Market Conditions: Is Chicago the Perfect Second Home City?
The Chicago Tribune recently reported on people who keep second homes in Chicago.
Some used to live here and simply kept their apartments.
Others buy because Chicago has great restaurants, museums and culture and it’s still affordable compared to “comparable” large cities with the same amenities.
O’Hare Airport, and its many international routes, doesn’t hurt either.
The Gold Coast used to be the most in-demand area for pied-a-terres, Malkin said. But she added that River North is also popular, as are areas near Grant Park that are walking distance from museums and summer concerts.
Liz Brooks, vice president of sales and marketing for developer Belgravia Group, said many out-of-state apartment owners live in driving-distance states like Michigan.
“They come in with friends and relatives to entertain or for a quick weekend getaway,” she said.
One couple, for example, has a home in Ann Arbor, Mich., but keeps an apartment to visit their son and grandchildren in Lincoln Square. Another couple’s primary home is in Houston, yet one spouse regularly travels to Amsterdam and often stays in Chicago.
Pied-a-terres vary from a one-bedroom to apartments with extra bedrooms to entertain family for the holidays.
Key on the second-home shopping list? Amenities and a management company to take care of anything that needs fixing. For example, when a toilet exploded in Jones’ apartment.
“When you’re not living there on a full-time basis, it’s rather nerve-wracking,” Jones said. “What if there’s a leak going on, and you don’t find it until you go home weeks after it started?”
Some even come to stay during the, gasp, winter.
Joe Hanauer lived in Chicago for decades before moving to Laguna Beach, Calif., in the 1980s.
He and his spouse often returned, staying in hotels.
“We recognized how much we missed Chicago,” he said. “Not just because we have a lot of friends, but also the culture, the feeling of the city.”
So 15 years ago, they bought a two-bedroom condo at the Drake Tower on East Lake Shore Drive. Hanauer had always loved the view of the city from that street, and its walking distance to downtown hot spots.
Ahead of visits, they call Treasure Island and get groceries delivered, which building personnel stock in the refrigerator.
When winter strikes, they love the convenience of simply walking downstairs to dine.
Now, unable to travel as often, the Hanauers have put the condo up for sale.
Over the years on Crib Chatter, many commenters have noted that Chicago is “cheap” compared to [fill in the blank]: New York, Washington DC, London, Boston, Los Angeles, San Francisco etc.
Is Chicago the best deal in the country for high rise living?
Is the Gold Coast still the place to be or will Streeterville, River North or even the South Loop eventually take the second home crown?
Chicago’s diverse appeal as a second home city [Chicago Tribune, by Alison Bowen, November 30, 2016]
The best *deal* ? No. I think living in Houston, Dallas, or (god forbid) Florida would be much more of a “deal”. But a second home for rich people who aren’t quite rich enough to own a pied a terre In NYC? Sure. I don’t think the people described in this article are your average joes either though – Grocery delivery and building staff stocking the refrigerator? Guess those crazy assessments at Drake Tower at least pay for something.
That being said, I know of a lot of families in the suburbs of Chicago, and within driving distance in Indiana and Wisconsin that keep places in the city for weekend fun. Heck, I’d do it if I moved to the suburbs. Chicago is a great city if you’re just spending weekends here (especially in the summer) – and 30 years later when it’s retirement time it can serve as a primary home or extra little boost to retirement portfolio.
Riz, I’d argue Houston, Dallas, Florida, etc aren’t comparable cities. Not saying they are bad places to live (well Florida maybe) but not really apples to apples when it comes to urban living imho. Chicago is definitely a deal compared to other major markets like SF, Boston, NYC, or LA.
If you have a kid using the condo or maybe in a position to pay cash, I can see why some might want a condo in the city as a second home. However, beyond betting on any long term value appreciation, it makes no financial sense imho. Much cheaper to just rent a nice hotel suite relative to the carrying costs of owning.
Russ , I agree with you on that last point – just saying if you’ve got the money to have a second home, I’d prefer to have my own place than stay in a hotel every other week. I’d also be less driven to want to come back out to the city if I had to stay in a hotel every time.
I wouldn’t look at it as an investment per say, but 30 years later I’m pretty sure you’d make your money back if you sold.
“argue Houston, Dallas, Florida, etc aren’t comparable cities”
Also, there was this condition: “for high rise living”
Miami is the only city in TX or FL with an argument as being comparable to Chicago for “high rise living”.
