What's Driving the Sale of Downtown Luxury Condos?

By Dennis Rodkin, Chicago Magazine

In the first few months of 2010, as some local developers slashed prices or staged auctions on their newly built condominiums, a small segment at the upper end of the condo market flourished. As Gail Lissner of Appraisal Research Counselors notes, “There are always wealthy people with the ability to buy.” The big difference lately is that those well-heeled folks have been shelling out princely sums to buy luxurious new condos in downtown high-rises. “These are not speculators buying cookie-cutter condos,” says Lissner. “By and large, they are buying to live in these really high-end, unique places.”

Consider these numbers: From the beginning of the year until the middle of May, about 40 downtown condos have been sold for $2 million or more—and most of those condos were in buildings that opened in the last two years. (Some sales may have not yet appeared in public records.) They ranged from an $8.182-million sale at the Elysian—the 60-story tower at 11 East Walton Street designed by Lucien Lagrange—to a three-bedroom unit that went for a little more than $2.24 million at Aqua, the much-praised skyscraper at 225 North Columbus Drive that Jeanne Gang designed for Magellan Development. (The Elysian sale was the highest price paid for a Chicago condo since November 2006, when a 61st-floor unit at the Park Tower—at 800 North Michigan Avenue—went for $8.275 million.)

What’s driving the sales? To update an old real-estate adage: timing, timing, timing. Many of these new elite homeowners made their decision to buy several years ago, while buildings were under construction or still in the planning stage—and before the recession punctured the real-estate boom. With those condo towers now ready for residents, the folks who agreed years ago to buy are finally inking the deals.

That’s generally what’s been happening at the Elysian, according to Caryl Dillon, who was the tower’s sales agent. Since January 1st, at least 16 buyers there closed on condos priced at $2 million or more (in addition to the $8.182-million sale already mentioned, one condo went for $7.25 million and another for $6.9 million). That’s on top of a first round of December 2009 closings at $2 million and up. Meanwhile, at The Legacy (which recently opened at 60 East Monroe Street), three units priced at more than $2 million were among the first closings in the building—and usually the earliest buyers sign off on the earliest closings. (Since condos on a building’s bottom floors are often finished first, some lower-level, lower-priced units bought during construction can also be among the earliest closings.)

Buyers who signed contracts before the bust could have opted to cancel their contracts when the economy soured—as did numerous buyers of medium-priced homes. But “10 percent [the standard deposit on a condo] is a lot to walk away from” on a multimillion-dollar sale, Lissner says. Still, as she suggests, it’s also likely that for many of these rich buyers “their lifestyle hasn’t changed in the downturn.”

Janet Owen, a Sudler Sotheby’s International agent who works exclusively in the luxury market, points out that many rich people have not had to worry about the tight mortgage-financing climate that has contributed to the drag on the larger real-estate market. Mortgage lenders have been requiring bigger down payments, higher credit scores, and more detailed documentation of financial histories from average buyers. “These aren’t issues [wealthy potential homeowners] have to think about,” says Owen. On top of this, she notes, “their buying had nothing to do with the $8,000 federal tax credit.”

That is especially true of well-to-do buyers who made their purchase decisions recently. In early May, someone paid $2.3 million for a previously owned condo on the 51st floor of the Trump International Hotel & Tower (that building, at 401 North Wabash Avenue, opened in 2008). Another buyer spent $3.45 million in April for a 54th–floor condo at 55 East Erie that an investor had held on to since 2003. These new purchasers “are almost always cash buyers,” says Tere Proctor, who was the director of sales at Trump before returning to agency work (at Koenig & Strey Real Living). “They see the value in buildings like Trump and the Elysian, and they’re banking on knowing that whenever the market gets better, they will be holding valuable real estate.”

Read the full article and see building highlights here.

Home Affordability is the best it has been in decades!

Daniel Kelley is the lead real estate analyst and portfolio manager of the Fidelity Select Construction and Housing Portfolio.

"Having just gone through a potentially once-in-a-lifetime down market, there is a bright light. Home affordability is the best in decades. In fact, on average, today's homebuyers have the lowest mortgage payments as a percentage of income in 30 years," wrote Kelley in a recent research report.

Highlights Around Town for the Month of July

Looking for some summer fun? Try one of these events!

• The River North scene will take center stage again at the Taste of River North, Saturday, July 17th 12pm-10pm and Sunday, July 18th 11am-8pm. Located in and around magnificent Erie Park, this fest gives food lovers and weary art shoppers a taste of the best of everything the trendy River North neighborhood has to offer along a picturesque green riverfront setting. Near Erie & Kingsbury.

• The Dearborn Garden Walk, Sunday, July 18, and the Chicago Yacht Club’s Race to Mackinac, Saturday, July 24! These two colorful & memorable events have always made the middle of summer most enjoyable by showcasing warm weather enjoyment on land and in water!

