Browsing all articles from January, 2018

By Dennis Rodkin

Crain’s Chicago Business

January 31, 2018

Photo by Little Realty This house in Naperville sold in May for $570,000. It's one of 14 homes in a subdivision built by M/I Homes.

Photo by Little Realty This house in Naperville sold in May for $570,000. It’s one of 14 homes in a subdivision built by M/I Homes.

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales of new homes fell last year in the Chicago area, the third down year out of the past four.

Developers sold 3,911 new houses, condos and townhouses in the 10-county Chicago area last year, down 4.4 percent from 2016, according to Tracy Cross & Associates, a Schaumburg-based real estate consulting firm that tracks new-home sales.

“It was another yawn of a year,” said Tracy Cross, head of the firm.

2018.01.31 New home sales fall in 2017-pic 2

The prior year’s increase of 9.4 percent came after two years in a row when the total was down.

Cross tracks sales at offerings of 10 homes or more. Builders in the city and many inner-ring suburbs often build on single lots or a small number of lots; those projects do not show up in the Cross study.

In the city, Cross shows a decline of nearly 15 percent, to 464 units. That’s largely because of a 2016 sales bulge created by a pack of early buyers in the Vista Residences, the condo portion of the 93-story Vista Tower under construction in Lakeshore East. No other development of Vista’s size came online in 2017 to carry the ball for the year, Cross said.

Suburban sales were down 2.9 percent last year, to 3,447 homes. Of those, more than 2,000 were sold by four large national builders (CalAtlantic, DR Horton/Cambridge, M/I Homes and Pulte Group), each with at least 400 sales during the year.

For those companies, all based outside Chicago, “400 or 500 sales is a number they’re going to be pleased with,” Cross said.

The post-recession high-water mark for local new-home sales remains 2013, with 4,415. Builders have sold fewer than 5,000 new Chicago-area homes in each of the past nine years. In the first seven years of the 21st century, builders sold more than 20,000 new homes each year and sometimes more than 30,000.

“It’s clear that nothing spectacular has been happening for builders in this market,” Cross said.

One clear reason for the slowdown is that jobs have been shifting back toward the city. McDonald’s, Kraft-Heinz, Beam Suntory and Archer Daniels Midland are among the corporations that have recently opened or are about to open new downtown headquarters.

“Building homes 30 miles out isn’t going to work when the jobs centers in the suburbs aren’t growing the way they were” in previous decades, Cross said.

While builders have been rushing to provide new homes in and near the city, they are unlikely to find land parcels big enough to sell at the scale of those halcyon years of the early 2000s, except when building high-rise residential buildings.