Another Developer Slashing Prices: 1224 W. Van Buren in the West Loop
1224 W. Van Buren, or VB1224 as it is known, in the West Loop is a loft conversion building that has been around a couple of years.
The developer just slashed prices on the remaining units by at least 20%.
The units have 42 inch cabinets in the kitchen and quartz counter tops.
They also have 4 inch wide plank floors.
Here are some of the price reductions:
1 bedroom plus den:
- Was $275,900
- Now $239,900
1 bedroom plus den with parking:
- Was $307,900 plus parking
- Now $256,900
2 bedrooms with parking:
- Was $349,900 plus parking
- Now $285,900
@Properties is handling the sales.
See pictures of the units here.
The developer faces some competition from original buyers, who are now sellers, however.
For instance, this 2/2, Unit #609, is currently listed as a “short sale” for $255,000 plus $25,000 for the parking.
It is currently under contract.
And yes, that is the Eisenhower Expressway right next to the balcony.
See the pictures for Unit #609 here.
Unit #609: 2 bedrooms, 2 baths, 1430 square feet
- Sold in July 2007 for $425,500 (included the parking)
- Originally listed in May 2009
- Reduced several times
- Currently listed as a “short sale” for $255,000 (plus parking of $25,000)
- Under contract
- Assessments of $569 a month
- Taxes of $5714
- Central Air
- Washer/Dryer in the unit
I remember when this building first started to be developed. I was at UIC back then. Can’t believe that there are still units available.
I think that 609 is one of the end units. This was not part of the original brick structure but was added on as part of the constructions. These untis are unique b/c they have a front exposure and a rear exposure. The problem is that the all glass rear (master bedroom) look right into the all glass rear of the unit across the way. Hello neighbor.
When they first converted that building, I was like wtf and knew this one wouldn’t end well. Living right on the Eisenhower is not an amenity. I can’t believe they got people to pay $400k plus for 2/2s there.
I recall the building next door to the east was also going to be converted. I guess that never happened.
I remember going to see this building back in the day. on the units that weren’t part of new construction there was a VERY pronounced step to get to the balcony- i remember that a large portion of the living room would have to be used to accommodate a staircase if you wanted to use the balcony.
sorry for all the suckers that didn’t have a great real estate agent like mine to keep me away from this place.
Seems like everyone is getting vetroed this days. (was that correct usage?)
Living on the eisenhower… oh dear, these places look beautiful from the road but wow, I feel bad for the owners
dark bowling alleys. does each unit come with a lifetime supply of paxil? I am just trying to imagine the association meetings/smackdowns.
@paulj,
and think, this unit has double the exposures and the majority of the other units. Think how depressing those units are.
What happened from 2000-2007 that made people think that sunlight was not that important of a feature of a home.
“dark bowling alleys. does each unit come with a lifetime supply of paxil?”
Sitting on top of the expressway as these units do is kind of like living in your garage with the car running and the OH door open. It’s unlikely you will die from CO poisoning, but will probably develop resperatory problems short-term; and lung and blood cancers mid to long term. Should also include scrip for Advair and bags of Taxotere and Cistoplatin.
This building was a former True Value warehouse with high load-bearing concrete floors, then it was sold to a developer in the height of the dotcom bubble to be one of those computer server/data centers (like the 1 million sf Grainger bldg. near Soldier Field/McCormick Place). That developer never even came close to getting that server/IT/datacenter/dotcom deal done. He lost it to the bank, the bldg. almost became a self-storage facility (probably the true highest & best use) in early 2000s, then it limped into the mid-2000’s until the current developer came along and turned it into condos.
Where are JZ and sparky to tell us that 1) these price cuts are definitely the last of them, 2) that this is the deal of a lifetime, 3) that now has never been a better time to buy and that we better buy now or be priced out forever or my favorite 4) that interest rates have no impact on RE valuations?
Who would’ve ever thought that a one bedroom apartment in Chicago with parking wasn’t worth 308k?
That is a beautiful view of the Eisenhower expressway from those balconies. I am sure car or truck enthusiasts will snap these up.
I also like how the wall in the bedroom doesn’t extend all the way to the ceiling. Allowing the resident domiciled in that particular bedroom to enjoy all of the beautiful smells of their roommates morning cooking as well as listen in on their morning TV shows and conversations, as well as the melodic horns from cars stuck in traffic on the expressway on their morning commute.
I remember when this building had no windows on the southern exposure, but a mural that covered the entire surface. I can no longer recall what that mural was.
Robert Shiller, Professor of Economics at Yale University and ½ of the famed Case/Shiller RE econ duo, declared that there is no apparent correlation between rising mortgage interest rates and falling U.S. RE prices over any reasonable period of time.
