Market Conditions: NYT Says Out of Towners Flock to Chicago for Second Homes
According to the New York Times, out of town buyers are flocking to Chicago to buy up second homes because Chicago is seen as affordable and stable.
CELEBRATING their wedding anniversary in April at the Palmer House Hilton in downtown Chicago, where they were engaged 10 years ago, Chris and Kristine Warnes knew they would be taking home beautiful memories of a luxurious weekend. They had no idea that they would be taking home a new condominium, too — a pied-à-terre with views of the deep blue of Lake Michigan and the bustling street life of the Magnificent Mile along Michigan Avenue.
About a week after they returned home to the suburb of Naperville, Ill., their offer of $290,000 for a 900-square-foot loft in a former Montgomery Ward building, now called Six North Michigan, was accepted. The unit, listed at $325,000, has Italian kitchen cabinetry with granite and tile accents throughout, and access to building amenities like a theater, a gym and a heated indoor garage.
“Well, of course, if we’re offered something that’s listed $30,000 under the customized price everybody else would have to pay, we’re going to jump on that,” Mr. Warnes said. “For several years, we had talked about a place in the city. It will allow us to live out our dreams earlier that we thought.”
For the Warneses, it all started with a short walk from the hotel east to Millennium Park, that jewel of green space that earlier this decade transformed a rather barren stretch of downtown into an art, dining and entertainment destination. Looking back at the skyline, the Warneses noticed a beautiful old building advertising converted condos.
As luck would have it, several models were open. They liked what they saw. As even greater luck would have it, on the way out they bumped into an agent, Kathleen Malone of @Properties, and she told them she had one unit that was a steal of a deal.
“We walked away after that just to make sure we had our figures in order and to make sure this wasn’t something we were doing on a whim,” said Mr. Warnes, 36, a project manager for a global staffing company. “But this was an offer we couldn’t refuse.”
For some other buyers, the relatively cheap prices, the international airport and the lure of the possibility of the 2016 Olympic Games were the reasons behind the recent purchase.
This Swiss-based family chose Chicago over other international cities.
“We could have picked London, could have picked Italy or another place in Switzerland, but we like the Gold Coast,” said Abdellatif Laasraoui, 47, referring to the area north of the Magnificent Mile where his family moved into a half-million-dollar vacation condo last year. “There is no comparison in space or comfort. You’d have to pay 10 times more to get something comparable.”
“And,” added Mr. Laasraoui, an executive for a steel manufacturing company, “to commute from Chicago, it is very easy. I can go anywhere in the world from Chicago.”
Chicago is often seen as “cheap” compared to other big metropolitan cities with similar housing stock (i.e. New York and San Francisco.)
“I gave a tour of industrial Chicago to urban planning professionals from the Netherlands,” said Rachel Weber, a professor of urban planning and policy at the University of Illinois at Chicago, “and the substance of their questions had less to do with my talk than with residential real estate. They were all looking to scoop up affordable second homes.”
Elizabeth Ballis, a broker with Coldwell Banker Residential Properties, helped the Laasraouis find their Gold Coast condo. She could tell them firsthand about how downtown had evolved.
“I got married 40 years ago and we lived in the Loop, at 11th and Michigan,” she said. “There was nothing going on. People thought we were crazy.”
Now, Ms. Ballis is working with clients from places as varied as Tucson; Austin, Tex.; and Switzerland, who all want to be part of the downtown action. “It shows how things have changed,” she said.
Chicago is Becoming the Second-Home City [New York Times, Susan Saulny, July 9, 2009]
I just returned from my home/condo shopping trip in Las Vegas. Compared to Vegas, Chicago is very stable! I have never seen anything in my life like I witnessed out there. Unreal. If anyone wants a condo in the desert that was 1.1M and now being resold at 295k let me know because there are multiple available….
Chicago is meeting our expectations for a second/weekend home. Two and one half hour drive away from our home in a small city: great urban views from our unit; museums; shopping; theater; restaurants; dog park; and just plain walking around. Very happy with our purchase.
Tony I know what you mean about LV, but it’s an airplane ride away. Too far.
Buy NOW before the foreigners SNAP up all the deals!
HD – Don’t forget about the Olympics. That will add at least another 15% in appreciation.
