Author Archives: Paul Blackburn

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January 22, 2015

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678 Kingsbury to become Luxury Lofts in River North

Finally, the project at 678 N. Kingsbury, also known as The Ronsley, is getting underway and what a project it will be. According to Crain’s Chicago Business, the 5 story building will include six newly built penthouses as well. The building will be altered greatly to include a glass facade and the penthouse units will be built on top of the existing structure. In addition to the new penthouse units, a new structure will be built onto the back of the building (where a parking lot currently exists. Think of it as adding an addition onto the back of a single family house).

What will the pricing be for 678 N. Kingsbury (The Ronsley)? According to the list agent, prices will range from $889,900 to $5.4 million. This will equate to roughly $650 to $900 a foot which is definitely on the high end for this area and on the high end for Chicago as a whole. The list agent described the building when he gave the following quote “It’s an ultra-luxury building and of the first Soho New York style lofts in Chicago.” The building will have a total of 41 units which is in line with other luxury buildings currently being constructed in Chicago (think of 400 W. Huron, 100 W. Huron and 4 E. Elm).

My thoughts on 678 Kingsbury

It will be interesting to see how the market responds to pricing. I do believe there is a need for luxury lofts in Chicago. Many of the loft buildings have not been constructed on a luxury level. Instead, most loft buildings and units are very middle market. I like the way the listing agent described the building as a “SoHo New York Style” loft project.

The location of the project is in River North, but it is quite far west in River North. Most buyers in this area looking to spend millions would prefer to purchase a single family home as opposed to a condo or loft so it will be interesting to see how this project is received, but as I said before I do believe there is a need for luxury lofts in Chicago right now.

The project is expected to break ground in February of this year (2015).

 

Paul Blackburn is an Illinois licensed Realtor and Broker with @properties. He can be reached anytime via e-mail at Paul@PKBlackburn.com

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January 16, 2015

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NEW GOLD COAST CONDO BUILDING AT WALTON & STATE. No. 9 Walton

A new luxury condo project is planned for the vacant space at State & Walton, adjacent to Walton on the Park. The most recent new construction developments in the near north side have mostly been made up of 3 Bedroom and larger units. The new development at Walton and State will offer 1 Bedrooms with 1,500 square feet all the way up to the penthouse unit which will have a total of 11,000 square feet.

Information on the new development at Walton and State is now being released. One Bedroom homes are starting around $1.4 million. Two Bedrooms will start around $1.85 million and Three Bedrooms will start at $2.5 million. However, please keep in mind this pricing is for the smaller floor plans of the respective bedroom count. Pricing will range roughly from $900 to $1,200 per square foot.

Each unit will have generous outdoor space. One of the best aesthetic features of the facade of the building is the fact that the balconies, for the most part, are recessed into the building and not overhanging. There is a wide array of layouts to choose from with varying square footages.

What Amenities will No. 9 Walton have?

The 4th Floor will house an indoor pool and spa, complete with a hot tub, steam room and sauna. The 5th floor will feature an open air atrium looking down onto the pool as well as a fitness center and small lounge. The 6th floor will feature a dog run, pilates studio and yoga studio. The 7th floor will feature a private dining / party space, outdoor terrace, full bar and kitchen along with a wine room.

Completion is expected in early of 2017.  This development is one of several new developments recently approved and started such as 4 E. Elm, 400 W. Huron and 100 W. Huron.

 

For more information on this development please do not hesitate to contact me.

 

Paul Blackburn is an Illinois licensed Realtor and Broker with @properties in Chicago’s Gold Coast office. He can be reached at anytime at Paul@PKBlackburn.com

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January 9, 2015

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Obama’s FHA Insurance Premium Cut EXPLAINED

All over the news the past couple of days has been the fact that President Obama announced a cut to the FHA Insurance Premium. Rhetoric from both sides of the isle may have you confused as to what this means, whether you are in the real estate market or not.

