The rising condominium market is lifting many downtown condo owners, but residents of River North are riding the highest.
A recent survey of 65 large downtown condo buildings found that resale prices on a square-foot basis in the second half of 2013 were just 6.3 percent below their peak in 2008. Prices in River North came back the most, at just 5.1 percent below their 2007 peak, followed by the Gold Coast, where prices were 6.3 percent below their 2007 peak, according to the survey by Appraisal Research Counselors, a Chicago-based consulting firm.
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After plunging when the housing bubble burst, downtown condo prices have been rising over the past two years, driven by rising demand and falling supply. Resale prices at the buildings surveyed by Appraisal Research rose 9.3 percent in the second half of 2013 from the year earlier.
“I think we are making great headway,” Appraisal Research Vice President Gail Lissner said.
Appraisal Research’s survey covers more than 20,000 of the 70,000 or so condos in the greater downtown, an area bounded roughly by North Avenue, Cermak Road, Lake Michigan and Ashland Avenue. Nearly 1,300 condos in the area sold in the second half of 2013, up 8 percent from a year earlier and about the same as 2008.
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Condo prices sank after 2008 as developers wrapped up projects they began during the boom, swamping the market with thousands of units they couldn’t sell. But the glut is gone, supplanted by a shortage: Developers are sitting on just 498 unsold condos in downtown Chicago, down from more than 7,000 in 2007, according to Appraisal Research.
The shortage is acute north of the Chicago River, where the only new condos for sale are at the high end, in the Ritz-Carlton Residences and Trump International Hotel & Tower. The supply of existing downtown condos available for resale is down too, dropping 8 percent in January from year-ago levels.
The low inventory means fewer choices for buyers and more leverage for sellers.
“The arrow is definitely pointing up,” said Sam Manzello, an agent at @properties who is selling a two-bedroom units at ParkView Condominiums in Streeterville that’s listed for $859,000. “With less inventory on the market, it’s starting to stabilize.”
Also working in sellers’ favor is a drop in the amount of distressed property on the market. Distressed sales — either short sales or sales of lender-owned condos — accounted for 11 percent of downtown transactions last year, down from a peak of 27.9 percent in 2011, according to the Appraisal Research survey.
River North posted the biggest price gains last year, the survey shows. Condo prices there rose 17.6 percent on a per-square-foot basis in the second half of 2013 versus the year earlier. The South Loop had the second-largest gain, 16.1 percent, while prices in the Gold Coast rose the least, 2.1 percent.
Development, which ground to a halt after the bust, has picked up in the past year or so, but only on a small scale. No developer has launched a big downtown high-rise since 2007.
But the animal spirits are starting to stir as the market strengthens. Chicago-based DRW Holdings LLC is expected in the next week or so to start marketing condos in a 25-story, 40-unit tower at 1149-1167 N. State St. in the Gold Coast, and Chicago-based CMK Cos. plans to launch sales this quarter at a 15-story, 144-unit high-rise at 1345 S. Wabash Ave. in the South Loop, Ms. Lissner said.
“The stage is absolutely set for new development, and we’re starting to see that take place,” she said.