Chicago Relocation
 

Empty No Longer: Chicagoland’s Vacant Lots Decline

November 1, 2012

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John D’Ambrogio

The supply of empty retail lots has fallen to the lowest level in three years according to Chicago Real Estate Daily. Depletion of Chicagoland vacant lots was predicted to take years so it comes as a pleasant surprise that the first half of 2012 found the “best” vacant lots (home-ready, in good school districts, close to transits) being grabbed fast.

Quarter two’s 17.1-year inventory is the lowest the inventory of vacant lots has been in years. Down from quarter one (19.1) and especially down from August 2011 (22.1). The deviation to Augusts’ rates could be yet another indicator that after this six-year slump the road to recovery, albeit slow, might actually be here.

Why now? Well one factor is the continuing story of 2012. Low mortgage rates for those who qualify and rising rental prices are driving people towards the housing market. Illinois Association of Realtors said August home sales were the highest the Chicago-area has seen in nearly five years – up 28.5 percent from August 2011. Desirable homes are going fast and thus have led some home buyers to build what they want.

Despite the surprise lot decline, the overall lot inventory still remains high. Majority of the buys and builds are in the suburbs given most suburban lots have a high ranking on the lot priority list. 60 percent of remaining vacant lots are in areas that are hard to sell – particularly in the city. Unfortunately vacant city lots are unlikely to sell any time soon due to the combination of their location ranking low on the priority scale and the cities’ highly competitive rental market. Basically, don’t expect a new condominium high rise anytime soon.

The road to recovery doesn’t just mean more home sales and lots sold; it means building sites, jobs for the construction, electric, plumbing, and landscaping. Some of those industries have thoroughly felt the impact of the recession and are equally as excited about declining vacant lots. In quarter two builders started work on 854 homes up 45 percent from the same time last year when only 589 were under construction. As mentioned above, this may be a, albeit, slow recovery, but  the bottom line is yet another aspect of the market is headed in the right direction.

 

Some comments from Baird & Warner Intern Elizabeth McGrath