Chicago’s New Home Construction — Highest In Years
Over the last year in the Chicagoland area, new home construction has been at its highest in upwards of a decade. Below is an overview of development trends and their implications.
According to a recently published study, over the last twelve months in twelve counties comprising the Chicagoland area, there were a total of 6,250 new units that commenced construction, a significant 5.6% annual increase.
72% of all new construction began in four counties: Cook, Kane, and Will (Illinois) and Lake (Indiana), with Cook County possessing five of the fifteen top communities of new production. Some of the most prevalent areas of development include the Gold Coast (State and Walton), River North (9 W. Erie), and the South Loop (827 Wells Street Complex). Conversely, construction declined in twelve counties, with largest dips in Will and McKenry Counties. Slightly outlying Chicagoland areas such as Boon, DeKalb, and Winnebago Counties are beginning, however, to see a gradual increase in new home construction.
New construction is undoubtedly a result of post-recession expansion to new communities in the Chicagoland area. Interestingly, the market indicates a surplus of vacant lots, but lots are typically scarce in the most desirable neighborhoods, driving developers and builders to competitively seek the best opportunities within them, in turn driving the price of land up considerably.
New constructions in the Chicagoland housing market will likely plateau over the next year on account of scarcity of lots in the most sought after areas. Metrostudy’s Midwest director Mark Gianopulous explains that “Builders in this market will be challenged to bring new housing units to market under $300k as construction costs, land and lot process, and development costs continue to increase.” That said, low interest rates and energy costs continue to motivate buyers overall, including in the realm of new construction — so 2017 still remains a potentially fruitful for year for new home construction in the Chicagoland area.