Chicago housing sales in January dropped by nearly 11 percent from the year before, according to data released on February 27th by the Illinois Association of Realtors. This is the 10th consecutive month of falling sales, although prices edged upward by 2.2 percent.

Another report, this one from the National Association of Realtors, showed a 4.3 percent decline in year-over-year sales nationally. It also noted the sixth straight month of declines in the median price of existing homes, which dipped another 3.1 percent last month. The glut in housing inventory in some areas was beginning to scale back, according to the report. However, with new listings hitting the MLS as the “spring selling season” approaches reset January’s inventory back at December levels—a 6.6-months’ supply. The supply hit its peak at 7.4 months in October, the NAR said.

Economist Mike Larson said the inventory problem is far from resolved.

“Inventory has come down [since last year], and a lot was made of that,” said Larson, who tracks housing for Weiss Research in Jupiter, Fla. “But frankly, if you look at historical data, that happens just about every year.

“Inventories are climbing again because of what I call ‘the march of the relisters,’” Larson said. Sellers whose homes failed to sell in spring and summer took them off the market around Thanksgiving and are now relisting them, he explained.

“I expect the inventory numbers to continue rising in February, March and April, and we may very well set a new high,” Larson added.

The NAR report also showed that housing sales in the Midwest overall stayed steady, with sales rising by under 1 percent from January 2006, though the median price fell by 3.5 percent. The biggest Chicago-area decline was in Grundy County, where home sales sagged more than 15 percent. On the other end of the scale, DeKalb County sales spiked by 33 percent, though median prices fell by 11 percent, according to the Illinois Realtors.

Condo sales in the Chicago area dropped by 3.4 percent, but prices simultaneously rose by 3 percent. Cook County condo prices went up 6.4 percent year over year—the best appreciation rate in the region.

Four years ago, Trump offered about 40 insiders a sweet proposition: low, low contract prices—in some cases roughly $500 a square foot—on condos in his planned Trump International Hotel & Tower.

Right now, similar units in that Chicago New Construction condo building—which is scheduled for completion in 2009—are being offered at up to $1,343 a square foot. This would seem like a bonanza for the “friends and family” group who got the early discount . . . except for one minor hitch.

Trump is now telling them that their agreements are “null and void.”

This elite group of buyers, many of whom have business connections with the project, received letters from Trump’s attorney informing them that their deals had been canceled. They now have to pay an inflated rate, much closer to current market prices, if they want to close on their condo units.

Real estate experts are baffled at the maneuver.

Kevin Ahearn, president of a Boston-based real estate firm specializing in luxury residences, said that, “In my experience it would be very unusual for a developer to get out of a purchase-and-sale contract because prices have gone up.”

If Trump asked people involved with his project to buy units “to help [it] appear successful and achieve certain hurdles,” said Richard Peiser, a professor of real estate development at the Harvard Graduate School of Design, “it would seem the buyer should enjoy the upside.”

The “friends and family program” allowed certain people affiliated with the Trump tower project to buy one traditional condo or hotel condo unit at 10 percent below its original sales price. They were also able to put down an initial deposit of only 5 percent, rather than 15 percent deposit required of other buyers.

“As we anticipate raising prices periodically throughout the pre- and post-construction period, this opportunity would become increasingly more worthwhile with each price increase,” says a Sept. 24, 2003, letter from the Trump Organization and Koenig & Strey GMAC Real Estate, sales agent for the project. The letter instructed buyers that they could re-sell their units, or transfer their purchase agreements to any third party, whenever they chose after construction began.

Since the real-estate boom sputtered to a halt two years ago, sales of condos in the $775 million tower have slowed, with about 21 percent of them still on the market. Meanwhile, construction costs have gone through the roof.

Trump explained that he was reneging on the deal with his associates to give himself “more income to handle potentially higher construction costs.”

“This job has become a tremendous success because of me,” he added, with characteristic modesty. “Everyone knows, with a friends and family program, if a job is very successful, people have clauses whereby you renegotiate or terminate.”

“Anyone who buys preconstruction gets a financial benefit for the risk they take,” argued Judi Diamond-Falk, an architect who designed an early sales office for Trump in Chicago.

Trump gained a marketing benefit from the early sales, she said, because he “could say that a certain percentage of units are presold to get his financing and tell the public a certain percentage was presold. People didn’t know they were friends and family sales.”

In other words, he paid his friends to make his project look more viable than it actually was, and now wants to take their money back.

