Simple supply and demand are having a strong impact in the South Loop.

A quick search in MRED for condos in the South Loop (I defined it as Congress to 18th, Dan Ryan to Lake Michigan) shows a huge number of condos on the market. If we look under the new, stricter maximum HUD loan of $380,000 we find:

• 391 active with an average price of $289,449, median price of $299,000.
• 144 pending* averaging $305,913 with a median price of $312,900.

For jumbo loans (over $380,ooo), the numbers are:

• 414 active The top price being asked is $3.2 million; the average is skewed by some very high end properties at $695,139; the median is a much more telling number at $539,500.
• 186 pending* The top pending price is $2.5 million with an average of $695,139 and a median of $539,500

Clouds Over South Michigan

I was surprised at the number of pending sales. (Pending is defined as when all contingencies?such as obtaining financing and inspecting the property?to the purchase have been met and there is nothing in the way of the closing). However, as many of us have seen, having a contingency-free deal no longer means the transaction will close. More and more often the deals don’t close due to financing “disappearing” or the buyers just not willing to go through with the deal and willing to lose their earnest money.

Despite all of these numbers, Appraisal Research Counselors is reporting that developers are planning to complete 2,147 more condos in the South Loop, which is 66% MORE than were completed in 2008.

But where is all of this leading us? Well, Crain’s Chicago Business is reporting that Miami developer, Lennar Corp., has sold only 43% of the condos in Library Tower, a 184-unit project at 520 S. State St.. This means that Lennar will likely not be able to pay off their construction loan that is due Jan. 11. The ramifications are huge in this type of situation, especially for those who have closed on a unit in the building and had planned to live in it.

So, where can we see things going in the South Loop? It’s pretty clear that we’re going to see a lot of bankruptcies, longer marketing times, and most importantly, much lower prices.

*Be aware that, amazingly and annoyingly, real estate agents very often do not understand what pending means and label their deals incorrectly as pending when they should be contingent.

Chicago Tribune's Median Home Price Heat Map

Today the Chicago Tribune released information on median home prices for Chicago. The data tracks home sales recorded in the last three months and was compiled for the Tribune by Record Information Services.

Their data, which is a bit hard to access, shows a few bright spots. According to their data, Calumet Heights is leading Chicago with a 39.16% increase in prices over last year. Other neighborhoods fairing well are Fuller Park (+32%), the Near South Side (+26.4%), the Near North Side (+22.7%), Washington Park (+15.2%), Oakland (+14.5%), New City (+10.8%), and Lincoln Square (+10.5%).

Neighborhoods that have seen price drops over the past year far exceed those that have held their own or increased prices. Some of the neighborhoods with the largest price drops include: Pullman (-51.9%), West Garfield Park (-45.1%), East Garfield Park (-34.6%), Belmont Cragin (-32.2%), Archer Heights, (-23.6%), and Dunning (-22.8%).

I could not find the supporting numbers that drove the heat map and I found a few things that were quite surprising. The neighborhoods that are on the extreme ends of the scale are next to each other: Pullman (-51.9%) and Calumet Heights (+39.6%).

Also, just a quick glance at the map shows you that the neighborhoods along Lake Michigan are doing the best, with the exception of the Loop which saw prices drop by 22.1%.