• Your love of flowers will flourish on as you also enjoy the Sheffield Garden Walk, July 17 & 18 as well as the continuing Summer Tropical Flower Show at the Garfield Park Conservatory here through September 26. The show is featuring Chicago-weather friendly fauna to enjoy throughout the year.

• Enjoy an evening of music in one of our many intimate music venues in and around Chicago! David Sanborn will be performing his long known sweet jazz saxophone Saturday, July 31 in Wentz Concert Hall at North Central College in Naperville. Andrea Marcovicci will serenade you with her soft & melancholy voice July 14 – 18 At Davenport’s Piano Bar & Cabaret. For something a little hotter, enjoy Chichito Valdes Afro-Cuban Ensemble July 23 & 24 at the Green Mill

• Want to get away? Day-Tripping is the way to go! A day in the country is a sure way to revive yourself from the daily city grind! County fairs abound with all the fun food and events that are a traditional part of them! The Kane County Fair in St. Charles, July 14-18; The DuPage County Fair in Wheaton, July 21-24; The Lake County Fair in Grayslake, July 27 though Aug 1

• Still can’t come back inside because the weather is so nice? How about an outdoor concert? Millennium Park & Ravinia are offering a wonderful line-up of classical favorites! If classic rock is more your style, Chicago will be performing with the Doobie Brothers on Friday, July 16 and REO Speedwagon along with Pat Benatar, Sunday, July 18 at Carter One Pavilion at Northerly Island.

• Art fairs are also a wonderful way to get a nice walk in as part of your exercise routine while enjoying the talents of many local and national artists as they showcase their sculptures and painting. The North Shore Festival of Art will be held July 25 - 26 in Skokie.

• The Gold Coast Art Fair! This year the fair has a new address…Butler Field in Grant Park! Save the Date! Aug 20-22

NOTICE OF MOVIE FILMING IN THE AREA

DW Studios Productions is currently filming scenes for the upcoming motion picture “Transformers 3” in the area. One of the principal locations in the film is Michigan Avenue in the vicinity of the Chicago River. Major filming with special effects is scheduled for Friday, July 16th, Saturday, July 17th and Sunday, July 18th from approximately 7am until 7pm. Scenes will include low flying helicopters and special effects such as gunfire, spark hits, explosions, fireballs and black smoke.


Please note the following proposed schedule for the area:

Tuesday, July 13th 8am to mid-morning: 1-2 helicopters flying closely at the top of the Trump Tower.

Thursday, July 15th 8pm – Monday, July 19th 5am: Michigan Avenue between Ohio and Wacker Drive will be closed. Lower Michigan Avenue will be available to vehicular traffic until Friday July 16th at 8pm. During these days, the loudest stunts and special effects will be filmed. Please note that gunfire and explosions will take place after 8am on Saturday, July 17th and Sunday, July 18th.

Saturday, July 17th and Sunday, July 18th from 7am throughout the morning: Precision skydivers with parachutes will be flying around the building and landing on the Michigan Avenue Bridge. They will be circling along the Chicago River. This will result in occasional closures for 10-15 minute periods for affected streets below the fly zone. This will include a lockdown of vehicular and pedestrian traffic. Areas expected to be affected include:
Hubbard between Clark and State
Kinzie between Clark & State
Dearborn between Wacker and Hubbard
State between Wacker and Hubbard
Wabash between Wacker and Kinzie

Monday, July 19th from 10am-4pm: 3 Base jumpers will be jumping from the Trump Tower roof to the south side of the Tower. The River Walk will be closed during this time. Additional closures may occur as necessary.

Tuesday, July 20th from 10am-4pm: If weather is inclement on Monday, July 19th this is the back-up date for the base jumpers.

Monday, July 19th - Wednesday, July 21st: Filming will occur at Hotel 71 and expected closures include Wacker from Michigan to Wabash as well as intermittent traffic control on nearby streets.

Saturday, July 24th – Tuesday, July 27th and Saturday, July 31st - Sunday, August 1st: Filming will occur at 35 E. Wacker and expected closures include portions of Wabash and Wacker as well as intermittent traffic control on nearby streets.

Tuesday, July 27th: Filming will occur in immediate areas surrounding Trump Tower and there will be intermittent traffic control in the area. Filming will also include helicopters.

Please note that businesses in the affected areas are scheduled to remain open during this time. Bus stops on North Michigan Avenue between Ontario and Wacker will be relocated. Signs are expected to be posted. Please be advised that loading zones for boats along the river may be relocated and signage will be posted indicating the alternate loading zones.

Public Assistance personnel will be placed at the pedestrian lock-up points and will provide detour information. The personnel will be wearing yellow shirts with the “Transformers” logo.

Chicago's Trump Hotel towers above U.S., Canadian rivals

The Donald's got The Best, at least according to Travel + Leisure magazine.

