Chicago's Luxury Housing Market is Tanking: A Tale of High-Rise Hopes, Ground-Level Realities
Condominiums and houses are down 25 percent or more since previous transactions
The Chicago luxury housing market in many neighborhoods is dropping precipitously in value.
This circumstance isn't just a cooling off – it's like it took a dip in Lake Michigan this January in the sub-zero temperatures. A range of high-end single-family houses, condominiums, and coops in the Gold Coast, Streeterville, and Lincoln Park neighborhoods are declining in value by the month.
“This is a worst-case scenario, which is currently trapping thousands of well-heeled residents who took out large mortgages,” says one Chicagoland residential real estate investor. “Northside condos appear to be taking the biggest hit,” he observes.
Consider 800 North Michigan Avenue, Unit 5202, which sold in September 2023 for $2,650,000. Its owners took a $1MM+ loss on the 3 bedroom, 4,200 square foot condo since the unit last transacted in 2018 for $3,850,000.
A property at 415 E. North Water Tower Street, Apartment 2101, is yet another example of plummeting real estate value. A unit that sold for $1,607,500 in 2019, it recently resold for $1.2MM on January 19th. The drop represented a 25 percent decline in less than five years.
Another Streeterville unit, 100 East Huron Street, Apartment 3401, recently sold for $520,000, down from $860,000 when it last previously transacted in 2008. This decrease amounted to a staggering 40 percent decline in value over 16 years.
When 60 East Monroe, a 72-story high-rise, was trotted out to much acclaim, many University Club members – the building connects to the University Club allowing members to take advantage of both facilities, including dining, gym, bars, a golf simulator, and more, according to the club’s website – jumped at the opportunity to buy a condo, as the building set a new standard for high rise luxury in the Loop.
Amenities in 60 East Monroe such as a rooftop dog walk and park have not been appealing enough to keep values steady. Unit 5005 in the building, a 2 bedroom, 2 bath unit, recently sold for $735,000 in August of 2023, down from $880,000 in 2016 when it last sold.
While condos appear to be selling (at a loss), many single-family homes just appear to be sitting on the market at asking prices far below previous transaction levels, representing unrealized losses for owners. The fabulous 6-bedroom listing at 1856 N. Mohawk, which last sold for $8.1MM in 2022, has a current listing price of $6.9MM (15 percent less than the last transaction).
1425 North State Parkway, an 8,000 square foot house listed and billed as a “grand and elegant home in the heart of the Gold Coast on a wide and deep lot … Beautifully updated and maintained” is currently priced at $4,395,000.
It last sold for $5,780,000 in 2011.
Curiously, its property taxes have more than doubled to $131,926 annually since the last time it sold, even though its owners are currently 24 percent underwater based on the listing price.
The owners of 1903 North Howe Street, which is currently listed at $3,295,000, are hoping for a more moderate loss, it would seem. It last transacted for $3,415,000 in 2014.
A former Chicago resident who took a “35 percent+ loss on a condo in Lakeview” told Contrarian: “The properties currently on the market or recently transacted are those which sellers can afford to get out of and take the loss.”
“In other words, the owners which have recently sold their luxury properties or currently have them listed either have no mortgage or have enough equity value in their house with a mortgage which they can afford to lose. Or they can afford to write their mortgage lender a check.
This is an unprecedented situation for high-end Chicago residential real estate — and there will be far more carnage this year if added supply comes online and outstrips demand and as short sales begin when more ARMs reset.”
Referencing Mayor Brandon Johnson's push to ban gas appliances in new construction, one seller commented: “At least new buyers will be able to keep the fancy 48-inch gas ranges that come with many of these homes. Still, I feel fortunate that we got out when we did.”
