The sudden death of the American condo

[twister244]

Wouldn't some of these be driven by market fundamentals? With higher interest rates, high construction costs, and elevated mortgage rates, one would assume selling units right now would be a challenge as nobody wants to buy if they think there's a chance rates will go down at some point in the 1-3 year time frame.

I would expect other factors to be at play. Do we see this trend across other major downtown areas?

[SIGSEGV]

Originally Posted by Doady

Ah, if there is communal maintenance then it is condominium. My mom's townhouse is freehold, so landscaping and maintenance is her responsibility, no monthly maintenance fee. The street and sidewalks are all municipally owned as well. It's like a semi-detached house because her unit is an end unit. It's about 8m wide, 32m deep, if you don't count the munipical-owned part of the street (aka. the "boulevard"), which is around 25 x 100ft if I am not mistaken.

There is a lot of potential for increased density even without high rises. People talk about condo owners caring too much their neighbourhoods, but is it really good to have a neighbourhood full of people who don't care (i.e. renters)? Sometimes a balance is needed: condo vs. rental units, townhouses vs. apartments, high-rise vs. mid-rise vs. low-rise.

Chicago used to have 3.5 million people, now it has 2.7 million? I'm not sure many more high-rise residential buildings need to be built there.

The population numbers without accounting for household size are not super useful for determining housing demand(Chicago has more housing units than ever before).

[Steely Dan]

Originally Posted by SIGSEGV

The population numbers without accounting for household size are not super useful for determining housing demand(Chicago has more housing units than ever before).

Despite be reiterated hundreds of times on this forum, that seems to be one of the most ungraspable concepts for many.

Chicago has MORE households as of 2020 than it did in 1950.

Those households just have way fewer people on average because families (especially in big cities) don't have nearly as many kids as they used to, along with the rise in single person households.



The other major part of the equation here, of course, is that the geographic distribution of households within Chicago has gone through some pretty radical shifts over the past 70 years, with some neighborhoods seeing extreme drops in households, while the central area has exploded with new household growth.

"Tale of two cities" and all that shit.

[Doady]

Originally Posted by Steely Dan

Despite be reiterated hundreds of times on this forum, that seems to be one of the most ungraspable concepts for many.

Chicago has MORE households as of 2020 than it did in 1950.

Those households just have way fewer people on average because families (especially in big cities) don't have nearly as many kids as they used to, along with the rise in single person households.



The other part of the equation here, of course, is that the geographic distribution of households within Chicago has gone through some pretty radical shifts over the past 70 years, with some neighborhoods seeing extreme drops in households, while the central area has exploded with new household growth.

"Tale of two cities" and all that shit.

Umm... I am a human geography major, I am well aware of declining household size. This thread is about a high-rise building boom. A boom. As in a rapid increase of housing units. Not gradual increase in units or steady number of units, but a rapid increase. A boom.

And not just any boom, this thread is about a boom of a very particular type of housing: the high-rise condominium apartment. Not rental apartments, not condominium apartments in mid-rises and low-rises, not condominum or freehold townhouses, not semidetached or detached house, but strictly condominium apartments in high-rises. Even if there is very high demand for new housing, it may not in the form of high-rise condominium apartments.

I never said 25% of Chicago housing units are empty or that the amount of housing has declined by 25% or that 25% of housing in Chicago needs to be demolished. I did not even say that no more high-rise residential buildings need to be built, let alone no more mid-rise and low-rise residential. One high-rise by itself requires extremely high demand, let alone a high-rise boom. I was was questioning the amount of high-rises that need to be built, whether it is enough for a boom.

Maybe these are "ungraspable concepts" for you? Before you get angry and condescending and start talking down to people, maybe learn to actually read what other people say.

[isaidso]

It bears mentioning that household size can't keep heading down. A ton of households are at just 1-2 people already. This absolutely will affect demand for housing going forward. The City of Chicago may have been able to build, up till now, more residential despite overall population decline but that's going to come to a head unless the city starts seeing population increase. If it doesn't, new residential means the demolition of old residential.

And judging by the high-rise construction figures posted on this thread, Chicago hasn't experienced a high-rise construction boom. "2,500 condos have been developed downtown since 2015". The actual numbers were quite low so aren't we talking about a change from not very many being built to next to none?

[Steely Dan]

^^ @doady: thank you for your clarification.

What you initially wrote in your previous post was a woefully inarticulate and gross oversimplification.

[Steely Dan]

Originally Posted by isaidso

It bears mentioning that household size can't keep heading down.

Yes it can.

I believe we're at 2.37 right now.

The bottom is probably around 2.0.

So, still a ways to drop.

[isaidso]

Originally Posted by Steely Dan

Yes it can.

I believe we're at 2.37 right now.

The bottom is probably around 2.0.

So, still a ways to drop.

Alright, but at some point we're engaging in mathematical gymnastics are we not? This is a looming issue for Chicago. And assuming your response 2 posts up wasn't meant for me.

[Steely Dan]

Originally Posted by isaidso

Alright, but at some point we're engaging in mathematical gymnastics are we not?

Whenever average household size finally hits its basement in Chicago, then yes, the city will experience an actual decrease in the number of households unless population grows.

But we're not at that point yet.

And it very well could be decades away.


It's also important to remember that with all of this talk of Chicago's population loss, in two of the three most recent decades, the city's population actually increased.