[tags]Trump Tower, Chicago Condos, Condo News[/tags]

Today, two specific types of condo properties are showing strong sales. Both in the city and suburbs, projects that appeal to “price-point” buyers–entry-level buyers and first-time investors, looking for condos at $200 per square foot or less–are in strong demand. Meanwhile, in downtown Chicago, developments offering views of Millennium Park and Grant Park are significantly outperforming their competition.

Suburban condominium conversions exploded in 2006, with more than 4,000 suburban units converted from rental apartments to condos (compared with the one downtown Chicago high-rise that went condo). The most typical suburban units for sale are one- and two-bedroom condos priced between $125K and $175K, with two-bedrooms showing stronger demand. Even including the renovation packages developers now offer, these conversions are much more affordable than new construction in the suburbs.

In downtown Chicago, Millennium Park is a powerful magnet for buyers, and developments with East Randolph Street and South Michigan Avenue frontage are proving easy to sell. Views of Millennium and Grant Parks are popular and highly marketable.

Magellan’s Aqua development, a block north of Millennium Park, is a combination hotel/rental/condo project with condos occupying the upper floors. The panoramic views, combined with a hotel and its amenities on-site, have proven very attractive to buyers–nearly 70% of the units are under contract.

The Legacy at Millennium Park, offering sweeping views of the park as well as hotel-style amenities via its connection to the University Club, is also recording brisk sales ( 70% under contract). And the mixed-use office/residential project at 55 E. Monroe (“The Park Monroe”) is reportedly selling well in its early stages of development.

[tags]Chicago condo sales, Legacy at Millenium Park, Aqua Condos, Downtown Chicago condos[/tags]

[dels]Chicago condo sales, Legacy at Millenium Park, Aqua Condos, Downtown Chicago condos[/dels]

The new Trump Tower in River North will be home to 92 floors of regular and hotel condos, making it the largest residential building in North America. The tower marks a new era in Chicago housing development – the Condominium Hotel, which aims to convert suburbanites, vacationers, and business travelers into part-time Chicagoans by offering condominiums for rent. In the past, these types of developments have been very lucrative for real estate investors, but it is unclear whether or not the Chicago market can sustain many of these condotels. “The luxury hotel market is clearly hot…it is unclear how much space Chicago, which is already overbuilt in the luxury condo market, can absorb,” says Diane Swonk of Chicago-based Mesirow Financial Holdings Inc. Donald Trump Jr., who is heading development of the Trump Tower, is likewise skeptical: “I don’t think that Chicago can sustain seven, eight or 10″ condo-hotels.

The Hotel Blake in Printers Row, as well as the Aldens Hotel on State Street, didn’t make it, and reversed decisions to rent condominiums in Chicago. But despite this and the glut of condominiums in Chicago, buyers are embracing the hotel-condo idea, and buying these types of condos. According to experts, brand recognition figures prominently for buyers looking for pre-construction deals. Popular, recognized names like Trump will most likely help these developments, but it is unclear whether foreign companies who are staking out a claim in the condotel market can weather such a market.

[tags]Chicago Condo Hotels, Trump Tower, Condotels[/tags]

[dels]Chicago Condo Hotels, Trump Tower, Condotels[/dels]

Officials from the landmarks division of Chicago’s Department of Planning and Development are giving support to the proposed dismantling of the historic Farwell Building at 664 N. Michigan Avenue.

The Farwell, designed by architect Philip Maher, is a legally protected city landmark ornamented in a mixture of French revival and art deco styles.
It formerly housed the Terra Museum of American Art.

The proposal, submitted by Chicago-based Prism Development Company, calls for the building to be “peeled like a grape,” according to Chicago architecture writer Lynn Becker. Prism plans to remove the Farwell’s limestone façade, tear down the 11-story building, and reapply the facade to the new structure it hopes to build—a luxury condo development named The Ritz-Carlton Residences.

The Ritz-Carlton Residences will be managed by Ritz-Carlton Hotel Co. It plans to offer 86 luxury condos, as well as office and retail space and parking.

Some preservationists maintain that if Prism is allowed to proceed, it effective signals the end of landmark protection in Chicago. The fact that six stories of the Farwell would be used for parking has only made them angrier.

“We fear that bowing to what is convenient for a developer will set a dangerous precedent that will be repeated again and again with other historic buildings,” said Jonathan Fine, president of the advocacy group Preservation Chicago.

“Each commissioner voting on the Farwell proposal needs to be aware that they are not just voting on the fate of one building, but setting a precedent that will turn the clock backward and handcuff the city’s power to protect its landmarks,” added Becker.

Although the McGraw-Hill Building at 520 N. Michigan Ave. was similarly stripped and reassembled in 1998, preservationists point out that in that case only the facade had landmark status. The Farwell Building would be the first such landmark to be radically changed, they said.

