What's the deal

Being a homeowner doesn't have to
be synonymous with being a millionaire

by Barry Pearce

In the midst of Chicago's current building boom, everyone seems to ask the same question, "Where does the money come from?" Builders don't mind that it's not easily answered - they're scratching they're heads all the way to the bank. But for the rest of us - those who are not part of the answer - it's a vexing mystery. Vexing because we can afford virtually none of the new lofts, condos or townhomes advertised on countless billboards, in newspaper ads, on the radio - even the movie theater has been invaded by taunting images of these chic dwellings flashed on screen before the show.

We expect a smattering of units to be built for the top income brackets, but how many corporate lawyers, doctors, traders and executives are in the new-home market? Judging by prices at new developments, an endless number. Not only can many of us not afford these units, we know hardly anyone who can. Talk of high employment, a defiantly buoyant economy and an unprecedented stretch of growth remains, for many of us, little more than talk.

We would expect to pay dearly for the Gold Coast. Lincoln Park and Streeterville we don't even contemplate. But the price of new homes, including condominium conversions, has skyrocketed in neighborhoods throughout the city. Lakeview, once a working class community with a large Latino population, has become unattainable. The median "attached home" price there in 1998 was $175,000. That's for a condo or townhouse, not a single-family, and the average for newly built units is significantly higher.

New condos in Roscoe Village are selling for well over $200,000 and in some cases, more than $300,000. Andersonville has become pricey, along with Ravenswood and much of Uptown. You can find a small new construction condo or rehabbed loft in the West Loop for around $150,000, but most buyers are paying $200,000 and up, unless they're looking for townhouses, in which case $300,000 is the low end. The newest loft condos announced in Bucktown, Signature Lofts, are going for - hold onto your credit report - $400,000 to $740,000.

Where's a non-millionaire home buyer to shop?
It's not that hard to discern where the deals are in Chicago. The South Loop, you will notice after a day of visiting open houses, is generally more affordable than the West Loop. As you move farther south, to Bronzeville and Hyde Park, prices are even lower. As you travel north along the lakefront, the same trend occurs, although Edgewater and Uptown are no longer the bargains they once were. Travel northwest and you'll see even more deals.

What's a deal?
One of the most basic, but easily forgotten rules in searching for real estate deals is that it's not a deal if you don't want to live there. "Live," it should be noted, is present tense. Considering how your home's value might appreciate and where an up-and-coming neighborhood might go is fine, but if you don't feel comfortable in a neighborhood today, you should not bank on liking it tomorrow. Neighborhoods generally change the way continents shift, so slowly movement is imperceptible.

A homeowner who bought a house near Wilson Avenue 10 years ago recently complained that prostitution and drug deals were big business near his home. He was disgusted by the trash on the streets and shocked by the size of the homeless population, the number of SROs in Uptown. These facets of the neighborhood were plainly visible when he moved in, but he chose to ignore them, thinking Uptown would soon gentrify and problems would disappear. In fact, these problems have shrunk in Uptown, but they have not gone away and perhaps never will. The real problem is that he did not buy in Uptown, but in some imaginary neighborhood, a mental landscape he created with the help of real estate brokers and developers.

If you want to buy a new home, either something built from the ground up or a thoroughly rehabbed condo, and you need to find a deal, you should keep a map of the city handy. Keep track of where the developments that fit your budget are located, and patterns will start to emerge. You may notice that you can't afford a two-bedroom condo anywhere along the lakefront between the Loop and Peterson. You'll also start to notice the neighborhoods where prices are reasonable and development is occurring. The two do not always intersect. Belmont-Craigin, for example, has comparatively low prices, but not much is being built there.

Once you've decided on your housing needs and the areas you can afford, visit the neighborhoods and walk the streets. Enough parts of the city have projects underway and affordable prices that you should be able to find a deal to suit you.

Land of deals
One way to think of Chicago's housing boom is to picture rings of development emanating from the Loop. Throughout the '80s and '90s, distressed land around the city's center, much of it vacated by industry, has been redeveloped. Whole new neighborhoods have been carved in the South Loop, the West Loop and River North. The rings continue to spread, now affecting the Near South Side, the Near North Side and the Near Northwest Side. It follows then, that the closer you look to the center of these concentric circles of development - the Loop - the higher prices tend to be. The other major factor to consider is the lakefront, which works in a similar way. Generally, the farther you look from the lake, the lower prices tend to go.
These principles are far from absolute. Lincoln Park is much farther from downtown than the South Loop but it's also far more developed and settled and much more expensive. Sauganash and Edgebrook, on the far Northwest Side, have evolved like suburbs though they fall within the city limits. Land is scarce in these desirable neighborhoods and when something does get built it's usually at a high price point.
The broad areas where you will find significant building, including condo conversions, and affordable prices are the Near South, the South Side and the Near Northwest Side. Buyers also can find deals on the Northwest Side of the city, but there tends to be much less product to choose from in these neighborhoods.

