We Love Terraces: $100K Price Reduction on 444 W. Belmont in Lakeview
Sorry about all the update posts lately, but quite a few of the properties we’ve chattered about are still on the market and many have had price reductions. During this “slow” winter market, I’ll be updating as many of them as I can.
We last chattered about this 2-bedroom unit at 444 W. Belmont in Lakeview in August 2008.
It has a fantastic 1000-square foot private terrace complete with a tented pavillion and refrigeration system. See some great pictures of the tent and terrace here.
It’s also now been reduced by $100,000.
But it doesn’t have any parking. Is the lack of parking hurting its sale?
See our prior chatter and pictures here.
The history again:
Unit #7B: 2 bedrooms, 2 baths, 1800 square feet
- Sold in July 2000 for $383,000
- Was listed in August 2008 for $825,000 (leased parking nearby)
- Reduced
- Currently listed for $725,000
- Assessments of $450 a month
- Taxes of $6,313
- Central air
- Brian Loomis at Coldwell Banker still has the listing
Love that deck. I think I could spend all summer up there 🙂 Rest of the place, not so much.
I just don’t get it. Who can afford to live in these places? Anywhere else in the country (non-urban) you get a mansion for this cost.
I’ve heard deeded parking is available behind the new construction next door. I agree with Gary. Is this place worth $425k for the 2/2, plus $300k for the roof deck? My answer is maybe and NO.
$725k? In the seller’s defense: They can’t just give it away!
Gary,
I’m from a smaller midwest metropolitan area. For 350k there you get a mansion.
The only thing I can think of is in Chicago they provide a lot of subsidized housing which apparently provides a floor to rent prices, thus keeping the cost of higher than it would otherwise be without government intervention.
I like this place and while I’m sure I’ll get a lot of crap for it, I don’t think $725K is out of line. The interior space is very nice, it needs a bit of updating (purely cosmetic) and the roof top is amazing. To be able to enjoy the few months of nice weather we have in this city, is a huge bonus for some people.
Sure you can buy mansion out in the burbs for less, but we’re not talking about the burbs, we’re talking about a place right off of LSD. The buyer pool isn’t even going to be the same as those who want cheap mcmansions in the burbs. Perhaps we shouldn’t compare it to them…
It’s different here.
No, it really is.
I’m being serious.
Jason R,
A quick scan of some sales data and I don’t think a regular unit in this building has sold for more than $450k, ever. Do you still think $275,000 is a reasonable price for a rooftop deck?
600 max
I like the place, but it is still way overpriced for the space. When you break it down like Chris did, you can see why it just doesn’t make sense (300K for a roof deck?). They spent 383K in 2000? If they are lucky they’ll get a 5-10% return on that…unless they are willing to wait a long while…
The sellers are quite obviously delusional.
“No way it will sell. Mark your calendars. This unit will reappear on Crib Chatter many months from now.” How totally prophetic was this statement?
I think this contributes, but I don’t think it is the main reason. I think the main reason is that the Chicago market in general (and certain sub-markets in particular) are just more desirable than other midwest locales. You might argue that desirability of a neighborhood or city doesn’t justify sky-high rents and prices, but the market largely disagrees with you. Even after this correction, the Chicago market will be severely “overpriced” when compared to, say, Detroit or Indianapolis.
Bob said:
The only thing I can think of is in Chicago they provide a lot of subsidized housing which apparently provides a floor to rent prices, thus keeping the cost of higher than it would otherwise be without government intervention.
You are confusing desirability with higher incomes. There are a lot more higher paying jobs in Chicago than say…Detriot or Indianapolis or Peoria…and all that extra cash sloshing around helps contribute to higher housing prices.
Speaking of desirability did you have to wait for the el or bus this morning? It’s COLD! My buddy in Miami who went to college in Chicago will occasionally write me an e-mail that says, “I played tennis outside in shorts and a t-shirt today. What’s the weather like in Chicago?”
