Compiling a list of “hot” neighborhoods in a cooler market might, on its surface, seem like an exercise in futility, but there is perhaps no better time to seek out a pioneering neighborhood. This is a buyers’ market, and if you’re looking for long-term appreciation, shopping for a new-construction home at a time when builders are willing to bargain makes sense.
The market for new homes is cooler, but it’s far from cold. During the first quarter of 2007, only half as many condos sold downtown as during the first quarter of ’06, but developers also have unveiled far fewer units. The number of condos sold downtown during the first quarter of ’07 was about the same as the number that started marketing programs, according to Gail Lissner, of Appraisal Research Counselors.
The trick for those who want in on the ground-floor of an up-and-coming neighborhood is figuring out where the heat is – or is likely to be in the not-too-distant future. Enter the New Homes list. Our definition of a hot neighborhood is one in which homes haven’t already experienced galloping rates of appreciation but are poised to see above-average increases in housing values.
Frequently, such neighborhoods are on the fringe of more gentrified neighborhoods. This certainly is the case with Washington Park, which is experiencing a spillover effect from highly-developed Hyde Park. Bronzeville is experiencing a similar effect as South Loop development continues to push past Cermak, and the impact on the Near South Side if Chicago hosts the 2016 Summer Olympics could be huge.
On the Near West Side, the influence of the built-up West Loop is spurring development on that neighborhood’s edges, especially the eastern slice of East Garfield Park.
Some eyebrows might raise at some of our more central selections – the Loop, the South Loop and Streeterville. The South Loop, by all accounts, is a highly competitive neighborhood for new-home sales at the moment, and some might say the supply is running too high. But the rapid growth of residential development here, the presence of world-class cultural amenities and a growing base of retail and restaurants (which is about to get a significant boost) make the South Loop a good bet long-term.
Streeterville likewise has a location that’s tough to beat. It too is seeing a major growth spurt and will be even more livable once the residential and commercial developments underway are completed. A surprising amount of developable land in this pocket, steps from the Magnificent Mile and the Loop, point to continued growth and solid investment value.
There are no guarantees that you’ll get rich by investing in real estate in the neighborhoods that we have selected, but now that the housing market’s all-night party has wound down, we believe that we have identified the communities that are most likely not only to avoid hangovers, but to thrive on the morning after.
Ultimately, though, you need to ask yourself if a particular neighborhood seems like somewhere that you want to live. It’s true that the early bird catches the worm, but some of our “hot” neighborhoods, though rich in potential, still suffer from crime or a lack of retail. The early bird also can get burned and should be ready to feather the nest she chooses for the long term, even if she’s wishing for a quick return.
Bronzeville
Median house: $382,000
Median condo: $229,900
In Bronzeville’s early 20th-century heyday, the neighborhood – which depending on whom you ask extends from the lake on the east to the Dan Ryan Expressway on the west and from 31st Street on the north to 47th Street on the south – was a Mecca of African American art, culture and business. It had its share of problems, but the neighborhood began seriously to decline after fair housing laws expanded options for middle-class African Americans. Public housing crowded the poor into dilapidated buildings that quickly became havens for drugs and violence.
The overhaul of Chicago’s public housing system, which began in 2000, has played a big part in putting Bronzeville on the comeback trail. The largest concentration of public housing in the nation, which once lined State Street with high-rises from 35th to 55th streets, is now being replaced by tidy brick low-rises at Park Boulevard (1,300 new homes) and Legends South (2,400 new homes). These developments integrate public housing residents with buyers and renters in other income groups.
Besides these publicly subsidized ventures, private development is giving the neighborhood a new gloss, from scattered rehab and infill sites to higher-profile projects like Metropolis, 330,000 square feet of retail and about 100 homes in a pair of curvilinear glass-and-steel buildings planned along State Street between Park Boulevard and Legends South.
The rebirth of the State Street corridor bodes well for the part of Bronzeville west of King Drive, which roughly corresponds to the city’s 3rd Ward. Compared to the slightly tidier, more prosperous 4th Ward to the east, which includes North Kenwood-Oakland, this slice of Bronzeville is still pocked with shuttered stores and weedy, vacant lots.
But the 3rd Ward may catch up yet, and not only because prices are rising: from June 2006 through May 2007, the average price of a detached house in the Grand Boulevard and Douglas communities (which encompass much of the western swath of Bronzeville) was $418,568, up from $196,461 during the same period five years earlier. And voters ousted Ald. Dorothy Tillman (4th) in the last election. Let’s hope Pat Dowell, the newly elected, will be able to move the neighborhood forward without the same reports of nepotism and back-room dealing that plagued her predecessor.
