Over the past five years, seven high-rise residential towers have gone up at Lakeshore East, the 28-acre development west of Lake Shore Drive between Randolph Street and Wacker Drive. Until now, the development has seemed a little bereft of life, even though those seven high-rises encircle a six-acre park filled with fountains, lawns, and play areas for children and dogs. But all that is about to change now that construction has begun on the so-called Parkhomes: 24 single-family homes, some lined up like townhouses and some stacked atop one another. They are the first of at least 45 street-level homes to be built around the park, says James Loewenberg, the co-CEO of the Magellan Development Group.
Though a latter stage of the project, these new homes aren’t late-comers, Loewenberg says, but an integral element of Lakeshore East. Without them, he says, the whole development would “have a canyon-like effect that would put people off it. So much of the focus of Lakeshore East has been high-rises, but we need to have something at human scale around the edge of the park.” Plans for a school north of the first Parkhomes are still in the works, Loewenberg says, but construction on a planned Treasure Island grocery to their west may begin at the end of summer.
Lakeshore East’s master plan calls for some 4,900 housing units, of which 1,436 have been sold so far, says Tricia Van Horn, Magellan’s marketing vice president. The first Parkhomes, priced between $1.7 million and $2.5 million, are being built on a slim L-shaped parcel in the southeast corner of the development. They will all face the park and have a Randolph Street high-rise as a backdrop. The first Parkhome houses were supposed to be delivered by fall 2006, but construction did not begin until late May 2007. In a slowing real-estate market, introducing 24 new high-end homes may seem risky, but Loewenberg professes to be unconcerned. “We’ve already sold eight or nine of them,” he says.
While there is no shortage of jobs in the northwest suburbs, the real-estate boom of the past decade has made it tough for many of the low- and middle-income people who hold those jobs to live within a reasonable commute of their place of employment. According to the Metropolitan Planning Council (MPC), workers who earn less than $50,000 annually make up 70 percent of the work force in five northwest suburbs. Unfortunately, only 40 percent of the housing stock in those communities lies within the price range of those employees.
On May 18th, the mayors of Arlington Heights, Buffalo Grove, Mount Prospect, Palatine, and Rolling Meadows addressed this problem at a breakfast at Arlington Park, where they discussed the benefits of employer-assisted housing (EAH) with about two dozen local employers. (The breakfast was co-hosted by Charter One Bank, which has a sizable work-force housing program of its own.) “You can’t separate out jobs, housing, and traffic congestion,” said Arlene Mulder, the mayor of Arlington Heights. “They all go together.”
Most often, a company’s EAH fund helps employees with the down payment on a home in the form of a forgivable loan (under the condition that the employee stays with the company for five years). Since 2000, 60 employers in Illinois have helped more than 1,000 employees buy homes, according to the MPC. The employer gets a state tax write-off on half of the amount it puts into an EAH; based on the experience of companies that have participated in the program, the savings realized by the company in the diminished cost of employee turnover often makes up the difference.
MarySue Barrett, MPC’s president, explained that the plans have worked well for “place-based” institutions such as the Chicago Public Schools, the city of Evanston, and the University of Chicago. It’s an innovative solution to the increasing problem of jobs landing in one part of the region and affordable housing in another. Illinois has been a national leader in EAH plans, thanks in large part to the MPC’s efforts. As Mayor Mulder told the assembled employers: “You will benefit within your heart and soul if you can find a way to help. The payback will come.”
For more information about EAH, go to www.reachillinois.org (REACH Illinois—Regional Employer-Assisted Collaboration for Housing—is a partnership between the MPC, Housing Action Illinois, and other groups).
The primary home-selling season is in full swing, and the hot topic is “right-pricing”—as in, is your home priced right to sell? That has become a crucial question in this softening home market, where sellers must tune their expectations properly. They can’t ask for the moon, as they might have a few years ago, but they don’t want to lowball their homes either. With that in mind, here are some tips from Chicago-area real-estate agents on how to know if your home is right-priced:
• “When a listing is put for sale, if excitement is not generated—if there’s a lull in showings or if there aren’t repeat showings—most likely the price is the culprit. As a seller, you will recognize that the price is right when you start to receive second showings, or when real-estate agents are interested in showing the property” to their buying clients. –Linda Feinstein, the broker-owner of ERA Jensen & Feinstein Realtors, Hinsdale
• “Your best shot at getting the price you want is in your first ten days on the market. After that people lose interest; they love new [listings]. So if you’re priced right, you will sell it quickly, even in this market. If after a month you’re not getting a lot of showings or any second showings, it’s time to start thinking about lowering your price.” –Robyn Brooks of Prudential Preferred Properties on Michigan Avenue, Chicago
• “Three or four showings a week is healthy. If you aren’t getting that many, then you’re in trouble.” —Anthony Rouches of @Properties on Fulton Street, Chicago
• “Look at everything else that’s on the market in your price range and be honest with yourself about what they have and don’t have compared to yours. The price might be substantially less than you expected a year to 18 months ago, when people had a much higher level of confidence and almost cockiness about what their properties were worth.” –Jeff Matheson of Baird & Warner, Gurnee
• “If ten others have sold in your price range in the past thirty days and yours hasn’t, then the market thinks you’re over-priced.”—Jack Ehlert of John Green, Realtor, Naperville
At first glance, the news was disturbing—reports earlier this week that downtown condo sales had nose-dived by 46 percent in the first quarter of 2007. But contrary to those early reports, the downtown condo market has not stalled, only slowed.