A FHA loan, is simply a loan that is INSURED by the FHA (Federal Housing Authority). FHA guidelines are such that allow lower down payments and more flexibility on basic qualifications than traditional lenders. Typically, whenever you put less than 20% down, you must acquire mortgage insurance. Even if you were not getting a loan insured by the FHA, you would still need to purchase mortgage insurance. Mortgage insurance is typically priced as a percentage and added onto your payment every month.

For example. If you had a loan that was only 10% down through Chase Bank you would need mortgage insurance. Your interest rate on a 30 Year Fixed may be 4%, but the mortgage insurance premium might be .7%. Therefore, at the end of the day, your effective payment would be 4.7% (now these are very simplistic terms as it is a bit more complicated than this, but this is the basics of it).

FHA Insurance has been considerably higher than standard mortgage insurance. The result of this has been those who would normally get an FHA loan have decided not to and instead go with a loan that only requires private mortgage insurance, provided that they can qualify for such a loan. What are the FHA Premiums and what will be the new premiums?

The old FHA premium was 1.35%. Yes, that’s right, 1.35%. That means that if the lender gave you a rate of 4% on your FHA insured loan, then your effective rate, with the FHA insurance would end up being 5.35%. On top of this monthly premium, FHA also requires an up front premium of 1.75% of the total loan value. Meaning that if the loan value was $100,000 then you would have an additional cost at closing of $1,750.

The new FHA premium that will be introduced will be cut by .5, meaning it will now be .85%. This is a big difference as it now puts FHA within the realm of private mortgage insurance (but still at the high end of it). The 1.75% up front premium, however, is not slated to go away.

At the end of the day this means that the average FHA borrower will save roughly $900 per year. While it is not a lot of money, for first time home buyers that $75/80 per month could help push them off the fence from renting to buying.

At the end of the day, this means that there are more options for borrowers today which will hopefully mean more buyers will enter the market to help continue the growth of a stable, healthy real estate market.

 

Paul Blackburn is an Illinois licensed Realtor and Broker with @properties. He can be reached anytime via e-mail at Paul@PKBlackburn.com

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January 8, 2015

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My Chicago Real Estate Predictions for 2015!

The Real Estate market in Chicago, for both sales and rentals did quite well not only in 2014 but in 2013 as well. Pricing in some areas have returned to 2006 and 2007 levels so the question is what is in store for 2015? Is it the best time to sell or the best time to buy? What will happen to rent prices which have continued to increase year after year for the past 4 years?

The Residential Sales Market in Chicago

I believe we will see steady price growth throughout the Chicago area, likely around 3%. Inventory levels should increase year over year as new construction comes on line and sellers continue to realize that market conditions have improved. Over the past 2 years we have seen much of the “back log” of buyers, that have been sitting on the fence for years, start buying. I believe much of this backlog has already entered the market. Driving demand in 2015 will be first time home buyers at various price levels, those trading up or down (current home owners moving within the city), and investors / second home purchases.

Interest rates are lower than they have been in well over a year. Current APR on a 30yr fixed is hovering in the 3.8% range.

Now is an excellent time to buy because I believe the hysteria we saw a couple years ago is over and the market is now normalized. This allows buyers who are currently in the market to breath a little as they are looking at property. Keep in mind, however, well priced properties are still selling in a day or twos time and receiving multiple offers. However, unless improperly priced, I do not see residential properties receiving 5 offers and selling for 10/20% above list like we did over a year ago. Is this a bad thing? Not at all! What we saw in 2013 and in 2014 was simply the market equalizing which happens after any crash in any kind of market. We do not want that type of market to continue because it is not stable and it is not sustainable. What we will have in 2015 is a normalized, highly stable and highly sustainable residential real estate market. In short, this means it is a great time for both buyers and sellers as both parties have lower risk when making financial decisions regarding their property.

The Rental Market in Chicago

As many of you know rental prices have been increasing dramatically since 2009/2010. Due to various economic factors that I will not bore you with here, investment money flew into multi family property throughout Chicago. Developers who could not get financing for a 30 unit condo building had no problem shoring up financing for a 300 unit rental building. Currently rents are at all time highs in Chicago.

