Traditional frame houses in Graceland West

There is one property in Chicago that is sure to attract lots of interested buyers even in a downturn because, if you have the money, you could be President Barack Obama’s neighbour. The 17-room property in the Kenwood neighbourhood went on the market this month without a price tag but the listing agency Garrisons said: “We’re looking for the people that want to live next to the president and they’re willing to pay a premium for it.”

Chicago might be the home of the skyscraper but it is traditional family homes, like the one next door to the Obamas, and town houses near leafy parks on Lake Michigan that are most in demand.

Like many other big US cities, Chicago has been hit by the housing downturn, particularly newly built apartment blocks. Whole swathes of shiny new residential towers in central districts such as the Gold Coast and Streeterville have been either cancelled, postponed or turned into rental projects.

In the South Loop agents tell of one developer who recently had 100 buyers default when they did not turn up to finalise the purchase of their apartments.

“Many new construction properties were built [in the city centre] at the absolute height of the market, so the number of new homes [developers] have to sell is unrealistic and they are sitting with inventory,” says Deno Jeffries of estate agency Remax in Chicago. “But, even though prices have come down, resale homes continue to trade.”

Jeffries sells homes in Lincoln Park, a popular area near the city centre, which has seen a recent surge in demand despite the slowdown.

“Recently the market has been very robust, though this has now slowed a little because interest rates have gone up but there is still activity – mostly between $200,000 and $800,000 and above $2m,” Jeffries says. “Homes in the $1m-$2m price bracket have been very slow-moving.”

Lincoln Park is the sort of 19th-century suburb where Henry James and Edith Wharton might have strolled and you would be happy to let your child play hopscotch on the pavement. There is a network of parks and a zoo, alongside the usual shops, restaurants and markets. One of the most appealing aspects is direct access to the shores of Lake Michigan, where every morning joggers can be seen.

A newly built block in Lincoln Park

The oldest part of this elegant suburb is the DePaul area, which has its own eponymous university. There are nearby hospitals and the city centre is only three miles away. “It’s a mix of high quality, Victorian-style homes in a mature landscape and is an attractive place for people to live,” says David Haymes, an architect who has lived there for more than 20 years.

Brick villas dating from the 1890s gaze on to wide leafy avenues such as Armitage Street, where family homes cost between $850,000 and more than $1.2m. “Old period residences have a long history of selling well,” says Jim Kinney, president of Rubloff Estate Agency.

One reason the market is active there, Jeffries says, is that there are few new owners. Most people have been there a long time and, therefore, feel no loss when it comes to selling. It is a similar story in other smart Chicago districts. Neighbouring Lakeview, just north of Lincoln Park, also attracts families and long-term buyers, as does Gracelands West to the north in the larger Ravenswood neighbourhood. Homes in Gracelands are often on larger plots and sell for $2m and above, although “terrific traditional cottages and frame homes on smaller lots can still be found for less than $1m,” says Jeffries. “And these properties are generally regarded as vintage.”

It is these classic homes that are faring best in the downturn. While luxury new-build apartments have seen price reductions of between 10 and 30 per cent in the past two years, typical single family houses in these districts have only had, on average, a 15 per cent fall in price, according to Kinney.

There are exceptions, however. Lincoln Park’s newer “McMansions” are large yuppie homes derived from combining and rebuilding one house with an adjacent “teardown” property. Symptomatic of noughties excess, these “palaces”, like some of their more extravagant skyscraper cousins, have seen a dramatic reversal in fortune. “Prices in this particular segment have come off their peak by as much as 30 per cent,” says Kinney.

However, though demand might have fallen off for now, there will always be a place for such grand homes in a city that is the 19th largest economy in the world. Chicago, which hugs the south-western shores of Lake Michigan, is the base for more than 1,300 foreign companies and 100 corporate headquarters complexes, including Aon, Boeing and United Airlines. More American than Superman, the city’s impressive skyline reflects its affluence and commerce.

Older homes in Lincoln Park

Chicago has some of the most famous skyscrapers in the world, such as the Willis Tower (as the Sears Tower was renamed in July, after new leaseholder and naming rights owner Willis Group Holdings); the John Hancock Center; and the gleaming white Wrigley building on the shopping mecca of Michigan Avenue. Construction of the much-hyped Chicago Spire was halted last year after the project ran into funding difficulties.

“Chicago is a very vibrant, fun place and is more of a destination than a lot of US cities. It is also very multicultural, with a lot of Europeans – English, Irish, Italians and Polish,” says British-born Marc Correal, a manager at the opulent Peninsula Hotel.

Correal and his wife, Hannah, both in their early 30s, rent in salubrious Lakeshore Drive, close to the city’s restaurants and bars, the lake and the peninsula, although they would like to step on to the housing ladder and purchase their first home. “If you want a generic two-bedroom, two-bathroom apartment, you can make a deal,” says Kinney. Although it varies a lot from building to building, two-bedroom apartments in the city centre are worth roughly half a million dollars, while condominiums outside the central district are advertised for about $250,000 or less.

“There is optimism in some condo markets in [the city centre],” says Haymes. “Several [downtown] developers have told me that things are looking up. People are feeling it is a good time to buy”.

Remax, tel: +1 303-770 5531, www.remaxep.com
Rubloff Estate Agency, tel: +1 800-480 7816, www.rubloff.com