Chicago Condo/Townhouse Appreciation in the Last 10 Years
How much appreciation has there been in the Chicago condo and townhouse market over the last ten years? As everyone knows- quite a bit.
Was it a “bubble”?
This is a list of price growth over the last three, five and 10 years for condos/townhouses. Data provided by the Chicago Association of Realtors.
Rogers Park:
- Three years: 17%
- Five years: 37%
- 10 years: 161%
Edgewater:
- Three years: 21%
- Five years: 33%
- 10 years: 194%
Lincoln Square:
- Three years: 11%
- Five years: 43%
- 10 years: 189%
North Center:
- Three years: 12%
- Five years: 17%
- 10 years: 117%
Lakeview:
- Three years: 5%
- Five years: 19%
- 10 years: 111%
Lincoln Park:
- Three years: 9%
- Five years: 17%
- 10 years: 88%
West Town:
- Three years: 12%
- Five years: 23%
- 10 years: 121%
Gold Coast:
- Three years: 8%
- Five years: 36%
- 10 years: 112%
West Loop:
- Three years: 12%
- Five years: 28%
- 10 years: 84%
Loop:
- Three years: 54%
- Five years: 76%
- 10 years: 148%
South Loop:
- Three years: 5%
- Five years: 6%
- 10 years: 36%
Yes- something seems skewed with the South Loop data.
Kenwood:
- Three years: 37%
- Five years: 56%
- 10 years: 159%
Hyde Park:
- Three years: 17%
- Five years: 28%
- 10 years: 139%
[Thanks to the tipster who sent me this information.]
Well I doubt this source is completely impartial. The Chicago Association of Realtors is going to want appreciation rates to be as high as possible so they can convince a potential client the time to get into real estate is “now” and a real estate investment is a “sure thing”. I am particularly suspicious of any area that appreciated >120% over ten years. Maybe the time to buy is “now” and I don’t want to be “left out”. 🙂
194% for Edgewater..lol.
Bob:
Large portions of the city in the condo/townhouse category are over 120% appreciation for the last 10 years. Beverly, for instance, is up 132%. Jefferson Park up 194%.
Some of it might have to do with smaller numbers of condos/townhouses selling in certain areas 10 years ago compared to today.
You don’t believe the Edgewater number? I have a friend who bought 6 years ago for $122,000. The owner before her bought the condo for $50,000 in 1996. A similar 2 bedroom, 1 bath in her building just went on the market for $235,000.
Edgewater has skyrocketed. She would be priced out now.
Bob, Edgewater and Rogers Park really DID appreciate this much, and they’re both going to experience a drop in values proportionate to their increase during the bubble, especially now that Lakeview and Lincoln Park prices are beginning to roll back into the realm of affordability.
I’ll give you two examples of properties well known to me up there:
1216 W. Jarvis, Apt 2N, attractive old vintage on the lake, one bed, one bath appx 800 sq ft:
1998- listed at $42,500. I saw it on a multi-list sheet supplied by a realter.
2002- For sale at $127,000, when I viewed it and walked away, feeling it was too expensive.
2004- Saw it listed for $144K. It sold for close to that.
2006. Saw one in same building, exact same floorplan, listed for $169. Dropped to $159.
Personally, my price for this place would be exactly $100K, based on age, condition, size, location, and what it would rent for (about $950, including all utilities and assessments and taxes).
Edgewater: 6101 N Sheridan Road, Park Edgewater. 1929 vintage building. 2 bed 1 bath, 5 room, about 1200 sq ft:
1995- $60,000 for apt 14C
1997- $78,000 for an F apt
2001-$130,000 for apt 5C
2008- $209,000 for another C apt.
These are just two examples, in buildings I know extremely well and have walked through numerous units of various sizes in. Just get hold of closing prices for 1998, 2000, 2002, 2005, 2007, and you will see that the price inflation in these two neighborhoods was unbelievable.
What made this bubblelicious appreciation possible was the lunatic speculation in tandem with voodoo mortgages. Now that that’s all over, and there are hundreds of empty units languishing for months and even years on the market around these parts (I know, I watch daily), we can expect proportionate rollbacks in prices, especially when the hidden supply that does not appear on the multilist but which I know darn well is there, referred to as “market overhang” hits the market.
When people say Chicago hasn’t experienced a boom over the past five or six years compared to other areas like Vegas, Miami, Cali… I counter with #’s like these that shows many Chicago neighborhoods have been booming for 10-15 years and is due for a correction or at least a long period (5-10 years?) of little appreciation.
The South Loop data is probably skewed by the original Central Station sales from 10 years ago.