If you have any issue with this fact, Bob, I suggest you take it up with Mr. Shiller. Your issue is with him, not me.
Where are JZ and sparky to tell us that 1) these price cuts are definitely the last of them, 2) that this is the deal of a lifetime, 3) that now has never been a better time to buy and that we better buy now or be priced out forever or my favorite 4) that interest rates have no impact on RE valuations?
Sparky,
I don’t understand then why the Federal Reserve purchased $1.2 trillion in mortgage backed securities in an effort to keep interest rates low if there is no correlation between interest rates and real estate valuations.
http://www.housingwire.com/2010/03/25/mortgage-rates-increase-as-fed-mbs-purchase-program-nears-end/
Apparently the Federal Reserve believes there is a correlation, judging by their actions.
“I can no longer recall what that mural was.”
Fake facade, with “windows”, no?
IIRC after long discussions on this topic I found research which said that in general the correlation isn’t between housing prices and interest rates; the correlation is between interest rates and amount of credit extended to the borrower; and furthermore, there is a correlation between the amount of credit extended and housing prices.
So if interest rates go up it merely means that the monthly payment is higher and therefore people borrow less; and because borrowers borrow less the housing prices will eventually fall.
“Robert Shiller, Professor of Economics at Yale University and ½ of the famed Case/Shiller RE econ duo, declared that there is no apparent correlation between rising mortgage interest rates and falling U.S. RE prices over any reasonable period of time.”
I posted references to a bunch of serious work on this from very respectable economists (i.e. not David Lereah or whoever is writing for Newsweek) a while ago (which is where you got your soundbite from). There was a wide range of legitimate dispute on this issue, including the extent and magnitude of any correlation. I have a lot of respect for Shiller, but I also do for some of the other economists who have weighed in on the issue and I would not give Shiller the decisive word on this.
I don’t have a dog in this fight and Shiller may well be right. I just don’t put a lot of stock in the so-and-so said it therefore it must be true form of debate.
Yes anon it was a fake facade. I wondered what the actual use they were hiding inside the building.
“I just don’t put a lot of stock in the so-and-so said it therefore it must be true form of debate.”
I’m hurt.
btw, finally sent my (brief) thoughts. Let me know if you have anything specific–I could drive/walk by in the next couple days.
The incorrect assumption here is that if mortgage interest rates go up, then house prices must come down. Yes, the amount of credit extended to the borrower will be less if rates rise. But the OTHER choice is that the buyers must now choose a less expensive home than what was previously considered when rates were lower.
As an aside , we had to consider less expensive homes when we were looking to buy in the early 80’s, when interest rates were in the double digits. As interest rates rose, RE prices did not fall. The only thing that changed was that we had to lower our expectations of the type of housing we could get for the amount of credit extended.
“IIRC after long discussions on this topic I found research which said that in general the correlation isn’t between housing prices and interest rates; the correlation is between interest rates and amount of credit extended to the borrower; and furthermore, there is a correlation between the amount of credit extended and housing prices.
So if interest rates go up it merely means that the monthly payment is higher and therefore people borrow less; and because borrowers borrow less the housing prices will eventually fall.”
“As an aside , we had to consider less expensive homes when we were looking to buy in the early 80’s, when interest rates were in the double digits. As interest rates rose, RE prices did not fall. The only thing that changed was that we had to lower our expectations of the type of housing we could get for the amount of credit extended.”
The other thing that likely changed was the value of your dollar. Thus, while the nominal prices stayed the same, the real value of the houses was falling.
“The other thing that likely changed was the value of your dollar. Thus, while the nominal prices stayed the same, the real value of the houses was falling.”
Uh oh.
This time around I think people are so leveraged any significant increase in interest rates will result in lower real estate valuations.
However as the EMU is now hemorrhaging under its own weight in debt I think its entirely possible there is a renewed “flight to quality” in US debt with Treasuries continuing to be the international safe haven. In other words a few more years of 5% mortgages.
So instead what will cause RE values to drop, precipitously, will be the removal of government stimulus measures and the overall economy.
If the government stimulus measures (tax credit, growth of FHA) had never been enacted RE values would surely be lower now and the drop not nearly as steep. But the NAR wanted to pull demand forward and that’s what they lobbied for via the tax credit and the FHA gobbling up market share.
Agreed – but value is not the point at stake here, price is. Rising mortgage interest rates do not correlate with lower RE *prices*.
“The other thing that likely changed was the value of your dollar. Thus, while the nominal prices stayed the same, the real value of the houses was falling.”
