Sunday, January 13, 2008
The Trump International Hotel & Tower Chicago will debut Jan. 30, almost two months later than originally targeted by developer Donald Trump.
Initially, five floors will open in the luxury hotel, which will occupy floors 14-27 of the 92-story mixed-used tower at Wabash Avenue and the Chicago River. The remaining floors will opening gradually, with completion expected in the spring.
This "soft opening" had been planned for Dec. 3, but Trump experienced a delay in getting a city occupancy permit while fire safety work was completed. On Dec. 28, the city issued a partial occupancy permit up to the 23rd floor.
Bank of America, which made a big splash in Chicago last October with its $21 billion purchase of LaSalle Bank, struck another blockbuster deal Friday when it agreed to buy distressed Countrywide Financial Corp. for $4 billion.
The proposed acquisition of Countrywide -- the biggest mortgage lender both nationally and in the Chicago area -- averts what could have been another major setback for the housing and financial markets. Rumors swirled this week that Countrywide was heading for bankruptcy court.
While banks and brokerages continue to write down bad mortgage investments, the failure of a brand as synonymous with mortgages as Countrywide would have dealt a psychological blow to investors and put further pressure on real estate markets nationally.
Worried about stocks, some investors are putting their retirement money into something they're convinced will be plentiful in 2008: foreclosures and tax liens.
Using self-directed individual retirement accounts, investors are buying depressed real estate, making loans to private companies and buying up tax lien certificates on properties, which give the investors a government-determined yield that the homeowner pays to release the lien. If the homeowner doesn't do that within a prescribed time period, the investor receives the property.
A handful of firms specialize in helping clients make alternative investments in their IRAs, but industry players say it's still a tiny fraction of the overall IRA market.
The vultures are circling.
In an abrupt reversal, the commercial property industry that started 2007 giddy about its prospects enters 2008 facing falling property values, a seized-up credit market and concerns that a slowing economy could dampen future leasing and rental rates.
While only several months ago investors expected to sell and resell office buildings at escalating prices regardless of their financial performance, vulture investment funds are raising money to pounce on bargains when lenders start unloading real estate that owners can't afford to hold.
"In 2008, I expect to see (lenders) repricing properties on a grand scale, saying you can have this at 30 or 40 cents on the dollar" for certain buildings in some markets, said Christopher Carroll, managing director of Cohen Financial LP, a Chicago-based financial-services firm. "Now, investors are putting together funds they'll use when they think values have hit bottom."
With the credit market crippled and underwriting criteria tightened, commercial property prices and sales volume have fallen steeply in the past few months, according to a mid-December report from Real Capital Analytics, a New York-based real estate research firm. Exactly when the floor for commercial property prices will be reached is anybody's guess.
Mia Wilkinson, a transplanted Englishwoman who works for Rubloff Residential Properties in Chicago, deals often with British and other foreign executives transferred to the United States for a few years. "Before, people would stay in corporate rentals," she said. "But now these same people are turning around and buying properties."
Wilkinson, who has been in the United States for six years, has bought property in Chicago.
The expansion of foreign real estate investment also means that areas that once were not popular with international buyers are now receiving interest. Doug Aitkin, who works for North Carolina's World Trade Center, said the Research Triangle area, which includes the cities of Durham, Raleigh and Chapel Hill, is now getting inquiries from French and Scandinavian home buyers, a new phenomenon.
READ IT: For those in the market for an architect/firm who can design them a multimillion-dollar estate that photographs beautifully, we have the book (or should we say catalog?) for you. Hot off the presses: "Dream Homes Chicago," the 11th tome in the "Dream Homes" series (all of the books specific to a certain city or part of the country) from Dallas-based publisher Panache Partners, which has turned luxury-home publishing into something of a formula.
The Chicago "Dream" (256 pages, $34.95) follows the format of lush, colorful coffee-table book. Some 46 Chicago area architects/firms (among them: Stuart Cohen and Julie Hacker; Paul Florian; James Nagle and John Hartray Jr.; Margaret McCurry and Stanley Tigerman) strut their most chichi residential projects and get the salient details about themselves out there to the public. (The text talks about the architect/firm, not the house that's shown.) And yes (if you were wondering), architects do pay a "small participation fee" to the tune of $1,000 a page to be included in the book, according to a spokeswoman for Panache, who also notes, though, that the final selection of entrants is juried by editors.
Palatial manors on the North Shore, graystones and brownstones from Lincoln Park and the Gold Coast, assorted suburban mansions, some built from the ground up, others being large-scale additions -- not a genre of Huge House is left unturned.
CRYSTAL LAKE - A proposal to build more than 50 row houses next to City Hall in downtown Crystal Lake has won preliminary approval from the city's Planning and Zoning Commission.
The three-story townhouses would be priced around $375,000 a unit and would be pitched to "transit-oriented" residents who work in Chicago and want to live within walking distance of Crystal Lake's restaurants and shops, said developer John Green of Chicago-based Centrum Properties Inc. The site is about two blocks from a commuter train station.
Green wants to build 57 units. At a meeting Wednesday, planning commission members indicated a preference for fewer units.
In the center of Logan Square, artists eat tofu scrambles, joggers wear iPod nanos and pet walkers escort small dogs past million-dollar homes.
About a mile west in the same neighborhood, few were outside on a recent rainy morning, save the family and friends visiting the makeshift memorial for Leonardo Otero, a 15-year-old gunned down Monday.
