Category Archives: Buying

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November 12, 2013

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Buying, Downtown, Luxury Sales, RE News

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Trump Tower and Other Developments Almost Sold Out!

Trump Tower at 401 N. Wabash once had hundreds of units on the market….but now they’re close to sell out with roughly 18 units left in their inventory. According to Crain’s Chicago Business 159 new construction condos sold in the 3rd quarter in 2013 which is up from the 2nd quarter and up slightly from the 3rd quarter of 2012. But why haven’t more new construction condos sold? After all the real estate market has been on fire all year! The answer is in the inventory numbers; there is simply very little new construction to choose from! As a matter of fact we are the lowest levels of new construction inventory since 1997. This is a big change from 5 years ago.

235 W. Van Buren led the way with sales in the third quarter according to Crain’s with 41 units sold. I’m not sure how many units are left in this building but I hope they’ve put a nice dent in their inventory. In total the building has 714 units most comprised of 1 and 2 bedrooms.

1201 S. Prairie Museum Park Related Midwest has been selling at two towers in Museum Park and have been doing extremely well. Between the two buildings they sold 64 units this past quarter. 1201 S. Prairie is their highest end (flagship) building in the development. Related, at least in my own humble opinion, has done a phenomenal job at revamping not only sales but the units themselves. Of course their absolute impeccable timing of this project didn’t hurt!

401 N. Wabash – Trump Tower As I said Trump Tower only has 18 units left to sell according to Appraisal Research…I’ll see if I can verify these numbers and post an update. Inventory in Trump, even in the resale market, has decreased dramatically. Those who purchased in this building in 2010 and 2011 already have equity in their units. It’s a beautiful thing!

2550 Lincoln Park Tower Chicago’s newest luxury building has been doing exceptionally well. They closed 30 sales in the third quarter and did so with an average square foot price of $840 per foot! The developer brought on Terri Proctor to head up sales at this development and she has and continues to do an excellent job.

225 N. Columbus – The Aqua Well there is not much to say here except it is sold out!

 

What’s Next? Since new construction inventory is so low why don’t they just building more?!

New units are currently on the way! Financing is still difficult for larger buildings and even though the condo market has seen a resurgence, selling out a 400 unit building would still be a very very difficult task.

CMK Development, the same developers who built 235 W. Van Buren are planning a building at 1345 S. Wabash which will contain 144 units. Soon we will also see plans announced for a luxury condo building in the gold coast (small and boutique) and another developer is trying to building 60 units in the West Loop.

 

Paul Blackburn is an Illinois Licensed Realtor & Broker with @ Properties in Chicago. He can always be reached via e-mail at Paul@PKBlackburn.com

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September 20, 2013

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Chicago Real Estate Market Condo Market Update!

Well, it is that time of year again. The season is changing which means it is time for me to send out my quarterly letter to my past and present clients. Here is what is being placed in the mail this weekend.

 

Chicago Real Estate Market Update

Fall is here. How will the real estate market react?

The spring and summer real estate market in Chicago was very interesting. Inventory levels were at record lows and buyers were coming out of the woodwork. Multiple offers became the new norm. Listings that sat on the market for more than a couple weeks were assumed to have something wrong with them. It felt like 2006 all over again!

While the market rebounded nicely this summer it was also nice to see that hysteria did not take hold. While many places sold for above list price with multiple offers there were still many places sitting on the market for months. Listings that have poor floor plans or were simply not in “ideal locations” still were not selling. While demand did pick up with great force, it did so with caution and common sense, something that was greatly lacking during the real estate boom. The new question is: Will this market continue as we head into the fall and winter season?

I believe the market will remain strong through the fall and winter mainly because inventory levels will remain low. While prices have increased year over year they have not increased enough for many people who purchased in 06 and 07 (the peak of the market) to cover their losses. While demand will remain high, I do believe we will see less multiple offers and less units selling at or above list price this fall and upcoming winter. There were many buyers who had been sitting on the sidelines for a while and many decided to take the plunge this past spring and summer. This surge of buyers in the market, coupled with rapidly depleting inventory, is what fueled the crazy buying frenzy we saw. I do believe strong demand will continue, just at a slower pace. This in turn should make a healthy market for both buyers and sellers as we enter 2014.

