That is right, inventory for new construction condos in downtown Chicago has had a dramatic decline from last year. According to Appraisal Research downtown developers had only 2,031 unsold condos at the end of the first quarter of this year. Number still seem high? Well compare it with the number from the same time last year; 4,182.
Due to the high demand of rentals many developers have changed their projects from condos to apartments. Also, many investor pools have bought blocks of condos from developers who are receiving pressure for their banks to come due on their construction loans. What does this mean for the condo market? Continued stabilization in prices.
Real Estate prices are mostly controlled by Supply & Demand. When there is over supply in the market, those who really need to sell lower their prices and this pulls the market downward. We cannot see stabilization in prices, until inventory levels increase, or demand increases to meet the levels of supply. Since Chicago is not seeing a mass influx of thousands of people a week typical buyer demand cannot be expected to soak up all the extra supply. Ironically, the intensified rental market has soaked up much of the supply, much more than many developers expected.
While there is still more inventory on the market than developers would like, it is a positive sign for those developers still holding many empty units.