Maybe if this was a 4br with parking they could ask that price but I dont see many people in the market for a 2 bedroom for that price. A 2br brings mostly young couples. This place at that price and you’re limiting yourself to a small pool of semi-wealthy older couples with no kids. Not a very big pond to be fishing in. But I agree, you cant just give this place away. The deck adds a lot of value. I’ll go with CG’s estimate at 600k to get this place sold.
“I played tennis outside in shorts and a t-shirt today. What’s the weather like in Chicago?”
The weather is “f*** you buddy!”
That’s what I’d say.
Bob and TftInChi,
I think there are many reasons for the overpricing of certain urban areas. Bob is on to something. Subsidized housing and various regulations that restrict development reduces supply. Then subsidized transportation increases demand. Then there’s the demographic thing where certain groups like the urban environment but when those demographics change the demand goes down.
For reasons that I can’t figure out certain industries tend to concentrate in specific cities – probably because of access to a skilled labor pool. However, eventually some smart companies (e.g. Bank of America) realize they can move to a lower cost of living area. Location is becoming less and less important as technology and cultures change.
But the other thing driving this is people’s values. We’re coming out of an era where people didn’t care about saving money. Now that’s changing and with it the value of Lake Shore Drive goes down. Eventually people realize that they will need to retire some day.
In Milwaukee for instance, the typical professional salaries match Chicago’s salary range, yet the existing-home prices for Milwaukee’s upscale North Shore suburbs are at least one-half of Chicago’s upscale suburban existing-home housing prices. These Milwaukee suburban communities have excellent public schools, significantly lower taxes, strong retail base, and large lakefront parks. Lots to do in Milwaukee area too; not nearly as provincial as it may seem to myopic Chicagoans. (And there’s even a Trader Joe and a Costco…) Needless to say, a two-income professional couple with children in Milwaukee area have significantly higher-quality life-style opportunities at a far cheaper price than their friends in Chicago’s North Shore suburbs. And as my teenage son says, “they’re so much friendlier here” too.
I doubt subsidized housing has anything to do with Chicago’s home prices or rent rates. If anything, readily-available subsidized housing would lower home prices because low income households could exit the private housing market entirely. Demand for subsidized housing here in Chicago far outstrips availability; waiting lists are years long for both family and senior subsidized housing and CHA demolition has reduced unit count without providing adequate replacement housing. Many working class families are paying more than half their household take-home pay for housing, and many working-class neighborhoods contain multi-generational households sharing those housing costs. Rental rates vary only slightly from neighborhood to neighborhood; Edgewater rental rates for instance are only slight higher than Austin rental rates, though the perceived neighborhood quality is dramatically different.
If you look at Chicago demographics, you’ll see most of the population is working-class, ethnic minority majority then low-income, high immigrant population, with only a relatively small professional-income household count. This particular site focuses upon high-end upscale housing as its subject matter, not the housing most Chicagoans actually utilize.
Last comment not meant as criticism; I like this website.
TftInChi,
We shall see. I don’t think Detroit is a good comp as it is largely a one industry pony. More fair comps might be Indy, Cincinnati & St. Louis.
And while it may be true that more people desire to live in Chicagoland, I’m not convinced there are more higher paying jobs per capita than these other cities. If that is the case then I guess it would be ‘desirability’ or some sort of premium.
Chicago may maintain this premium but I bet the spread narrows a bit in this downturn. The bubble never really hit less “cosmopolitan” midwest cities such as those three.
Much of St. Louis proper looks like Detroit from what I remember. Out of the three, Indy was doing the best. It’s certainly cheaper, but not as dramatically as you’d hope – prices are just more in line with what people can afford. But even around 2001-2002 prices were already stagnant and declining – along with the local economies – in places like Ft. Wayne for instance.