What is going on with interest rates?

Just in case you don’t follow the bond market much, interest rates have increased significantly over the past few months. Rates on a 30yr fixed went from the 3.7% range up to 4.8% and even higher. What caused this? As you may remember the fed starting pumping more money into the system….again! This time it was called QE3.  The fed did this by purchasing X amount of Mortgage Backed Securities each month which in turn pushed down interest rates to the crazy lows of 3.7% and 3.6% for a 30yr fixed. A few months ago the fed started running its mouth and said it may “taper” their bond buying; in other words buy less, if the economy continued to improve. Naturally the bond market freaked out and almost instantaneously started trading as if bond buying by the Fed was already screeching to a halt.  The Good News? The good news is the fed recently announced that they will continue their bond purchasing and will not “taper” for the time being. Long story short interest rates on 30yr fixed mortgages should start to hover around 4.25 to 4.5. At the time of me typing this letter rates are averaging around 4.37% APR for a 30yr fixed. Hopefully these rates will last into 2014.

What is going on with the rental market?

The rental market is still strong but I believe we have definitely hit a price ceiling. New inventory is starting to hit the market downtown and inventory levels will continue to increase through 2014 and even 2015 as new projects are announced on a weekly basis. I’ve personally noticed that market times for rentals have started to increase even in some of the most desirable neighborhoods and buildings. This does not yet mean we will see rents falling however, it does mean is we are at the peak of the rental hysteria that we have seen since 2011.

Is it a good time to buy or sell?

In typical realtor fashion I will say it is a good time to do both! What is most important, however, is to understand your goals and your time constraints. If you are a buyer in today’s market you need to understand that inventory is low. Therefore, you will likely not be able to find that perfect place in only 30days so be sure to budget plenty of time to find the right place. How much time? I would say budget at least 3 months plus 30 to 45 days to close.

If you are a seller now is a good time to test the market since inventory levels are low. Prices have increased year over year and should continue to do so. Keep in mind pricing has not sky rocketed, however, most areas of the city have weeded themselves of the pesky low priced short sales and foreclosures that were killing values and lender appraisals. While buyers are out in the market in full force they still do not want to over pay. Pricing your listing 20% above your competitor won’t get you any more money. If anything, it will only hurt you.

 

I hope you enjoyed the summer and enjoy the fall weather that is slowly falling upon us! As always if there is ever anything I can do for you, your friends, or your family please do not hesitate to reach out or pass along my name and number.

 

 Paul Blackburn is an Illinois Licensed Realtor and Broker with @ Properties in Chicago. He can always be reached on his cell or via e-mail at Paul@PKBlackburn.com  Also visit http://www.BuyingInChicago.com for information if you are a first time buyer in Chicago!

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September 18, 2013

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Dog Friendly Condos in Chicago – Dog Friendly Condo Buildings

Chicago is a very dog friendly city but how many condo associations are dog friendly? How many condo buildings are dog friendly in Chicago?Here is a quick little guide about some things to watch out for if you are a dog owner and searching for a condo in the city of Chicago.

First off, if you’re new to the city it is important to note that Chicago is VERY dog friendly. Many shops and small restaurants will put dog bowls and dog treats outside in the summer time and some businesses have even started use “pet safe salt” to salt their sidewalks in the winter time. Many condo buildings are also dog friendly, however, one small “incident” can change the way a condo association views pets. With this being said the “dog friendly” environment in condo buildings can change quickly.

Aggressive Breeds

I don’t want to get into a debate here about what breeds are “aggressive.” Personally, I don’t agree with many people’s view points on “aggressive” breeds but lets skip the arguments for now. Insurance companies typically set the standard for aggressive breeds. Condo Associations have insurance not only for the building (fire/hazard) but also for liability. While many insurance companies may cover aggressive breeds they do so only at an increased cost. Therefore, we many condo associations have a “No Aggressive Breed” exception in their condo bylws.

