Manhattan mega-developers are reeling after a federal judge ruled that complexes with more than 100 units must refund buyers' formerly non-refundable deposits upon request.
Manhattan Federal District Court P. Kevin Castel ruled Wednesday that developer Related Companies must pay back a $510,000 deposit — plus interest — to buyers wishing to back out of the deal, based on a slightly obscure 1968 law, the New York Times reported. Castel said an affiliate of Related Companies had failed to comply with a little-known federal law known as the Interstate Land Sales Full Disclosure Act.
The decision could allow buyers in any condo buildings with more than 100 units to get their deposits back, according to the Times.
"It's a free ticket out," one real estate lawyer told the newspaper.
Lawyers for Related told the Times they planned to appeal the decision.
By Nina Mandell, DNAinfo.com
Showing posts with label Condos. Show all posts
Showing posts with label Condos. Show all posts
Thursday, September 23, 2010
Thursday, July 29, 2010
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.
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.
Wednesday, July 7, 2010
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.
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.
Monday, June 7, 2010
First 5 Months' Condo Sales Dramatically Increased Compared to 2009
According to figures generated for ChicagoCondosOnline.com by MRED, the regional MLS, year-to-date sales of Chicago condos through May 2010 are:
* Up 47% in total dollar volume, to $1.3 billion
* Up 51% in units closed, to 4,229
* Down 6% in median sales price, to $262,000
* Down 4% in average market time, to 150 days.
Comparing May sales to April:
* Units closed were up 1%, from 1,030 to 1,083 closings
* Dollar volume was up 4%, from $328 million to $341 million
* Median sales price was down 2%, from $270,000 to $264,900
* Average market time was down 6%, from 154 days to 144 days
* Up 47% in total dollar volume, to $1.3 billion
* Up 51% in units closed, to 4,229
* Down 6% in median sales price, to $262,000
* Down 4% in average market time, to 150 days.
Comparing May sales to April:
* Units closed were up 1%, from 1,030 to 1,083 closings
* Dollar volume was up 4%, from $328 million to $341 million
* Median sales price was down 2%, from $270,000 to $264,900
* Average market time was down 6%, from 154 days to 144 days
Monday, April 12, 2010
Selling A Second Lifesytle
By Clare Pierson, Chicago Agent Magazine
While some agents are concentrating on finding buyers in general, others are focusing on a special niche that could bring in more business, and at a higher price point: second homes. Focusing on selling second homes might take a little more effort, education and hustle, but in the end it can pay off – and be fun in the process. We spoke with a number of Realtors who work with second-home buyers in Chicagoland to find out how to be successful in this specialized field.
When the term “second home” or “vacation home” is mentioned, what comes to mind? Perhaps images of a lake house complete with its own boat dock or a chalet perched on the side of a ski hill. While both of these ring true, another concept that might not immediately come to mind is a high-rise condo on Michigan Avenue — yet Jean Hagerty, a Resort and Second-Home Property Specialist (RSPS)-licensed agent and luxury home specialist with Keller Williams, sells homes in the Loop and Gold Coast areas to second-home buyers on a regular basis. Seeing Chicago or another urban metropolis as a viable second-home market is a fairly newer concept, but it is indeed a growing niche and it makes sense.
Certainly Chicago’s Broadway-caliber theaters, expansive lakefront and nationally recognized dining scene help this concept along. “I love our city and what it has to offer, so for me to tout how great it is to live downtown is easy and exciting,” says Hagerty. “There is always something new going on here.”
According to Hagerty, a broad range of buyers look to buy second homes in downtown Chicago – a family with a large home in the suburbs might want a downtown getaway, or a parent will buy a child going to college a city condo with the expectation they will use it after their budding student graduates. Additionally, entrepreneurs and retired people with flexible schedules like to split their time between Chicago and someplace warm.
“Buying in Chicago is a little more deliberate,” she says. “We attract people with season tickets to ball games, the opera, the symphony. They are foodies, sports fans and cultural devotees. In other words, people who spend their time here are doing a variety of things. Some have business here frequently, some have family. The Chicago second-home buyers intend to split their time between here and somewhere else. So, it is easier to justify than a home you would use only during one time of the year.”