I believe in 2015 we will see rent prices, in the majority of the city, remain flat or slightly decline. As thousands of new, high end, rental units hit the market in downtown Chicago we will see market times increase for rentals and vacancy rates slightly increase as well. We will see a great deal of units hit the market toward the end of spring through the beginning of fall 2015. We will see in additional 5500+ units hit the market in 2016 as well.

I believe low interest rates and a now steady inventory of for sale properties in Chicago will continue to act as a ceiling for what rental buildings can charge for rent in Chicago.

While we may see base prices high at many of these new buildings opening up, keep an eye out for concessions such as 1 to 2 months free, free parking, along with free utility packages, discounted move in fees, etc. I believe the biggest price declines for rentals in Chicago, however, will not happen until middle / end of 2016.

Some recent articles have been released stating that the current demand for high end rentals in Chicago is sustainable. The sustainability, however, of current demand is almost irrelevant. What is relevant is how the current demand relates to supply. Supply for rentals in increasing heavily in Chicago and continues to do so, not only on a large scale (300 to 500 unit buildings in downtown) but also on a much smaller scale (20 to 40 unit buildings in outlying Chicago neighborhoods away from the city center).

While job growth does continue in Chicago, we need to understand that incomes are not increasing on a citywide level which has determined the ceiling of rent prices in the downtown market.

What rent price range will do well in 2015? We will continue to see the $1,000 to $2,000/mo price point do well. This price point is perfect for those recently removed from college and those transferring to Chicago who plan to purchase in the next year or two but want to save money. The area I believe that will be hardest hit by the new rental supply in Chicago will be the higher end 1 Bedroom prices, priced between $2,500 and $3,500/mo. I believe it will be these units where we will see the largest concessions in 2015.

 

Paul Blackburn is an Illinois licensed Realtor and Broker with @properties in Chicago. He can be reached anytime via e-mail at Paul@PKBlackburn.com

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October 6, 2014

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400 W. HURON – River North’s Newest Luxury Condo Development

400 W. Huron, located in the heart of Chicago’s River North neighborhood is being developed by Smithfield Partners, the same developers as SoNo and 30 W. Oak. 400 W. Huron is slated to rise 16 stories into the air. Luxury residential units will start on the 5th floor and rise up to the 15th floor. The 16th is comprised of private roof deck for 15th floor units.

The condominiums at 400 Huron start at 2,144sf and go up to 4,931sf for the largest unit. The smallest unit is a Three Bedroom, Two and Half bath home, while the largest is a Four Bedroom plus Den, Library and Family with Four Full baths and Two half baths.

The amenities at this new luxury building in River North include everything from a state of the art fitness center to a heated garage and 24hr door staff. The finishes of the actual units will be top notch. They’ll include Valcucine Kitchens and Baths, Miele appliances, custom closet built ins, 10ft ceilings throughout, Floor to Ceiling Windows, Toto plumbing fixtures and upgraded Grohe faucets.  Pricing is set to range from roughly $1,250,000 (3 Bedroom condos) up to $4,000,000 (4 Bedroom + Condos).

New construction developments have been rare in recent years. While 400 West Huron is not a large development at only 26 units, it does help satisfy a much needed demand for new construction in River North. Floor Plans have not been released on other websites as of yet, but I have had a chance to review them. The architect has done an incredible job at maximizing the square footage and use of space per unit. All kitchens open up to large great rooms and bedrooms are situated properly away from the main living areas. Outdoor space is a key feature in this building with many units having balconies (terraces might be a better word to use) that run the length of the unit. Penthouse units even have access to private roof space.

For more information about this building, to get detailed information and a private presentation of floor plans, renditions, etc. please contact: Paul Blackburn with @properties. He can be reached via e-mail at Paul@PKBlackburn.com or via his cell at 773.771.7502

400 West Huron

400 West Huron

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September 3, 2014

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New Construction in Chicago

New Construction condos and single family homes are still in high demand throughout Chicago but some developers are coming to the rescue with smaller projects throughout the city. The biggest problem, however, is that many home buyers are unaware of new projects until they’re mostly sold out. The question is, why?

