You’d think that if anyone could get through today’s slumping economy and struggling real estate market with few problems, it’d be Donald Trump. And you’d think that his 92-story high-rise in River North, the much-heralded Trump International Hotel & Tower, would be a strong enough draw to easily sell out all of its units, even in tough times for the housing market.
Well, turns out even Trump can’t escape today’s tough economy unscathed.
Crain’s Chicago Business reported late last week that Trump has gone to court to sue for more time to pay off the $640-million construction loan he took out on Trump Tower, which is located along the Chicago River in the city’s River North neighborhood. You can read the story here.
Basically, Trump is saying that the lending group has wrongfully refused to extend the maturity date of his loan. The story in Crain’s also highlights the struggles Trump has faced in moving the tower’s pricey condo units. According to the story, Trump has sold condo and hotel units worth $204.1 million. Another $353.1 million in purchase contracts have yet to close. Trump certainly has some significant money tied up in the project. The tower, at 401 N. Wabash Ave., will cost nearly $847 million once it is complete, Crain’s says.
I bring this all up because it shows that no one is immune to the real estate slump. That’s why before you decide to put your house on the market, or before you decide to begin shopping for a new home, you must meet with a licensed, skilled REALTOR®. A top REALTOR® is more important than ever in a tough market. REALTORS® can guide buyers toward fair deals, and can help sellers get the best price possible for their residences.
A house is one of your biggest investments. Why wouldn’t you protect it by working with a professional?
You need only concern yourself with what housing prices are doing in your city and in your neighborhood. In Chicago, there are several neighborhoods – including Lincoln Park, Lincoln Square, River North and the Gold Coast – where housing prices are holding steady or increasing.
SearchChicago-Homes had an interesting story last week that highlighted this point once again. One of the most important reports tracking housing activity and values is the Standard & Poor’s Case-Shiller index, which tracks sales in 10 metropolitan areas. The researchers behind the index recently reported that of these 10 markets, the only one that they predict will not suffer a loss in average housing prices during the next four years is Chicago.
The index instead predicts that Chicago housing prices will remain flat for the next four years. Yes, that means they won’t increase in value. But they won’t lose value, either. That’s good when compared to some of the other major markets that the index tracks. Washington D.C. housing prices, for example, are expected to drop 15 percent, while home values in Los Angeles are expected to plummet 17 percent.
Makes you glad, once again, to be living in Chicago, doesn’t it? And if you’re a homeowner in the city, you should be even happier.
It’s easy to get depressed these days when the statements from your retirement accounts come in. You open that envelope, take a deep breath, look and then … Well, it’s safe to say that you don’t like what you see. You’re far from alone, of course. Thanks to the country’s economic slump, the monetary values of 401(k) plans across the United States have been falling fast. But the struggling stock market shouldn’t keep you from buying a house if you’re ready to purchase.
Certified planner Chris Bird last week told an audience at the 2008 REALTORS® Conference & Expo in Orlando that the stock market will eventually regain its strength and that your investments will again begin growing. The stock market isn’t meant for short-term gains, Bird said. It’s meant to create long-term wealth. Does that sound familiar? It should. It’s what I always say about residential real estate. It’s not designed to double your money in a year. It’s designed to steadily pick up worth over several years. You can read about Bird’s speech here.
The gist, though, is that you shouldn’t fret too much over “the talking heads who say the sky is falling.” That’s good advice, whether those talking heads are bemoaning the state of the stock market or the health of the housing industry. In fact, the falling stock market might actually mean good things for residential real estate. Because the stock market has had such a rough year, many investors have lost faith in it. They’re looking for somewhere else to put their money. And what’s a safer, steadier investment than residential real estate? Not even in the worst housing markets in the country has the value of residential real estate fared as poorly as has the stock market this year.
I always advise my clients to look at real estate as an asset to be held for several years. The days of buying a home, fixing it up and then selling it a year later for immense profits are over.
Personally, I’m glad. That boom market caused too much artificial inflation of home values over the years in Chicago and across the nation. We’re moving back toward a normal market, where homes will still appreciate in value, just not as quickly as we saw during the real estate boom of 2001 through 2006. So next time you open that 401(k) statement, or the next time you worry about the worth of your home, remember not to panic. Be patient. Your investments will regain their health again.
I always tell my buyers and sellers not to pay too much attention to national news reports regarding the housing industry. That’s because those reports focus on the entire country, while my clients need only worry about their local markets.
To see what I mean, visit the Chicago Tribune’s Market Pulse Web site, which you can find here. The page lets you click on different Chicago neighborhoods to find their median housing prices and how they have changed during the last year. By doing this, you’ll discover that housing in Chicago has seen widely varying performances in the last year depending on the neighborhood.
For instance, in Logan Square, the median housing price has dropped 4.84 percent during the last year. On the Near West Side, the median price has dipped 1.97 percent during the same time.
It’s true that most Chicago neighborhoods did see their median housing price drop during the last year, something that is to be expected given the country’s long-running housing slump. But the city’s traditionally strong neighborhoods have bucked this trend and have seen their median housing prices rise during the last year, even as the struggles of the national industry worsened.
In Lincoln Park, for instance, the median housing price of $475,000 represents an increase of 4.4 percent from one year earlier. The news is even better in the Near North Side, where housing prices jumped 14.49 percent from one year earlier. The median housing price in this slice of the city, which includes the Gold Coast, River North and Old Town neighborhoods, now sits at $395,000. In Lincoln Square, one of the hottest neighborhoods in Chicago, the median housing price of $352,500 is 20.31 percent higher than it was one year ago.
The news is even better if you check how median prices have changed in the last five years. Do this, and you see that the vast majority of Chicago neighborhoods have seen the value of real estate appreciate during this time.
The lesson here is clear. Just because housing prices are stagnant or dropping in many parts of the country, doesn’t mean they’re doing the same here in Chicago. If you’re looking to buy in the city, rest assured that residential real estate here is still a top investment.
I remember driving through Chicago during the housing boom in the early 2000s. Construction cranes dotted the sky everywhere. Developers were putting up condo towers, single-family homes and townhouse developments faster than the newspapers could report on them.
That’s changed, of course. The pace of new residential construction has slowed significantly.
But there are still plenty of new housing developments in Chicago’s top neighborhoods. And buyers are excited about them.
One project getting closer and closer to completion is Silver Tower, a new high-rise under construction at 303 W. Ohio St. in Chicago’s River North neighborhood. The tower, when done, will rise 40 stories in the air. In early October, construction crews poured the building’s 32nd floor, so it won’t be too long before the project is complete.
Silver Tower features quite a few perks: A 24-hour doorman is here, and there’s a sky lobby with a fitness center that never closes. Silver Tower also features a landscaped patio and garden.
Sales are moving briskly at Silver Tower, too. About 75 percent of the project’s 225 condo units had been sold as of mid-October.
Silver Tower is just one example of the strength of Chicago’s top neighborhoods. Communities such as River North, the Gold Coast, Lincoln Park, Lakeview, Lincoln Square and Roscoe Village are still highly sought-after by buyers. People still want to live in these neighborhoods, and they recognize that housing here is still a top investment.
Because of this, we see projects like Silver Tower meeting with great success. This is a tough residential market, and pockets of the city are suffering when it comes to housing sales. But activity in the city’s top neighborhoods, the neighborhoods that have always been strong housing markets, remains solid. Yes, sales have slowed since the housing boom. But there’s still plenty of buying and selling going on in the heart of the city.
Mario Greco is the #2 full-service residential real estate agent in Chicago. He has sold over $575 million in Chicago real estate since 2002, and leads a group of 8 agents and 9 office personnel.
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