Read the full article here.
While some agents are concentrating on finding buyers in general, others are focusing on a special niche that could bring in more business, and at a higher price point: second homes. Focusing on selling second homes might take a little more effort, education and hustle, but in the end it can pay off – and be fun in the process. We spoke with a number of Realtors who work with second-home buyers in Chicagoland to find out how to be successful in this specialized field.
When the term “second home” or “vacation home” is mentioned, what comes to mind? Perhaps images of a lake house complete with its own boat dock or a chalet perched on the side of a ski hill. While both of these ring true, another concept that might not immediately come to mind is a high-rise condo on Michigan Avenue — yet Jean Hagerty, a Resort and Second-Home Property Specialist (RSPS)-licensed agent and luxury home specialist with Keller Williams, sells homes in the Loop and Gold Coast areas to second-home buyers on a regular basis. Seeing Chicago or another urban metropolis as a viable second-home market is a fairly newer concept, but it is indeed a growing niche and it makes sense.
Certainly Chicago’s Broadway-caliber theaters, expansive lakefront and nationally recognized dining scene help this concept along. “I love our city and what it has to offer, so for me to tout how great it is to live downtown is easy and exciting,” says Hagerty. “There is always something new going on here.”
According to Hagerty, a broad range of buyers look to buy second homes in downtown Chicago – a family with a large home in the suburbs might want a downtown getaway, or a parent will buy a child going to college a city condo with the expectation they will use it after their budding student graduates. Additionally, entrepreneurs and retired people with flexible schedules like to split their time between Chicago and someplace warm.
“Buying in Chicago is a little more deliberate,” she says. “We attract people with season tickets to ball games, the opera, the symphony. They are foodies, sports fans and cultural devotees. In other words, people who spend their time here are doing a variety of things. Some have business here frequently, some have family. The Chicago second-home buyers intend to split their time between here and somewhere else. So, it is easier to justify than a home you would use only during one time of the year.”
Read the full article here.
Thursday, January 7, 2010
Trolley Tour
Join us for our first Trolley Tour of the year!
For more information or to RSVP visit our event website.
This event is for prospective clients only please.
For more information or to RSVP visit our event website.
This event is for prospective clients only please.
Wednesday, April 22, 2009
We Are At the Nordstoms on Michigan Ave. - Check Us Out
Check us out at the Nordstrom Kiosk during mall hours 7 days a week.
Chicago Magazine Link:
Tuesday, March 31, 2009
Hotsheets March 30, 2009
| Chicago Activity | |||||||||||||
| Street # | CP | Str Name | Sfx | Unit # | City | Area | # Rms | Beds | Baths | List Price | Sold Pr | Closed Date | |
| 1 | 345 | N | LaSalle | St | 2209 | Chicago | 8008 | 2 | 0 | 1 | $144,900 | $133,000 (F) | 3/27/2009 |
| 2 | 1455 | N | Sandburg | Ter | 502 | Chicago | 8008 | 4 | 1 | 1 | $188,900 | $182,250 | 3/30/2009 |
| 3 | 260 | E | Chestnut | St | 511 | Chicago | 8008 | 3 | 0 | 1 | $189,000 | $178,500 | 3/27/2009 |
| 4 | 451 | W | Huron | 908 | Chicago | 8008 | 4 | 2 | 2 | $459,900 | $444,000 | 3/30/2009 | |
| 5 | 175 | E | Delaware | Pl | 7006 | Chicago | 8008 | 5 | 2 | 2 | $489,000 | $455,000 | 2/27/2009 |
| 6 | 525 | W | Superior | St | 325 | Chicago | 8008 | 5 | 2 | 2 | $549,000 | $515,000 | 3/30/2009 |
Monday, March 2, 2009
Concierge Media Group
Please check out http://redcarpetconciergeofchicago.com/ExtraExtra.html and click on Chicago Events for current networking connections. Please send your news, events and pictures to us for our readers.
Sunday, February 3, 2008
The Next Big Thing: Storage Condos
Where to go with all those mantoys when you "downsize" to a smaller home or condo? How about a storage condo, where, as the Times puts it, you can store your gear and play with it too. Forget the sterile atmosphere of yesteryear; these units come with"cable television, high-speed Internet, individual thermostats and even clubhouses." You might be surprised how many people watched the superbowl from one of their units!
