Update on Crain’s Sellers Who Moved But Can’t Sell: 4917 N. Lincoln
Remember this Crain’s article from late April called “Stuck with Two Mortgages” with several sellers who had multiple mortgages because their properties weren’t selling?
Here’s an update on two of them from the article. To refresh:
Eric Fontaine, 37, and Colleen Borkowski, 28, are eager to begin their new life together in Boston, where Mr. Fontaine relocated last fall to take a product marketing management position with Setra Systems Inc., a manufacturer and designer of pressure measurement instrumentation in suburban Boxborough. The couple is getting married on May 3 in South Bend, Ind., but their dream home is on hold.
That’s because when they moved, each still owned a condo in Chicago.
“My hopes were high, but when the market info started coming in, that started making me a little more skeptical,” says Mr. Fontaine, who placed his 2001 two-bedroom, two-bathroom condo in east Ukrainian Village on the market with Prudential Preferred Properties in September. He dropped his asking price to $359,000 — $30,000 less than the original asking price — and at press time had found a buyer after six months of carrying the mortgage.
His fiancée’s condo, built in 2005 and fully upgraded, is situated among a glut of newer construction in the Lincoln Square neighborhood. Ms. Borkowski put it on the market in November with Keller Williams Lincoln Park and “would love for somebody to like it as much as I did.”
“To know that nobody else wants it is hard,” she says.
Ms. Borkowski, a paralegal with law firm Wilmer Hale’s Boston office, has already lowered the price once, from $375,000 to $369,900.
While the couple debated renting out one of the places, they have no desire to be long-distance landlords.
“The tough part is you can’t really do both,” Mr. Fontaine says. “You have to make a choice. If you do rent it, you can’t sell it. For us, we’d rather just get out from under it.” Plus, Mr. Fontaine doubted rental income would cover either property’s mortgage, property taxes and assessment.
Mr. Fontaine’s unit in Ukranian Village DID sell.
825 N. Marshfield #2:
- Sold in April 2006 for $350,000
- Listed for $389,000
- Reduced
- Listed at $359,000
- Sold in April 2008 for $350,000
Ms Borkowski is having worse luck. Her unit in Lincoln Square is still on the market and has been reduced again.
Here’s the listing:
LINCOLN SQUARE *TOP FLOOR* 2BR/2BA HOME. FANTASTIC LAYOUT W/ SPACIOUS ROOMS & GENEROUS LIGHT. KITCHEN W/STAINLESS APPS, GRANITE COUNTERS & AMPLE MAPLE CABS. LUXURY MASTER SUITE W/ MARBLE BATH, SEP SHOWER, DOUBLE VANITY & WALK-IN CLOSET. STORAGE & IN-UNIT WASHER/DRYER.
2 PRIVATE DECKS PLUS SHARED ROOFTOP W/SKYLINE VIEWS. WALK TO EL, SHOPS & RESTAURANTS. CUSTOM NEUTRAL PAINT THROUGHOUT. A PERFECT HOME!
4917 N. Lincoln #3: 2 bedrooms, 2 baths
- Sold in November 2005 for $361,400
- Originally listed in November 2007 for $375,000
- Reduced
- Listed in April 2008 for $359,900 (parking included?)
- Reduced
- Currently listed at $339,900 (parking included?)
- Assessments of $169 a month
- Keller Williams Lincoln Park has the listing
Obviously a disappointing story and I’ll leave the “they shoulda realized X, Y, Z to someone below” as this couple made many dubious decisions.
Key moral of the story…don’t let cognitive dissonance ruin your personal finances. You “may be hurt” that no one is taking a liking to your dream home, but that’s the reality of the market. Don’t anthropomorphize your home. If you want/need to sell, lower the price.
It’s only mid-June but the buying season is already halfway over and unemployment is rising.
As it always is with the internet, YMMV.
1) Buying a condo and then voluntarily relocating out of state two years or three later seems a bit imprudent;
2) 28 year old paralegals can afford $360,000 condos?
