of properties to look at.
Now he’s thinking of turning it into a rental instead of lowering the price again.
“You’ve got a lot of choices,” Sammarco said. “Right now nobody is really comfortable that the worst is behind us. If you don’t think the market is stable and you don’t think it’s going to be as good or better, why wouldn’t you rent?”

The article talks about how sales are up in September due to the looming deadline for the first time homebuyer tax credit.  But how many of those buyers are buying $400,000 and $500,000 condos?

Chicago single-family-home sales jump, but condos are still suffering [Chicago Tribune, Mary Ellen Podmolik, Sep 25, 2009]