Friday, January 11, 2008
Waterview Tower
One of my fav’s of the few new buildings offering hotel amenities along with terrific condos with unstoppable views..
Monday, November 5, 2007
Five Top Reasons to Buy a Condo
In short (to see the American Chronicle article click on the link above):
1)Condos Do Not Require Upkeep
As any single-family-homeowner knows, this is a biggie!
2)A Condo is an Investment
Like a house...but unlike a rental. And in downtown Chicago, it is a very good investment!
3) Amenities
I am addicted to indoor swimming pools now -- for exercise and fun with my grandchildren -- but would hate to have to clean one!
4) Space
Square foot for square foot, condos are more reasonably priced than single-family-homes.
5)Social Life
Ever wonder why the elevator plays such a big role in soap operas and nighttime dramas?...
1)Condos Do Not Require Upkeep
As any single-family-homeowner knows, this is a biggie!
2)A Condo is an Investment
Like a house...but unlike a rental. And in downtown Chicago, it is a very good investment!
3) Amenities
I am addicted to indoor swimming pools now -- for exercise and fun with my grandchildren -- but would hate to have to clean one!
4) Space
Square foot for square foot, condos are more reasonably priced than single-family-homes.
5)Social Life
Ever wonder why the elevator plays such a big role in soap operas and nighttime dramas?...
Wednesday, October 10, 2007
Trump This
Chicago Real Estate Daily is reporting on a lawsuit filed against Donald Trump by a couple whose "friends-and-family" contract was declared null and void by the developer. We'll see what the courts say!
(Photo by Stephen J. Serio)
Wednesday, September 19, 2007
New Development in the Media
Please click on this image to see the 2 page spread we did to pre-launch our exciting NEW development at State and Huron.
Wednesday, September 5, 2007
Trump Tower
After Labor Day, we start to get reflective. This was the Trump building just a year and a half ago. How time flies!
Friday, October 13, 2006
Condo market: Hanging tough?
Worry, sure, but sales remain healthy; builders 'still bullish'
"Very good": At Metropolis, 8 W. Monroe St., 90% of the 170 units have been pre-sold, says developer Keith Giles.
What if they build it — condominiums in and around Chicago, that is — and nobody comes?
Amid a continuing binge in local condo construction, developers ponder this question as the residential real estate market — in the face of rising mortgage interest rates — begins to show signs of slowing.In white-hot cities such as Miami and Las Vegas, condo construction has gotten so far ahead of actual demand in recent months that bankers have stepped in and called a halt to high-profile projects before ground could be broken. With slowing appreciation rates and waning interest by speculators, some observers predict that a condo "correction" is on tap for Chicago next.Yet sales remain healthy so far, and there is no evidence of financial turmoil among builders. In fact, they are betting big that fears about the market are overblown.
"We're still bullish on condos. We think metro Chicago is a solid marketplace," says Christopher Huecksteadt, a director with Metrostudy in Hoffman Estates, a research firm that tracks real estate trends in big cities around the country. "If we were adding new condo units to the market and they weren't selling, that would be cause for concern. But that's not happening here."
ndeed, developers appear to be flourishing. Keith Giles, co-owner of Frankel & Giles in Chicago, won't finish up work on Metropolis, his 16-story, 170-unit condo tower at 8 W. Monroe St., until late summer. But already more than 90% of the units, priced as high as $1.5 million, are sold.
"I think we'll be completely sold out by summer," Mr. Giles says. "
Last year was the best year for condo sales in the history of Chicago, and the market appears to still be very, very good."Some critics remain unconvinced, however. Cook County's population actually dropped by 73,000 people between 2000 and 2005, new Census Bureau data show. Freddie Mac, the nation's second-largest mortgage company, based in McLean, Va., predicts that overall U.S. home sales will drop 8% this year. In many cities, condo developers are facing critical overbuilding scenarios.In Miami, 25,000 condos are under construction and another 25,000 planned — in a market where about 2,500 units sold annually over the past decade.
