The condo sales numbers coming out of Chicago are horrific. During the first quarter, sales of downtown condos dived 46 percent compared to the same period last year. If Chicago has another quarter like this, there won't be any sales at all.

Condos always were the most vulnerable sector of the housing market. They are particularly prone to speculative behavior. When the so-called investors took fright and disappeared, they left a massive, largely unsellable inventory behind.

Where does the Chicago condo market go from here? If the market is going to clear, prices have to fall. It is as simple and as ugly as that.

(Chicago Business News) The slide in new downtown condominium sales accelerated in the first quarter, prompting some developers to think twice about launching big new projects. Sales of new condos and townhomes in the downtown Chicago market plummeted 46% in the first quarter to 1,207 units, the lowest first-quarter total in four years. The number of new units proposed during the first quarter also fell sharply, but fears of an oversupply persist.

Buyers signed contracts for 1,207 downtown condos and townhomes in the quarter, a 46% plunge from 2,243 in the year-earlier period, according to a report by Appraisal Research Counselors, a Chicago-based real estate consulting firm. It was the seventh straight quarter of declining sales and the biggest quarterly percentage drop so far.