Mass Modern Auction

One of my favorite auctions is July 10th at 10am. Mass Modern is Wright's annual one-day sale featuring 20th century designs and objects offered without reserves. The catalog includes everything from affordable designer dining chairs to high-end Le Corbusier lounge chairs. For more information visit Wright's website, http://www.wright20.com/.

65 East Goethe

Bill Wrigley's penthouse space, which is listed by Jim McKinney and Brian White of Baird & Warner, was recently placed on the MLS as separate units. The 8th floor penthouse (8WNE) has over 12,000 square feet of raw space and an additional 3000 square feet of private roof top. It has been on the market for $14 million since last October. While it is certianly one of the best spaces in the entire city, I don't see a buyer spending anywhere near that asking price for raw space. The potential buyer would most likely spend around $1000 / square foot to finsish the space, which puts them into the property for over $25 million. By comparison, the 61st floor penthouse in 800 North Michigan was listed for $10.95 million and closed for $8.25 million in 2006. While 800 North Michigan doesn't have the neighborhood feel of 65 East Goethe, it was a finished space and has spectacular uninterupted lake views.

This is why I wasn't too suprised to see 8N come on the market for $5 million and 8W come on the market for $6 million last week. 8N is a 5500 square foot unit, and 8W is a 3500 square foot unit and includes 1500 square feet of exterior roof space.

Short Sales In the Luxury Market

A couple weeks ago one of the vice presidents of Sotheby’s International Realty was in town. Most agents at Sudler | Sotheby’s (Chicago’s local Sotheby’s Realty branch) handle transactions ranging from south side foreclosures Gold Coast singles family homes (myself included). However, Sotheby’s International brand only really cares about properties over $1.5 million. Nonetheless, I heard him say somethng that I never thought I’d hear. He said, “All Sotheby’s agents should get familiar with and certified in short sales and foreclosures.”

The reason for this is a phenomenon being referred to as 'short sale tsunamis.' Thankfully, we are about through with short sales that are a result of too many sub-prime loans. These were caused by banks that were giving loans to anyone who simply said they had a job. Most of these were loans were giving for properties under $500,000.

However, the next ‘wave’ is just beginning to hit. This next wave is a result of option adjustable mortgages. These are mortgages where you can pay even less and have your mortgage balance grow. Most of these homeowners were certainly qualified to buy a home, but they were just qualified for an amount out of their price range. This is being enhanced further because of peoples unemployment running out and once things started getting bad many people refinanced out of sub-prime loans into option adjustable rate loans. This group of mortgages was for loans that were for many luxury properties. This wave is expected to continue over the next 24 months, and is why realtors in the luxury market better start learning how to work short sales and foreclosures.

Why is it important to have an agent who is familiar with the short-sale process?

The only thing most people (including agents) know about short sales is that they can be long and annoying. While this can be true, there is a reason why. The most important thing you need is a listing agent who knows how to present the offer to the bank. While banks are getting quicker they still want everything presented in a short sale package. This package includes everything from the proposed purchase price to a letter explaining the sellers’ hardship. If it is not presented in their way they simply reject the offer and it goes into foreclosure. When I’m working for a buyer who is interested in short sales I initially screen the listing agent to see if they know what they’re doing. More and more agents are familiar with the process, but I’ve had agents flat out tell me, “This is my first short sale, and I don’t really know what I’m doing.” This is why 40% of short sales eventually go into foreclosure. If it’s clear the listing agent doesn’t know what they’re doing then I’ll advise my buyer that it is probably not even worth their time viewing the property.

If you are in the Chicago area and you’re interested in purchasing a short sale or you are a homeowner who might possibly be in a short sale situation feel free to send me an email at Bradley.Riemann@SothebysRealty.com or give me a call at 888.471.9993.

Oak Park Single Family Homes

I just put this chart together for a buyer who is looking at single-family homes in Oak Park. In my opinions, it is a fairly accurate representation of the entire Chicago area market (prices may vary). It shows that while the market is nowhere near back to 2006 numbers, it has steadied. I would guess that by the end of the year the 2010 median house price is higher than in 2009.

Click image for larger view.

179 East Lake Shore Drive

One of Chicago’s top properties came off the market last week.

Marie Campbell of Koenig & Strey Real Living’s $7.5 million penthouse listing in the Drake Tower was cancelled on June 7th. This beautiful property is located on the 29th floor and has amazing panoramic views of the city and lake. The 5000 square foot full-floor property has three bedrooms, 4.2 bathrooms, and elegant traditional finishes.

Selling Designer Spaces

About a month ago Jim McKinney and Louise Study of Baird & Warner listed unit 4501 in the Pinnacle (21 East Huron). It is a 5500 square foot three bedroom 3.1 bathroom penthouse with over 2000 square feet of exterior space. This is one of the best spaces in the city.

My friend Allen Villanueva was the architect and designer of the penthouse residence, and a couple weeks ago he was kind enough to give me a personal architectural tour. Allen thought out every space, finish, and architectural detail ahead of time and the builder delicately executed them all.

While I’m guessing the owners have at least $9 million into the residence. In my opinion, it is still a couple million overpriced. Unfortunately, this is one of the problems with very high-end properties. Pretty much all buyers who are looking to spend $9 million for a property would prefer to spend $3.5 million for a space and then customize it for $1000 per square foot. Occasionally the perfect buyer will come through, but this is rare.

If this sounds like your ideal property then you might just be that perfect buyer. However, I could point you towards many other properties in the Chicago area that are more affordable, and then introduce you to Allen or another designer who could customize it to be your dream home.

For additional photos of this penthouse unit in the Pinnacle visit: http://tours7.vht.com/Viewer/PhotoGallery.aspx?ListingID=1259594&Style=IDX

Where are luxury properties turning in the Chicago area?

Many homeowners have been asking me lately, "In which areas are properties selling, and which areas are they stagnant?" Lincoln Park and Winnetka would generally be my first answers, however after that I was a little unsure. So today I finally found some time to further research this. This is the product of today's study.

Some things were expected, however others came as a surprise to me. As with any statistics you really must read between the lines, though.

The Loop being at number three was my biggest surprise. When I thought about it and looked into it further I realized both properties that sold in the last year were located in the New East Side (the area east of Michigan, south of the river, and north of the park). In the proper Loop there have been no sales and there are three properties currently on the market over $3 million.

Hinsdale was another major surprise to me. It is the only suburb not on the North Shore that is continuing to hold strong (you could maybe consider Burr Ridge and Oak Brook but I would consider 1:5 average at best).

In general, your prime luxury markets are continuing to be centered around Armitage and Clark in Chicago. On the North Shore, Winnetka continues to be in high demand. The further north you get, though, the lower the demand for properties.