When the Olympics arrive the South(side) will rise again! Those abandoned, blighted neighborhoods surrounding Washington Park will be magically transformed into an urban oasis of mid-rise condos and box stores like Trader Joe’s, Whole Foods and DSW Shoes. Nevermind the urban blight that extends west from Washington Park. If you build it they will come!
http://www.bing.com/maps/default.aspx?v=2&FORM=LMLTCP&cp=qyyqkx7pypfb&style=b&lvl=1&tilt=-90&dir=0&alt=-1000&phx=0&phy=0&phscl=1&scene=11400893&encType=1
those vacant lots look perfect for some of the smaller olympic events. beach volleyball, horseshoes, etc
I hope to God the foreigner can save our economy. Maybe if we can stablize our currency and introduce enough reforms they will let the US enter the Euro zone. We could use some EU funds for infastructure repairs.
Most foreign debt holders are trying to reduce USD exposure. Maybe real estate will do better than Treasuries but I don’t see how it really accomplishes the goal.
Damn maybe that guy was right about all the “empty nesters” saving the condo market!
Lol, ok maybe not…
Actually didn’t you hear about the new Olympic event – Urban Shooting.
it goes to show that the economy move with market forces and all the doom and gloom as some positives can bring the system the other direction.
the world isn’t giving up on the US, and Chicago is a great affordable world city.
There comes a time
When we head a certain call
When the world must come together as one
A handful of exceptions don’t make a trend. Looking at the enormous number of near-to-Downtown condo units available, it appears this “2nd home” trend won’t benefit the low absorption rate and is a mere speck on the overall residential condo real estate market.
Leave it to NYT (I’m a subscriber) to misreport. NYT recently did an article that featured Prairie Crossing subdivision in Grayslake, repeatedly referring to town as Grays Lake. Fairly consistent error-filled reporting when topic is Chicago area.
DANG! An INTERNATIONAL AIRPORT!!!
Meh. Doubt these type of sales will help much.
Peter Schiff addressed a Las Vegas crowd in 2007 (it’s on youtube) predicting the LV condo crash. He couldn’t understand why anyone would buy condo in a city that has 100,000 hotel rooms.
“The room stock in Clark County grew by 342 in 2007 and is expected to grow by another 8,661 rooms in 2008 for a total of 141,608 rooms. In 2009 we expect room growth to increase by 9.9 percent to 155,562 rooms and then to slow to 2.5 percent in 2010 for a total of 159,380 rooms by year end.”
Better yet, why would someone want to spend longer than 3-4 days in Vegas.
Vegas has to be the most overhyped city in this decade. I am not sure what my generation’s fascination is with it.
Vegas is nothing more than a place in the desert to gamble a lot, drink a lot, etc. Sad commentary on my generation’s values that it happens to be so popular. 8)
*Side note: haven’t been back to Vegas other than flight transfers in eight years.
I love Chicago, but I just don’t see Chicago as a large second home market. I get why people keep second homes in NY, but Chicago??? World class city it is, but this ain’t NY by any stretch.
Olympics won’t do anything to help the city either. I was in Atlanta during the Olympics there. The shitholes near the stadiums are still shit holes… Just shit holes near a stadium. There was never a wholesale revitalization of the communities and any revitalization had more to do with people wanting to live closer intown than anything to do with the olympics. In fact, much of the revitalization occured post 2000…
I think it’s relative Russ. Chicago is a big step up if you’re from a town with 1 stoplight. And there are a lot of those in the midwest. To those the jump from chi to nyc is likely meaningless.
However, i suspect there aren’t enough peeps in those towns to make a difference.
Chicago is bargain big city livin… so yeah, I guess.
“However, i suspect there aren’t enough peeps in those towns to make a difference.”
There are enough peeps, just not enough peeps looking to drop half-a-mill on a 2d home. Especially not on a 2d home that comes with cold winters and no skiing. They (mostly) buy 2d homes in ski areas or Florida/Arizona/Coachella/Hawaii. And those that don’t mostly want to hunt or fish.
There certainly are a few “small-town midwesterners” with money who desire an urban piedatierre, but that’s a pretty select group, and I suspect a great many of them are those who have already bought or signed contracts.
How was your week away from the cubicle anon(tfo)????
“week away from the cubicle”
Good, thanks.
And I have a door.
Hahahaha. I have a door too. It stays closed most of the time.
“And I have a door.”
You have one of those 70’s officles or cufices? The ‘luxury’ cubicles with 8′ height and a door?
