Thursday, October 29, 2009

No takers yet for lot beside Obama home

Owner inflating asking price to double what was paid 19 months ago

(CHICAGO) A vacant lot next to President Barack Obama's Chicago home is on the market for almost double what the owner paid 19 months ago.

The land was once owned by the wife of former fundraiser Antoin 'Tony' Rezko, who later was convicted of influence peddling, and was part of a US$1.75 million real estate deal that hurt Mr Obama's election campaign. The 15-by-46-metre lot is being offered for US$1.3 million.

The opportunity to live next to the president hasn't helped sell the house on the other side of the Obama residence. Those neighbours set a US$1.85 million price this week, seven weeks after putting their home up for bid.

'The high-end market has taken more of a hit in this downturn,' said Jim Kinney, vice-president of luxury home sales for Baird & Warner real estate in Chicago. 'The whole stimulus package has been aimed at the bottom end of the market.'

Illinois real estate is showing signs of improvement. The Illinois Association of Realtors said last Friday that year-over-year sales increased in September for the first time since March 2006, with first-time buyers driving the rebound. September unemployment in the metropolitan area was 10.5 per cent, more than the national average of 9.8 per cent.

John Poulos, a lawyer, and his wife, Marjorie, paid US$675,000 for the lot in March last year, when they purchased it from 5050 S Greenwood LLC, property records show. Michael Sreenan, a former attorney for Rezko, said that he wholly owned that corporation.

'We've gotten some inquiries, but haven't found that perfect buyer,' said Karen Ashley-Bowman, the listing agent for Urban Search Corp of Chicago. The vacant lot is south of the Obama family's red brick mansion in the Kenwood neighbourhood.

Mr Poulos declined to comment, citing a desire to maintain privacy for himself and the president's family.

The limited-liability 5050 S Greenwood bought the lot from Rezko's wife, Rita, in December 2006, two months before Mr Obama announced his presidential bid.

The land earlier was listed as part of the property that the Obamas purchased in 2005, shortly after he was elected to the US Senate. The sellers listed the home and lot separately, asking US$1.95 million for the house and US$625,000 for the landscaped side property.

The Obamas bought their house for US$1.65 million, and Rita Rezko purchased the lot for US$625,000, its full asking price. She then sold one-sixth of the lot to the Obamas for US$104,500 to help them create a larger buffer for their property.

Mr Obama said that the deal was 'boneheaded' because Rezko at the time was known to be under federal investigation, the Washington Post reported in December 2006.

Rezko, a developer and Illinois fundraiser, was convicted in June last year for taking part in a scheme to extract kickbacks in exchange for influencing the award of state business under Governor Rod Blagojevich, who was removed from office earlier this year. Rezko, 54, is awaiting sentencing, while Blagojevich faces trial on corruption charges.

Hillary Clinton, now Mr Obama's Secretary of State, used his connection to Rezko to criticise him during one of their campaign debates last year. She said that she was fighting Republican proposals while Mr Obama was representing a contributor's 'slum-landlord business' in Chicago.

Rezko was among the first three donors to Mr Obama's 1996 run for the Illinois Senate. In 2007, Mr Obama gave to charity more than US$44,000 in campaign donations linked to him.

The Obamas' home has 6,400 square feet of space. Mr Obama, 48, and his family have spent one weekend there since the president took office on Jan 20. White House spokesman Ben LaBolt declined to comment.

The Obamas's neighbour to the north, Bill Grimshaw, 71, listed his family's 6,000-square-foot home last month, touting the eight-bedroom home's proximity to the president's house.

Trish Hoffman, a spokeswoman for Chicago-based Matt Garrison Group, the real estate firm handling the Grimshaw house, said that there have been many inquiries about it.

Sellers often think a unique location, such as next door to the US president, makes a property worth more than the market price, Mr Kinney said.

'That will have its pluses, as well as its minuses,' he said. 'The property is going to stand on its own merits, unless you have a true Obama fan.'

A listing for the lot states that access is restricted and a copy of a driver's licence is required prior to a showing.

Even without such challenges, the market for building homes is probably the slowest part of the high-end market, Mr Kinney said.

'There are just so many choices that people can make a deal on for empty, new construction,' he said.

Ms Ashley-Bowman said that the owners purchased it with the intention of building a 10,000-square-foot home but changed their minds.

Neighbourhood residents often tell her that they think the Obamas should purchase the vacant lot to expand the buffer around their home, she said.

'I imagine he has more pressing problems right now,' Ms Ashley-Bowman said. 'But it would be nice in terms of finishing off his property.' - Bloomberg

Source: Business Times, 29 Oct 2009

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