In the more than 21 years I’ve worked in Chicago real estate, I truly have never seen the market so skewed to buyers. The simple fact that this market so heavily favors buyers means it’s the perfect time to take advantage. Because real estate is all about timing, these opportunities are few and far between and don’t last long.
A report from Trulia last month noted that about a quarter of listings on the market had experienced at least one price reduction. Chicago was no exception. There were more properties in Chicago (30% of the city’s listings) that had price reductions than properties in several other major cities, including San Francisco, New York City, Los Angeles and Washington, D.C., with price reductions in the Second City averaging 8%. Luxury real estate (properties priced above $2 million) across the country experienced even deeper discounts—average reductions were around 14% lower than the original listing price.
Chicago also experienced a more mild average price reduction, which shows that the risk for buyers who should also consider resale value down the line. Real estate in Chicago, while certainly not immune to the current market’s conditions, still doesn’t experience the extreme volatility that cities like New York and Los Angeles are subject to. Chicago homes are great investments for the long term.
Just like the stock market, with it’s “Buy, sell, buy—no wait, sell! Buy!” mentalities, real estate purchases are equally difficult to time perfectly. But based on past experience, I can tell you that once interest rates begin to increase, there is typically a rise in home buying which consequently raises prices. And right now, interest rates are the lowest they’ve been in years.
For buyers in the market for luxury real estate in Chicago, a good FICO score and a down payment of 20 to 30% puts you in the driver’s seat. If you’re able to pay cash, especially on properties costing anywhere from $2 million to $5 million, the roadway is clear for deals to be made—especially with developers.
Just a few buildings buyer should consider in this opportunistic market:
Lincoln Park 2520: One of the few pieces of new construction in Chicago, this luxury building currently has several listings and is in a prime position for buyers to negotiate.
Ritz-Carlton Residences: These Chicago luxury condos have been talked about since it was barely a twinkle in the eye of Michigan Avenue. Some units have already experienced resales, showing the value in these units even in the current market. The price on the few units left won’t get any lower.
800 Michigan Avenue: As one of Lucien Lagrange’s prestigious buildings, units in Park Tower have always turned around to have a great resale value simply because of their luxury and exclusivity.
Trump Tower: Those who bought real estate in Trump Tower during development didn’t have the same opportunities that buyers have now to get into this prestigious building, which is coveted for the Trump name alone—not to mention the services, amenities and privacy that come with it.
The market for prime real estate in Manhattan is already beginning to bounce back, which means Chicago won’t be far behind. Those who know what they want now and can make decisions will certainly reap the benefits by buying before the end of the year. The holidays (between the end of November and the first of the year) have always been a great opportunity for buyers, so in 2010, this could be the sweet spot for buyers go truly get the deal of a lifetime.