Temperature soars in some areas, even in cooler market
Chicago has been better insulated than some cities from a stubbornly long economic slump, but real estate sales here have slowed and prices are no longer as taut as trampolines when tested. A slower market is all the more reason to pay attention to real estate’s first three tenets: location, location, location.
Few would have predicted 10 years ago how rapidly prices have risen in Chicago during the ’90s. In certain neighborhoods, from the Loop to Streeterville and from River North to Lincoln Park, a pack of buyers has been willing to pay almost anything for the right home. Now that the music has slowed, however, it’s time for some to reconsider the chair they plopped down on with so much force – and money.
The question is how a slower economy has affected various locations and which emergent neighborhoods are remaining hot, or at least fairly warm. In Chicago, development has been spreading out from downtown in concentric rings. Generally, the closer a ring is to the Loop and the lake, the higher the prices and the safer the investment. This trend is not always consistent, however, and of course, a wide variety of factors affect neighborhood housing values.
So how does one determine which neighborhoods are “hot?”
Well, that of course depends on how you define the term. For real estate types, a neighborhood is often considered hot in the earliest stages of rehabbing and development, especially if it’s somewhat run-down, with bargain prices and big potential for appreciation. That’s the outlook of the professionals, though, who see communities in terms of dollar signs. Home buyers are certainly concerned with investment value, but if they plan to live in a neighborhood for five or ten or twenty years, it’s not the only or even the biggest concern.
Our list of “hot neighborhoods,” admittedly a subjective one, factors in appreciation, but also takes other considerations into account – safety, services, convenience, amenities – the things home buyers are concerned with. Certain popular neighborhoods, such as Lakeview and Lincoln Park, have not been included despite high marks for livability. Prices in these areas simply are already too high for the neighborhoods to be considered hot.
Is the West Loop hot? It certainly has been. Thousands of new housing units are underway, and new stores and services are beginning to pop up. Prices likely will continue to rise, but in terms of rapid appreciation the time to buy here has come and gone.
The neighborhoods we have decided to call “hot” are not necessarily places where buyers will get rich by investing in real estate, but these areas do show the promise of above-average appreciation for years to come. They also meet certain minimum standards for livability. Some neighborhoods not on the list may well be “hotter” in terms of investment value, but if they did not have a certain level of safety or services we did not include them.
Perusing our list of hot neighborhoods is not a bad way to begin the search for a home, but the bottom line in selecting a location should be the most common sense criterion: does it seem like somewhere you’d like to live? If a neighborhood passes that test, odds are you’re making a good decision. These days, almost any neighborhood in the city seems like a safe bet.
Albany Park. Bordered roughly by Montrose, Foster, Pulaski and the North Branch of the Chicago River, Albany Park has become one of the city’s most diverse neighborhoods. The flavor here ranges from Middle Eastern to Latin to Korean to Serbian. The restaurants and shops reflect that colorful mix.
There is a fair amount of poverty in the community, but pressure from the Ravenswood / Lincoln Square area to the east and Irving Park to the south has been pushing up property values and encouraging condo conversions, especially on the eastern edge. Ravenswood Manor, which despite its name is really a part of Albany Park, is a beautiful riverfront enclave whose vintage apartment buildings are rapidly going condo. Housing in this corner of the neighborhood is getting pricey, but go a few blocks west or north and a home costs much less than in Ravenswood, directly east – one sign of a potentially hot neighborhood.
The median price of a single-family home here rose to $275,000 in 2003, up 20 percent over the median in 2000, according to the Chicago Association of Realtors. The median condo price has risen 28 percent since 2000, but at $186,000, it’s still much lower than most of the North Side.
Bridgeport. The Near Southwest neighborhood of Bridgeport, directly west of Comiskey Park, is bounded roughly by the South Branch of the Chicago River, the river’s South Fork, Pershing Road and the railroad tracks that run alongside Stewart. The colorful working class enclave has supplied Chicago with mayors for more than 50 of the last 100 years and remains the heart of the Democratic organization in Chicago.