Bob:
I largely agree that the gap will narrow. Just like the gap between NYC, San Fran and Chicago will narrow, IMO. I also see people’s point in the effect of higher salaries on housing cost. I do, however, think that people here largely underestimate the appeal of urban living to a certain segment of the population and the effect this has on housing prices. To those types of people, NYC and San Fran are the center of the universe (or maybe just the US) and only a handful of other cities can compare (Chicago, Boston, LA, maybe a few others). You may not agree with this mindset, but I think it certainly effects desirability and market values. I mean when entire generations of hipsters from across the US all want to live in the same 5 square mile area, that type of demand creates a whole different type of market.
architect:
You won’t get any hate on Milwaukee from me, but I do think you are overestimating the job market there. I know quite a few people who live there and have well-paying jobs and live in a nice part of the city. That said, I don’t think there are nearly as many of these types of jobs as in Chicago and I don’t think that the city offers as much culturally. I think these two facts almost single handedly account for Milwaukee’s affordability when compared to Chicago.
“some smart companies (e.g. Bank of America) realize they can move to a lower cost of living area”
Uh, Gary, the entity that is BofA was NCNB–i.e. North Carolina National Bank. The origin bank was founded in Charlotte in the mid-19th century. They haven’t moved at all, they’ve just eliminted headcount in their acquired banks.
“This particular site focuses upon high-end upscale housing as its subject matter, not the housing most Chicagoans actually utilize.”
….which is funny considering the audience it attracts.
Just had to comment on this…
What you say about Chicago’s working-class demographics has some truth to it. But you might be surprised at the demographics of the most affluent areas of the city. The loop, river north, gold coast, lincoln park, lakeview…they all have a very high ratio of yuppies to working-class. The effect this can have on the city as a whole is startling. Many people who can’t afford to live in these neighborhoods still want to and will sacrifice a lot to live near them or in more far-flung neighborhoods which offer similar amenities. While the whole city doesn’t live in these neighborhoods, the neighborhoods still effect the mindset and expectations of a large percentage of people.
architect said:
If you look at Chicago demographics, you’ll see most of the population is working-class, ethnic minority majority then low-income, high immigrant population, with only a relatively small professional-income household count. This particular site focuses upon high-end upscale housing as its subject matter, not the housing most Chicagoans actually utilize.
There aren’t many jobs in Milwaukee – I have several friends who would move there in a flash if they could get jobs there. Especially in “creative” fields and the like.
With all due respect TftInChi, your argument is the “everyone wants to live here” therefore prices are higher argument. Every major city used that argument to justify high prices. There is something to be said for living in a City but the premium is not quite as great as you would think. I have good friends who rent an apartment in a large complex in Palatine for $1,250 a month; my other high school friends rent a condo out near woodfield for $1,300. Compare that to my rent on the near nw side for $850, new 2/2’s in my ‘hood for $1,200, and other lawyers in my firm who rent in Wicker Park for $1,400, Belmont/Lincoln for $1,000, etc. My point is that rents are very similar. Why should owing cost so much more???
I can’t speak for rents in other cities; I’m comparing city v. suburban rents regarding everyone wants to live on the northside arugment.
“Why should owing cost so much more???”
Because the sellers can’t just give their property away. Duh!
I think that, for purposes of conparison, you should ignore condos in the city v condos in the ‘burbs–I think (feel free to disagree) that the target markets are sufficiently distinct to make the comparison untenable. Comparing townhomes or SFHs is much more reasonable, as I think they are closer substitutes as far as the probable buyer market, at least w/r/t Chicago.
2 things come to mind that separate Chicago from other midwestern cities in terms of professional populations. 1 is that Chicago is home to a huge population of Biglaw lawyers. Indeed, Chicago is home to 3 or 4 or 5 of the world’s largest law firms. They all tend to have large populations of well-paid professionals. St. L, Indy and Detroit don’t have anything resembling this.
The other thing is the exchanges. There isn’t really anything like the trading populations in the other cities.
Other than these two populations, I suspect that bankin, accounting and other professional populations are similar.
“I’m comparing city v. suburban rents regarding everyone wants to live on the northside arugment”
Do any of the ‘burban friends work downtown? If a couple, do they both? Because close(-ish) to work is a very big deal and would outweigh other consideration–if I worked in Lake Forest, I would find Highland Park (or Deerfield or wherever) a *lot* more appealing
“Other than these two populations, I suspect that bankin, accounting and other professional populations are similar.”
