City Condo Sales Have Come Back, And 2021 May Be Even Better
The coronavirus pandemic may have crushed the home sales market last spring, but it is showing signs of life this winter, and that could mean 2021 will be a big year.
“We have more people looking at real estate online and in person than we ever have,” Baird & Warner President of Residential Sales Laura Ellis said. “When properties come on the market, it’s not unusual to see six, nine, 10, a dozen offers.”
And the increased activity isn't just in the suburbs, where some city residents fled during the pandemic, seeking more space and less congested environments. The city’s condo market is also seeing more potential buyers check out what is on offer, according to Ellis, although not as many as in some outlying areas.
“We’re not at all in a depreciating market. It’s just that the condo market is not appreciating at the same rate as single-family homes,” she said.
According to a report from the Chicago Association of Realtors, 1,684 homes were sold in January, including condos and single-family. That’s a 15.2% increase over last January. The activity is pushing up prices. The median sales price of a Chicago home in January was $310K, a 15.9% jump over January 2020.
Brokers say February is looking good as well.
“A lot of people are coming back into the market, and everyone is super busy,” Wolf Development Strategies CEO David Wolf said.
His firm launched sales last week for The Reed, Lendlease’s new residential tower at 234 West Polk St. in its Southbank development in Printers Row. Although it usually takes a few weeks to get the first buyers all the way through the sales process, Wolf sold three units in the first week. That would be a robust pace even if there weren't an ongoing pandemic.
“Three units a week would be phenomenal,” Wolf said.
The initial shock of COVID, coupled with the episodes of civil unrest in late spring, temporarily derailed the home sales market in Chicago, Wolf said. In May 2020, 1,666 homes were sold in Chicago, a 43.6% decline from May 2019, according to CAR.
High-rises in the downtown core were the hardest hit, Wolf said, and sales in that segment remained slow in the summer and fall. But elsewhere, sales recovered, especially in mid-rises outside downtown, and by October, home sales were coming fast. That month, 2,541 sales were completed, a 21.9% increase over the previous October.
“While every neighborhood is reacting differently to the pandemic, overall, single family homes continue to be popular with homebuyers and condos are also keeping pace,” Chicago Association of Realtors President Nykea Pippion McGriff said in a November press release.
Now downtown is starting to return to form too.
“In general, we’re starting to see people tiptoe back into the downtown condo market,” @properties Executive Vice President Cyndy Salgado said.
Most of the people touring homes are looking for units priced less than $1M, she said. Buyers above that line are more likely to be waiting out the pandemic at second homes in the Sun Belt and have the luxury of waiting. But for those below, they are likely looking to buy after major life events, including getting married, divorced or having to move when an apartment lease expires.
“They’ve got decisions to make that are more need-driven,” she said. “They were the ones out there looking during COVID, and they’re out there looking right now.”
Wolf’s firm handles sales at 1400 West Monroe St., JK Equities’ 42-unit project in the West Loop. Sales opened in 2019, and the pandemic hasn’t slowed things down.
“We sold more units from March until today than in the previous 12 months,” Wolf said.
But the pandemic has had an impact on what kind of units attract the most interest, Salgado said. Like suburban homebuyers, condo buyers in the city want more space that allows them to work at home and outdoor amenities such as balconies and rooftop terraces.
@Properties handles sales for Alcove Wicker Park, a development at 1648 West Division St. in Wicker Park with 42 condos and 12 townhomes. The condo units, priced at about $600K, include oversized balconies, and the development has a rooftop terrace. That makes it desirable for many present-day buyers, even during the city’s historic stretch of consecutive days of snowfall, according to Salgado.
“It really hits the sweet spot, and we’ve sold four units in just the past two or three weeks despite this crazy weather,” she said.
Wolf said the solid numbers in Chicago for January, as well as the fact that so many homes are selling during such a terrible stretch of winter weather, makes him optimistic about the rest of the year, especially if the city’s restaurants, museums and music venues can reopen as the number of vaccines administered rises. The only factor holding the market back right now is low inventory. The multifamily market was so strong for so many years that developers concentrated on creating apartments, leaving buyers few options.
“There is a lot of demand for condos in the $700K to $800K range, but what’s out there? Nothing.”
The supply of inventory in January was 3.4 months, a 2.9% decrease from January 2020, according to CAR.
Salgado also said she expects the more affluent buyers will come back to the market later this year, after they return from their winter homes. Her firm is handling sales for Superior House at 366 West Superior St., a 33-unit building on the Near North Side. The luxury building has a few units left at about $1.5M, she said.
“We have a couple of hot prospects, and we expect to receive some offers soon.”