Aggressive breeds contain the stereotypical Pit Bull, but may also include dogs such as Siberian Huskies, Chows, Rottweilers, Akitas, Great Danes, Staffordshire Terriors, and even German Shepherds. If you own one of these dogs it is important to check with the condo association as soon as possible to see if these dogs are allowed.

Weight Restrictions

Some condo associations have weight restrictions on dogs. The most common limit I’ve seen in building is 35 to 40lbs. This is typical for buildings in the Gold Coast area. Some condo associations will simply have the rule in place and as long as you don’t walk in with a mastiff you’re fine. Other condo associations will want to see a letter from a vet verifying your dog’s weight.

Special Entrance / Exit

Don’t be surprised if your condo association asks you to use a special entrance or exit for your dog. This is done not because they don’t like your dog but because likely one or two irresponsible owners may have let their dogs leave a little surprise in the lobby or the main elevator and failed to clean it up. Don’t be made at your association, be made at your fellow neighbors for this one. Some buildings say you can use the common elevator but you need to carry your dog while in the elevator.

Pet Number Restrictions

Most buildings limit the number of dogs to two dogs per unit. Some buildings may have a combined weight total. For instance one building I know of in the west loop has a weight total of 80lbs. You can choose to have two 40lb dogs for instance or one 80lb dog.

Some Buildings are not dog friendly at all

Some buildings have adopted a no dog policy. These buildings are rare but you will see them here and there. Some co-ops ban dogs and even the John Hancock no longer allows dogs. These policies come about for many reasons. For instance, in the John Hancock there was an incident a while ago where a larger dog decided to….eat a small dog. Since that time no new dogs were allowed to be adopted by any owners.

While I be the minority if I own a dog in downtown Chicago?

Absolutely not! Many many condo owners have dogs. This is up to everyone’s personal preference. There are plenty of dog walking and dog sitting services to handle the most discerning and loving dog owner. Just remember to let your Realtor know what kind of dog you have or what kind of dog you are thinking about adopting so you can look for condos that will accept you and your four legged friend!

 

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August 15, 2013

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Gut rehabs the next wave in Chicago Real Estate?

New construction condos in Chicago are few and far between. Large scale new developments were mostly halted in 2008 and even though demand for new construction is high in Chicago banks are not willing to take the risk and offer developers construction loans on a 300 or 400 unit condo project. With the majority of new buildings in Chicago at least 5 years old the question is “What is next for Chicago condos?”

Gut Rehabs

With no new construction condos in the downtown neighborhoods many are turning to older buildings and buying “dated” units with the plans of gutting and rehabbing the units with all of today’s modern finishes and conveniences. Newer construction buildings (built between 2003 and 2008) are still selling at a premium as the finishes are “nice” and still acceptable. However, over the past decade tastes in finishes have changed a great deal. Those wanting the most updated and modern look in the downtown neighborhoods are really left with only one option: Do It Yourself….well hire it out but still “rehab your unit.”

Many older buildings have also started modernizing their hallways, amenity floors, lobbies and elevators. These capital improvements along with a cheaper price point, which allows buyers to customize their own units, are allowing old buildings to give new ones a run for their money.

If I am thinking of buying in an older building and customizing a condo; what should I look for? What should I watch out for?

 

Buy in a building that is not afraid to spend money:

It is important to buy into a building that is constantly modernizing itself. Buildings that haven’t completed any capital improvements in over 20 or 30 years are not and will not be able to compete in the market place. Updated hallways, lobbies and amenities are key. While these updates do cost money and may mean higher assessments, you will see a greater return on your investment in such buildings. Buildings that choose not to update will eventually have to (at some point new elevators and new fitness equipment will be a must) and that cost may come as a special assessment anyway. In the meantime however those buildings start to develop a reputation of “old and tired.”

Structural obsolescence caused functional obsolescence!

Consult the building engineer, an architect and a great contractor on exactly what you are able to do with your unit before buying. Many older buildings may have large living spaces but small bathrooms and small kitchens. Current trends are open, expansive kitchen spaces, large closets and well sized bathrooms. Make sure plumbing, electrical and structural walls are able to be modified to allow the reconstruction you so desire. You can update a unit all you want, but if the floor plan is poor then you will not see a good return on your investment. Many times a small change in the floor plan will earn you your greatest return.