So it's not really the same situation as some of the other rustbelt cities that just keep losing both population AND actual households decade after decade for the past 70 years. The growth/loss dynamics in Chicago are a bit more complex.

[Zapatan]

Originally Posted by Doady

Chicago used to have 3.5 million people, now it has 2.7 million? I'm not sure many more high-rise residential buildings need to be built there.

A lot of people moved to the suburbs.

Although I guess metro population matters less for skyscrapers since there aren't any in the burbs.



I keep reading about how interest rates are predicted to drop soon but I sure hope it actually happens.

Chicago could do so much more to stay relevant in the skyscraper world. Another Sears caliber building is the least it could do.

[Klippenstein]

Originally Posted by Zapatan

A lot of people moved to the suburbs.

Although I guess metro population matters less for skyscrapers since there aren't any in the burbs.

Well, this is a good point since many of the tall office buildings were built after white flight happened and Chicago's population started to shrink.

More recently though most high rises have been residential. In fact, they're probably a big reason Chicago has gained population. So saying that Chicago doesn't need to build high rise residential is misguided.

As somebody already mentioned, we went from building relatively few condos in high rises to none. They aren't the driving force in construction downtown. Having a lively downtown core with more of a big city feel than the vast majority of US cities is one of Chicago's biggest draws and so residential high rises will continue to be in demand into the foreseeable future, albeit to lesser extent than fast growth cities.

[ardecila]

Lots of dynamics going on here. Probably best to look by generation.

• Boomers (empty nesters) historically bought a lot of downtown condos, either downsizing from a suburban house for the upper middle class set or getting a pied-a-terre for the truly rich. But most of these folks have already made the moves they are gonna make for lifestyle, the next move will be to assisted living.
  
  
• GenX doesn't want to buy condos in Chicago, either because they have historically been a poor investment, or because they buy into the failing city narrative and don't want to be tied down to a sinking ship. Many of the leading doom-and-gloom voices about Chicago right now are GenXers.
  
  
• Older millennials don't want to buy condos in Chicago because many of them are in child-rearing age and they want the 3 S's of safety, schools, and space. They'd rather spend their money on an SFH in a suburb or outer neighborhood with good schools.
  
  
• GenZ and younger Millennials simply can't afford to take the plunge on any kind of homeownership, whether that's a house or a condo.

As always, there are plenty of exceptions to these rules but we're talking about overall trends. Chicago also massively overbuilt condos in the 2000s boom and demand never really caught up, so even a somewhat healthy demand for condos isn't reflected in the new construction figures. My wife and I own a condo in an inner neighborhood, and it's staggering how many of the other owners used to live here and now rent out their units after moving to the burbs or another city entirely. Our building opened in 2003 and a lot of owners are *still* underwater from what they originally paid 2 decades ago.

[iheartthed]

Originally Posted by isaidso

It bears mentioning that household size can't keep heading down. A ton of households are at just 1-2 people already. This absolutely will affect demand for housing going forward. The City of Chicago may have been able to build, up till now, more residential despite overall population decline but that's going to come to a head unless the city starts seeing population increase. If it doesn't, new residential means the demolition of old residential.

And judging by the high-rise construction figures posted on this thread, Chicago hasn't experienced a high-rise construction boom. "2,500 condos have been developed downtown since 2015". The actual numbers were quite low so aren't we talking about a change from not very many being built to next to none?

It's also possible that Chicago's population has declined because it isn't building enough housing. NYC's count of housing units has increased by almost 40% since 1950, which has translated into a roughly 12% population increase over the same period of time. Chicago's housing units has only increased by about 12%, which has probably not been enough to sustain the population.

[Steely Dan]

Sounds like the decline of condos in Chicago is part of a larger national trend.

The sudden death of the American condo
APRIL 9, 2024 BY SALIM FURTH

Condos are disappearing. They persist now mainly in pre-2010 buildings. Among multifamily homes built in the 2020s, just 1 in 25 is owner-occupied. What happened?

Full article: https://marketurbanism.com/2024/04/0...-time-passing/

Cool national maps of the collapse in the link.

[mhays]

Chicago's 2.37 is related to how many square miles the city contains. Maybe it's 2.0 in the inner 50-100 square miles. It's also propped up by being cheap enough that fewer people need roommates.

[Crawford]

Originally Posted by iheartthed

It's also possible that Chicago's population has declined because it isn't building enough housing.

I don't think this is likely. Chicago is extremely pro-development relative to other major U.S. cities.

[Steely Dan]

Originally Posted by mhays

It's also propped up by being cheap enough that fewer people need roommates.

Wouldn't that drive down average household size, rather than prop it up?

[Kngkyle]

I'd be open to buying a new construction downtown condo if they didn't all have $1,000+ monthly HOA fees for amenities I'd never use.

[Steely Dan]

Originally Posted by Crawford

I don't think this is likely. Chicago is extremely pro-development relative to other major U.S. cities.

Yeah, seeing how properties in Chicago do not appreciate anything remotely close to peer cities on the coasts, Chicago's supply demand/curve seems somewhat balanced.

[IrishIllini]

Originally Posted by Steely Dan

Wouldn't that drive down average household size, rather than prop it up?

Likely a statement suggesting construction can continue to happen because more people can afford to live in new(er) studios and one bedroom units. There could well be some truth to that, but Chicago's demographic trends are a mixed bag and have been for three+ decades at this point.