"Chicago has been a fairly steady and stable market compared to Miami, but if home sales turn down this year at all, that could change," warns Jack McCabe, a residential real estate consultant based in Deerfield Beach, Fla. "I don't think there are enough high-income households in Chicago to support all the expensive condos being built. There is a good chance that Chicago is going to undergo some correction."
Other observers doubt that conclusion. In downtown Chicago, there were 8,162 new condo sales in 2005, according to Appraisal Research Counselors, up from 6,298 the year before. Gail L. Lissner, a vice-president at the research firm, estimates there are currently 8,400 more condos under construction, with 6,700 of those are pre-sold.
"Some of the condo units that don't have buyers yet won't be finished until 2007 and even 2008," Ms. Lissner says. "There is still plenty of time to get them sold."
After that, she has been able to identify another 4,150 condos planned but not under construction yet; more than half have been sold.Conclusion: Chicago has 12,500 condo units either under construction or proposed, reasonable considering last year's sales total and the long lead times on high-rise towers.
"We've had increasing sales and a low inventory of unsold condos," Ms. Lissner says. "That tells you supply and demand are in reasonably good balance."
New construction sales only tell part of the story, though. Has the supply of new product hurt resales of existing condos? There is, after all, now a pool of some 60,000 units downtown overall. But again, no danger signs: In January, condo resale prices in metro Chicago were up 9.1% over the year-earlier January, according to Metrostudy.
"The metro area added 50,000 new jobs last year, and we should add another 50,000 jobs this year," says Mr. Huecksteadt of Metrostudy. "That's keeping the housing market strong."
A few years ago the local condo market, as it was elsewhere, was propped up, in part, by "flippers."
Speculation, by some accounts, represented close to 20% of condo sales here at one time. Most experts figure the ratio is now below 12%. But the speculators haven't disappeared.Tim Duquette, a sales representative with Rubloff Residential Properties, recently put down a deposit on a $284,000 one-bedroom condo soon to break ground at 847 W. Jackson Blvd. Mr. Duquette figures he may rent out the unit for a while before he sells it.
"Monthly rental rates on condos are up 18% in the past 18 months," he says. "There is still great demand for condo living, and they do make a good investment."
Such talk is enough to encourage developers to forge ahead. Jameson Realty Group of Chicago is spending $80 million to build a 39-story, 34-unit condo tower at 50 E. Chestnut St.President Charles Huzenis had just eight units sold — prices range from $2.3 million to $3.1 million — before he broke ground early in March, but he figures to sell at least 15 or 20 more before the building is finished in late 2007. That will more than cover the cost of his construction loan.
"We've looked at the demographics, and the fact is, there are 160,000 people in Cook County with net worths of $1 million or more," he says. "There is enough wealth here to support this kind of condo construction. The demand is so good this spring that it's surprising even us."
Still, some developers worry about competition in hotbeds such as the South Loop. Russland Capital Group Inc. is hoping to break ground soon on a 28-story, 268-unit tower at 1400 S. Michigan Ave. So far, some 60% of the condos are sold.
"We'd like to get to 80% before we start construction," says Alexander Vaisman, a general partner in Russland. "The problem is, there are six or eight other condo buildings going up in the neighborhood. Sales are still good, but we're feeling some pressure from the competition."
©2006 by Crain Communications Inc.
Tuesday, September 19, 2006
Glut reaction?