Jon Rodgers, principal at Prism, along with city planning officials, said that the proposed renovation will save the elderly landmark.

“We had two independent engineers, and they both concluded that the building is falling apart,” Rodgers said. “The exterior facade is being held together by a system of metal pins, because the original structure system has eroded away completely. The mansard roof is being held together by chicken wire.”

Rodgers maintained that the project, expected to finish by the summer of 2009, will “breathe new economic life” into the Farwell Building.

Officials were originally skeptical of the Farwell plan, said Brian Goeken, deputy commissioner of the Planning Department’s landmarks division. But once engineers hired by both the city and Prism had outlined the building’s deterioration, it was obvious that this was the best way to proceed, he said.

“I did not foresee bringing these recommendations,” said Goeken. “It’s a preservation matter of last resort.”

The landmarks division will lend its support to Prism’s plan at the Commission on Chicago Landmarks’ Thursday meeting, where commission members are expected to vote on it.

[tag]Chicago real estate, Chicago condos, Chicago homes[/tag]

Mark Nash, the Chicago-based author of five books on real estate, also publishes an e-zine called “Agent to Agent.” This e-zine recently compiled results from a survey of 923 real estate agents, brokers, and executives from all 50 states and Canada, which asked what’s “in” and what’s “out” among home buyers as we move into 2007.
Here are some highlights of what they had to say:
Home-buyers want . . .
Upscale garages: It’s not just where you park the car and stash your junk anymore. Buyers want to see attractive storage systems, a mini-fridge, heating / AC with good insulation, and tough but residential-looking flooring.
Personal spaces: What Ward Cleaver called a “den” is now a “man (or mom) cave”—and buyers want them. These are dedicated personal spaces where one person can work or relax undisturbed.
Two home offices: The number of families where two people work at home is rising. Each office space should be at least 10-by-10 feet. It’s also easier to use this feature as a selling point if the home is convenient to a site offering hourly rentals of meeting spaces that provide technology and privacy.
Rejuvenation rooms: Spaces for exercise, meditation and yoga are in demand—along with exotic, pricey saunas and showers (with features like waterfall fixtures and programmable temperature).
Heated patios, walkways and driveways: These cut down on winter maintenance like shoveling, and also allow homeowners to squeeze extra weeks of use out of the patio in the spring and autumn.
Sustainable design: This includes energy-efficiency, indoor air quality, and effective use of resources—if they’re available, the use of natural energy sources like wind, solar and geo-thermal, is maximized.
Structured wiring: Buyers with a high-tech orientation want coaxial TV cable (RG-6), Category 5E voice and data lines, distributed radio and remote camera security all wired into multi-outlet boxes called “home network centers.”
Different finishes: The new trend is to have stained-wood base cabinets and painted-wood upper cabinets.
Glass tiles: Compared to ceramic tiles, glass tiles reflect light and add a brightness and shine to kitchens and bathrooms, at virtually the same price.
Drawer-style refrigerators/freezers and dishwashers.
Engineered-stone compound countertops: With a lower price-tag than granite, and with a variety of colors and finishes available, these synthetics will be the next new thing in 2007 kitchens.
Exotic and reclaimed woods.
Bolder, deeper colors for shutters, doors and window frames.
A master-bedroom laundry. These backup laundry spaces began to appear in 2006 and will definitely catch on in 2007.
A wrought-iron fence.
Homebuyers will avoid . . .
“As is” homes. It’s a Buyer’s Market, and buyers expect you to spend some effort to court them.
Buyer incentives: These are confusing gimmicks that don’t sell houses. Just subtract the cost of your incentive offer from your asking price and come in lower than your competition.
Nonstop open houses: Buyers know you’re desperate if your home is open every Sunday—they’re watching. Try to have a public open house about every three weeks.
Glass-front upper cabinet doors in the kitchen: Buyers have discovered that these expose disorganized cabinets, and require a lot of maintenance to keep clean.
Vessel sinks: Bowl-shaped, above-counter bathroom sinks have also proven to need too much attention to keep them looking attractive.
Shiny metal finishes: Antiqued and polished brass are out. Brushed nickel and pewter is in.
Stainless-steel refrigerators and dishwashers: Buyers’ tastes are moving toward warmer colors and a less “industrial” look.
Spiral staircases: These stairs are just unfriendly to aging baby-boomers, as well as their pets and grandchildren.

[tag]Chicago real estate, Chicago homes, home buyers, home sellers, how to sell your home[/tag]