According to Gail Lissner of the Appraisal Research Counselors—the local real-estate consultants that provided the data for this latest round of news—sales did drop by 46 percent, but only when compared with the first quarter of 2006. But the market of a year ago differs considerably from today’s. The more appropriate comparison, Lissner suggests, is to the two quarters immediately prior to first quarter 2007—periods when the new, slower pace of sales prevailed. With the more recent figures in mind, the recent sales report “wasn’t an improvement, but it wasn’t a decline,” says Lissner. “It leveled off.” The number of units sold in the first quarter was approximately equal to the number of new units that came on the market, she notes. Which is to say, the logjam of new condos didn’t clear, but it didn’t get any more crowded, either.
By one measure, the condo market even showed slight signs of improvement in the last quarter. Because enormous numbers of new condos came on the market in 2006, Lissner points out, the number of finished but unsold condos kept rising throughout the year. “That’s stabilized now,” she says, “and that’s a positive feature.” Most of the unsold inventory Appraisal Research is tracking now, Lissner explains, is proposed condos still on the drawing boards; that is, they are not yet under construction. Some of those units might be postponed indefinitely, easing the logjam even more by providing time for the market to absorb what’s already been built.
In Chicago’s June cover story about the South Loop, Appraisal Research noted that 45.6 percent of the condos sold in downtown Chicago in 2006 were in the South Loop. The latest figures show that the neighborhood continued to lead in sales. About 47 percent of all condos sold in the downtown area in the first quarter of 2007 were in the South Loop, according to the company’s data. “There is still a very strong indication of demand for South Loop condos,” Lissner says.
If all goes as expected at today’s Chicago City Council meeting, the city will enact legislation to better ensure that people with middle and modest incomes can afford to buy homes in the city. It’s the latest step—and a significant one—in a five-year campaign to stem the loss of affordable housing as the city welcomes a wave of new high-end homes. If passed—as is generally expected—the proposal will tighten up the rules for developers and homebuilders; according to Jack Markowski, Chicago’s housing commissioner, it should result in about 1,000 new affordable housing units being built each year.
The proposal, which Mayor Daley supports, will require builders of most new multiple-unit housing to set aside at least ten percent of their units for people whose household incomes are at or below the local median household income. That group includes teachers, police officers, and others whose incomes effectively exclude them from buying into the city’s luxurious new high-rises.
Other programs the city has set up over the past several years—such as the Chicago Partnership for Affordable Neighborhoods (CPAN)—have been largely voluntary. For instance, developers can currently get help with zoning variances and higher density in return for including affordable housing. That means that each developer can essentially negotiate individual terms with the city. If this latest proposal passes, “you will have a level playing field,” says Kevin Jackson, the head of the Chicago Rehab Network, an organization that has been active in the push for affordable housing. “Everybody is going to have the same standards, and everybody is going to have to work by them. That’s a good public policy move.”
At least one local developer agrees. “I’ve been saying for years that if everybody has the same obligation, that’s a great idea,” says Phil Mappa, whose MR Properties relied on the CPAN program to get density allowances in return for a set-aside of more than 20 percent of the units in one West Loop project. “It’s not unreasonable to ask that everyone contribute equally. The need for housing in the city for the person making $40,000 to $70,000 is huge.”
Mappa notes that, at something between $65,000 and $75,000, the city’s median household income “covers about 90 percent of the city workers. You don’t want to push them all out to the fringes of the city, to the only neighborhoods they can still afford.”
Markowski says that, since 1989, city hall has “invested nearly $4 billion to support 125,000 [affordable] housing units in the city.” That is a considerable addition—and it includes both rental and for-sale units—but it’s not enough to plug the gap. A recent study by the University of Illinois at Chicago and the Rehab Network indicated that there are 120,000 households in northern Illinois (many of them renters) that could not afford to buy housing at the going rate.