Many real estate brokers and developers are marketing their new construction to their own clients first and only later listing the property for sale in the public market. While many may scream this is unethical, it actually makes perfect sense. It allows developers to gauge interest from the market and set proper pricing for future units and it allows agents to do right by their buyer clients by bringing them something exclusive.

Many small new projects are popping up around the city but many are not in the staple neighborhoods that you might think such as Lakeview and Lincoln Park. Instead, Ukrainian Village, Logan Square, Bucktown, Wicker Park and even Uptown / Andersonville are seeing new developments from condos to townhomes.

What sort of budget should you have?

If you are looking for a new construction 2 Bed / 2 Bath condo your budget should be up to $500,000 to be able to choose from an array of options in the above mentioned neighborhoods. If you’re looking for a new construction town home, you may find a few under $500,000 but $600,000 to $700,000 would definitely be a better bet.

If you’re looking downtown, well you are pretty much out of luck. There is very limited new construction in areas such as River North, Gold Coast, etc. 4 E. Elm is a new project marketed by our company and the units are starting at $2.1 Million.

Be able to buy off of plans

Many new buildings, even smaller ones are starting to sell primarily based on floor plans or during construction when framing may be the only thing you can check out. Be prepared to make decisions based on floor plans, artistic renditions, etc.

If the developer is established in Chicago they may have models of other projects they’ve completed that  you can tour in order to get a feel for their craftsmanship and an idea of the types of finishes they plan to use.

 

Paul Blackburn is an Illinois licensed broker and Realtor with @properties in Chicago. He can be reached via e-mail at Paul@PKBlackburn.com

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May 28, 2014

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Chicago Condos Still Selling Fast!

Buyer demand, in Chicago’s “hottest” neighborhoods, has continued this spring and will likely continue throughout the summer and fall. Inventory levels remain low throughout Chicago’s best neighborhoods such as Streeterville, River North, Gold Coast, West Loop, South Loop, Lincoln Park, Lakeview…need I go on?

We are seeing many first time buyers enter the market, but they are not the same first time buyers we saw years ago. The last real estate crash scared many away from buying for a significant period of time. Therefore, we are seeing many first time buyers that have established families and excellent income levels. Many think when we say the “first time buyer market” is hot, we are only talking about cheaper condos priced between $100,000 and $300,000. This is no longer the case. Many first time buyers are now couples with children who are purchasing larger units throughout the city at, and even well above, $500,000.

In-Town buyers are back again in full force as well. What we thought may have just been a fad when interest rates were at 3.5%, second home buyers continue to pick up property in Chicago. To clarify, what I mean by “In-Town” buyers are people who have their primary residence elsewhere and are purchasing a home in the city to use on the weekends and holidays, etc. These buyers are not just purchasing small studios, but instead are purchasing everything from high level, large One Bedroom condos (think Trump or The Pinnacle where 1 Beds sell for $525,000 on up) and even single family homes!

If you follow national on the real estate market you will see random stats such as new home starts are skyrocketing but at the same time builders confidence level is decreasing. Some stats are showing that there are less first time home buyers than a year ago. I can see this being true, but after all we had so many people sit on the fence for several years that it would only make sense we would see one year (last year) with an abnormally high amount of first time home buyers. We can’t compare every year to last year! Though, economists always love to do that.

In conclusion, what should you take away from this? The condo market in Chicago is very healthy. Supply is low, demand is high across the board from various types of buyers and buyers that are interested in various types of products. This means the market is healthy; it is as simple as that.

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May 27, 2014

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New Rating System for Condo Associations? Could this catch on?

When buying a condo the biggest concern you should have is the state of the condo association. You are not just buying a property to live in, but you are also buying into an association which manages the common grounds of the property, pays bills for the property, among other things. During the last real estate crash we saw many condo associations in financial difficulty due to mismanagement of funds, poor management companies (or complete lack of) and inexperienced board members who had no business being on a condo board in the first place.