“Agreed – but value is not the point at stake here, price is. Rising mortgage interest rates do not correlate with lower RE *prices*.”
If you’re talking about nominal prices, I agree, but if you’re talking about real prices, I disagree. As the government and Fed move away from the heroic measures they have undertaken to stop housing prices from sliding (notice that policy makers clearly believe a spike in interest rates will cause house values to plummet, hence the FHA explosion, Fannie/Freddie injections and Fed purchases of MBS) they are praying that some level of general inflation will creep into the economy and provide the final leg of the bank bailout by buoying nominal asset values to disguise the amount by which the banks are truly insolvent. A house with a price of $200k today is worth less than a house with a price of $200k in 1995 because inflation has eaten away the value of the dollar. To the extent Dr. Shiller and his disciples disregard that, they are distorting the truth.
The other problem that I have with time series data purporting to argue this point is that the housing supply has changed drastically over time meaning we are not comparing apples to apples. Average home size has skyrocketed and amenities, such as granite counter tops and sub zero appliances, have further driven up average costs in a manner that is not reflected in a two variable model measuring price and interest rates.
“A house with a price of $200k today is worth less than a house with a price of $200k in 1995 because inflation has eaten away the value of the dollar.”
You understate that greatly, and it’s much more powerful stated fully:
Based on CPI, a house selling for $285,604.99 today is worth no more than a house selling for $200,000 in 1995. So, even tho the price “increased” by almost 2.4%/year for 15 years, it’s “worth” the same.
And, of course, *in general* higher mortgage interest rates go hand-in-hand with higher general inflation, which plays into it as well.
“To the extent Dr. Shiller and his disciples disregard that”
All of Shiller’s *longterm* (i.e., 100 year) research that I’ve seen (admittedly hardly comprehensive) is based on Real Dollars. See here: http://www.ritholtz.com/blog/wp-content/uploads/2009/06/case-shiller-updated.png
“Average home size has skyrocketed and amenities, such as granite counter tops and sub zero appliances, have further driven up average costs in a manner that is not reflected in a two variable model measuring price and interest rates.”
Well I think the latest “finishings” fads are basically this generation’s equivalent of Avacado-colored furniture and shag carpeting of the 1970s, and not worth nearly the RE premium baked in. Yes were people monumentally stupid to pay 40k more for a home that had fixtures that were 10k more expensive? Undoubtedly, but such market distortions happen when you have crazy amounts of leverage floating about. Afterall they had little skin in the game.
As far as home sizes being bigger, we can control for this via PPSF, adjusted for inflation, instead of looking at median home prices.
Are you saying is that we can not predict the future based on the past because the future is too different from the past? That may well be, but that is not my point.
The government’s intervention has changed the game, no doubt. We haven’t played this game before with these new rules. The result of govt’s intervention remains to be seen and is only pure speculation now. Who’s to say that the government won’t step in for the next crisis and change the rules once again? Ooops, all of today’s predictions just went out the window.
But alas, that is not my point. My point has *only* been that there has been no apparent correlation between rising mortgage interest rates and falling U.S. RE prices. That’s my story, and I’m sticking to it.
“As the government and Fed move away from the heroic measures they have undertaken to stop housing prices from sliding (notice that policy makers clearly believe a spike in interest rates will cause house values to plummet, hence the FHA explosion, Fannie/Freddie injections and Fed purchases of MBS) they are praying that some level of general inflation will creep into the economy and provide the final leg of the bank bailout by buoying nominal asset values to disguise the amount by which the banks are truly insolvent. A house with a price of $200k today is worth less than a house with a price of $200k in 1995 because inflation has eaten away the value of the dollar. To the extent Dr. Shiller and his disciples disregard that, they are distorting the truth.”
Sparky:
I agree that homebuyers will simply choose another house or condo if interest rates rise. But this will certainly have ramifications we don’t yet know on the entire housing market.
If the professional couple that before was buying the 2/2 in Lakeview now can no longer afford those prices and instead must buy a 2/1 in Lincoln Square or Logan Square- what happens to the 2/2s in Lakeview?
Similarly for the single family home market. Rising interest rates mean buyers will no longer be able to afford a “starter” home in Oak Park as those prices will be higher so the demand will shift elsewhere.
We have never seen a real estate market coming out of a bubble with interest rates actually rising. Most of what the economists believe will happen likely won’t happen- is my guess.
The 2/2’s in Lakeview could be bought by the those who can not afford the next level up from that. And so on. There is shift in expectations all across the board.
“If the professional couple that before was buying the 2/2 in Lakeview now can no longer afford those prices and instead must buy a 2/1 in Lincoln Square or Logan Square- what happens to the 2/2s in Lakeview?”