Like other Chicago neighborhoods, Logan Square is a complex place that changes character block by block. Here, conflicting forces of gentrification and seemingly intractable crime have made Logan Square a place with two identities: a hot neighorhood and a crime hotspot.
The upside to a housing slump is cheaper homes. But many prospective buyers don't see bargains yet, especially as stricter lending standards qualify only the cream of the credit crop.
While some markets like south Florida, Las Vegas and the central valley of California have seen sharp declines in home prices -- up to 20 percent by some measures -- overall national statistics show a much less dramatic drop so far.
Home prices fell 0.4 percent nationally in the third quarter, according to the Office of Federal Housing Enterprise Oversight. That's the first decline after 50 straight quarters of appreciation averaging 1.62 percent per quarter. The U.S. Standard & Poor's/Case-Shiller home price index, another home price tracker, said prices dropped a record 6.7 percent in October from a year ago.
While the supply of unsold homes is at a record high and forecasts of further price depreciation and swelling inventories bode well for buyers, housing affordability still remains low. The decrease in housing prices has only begun to eat into the nearly 13 years of quarterly price gains.
The National Association of Home Builders said in November that only 42 percent of all homes sold in the third quarter were priced low enough to be affordable for families earning the national median income of $59,000. That's down from 61.5 percent in the third quarter of 2001, when incomes and, more importantly, home prices were lower during this decade's recession.
Colorado Springs, Colo., real estate agent Terry Shattuck said only those who need to move are motivated buyers these days.
New-home permits were down about 28 percent in the Chicago area in 2007 compared with the more prosperous 2006 -- and 2008 could be worse.
That was the word from a forum of eight suburban builders Friday.
Through November, 31,890 permits were issued for single-family and multi-family homes in the Chicago metropolitan area, according to the National Association of Home Builders. That is down from 44,080 in the same period of 2006.
Several builders at the forum said 2008 sales should mirror those in 2007 or drop lower.
The gloomiest prediction came from Andy Konovodoff, president of the Illinois division of Town & Country Homes, owned by K. Hovnanian Homes, based in New Jersey.
His company sold 1,230 homes in 2006, 890 in 2007 and is expecting 355 Chicago-area sales this year.
Not far from Illinois Highway 7, a main drag through Joliet crammed with cars and lined with new retail stores, Diane Hartman's four-bedroom single-family home waits for a buyer who never seems to come.
It's the same story across Will County, in new subdivisions built out of cornfields and older streets lined with mature trees: There are precious few home buyers these days, despite the dense traffic, commercial development and other signs of economic vitality.
One of the nation's fastest-growing counties in recent years, Will County now has the highest foreclosure rate in Illinois and its housing market has come to a standstill. Yet where California or Florida can blame out-of-sight prices, and Ohio or Michigan their shrinking economies, Will County remains affordable and growing even as its residential for-sale signs multiply.
Five years ago, Vonzella Boone bottomed out. She was homeless, addicted to crack cocaine and alcohol, and estranged from her family.
Today, she says, that life is a distant memory. Sitting in the living room of her apartment at Independence House, Boone, 43, reflects on the second chance she found in the building and its program. Since moving in three years ago, she's gotten a job, her first car and bank account, and been reunited with her four kids.
Boone said Independence House gave her the structure and support she needed to succeed at sobriety.
"I never thought this would be my life. I'm happy," Boone said. "If you want to make it and not do drugs, this is the place to be. They help you stay clean and focused. You can fall and they are here to pick me up."
Independence House is a 25-unit building for recovering substance abusers at 820 S. Independence Blvd. in the North Lawndale neighborhood.
The wall of buildings that lines Michigan Avenue across from Grant Park is architecture's version of prime time -- no place for the meek or mediocre.
From the stark Romanesque grandeur of Adler & Sullivan's Auditorium Building to the sumptuous Second Empire splendor of the Blackstone Hotel, this man-made cliff is at once a showcase for individual talent and a sublime ensemble, a sharp urban edge that looks as if it were cleaved by a butcher's knife. The deft insertion of the new, diamond-like Spertus Institute of Jewish Studies into this mesa of masonry only underscores its visual power and symbolic role as the face of Chicago.
So it is hard not to be disappointed by the latest and most prominent addition to the wall, the Columbian, a 48-story condominium tower that holds down the high-profile corner of Michigan and Roosevelt Road, just north of the forest of construction cranes that is turning the Near South Side into a crazy quilt of high-rises.
Free granite countertops! Free basements! Free financing!
You name it, builders have been offering it in the last year, in an effort to pump up that endangered species: the new-home buyer.
It got so desperate that some builders were lopping $100,000 off the list price of houses, just to keep sales moving in 2007.
But you can hand out the candy for only so long before you've given away the store, and some builders are starting to say: Enough.
"We are going to get away from these crazy incentives that have been flooding the marketplace," said Jim Hughes, executive vice president of Wiseman-Hughes Enterprises, a builder based in Wheaton. "We got caught up with everybody else -- the free $60,000 in upgrades here, or the $70,000 off a spec home there."
This is not to say that his firm doesn't want to make deals; it's that it wants to do deals on a buyer-by-buyer basis, he said. So assistance with financing, or the glamorized kitchen, or the finished basement may be available -- based on what the buyer wants.