Sellers acknowledge that market has slowed, but buyers see opportunity in the 'G' word
By Mary Umberger Tribune staff writer
Published September 17, 2006
In the condo market, "glut" is becoming a four-letter word--at least for sellers.The once-exuberant market isn't dead--drowsy, maybe, but not dead--and it's a brilliant time to be a buyer, real estate experts say."Buyers are expecting more. They know it's a buyer's market," according to Deerfield agent Honore Frumentino. "The sellers who are willing to play ball are getting their homes sold."The ones who still think Santa Claus is going to come down the chimney--their homes are going to still be sitting there."What she, along with many other Chicago-area agents, means is that the eager seller needs to spruce up and price right to get the deal done, because there are a ton of condos on the market.To be precise, there are about 12,000 condos in a "ton," that being the number of units for sale (excluding townhouses) throughout metropolitan Chicago at the end of August, according to the Headrick-Wagner Appraisal Group of Naperville.That doesn't, however, count those for-sale-by-owner and some new units whose builders don't market through agents, according to Chip Wagner, president of Headrick-Wagner."There are large developments coming on the market that aren't being reflected on the MLS," Wagner says.Whether that's a "glut" is debatable: Some consider the market "balanced" if there's a four-month supply of homes for sale. That is, it would take four months to sell the inventory if no other properties were to come on the market. Others see it "balanced" with a six-month supply. Headrick-Wagner estimates a 6.1-month supply of condos in the overall Chicago market, just outside the more generous definition."Overall, we're almost double what we were last year in Naperville," agent Gail Niermeyersays of inventory. "And market time is probably double what it used to be--four to five months."But by the same token, I just sold one luxury condo and one so-called regular condo," she says. "People just have to be patient."And realistic, the agents say. Homeowners must pay close attention to sales prices of comparable units, and they may have to throw in some incentives--offering to pay the buyer's condo association dues or closing costs, for example."I tell sellers to watch the market to see what the last [comp] sold for and get yourself down to that sale price so you can be the next one," Niermeyer says.Such price adjustments tend to be easier said than done."People get used to things selling at a certain price level," says Palos Park broker Doug Blount. "They're reluctant to give up what they think they've gained."Frumentino says it's generational. "The younger sellers are listening more [to suggested price changes] than older sellers," she says. "Older sellers are still banking on making a killing without doing that much."Overall, though, Blount says, sellers appear to be adapting.For example, since the beginning of the year, asking prices for condos and townhouses in his southwest suburban marketplace--Orland Park, Palos Hills, Palos Park and Palos Heights--have gone up 6.2 percent, he says.But between June and the end of August, those asking prices inched up 2.8 percent, indicating that sellers are being more aggressive to get buyers' attention, Blount says.Sales prices, though, didn't dip commensurately: The average for the long period and the more recent one were essentially the same, he says."There's more negotiation," he says. "Buyers are coming in a little lower, but sellers are negotiating pretty tough, hanging on to their [lowered] price."That equilibrium may change, though, if inventories continue to pile up while would-be buyers wait and see, a phenomenon that even the National Association of Realtors acknowledges."Psychological factors are causing some buyers to remain on the sidelines, waiting for prices to stabilize or for more favorable news about the market and the economy," said David Lereah, NAR's chief economist, as he announced Sept. 1 that contracts to buy all types of homes in July were down 16 percent from a year earlier.Craig LeMoyne knows it's a buyer's market, so he took his time this summer looking for a condo after a job transfer to Chicago from suburban Detroit. He traipsed through an estimated 60 units before settling in early September on a two-bedroom place on the North Side. But the deal fell through, and now he's thinking about becoming a renter again."Some of these units are just ridiculously priced," LeMoyne said. "They don't realize the market has changed."He had good reason to be deliberative in his search: He lost about $20,000 when he sold his home in Dearborn."I bought four years ago, and it was a hot market then," he said. "The market tanked. I'm very gun-shy. I don't want to make the same mistake."Though his new job is on the South Side, LeMoyne shunned the South Loop because he worried that it's overbuilt.He's hardly the first to wonder aloud about the condo-filled neighborhood, where sales outshone all other downtown areas in 2005 and through the first quarter of this year, and then dropped off, according to a report from Appraisal Research Counselors, which specializes in tracking development in downtown Chicago.In the second quarter of this year, about 2,000 units were completed, being marketed or proposed by developers there, accounting for almost half of all such condos in the broadly defined downtown area, said Appraisal Research vice president Gail