Condo Mania In Chicago
As the housing sector has grown into it's late stage, the bubble grew into the condo market. Now it seems that everywhere, speculation is rampant. "How big is the boom? In 1990, Chicago had around 50,000 downtown housing units. Today, there are 85,000, a 70 percent increase, and more on the way."
"'We know well over 10,000 units that developers are trying to get started, get marketing for this year,' Gail Lissner said. 'We are certainly seeing a growing segment of buyers who are using the downtown base as their second home.'"
"A surge in investors, or speculators, who buy condos hoping to re-sell quickly for a fast profit, are warning signs of an overheated market. Experts agree that speculation is rising."
4 Comments:
Its been like this for at least 2 years where you can put 20% down with p&i taxes,insurance,and association fees you cannot even come close to breaking even on the majority of condos in the "happening areas". In all the buildings with preconstruction prices the prime units are gone before the first ad hits the paper and the crap ones languish till the building is complete and occupied. The south and west loop especially are burdened with lots of vacant space with more on the way. When the tree starts shaking its gonna be raining condos and all these "investors" are gonna learn a valuable lesson in real estate investment. Making the numbers work matters if they dont something is fundementally wrong. Appreciation dosent pay the bills in a down market and by the time you realize there is no quick money to be had its to late to get out you get trampled by the herd...
This condo market is really bad... and it's going to spill over into these "investors" primary residencies as well... remember, a lot of these guys ripped out their home equity to finance these deals... and some people did that several times... so it went something like... bought an investment property for 400K... did a cashout refi with it, because it appraised at 500K... took that 100K and bought another property... and so on...
I have had to due food deliveries to help make ends meet. I have been under employed for two years now. Here in Chicago lots of these new condos are being rented to swatters or the investor's kids are living there. Look when you keep delivering food to the same kids who don't have any real furnature in their condo they are in way over their heads or just passing through.
I bet the unoccupied or rental rate is 30-40%.
Denver investor you know the drill. The history of the worst condo debacle of all was Houston around 1984 which is still scraping the bottom 20 years later. I believe 2 bedroom condos fell from $50-70k to $10-20k that rented for $450-500 month in a declining interest rate environment. Way too many had been built during the oil boom of the late 70's and early 80's. Compare that bubble to what is going on today and it is going to be pretty scary.
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