The real estate boom that made Naperville one of the fastest-growing suburbs in the nation has slowed dramatically, according to city officials, developers and real estate brokers.
An oversupply of homes is stabilizing prices, making it tougher for homeowners to sell and hitting construction companies and other businesses, they said.
”The economy is really shaky,” said Naperville Mayor Margaret Price.
”That`s reflected in building, whether it be commercial, residential or whatever. Lending institutions are taking a much harder look at building and development.”
Building booms are also losing steam in suburbs such as Schaumburg, Buffalo Grove, Orland Park and Geneva, while developers scramble to fill millions of square feet of vacant office space along the East-West Tollway and other once-thriving commercial corridors.
In 1985, Naperville issued residential building permits for 4,055 single- family and multifamily units-1,400 more than Chicago, the nation`s third largest city.
But last year, Naperville issued 921 residential building permits-the lowest number since the recession of 1982, according to Bell Federal Savings & Loan Association, which keeps track.
This year, the suburb is growing only slightly faster. And people such as Jeff Walters, general manager of Becker Electric Services Inc. in Naperville, have been quick to see the difference.
Becker Electric went from a crew of four to 17 at the height of the building boom. Work orders flooded in year-round from throughout Du Page County.
But this July, during what should have been the high point of the construction season, things started to trickle off.
”No builders were calling. Nothing was going on,” Walters said.
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His business has picked up since then, but Becker Electric`s work crew stands at 10.
It will be a while before contractors return to the go-go days of the 1980s. Naperville has more than 1,700 vacant housing units-more than all the housing units in the tiny Cook County suburb of Indian Head Park. And the overbuilt housing market is affecting more than contractors.
In 1988, it took homes in Naperville an average of about 60 days to sell, according to Chris Read, a senior vice president at the John Greene real estate company. Today, she said, it takes 90 to 120 days.
The overbuilt housing market also is moderating home prices.
In the late 1980s, Naperville home prices were rising by 8 to 15 percent a year, Read said. Today, prices are ”stable,” she said.
Most new single-family detached houses in Naperville start around $180,000 to $200,000, developers and real estate brokers said. The market has slowed most dramatically, they said, in houses priced at $350,000 and up.
The end of a boom is tough to spot in a suburb where new gas stations and fast-food franchises still grow like weeds. But one trend is undeniable: The price of undeveloped land around Naperville is dropping sharply.
An acre of undeveloped land near the Will County portion of Naperville was bringing as much as $40,000 to $50,000 in 1988 and 1989, said Bob Schulz, vice president of the Oliver Hoffmann Corp., a land developer.
But now, Schulz said, prices have dropped to as low as $20,000 to $30,000 an acre-not good news for farmers who were holding out for $50,000.
”Those are the same individuals who will be keeping their farms as farms for a number of years,” Schulz said.
To be sure, no one is predicting that Naperville and suburbs like it are going from boom to bust. ”When the economy is back, it will pick up again,” said Max Dieber, research director for the Northeastern Illinois Planning Commission, the state-chartered planning body for the six-county metropolitan area.
Naperville began the 1980s with a population of 42,601. By 1990, according to preliminary figures from the U.S. Census Bureau, it had 82,340 residents. But rosy accounts of the last decade obscured the current slowdown not only in Naperville but in other suburbs as well.
Schaumburg issued more than 1,900 permits for new housing units in 1986. But through July of this year, it had issued only 315, according to Bell Federal.
North suburban Buffalo Grove issued permits for more than 1,300 housing units in 1986. As of July, it had issued permits for 414, according to Bell Federal.
The downturn in residential real estate is occurring at the same time as a major slowdown in the suburban office market, although the suburban retail and industrial markets remain relatively strong, with vacancy rates of about 10 percent, real estate brokers said.
More than 26 percent of speculative office space is vacant in the Northwest Tollway corridor, which stretches from Mt. Prospect to Elgin. In the East-West Tollway corridor, which runs from western Cook County to Aurora, the vacancy rate is 17.5 percent. That means there is 4.3 million square feet of office space-enough to fill six Oakbrook Terrace Towers-vacant along the East- West Tollway.
”Building has come to a screeching halt,” said Steve Kozarits, vice president of Coldwell Banker commercial real estate`s Oak Brook office.
The slowdown has hurt entrepreneurs like Richard DiSimoni, a 30-year-old, freshly minted graduate of Northwestern University Medical School. In July, he opened Eaglecrest Dental at the busy corner of Illinois Highway 59 and 75th Street and expected the world to rush in to get their molars and bicuspids cleaned.
Instead, business has been slow-so slow that one-third of DiSimoni`s 33 clients are family members and he`s considering working part-time at another dental office to make ends meet. Not even snob appeal (Eaglecrest combines the names of the nearby White Eagle and Cress Creek country clubs) has helped.
”I was kind of hoping and praying that it would be a little bit better,” DiSimoni said last week, sitting in his office, just over the Naperville border in Aurora. ”I`m a real hyper-type person. I have a real problem sitting around not doing anything.”
Jerome O`Connor, president of the Home Builders Association of Greater Chicago, blamed the slowdown on federal tax laws that have discouraged investment in multi-family housing. Other experts cited lenders` caution in the wake of the savings and loan debacle and overbuilt housing markets.
In addition, experts said, the pent-up demand for housing that followed the early 1980s recession added significantly to the number of housing starts in the middle of the decade in suburbs such as Naperville. And as the decade ended, other suburbs-such as Orland Park in southwest Cook County and Geneva in Kane County-began emerging as less-expensive alternatives to Naperville.
But even in those suburbs, the housing boom is leveling off.
In Orland Park, nearly 750 permits for new single-family and multi-family units were issued last year, according to Bell Federal. This year, 392 permits had been issued through July.
In Geneva, 330 permits for new residential construction were issued in 1989. Through July, the suburb had issued about 240 permits. But Geneva officials expect the final total to be about the same as last year.
”We`re not soaring upward,” said Jim Bricker, Geneva`s director of development.
The housing slump is not as steep as on the East Coast. Real estate agents also said there is a growing inventory of homes on the market in Chicago, especially on the city`s Near North Side.
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Also, the slowdown has a silver lining for Naperville, which has struggled to provide services to a population that often seemed to grow too fast too soon.
During the 1980s, the suburb`s roads grew congested with traffic, lawn-sprinkling bans had to be ordered during droughts, and citizens fumed when the suburb`s electrical plant went on the blink.
In addition, the boom forced Indian Prairie School Distict 204, which covers western Naperville and eastern Aurora, to purchase portable classrooms, build new elementary schools and start a construction program that will double the size of its high school by 1992.
”I`m definitely glad it`s slowing down,” said Cliff Walin, leader of a group of Will County residents who want to form a village of Wheatland to fend off Naperville`s southward push.
”It gives the school districts a chance to catch up with the tremendous influx of students without a raise in taxes.”