Lissner.And there's more South Loop construction on the way. Nonetheless, Lissner predicted the neighborhood would continue to command a "solid market share," with demand driven by the major retail development underway along Roosevelt Road.Downtown housing, in general, has exploded to more than 80,000 units currently from 48,000 in 1990. It may top 100,000 by 2010. Sales are tending to keep up, according to her company's report.Investors have played a significant role in those sales throughout the housing boom, and Lissner and the report's co-author, Ron DeVries, worry about how much "flippers"--investors who attempt to resell units right away--will weigh on an overall slowing market. So far, they say, concerns about investors who just walk away, leaving their purchase deposits on the table, haven't played out, they said.Flippers are impossible to quantify because sales contracts and property-transfer data don't spell out the intentions of a buyer, analysts say. But industry studies of quick-turnaround sales and other indicators suggest flippers may have been involved with as much as 30 percent of sales in some of the nation's "superheated" markets, according to David Berson, chief economist for Fannie Mae. Anecdotally, flippers were very active in some parts of Chicago at the height of the boom, though they're not a significant presence in the condo market now, according to local agents."The investors have disappeared," said Arlington Heights agent Mary Zentz. "Now, with the market slowed down, there is just no opportunity to have the easy sale. They can't find the fast turnaround."Baby Boomers also are credited with fueling the condo market, and industry experts expect that to continue.Frumentino, for one, expects Boomers to continue to downsize from single-family homes as their nests empty and they approach retirement. "We'll still have a lot of Baby Boomers who want to make lifestyle changes, and it won't matter [for them] what's happening with the economy."She says that sales of condos and townhouses throughout the North Shore are down about 10 percent down from last year, with 202 going under contract last month, down from 226 in August 2005. About 1,600 North Shore condos and townhouses are for sale now, though comparable MLSNI inventory data for last year aren't available, she said."We have about an eight-month supply, and that's not bad," she says. "Until recently, until the boom, it took four or five months to sell anything," she said. "The market is price-sensitive, but it is not dead. If people see value in a home, they're going for it."But "this is not a market that has any forgiveness," Frumentino said. "Everything has to look good, show well, price well."She said the current wave of incentives from sellers may be short-lived."Once we get into 2007, I think they won't be such an issue. In the last part of the year, you always have sellers who don't want to carry [their units] into the next year and are willing to get closed by the first of the year."Such a change would be expected as the market "normalizes," she says."We've just had the longest abnormal market since the '70s. This was a run that nobody could predict and we enjoyed it for a long time, and now we're back to normal."Blount says he's expecting next month to indicate where the market is heading. "I think October will tell us what's really happening. August is typically a slower market, and I'm thinking this year is a more typical year than we've seen for a while."I'm not too concerned at this point," he says. "The market was very strong for a couple of years, and it can't go on forever."Frumentino said the game has shifted to buyers. "It's been a long time coming for them. They had to wait, but now they're flexing their muscles."We're all taking note."
----------mumberger@tribune.com E-mail this story
Copyright © 2006, Chicago Tribune
By Mary Umberger Tribune staff writer
Published September 17, 2006
In the condo market, "glut" is becoming a four-letter word--at least for sellers.The once-exuberant market isn't dead--drowsy, maybe, but not dead--and it's a brilliant time to be a buyer, real estate experts say."Buyers are expecting more. They know it's a buyer's market," according to Deerfield agent Honore Frumentino. "The sellers who are willing to play ball are getting their homes sold."The ones who still think Santa Claus is going to come down the chimney--their homes are going to still be sitting there."What she, along with many other Chicago-area agents, means is that the eager seller needs to spruce up and price right to get the deal done, because there are a ton of condos on the market.To be precise, there are about 12,000 condos in a "ton," that being the number of units for sale (excluding townhouses) throughout metropolitan Chicago at the end of August, according to the Headrick-Wagner Appraisal Group of Naperville.That doesn't, however, count those for-sale-by-owner and some new units whose builders don't market through agents, according to Chip Wagner, president of Headrick-Wagner."There are large developments coming on the market that aren't being reflected on the MLS," Wagner says.Whether that's a "glut" is debatable: Some consider the market "balanced" if there's a four-month supply of homes for sale. That is, it would take four months to sell the inventory if no other properties were to come on the market. Others see it "balanced" with a six-month supply. Headrick-Wagner estimates a 6.1-month supply of condos in the overall Chicago market, just