Near South
Deals are becoming harder to find in the South Loop, much harder than even a few years ago. Loft and townhome projects have been filling in the gaps between the larger communities of Printers Row, Central Station and Dearborn Park, which have provided a foundation for the neighborhood. The largest planned loft development, for example, is now Dearborn Station, 1526 S. State. The 325 units in this project will average more than $200,000, with some units priced significantly higher.
The South Loop, however, remains less expensive than the West Loop or River North, two other booming nearby neighborhoods. That's partly because the area remains low on density and amenities, although population and convenience have been growing each year. New lofts, condos and townhomes have sprouted on nearly every block, and while a new Dominick's at Roosevelt and Canal has made the area more livable.
Deals to watch for include Legacy Development's One East 14th Place, a new 16-story highrise with condos priced from $119,000 to the $220s. For a brand new downtown highrise with great views, these units are priced competitively. Both Bank Note Place, 1910 S. Indiana, and Film Exchange Lofts, 1307 S. Wabash, offer brand new loft condos in the low $100s. Millennium, a 32-unit townhome project with a creative design, has prices starting in the $220s.

South Side
As you move south of Cermak, prices again begin to fall. The South Side has been underdeveloped since white flight scarred so much of its housing, but many strong neighborhoods have survived and developers are paying new attention to this part of the city in neighborhoods ranging from Bronzeville to Hyde Park to Chesterfield. The reasons - lower acquisition costs, more available land and an under-served market with pent-up demand - are apparent. These conditions have existed for a long time, but builders no longer have to take it on faith that they can sell homes to the south.
Two of the best test cases are the Chatham Club, by Bejco Development, and South Commons, by the Habitat Company. At press time, only 24 single-family homes remained for sale at the Chatham Club, 8902 S. Indiana, a 143-unit development. These freestanding single-family homes have private garages, two to four bedrooms and 1.5 to 2.5 baths, and are priced from the $170s to the $260s. That price range would not get you more than a small condo or loft on the North Side, which explains why Bejco has sold more than 100 units at Chatham Club in short order.
South Commons, an 886-unit community on South Michigan Avenue between 26th and 31st streets, has been well known on the South Side as a strong rental complex. The success of the rentals has carried over into their new life as condominiums, with nearly 200 units sold since last spring, according to Sales Director Marsha Bynum. One look at the South Commons price range explains the fast sales pace. Base prices in phase I range from $35,500 to $48,500 for studios and $65,000 to $100,500 for one-bedrooms. Two-bedroom condos are $103,000 to $121,000, and three-bedrooms range from the $180s to $190,500.
South Shore Pointe, at 71st and South Shore, is an 87-unit development by Shore Bank Development, an arm of South Shore Bank. These townhomes are priced roughly from the $140s to the $260s.

Near Northwest
Like the South Loop, the Near Northwest Side is not the haven for housing deals that it once was. Prices have increased rapidly in neighborhoods such as Wicker Park, Bucktown and East Village, and some observers wonder whether the numbers have become inflated in what are often gritty urban locations.
Fortunately, development has pushed to other corners of the Near Northwest Side as land costs have gone up in Wicker Park and Bucktown, and as loft buildings have become harder to find. Neighborhoods such as River West, Logan Square and Avondale are now host to a spate of conversions and even some loft and townhome development.
Logan Square, bounded roughly by Western, Pulaski, Armitage and Diversey, has been especially active lately, with a surprising number of conversions quietly spreading throughout the neighborhood. Jameson Realty Group currently is selling North Corners Condominiums, 19 rehabbed units at 2439 N. Kedzie. Prices range from $125,000 to $135,000 for units with two bedrooms, hardwood floors, new GE appliances and new kitchens and baths. Jameson also is selling Altgeld West, 16 rehabbed condos priced from $107,900 to $124,900 at 2652 W. Altgeld. St. George Lofts, 2161 N. California, offers the same kind of style and amenities as downtown loft conversions, with prices starting in the $140s.

Northwest Side
One trick in finding where the deals are is to find where the deals aren't and look a little to the west. Not long ago, Ravenswood offered spectacular single-family homes at a fraction of their cost in Lakeview or North Center, and in a neighborhood every bit as solid and pleasant. That's no longer the case, but Ravenswood Manor, Albany Park and Irving Park, to the west, are still comparatively affordable.
Ravenswood Manor, bounded roughly by Montrose, the River, Lawrence and Kedzie, is just slightly west of Ravenswood proper and is still walking distance from the quaint Lincoln Square Mall. Coldwell Banker is selling Sacramento Place, 4500 N. Sacramento, a gut rehabbed building with condos priced from $99,000. Units at Agatite Gardens, another conversion by the same developer and marketed by Coldwell Banker, is priced from the $100s to $149,000. The project is located at 2601 W. Agatite and includes two duplexed units.
Irving Park, bounded roughly by Addison, Montrose, the Chicago River and Cicero, includes a number of quaint pockets as well as plain but pleasant blocks of standard Chicago bungalows. Independence Place, 3715 W. Byron, is a 13-unit conversion with one-and two-bedrooms in the $120s. Old Irving Village, 3801 N. Milwaukee, has luxury townhomes with two to four bedrooms, 2.5 to three baths, family rooms, woodburning fireplaces, attached garages and a minimum of 1,800 square feet. Prices start at $231,900.