On Gold Coast, a Glut of Pricey Homes

 This 1890s mansion on Astor Street came on the market this month at nearly $12.6 million

This 1890s mansion on Astor Street came on the market this month at nearly $12.6 million

At the rate top-priced mansions are selling in the Gold Coast, an Astor Street home that went up for sale earlier this month should sell by 2059.

In the simplest terms, the equation goes like this: Since mid-2014, one Gold Coast mansion has sold for $4 million or more, and as of yesterday there were 14 on the market in that price range. At the rate of one sale every three years, the inventory would last 42 years.

"It's a beauty contest and a price war, and you have to be patient," said Carla Walker, the Berkshire Hathaway HomeServices KoenigRubloff Realty Group agent representing one of the longest unsold mansions in the neighborhood.

In other top-of-the-market neighborhoods, the inventory isn't as swollen. In Lincoln Park, as of yesterday there were 20 existing homes for sale at $4 million or more, and 24 have sold in the past three years. In Winnetka, 10 are listed and 15 have sold in the past three years—seven of them in the past 12 months alone.

Walker's Gold Coast listing, built in 1896 on State Parkway as a 30-room mansion, now houses six units including a large owner's unit with vintage details intact. It came on the market in 2013 priced at almost $10 million and listed with a different agent. Its asking price has been $5.9 million since April.

Around the same time, the Gold Coast saw its only big-ticket sale in almost three years. An Astor Street mansion sold that month for $4 million, or 23 percent off the $5.2 million the sellers paid for it in 2008.

And yet instead of a round of hefty price cuts following that discount sale and heating up the price war, more homes listed, increasing the competition.

A house on Cedar Street hit the market in early July priced at $4.5 million, almost $1 million more than the sellers paid for it in February 2016, and several days later an Astor Street mansion listed for almost $12.6 million.

Waiting in the wings is philanthropist Ann Lurie's Dearborn Parkway mansion, which was on the market from May 2013, at $18.75 million, through December 2015, at $11 million. With so much inventory on the market, she's held it back since.

"These are not people who need to sell right away, so they can afford the next home," said Meladee Hughes, a Coldwell Banker agent. They can afford to wait, and they will." The price on her listing on Astor Street hasn't budged from $7.2 million since the house went up for sale in June 2015.

Agents who work the upper end of the Gold Coast market acknowledge the surfeit of homes on the market but are nearly unanimous in their assessment of why well-heeled buyers aren't picking up these homes. "It's a reaction to what 's been going on in the city," said Katherine Malkin, a Baird & Warner agent. "We're the only major city losing population, we're nearly at junk-bond status, the level of violence is problematic. And is the property tax increase going to be followed by continually greater increases?" Rather than invest more in Chicago real estate, she said, "they're staying put, waiting to see what happens in this state."

Malkin represents a State Parkway home that first listed in 2015 at $14.5 million and has been asking $12.5 million for more than a year. The home's property tax bill in 2015 was nearly $99,000. She said she counsels buyers who balk at big tax bills to consider how it looks folded into the overall cost of owning a home in Chicago, which in relative terms is far cheaper than a mansion in New York or San Francisco.

"Your overall cost of ownership is much lower," she said. "But people don't see it that way." Instead, they see property taxes in Chicago as an indicator "of our problems that aren't being fixed," she said.

Malkin's comment was echoed by Hughes, Walker and Melinda Jakovich, a Berkshire Hathaway HomeServices KoenigRubloff Realty Group agent. Jakovich's listing on Dearborn took a price cut in June to $6.45 million, about 7 percent below the nearly $6.9 million it started at in October 2014.

"With our taxes and other things that are going on, some people are getting concerned," Jakovich said.

Also dampening sales of older mansions, the agents said, is a preference for new construction, including high-end condo buildings on Elm, Walton and Delaware streets. It's not just an attraction to glittering new finishes, Hughes said, but "they want the security of being in a tall building, with a doorman, because of the perceived security issues in the city now."

Source Crain's Chicago Business