Wonder why these folks are selling their unit in the drake… could it be the tax hikes?
“Wonder why these folks are selling their unit in the drake”
Sez in the post:
“Now, unable to travel as often, the Hanauers have put the condo up for sale.”
yeah I saw that again after I hit the submit button
Given that Crains is noting that Chicago will be “worst in 100 largest US residential markets” for 2017, I don’t think Chicago is a good 2nd home market. Those “2nd-home” Chicagoans interviewed had a Chicago-connection, whether family, business, or former residence. Have yet to run into a London, Paris, or otherwise international buyer who maintains a 2nd home in Chicago for purposes other than establishing eventual Green Card residency.
“Chicago is a great city if you’re just spending weekends here (especially in the summer) – and 30 years later when it’s retirement time it can serve as a primary home or extra little boost to retirement portfolio.”
There was a Hollywood actor/director type that used to be from Chicago who owns a second home in the Gold Coast and comes here every summer. I can’t remember the name of the person now.
John Mahoney?
Inner Loop 610 in Houston will eventually give Chicago a run for its money. Prices per sf are already caught up to Chicago. There are many high-rises and condos/THs, pro sports teams, opera, symphony etc. West U. is like Roscoe Village except better and bigger lot widths. Houston also has the advantage of having its Lake Forest and Winnetka, known as River Oaks, within a 15 minute drive of downtown. All big cities have a plethora of Zagat type restaurants, and sadly or positively, as one views it, all this urban culture is homogenized today. Same colors, finishes, kitchens, baths, hotel lobbies etc. in all cities today.
“Inner Loop 610 in Houston will eventually give Chicago a run for its money.”
Wouldn’t it have already done it? It’s not like this area hasn’t existed for 40 years.
That’s wishful thinking about inner Houston. I don’t even know where to start.
“Have yet to run into a London, Paris, or otherwise international buyer who maintains a 2nd home in Chicago”
And I have yet to meet an international buyer who maintains a 2nd home in Manchester, Lyon, or Frankfurt. What of it? What you’re really saying is that Chicago isn’t NY or LA, it isn’t an internationally worthy US city, so why bother. So someone from South Bend and not from Paris buys a 2nd home in Chicago and we never get our international RE street cred? Who cares?
Don’t kid yourself, there’s a LOT of boiling-beneith-the-surface resentment in Paris and especially in London with foreigners buying properties that citizens feel should be left for citizens to buy. It’s one thing when a foreigner buys an unattainable for almost anyone $15MM house in Chelsea, quite another when the “affordable” $700K flats are eaten up by foreign investors. Chicago doesn’t have that problem, maybe it never will, but being the internationally most desirable doesn’t seem to end well in this new era – brexit anyone? If Cranes is to be believed, people will find their urban utopia in its top ranked Phoenix anyway, millions of people living in a forever sprawling arid desert, Schaumburg with sand minus the water… what could possibly go wrong?
Chicago will never be an international city where visitors from warm weather have to buy down jackets just to visit because the high temperature is predicted to be 5 degrees in the middle of December.
“It’s one thing when a foreigner buys an unattainable for almost anyone $15MM house in Chelsea, quite another when the “affordable” $700K flats are eaten up by foreign investors.”
Thank you Jay. I’m so glad the international buyers, with the exception of some Chinese, are NOT buying in Chicago. The second home buyers here are more likely to be Americans. And they intend to use the property.
All you have to do is look at the disaster that is Vancouver and now, sadly, looks to be Seattle. Anyone else see how all the Chinese buyers are suddenly turning their sights to Seattle? But they’re never even going to use these houses. They are purely to launder the money out of China. It’s a huge distortion on the housing market.
It’s not going to end well.
From Bloomberg:
Just a few days after Vancouver announced a tax on foreign property investors, Seattle real estate broker Lili Shang received a WeChat message from a wealthy Chinese businessman who wanted to sell a home in Canada and buy in her area.
After a week of showings, he purchased a $1 million property in Bellevue, across Lake Washington from Seattle. He soon returned to buy two more, including a $2.2 million house in Clyde Hill paid for with a single cashier’s check.
https://www.bloomberg.com/news/articles/2016-12-04/vancouver-housing-tax-pushes-chinese-to-1-million-seattle-homes