Market Conditions: “The Carrying Costs Will Eat You Alive”

Crain’s reported that 2 developers, Habitat Co. and Thrush Co., successfully auctioned off unsold condo and townhouse units at two South Side developments in December 2008:

  1. McKinley Park Lofts at 2323 W. Pershing Road, a 163 unit loft conversion in McKinley Park
  2. Jazz on the Boulevard, a 137-unit complex at 41st Street and Drexel Boulevard in North Kenwood

Habitat, which developed the McKinley Park Lofts, sold all 34 units up for auction at the auction.  Condos sold for $150,000 to $250,000, down significantly from the original prices which were as high as $374,000.

The discounts were even more deep at Thrush’s Jazz on the Boulevard. 10 townhouses originally priced up to $625,000 sold between $250,000 and $300,000.

10 out of 12 condos also sold for between $150,000 and $200,000 which had been originally priced up to $363,000.

“The condo market in Chicago is very soft,” says Rick Levin, president of the Chicago firm that led the auctions. “There’s an oversupply and financing is difficult. . . .I think you’ll see that continue through 2009.”

“It’s better to close out and move on,” says Thrush President William Wolk, adding that the project has completely sold out since the auction. “The carrying costs will eat you alive.”

Currently, there are 7 re-sale units on the market at McKinley Park Lofts ranging in price from $174,900 to $234,900.

Condos sell for big discounts at 2 auctions [Crain’s Chicago Business, Jan 6, 2009]

25 Responses to “Market Conditions: “The Carrying Costs Will Eat You Alive””

  1. McKinley Park Lofts and Jazz on the Blvd? What were these developers thinking (other than dollar signs and profit!)?

    Where’s their next big development project……Englewood? Markham? Ford Heights?

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  2. McKinley Park Lofts has a lot of potentitial. They were pretty nice, overlooking the park. My sister lived over there for years, claiming it was an up and coming area. She said I was a fool not to buy a pre-construction loft in Mickinley Park Lofts at $340,000.00. She claimed her little house had already doubled in value.

    She is divorced now and lost the house which was underwater……

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  3. Thrush on Jazz

    http://www.youtube.com/watch?v=UVEZG2GiIQc

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  4. anyone see the adp job numbers today? its all stablized….

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  5. Part of the problem with the housing bubble was that suddenly all the properties throughout the city were listed at the same price.

    Why is someone paying $200,000 for a 720 foot 1-bedroom at McKinley Park Lofts when they can pay $235,000 and get the same thing in the Loop or even in River North/Streeterville?

    I know- different neighborhoods for different folks. But McKinley Park is working class. Houses should be $200,000 there- not lofts. The lofts should be $70,000. (And I know what I speak of as I worked in the neighborhood for 5 years in the 1990s.)

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  6. *anyone see the adp job numbers today? its all stablized….*

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  7. ??

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  8. Jason,

    ADP’s forecast for Friday’s (official) BLS nonfarm payrolls came in at -693k jobs versus a -493k consensus among economic forecasters. This was the first release to use a new methodology intended to correct for the too-optimistic bias of the ADP forecast in the last year or two.

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  9. This reminds me of that proposed condo development at Cicero and I-55 just north of Midway. It could not be a worse location for condos, and I would laugh my ass off every time I saw that sign for “luxury condos coming soon”. The sign isn’t there anymore; the developer must have finally lost their loan.

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  10. LOL @ $625k townhomes in North Kenwood. What were the banks thinking when they loaned this guy money! I mean the boulevard is nice but dude… you can get a mini townhome in lincoln park or old town for that kind of money!

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  11. I know what it is, but why do you say it is stabilized?

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  12. Jason, I think it was sarcasm. Things are far worse than expected, so I would assume he was being sarcastic.

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  13. Sabrina you’ve elucidated on why I love to include such neighborhoods as Bridgeport and McKinley Park in my MLS surfing. I really do find it entertaining that there are developers pitching 900sf 1/1 “lofts” in these places for…drumroll…240k.

    In fact I know of one developer in these neighborhoods that recently raised prices after sales were slow. Guess they are carrying true to their threat to buy now or pay more later. I guess I will be priced out of Bridgeport and McKinley Park forever. LOL.

    “McKinley Park is working class. Houses should be $200,000 there- not lofts. The lofts should be $70,000. “

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  14. Oh. Sorry I am a little slow. I thought we were looking at different numbers.

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  15. Bob you’re familiar with the south and southwest; I follow the north and northwest. Here’s one of my favorites:

    “Dubin does the town!”

    Shoemaker lofts starting at $269,000.

    http://www.dubinresidential.com/shoemaker-lofts-avondale-chicago/

    Pulaski and Belmont. WTF???? Near the store with the spinning rims, the long vacant Jewel and the gas station. That corner is the definition of blighted. It’s not Logan nor is it near the train………my god what was Dubin thinking (other than “if you build it they will come!).

    They rent on craigslist for $1550 for 1,200 sq ft to $2,100 for 1,700 sq ft.

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  16. Bob, FYI for 2009 Dubin plans on building lofts in Bridgeport and townhomes in McKinley Park. You should buy pre-construction!

    http://www.dubinresidential.com/site/epage/35607_482.htm

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  17. “stablized” is the new “contained”, don’t you know? remember when subprime was “contained”?

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  18. Who is Dubin’s lender? I’d like to make sure I don’t have money in their bank.

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  19. re: Shoemaker lofts. What a boondoggle…and the developer got OUR $ to push those beauties via TIF funds. Read Ben Joravsky in the Reader for more on TIF madness.

    Also that strip by the Jewel is prime hooker/john sting by the CPD. Weird area…guess Dubin was betting on trickle-down effects from neighboring established hoods in Old Irving and The Villa.

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  20. “Part of the problem with the housing bubble was that suddenly all the properties throughout the city were listed at the same price.”

    That’s so true Sabrina. It seemed you weren’t much of a deal at all for taking a flier on a lesser or developing area.

    That same pricing made its way to the burbs too. Have you seen the prices for condos in Arlington Heights? It’s nuts! AH has done a very nice job over the last 10+ years making a little downtown for itself with some nice restaurants, bars and even some small local theater but it isn’t downtown Chicago and they’re asking for downtown prices.

    Lombard tried to do the same thing near their Metra station but they got in the game way to late (2004, 2005) and now there are 40+ condo units for sale in two new buildings (400 & 500 E St Charles Rd) ranging in price from $215K – $410K. The problem there is there is no reason to live in the immediate area other than the train. No restaurants, bars etc.

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  21. “Bob you’re familiar with the south and southwest; I follow the north and northwest. Here’s one of my favorites:

    “Dubin does the town!”

    Shoemaker lofts starting at $269,000.”

    Wow, look at all the sold out floorplans. Poor suckers.

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  22. “starting at $269,000.”

    So does that mean someone paid $269k for one of those 660 sq ft. shoeboxes?

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  23. “So does that mean someone paid $269k for one of those 660 sq ft. shoeboxes?”

    Not usually. The low price generally gets updated to reflect units available. So it’s $270k for ~1070 sqft with a parking spot.

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  24. The Jewel (or maybe it was a Dominicks?) across the street has been vacant for a long time; long before my time in the area (I live about a mile or so north of the subject property). It’s hideous. Large weed filled parking lot; boarded up big box store.

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  25. they won’t move to Streeterville because the dues will probably double their mortgage payment. I think prices overall have to come down to get the market moving, and opening credit, but the ridiculous dues on all the buildings in the GC, Loop and Streeterville will keep those condo’s on the market even longer.

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