Sue Fox, @Properties. Direct 773.816.1788
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Archive for the 'Gold Coast' Category
When it comes to truly high-end real estate, Chicago is worlds away from New York. While the Big Apple has dozens of properties that sell for multiple millions, it’s exceedingly rare to find homes in the Windy City that close for $5 million or more.
How rare? Over the past year, only three single-family homes in the entire city of Chicago have sold for upwards of $5 million, according to Midwest Real Estate Data LLC. Another five houses went for $4 million to $5 million. The most expensive Chicago house to sell was 25 Banks Street, a 13,500-square foot Gold Coast mansion built in 1880. Located a block from the lake, it boasted 8 bedrooms, 11 bathrooms, a media room, a wine vault, staff quarters with a separate entrance, and a rooftop terrace. But even this grandeur came at a bargain price: $6.8 million, about half its original price tag of $13.5 million after more than three years on the market.
Of course, there were also seven Chicago condos that sold for upwards of $5 million over the past year. With the exception of one, they were all at the Elysian, the new luxury building located at 11 E Walton Street. (The other was a top-floor penthouse located above the Four Seasons Hotel at 132 E Delaware Place.) At $8.6 million, the priciest condo cost more than the most expensive house — and both were cash deals, as were the majority of all the $5 million-and-up sales. Hmmmm, I was just wondering what to do with that $5 million just sitting in my bank account…
In any case, multi-million dollar sales of any sort are a rare breed in Chicago. There were only 50 single-family houses and 75 condos that sold for $2 million or more citywide (mainly in the Gold Coast, Streeterville or Lincoln Park) over the past year. On the North Shore, moreover, there were 86 homes that sold for over $2 million, but only six that fetched more than $5 million.
Will 2011 prove to be the bottom for Chicago home prices? The jury is still out, but on a national level, many housing experts believe that the worst will soon be behind us.
In June, MacroMarkets LLC polled more than 100 economists, real estate experts and investment strategists with a wide range of viewpoints, including the National Association of Realtors Chief Economist Lawrence Yun, Moody’s Analytics economists Mark Zandi and Cecilia Chen, FusionIQ CEO Barry Ritholtz, and Freddie Mac Chief Economist Frank Nothaft. More than half of the panel said they expect U.S. home prices to hit bottom sometime this year and then remain stable through 2015.
“A significant majority of our panelists believe that the bottom for home prices arrived in the first quarter or will arrive sometime before year end,” said Robert Shiller, co-founder of the Standard & Poor’s/ Case-Shiller National Home Price Index and Macro Markets’ chief economist and co-founder. “Despite persistent macroeconomic uncertainly and unprecedented housing market dysfunction, almost two-thirds of the panelists see the U.S. residential real estate market as at an historic turning point.”
To be sure, I still see plenty of homes that aren’t selling. But those that do sell tend to be either distressed properties at bargain prices or handsome homes with plenty of amenities in solid neighborhoods. Put it all together, and it seems home prices in Chicago are finally starting to touch bottom.
The pain is spreading. We’ve already seen developers resort to condo auctions downtown to finally rid themselves of unsold units, but now the fallout from Chicago’s condo implosion is spreading north to the Gold Coast.
The developer who converted a 391-unit apartment building at 1400 N. Lake Shore Drive into condos in 2006 just announced an April 25 auction to sell off 30 of the 80 remaining units. “People are going to get a great deal,” Robert Mosky, president of RDM Development & Investment LLC, told Crain’s Chicago Business. “It’s going to help out the building.”
Help out the building? Mosky said that bidding for studios — that once sold for $140,000 to $160,000 — will now begin at $50,000. One-bedroom condos will start at $90,000, a devastating reduction from the original prices of $250,000 to $270,000. This may be an attractive deal for new buyers who value the location, but these fire sale prices will hardly help out the rest of the building’s owners, many of whom are likely now underwater on their mortgages.
With Chicago condo sales sluggish (particularly downtown), some developers are turning to auctions as a last resort to jumpstart sales. It’s so hard to get a condo loan these days in buildings with many unsold units that auctions — where the financing is already lined up for potential buyers — can help get people in the door. Then, the hope is that other buyers will be able to qualify for conventional loans to buy the remaining units.
But at 1400 N Lake Shore, trouble has been brewing for months for many existing owners (see my Dec.16 post). There are now at least four condos being offered as short sales in the building, and many more for sale with price tags well above the planned auction prices.
Even the Gold Coast is showing a little tarnish these days. Prices have fallen sharply at 1400 Lake Shore Drive, a 391-unit condo conversion project where many units remain unsold despite the sales team’s prediction back in February that they would “close it out” by the end of 2009.
Well, here we are in December 2009, and buyers still have plenty to choose from here. “Massive Price Reductions @ Prime Lake Shore Drive Location,” promises a recent 1-bedroom listing in the building. Massive, indeed. This second-floor unit was originally priced at $261,400 — in February 2006, when the market was much healthier. Now it’s listed at $159,900. Another 1-bedroom (touted on the MLS as a “highly upgraded ultra luxury unit” on the 20th floor) has gone from $299,900 in early 2008 to $189,900 today, a 37% price cut. A 2-bedroom on the 3rd floor is now priced at $299,900, down from $360,900 in March 2007.
Meanwhile, owners in the building also appear to be hurting. A 2-bedroom unit that sold for $417,900 in early 2006 is now for sale at $374,900. It’s been on the market since June. There are also two short sales in the building, including a 21st-floor unit now listed at $275,900. That one has been on and off the market for two years, starting at $398,800.
There have only been 6 sales in the building in the last 6 months, according to the MLS. This is a pretty poor track record for a building this large, especially considering that the $8,000 first-time buyer’s tax credit pushed up sales in Chicago during this period and most units at 1400 N Lake Shore are in a price range that appeals to first-timers.
Then again, this is a golden opportunity for buyers looking to spend under $150,000 for a Gold Coast location. There are now 9 units at 1400 N Lake Shore that meet that criteria.
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