With all the housing and economic experts gazing into their crystal balls for 2005, now may be a good time to reflect on what was happening in the Chicago real estate market 10 years ago. So, settle back and ponder what a difference a decade makes.
When this writer drafted the first City Homes column for New Homes in 1994, benchmark 30-year fixed mortgage rates averaged 8.75 percent and were inching toward 9 percent. Home buyers needed incomes of $46,200 to qualify for a $100,000 home loan on a typical $125,000 house with a monthly payment of $1,078.
At River Plaza, a highrise condominium conversion at 405 N. Wabash in River North, you could buy a studio for $55,900, and a one-bedroom unit for $97,500. A deluxe two-bedroom residence was priced at $184,500. Buyers also received a free membership at the Lakeshore Athletic Club – a $500 value.
Today, benchmark 30-year fixed mortgage rates average 5.77 percent, and many would-be home buyers are wringing their hands and regretting that they didn’t lock in the rock-bottom 5.21 percent rate in June of 2003.
Despite recent increases, a 5.77 percent home-loan rate is very near the 40-year historical bottom of the market in volatile mortgageland, experts say. Rates have averaged anywhere from 5.21 percent to 8.75 percent over the past decade.
Back in 1994, Chicago was called the “Second City,” but there was no $475 million Millennium Park or “Bean” sculpture, and sooty Michigan Avenue south of the Chicago River was far from a hot condominium conversion market. The Museum Campus was pure PR, State Street was dying and Mayor Richard Daley’s dream of rooftop gardens and landscaped boulevards was just beginning to sprout.
In 1994, a two-story home with three bedrooms, two baths and 1,740 square feet of living area at developer Ron Shipka’s new Landmark Village development was priced at $229,000 in a sleepy blue-collar neighborhood named Roscoe Village. Today, Shipka’s Enterprise Development is one of Chicago’s biggest developers with upscale highrise projects like the planned 67-story One Museum Park, where condos with lake views range from $500,000 to $1.5 million.
At the other end of the spectrum in 1994, activist and grass-roots developer William Lavicka was moving a vintage three-story Victorian mansion at 229 S. Ashland around the corner to a vacant lot at 1505 W. Adams in the Jackson Boulevard Historic District on the Near West Side.
Preservationist Lavicka, who believes every old brick building in Chicago is worth saving, restored the mansion and put it on the market for $600,000.
Today, Lavicka recently completed the transformation of a former German Lutheran church at 31st and Racine in Bridgeport into a luxury single-family home. His current project is the restoration of a mansion near 33rd and Calumet in Bronzeville, on the Near South Side.
The transformation of Old Town during the last decade has been no less dramatic. In 1994, developer David “Buzz” Ruttenberg raised eyebrows when he announced the 39-unit Schiller Place townhome development, at 1440 N. Wells, where units were priced from $297,000 to $400,000 only a couple of blocks east of the infamous Cabrini-Green public housing project.
That was just the start. During the past few years, developer Dan McLean’s MCL Companies staked out a tract at Division and Sheffield near a brand new Dominick’s and built Old Town Village East. The builder soon followed with Old Town Village West, in the shadow of Cabrini-Green. Today, condos at the project are priced from $285,900, townhomes start at $665,900, and single-family homes go for $822,900.
Next year, North Town Park, a 680-unit mixed-income residential development is planned nearby on an 18-acre former Cabrini-Green site bounded by Division, Oak, Larrabee and Orleans.
Development partners Holsten Real Estate Development Corp., Kimball Hill Urban Centers Inc. and Cabrini Green New Beginnings plan to build about 285 for-sale townhomes and condominiums and about 395 rental apartments in mid-rise buildings. Townhomes are expected to start at $200,000, while condominiums are projected to start at $175,000.
And by the time all of this is finished, Old Town might have to be renamed New Town.
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.