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.
Chris Warnes, with sons Hudson and Jack, recently purchased a condo in a building near Millennium Park.
Nancy Laasraoui and daughters Mariam, center, and Yasmine, spend summers in a Gold Coast condo.
Chicago’s bargain condo market is attracting vacationers from afar.
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.”
After long playing second fiddle in the glamour game to coastal cities like New York and Los Angeles, Chicago has become a second- and vacation-home hot spot, fueled by its market of new condos and converted high-rise and loft buildings. Buyers are drawn to its revitalized neighborhoods, perennially strong theater scene, groundbreaking modern architecture and relative affordability.
The interest is coming from near and far, from quiet corners of the Midwest and from overseas. Buyers like the Warneses, who have young sons, want to expose their children to city life. Others are empty-nesters who want more of a city life, like Robert Johnson, a physical therapist who runs rehabilitation clinics in and around Chicago but lives more than an hour outside the city.
Still, the vacation-home market has cooled considerably since the beginning of the recession and the housing crisis. The city has a ready supply of deeply discounted condos, even in blue-chip neighborhoods around downtown and on the lake.
But buyers are looking for and finding slivers of opportunity. And they say they are buying with some confidence, knowing that the Chicago market has generally been more tempered than those on the coasts and in the Southwest, where the housing crisis has perhaps done the most damage.
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.”
The Laasraoui family, whose primary home is in Lugano, Switzerland, said they wanted a modern American counterpart to the slower European country life. Chicago’s downtown has been virtually reborn as a residential and arts and entertainment district over the last 15 years, and the city is a finalist to be the host city for the 2016 Olympics, a position that has only increased its international cachet.
“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.”
Mr. Johnson, 53, the empty-nester, is actually seeking a third home, a place in to complement a lake house in Michigan and a home in La Grange Park, Ill. He wants to be able to walk to his downtown office on weekdays instead of taking a train and a bus from La Grange Park. Single after a divorce, he wants to be close to the vibrant night life of the Gold Coast and other downtown areas.
“Tom and I are looking and we’re in no rush because we want to find the right place to meet my needs,” Mr. Johnson said, referring to his broker, Tom McGavin of Rubloff Residential Properties. Mr. Johnson wants a three-bedroom condo in a low-rise building with a private rooftop garden “where I will be able to go outside, breathe deeply, play my guitar and sing out loud,” he said.
Mr. McGavin added: “He’s watching mortgage rates and prices. His concern is the whole world’s concern: what’s the economy doing?”
According to a report released in April by Appraisal Research Counselors, a Chicago-based real estate analysis firm, condo projects that are seeing the most sales traffic have offered discounts in the 20 percent range. These include the South Loop development Vetro and R+D659 in the West Loop, which has even thrown in free parking.
But the report also found that buyers were remaining on the sidelines unless they were “absolutely convinced that they are getting a tremendous deal.”
The pace of sales has slowed from recent years, although spring and summer closings showed improvement over the winter’s. Chicago home sales were up 16.7 percent in April compared with March, according to the Illinois Association of Realtors. The median price for both months was $220,000, down 26.7 percent from a year ago. The median price for condos in both April and May was $290,000.
Condo projects like the Chicago Spire, a twisting lakefront skyscraper designed by Santiago Calatrava, and the Waterview Tower, a mixed-use hotel and condo building in the Loop, have stalled. Others have been converted into rental units. Even so, thousands of new units will reach the market by the end of 2009.
“I gave a bike 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.
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