When you purchase a condo in the state of Illinois you are entitled to certain things. You can gather all the information from the condo association such as the meeting minutes, the budget, their bylaws, rules & regulations and a form called a 22.1. A 22.1 form is a standard form that asks questions of the condo association such as “Is the association involved in any litigation” or “Are there any special assessments planned?”

Some buyers take the time to review this information but others do not. In my opinion, this information is extremely critical. I always review these documents for my clients and stress that they review them on their own and direct any questions they have to myself and/or their attorney. A new company, founded here in Chicago, is out to standardize how condo associations are evaluated. They have developed a system, similar to the FICO Credit Score system that evaluates condo associations based on numerous, numerous factors. They then assign a numerical score to the condo association. Their thought is that such a score is much easier understood than evaluating all the condo docs that a buyer may receive. Their thought is “this way, a buyer can look at the score and know immediately the general health of the building itself.”

From a pure business perspective I think the idea is brilliant as it definitely fills a need and want in the market place. From a practicality standpoint, in the real estate industry, I am a little worried about some problems that may arise from such a system.

One of the concerns I have is that buyers will start to simply rely on only the rating. The problem is, with any rating system, no matter how forward thinking they may be, the rating is only good for a current point in time. It does not look forward or help predict problems that may arise in the future. While it may provide valuable insight into a condo associations current health it also takes the work away from the buyer. The buyer may say “great, I don’t have to read all these documents now” but the buyer will also then be less educated as to what is going on with their association.

What about condo associations on the rebound? As many of you may have experienced there have been associations that have had financial problems in the past. What about those that are on the mend? What kind of rating will they get? Could a low rating due to problems in the past keep them down and delay their recovery?

Does this now add to the already expensive process of buying and selling a home? Will this become the new industry norm that not only buyers will use but banks may use during their underwriting process as well? Could this eventually mean longer wait times for mortgages or could it mean lesser wait times because the banks will now only have to look at a score given by this rating agency?

The biggest concern I have, however, are those that will now look at such a rating agency as a replacement for their own due diligence. It was this attitude that spurred the credit bubble we saw just over a half decade ago and it is something we cannot afford to see again. I believe the concept of Association Evaluation is phenomenal and can be a wonderful tool for buyers, sellers and condo associations. But again, it needs to be just that, a tool and not a replacement for Realtor’s, Buyers, and Lenders own due diligence.

 

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March 24, 2014

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HOW TO CHOOSE A REALTOR IN CHICAGO

How do you choose a Realtor (Real Estate Broker) in Chicago whether you are looking to buy or sell? What should you look for?

Real estate brokerages would love you to believe that it is difficult to become a Realtor. I’ve been in the business for 7 years and I can easily tell you, based on the experiences I have had with other agents, that almost anyone can enter this business. Whenever the barrier to entry is low, no matter what the field is, you are bound to attract…..idiots. The fact remains that many people in the real estate business, should NOT be in the real estate business. A Real estate broker is helping you with the purchase or the sale of one of your largest assets, if not THE largest asset you will own. So what should you look for when choosing an agent? How do you pick out the idiots from the heard so you know to avoid them?

An agent that Shuts Up:

An agent should not try to talk your ear off right away. Instead, they should shut up and listen to you. They should listen to your needs and your wants. They should ask you questions and just as important; they should know what questions to ask you. Your agent should not be there to SELL you, instead, they should be there to advise you (and sell your home if that is what you hired them to do).

An agent that is all-knowing:

Surely, an agent can’t know everything and any agent that says they do is a load of crap. What I mean by “all-knowing” is that your agent should UNDERSTAND all aspects of the business. They need to understand how mortgages work, from application through the underwriting process. They should understand the basics of real estate law and contract law. They should understand basic accounting so they can help you evaluate the financials of a condominium association. They do not need to be experts in these fields, but they need basic knowledge in all these fields.

