Too Many Condos!

Glut persists at some downtown projects | Residential News | Crain's Chicago Business

There are currently 7,525 condos currently on the market on the northside of Chicago. That is an astounding number! Who are the buyers that are going to absorb these properties?

This is one of the current struggles condo owners face today. There is so much to choose from in every area of the city. What I would like to address today is whether to buy a new construction condo or a pre-owned condo and the pro's and con's of each.

Buying New Construction

Buying a new construction condo can be very exciting. Normally when visiting a new construction development you'll start your tour in a model which will showcase the finishes you can choose from. This normally includes a cabinet choice, hardwood floor color, and countertop choice. The developer will also offer buyers optional "upgrades" to the unit. These are things like a backsplash choice, higher end granite for your countertops, a possible appliance package upgrade and paint choices for the walls. These will always carry an additional cost, however, your agent can outline them in the contract and try to get as many included in the price as possible.

There are still quite a few unsold developments in the city. The problem I see with buying in a new construction development is that as an agent, I don't know where the developer's bottom is. For example, if you purchase one of the first units in a new development, how do you know that the prices of the remaining units will not fall drastically below your purchase price? It has been taking years for these large condo projects to sell out. If you bought a condo in a new building in 2008 and there are still units left today, you will find that today's buyers will pay significantly less than what you paid for the same product.

Another concern is the developer's financial stability. With an ever increasing short-sale and foreclosure market, many developers are in default. If this is the case, it will probably be very difficult to get a loan on a property like this.

My best advice in today's new construction condo market is to buy a unit in a building where there are only a handful of units remaining. A condo association will have already been established and the developer is ready to be done with the project.

If you do decide to move forward with a purchase in a new construction condo building where is less than 75% of the units sold, please beware that there could be further "price improvements" in order to entice new buyers.

Buying a Resale Condo

More often in today's market, buyers will purchase a "resale" condo. This just means that someone already owns the unit other than a developer. The con's here in comparison to a new construction unit is that you don't have any control over choosing finishes. You also will have some normal wear and tear in the unit as well as older appliances and mechanicals. The pro is that you will most likely pay less than what the owner paid if he/she purchased the property around 2005-2007. You will also be buying into a building where the condo association has been established and a lot of the kinks have been worked out.

Unfortunately, back in the heyday of condo developments, developers cut a lot of corners in some main areas. So, if the developer has been out of the picture for a while, the condo association may have already addressed any problems with the building.


In summary, while it may be safer to purchase a condo unit that has already been previously owned, you will be the one living in the home. If you fall in love with a certain property move on it if you think you are getting a good deal in today's market. No one can predict the future.

Good luck out there!