“We have never seen a real estate market coming out of a bubble with interest rates actually rising. Most of what the economists believe will happen likely won’t happen- is my guess.”
Bingo. Another huge exogenous variable that is likely assumed away (or at least very difficult to account for) from the C-S Index is the broader economy. One big driver of mortgage rates is the Fed changing the discount rate. The Fed generally only increases this rate in a strong economy. When the economy is strong and unemployment is low, a 25 bp increase in mortgage rates is not going to reverberate through the real estate market.
Look back at the early 80’s on the chart anon posted – even when Sparky was looking at RE back then, real prices actually dropped, but he only saw the nominal prices stay the same. I think this is the same scenario the statists in DC are trying to cook up right now. But who knows, if the US is a safe harbor for another deluge of foreign cash, we’ll have a bunch of suckers chasing MBS again and we could enter Bubble 2.0. Time will tell.
That makes sense- but we’re all assuming Generation Y is willing to trade down- essentially- just to say they are homeowners. This is where it will get quite interesting because you can rent a much nicer place than you can buy- especially as interest rates rise. Most will likely remain renters in the city until they buy a single family home.
It will be interesting to see how it all plays out. Homebuyers haven’t known “high” interest rates (above 7%) in 9 years. It’s a whole generation that doesn’t remember what it is like to have them.
You need to look at the chart of real estate price history with the mortgage interest rates super-imposed upon it to see that there is no apparent correlation between them. There is a chart that has all of that in another thread on cc. Yes, you can cherry pick your dates where there there appears to be a correlation over a *relatively* short time frame, but overall, there is no correlation between rising mortgage interest rates and falling RE prices over *any reasonable period of time*.
“Yes, you can cherry pick your dates where there there appears to be a correlation over a *relatively* short time frame, but overall, there is no correlation between rising mortgage interest rates and falling RE prices over *any reasonable period of time*.”
I don’t dispute this in the least. But the last time we had national housing prices falling was during and after the Great Depression. Every other housing market in between these two events cannot be used to determine what will happen this time.
By the way- that Shiller chart is interesting in the 1980s because there was a big housing bust that decade but interest rates actually declined a bit from the early 1980s to the middle part of the decade (but prices also fell.)
Remember, mortgage rates did not go below 10% for like 13 years (from 1978 to 1992 or thereabouts).
It also projects out a return to the mean by 2015 or so. That’s nationwide.
It still boggles my mind that the huge section-8 complex across Throop St didn’t get leveled and turned into condos during the boom.
Though on the plus side, you won’t have to go very far to get your crack.
I am very familiar with this building as one of my crew rented here. He was paying $1700 mo for a 2/2 with den space and a parking space.
Horrible construction. Cheap finishes. HUGE noise problem even on top floor. Dirty and I mean filthy DIRTY public areas and garage space with no interest from the developer in cleaning/maintaining in any form. No Condo board ever was put in place as most of the building is still sitting empty with absolutely no interest shown and an on premise manager who did not show any interest whatsoever in making the building a decent…even passable building in which to live. Promised amenities guaranteed to the new owners that still have not been put in place. A funky rooftop space with no furnishings, sitting areas, etc….just a wooden plank that takes you from the door to the edge of the building. The residents are mainly college kids with rich parents who party 24/7 and made it a point of being as loud as possible at all times of the day and night. The back parking lot is trashy with no one claiming responsibility for cleaning it, yet it is patrolled by a tow truck driver who took great pride in towing visitors cars even if they parked for a five minute time. Dog crap everywhere including in the garage….I could go on and on with the negatives in this poorly converted old factory space, but it is of no interest to anyone.
Last year around this time a brand new tow truck that had set up a permanent parking spot right outside the back door was set on fire after the driver had towed numerous cars belonging to patrons of Union Park Bar.
On the only small positive note, the view of downtown is not that bad from the rooftop if you can look past that huge billboard and the water tower.
What I find histerical are the number of resales listed while there are still never been lived in units still on the market.
Gets my vote for the worst condo building in the West Loop…and that is saying a lot!
“Last year around this time a brand new tow truck that had set up a permanent parking spot right outside the back door was set on fire after the driver had towed numerous cars belonging to patrons of Union Park Bar”
Man you have no idea how many times in my life i’ve wanted to set a tow truck ON FIRE… good for those patrons!
Yeah, I have to admit, being a person who has had my share of visits to underground tow lots seeing the burned out shell of that BRAND NEW (less than one week old, from what was posted on a building flyer) I did take some perverse pleasure of seeing it remain in it’s original spot for a few weeks.
Evil, huh?