3) They’re leaving pricey Chicago for the even more expensive suburbs of Boston?
4) They’re getting married at Norte Dame? Oh, that explains everything with these FB’s. ’nuff said.
Ehh…its tough to root against them. Remember the gal brought 50k cash to closing so she’s now whittling into that. These people weren’t flippers they just made some bad financial moves. She does seem to be willing to slash her price fairly quickly so I don’t think shes entirely out of touch with the market either.
These are way more than just bad financial moves – they’re committing financial suicide. They’re not out of touch these people are just plain idiotic.
I don’t feel sorry for them at all. I envision her at her “look at my great condo party”. “i am so cool!! I’ll paint the place the ugliest green I can!! And now, I am moving to Boston!! I’ll make at least $100K off of the $50K my mommy and daddy gave me!!!! Real estate never goes down!!”
Sorry… that just came out…. 🙂
I thought they did quite well given their timing. They bought in 2006 which has to be at the top. He got out almost unscathed – hers is not as good. Going forward they have 2 incomes and might find a decent deal in the next few years. Definitely not a “hardship” story at all…
haha, ya. does look like someone opened a can of Campbell’s Pea Soup and painted the wall with that.
Woof.
HD… you are indeed a very bitter person… Calling people idiotic on a blog… yeah, that’s classy.
You don’t know any of their financial situation so stop making assumptions. The only fact we do know is that they still have one condo left to sell and she’s willing to reduce prices until it gets sold.
How is relocating to Boston imprudent. It’s their business and if he was offered big time money to move there, then why not? Why does it bother you that a paralegal was able to afford a 360,000 place? Financial suicide?? Once again, that’s your opinion. How do we know that they really don’t care about losing $30K here and there to get their new life started in Boston because they can easily afford it. Oh wait, you just assume that they can’t…
Also, who cares if their parents are well off (again, just another assumption), it’s their family’s money, so they can do whatever they want with it.
Well, if they didn’t care about losing the 30K *here and there* they would have sold it by now. The whole story reminds me of someone I know who wouldn’t listen to me and got herself into the same situation. But you are right, it is thier money.
“Plus, Mr. Fontaine doubted rental income would cover either property’s mortgage, property taxes and assessment.”
The above, coupled with a declining/stagnant market, should have made it clear to them that they are overpricing the unit. I know many buyers, including me, are thinking in terms of rental parity now (because the market has basically no upside in the near term).
As for why they are “committing financial suicide”: human psychology is a huge, huge reason home sales are way down… like trading, from a purely monetary point of view, it is hard for owners to sell at a loss or where they feel they could’ve sold just a year back. Hence, the huge disconnect with buyers.
This particular case is striking because she really NEEDS to sell and she still isn’t aggressively pricing this unit. As a wild guess, I think 315-320K will create a sale. This will result in a loss she won’t like, but it may very well prevent an even bigger loss… the market will eventually recover, but not before taking sellers like these into losses they cannot afford.
Jason: I pretty much envisioned them in that way also.
It is a nice 2BR 2BA with low assessments but the fact of the matter is I can get a similar place a lot closer to the city.
Drop it another 50k and we’ll talk. Place is closer to Skokie than it is to downtown.
Just a thought from a fellow 28 year old. We, those of us in our late 20s, grew up in a time period when buying a home was almost always a good investment decision (or so it seemed). Many of us in Chicago who buy in these neighborhoods come from middle class midwestern families where the most sophisticated financial advice we have received was “you should probably buy rather than rent.” Most of us don’t really remember the real estate market in the 80’s because we were just kids then. When we were in our teens the real estate market was very strong, and it peaked when we were in our early 20s (the time when most of us would have begun paying attention to such things). Therefore, a lot of first time buyers like these two people (and many people in our peer group), have made a mistake that even a relatively sophisticated person in their position would make. I just thought I would note this point since I talk to some extremely intelligent people every day who make this exact same mistake. They aren’t idiots. Some of them are, in fact, otherwise extremely sophisticated people. They just don’t have the financial knowledge that might be required to make these decisions. It is actually quite sad to watch people make this mistake. Many of them are losing a great deal of their hard-earned money.
