New home sales fall in Chicago

“This is very much consistent with what we expected,” said Erik Doersching, CEO of Tracy Cross. Doersching told Crain’s several times in the past two years that because little supply was in the pipeline when the housing boom hit, and it takes a few years to get a product rolling, builders would likely not be able to capitalize on the boom as much as sellers of existing homes would.

Earlier this month, Doersching said the housing boom “was more like a blip” for local homebuilders.

For Chicago-area homebuilders, the peak during the recent boom was first-quarter 2021, when 1,914 new homes sold. Soon after that, existing inventory began to be depleted.

Doersching says the experience of one national builder, D.R. Horton, proves that out. Horton is one of a few builders to have opened a new subdivision during the boom, and it led to a sales spurt.

The Texas-based firm launched sales at Stonewater in late summer 2021 and as a result has sold about 100 more houses this year than last, according to Tracy Cross data.

Stonewater is a development of detached houses priced in the $310,000 range and attached townhouses priced in the $250,000 range. It’s in Wonder Lake, about 58 miles northwest of the city in McHenry County. 

“We don’t have others” opening new developments, Doersching said. The reasons include a fallow decade of sales following the housing bust of 2007; flat population growth keeping demand for homes down; and the shift of job centers back toward the city from the outlying areas where big new developments can go.

D.R. Horton declined to provide an executive to comment for this story. 

D.R. Horton is typical of another aspect of the local homebuilding industry: It’s one of five big national firms that dominate new home sales here. Year to date at the end of the third quarter, other top-selling homebuilders in the area include Florida-based Lennar, with 593 sales, and Virginia-based Ryan, with 230.

Of 2,682 new Chicago-area homes sold in the first three quarters of 2022, those five companies sold just less than 75%.

The top-selling Illinois-based builder this year is Silverthorne, based in Hampshire, about 56 miles northwest of downtown Chicago. Silverthorne sold 37 homes in the first three quarters of 2022. That’s about 1.4% of the total homes sold.

The gap between local companies selling a maximum of 37 homes and nationals selling 230 or more, Doersching said, will make it difficult for locally owned firms to regain the dominance they had in the early 2000s.

“It’s not easy to mount a resurgence against these companies when you can’t do things competitively like mass purchasing of appliances to keep prices down,” Doersching said. 

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2022-11-01 08:05:27

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