Take advantage of what old buildings have to offer!

Location, Location, Location. Many times older buildings have some of the absolute BEST locations and BEST views in the city. Take advantage of this! If you are interested in a building on Lake Shore Drive then make sure you have a great view of the lake. If you are interested in a building in the heart of the Gold Coast then get a south view so you can see the entire skyline and the lake. This may seem like a no-brainer but you’d be amazed at how many people look at only the price tag when they’re rehabbing a unit versus looking at the entire package of what a unit has to offer.

Wider is better!

One of the biggest downside to some of the newer construction buildings are the long and narrow floor plans. Many times this is done to maximize the number of units in a building. Many older buildings have wide floor plans. Wide floor plans are almost always preferred as they offer much more window space. In addition, newer buildings have taller ceilings (9 or 10ft) whereas many older buildings only have 8ft ceilings. A wider floor plan, which allows for much more light will make ceiling height feel taller versus a long narrow floor plan which will make a unit feel “closed in.”

Assessments

Older buildings typically have higher assessments simply because they are less efficient and more costly to maintain. It is very important to see how an association is spending their money. High assessments are not necessarily bad so long as you are getting something in return such as a building that is constantly updating and modernizing itself. A building that has high assessments because they are always “fixing things” versus “improving things” is a building that you will likely want to stay away from.

 

Paul Blackburn is a licensed Illinois Realtor and Broker with @ Properties in Chicago. He can always be reached via phone or e-mail at Paul@PKBlackburn.com

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May 15, 2013

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Buying, South Loop

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South Loop Condos Under 250k hard to find

The South Loop in Chicago was once filled with excess inventory. In 2011 there was roughly a three year supply of inventory. In 2012 there was over an 18 month supply of inventory. Now, there is only a few month supply of inventory, especially under 250k.

Why am I specifically talking about $250,000? If you are familiar with the South Loop market you will know that many new construction buildings had built small 1 Bedroom units. 1720 S. Michigan and 1620 S. Michigan are the most popular and had the most foreclosures. Some small 1 Bedroom units sold for only $105,000 to $115,000 just over a year ago. Those same units are now selling for $150,000. It is amazing how things have changed in the past year. 1529 S. State also had a handful of units on the market in the past but even that building is rebounding nicely.

Rent prices have also remained high in the South Loop with most 1 Bedrooms renting above $1,500 without parking. This has spurred many renters to become homeowners but also has created a great demand for investors especially as most South Loop buildings do not have any rental restrictions.

What buildings are the hottest in the South Loop?

1201 S. Prairie – Recently taken over by Related Midwest, 1201 S. Prairie, part of the Museum Park development is doing extremely well and is definitely the “most modern” of any South Loop development. 1305 S. Michigan continues to be red hot. While some short sales are transacting at low prices, these units do have very poor views. They are selling fast and above list price. Most units, however, are selling at “market rate” with most 2 Bedrooms selling in the low $300s.

1400 S. Michigan and 1250 S. Michigan continue to see very low inventory. Only two 1 Bedroom units are currently on the market in 1400 S. Michigan. You may remember several years ago an auction was held for the remaining units in this building. 1250 S. Michigan currently only has 1 unit available (several others are under contract). The unit currently available for sale is a 3 Bedroom condo priced at $750,000.

Museum Park: All Museum Park buildings continue to be in demand. Specifically One Bedrooms which once flooded the market are now hard to come by.

 

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

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May 8, 2013

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What to do in a Multiple Offer Situation – Chicago

So you’ve found the perfect place but guess what, so did someone else! Multiple offer situations in Chicago are becoming increasingly common. Many properties are selling for above list price. So e question then becomes “What should we do to become the winning bidder?”

Keep your offer clean: Avoid asking for repairs at the beginning, avoid asking for closing costs to be covered, etc. The sellers want a nice clean offer so give them one! Don’t add any additional stipulations outside of the normal contingencies unless they are absolutely necessary.

