I'm sure you've noticed the numerous construction cranes dotting the Chicago skyline over the last few years. Well, according to a December Crain's story Chicago actually hit a record of 60 cranes operating in November. But according to that same story construction starts actually declined in 2017 for the first time in 7 years. So it looks like the Chicago construction boom may finally be over.
Well, not exactly. Check out their graph below. I'm focusing on the residential portion and, although the numbers for 2017 and 2018 are lower than 2016, they are still higher than all the years from 2008 - 2015.
Nevertheless, thank God that new residential construction is slowing down. I've been concerned about a potential glut in the market and Crain's has been reporting on rising apartment vacancies and landlords offering more incentives to tenants. On the other hand that's good for buyers and renters.
The other interesting tidbit is that construction costs in Chicago were on track to rise 4.9% from 2016 to 2017, which I see as a good thing for home prices in general. If new construction costs are rising at that rate then that should, in theory, put similar pressure on existing home price increases since new construction competes with the existing housing stock. Keep in mind that Chicago home prices have only been rising at about 3.6% per year, which is pretty anemic compared to the rest of the nation. So we can use all the help we can get from rising construction costs.
Gary Lucido is the President of Lucid Realty, the Chicago area's full service discount real estate brokerage. If you want to keep up to date on the Chicago real estate market, get an insider's view of the seamy underbelly of the real estate industry, or you just think he's the next Kurt Vonnegut you can Subscribe to Getting Real by Email using the form below. Please be sure to verify your email address when you receive the verification notice.