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.
The Property: Situated on a secluded country lane in Barrington Hills, this 11-room house, built in 1990, has four bedrooms, an in-ground pool and hot tub, and a modern metal barn, as well as access to the local network of horse trails. The previous residents lost the home in a bank foreclosure, and the bank, eager to get the property off its books, listed it for sale in late March “as is” with the Baird & Warner agent Linda Rengel. The house was showing wear, she acknowledges: the entire interior needed paint, new carpet, and bathroom upgrades; the landscaping was an overgrown mess; and the garage stunk from its former use as a dog kennel (“That has to be fumigated,” Rengel says). On top of all those issues, there was no way to warrant the pool’s condition; it had been drained and covered for the winter, and potential buyers couldn’t be told with certainty that it had no leaks or other damage.
But the property has advantages, too. Because it’s only 17 years old, the house has the room sizes and impressive, semi-traditional exterior that appeals now, Rengel says. “In Barrington Hills, you find a lot of dated houses in styles people don’t like. They’re on gorgeous pieces of land, but you have to build. This one looks more like what people want.”
Price Point: If thoroughly prepped for sale, Rengel estimates, the house would have been priced in the mid-$900,000s. Given the house’s condition, she priced it at $749,900. But within two days of listing it, Rengel was entertaining five competing offers, and bidding took the price up to $775,000—still a bargain considering that any repairs (which the buyer began promptly after the May 1st closing) “shouldn’t go past $125,000,” Rengel says. Even spending that much, the buyers will have acquired the wooded, five-acre property at a significant discount. “That’s not just the deal of the week,” she insists. “They got the deal of the year.”
Buyers: Not yet identified in public records Sales Agent: Linda Rengel, Baird & Warner
The Property: A converted coffee and tea showroom beneath an antique copper ceiling, this McKinley Park residence is that rarest of finds: a true industrial loft. “They’ve all disappeared,” says Mario Greco, the Rubloff agent representing the seller. With its great aged factory doors, original hardwood floors, and big storefront windows, the place has the requisite funky patina—but it’s also got such contemporary touches as concrete countertops and hanging glass shelves in the kitchen. The main floor is about 1,700 square feet, configured as one enormous main room with the kitchen at one end (there are also two full baths and a laundry room). The master bedroom (along with more open space) is perched on an L-shaped mezzanine, and there is a small terrace off the back of the kitchen and a grassy public playground across the alley. The 1,100-square-foot basement, unfinished and with no windows, could easily be turned into workspace or a cavernous family room. There is one indoor and one outdoor parking space.
The seller, Dan Delany, bought the space five years ago, when Bridgeport, the neighborhood that lies just east of McKinley Park, had just begun to flourish. A consultant for not-for-profits, he has been spending more time in New York lately and has decided to sell.
Price Points: To get this much space on the North Side, you would easily pay twice the price. But to buy so low, you do have to give up some things. The building is on busy Archer Avenue (with a front-door view of the above-ground Stevenson Expressway), and the surrounding neighborhood is working class. Some potential buyers might find it hard to do without the hip boutiques and cafés, but there are thriving arts communities in Bridgeport and nearby Pilsen, and good restaurants in Chinatown, on South Oakley Avenue’s Italian strip, and in the South Loop. There is a grocery store and other shopping a block away; the buses, El trains, and expressways are close at hand; and you can make the trip into the Loop in less than five minutes. Listing Agent: Mario Greco, Rubloff, (773) 687-4696
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.
The Property: This 13-room mansion in a French Normandy style overlooks the fifth fairway of the Indian Hill Club golf course just outside Winnetka. Sequestered behind brick gates and surrounded by formal landscaping, the house has seven bedrooms, five fireplaces, a library, and a chauffeur’s apartment and other servant rooms that Jean Wright (the seller’s agent) says the new owners will convert to family space. There is a pool and cabana on the nearly two–acre lot.
Built in 1925, the house had belonged to two generations of descendants of Charles B. Schaffer, a Chicago oilman and racehorse owner. It has stood mostly unused for about the past decade, as the second generation—Nancy Neumann Brooker, and her husband, T. Kimball Brooker—decided what to do with it. “They used it as a second home, but only sometimes,” says Wright. “They were having work done on it.” Following his wife’s death in 2003, Kimball Brooker decided to sell. The kitchen and baths, Wright says, “are original—and I mean original.” Renovating them will be pricey: there are five full baths and three partials. Price Points: Brooker listed the home with Wright in July and got only low-ball offers. “But right after we signed the contract [in early April, for $4.45 million], we had an offer for $5 million, and suddenly two other people were very interested. It’s interesting that it sat there all that time and then suddenly, all this activity.”