Price: If you are in a bidding war it is probable that the unit will sell for over the asking price. What you need to do is forget everything you remember bout real estate over he past few years and focus on the present. Look at the property and compare it to other you’ve seen. What is it worth to you? Rely on your Realtor here to make sure you a not grossly over paying for the property but at the end of the day you need to figure out what it is worth to you and stick to that number. Put your absolute best price forward right away.

Shorten contingencies I typically ask for 7 business days or longer for attorney review or home inspection. If you are in a multiple offer situation you can lessen the time it takes for you to complete these items. It will allow the seller to get past all the contingencies quicker which is always a good thing

Closing Date: Dear Mr/Mrs. Seller, What works best for you? Sometimes a quick closing isn’t ideal for the seller of the property as it may not give the sellers enough time to find a place. Therefore I always ask the listing agent what the sellers prefer.

Solid Pre approval:For the love of all that is good use a decent mortgage broker. Don’t use some random person or someone who is a mortgage lender “on the side.” Using a well established mortgage lender can let the sellers rest knowing there will not be unexpected delays with the mortgage.

Earnest Money Put your best foot forward on earnest money if need be. In chicago we typically turn over earnest money in two stages: First, is the initial earnest money that gets turned over with the contract and the Second is turned over after the completion of attorney review. If you are can increase your amounts on earnest money you will again make the seller feel much more comfortable.

Remember price is important but many times it is not the most important thing when negotiating a sale.

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May 6, 2013

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The New Reality of Real Estate in Chicago

The housing market in Chicago has taken a dramatic turn from where it was a couple years ago. Condos and Single Family Homes in Chicago’s hottest neighborhoods are moving fast in all price ranges. Where is the sweet spot? The hottest section of the market is currently between$300,000 and $500,000 but we are also seeing higher end properties sell in only a matter of days.

Over the weekend I put a 2/2 loft under contract. My clients had to pay more than $7,000 above list price. We put an offer in after the property was only on the market for a day. Our goal was to get the property under contract by the weekend. We were up against one other buyer but we knew if it dragged into the weekend we could easily be up against multiple buyers. This property was in Bucktown.

Another property down the street in Bucktown had 22 showings in a 2 hour period last weekend. My buyers looked at this property on Sunday (the first day of showings for this new listing). On Wednesday they e-mailed me saying they wanted to make an offer. Unfortunately it already sold. Of the 22 showings the property received 3 offers from buyers. More than likely it sold for above list price as well.

A colleague of mine was showing a home in the $600,000 to $700,000 range in Old Town. She was one of 6 agents with buyers submitting offers. Her clients went $30,000 above list price….guess what? They didn’t get it. While we don’t know the exact sale price it has been eluded that it likely sold for almost $50,000 above list.

The most obvious question people may have is “What the h*ll is going on?!” Is this sustainable? Well here are my thoughts on the subject.

Currently in Chicago, in the more desirable neighborhoods, we have an inventory problem. Inventory has decreased to all time lows and buyer demand has increased dramatically. Lets start with demand, however. Why has demand increased?

The Hangover Effect: After 2008 everyone had a hangover in the real estate market. Just like in real life, when you wake up with a hangover the last thing you want is another shot of tequila that you had the night before. This hangover lasted in the market for several years. People simply wanted nothing to do with the market. Granted, many people did not have the finances to buy and many were worried about their jobs and lending (the bars) were not very open.

Now the “hangover effect” has mostly lifted. The economy is rebounding and consumer confidence in the housing market is back. During this hangover period many people rented and saved cash. Now, as they have seen the market stabilize we are seeing a rush of buyers into the market. With increased confidence we are also seeing record low interest rates and property values are back to normalized levels.

It is important to note that in distressed areas most of the demand is made up of investors. However, in prime “Class A” areas the majority of demand are first time, Second time and second home buyers who plan to use the property.

Where is all the supply? There are a couple reasons for low supply. First, we haven’t seen any new construction for condos or single family homes in almost 5 years. Only now is construction starting to pick up again and it is doing so at a slow pace.