No, I’m not bitter at all – I have a great sense of schadenfreude.
Joe said, “Some of them are, in fact, otherwise extremely sophisticated people. They just don’t have the financial knowledge that might be required to make these decisions.”
Red flags didn’t go off in her head when she, single 26 year old paralegal, signed a real estate contract for a $360,000? I mean seriously, that’s about as financially unsophisiticated as you can get. Sophisication might be driving a Lexus SUV or owing a sweet condo like this, but, financial sophistication is something completely different. Financially sophisticated she is not.
Just like her, I seriously considered purchasing a condo in the city about the same time she did. I really really wanted to buy a place just like her. I may have even toured units in her building from what I can remember. But at the end of the day, after doing the math and seeing the craziness around me, I choose to stay out of mania. The same mania, which turned out to be a real estate bubble.
Society should be discouraging behavior described in the article. For god sakes she’s a 26 year old paralegal buying a $360,000 condo and no one here sees anything wrong with that. The bubble mentality lives on.
Granted, if the article said she was a millionaire trust fund baby then I could understand her situation better. But the article doesn’t say she is a millionaire – it says she’s a paralegal. If there is anything that we’ve learned from the foreclosure crisis it’s that just because you quality for a loan for $x amount – it doesn’t mean that it is prudent, wise or affordable to do so.
“Why does it bother you that a paralegal was able to afford a 360,000 place?”
I don’t think it BOTHERS homedelete I think he/she is questioning whether or not a 28 year old paralegal CAN afford a $360,000 place.
I honestly don’t know what the average 28 year old paralegal in the city makes but I’d want to be bringing in $100,000+/year before I bought something that cost this much.
As the same age I agree with Joe. However, when I meet people my age out and about one of the first things I hear when the question of where we live comes up is that they OWN a condo, even if I never inquired as to their ownership status. People never go out of their way to offer up that they RENT at location X. So we shouldn’t completely discount Jason’s 7:46am comment. There is definitely some bit of truth in that 20-somethings perceive ownership as a status symbol and are willing to pay far more than equivalent rental yield to have this status.
At the end of the day though Joe is spot on. We shouldn’t gleeful at the predicaments of people like this, its a bit like being gleeful when someone invests their life savings in a fancy sportscar has minimal insurance and totals it.
I think society should laugh at the guy who ‘invests’ his life’s savings in a fancy sportscar with minimal insurance then and totals it. It would go a long way towards discouraging such stupid behavior.
Jason’s comments are not spot on. Most 20/30 somethings I know don’t own and instead choose to rent. I think the 20 somethings you mean are ‘college educated 20 somethings that live along the lake and inhabit the same social circles as me.’ Come to my world which is probably more broad than the Lakeview scene and you’ll see a different perspective of 20’s somethings who chose to rent $360,000 condos for $1,500 a month and save the rest in the bank. Now that’s financial sophisication.
Bob – I completely agree with you. This person put a significant amount of money down on the place — something that is not consistent with many of the ridiculous buyers in the past years. It’s an unfortunate situation for her. I don’t think anyone should take pleasure that this particular person is losing money regardless of whether or not her salary supports the cost of the unit (we’re ALL speculating as to her net worth). Sure, it’s a fair question to ask and from the article it doesn’t bode well for her financial decision making skills.
I don’t take pleasure in thier loss, and I was a bit hung-over this morning. I just remember hearing these arguements. “Jason, you really need to buy your own place.” “Why don’t you own your own place?” “Why don’t you buy a condo?” “Renting is throwing your money away.” “People never lose money in real estate.”
During that time me and my buddy seemed like the only people who were missing out. I in turn, thought that everyone was CRAZY CRAZY CRAZY!!! Its pretty simple, just ask yourself, who the heck is going to buy all these condos??? It just seemed like insanity to me. Like Joe, I also heard this line of BS from my parents. My sister and her husband fell for it. Now they own a house that is way underwater. (They are divorced too, but for other reasons.)