In the past decade, formerly frumpy downtown Des Plaines has undergone a transformation into a lively place dotted with new restaurants and stores, a fantastic central library, and, most noticeable of all, thick clusters of new, mid-rise condo buildings. Standing at the center of town—at Metropolitan Square near the Metra station—you can look southeast along Miner Street and see five of them lined up. Turn in any other direction and you will spot more. These new buildings have done great things for Des Plaines, bringing foot traffic into the nicely revivified downtown and property taxes into municipal coffers.
City building officials say they have no accurate count of how many new condos have been built over the past decade in and near the downtown area, though they clearly number in the hundreds. And one local real-estate agent has detected a negative impact. Mary Wright, a Keller Williams agent in neighboring Park Ridge, crunched some data from the Multiple Listing Service of Northern Illinois (MLS) and found that “used” (that is, older) condos in Des Plaines dropped in price during the first quarter of 2007 when compared to the same time last year. One-bedroom, one-bath condos sold for 4 percent less; two-bedroom, one-bath condos for 7.8 percent less; and two-bedroom, two-bath condos for 1.9 percent less. (Not enough three-bedroom units sold to deliver reliable numbers.)
“There is so much new inventory to choose from that buyers think they don’t have to look at used condos,” Wright says. Although prices are higher for the new units, they generally come with new appliances, bigger rooms, new hardwood floors and granite counter tops—“all those perks that people want now,” Wright says. (Because most new condo sales are not reported to the MLS, it is difficult to tell how new-condo sales are faring compared with a year ago.)
Wright does not attribute the price drops on used condos to a softening real-estate market, in large part because the same set of data for four neighboring towns—Arlington Heights, Park Ridge, Mount Prospect, and Palatine—showed a mix of increases and decreases in both sales volume and prices. Only in Des Plaines was the drop so pronounced—and it’s the one suburb that appears to have the biggest crop of new condos.
Last week, two real-estate projects in the Chicago tradition of “make no little plans” took some giant steps forward, as both plans won approval from the city’s Plan Commission. One is the ongoing proposal to build a twisting 150-story condo tower—the architect Santiago Calatrava’s Chicago Spire—just north of the Chicago River and west of Lake Shore Drive. Plans for the tower are in their fourth incarnation since the original developer, Christopher Carley, unveiled a rendering of the building in July 2005. (Garrett Kelleher’s Dublin-based Shelbourne Development is now handling the project.) A subsequent redesign made the building look like a stumpy version of the architect’s initial curvaceous beauty, but the latest version brought some sexiness back to the design. On April 19th, the commission gave its unanimous approval to the latest plan; it now goes before the City Council’s zoning committee on April 26th, and from there to the full council in May.
At the same meeting, the Plan Commission also approved a proposal by Walton Street Capital to put offices, condos, hotel rooms, and parking in the mammoth old Main Post Office that hangs over the Congress Expressway just west of the South Branch of the Chicago River. The 2.5-million-square-foot structure, built in 1921 (with a 1933 addition), has stood empty for almost 11 years, since the United States Postal Service moved into a new facility immediately south of it. During those years, proposals surfaced to put everything from an Ikea store to a casino to an auto mall in the architectural white elephant. Walton Street plans to remove almost a third of the building’s gargantuan mass, leaving two end towers and a low section between them that will house the hotel.
The Spire and the post office have different fundamentals. Potentially an instant landmark—and, if built, the tallest building in the Americas—the Spire would put about 1,200 condos along a very desirable stretch of lakefront; the mixed-use, rehabbed post office would drop 300 condos into an area not yet established as a residential neighborhood. Construction on both projects is slated to begin later this year.
For people whose job demands that they park all over the city, there may be nothing more frustrating than hunting for a parking space in a permit-zoned Chicago neighborhood. A potential solution to that problem isn’t working—most likely because of tinkering by city hall.
Permit-zone parking started on the Northwest Side in 1979 in the neighborhood around Northeastern Illinois University, an innovative way to stop students from swiping all the on-street parking from local residents. Permit zones have since proliferated, and now Chicago has at least 1,300 different zones.
For more than a decade, real-estate agents working in the city have complained that they can’t park near the houses that their clients want to see—so over the past year the Chicago Association of Realtors (CAR) helped arrange a special pass: an all-zones permit, paid for by agents, that allows them to park in any zone between 9 a.m. and 9 p.m.