In each transaction it is my job to act as a facilitator. I am here to make sure the attorney is doing things properly, to make sure the mortgage broker is doing things properly, to make sure the condo association is turning over the proper paperwork to my client, and to make sure the agent on the other side of the transaction is doing things properly. Your agent is likely not an attorney nor a mortgage broker, but they should strive to learn as much as they can about these topics. They need to be your advocate throughout the entire transaction.

Knowledge of the market

Real estate is extremely localized and in Chicago there are neighborhoods, within neighborhoods which influence everything from pricing to schools to the overall “feel” of the neighborhood. Your agent needs to know these neighborhoods like the back of their hand. If they don’t, then they should not be working in that neighborhood. They should be able to give you at least rough pricing off the top of their head. While specific pricing may require your agent to look up comparable sales; your agent should be able to at least give you a price range for sale or if you’re a buyer tell you if something is over priced off the top of their head. If they cannot, then they do not know the market well enough.

Not a side job

Your agent cannot be part time. I am sorry, but these agents just piss me off. Helping someone with such a large purchase or sale is NOT a part time gig. If you had $100,000 to invest would you go to a “part time” financial adviser? If you were sick would you go to a “part time” medical doctor? No you wouldn’t, so don’t go to a part time agent.

Your agent needs to be on time

Your agent needs to be on time. If your agent is constantly late, they don’t respect your time. But more importantly, if they can’t manage their time how can they manage anything else? Precision and details are important in this business. If you are buying a home for $500,000 do you want your agent to do things with precision?

An agent that discounts themselves

There was a trend a while back, which is thankfully going away, where agents would greatly discount commissions and kickback large amounts of their commissions to buyers. I will not name the services in this blog, but instead, all I will say is you get what you pay for. The most successful and knowledgeable agents in Chicago do not need to discount their services. Would you trust a doctor that advertised a $25 physical exam? I’m thinking not so much. Same is true with the real estate profession. By the same token, however, hold your agent to high standards. Understand that they are getting paid to represent you and you should expect nothing but the absolute best from your agent.

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March 24, 2014

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MY ADVICE TO FIRST TIME BUYERS IN CHICAGO

First Time Home Buyers always have a lot of questions. Listed below are some of the most common questions and concerns I hear working with home buyers in Chicago.

What Neighborhood in Chicago is the best investment?

Chicago is extremely diverse with so many different neighborhoods each offering their own “feel.” The old saying is real estate is “Location, Location, Location.” This saying continues to be very true, but not just for your pocket book. If you are buying a home to live in, then YOU need to enjoy the location. Try not to get too wrapped up in “How much will this area appreciate in the coming years” but instead focus on “What will I enjoy about this neighborhood while I live  here?” Many buyers don’t give themselves enough credit. The things in a neighborhood that you love or hate, are likely the same things that the next buyer will love or hate as well. Focus on what you will love about the neighborhood first and then focus on what appreciation you may see in the future. After all, if you don’t like the location, then are you really getting your money’s worth?

How much space do I really need in Chicago?

Do you want a two bedroom or a one bedroom? What is more important to you: Space or Quality? Sure, it is great to have both but if price remains the same quality will decrease as space increases. Many people may say “One Bedrooms are not good for resale” In some areas this may be true, but overall I do not find this to be the case. Instead, you need to ask yourself the question “OK, this is only a One Bedroom but what do I like about it over some of the Two Bedrooms I have seen?” Chances are the quality is better, the living room space may be larger, the view may be better. Are these things important to you?

Transportation

How close are you to Transportation? Do you use the CTA or no? While that six block walk to the red line may seem wonderful in the summer time, it will feel like hell in the winter time so keep that in mind. If you are the kind of person that doesn’t mind walking a mile to the train in the freezing cold then your options can be much broader. If you are like me a despise walking even two minutes in the cold then your options will need to be more constrained.

Stay within your means

You may love the amazing condo that is pushing your budget but what good is it if you can’t afford to furnish it properly or enjoy the wonderful restaurants and bars down the street. Be conservative with your budget. Sometimes you can spend less money on a purchase and then some money on great renovations or furnishings and end up with a place that is perfect for you.