Those would be sweet if their dark green color actually aged gracefully and not like a soviet flat. At least great for giving the illusion of privacy but really none with regard to noise whatsoever.
I see broke people
I love me some Vegas but agree completely with the 3-4 night maximum stay. Greed is not good for the greedy, it’s good for those who sell them stuff.
This article is just advertising B.S. The Times always runs these real estate fluff pieces on different global locales.
There is nothing beyond these anecdotess that indicates that A. Chicago is becoming a big second-home destination and B. The volume is such to help insulate Chicago from wider market forces.
In fact, I would argue that Chicago is a smaller second-home destination than many “peer” cities.
I would also argue that Chicago is more at risk of a deeper downturn than other cities. Unlike many other cities where there are greater restrictions on development (NYC, LA, SF, BOS), Chicago is wildly overbuilt, and faces many years of oversupply. NYC will recover in a year or two, and Chicago will still be struggling to unload crap South Loop condos.
To think the Olympics or foreigners will save Chicago is ridiculous. What have the Olympics done for the cities of Atlanta and Barcelona? Beijing can’t even lease out space in their Olympic stadium and have no idea what to do with it. Sure the Olympics will be great for area hotels and restaurants for about 3 months during the summer, but it in no way will it revive the condo market.
The whole Olympic spin is just being talked up by Daley and area business to get them in the media spotlight and bring in extra revenue for 3 months. Once the Olympics end, the crappy neighborhoods will still be crappy neighborhoods.
In other news our interventionist government now looks like they’re gonna bail out CIT as well.
Corporate welfare at its finest folks. I guess you don’t need a viable business plan or road to profitability if you have enough lobbyists.
It’s a real office with a real door.
This article was written by a Chicago-based reporter. To say ‘flocking’ is a stretch when under 50 units are being sold a quarter with an unsold inventory of thousands. This is another example of how Chicago thinks it has or is ‘making it’ because the NYTimes carried an article. To me, it is more of that Chicago ‘wind’ at work.
Barcelona actually benefited a lot from hosting the Olympics. They built a large swath of public beaches where only urban decay existed before. Those areas are now quite nice to walk around in. Imagine Chicago before vs. after it’s man-made beaches and the overall effect that has on lifestyle in the city. Before 1992, Barcelona was not on the map of places to visit really. Now it’s a huge tourist destination. As for real estate, there has been statistically higher residential property appreciation in neighborhoods near London’s 2012 Olympics and Barcelona’s 1992 Olympics when compared to the cities’ general residential appreciation (or drop) during the same time-periods. On the global map, Chicago really isn’t much right now. Nobody can say that we don’t look at China as more impressive now then before they pulled off Beijing’s ceremonies. It has definitely affected my interest in visiting China and doing business in China. I don’t think it will do much for real estate. The South Loop is so awash in space it’ll take an Olympics every year for a decade to solve the neighborhoods overcapacity.
“This is another example of how Chicago thinks it has or is ‘making it’ because the NYTimes carried an article.”
If you have such distaste for Chicago, go back to NYC. Relatively few Chicagoans give a crap what the NYT publishes about Chicago.
“Nobody can say that we don’t look at China as more impressive now then before they pulled off Beijing’s ceremonies.”
I can. Honestly. If anything, the (apparently) draconian measures undertaken to (i) hide remaining slums, (ii) prevent any potential demonstrations and (iii) make the air remotely acceptable for the athletes have reinforced negative views of China, or at least of the current government. Why would I be impressed that the most populous nation in the world–with the largest manufacturing base–was able to “pull off” an Olympics with the full weight of the totalitarian regime used to ensure that it did happen? It’s like being impressed that the US Army rolled over the Iraqi army–it’s exactly what I expected.
China is still a joke… All the moronic sheep in this country are worried about them… our GDP per capita is over 16x theirs!
I’ll be worried about china when half their population starts making more than $2 a week, and their northern deserts stop expanding. The chinese are raping the shit out of their natural resources for short term profits. We all know how that typically ends.
Do you have any idea how fake and stupid the Beijing olympics was? They shut down every factory, made people stop driving just so the air would be clean enough to breathe!!! They wouldn’t even have a kid with crooked teeth sing on camera!
China = shithole, plain and simple.
The NYT is a joke publication and a mouthpiece of the democratic party. I still can’t believe they have the circulation numbers they do but I suspect its a lot of stuck midwestern liberals way to try to feel connected to NYC snobbery and elitism.