But after critics said the agents didn’t deserve that special privilege, Mayor Richard M. Daley cut the hours on the pass to 9:30 am to 6 p.m. Trouble is, “most homebuyers are only free to look at houses after work,” says Brian Bernardoni, director of governmental affairs for CAR. ‘After work’ would typically mean after 6 p.m.—when the all-zone permits no longer apply.
The result: six weeks after the permits first became available, the office of Miguel del Valle, the city clerk, reports that only 32 people have paid the $300 for an all-zones permit (the pass is also available to home health-care workers). There are at least 11,000 real-estate agents in Chicago; if the pass had included the evening hours, Bernardoni estimates that something like 3,000 agents would have bought them by now.
So don’t blame your real-estate agent the next time you have to walk several blocks to see a house. After all, the agent can’t very well include a $100 parking ticket in your closing costs.
There are far more homes on the market locally than there were at this time last year. As of April 1st, there were 43.3 percent more properties listed for sale in Chicago and the six-county metro area than on the same date a year ago, according to data from the Multiple Listing Service of Northern Illinois (MLS). What’s more, ZipRealty, a California-based sales firm with a sizable Chicago presence, determined last week that Chicago’s inventory of homes for sale jumped by 7.5 percent from February to March—exceeding the 6.5 percent average for 18 major metropolitan areas surveyed by the company. It’s also a much bigger jump than the norm reported last week by the Wall Street Journal. The paper cited Credit Suisse Group’s finding that, since 1985, the average February-to-March increase in inventory nationwide has been 1.7 percent.
With the average time to sell a home here now hovering around 137 days, sellers seem to have acknowledged the change in the local real-estate market. “There’s been a change in sellers’ expectations,” says Terry Semmens, ZipRealty’s Chicago district director. “They’re waiting to buy [until] after they’ve sold. Too many people suffered through 2006 supporting multiple house payments, so now [sellers] are putting the house up before they go looking for their next house.” The big uptick in inventory now, he suggests, is the result of many sellers calculating that, in order to get moved into a new place by the beginning of the next school year, “they should get started now so they don’t get stressed when summer is coming around and they still haven’t sold.”
At the same time, Semmens says, sellers seem to be willing now to take offers that are contingent on would-be buyers’ selling their old house first. “This is part of reality again,” he says. It all means that buyers see the balance tilting even further in their favor with more houses to choose from—and more favorable contractual terms.
The real-estate market has been giving off conflicting signs for months. That’s making anybody who has a property to sell eager to get rid of it, just in case the signals go from confusing to bad.
Most expert observers agree that the worst-case scenario—the bottom dropping completely out of the local housing market—is not going to happen in Chicago. Still, nobody wants to be the one who sent up a signal flare by cutting prices—which is why builders and some individuals selling their own homes have been offering incentives to buyers. Throw something in without raising the price and you have effectively discounted the price without asking for less.
“We’re seeing incentives galore,” says Jim Merrion, the northern Illinois regional director for RE/MAX. Which means that if you are shopping for a home this spring, you might have an opportunity to snag some freebies. A condo builder might throw in a garage space with each condo purchased. A builder of single-family homes might sod the whole lot rather than just out front. And a family selling its own home might offer a buyer cash back for a quick closing, or offer to leave the plasma screen TV in the family room. There have even been wild tales circulating of sellers offering a free car to potential buyers—or a trip to the Caribbean.
True or not, those types of outlandishly tantalizing offers may not be the best incentives to move a home. Instead, take a cue from developers, who have been putting forward offers of enhanced financing terms, kitchen upgrades, and free laundry appliances. “The best incentives are the ones that are closest to the buying process,” says Steve Hovany, the president of Strategy Planning Associates, a Schaumburg-based consultant to housing developers. “They’re the ones that make people decide to buy.”
According to both Hovany and Merrion, buyers shouldn’t hesitate to ask for incentives. These days, builders expect most buyers to come in looking for goodies, Merrion says, and individual sellers may be receptive as well. “If you offer them a good price and good terms, and then say, ‘Hey, can you also throw in the Weber Genesis [grill] I saw out back?’ you have a reasonable chance of getting it this year,” Merrion says. “You wouldn’t have last year.”
Over the past five years, seven high-rise residential towers have gone up at Lakeshore East, the 28-acre development west of Lake Shore Drive between Randolph Street and Wacker Drive. Until now, the development has seemed a little bereft of life, even though those seven high-rises encircle a six-acre park filled with fountains, lawns, and play areas for children and dogs. But all that is about to change now that construction has begun on the so-called Parkhomes: 24 single-family homes, some lined up like townhouses and some stacked atop one another. They are the first of at least 45 street-level homes to be built around the park, says James Loewenberg, the co-CEO of the Magellan Development Group.
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