People like this irritate me. “Well, Jason doesn’t own his own place.” Was some snide comment I heard once from someone. I laughed in her face. (She lost her place to foreclosure In Janaury.)
So after seeing what’s happening now, I guess I am getting the last laugh (which does bring a little enjoyment, but I am not wishing them harm.)
One of my best friend’s is a multi-millionaire and he rents a little crappy one bedroom on LaSalle. Now we know WHY he’s a multii-millionaire. 😉
“One of my best friend’s is a multi-millionaire and he rents a little crappy one bedroom on LaSalle. Now we know WHY he’s a multii-millionaire.”
So, choosing to not spend much money makes one a multi-millionaire. Sweet–I’ll have to tell my mom (retired teacher) that she’s a multi-millionaire.
I thought the same thing: who is going to buy all these condos? More importantly, how do people afford these condos?
I tried to look at things in a historical perspective in my life. In 1995, I had just finished high school and my friend’s rich rich parents bought a mansion of a home in Deer Park $400 grand or so. I also remembered my parents bought a nice ranch house with a yard in the NW burbs for $120k in early 1998.
Fast forward a few years later to 2004/2005. I was looking for condos in the city I and was appalled. HOmes in my parents’s neighborhood were selling for $300k and rinky dinky condos in north center were selling for $360,000. I kept thinking, well, just a few years ago the rich people I knew could afford $400k ….but the average unit in a 3-flat now costs $400k, that must mean everyone is rich!
Then I googled ‘real estate bubble’ and what do you know, I learned all about option arms, neg am loans, subprime, and the $10.00 an hour strawberry pickers in california who were buying $700,000 houses. Then it all made sense.
Whether you all on this site want to admit it, $50k isn’t even 20% of a $360,000 condo; she bought at the height of the boom; she’s a 26 year old paralegal; she’s trying to sell after owning for only 3 years………Her story sounds a little frothy to me.
Its people like her who impulsively bought an overpriced condo with questionable finances that drove up the prices for everyone. The mere fact she had a 15% or so downpayment doesn’t change the fact she overpaid and accordingly, she is contributing to the collapse of the real estate industry. I’m surprised people on this board aren’t more angry. Post this story at thehousingbubbleblog.com and you’ll get dozens of scathing ridicules in no time.
Homedelete,
What point does being angry serve? She is likely out at least her downpayment, maybe more. At the end of the day I’d rather have bloggers angry and hurling insults at me than be out 50k. We all know she is paying a steep price for her decisions.
If she did get her 50k downpayment from her parents, which I suspect she did maybe parents can learn from this. Don’t give large gifts to your children if they are imprudent. Most young people (under 40), MBA types and accountants aside, are imprudent. Tough lesson for ma and pa.
I’m not angry I’m happy.
I see posters questioning how a paralegal can afford at $360,000 condo. Quite easily. I’m a paralegal. An entry-level paralegal at a large law firm can get a base salary of 50K+. If you’re a litigation paralegal you can at least double that with OT and bonuses. You don’t have much of a life, but you have money. If she’s been a paralegal for a number of years her base could be over 75K. Anyway, that’s just for the curious.
Anon, maybe the mere fact of saving money and practicing frugality will not by itself make you a millionaire, but the converse is certainly true, in that being foolish, extravagent, and ignorant of basic financial principles will sure as hell make you poor.
Cash in hand is the first step towards finding the right investment opportunities. How can you invest if you have no savings, and how can you have savings if you spend carelessly and up to the limits of your paycheck? And speak not of folks who borrow money from a bank (or HELOC their houses!!) and set up a trading account, and parlay $2000 into a mega-fortune by dint of sheer brilliance and timing. They exist, but they are statistically insignificant, and most folks who try this end up broker than they would have been if they’d just worked a minimum wage job and saved $10 a week.