The largest reason supply is low is due to many homeowners still underwater on their values. Many “would be” sellers simply cannot afford to sell their homes. Many homeowners are still refinancing using HARP and similar programs and some are still completing mortgage modifications. These homeowners are not selling anytime soon.

Who is selling now? I’ve noticed that many current sellers were buyers back in the early 2000’s before prices ran up. Some were buyers at the peak in 06 but put more than 5% down so they can at least walk away from the sale with some cash.

What is most interesting are tenant occupied properties selling. Many of the condos I have been showing in Lakeview, Lincoln Park, Near North, etc. have tenants in them. These are not standard “investment” condos for the owners but instead were their primary residences they could not sell back in 08, 09 so they rented them. They are now able to unload them for what they feel is a “decent” price.

What does the future hold? The inability for developers to obtain financing on large buildings is a good thing. This will help supply remain low. Interest rates will likely stay low for a while. The FED is talking about slowing or limiting their purchase of MBS however they will likely continue for a short while. The MBS market is in recovery mode especially with treasuries at record prices (low yields).

At the end of the day interest rates should remain low through 2015 and supply will likely remain low. This will start to push up pricing in your better markets which will slowly allow those who could not sell before to start to sell. The hope is that supply will be introduced slowly into the market.

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April 25, 2013

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Lake Shore East Condos – The New East Side Update!

Lake Shore East Condos, particularly new construction, have been selling quickly. The Chandler at 450 E. Waterside, The Regatta at 420 E. Waterside, The Lancaster at 201 N. Westshore, 340 On the Park at 340 E. Randolph and The Aqua at 225 N. Columbus have low inventory; at least low “Prime” inventory. What has sold in Lake Shore East recently?

The Lancaster: 1203 recently went under contract in just three days! It is a 1 Bed / 1 Bathroom but faces West. The west views in the Lancaster are the prime views as those who face east will eventually have their view obstructed with a new development. 1203 went under contract when the list price was $349,000 + 40k for parking.

340 On the Park:  Another great deal in the area was at 340 E. Randolph when 2406 sold (after 2 weeks on the market) for $530,000. 2406 is a north facing, corner 1 Bedroom unit with 1244sf. It appears to have sold without parking for this price.

The Regatta: A combo unit recently sold, unit 1011 having just over 1500sf. The unit had great views facing north and also slightly east. The unit sold after 45 days on the market and closed for $692,000.

A penthouse unit also recently sold. Unit 4301 sold for $1,340,000 and took just around 4 months to sell. This unit had an oversized terrace as well as a balcony off the master bedroom.

The Chandler: A foreclosure in the Chandler, 450 E. waterside, sold for $801,101. It was unit 402 which is a 3 Bedroom / 2.1 Bath facing North which gives you views of the River, skyline, Navy Pier, Lake Shore Drive, etc. This unit did sell with parking and actually sold for over list price. The original list price was $789,000. The unit had an offer within a week.

 

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

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April 22, 2013

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Trump Tower in Chicago – 401 N. Wabash Condos

Trump Tower Residences, located at 401 N. Wabash in Chicago has quickly become an iconic building. Many transplants and Chicagoans wonder how well Trump Tower is doing. What are condos selling for at Trump Tower? How much inventory is left in Trump Tower Chicago? Are prices increasing in Trump Tower?

Several years ago the real estate market in Chicago was a scary sight and Trump Tower Private Residences was not at all immune to market conditions. As a matter of fact, Trump Tower was probably hit harder than the average condo building in Chicago due to the delivery of condos in the building. Thankfully, those who could not afford to hold onto their units quickly sold. While this temporarily pulled down pricing in the building it allowed the “dead weight” who should never have purchased in the building to get out. Now, in the spring of 2013, the building is doing exceptionally well. Some buyers who purchased in 2009 are up over 20% or more on their investment in the building.

The developer still has a handful of units to sell and will likely be active in the building for years to come. However, the prime units with the best views have mostly sold. The “A” tier, which changes in square footage depending on the segment of the building, is the most desirable tier and this is a wrap around unit facing east. You get great views south as well as north. The view looking down the river, however, is priceless. All “A” tier units are over 3,000sf.