Laura:
You’d agree that the Jarvis place was undervalued (or, at least, really cheap) at the ’98 price in 1998, right?
That’s a place that would have qualified as “affordable” for someone making
is there someplace a non realtor could dig into those numbers, to see if they were fishy or not, what they used in there calculations? even if they are solid, the numbers wont hold without signifigant increases in peoples incomes, and thats not happening
I believe ’98 prices were very, very cheap, and that these two neighborhoods were much worse areas at that time.
Part of the appreciation in these two areas reflects improvement of the area, particularly Edgewater, by which I mean the area North of Foster, south of Devon, and east of Western , to the lake. This area was very dangerous in 1998, but is now one of the cleanest, safest areas in the city. Rogers Park has improved substantially, even though it has a way to go yet.
However, now, both areas are still very overpriced, as is most of the rest of the city, and the country. Prices are not yet lining up with local rents and incomes, and they aren’t anywhere else either.
I personally expect all prices in major metro areas to roll back to 2002 levels at least. Los Angeles and Miami will go back even more.
I believe that Edgewater and Rogers Park will continue to improve, slowly, and that the South Loop will be a bust. Lincoln Park and Lakeview and Streeterville will continue to be the most valuable nabes, but their prices will roll back to reflect the income spreads of the neighborhoods, and to reflect the fact that most people aren’t centimillionaires.
Doesn’t some of this appreciation in areas like edgewater and rogers park and west town reflect the fact that a LOT of propertes there have been rehabbed? I think it’s really misleading to think everyone who bought in the mid ’90s in these neighborhoods has tripled or quadrupled their money without putting a substantial chunk of change into home improvements. But maybe I’m wrong. Maybe all these people buying condos 10 years ago for 50K were buying beautifully rehabbed places with great finishes in gut-rehabbed buildings…but I doubt it.
When I look at prices in River North, LP, and Lakeview, much of it seems very reasonable to me in comparison to transitional neighborhoods in the city. My big question is if you’re looking to rehab (and then live in) a place for at least a few years, where is the best ‘hood to buy now if you want a very urban, walk-to-everything lifestyle and you’re not that interested in being a ghetto pioneer?
This is off topic, but has anyone seen this listing in the Columbian? http://chicago.craigslist.org/chc/rfs/673519715.html
I would suspect that the 37% for the south loop is correct, since there was very little, precious little indeed, there ten years ago…
Danny, the two buildings from which I pulled my examples are unrehabbed “intact” vintages.
The unit at 1216 W Jarvis had the kitchen from the 70s conversion.
Yes, many, many people tripled and quadrupled their money throughout the great boom of recent years. This situation was duplicated across the country- you made almost a year’s income off your place just by LIVING in it, thanks to the prevalence of extremely loose lending.
Yes, a lot of stuff was rehabbed, but these were all rental buildings previously, and most of them were ridiculously overpriced relative to the rents they can collect.
Example:1362 W. Greenleaf, developed by the Herlo Brothers. A 650 sq foot 1 bed was made into a tiny 2 bed with a 12X 11 living room. All the units in the building were made to accomodate one more bed than they had had as rental.
The units were offered for sale at $176K.(!!!!!) They did not sell and are now being rented out for $950, brand-new rhabs with granite, steel, washers & dryers……because the price tag of $176K was much too high for the likely buyer of these units, as you can see from the rent. $950/month does not equal anything like $176.
The rents and incomes are the acid test of housing prices. I figure that at the prices being asked for units substantially similar to (and usually rather inferior to) my rental, I would pay twice as much for my apt if I put 10%down and bought. This is after figuring mortgage payments, plus the maintenence and heat now included in my rent. I’m noticing similar discrepencies on downtown apts featured on this website- $1600/month rent does not equal $332K.
Therefore, I believe we still have a looooooong way to drop.
Isn’t 1363 Greenleaf near the beach though? I’ve been following some units in the 1200 block and I think the beach amenity puts these properties in a different category than your typical Rogers Park housing stock.
IF they can ever unghettofy Rogers Park, I think the beachfront condos have a potential to skyrocket, esp. the 1200 block of Greenleaf. Sure you can only use the beach 2 months/year, but people moving to Chicago in the summer from another town might not fully comprehend that and be willing to pay $$$.
The biggest boost to Rogers Park would be the LSD and Lakefront Park extension; Sheridan Road would become a charming neighborhood street, well, boulevard up to Howard, Sheridan in Edgewater would be lovely (and even Broadway would benefit).
Everything east of Clark is “near the beach”, Danny.
The units at 1358-1366 W Greanleaf are now renting out for $950 because the ARE NOT SELLING, which is no wonder, because there is no parity between $950 rent and $176,000.
