Welcome to condo country.
Whether in the tightly packed neighborhoods of Chicago’s North Side, the redeveloping downtowns of suburbs on commuter rail lines or in the exurban corn fields now sprouting homes, condominiums have become a sizable part of the housing market.
Single-family homes — houses — aren’t in danger of going away. In the suburbs, they still dominate, especially in the resale market. But in new construction, so-called attached housing — which includes town homes as well as condos — the area has “almost reached parity,” says housing consultant Tracy Cross, president of Tracy Cross and Associates, Schaumburg.
“Chicago is unlike any other major metropolitan area with the exception of Washington, D.C., in that it has almost absolute parity of production of detached and attached housing,” he said. D.C.’s new-construction market is about 45 percent attached housing, he added.
In the resale market, the National Association of Realtors reported that second-quarter sales of condos and cooperative apartments totaled nearly 1 million units nationwide.
Condo and co-op sales accounted for 9.6 percent of existing home sales in 1993. In 2003, condos commanded a 12.8 percent market share — a 33.3 percent rise in the portion of sales over the last decade, according to the NAR’s “Real Estate Outlook” publication for August.
But, according to Illinois Association of Realtors’ figures, condos accounted for 38.7 percent of all sales in the Chicago metro area (Cook, DuPage, Lake, McHenry, Kane, Will, Kendall and Grundy Counties) in the second quarter. That’s up 17.5 percent from a year earlier. In comparison, sales of existing single-family homes in metro Chicago were up 10.2 percent in the period, according to the Illinois Realtors’ data.
Condo prices in metro Chicago rose 7.5 percent in the second quarter, to a median $194,200 from $180,600 in the second quarter of 2003. House prices, meanwhile, rose 7.9 percent, to $245,200 from $227,200, the Realtors’ reported.
And lest you think condo sales are a city phenomenon, 58 percent of condo sales were in the suburbs in the second quarter.
What’s driving the market? Demographics, the Realtors say.
One of the population segments influencing the condo market is first-time buyers.
“Within any given area, condominiums typically cost less than houses. First-time home buyers typically have household incomes less than repeat buyers, so condos are an affordable option for them,” says a report in “Real Estate Outlook.”
“Another group helping to fuel condo sales is Baby Boomers,” the publication says. “Condos typically provide a higher-amenity/lower-maintenance lifestyle — an attractive choice for Baby Boomers approaching and/or planning for retirement.”
Cross says the market for new-construction condos, especially in the suburbs, comes from those who can’t afford single-family homes and people who are buying a lifestyle. Twenty percent of new-construction condo buyers in the suburbs are downsizing from larger homes, he says, and about 30 to 40 percent in the city.
The most popular generic form of condominium in suburbia is a courtyard town home configuration done in condo ownership form, with a rear-loading garage in a 2 1/2 story building, Cross says.
But, the prime force behind the rise in building of attached housing in the suburbs is minimum lot size for detached houses, Cross says.
The typical minimum requirement in the Chicago area is 8,400 square feet, with some new developments facing minimums above 10,000 and sometimes 12,000 square feet, he says.
In 95 percent of all other metropolitan areas, the established minimum is 6,000 square feet, Cross says.
The more land required for a single-family home, the higher the cost of the home. The price of attached housing here is 15 to 20 percent under that for single-family, he adds.
– Today’s edition of Real Estate is focused on condominiums. In addition to our cover stories, Marilyn Kennedy Melia’s Financing feature talks about condominium mortgages; condo attorney Mark Pearlstein writes about a smoking ban in common areas; and Jane Adler’s 55 Plus column describes the difference between age-restricted and age-targeted housing.
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Wayne Faulkner is editor of Real Estate. You may contact him at wfaulkner@tribune.com, or write to him at Chicago Tribune, Real Estate section, 435 N. Michigan Ave., Chicago, IL 60611.