outside the more generous definition."Overall, we're almost double what we were last year in Naperville," agent Gail Niermeyersays of inventory. "And market time is probably double what it used to be--four to five months."But by the same token, I just sold one luxury condo and one so-called regular condo," she says. "People just have to be patient."And realistic, the agents say. Homeowners must pay close attention to sales prices of comparable units, and they may have to throw in some incentives--offering to pay the buyer's condo association dues or closing costs, for example."I tell sellers to watch the market to see what the last [comp] sold for and get yourself down to that sale price so you can be the next one," Niermeyer says.Such price adjustments tend to be easier said than done."People get used to things selling at a certain price level," says Palos Park broker Doug Blount. "They're reluctant to give up what they think they've gained."Frumentino says it's generational. "The younger sellers are listening more [to suggested price changes] than older sellers," she says. "Older sellers are still banking on making a killing without doing that much."Overall, though, Blount says, sellers appear to be adapting.For example, since the beginning of the year, asking prices for condos and townhouses in his southwest suburban marketplace--Orland Park, Palos Hills, Palos Park and Palos Heights--have gone up 6.2 percent, he says.But between June and the end of August, those asking prices inched up 2.8 percent, indicating that sellers are being more aggressive to get buyers' attention, Blount says.Sales prices, though, didn't dip commensurately: The average for the long period and the more recent one were essentially the same, he says."There's more negotiation," he says. "Buyers are coming in a little lower, but sellers are negotiating pretty tough, hanging on to their [lowered] price."That equilibrium may change, though, if inventories continue to pile up while would-be buyers wait and see, a phenomenon that even the National Association of Realtors acknowledges."Psychological factors are causing some buyers to remain on the sidelines, waiting for prices to stabilize or for more favorable news about the market and the economy," said David Lereah, NAR's chief economist, as he announced Sept. 1 that contracts to buy all types of homes in July were down 16 percent from a year earlier.Craig LeMoyne knows it's a buyer's market, so he took his time this summer looking for a condo after a job transfer to Chicago from suburban Detroit. He traipsed through an estimated 60 units before settling in early September on a two-bedroom place on the North Side. But the deal fell through, and now he's thinking about becoming a renter again."Some of these units are just ridiculously priced," LeMoyne said. "They don't realize the market has changed."He had good reason to be deliberative in his search: He lost about $20,000 when he sold his home in Dearborn."I bought four years ago, and it was a hot market then," he said. "The market tanked. I'm very gun-shy. I don't want to make the same mistake."Though his new job is on the South Side, LeMoyne shunned the South Loop because he worried that it's overbuilt.He's hardly the first to wonder aloud about the condo-filled neighborhood, where sales outshone all other downtown areas in 2005 and through the first quarter of this year, and then dropped off, according to a report from Appraisal Research Counselors, which specializes in tracking development in downtown Chicago.In the second quarter of this year, about 2,000 units were completed, being marketed or proposed by developers there, accounting for almost half of all such condos in the broadly defined downtown area, said Appraisal Research vice president Gail Lissner.And there's more South Loop construction on the way. Nonetheless, Lissner predicted the neighborhood would continue to command a "solid market share," with demand driven by the major retail development underway along Roosevelt Road.Downtown housing, in general, has exploded to more than 80,000 units currently from 48,000 in 1990. It may top 100,000 by 2010. Sales are tending to keep up, according to her company's report.Investors have played a significant role in those sales throughout the housing boom, and Lissner and the report's co-author, Ron DeVries, worry about how much "flippers"--investors who attempt to resell units right away--will weigh on an overall slowing market. So far, they say, concerns about investors who just walk away, leaving their purchase deposits on the table, haven't played out, they said.Flippers are impossible to quantify because sales contracts and property-transfer data don't spell out the intentions of a buyer, analysts say. But industry studies of quick-turnaround sales and other indicators suggest flippers may have been involved with as much as 30 percent of sales in some of the nation's "superheated" markets, according to David Berson, chief economist for Fannie Mae. Anecdotally, flippers were very active in some parts of Chicago at the height of the boom, though they're not a significant presence in the condo market now, according to local agents."The investors have disappeared," said Arlington Heights agent Mary Zentz. "Now, with the market slowed down, there is just no opportunity to have the easy sale. They can't find the fast turnaround."Baby Boomers also are credited with fueling the condo market, and industry experts expect that to continue.Frumentino, for one, expects