And cash confers bargaining power. As some well-known financial genius- I forget just who- remarked, there is no strength like cash in hand, and no weakness like the lack of it, which really hits home when you see the terms you can borrow on with a good balance sheet, vs. what’s available to you in credit when you’re stone broke.
I’ve been lucky enough to meet a number of people who work very ordinary jobs, yet have managed to amass small fortunes in the neighborhood of $1MM-$3MM, by saving religiously, avoiding debt, and investing very carefully in meticulously-researched opportunities. What strikes me about these people is how much regard they have for $15, and how they bargain for everything, absolutely everything, they buy, whether it’s a pallet of canned goods or a new BMW. You never saw people so paranoid about getting ripped off, and you never saw such a crowd for getting on the phone with the bank and fighting down every last credit card service charge. Sometimes they go to ridiculous extremes, like an elderly couple, Jewish refugees from Europe who suffered great poverty during the war, and who responded to the unspeakable trauma of it by being so tight that they spent the last years of their lives wearing houseshoes with rags wrapped around them for warmth, out in public, and fishing through trash dumpsters for discarded clothes. It sounds extreme, but I have a lot more sympathy and respect for folks like this than I do the Borrow-your-way-to-wealth-shop-till-you-drop mob.
On the other hand, I have relatives who inherited nice chunks of change, and segged right into really high-paying jobs right after graduation, then never made less than $200K a year for 30 years on end, and have still ended up struggling at the age of 70. These are the people who never wait for a sale, but go to the store and buy not one pair of overpriced shoes, but a pair in every color offered, just to give the stuff unworn to the Salvation Army 2 years later. And they NEVER question an asking price for a house or sticker for a car. Salespeople and retailers LOVE people like this.
I tell you from my heart, I wish like anything I’d practiced frugality in my youth. I often think how much better my life would be now.
Laura: Great post, and it brings to light something I’ve always noticed in life. Whatever rule, whatever price, everything…and I mean EVERYTHING in life is negotiable.
I enjoy reading many of the different perspectives and philosophies — they do inter-relate to how psychologically people approach housing, the focus of this blog.
However, let’s not discount factors of luck or circumstance. Financially speaking or otherwise, bad things happen to smart people and good things happen to not-so-smart people. The fact is, we could have been born blind on a hilltop in Afghanistan or inherited $20 billion.
Perhaps I could be more or less frugal – but there are some things I enjoy that make no economic sense. Negotiating the price of $15 items might be frugal, but one could argue it’s a waste of time — depending on how you value your time. If you make $100 per hour in your job, economically speaking you are better off working for that incremental hour than negotiating for 15 minutes to save $2 on socks. How’s that for a NPV negative project for you?
they are both taking a hit on their sales. however, when they are all done and she finally does “drop her pants” on the condo such that she does sell, they’ll eventually purchase for a low price in their NEW city. 😉 “sell low, buy low market.”
Yeah, Laura, all true. But there is a LOT of space in between, which most people inhabit. AND Jason’s friend is not rich because he’s cheap (that is, we don’t know WHY he’s rich), but it does help to keep one rich. I think there is a limit tho, and I would be unhappy living in a “carppy one bedroom” when I could have nicer digs; that said, I ain’t buying a Bentley or a 100m yacht even if I had Buffett’s bank account.
True.
But Laura, I hold much less respect for that crazy old couple than someone who spends a little more to look presentable to the world.
There is a not so fine line between someone who lives very modestly but for all appearances is okay and someone who is batshit crazy frugal wearing rags and dumpster diving. That old couple could’ve easily gone to goodwill and got real socks.
I don’t respect batshit crazy frugality–its no better than any other form of insanity, including the borrow and shop till you drop crowd. I do respect those who bargain for every bit, watch every expense and fight every perceived unjust charge (I am one of those people, yet not wearing rags nor intending to).
People should do what makes them happy. If they enjoy being frugal or shopping till you drop, then that is their own personal choice. It is easy to criticize some one’s actions in hindsight.
