It is likely that 2007 will go down in history as the year of gloom and doom in real estate, with headlines dominated by reports of falling property values, the sub-prime loan debacle, skyrocketing foreclosures and waning consumer confidence.
A page-one story in a recent Sunday edition of The New York Times forecasted that the median price of American homes is expected to fall 1 percent to 2 percent this year “for the first time since federal housing agencies began keeping statistics in 1950.” That is gloomy news.
However, good news followed, like the Calvary charge in a Hollywood western. A few days later, President Bush proposed changes in the Federal Housing Administration’s mortgage insurance program that would allow thousands of sub-prime borrowers to refinance with FHA loans and avoid foreclosure.
Some critics said the Federal Reserve Board was in denial about the economic slowdown as some major sub-prime lenders shut down offices nationwide. Meanwhile, the stock market continued its roller-coaster ride with the Dow Jones average bouncing up and down in the low 13,000 range after falling from 14,000.
With all this chaos in the news, Appraisal Research Counselors’ mid-year downtown Chicago Residential Benchmark report disclosed a glut of nearly 7,700 unsold new and freshly converted condominiums on the market.
However, Appraisal Research also said that selling new homes clearly is more competitive now for “developers who can find a niche in this crowded market.” Appraisal Research advised that buyers seeking the best city housing choices in a gloomy market should choose condominium projects with knockout locations or views, top-notch architecture, high-quality finishes and prices appealing to a range of buyers.
A few smart downtown Chicago condo developers have capitalized on the following successful niches, garnering strong sales in a very cloudy market:
Design and price. Innovative contemporary architecture and reasonable prices led to strong pre-sales at 235 Van Buren, a 46-story high-rise condominium now under construction on the southeast corner of Franklin and Van Buren streets in the Financial District, on the southern edge of the Loop.
CMK Companies quietly sold more than 370 units without advertising prior to the projects opening on the promise of glassy contemporary design by renowned architect Ralph Johnson of Perkins & Will. Johnson also designed the Contemporaine, CMK’s award-winning new-construction high-rise condominium at 201 W. Grand Ave.
Lifestyle amenities. X/O Condominiums’ 34-story south tower and 46-story north tower showcase outstanding, edgy contemporary design by noted architect Lucien Lagrange, not to mention Spa X/O, a 13,000-square-foot lifestyle center that will take the South Loop to “a whole new level of style,” claims developer Keith Giles of Kargil Development LLC.
Some 200 units valued at approximately $100 million have been sold, according to Frankel & Giles Real Estate, the exclusive sales and marketing agent. Residences at X/O Condominiums range in price from the $300s to more than $2 million.
Location and finishes. A location steps from the Magnificent Mile and upscale finishes got sales off to a fast start at The St. Clair at CityFront Plaza, a 41-story condo development planned for 200 E. Illinois St.
“We’ve sold about 35 percent of the 253 residences in only a few months at The St. Clair,” says Jennifer Arons, senior vice president of Centrum Properties, the developer.
Finishes at the St. Clair include state-of-the-art kitchens with granite countertops and stainless steel or paneled built-in appliances – a Bertazzoni gas range, Bosch dishwasher and Liebherr refrigerator.
One-bedrooms start in the high $300s and prices range upwards of $3 million for a penthouse.
Appealing prices and views. At 200 North Dearborn Private Residences, American Invsco sold 80 condominiums (valued at $25 million) in one hour during a special computerized sales event. And nearly one-third of the 309-unit building was sold within a few days.
The average price was $312,500, but prices for studios started in the low $200s at the 47-story high-rise conversion in Chicago’s Loop. Prices currently range from the $250s to the $520s.
Views also are a magnet for buyers. All units except four at 200 North Dearborn have private balconies that face the lake to the east and downtown to the west.
“The downtown views are dramatic,” says Nicholas S. Gouletas, president and CEO of American Invsco. “Units on the north side of the building feature breathtaking views of Marina City and River North.”
Real estate columnist and media consultant Don DeBat has written about Chicago-area housing and mortgage markets since 1968. He is chief executive officer of DeBat Media, Inc., www.DonDebat.net.