Boomers to continue to downsize from single-family homes as their nests empty and they approach retirement. "We'll still have a lot of Baby Boomers who want to make lifestyle changes, and it won't matter [for them] what's happening with the economy."She says that sales of condos and townhouses throughout the North Shore are down about 10 percent down from last year, with 202 going under contract last month, down from 226 in August 2005. About 1,600 North Shore condos and townhouses are for sale now, though comparable MLSNI inventory data for last year aren't available, she said."We have about an eight-month supply, and that's not bad," she says. "Until recently, until the boom, it took four or five months to sell anything," she said. "The market is price-sensitive, but it is not dead. If people see value in a home, they're going for it."But "this is not a market that has any forgiveness," Frumentino said. "Everything has to look good, show well, price well."She said the current wave of incentives from sellers may be short-lived."Once we get into 2007, I think they won't be such an issue. In the last part of the year, you always have sellers who don't want to carry [their units] into the next year and are willing to get closed by the first of the year."Such a change would be expected as the market "normalizes," she says."We've just had the longest abnormal market since the '70s. This was a run that nobody could predict and we enjoyed it for a long time, and now we're back to normal."Blount says he's expecting next month to indicate where the market is heading. "I think October will tell us what's really happening. August is typically a slower market, and I'm thinking this year is a more typical year than we've seen for a while."I'm not too concerned at this point," he says. "The market was very strong for a couple of years, and it can't go on forever."Frumentino said the game has shifted to buyers. "It's been a long time coming for them. They had to wait, but now they're flexing their muscles."We're all taking note."
----------mumberger@tribune.com E-mail this story
Copyright © 2006, Chicago Tribune
Tuesday, August 22, 2006
Apartment wave forms on Chicago's horizon From the Crain's Chicago Business Newsroom As condos cool, rental construction heats up
August 20 08:28:00, 2006 By Alby Gallun
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Amid rising occupancies and rents, the downtown apartment market is on the verge of its biggest construction boom in nearly 20 years.
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Amid rising occupancies and rents, the downtown apartment market is on the verge of its biggest construction boom in nearly 20 years.
Developers will add more than 1,250 apartments to the downtown market this year and are working on plans to build as many as 8,000 units over the next four years, according to a report by Appraisal Research Counselors, a Chicago real estate consultancy. That would increase the total 44% to roughly 30,250 units.
Condominiums have been the property type of choice for many downtown developers, but some now are turning to apartments as the condo market slows.
The rental market, meanwhile, is surging after a long slump, as an improved job market boosts demand for apartments and thousands of units are converted into condos, shrinking supply. The number of units fell 25% since 1991.
"Supply has gone way down and with the rise in rents and occupancies, a lot of these projects are feasible right now," says Appraisal Research Vice-president Ron DeVries.
After bottoming out at 89.7% in 2002, the downtown rental occupancy rate hit 97.2% at the end of the second quarter, according to Appraisal Research.
With the upper hand over tenants, downtown landlords have nixed concessions like free rent, fueling a 13% increase in effective rents at luxury buildings over the past year.
The timing couldn't be better for a few developers who are close to completing projects, including Chicago-based Golub & Co., which is leasing units at the Streeter, a 481-unit tower at 345 E. Ohio St., and Fifield Cos. of Chicago, which is wrapping up the 450-unit Residences at Left Bank at 300 N. Canal St.
Yet the party is about to get more crowded. Five new buildings accounting for 1,976 units are expected to open in 2008. Dallas-based Lincoln Property Co. and Amli Residential of Chicago each have South Loop projects in the works, and Chicago's Magellan Development Group LLC is working on two East Loop towers with a combined 1,083 units.
On top of that, Appraisal Research is tracking projects that could add about 5,562 apartments to the market over the next four years. With a slowing condo market, some condo developers are thinking about selling their sites to firms that build apartments, or even doing it themselves.
The question is whether the exuberance of developers will come back to haunt them when the supply of apartments exceeds demand. Appraisal Research's Mr. DeVries says he's not overly concerned, noting that condo conversions have removed so many apartments from the market that there are actually fewer rental units downtown now than there were 15 years ago.
"I think the market is there to absorb" extra supply, says Matthew Lawton, who sells apartment buildings and lines up financing as senior managing director in the Chicago office of Holliday Fenoglio Fowler L.P. "Will it put a governor on . . . rent growth? Absolutely."
copyright 2006 by Crain Communications Inc.
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