Yeah but as long as your choice doesn’t affect me by bidding up the price of real estate so high that it crashes a few years later.
I think this has been mentioned before, but the main reason everyone who bought in 2004-2007 is in pain is that they are leveraged beyond belief. For some reason, it has become perfectly OK in American culture to borrow 10x or more of a down payment for a house when the most one can margin is 2x of one’s deposit in stocks. The disconnect is startling and shows how pervasive the “home prices always go up” mantra has gone to people’s heads.
The bubble was essentially a pyramid scheme (greased by the investment banks) where one over-leveraged buyer/investor bought high and was able to sell to an even more over-leveraged/naive/optimistic buyer. However, once people caught on the music was over.
It is unfortunate that those that bought last are now stuck with losses… but I cannot feel sorry for them because they were essentially “gamblers” that made bad bets. I know some of them did not know that they were “gambling” … but what else can you call it when they leveraged 10x or more AND bought after a huge run-up of 100-200% in home prices in such a short time period AND had no money in savings so that they could not withstand any downturn in prices.
Lincoln Square, once just another working class neighborhood filled with working class apartments. As a kid I remember the malling-off of Lincoln and Meyer’s when it was Meyer’s. It’s amusing that during the boom so many came to pay so very much to basically live in the same location and in the same manner as many generations did before them…at much less cost.
The real estate boosters really did a masterful job in hawking our outlying neighborhoods and getting people to shell out hundreds upon hundreds of thousands of dollars for apartments. Too bad trees don’t grow to the sky and not every neighborhood can be a Lincoln Park and not every new buyer thinks $360,000 for an apartment (mega negative cash flow) is a good idea.
BTW, yes, people can most certainly do what they want with their money, but I don’t see renters and outright owners clamoring for the nanny state to make it all better.
*I tell you from my heart, I wish like anything I’d practiced frugality in my youth. I often think how much better my life would be now.*
Me also!
Great string of posts! BTW, my buddy agrees with many of the philosophies on this site, so maybe there’s hope for all of us! 😉
“It’s amusing that during the boom so many came to pay so very much to basically live in the same location and in the same manner as many generations did before them…at much less cost.”
Let’s talk about Armitage/Halsted in the 60s–it was the barrio. Or Wrigleyville, which was barely working class. Neighborhoods change. Also, there aren’t nearly as many families with 3 or 4 kids living in 2 or 3 bedroom apartments, which used to be completely normal for even “middle class” folks. So, it’s not so much “living in the same manner” even tho in the same location.
No. Instead they can’t afford kids and their mortgage at the same time because they pay a much larger percentage of their income on housing. So in essence while these working class families of the 60’s could live comfortably in an apartment with their kids, the condo owners couldn’t–they pay too much for their housing.
This neighborhood is no Lincoln Park or Gold Coast. Tell me again why 2/2 condos are going for 300k+?
“Tell me again why 2/2 condos are going for 300k+?”
Because 26 year old paralegals like Colleen were foolish enough to pay $360,000 – her stupidity set the comps for the entire neighborhood. Now that the market is running out of greater fools prices are finally declining.
Well put. A question that is off the beaten path. I am shopping for kitchen appliances. I want all the appliances for the kitchen to be the same brand. Does anybody have a good website where you can compare? Looking at GE and Whirlpool.
http://www.abt.com/ is worth a trip to the suburbs. GE is trying to sell its appliance division. Not sure of the history behind Whirlpool.
Out of curiosity I just looked and, according to http://www.urbanrealestate.com, this is still on the market. It’s at a strange price, $333,030, and looks like it’s still the original realtor. How much of a difference can $6,000 make?
I now feel guilty at all my barbs at her. Her only mistake was overpaying and some bank being willing to give her a big loan.
She is more noble than me: I’d be willing to trash my FICO score for 30k. I’d take a big pile of cold hard cash over credit worthiness any day.
Hahahaha!!!
The condo sold in August for 333,030.