ChitownLiving | Chicago Real Estate + Life

A client of mine just purchased a new construction condo in a mid-rise building in Chicago’s North Center community area.  Just next door, the developer is constructing an identical building to be delivered sometime in 2007.  Same location, views, floorplans, finishes, ammenities, etc.  I’m talking an identical twin.  Interesting to note however, that prices are quite a bit higher, about $10,000.  According to the developer, this is largely due to the increase in cost of building materials in the Chicago area. In the residential market, we often think of housing price increases in terms of appreciation, but often overlook the impact of the cost increases in building materials and services.  In Chicago, building material costs have increased 36% over the past 2 years.  Major materials such as copper, concrete, and steel have increased  16% in 2004, 8.7 percent in 2005, and are projected to rise about 8 percent this year. Question I have is, if housing prices are supposedly coming down, and the cost to build is on the increase, how many developers will be in serious trouble?  Hope they implemented aggressive material purchase hedging strategies. Post Based on Article By: Susan Diesenhouse Chicago Tribune Builders Draw Up New Budget (login required but registration is free)