Chicago’s top ten acctg firms have 12,040 local employees. Detroit’s top ten have 4,651. Indy and St Louis undoubtedly have even fewer, being much smaller markets (STL market is about 60% the size of Detroit; Indy is about 1/3). Also, advertising, PR, etc., etc. are much bigger here as well.
We also have lots of research and academic jobs compared to smaller cities (though spread throughout the metropolitan area of course).
I read a study done a few years ago, I can’t remember where right now, about peoples housing preference, more in regard to neighborhood than housing type. The finding was that people really would prefer to live in “traditional” type areas, that is non-subdivisions, with regular blocks, with alleys behind houses sometimes, but couldn’t afford the housing, or found there simply was none available or they were leery of an older house. The other interesting thing was that traffic actually moved quicker overall in the traditional areas vs. a developer planned area with cul de sacs and arterials. The reason I bring this up is that this is a more traditional “urban” type of environment (at least in a North American context) than a lot of the newer, further out, far-flung suburbs which got a lot of the recent construction.
anon(tfo) it’s a mixed bag where they work. It’s not that much of a consideration for some people. Check out the inbound and outbound highways in the morning and you’ll see that people commute both ways for work. I know a guy who travels from Wicker Park to Waukegan everyday for work and has no qualms whatsoever about the commute time. In fact he kind of likes it.
hd,
I have done the commute and reverse commute (2nd & 3rd shift), and I can tell you the commute going from suburbs to city in the morning and city to suburbs in the evening is much worse than the reverse.
anon (tfo), the relative populations of those places are also relatively much smaller too. That’s why I believe they are much less of a factor in comparison.
Its the “special” factors about Chicago that I’m pointing too.
“the relative populations of those places are also relatively much smaller too”
Not quite current metro population: Chicago-9334; Detroit-4484. Ratio = 2.0816
Acctg Firm Employees: 12,040/4,651. Ratio = 2.5887 25% higher than the population ratio.
I’m not arguing that the “special factors” aren’t the biggest factor, but there is a different job base in Chicago, just as NYC has a different job base than anywhere else.
anon,
Regarding B of A. Wasn’t sure which way the acquisition went but notice they put the combined operation in NC rather than SF. I’m sure that saved them a ton of money.
Regarding the comments here about the trading population and the exchanges…we all know where that is ultimately going. From a business standpoint location is becoming increasingly irrelevant.
Gary,
For corporations this may be true. But I’ve noticed certain client-facing industries tend to be clumped downtown, perhaps due to the ‘prestige’ (or rather perceived prestige) of a downtown address. IE: law firms, headhunters, ad agencies, etc.
What do you guys see as an appropriate asking price for this place if this is so out of whack? Not that I dont agree I just wonder how you break it down. Everyone seems to throw out numbers with no real backing. Whats an average per square price in this neighborhood for a nice place? At 1800 square feet interior thats a nice sized 2/2. Add onto it an amazing roof top deck that is already finished and ready to show off and you have a pretty nice place in my book. Again I have no idea what this will sell for but I would be interested to find out what places of similar size and quality without the rooftop sell for in this hood.
My guess is that an average rooftop deck in Chicago is worth maybe $75-100k. This rooftop deck is clearly a cut above that. I give $430k to the unit, which is clearly a maximum given the comps, and $170k to the deck and magically arrive at the other posters’ $600k as a fair price.
By the way, the deck might be ready to show off, but in my opinion the interior of the unit is tacky. Combined with the lack of parking, $430k for the unit in this market might be too much.
Someone on the previous posting mentioned problems with the deck; either it was done w/o association approval or caused leaks or both. Could be too much of a good thing if it’s true.
Much of the square footage is hallways.
Unit 3A is listed for $475k. Give $10k/floor (absurdly high, I think), add another $10k for the more expensive kitchen, you’re at $525k for the unit. Which means they are asking $200k for the deck.
The raw space of the deck is probably worth ~$100/ft; is the decking and the tent, etc. worth $100k (or even $70k, as “proposed” by Chris?). Nevermind that the unit isn’t worth over $291/ft.