Outdoor Space?  Those seeking a balcony will need to look elsewhere as all terrace units have already sold. There are only in the entire building on the 29th and 51st floors. The most recent to change hands was 29I selling for $1,640,000. It is a 2/2.1 with a 350sf balcony.

Cheapest entry point into the building? On the condo side the cheapest entry point is going to be a Studio unit. They typically sell around 400k give or take 50k. One Bedrooms start in the mid $500’s to low $600’s and move up from there.

Amenities in Trump Tower: Trump Tower is a fully amenity building in Chicago. The fitness center does not disappoint and because you are connected to the hotel you get 5 star services in the fitness center such as bottles of water on each machine, fresh towels, etc. There is an indoor pool, spa, 24hr doorstaff, etc. You also always have access to Room Service as well as concierge.

Future of Trump Tower in Chicago: We can never predict what the future will hold for Trump Tower but the future does look bright. I believe we will continue to see many buy into the building. We will also see many extensive renovations. While the finishes in the building are nice, they are just basic for a high end building. We will continue to see buyers gut units and replace with premium finishes which will only help increase prices more in the building.

 

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

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April 18, 2013

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Chicago Housing Market – Spring Market Update!

2013 Spring Market Update!

Inventory is at all time lows and demand has surged as new buyers have entered the market. The pendulum has swung the other way and we do not have enough properties on the market. Do you want to sell? Now might not be a bad time. With demand so high and inventory so low the question then becomes: “Why are more people not selling?”

I hoped that we would see more properties come to market this spring but we have not. The main reason is that many homeowners are still underwater on their homes. There are also those who do not want to sell because they cannot get what they WANT for their homes.  This has lead to many multiple offer situations and properties selling within only a few days on the market if priced appropriately.

Have prices increased?

Yes and no. It depends on how you measure price levels. Some foreclosures sold at very cheap prices in recent years. So if we are comparing current sales to distressed sales then yes prices have increased. However, if we look at the market as a whole, year over year prices have only increased a small amount.

Aren’t investors the main cause for demand?

If you’ve watched the talking heads on CNBC and all the “real estate analysts” you may have the impression that investors are the main cause of increased demand. This may be true in certain markets and may even be true in certain buildings in Chicago but as a whole, in Chicago’s more desirable neighborhoods, investor demand is not driving the market. First time and second time home buyers are what currently make up demand.

What are the hottest neighborhoods in Chicago?

The Near North side is doing very well which includes Streeterville, River North, and Old Town. However the hottest areas have been Lincoln Park, Lakeview, Wicker Park, Bucktown, West Loop and even the South Loop. Areas such as River West and West Town have also seen a great deal of demand.

If demand is so great why aren’t developers building condo buildings?

Financing is next to near impossible to obtain to build a large condo project. But, it is very easy to obtain to build apartment buildings. This is where developers have been focusing their energy especially with the rents increasing throughout the country. There are still developers building condos but they are doing so on a smaller scale focusing on 4, 8, and 12 unit style buildings. Some larger projects, up to 40 units are in the plans for areas such as the West Loop. Chances are they will do fairly well.

What about rentals? What is going on with rent prices?

Rent prices remain in an upward trend. While they are not increasing by double digit gains they are increasing steadily. We will probably see a 3 to 5% year over year increase in 2013 and perhaps slightly higher in the downtown / near north side market. Rental inventory remains low but may spike soon as roughly 5,500 Class A rental units hit the market between now and the end of 2014 in the downtown area.

My recommendations

If you have been holding off on selling and want to “test” the market, now is a good time to list your home, as you will get instant feedback on the pricing and desirability of your home.

If you are looking to buy it is still a great time to buy, as prices haven’t jumped. However, you must be prepared to view places as soon as they come on the market. You also need to be working with an agent from a large firm that has access to “off market” properties as these are some of the better deals that are transacting.

Still pay particular attention to the condo association you are buying into. While most have recovered from the issues of the crash there are still some broken associations dealing with repairs from poor construction to poor management. It is extremely important to understand when you buy a condo you are also buying into the association.