The building is still west of Sheridan Rd, but even stuff east of Sheridan, like 1106 W Pratt and 1142 W Pratt, are getting hammered. Anyone foolish enough to pay $195K for a one bed at the 1142 W Pratt Bldg is going to see apt 2P at 1400 N Lakeshore Dr for sale, for $185, and WEEP.
I mean, even 1400 N Lakeshore Unit 2P, has been on the market for months at $185K. Beautiful vintage building, best nabe in the city, across the street from Oak Street Beach.
Yet sellers here in Rogers Park are still clinging to prices that sellers in Lakeview and Downtown are having a hard time getting. I’d like some of whatever they have been smoking around here.
Good points Laura. However not all of us would consider Oak St beach the best beach in Chicago. It is way too crowded for my tastes to go into the water (not that I’m scared of crowds or the water but combine them and I guess its a phobia of mine–too many stories of ecoli I guess).
I’ve never been to Loyola beach in the summer though so don’t have a benchmark but I am still sure it can’t be as crowded as Oak St. beach. I mean when you can’t see sand because of so many people/beach towels you know its crowded. Oak st. is a zoo of people.
Umm – I live at 1360 N. LSD – 1400 is two blocks south of North Ave. Beach. Oak Street beach is 6 blocks south.
And 1400 N LSD has window unit A/C, had at least two fires last year, has been flooded by breaking pipes several times, is undergoing constant construction (I’m sleep deprived because of it) and, according to apt. reviews, surly desk staff.
Maybe not a good building to use to compare.
You look at these 10 year increases and they don’t seem so great. The S&P 500 is up 150% 1997-2007, and I believe this has been worst decade for stocks since the 1930’s. (It’s up 330% over last 15 years.) The CPI is up 128%. Any area with an increase less than that has lost real dollar value. The money in real estate is always in the buying and selling decision, rarely in the holding.
DBA,
Your stats on the market are pure fabrication, you also selective picked your dates to exaggerate apprecation.
S&P 5/12/97: 829.75
S&P 5/12/07: 1,522.76
(1,522.76/829.75)-1 = 83.5%
But if we use 1998 -> 2008 we get a completely different answer:
S&P 5/14/98: 1,108.73
S&P 5/14/08: 1,408.66
Total return of: 27%.
Neither of these come close to 150%, even with reinvesting dividends they wouldn’t. And no it has definitely NOT been the worst decade of stock returns since the 1930s. There are many other 10 year periods of stagnant or low returns.
This is probably not the right forum, but I am always curious about the American Invasco (?) developments, and why do they have so many foreclosures in their developments?
A friend told me to never buy in one of their developments… Any idea? Bad investment decision? Most of their properties are of good value though (not to say they are of the best value). There is room for negotiation of course.
Appreciate the thoughts and insights.
Thanks.
A lot of investors buy in American Invsco buildings because they offer the various investment plans like the 2/2/2 – which is two years of paid assessments, two years of paid taxes and two years of a guaranteed rental.
The problem is- once the “deal” runs out (after two years) the owner is stuck paying all those extra costs and many find out they simply cannot do so.
Also, in my opinion, the sheer number of rentals in their buildings hurts property values.
Laura: I’ve often wondered how people could get away with charging the prices they do in Edgewater and Rogers Park. It used to be “affordable” for your average person. Not anymore.
I’ll be watching to see what prices are doing in those neighborhoods.
Little Boi –
I believe the Sterling was among their conversions, that’s a good primer. Just from following this site I wouldn’t go near anything they attach their name to.
I know someone who once worked for American Invsco and he told me to stay away from their properties. Their conversions include the Sterling and The New Yorker in Lakeview. Both buildings have a high foreclosure rate.
American Invsco also converted the building at 312 May. After the conversion, the atrium and roof needed to be completey redone and each unit got hit with a huge special assessment. Of course, that could happen in other buidlings too. Caveat emptor.
Bob,
You’re right. I made a calculation error. I had 51% increase in S&P, not 151%. But hey that still better that the South Loop.
I do think I right about this being a weak period for stocks. The Dow by decade:
1930’s -38%
1940’s 31%
1950’s 242%
1960’s 19%
1970’s 2%
1980’s 241%
1990’s 304%
2000’s 13%
DBA
Housing prices should increase at or near the rate of inflation i.e. historically 3-5%. So using history as a guide, over a 10 year period, housing prices should have increased 30% to 50%. The numbers above show a completely different story. I would be very very wary of buying anything right now.
People, please remember, homes used to be affordable. Nowadays things are crazy. Do you really want a $2,700 PITI payment every month for 30 years?