Chicago‘s luxury real estate market has been in spiraling decline since 2021 and a billionaire is the latest to sell his home for a dramatic loss amid soaring crime.
A trend of decline across the Midwest city has hit luxury condos the hardest, as wealthy billionaires like Citadel CEO Ken Griffin sold a portion of his penthouse at a 44 per cent loss of $15 million last month.
The hedge-fund manager had paid more than $34 million for the entire 37th and 38th floors of the condo tower No.9 Walton in 2017 and sold them last month for $9 million and $10 million respectively.
Griffin was quick to blame ‘failed political leadership in Illinois‘, taking a stab at Democratic Govenor JB Pritzker for the rising crime and declining real-estate values.
‘The decline in value of Chicago real estate is representative of the failed political leadership in Illinois which is a loss ultimately borne by the people of the state,’ he said, weeks after shelling out $45million for an 150million-year-old set of fossils.
Some 28 per cent less of the windy-city’s homes sell for more than $4 million and the median sale price dropping from $5 million to $4.625 million.
The median price of Chicago’s condos above $1 million dropped 9.1 per cent in the third quarter of 2024 from the same period in 2021, according to a report by brokerage @properties.
A trend of decline across the Midwest city of Chicago’s real estate market has hit luxury condos the hardest, as wealthy billionaires like Citadel CEO Ken Griffin sold a portion of his penthouse at a 44 per cent loss of $15 million last month
Chicago experienced 28 per cent fewer of the windy-city’s homes selling for more than $4 million
Griffin was quick to blame ‘failed political leadership in Illinois’, taking a stab at Democratic Govenor JB Pritzker for the rising crime and declining real-estate values
In comparison, prices for high-end single-family homes above the $1 million mark rose 14 per cent in the same time frame.
As many wealthy sellers are looking for where to place blame, real-estate agents say the beginnings of the downward spiral stem from 2020.
The year was the peak of the pandemic, Chicago was in lockdown and many big cities were the center of protests and violence related to the murder of George Floyd.
The summer of 2020 saw clashes between protestors and police, mass lootings that caused stores to be boarded up, and a general sense of unrest in the city.
However, unlike big cities like New York or San Francisco, Chicago never bounced back, and its crime rates have remained high.
Although murders in Chicago have declined by 26 percent, overall crime in the city has climbed 36 percent year-to-date compared with the same period in 2020, the WSJ reported.
As interest rates soar and crime continues to coast, ‘the high-end downtown luxury market has definitely taken a big hit,’ said Nancy Tasson of Jameson Sotheby’s International Realty.
Tasson, who also worked on Griffin’s penthouse sale, told the Wall Street Journal: ‘Once [the social unrest] happened, we couldn’t recover from it.’
As many wealthy sellers are looking for where to place blame, real-estate agents say the beginnings of the downward spiral stem from 2020 as protests related to the murder of George Floyd
The alarming crime rates have also deterred businesses like Citadel as Griffen cited crime as one of the major factors in this decision to move the company from Chicago to Miami in 2022
As interest rates soar and crime continues to coast, ‘the high-end downtown luxury market has definitely taken a big hit,’ said Nancy Tasson of Jameson Sotheby’s International Realty
As the violence erupted, many suburbanites who had plans to downsize to the downtown quickly shifted toward different areas.
Compass real-estate agent Jeff Lowe said one of the city’s major losses is empty nesters who move from the suburbs to Florida but keep a place in the city.
‘People used to sell their giant mansions out there and then they would buy an apartment in the city and a place in Arizona or Florida,’ he told WSJ. ‘What happened during the pandemic was they started skipping the downtown part.’
The alarming crime rates have also deterred businesses like Citadel as Griffen cited crime as one of the major factors into this decision to move the company from Chicago to Miami in 2022.
The hedge-fund manager said that, among other incidents, one of his colleagues was robbed at gunpoint while getting a coffee.
Citadel was one major corporation out of many to relocate from Chicago around the same time, including Boeing, Caterpillar and Tyson Foods, reported WSJ.
However, Griffin’s quickness to blame crime has also been challenged as real-estate insiders say crime can’t be the sole blame.
They said the record $58.75 million he paid was ‘far higher than anything Chicago had seen before’, reported WSJ.
Part of the problem, said Ames, is that Chicago doesn’t attract international buyers that have built condo markets in cities like New York or Miami. She added that Midwest buyers tend to keep their distance from outrageously lavish spending: ‘Our market is not flashy. It’s not like Beverly Hills’
Condos, however, felt the brunt of buyers’ safety concerns as many high-end buildings resorted to slashing asking prices to draw people in. In November, a condo at the Four Seasons Hotel Chicago sold for $1.025 million, 43 per cent less than the $1.8 million the seller paid for it in 2000
The median price of Chicago’s condos above $1 million dropped 9.1 per cent in the third quarter of 2024 from the same period in 2021, according to a report by brokerage @properties
According to real-estate agent Jennifer Ames of Engel & Völkers Chicago, Griffin ‘overpaid’, and Chicago developed Jim Letchinger said: ‘It’s unlikely he would have found anybody to pay him anything close to what he spent.’
Letchinger added that while such buyers are more common in New York or Palm Beach, ‘we don’t see them in Chicago very often.’
‘He just wanted to sell. And quite frankly, if he sold for $5 million or $10 million less or more, it doesn’t make any difference to him.’
Local agents told the outlet that his ‘highly visible selloff’ will only worsen the perception of values across the market.
Condos, however, felt the brunt of buyers’ safety concerns as many high-end buildings resorted to slashing asking prices to draw people in.
In November, a condo at the Four Seasons Hotel Chicago sold for $1.025 million, 43 per cent less than the $1.8 million the seller paid for it in 2000.
At Letchinger’s latest condo project, One Chicago, roughly 35 per cent of the building’s 77 units remained unsold after five years of sales.
Letchinger told WSJ: ‘It started with a bang. We had 19 or 20 sales in the first four or five weeks. Then, we didn’t see anybody for a year and a half. There was a point in time where we didn’t know if we’d ever sell another condo.’
Prices of some of the condos were slashed by 20 percent, and some were rented out.
Part of the problem, said Ames, is that Chicago doesn’t attract international buyers that have built condo markets in cities like New York or Miami.
She added that Midwest buyers tend to keep their distance from outrageously lavish spending: ‘Our market is not flashy. It’s not like Beverly Hills.’
Hope for condo sales, however, has emerged as sales have begun to pick up in the last few months. Letchinger told WSJ that he sold 18 units at One Chicago in the last four months.
‘I think we’re starting to find the bottom,’ said Lowe. ‘Prices have come down enough that I think people are seeing real value.’