Trump International Hotel & Tower Chicago is ranked in the magazine August's issue as the No. 1 large city hotel in the U.S. and Canada.

The 339 rooms in the hotel are on floors 14 through 27 of the 92-story tower at 401 N. Wabash -- the former site of the Sun-Times Building.

Donald Trump, in a statement, called the honor "tremendous."

"With Trump Hotel Collection, we set out to invent the next generation of luxury hospitality," said Trump, chairman and president of The Trump Organization. "We are committed to bringing the best design, service and amenities to the market."

The Peninsula hotel at 108 E. Superior ranked No. 2 on the Travel + Leisure list.

July 9, 2010, SUN-TIMES STAFF

CATERING TO SENIORS CAN MAKE YOUR BUSINESS BOOM

Even when business isn’t booming, there are still plenty of opportunities to enter the senior market, especially since baby boomers often seek a simpler way of life regardless of the push or pull of market forces. Boomers are an ever-growing market segment, and they are more active and picky than the 50+ buyers in the past. Whether you’ve been working in the senior market for ages or are just looking to discover its hidden potential, you must understand how to cater to boomers’ needs to tap into a market that may lead you to new success.

Taking the Additional Time to Make a Senior Sale
To meet seniors’ long-term needs, agents and developers say selling to baby boomers often takes longer than selling to younger clients. Lucchetti notes the emotional attachment seniors have to their homes – some of which they have lived in for a lifetime – often leads to a longer lead time before they make the final move.

Hartz notes that senior buyers are often cautious and conservative – particularly in this market. However, they often move quickly when they sell their property as they are ready for the next step in their life and can be cash buyers – a huge plus in any market.

Since the sale can take longer with boomers, agents must be persistent in their communication with clients. Thompson uses newsletters and community outreach to stay in contact with seniors, while communicating with their relatives through e-mail. She says you must build a relationship over time to gain their trust, which requires you to stay in touch with them frequently.

Just because these clients are more mature, it doesn’t mean they are still living in the dark ages. Tricia Fox of Keller Williams Luxury Homes says she e-mails back and forth with most baby boomer clients, and occasionally texts with those savvy enough to do so. Find out which method of communication works best for the client, and proceed accordingly.

“Knowing the effects that arthritis, as well as loss of hearing and vision, can have on communication and decision making has a big impact on how you deal with boomers and other seniors,” says Kunicki.


How You Can Benefit from Boomer Business
Despite all the additional work required, Fox says the senior market is the “best market” to be in at the moment, as many seniors are buying a second home or downsizing and embracing the Chicago area.

While it is not always true, oftentimes boomers are the ones out there with money to spend. Boomer Project founder/president Matt Thornhill claims that the over-50 crowd outspends the under-50 crowd by $400 billion. Additionally, the latest survey conducted by ProMatura Group found that 50+ sentiment is on the rise, and that 50+ primary home purchases have risen by 5 percent. With more years in the workforce, boomers have the potential to spend a lot more money on their next step in life.

With Social Security no longer a primary source of income for many boomers, there is a growing trend of delaying retirement. The Del Webb survey found that boomers turning 50 this year plan to retire a median of four years later than 50 year olds in 1996, at age 67 versus 63. Among the younger boomers, 72 percent plan to work in some fashion during their retirement years. With more and more seniors continuing to work and putting off retirement, many are no longer interested in communities that are far from employment opportunities.

When it comes to the bottom line, most agents claim the commission in the senior market is comparable to the pre-retirement age market. Additionally, some independent senior communities offering rental properties, such as LaGrange Pointe in LaGrange, provide commission to agents.

Overall, boomers and seniors are not a market to be ignored. The U.S. Census states that the over-50 crowd will grow 21 percent in size in 10 years, while the 18 to 49 population will remain the same size. As the number increases, so do your opportunities to find additional clients – and sales. Those who cater to the senior market may find that their business grows on all fronts, if they take the time to understand the specific and changing needs of baby boomers and their families.

For the full article click here.

Morgan Phelps, Chicago Agent Magazine

YTD condo closings up 45% over 2009

In the first six months of this year, condo sales have dramatically increased compared to the first half of 2009. And June closings were up 26% over May.

According to figures generated for ChicagoCondosOnline.com by MRED, the regional MLS, year-to-date sales of Chicago condos through June 2010 are:
* Up 42% in total dollar volume, to $1.8 billion
* Up 45% in units closed, to 5,630
* Down 6% in median sales price, to $263,700
* Down 6% in average market time, to 148 days.

Comparing June sales to May:
* Units closed were up 26%, from 1,083 to 1,365 closings
* Dollar volume was up 27%, from $341 million to $434 million
* Median sales price was up 2%, from $264,900 to $270,000
* Average market time was flat, at 144 days

For details on month-over-month and year-over-year: click here.
For previous market reports: click here.