List Price: $3.999 million
The Property: Formerly a machine-parts factory, this 10,000-square-foot structure on a residential block in Roscoe Village is being converted into a lavish, contemporary home, complete with a rooftop deck the size of some suburban back yards. When finished this summer, it will have six bedrooms, four fireplaces, an elevator and some serious bling—including a bar in the master bathroom, an indoor lap pool enclosed in a glass booth, and a four-person guest shower.
“I stole a lot of ideas from Vegas,” says Spencer Forman, who is transforming the structure, built in 1943, with architectural plans by Atul Karkhanis of AK Architects. They’re going for the look of homes in Dwell magazine, the showcase of sleek, mostly minimalist contemporary designs. That’s evident in the long slit windows and a slender zen garden running along one side of the roof next to a metal privacy screen.
Both of those features are functional as well as timely. Because the building comes right out to its lot line, passersby would be able to look into the house through conventional windows. But here, the windows start at seven feet above ground; they bring in light and sound but block prying eyes. “You can walk around naked in here and nobody sees,” Forman says. And the linear zen garden creates a setback in front of the privacy screen so the building doesn’t appear to tower over the street.
Price Points: At $3.999 million, the house showcases premium touches, such as computerization that controls lights, heat and plasma screens; and a heated car wash in the four-car garage. And yet Metra tracks pass immediately to its east and El tracks run four doors west. Even with triple-brick construction and insulated windows, the place will be noisy at times. Then again, Forman is hoping to sell it to a pro athlete or some other celebrity—who likely would fill the place with noisy friends anyway. After all, they’ll have to make some use of that four-person shower.
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.
The Property: This classic red-brick colonial with three bedrooms, two-plus bathrooms, and two fireplaces provided a rare opportunity to get an appealing, nicely updated home in exclusive Kenilworth for under $1 million—and it has played that role twice in the past year. Built in 1929, the house sold for $5,000 less than the price it had brought just ten months before, in June 2006. And that was with a few significant upgrades since that earlier sale: repair to a basement leak and new landscaping. “My sellers made some very nice improvements,” says their agent, Julie Miller of the Hudson Company, but she declined to explain why they resold so soon. “I would have loved to see them get more, but given that they wanted to sell in a relatively short period of time, we’re fine.”
In June 2006—after it had been put on the market with a recently rehabbed kitchen, master bath, and second bath—the house sold for $10,000 more than its $935,000 asking price after just two months. Those buyers (the most recent sellers) then put the house back on the market in December, six months after closing on their purchase of it. With the upgrades, they initially priced it at $985,000. They later dropped their asking price to $975,000 before agreeing to sell for $940,000. That deal closed on April 19th.
Price Points: At either selling price—this April’s or last June’s—the house was a good buy. It stands on a block of pretty homes within walking distance of a Metra station, and any children who might live here would go to two premier schools: Joseph Sears Elementary and New Trier Township High. And it is relatively affordable in these upper-end environs: of 24 sales in Kenilworth in the past 12 months, only seven have gone for under $1 million, according to data from the Multiple Listing Service of Northern Illinois. “That house is in the hot price range,” Miller says. “It’s very hard to get into the New Trier district in a nice house in good condition for under a million dollars, sad to say.”
The Property: Designed by the great North Shore architect Howard Van Doren Shaw, this home was built in 1913 as one half of a pair of twin gatehouses for a lavish lakefront estate on Sheridan Road. When the present sellers, Tierney Danehy and Tom McNulty, bought the place in 1995, it had been severed from the estate house (which still stands) and was being rented out, with two apartments upstairs and four two-car garage bays on the main floor. “It was great space that we could turn into whatever we wanted,” says Danehy.
Danehy and McNulty put a large living/dining room in two bays and a kitchen/great room in the other two bays, with a staircase between the rooms. (They replaced the garage doors with sliding doors.) Upstairs, they put four bedrooms, two baths, a laundry room, and a den in what had been two servants’ apartments and some additional space above their new two-car garage. The couple also preserved many of Shaw’s touches, such as an elaborate rope molding below the eaves and the two-toned brickwork inside the house. (The two exterior staircases that used to lead to the apartments are still there, although they are only decorative now.) When adding new details, such as exterior door entablature, the couple and their architect, Lesa Rizzolo, did an excellent job of staying in touch with the character of the original structure.
Price Points: With its Sheridan Road address, its views into a wooded estate, and a lot that is more than a third of an acre, this home is a prize. But its floor plan will not appeal to someone who is shopping for an impressive center-entry house; it is a warm and appealing home, but light on grandeur. The price tag is in keeping with Glencoe, where two thirds of the 89 homes that sold there over the past year went for more than a million dollars.
Listing Agent: The homeowner, Tierney Danehy (of Village Green Realty), is handling the sale: 847-501-4300.
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.
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