Ultrahigh-end homes slow to sell in crowded market

Ultrahigh-end homes slow to sell in crowded market - With no hordes of buyers in sight, builders of some of the area's most expensive homes are trapped in a down market
By Mary Ellen Podmolik
Copyright © 2009, Chicago Tribune
October 18, 2009
http://www.chicagotribune.com/business/chi-sun-castles-1018-oct18,0,2937682.story


If a man's home is his castle, what happens to the new castle still looking for its man?

In the current economy, it sits and waits.

In Oak Brook, it's a $5.75 million stone castle. In Burr Ridge, it's a Middle Eastern-influenced home named Villa Taj, once priced at $25 million and headed for the auction block next month. In Barrington Hills, it's a nearly 12,000-square-foot home sitting on five acres. In Chicago, it's an unfinished, four-story, bank-owned home with an elevator. And in Lake Forest, it's an elegant country home whose already trimmed price was just slashed by another $1 million.

All are newly constructed, ultrahigh-end homes, reminders of the housing market's headier, healthier days. And all are additions to a market that is bursting with multimillion-dollar homes waiting for that very discriminating buyer with very deep pockets.

"It used to be when we showed a $3 million house, we'd show three or five," said Jaime Adams, a real estate agent with Adams & Myers Realtors, Hinsdale. "Now, you're maybe showing [homes] between $2.8 million to $3.6 million or $3.7 million, because you don't know if someone is going to wheel and deal. You're maybe showing 12 or 13. You have such a swing factor."

In Lake Forest, for example, more than 50 homes are listed for sale for at least $3 million, not counting homes that are being privately marketed. In the past 12 months, 11 residences in that price range sold, and it took, even with significant discounts, an average of almost 500 days to sell those properties.

Move up to homes listed for at least $5 million and there are more than 20 Lake Forest properties for sale. In the past 12 months, one home in that price range sold, which means if the supply and market held steady at their current level, it would take 20 years to whittle that inventory.

The same scenario, high inventory and reduced pricing, has been unfolding throughout other tony communities, which might lead one to wonder why a builder would deliver another house to an already crowded, depressed marketplace.

The answer is they have little choice. Many builders started ultrachic homes 12 to 18 months before the housing bubble totally burst. Those homes have just recently come online.

Builders are trying their best to market them, using Web sites, neighborhood cocktail parties, open houses and price cuts. They also are working with lenders to help facilitate super-jumbo mortgages, but that isn't always a problem. There are far fewer buyers in this rarefied air, but they are part of a well-heeled group that frequently pays with cash.

Paul Iwanski is among the area builders looking for that special someone. For the past nine years, his firm, commercial contractor Iwanski-Pyzik Masonry, has built area schools and drugstores. Last year, Iwanski, who keeps swords on his office wall, decided to follow one of his dreams. He built a castle.

The 18,000-square-foot home in Oak Brook, still unfinished, includes more than 12,000 square feet of living space, walls 14 inches to 22 inches thick and heated concrete floors. Iwanski is selling it for $4 million unfinished; $5.75 million finished.

The home's Web site, kingwanted.com, has received more than 14,000 hits, and e-mails from as far away as Dubai, but has not produced any offers.

"I believe there is a buyer for it," Iwanski said. "If we have to wait, that's OK. We built this for us. If we cannot sell it, I won't cry about it. Then I'll find a way to live in it."

Longtime homebuilder Don Ciaglia plowed ahead with the spec construction of one of his largest luxury homes, on a wooded hilltop in Barrington Hills, despite the industry's darkening skies a year ago.

"We weren't going to stop building," he said.

Adds his wife, Ruth Ciaglia, an ERA Countrywood Realty agent who listed the home, "At the time, a house like this was really a good idea. There were houses like that that were selling. Who knew?"

Ciaglia has lowered the price by $50,000, to $5.39 million, but doesn't plan any more reductions.

Price reductions on some luxury properties, however, are totaling more than the cost of several midpriced homes, giving these posh pads a new definition of "wow factor."

In Lake Forest, a 7,800-square-foot cedar, concrete and stone home, originally priced at $6.7 million, had seen its price reduced to $4.995 million. Earlier this month, the private investors that funded its construction told the builder to slash the price by another $1 million.

"It tells you a lot, on a home that already has come down $1.7 million," said Lisa Trace, a real estate agent with Griffith, Grant & Lackie Realtors in Lake Forest. "It all just collapsed around them, as it did for everyone who was building a spec home."

One builder who's decided to see the glass as half full is Adel Tarakdjian, who in December started building a 23-room home in Glencoe that's listed at $5.995 million.

Tarakdjian, who constructs a spec home every two to three years to use as a marketing tool, has no plans to drop the price of the home that is loaded with features, starting with the 1,200-pound, heated, steel front doors. In fact, in July, before he'd finished the project, he increased the price by $295,000.

"I believe in my product," he said. "Of course there's risk involved. There is risk involved in everything we do in our lives. If I cross the street, there is risk involved.

"I do sleep. I sleep well."

mepodmolik@tribune.com