East Garfield Park
Median condo: $206,500
Median house: $249,000
The West Side neighborhood of East Garfield Park, bounded roughly by Taylor Street on the south, the Metra tracks on the north, Rockwell Street on the east and Hamlin and Independence boulevards on the west, has long struggled to recover from the 1968 riots that decimated its Madison Street business district. Only a few stores hung on as a different sort of trade took over – drugs, prostitution and gangs.
The streets are still tough here, but the tide has started to turn in recent years, with residential development pushing west from the West Loop along Madison Street. Small developments, such as the six-unit Flats on Fulton and a 10-unit conversion at 2809 W. Washington Blvd. – swim alongside bigger fish, such as the 39-unit Flournoy Flats. These projects are gradually bringing new residents to a neighborhood that has suffered a host of urban ills.
The new construction has been complemented and encouraged by the beautiful renovation of the Garfield Park Conservatory, at 300 N. Central Park Ave., and by the neighborhood’s stock of vintage homes, flats and greystones, some of which are being converted to condos.
Prices for conversions and new construction in East Garfield Park are frequently lower than in nearby areas such as Humboldt Park, West Town and the Near West Side, but they’re on the rise.
The average price of a detached house was $83,627 during the period from June 2001 through May 2002. That number jumped to $268,496 during the same period in 2006 and 2007 – a 243 percent increase. During that same five-year span, the average condo price rose to $207,591 from $123,150, a 69 percent increase.
Add to the mix the fact that East Garfield Park is relatively close to the Loop and the Eisenhower Expressway, a key artery for commuters to the western suburbs, and it appears that the neighborhood’s long-term housing values are poised for healthy appreciation. In the short term, though, anyone buying in East Garfield Park should be aware of the neighborhood’s serious safety issues.
The Loop / New East Side
Median condo: $325,000
A mere decade ago, it would have seemed odd to call the Loop / New East Side a neighborhood. The area bounded by the lake on the east, the river on the north and west and Jackson Boulevard on the south was dominated by business, the province of office towers and old-school cultural institutions such as the Art Institute of Chicago and the Chicago Symphony Orchestra.
Enter Millennium Park (which, as most Chicagoans know, actually got completed after the millennium, in 2004). This playground of modernist sculpture created a hot residential amenity at a time when growing numbers of empty nesters, second-home buyers and professionals were in the market for downtown real estate. Residential development began to take off in the area around the park (a neighborhood some call the New East Side), and a number of projects also popped up in the Loop proper, directly west.
Today buyers are flocking to nearly 30 developments in the Loop / New East Side, among them Modern Momentum, The Legacy at Millennium Park and Vetro. Lake Shore East, which will include nearly 5,000 new homes on a 28-acre site between Millennium Park and the river, west of Lake Shore Drive, is about a third complete. Its one low-rise component, the Parkhomes, broke ground in May, and Aqua, its architectural centerpiece, started construction in February.
When these projects sell out, there likely won’t be another big wave of new building, since land in this dense sector of downtown is scarce. That means the law of supply and demand is likely to work in favor of Loop homeowners.
The average condo price in the area rose to $485,712 during the last 12 months, up more than 90 percent from the average of $252,971 recorded during the same period five years earlier. Values are likely to continue their upward march as residential flavor builds alongside world-class amenities ranging from Grant Park to Monroe Harbor to the Harold Washington Library.
South Loop
Median condo: $275,000
During the first quarter of 2007, almost half the sales of new homes in the city occurred in the South Loop – not a surprising figure considering the building boom underway in the area bounded roughly by Cermak Road on the south, Jackson Boulevard on the north, Wells Street on the west and the lake on the east.
The northern part of the South Loop, on the edge of Loop offices, was the first to take off in the early ’90s, when vacant industrial land dominated large pieces of the neighborhood. Now that the northern blocks have become relatively well established, the southern areas are starting to take off.
Most developments in the sector we might term the “south South Loop” are clustered in a fairly small pocket along the 1800 to 2100 blocks of Prairie, Indiana, Wabash, State and Michigan. The quality of the latest developments is uneven, but many feature progressive designs, and a high level of luxury.