I just think that breaking it up into two separate components is idiotic. You cant just buy a similar 2/2 for 425k and then “magically” put a gorgeous 1000 sq ft rooftop deck on top of any comparable 2/2 for 125k or so.
Someone please find me a comparable 2/2 in this neighborhood for under 500k with 1000 sq ft of raw rooftop space.
Dont forget about maintence of that outdoor deck. either you’ll have to store all that crap in a storage unit (also moving all that crap twice a year) or leave it up there and have it destroyed in 1 winter.
“Someone please find me a comparable 2/2 in this neighborhood for under 500k with 1000 sq ft of raw rooftop space.”
Wait 18 months.
haha tfo that was actually a very clever answer and got an audible chuckle out of me. Well played sir.
ChiGuy–why couldn’t you just throw tarps/covers over the stuff?
JCL
Please find me a comparable 2/2 with a 1000 sqft. rooftop that justifies $725K. Sure it might be 1-3 of a kind in LP but anyone putting that kind of priority on outdoor space should buy a 2/2 house in MIA so they can enjoy it 12 mo/year.
Crains Chicago just published list of Chicago’s largest employers:
78,000 US Government
43,910 Chicago Public Schools
35,570 City of Chicago
23,451 Walmart
22,142 Cook County
18,124 State of Illinois
15,660 Advocate Health
14,287 U of Chicago
14,254 Walgreens
14,000 United Airlines
How many of those jobs are six-figure paychecks which qualify a buyer to purchase a home such as this one? There are far more $500,000+ homes for sale then there are lawyers to buy them.
JCL, you asked us how we break it out, then tell us the breakout doesn’t make sense?
What do you think is a more reasonable way to price it?
3A at $475k — they are dreaming. Not as much as this guy, but still dreaming.
I guess tarps are an option, albeit not the best. I figured with that nice of furniture I wouldn’t want to take any chances. I imagined 1 windy day would tear them up and all those cushions would be ruined.
JCL says “Add onto it an amazing roof top deck that is already finished and ready to show off and you have a pretty nice place in my book.”
I’m betting that that rooftop deck doesn’t look so nice on 1/13 compared to mid-summer as the picture shows. Maybe if they hold off until late APR to list it, it would seem more of an asset.
I hope the unit comes with a massive storage space you can move all that patio furniture to for 6 months out of the year 🙂 No parking space, probably no storage space either… clearly worth 3/4 of a million dollars!
Well, maybe you could move it into the pavillion… Seriously, the deck is a massive asset, even if it does involve a little work. Hell, if they were willing to just sell me the deck, I’d buy. 😉
I viewed the roof deck and it is amazing. There is an enclosed storage area (for furniture, supplies) that is adjacent to an enclosed rooftop Butler’s Pantry (dishwasher, sink, cabinetry); you can’t see this space in the photos. Speakers and flat screen on the roof as well as water for sink/bar (and probably hose for plants) outside and gas line for grill outside. Never seen anything that comes close.
Correct me if I’m wrong, I’m a rookie at real estate pricing but I always thought that the only way you get top dollar for certain amenities is if they match the market in which you are in. Chicago is cold 75% of the year therefore the cost of that deck outweighs the benefit. And who feels like trekking down the street during snowstorms months to get their car? Isn’t that something the appraisor would point out? I can understand charging maybe an extra 100k for the deck but 275 seems like the realtor is being a bit too greedy and that will hurt his sellers. Huge Deck, no parking seems like bad combination when you’re trying to sell a 725k unit.
Lauren,
Not a lot of people who live in this area have cars. Its pretty convenient to public transit. The deck is a huge plus, IMO, however I’d be willing to bet the premium prospective buyers would place on the deck is probably much higher in warmer months.
Saying Chicago is cold 75% of the time is a bit much. Individual perceptions vary but I only think it is cold 33% of the time. Sure when we’re in the dead center of this 33% of the time it may seem like its cold 75+% of the time, but its not the case.
Unit 3a that some of us mentioned was 475 then lowered to 450 on 1/20/09.
It is now under contract.
Maybe the warmer weather will inspire a roof deck purchase?