Bridgeport was settled first by the Irish and Germans, hired to build the Illinois and Michigan Canal, and later by additional waves of immigrants – Swedes, Poles, Lithuanians, Czechs and Italians. Each group formed its own community, developed its own churches and bakeries and guarded its precious turf, often with the aid of street gangs.
But in-fill development, the new Union Lofts and Bridgeport Village, a project that may total 400 houses on 40 acres, have brought new life to old streets. During 2003, Bridgeport was perhaps the city’s fastest appreciating neighborhood. The median single-family home here sold for $410,844 last year, a more than 133 percent increase over 2002.
It should be noted that a comparatively small number of homes (76 in 2003 and 52 in 2002) change hands in this staid community, which means a small number of expensive homes can skew the statistics. Still, values clearly are rising quickly in blue-collar Bridgeport, ten minutes from the Loop.
Humboldt Park. Bounded roughly by Chicago, Armitage, Western and Pulaski, Humboldt Park is a sprawling neighborhood that varies widely from pocket to pocket. The northeast enclave just west of Western has been dubbed “West Bucktown” lately by developers eager to lure home buyers from Bucktown and Wicker Park directly east. Farther west, the neighborhood has seen very little development and though prices have risen, they’ve done so much more slowly than in the rest of the city. The median single-family home here is just $135,000, low compared to citywide averages and incredibly low for a conveniently located North Side neighborhood.
Humboldt Park makes the list because prices are still incredibly low here given the location and because it is surrounded on three sides by trendy neighborhoods that have gentrified rapidly. Bucktown and Wicker Park to the east, West Town to the south and east, and Logan Square to the north all have seen a boom in condo building, and land costs have skyrocketed.
Though developers have already begun nibbling at the eastern edge of Humboldt Park, their movement westward may be slow and tumultuous. The Puerto Rican community that dominates here has been pushed west for years as neighborhoods like Lincoln Park and Bucktown gentrified and there is a concerted effort to keep housing here affordable.
Rogers Park. The city’s first neighborhood, bordered by the city limits on the north, the lake, Devon and Ridge, makes the list with some reservations. We include it because quite simply, it is the last place to buy an affordable home on the north lakefront. In a market where prices have skyrocketed, a growing number of buyers have moved north to purchase their first homes here.
The median condo and townhouse price in Rogers Park rose 180 percent from 1993 to 2003 and still was only $182,000. That compares favorably with Edgewater because the average condo here is larger. A steady stream of vintage buildings with large apartments in the neighborhood has converted, and several new townhouse developments also have risen lately.
Our reservations stem from safety concerns that still are very real in Rogers Park, where drug deals and street crimes are visible in some pockets. But even notorious sections such as Howard Street and the Juneway Jungle have made significant progress (several former drug houses have been converted to condos), and in the best sign for the neighborhood, the rate of homeownership in the rental-heavy area has been rising steadily.
Uptown. Bordered by Irving, Clark, the lake and Foster, this diverse lakefront neighborhood has been “hot” for longer than many real estate developers care to remember. So why does it make the list? Because for better or worse, the tide seems finally to have turned in Uptown.
Ald. Helen Shiller has moderated if not changed her stance on development, enough to win the endorsement of longtime foe Mayor Richard Daley last election. Residential development and rehabbing have been steady if slow here for well over a decade, and several new high profile projects may finally tip the scales.
Metropolitan Development is building 127 condos and townhouses at Rainbo Village, 4826 N. Clark, priced from the $190s. Joseph Freed Homes is building loft condos and 41,000 square feet of commercial space that will include a Borders Books & Music in the old Goldblatt’s building, on Broadway just south of Lawrence. Finnegan Development is converting the vacant Heilig-Meyers Co. furniture store, at 4840 N. Broadway, into 22 loft condominiums and 15,000 square feet of retail, and a little south, the so-called Wilson Yard, a former CTA property, is slated for an eight-acre redevelopment.