Developer Rick Turner of Dynaprop Development Corp. plans to seek LEED Gold Certification from the U.S. Green Building Council for his latest project, the 12-story eco18, 1830 S. Wabash Ave. The high-profile, ultra-sleek X/O Condominiums, designed by architect Lucien Lagrange, has stirred up controversy with some of its Prairie Avenue neighbors who think its design is too tall and too modern, but architecture fans have been singing its praises.
Farther north, The Enterprise Companies’ One Museum Park, a beautifully designed tower, has upscale amenities and condos priced from the $650s to $2.6 million in one of the South Loop’s toniest projects to date.
Residents sometimes grumble about the lack of restaurants and retail here, but recent news that gourmet grocer Fox & Obel may come to the northeast corner of Wabash Avenue and Roosevelt Road is good news, as is the development of a mini “restaurant row” on Wabash. In another hopeful sign, despite claims of a saturated South Loop market, the average condo price was $295,586 during the last 12 months, up 15 percent from $256,367 during the same period five years ago.
Streeterville
Median condo: $377,700
If all projects on the drawing board are pursued, Streeterville has the potential for 2,878 new homes to begin marketing during 2007-2008, according to housing analyst Appraisal Research Counselors. That would make the neighborhood, bounded roughly by the lake, the river, East Lake Shore Drive and Michigan Avenue, second only to the South Loop for the amount of new residential construction entering the market.
Of course, not all of those new homes will see the light of day during the next year (some never will), but the potential number of new units points to a trend. Streeterville, especially the southern half of the neighborhood, is hot.
High-rise condo developments with units on the market include The ParkView, Avenue East, 535 St. Clair, 550 St. Clair, The Fairbanks at Cityfront Plaza, The St. Clair at Cityfront Plaza, 600 North Lake Shore Drive, 600 North Fairbanks and The Ritz-Carlton Residences. Condo conversions include Pearson on the Park, 474 North Lake Shore Drive and 900 North Dewitt Place, and The MCL Companies is developing the Lofts at River East Art Center, the conversion of an existing building and addition of two new-construction floors.
Prices at the new towers underway range from under $300,000 to more than $2 million for a luxury penthouse, though top units at some Magnificent Mile developments exceed $9 million. Many of the new buildings are modern, with eye-catching architecture, a movement that might reach its zenith with the Chicago Spire, the massive corkscrew-like tower designed by starchitect Santiago Calatrava, if that project goes forward.
Amenities have evolved with the neighborhood’s residential base, and additions ranging from a 21-screen movie theater to a Dominick’s grocery store to Starbucks have made the location even more convenient. There’s still plenty of room for growth, as the Appraisal Research Counselors projections show, and continued commercial development is likely to follow the new condos.
With Magnificent Mile shopping on one side, the lake on two others, and the river on the fourth, it’s hard to find a downtown location with more going for it or with better potential for growth. The average condo price in Streeterville was $607,021 during the last year, up 28 percent over the same period five years ago.
Washington Park
Median condo: $185,900
Washington Park extends from 51st Street to 63rd Street between the Dan Ryan Expressway and King Drive, running alongside the park from which the neighborhood takes its name. That name has been in the news a lot lately as a key part of Chicago’s bid to host the 2016 Summer Olympics.
Like much of the South Side, Washington Park suffered deteriorating housing stock and rising crime as white residents fled in the ’50s and ’60s. At first glance, an observer might see only a desolate landscape of boarded-up stores, vacant lots and blatant drug dealing, but, like nearby Woodlawn, Washington Park is a diamond in the rough.
Home prices are well below the citywide median, but they have been rising. During the last year, the neighborhood’s average condo and townhome price was $196,000, up 40 percent from the 2002 median of $140,115.
It’s difficult to gauge the median price of a single-family house here at the moment because so few have changed hands during the last year. That may be a sign that property owners are hanging on to houses in the neighborhood, waiting to see what effect plans to build an Olympic stadium in Washington Park’s eponymous park and to upgrade the surrounding infrastructure will have on values.
Some observers say the Olympics could rejuvenate a significant portion of the South Side centered on Washington Park. Meanwhile, though, homebuyers won’t find convenience retail in the neighborhood – residents rely heavily on nearby Hyde Park for restaurants, coffee shops, bookstores and other amenities. The twinkling blue lights of the Chicago Police Department’s security cameras on local streets serve as reminders of the neighborhood’s crime problem, and much of the property is distressed.
But the park from which the neighborhood takes its name is a beautiful oasis of lagoons, running tracks, soccer fields and basketball courts. That park, and the neighborhood surrounding it, could be poised for a major boost.