1400 S. Michigan in the South Loop to Auction Off Remaining Units on November 15
For the second time this year, a South Loop new construction high rise is going to use an auction to sell remaining units.
1400 S. Michigan, or Michigan Avenue Tower II, expects to auction 40 out of the remaining 97 units available in the 257 unit building on November 15.
This is a tactic that was used by the developer of the Vetro, at 611 S. Wells, back in March. In March, the Vetro also auctioned off 40 of its remaining units and then reduced prices on the 51 that remained (lowered prices to the auction prices.)
Of those 51, according to the Tribune, less than 10 remain. So the building has, obviously, still not sold out (even with the reduced prices.)
From the Tribune:
“Buildings that were competing needed to re-price if they wanted to gain some market share. There was a ripple effect,” said Gail Lissner, vice president at Appraisal Research Counselors. “The bottom line is no one is selling if they’re not discounting.”
The same scenario may play out again, said Jon Gollinger, co-founder and East Coast CEO of Accelerated Marketing Partners, the Boston-based firm that handled Vetro’s auction and will conduct the event for developer Russland Capital Group’s Michigan Avenue Tower II.
“Today, with the declining market that’s occurring, there’s a failure to understand what market value is,” Gollinger said. “Today, all purchases are elective purchases. The consumer rules, it’s as simple as that.”
Some of the minimum bids are as follows:
Studio: 580 square feet
- Last asking price of $135,900
- Minimum bid of $99,000
1 bedroom/1 bath: 692 square feet
- Last asking price of $252,900
- Minimum bid of $120,000
2 bedrooms/2 baths: 1027 square feet
- Last asking price of $395,900
- Minimum bid of $175,000
2 bedrooms/2 baths: 1259 square feet
- Last asking price of $446,900
- Minimum bid of $235,000
3 bedrooms/3 baths: 2100 square feet (only one of these available)
- Last asking price of $682,000
- Minimum bid of $375,000
Find out more information at 1400 S. Michigan [website]
We also chattered about flips in this building in September 2008, specifically about Unit #708.
See the chatter and pictures here.
This was the sales history as of last September. I can’t find any record that this unit ever re-sold.
Unit #708: 1 bedroom, 1 bath, 751 square feet
- Sold in September 2008 for $357,500
- Was listed in September 2008 for $329,900 plus $40,000 for parking = $369,900
- Assessments of $380
- Taxes are “new”
- The den is 5×6
- Or- you could have rented it for $1750 a month without parking or $2000 a month with parking
Will this auction set off the same kind of frenzy that the Vetro auction did 8 months ago?
More condos on the block in the South Loop [Chicago Tribune, Oct 21, 2009, Mary Ellen Podmolik]
Ouch. the owner of 708 isn’t going to like that his $350K condo is now going for $150K. Anyone wanting access to the auction site can use login “john.doe@yahoo.com”
I could be down for unit 2706, though. $235K is “affordable,” albeit, for me, it would be a 5-6 year “home” at most, then become a rental. Of course this excludes assessments, which would kill any deal for me.
A one bedroom in the south loop will NEVER rent for $1750, not in the next 10-20 years. A 2 bedroom maybe.
so what do you guys think 2605 and 2705 go for? 2/2, 1144 sq ft, north exposure, original ask $520K (lol), min bid $200K.
also, anyone knows approximate assessments on the 2/2’s? $380/mo seems high for a 750 sq ft 1/1. amenities seem pretty standard: doorman, pool, workout room. is the building old?
Remember that the Vetro auction actually added 5 units (presumably because they liked the prices they were getting on those tiers), for a total of 45 units auctioned.
According to Accelerated Marketing Partners’ website, one of the reasons behind the auction was so the remaining units would qualify for FHA’s owner-occupied lending percentages on the building.
Vetro’s minimum bid studio was $115K, but that bid went up to $144K
The Chicago Tribune article linked in the post suggests that only 44 units sold as a result. They auctioned 45 in total. Which unit was auctioned but didn’t close?
“The building is seeking to become approved for Federal Housing Administration-backed loans before the auction.”
does this mean FHA loans would be available for the actual auction? or just that they want to have it ready so that after the auction FHA will be available for the remaining units, as BriBri says above?
also, how many of the auction units do you think will really be o/o?
Why did they put minimum bid and then last ASKING price instead of closing or bid price.. you could make up any damn number you want in there… why don’t they just put “reccomended winning bid” or something like that. fuckin Chicago and their snake oil realtards annoy me with their tactics!
Sonies, read it again. The previous asking price is what they were trying to sell the units for. The minimum bid price is where the bidding starts. The winning bid occurs when people stop raising the bid.
Gotcha. Not enough coffee yet, obviously.
BriBri,
When Vetro added the 5 units, I assume they were added during the auction, not prior to it? Is that correct?
Correct, the 5 extra units at the Vetro were added during the auction.
Does anyone have any approximate figures where the final bids settled in the Vetro auction vs. the starting minimum bid?
sorry to get off topic here (i usually do anyways) but i posted a topic on YoChicago and it never got answered but i am very curious about this.
“I am a complete novice/idiot/uniformed when it comes to new construction. But something seems strange/fishy that flippers are able to under cut the developers by 20% or more at the Trump. I understand what Ms. Ames is talking about for Trumps bank might not allow the developer to price lower. But the flip side of this be, after all the pre construction/flippers buyers sell at a lower price would lower the comps and a buyer for the higher priced developer unit be declined a loan based on the assement?
http://yochicago.com/trump-resales-above-and-below-ground/11991/comment-page-1/#comment-45889
chitowninvestor,
I can’t find the CC entry but i believe there’s one with fairly extensive results. G lists a lot of that info.
this link has at least some of the results.
http://cribchatter.com/?p=7194
Unit #708: 1 bedroom, 1 bath, 751 square feet
•Or- you could have rented it for $1750 a month without parking or $2000 a month with parking
bwahhahahahaaha… ahahahahah. waaaaaaaaaaaaaahhahahaha
oh wow… 708 is a SFB!!!
“The Chicago Tribune article linked in the post suggests that only 44 units sold as a result. They auctioned 45 in total. Which unit was auctioned but didn’t close?”
I believe that would be unit #2705. 1209/2010/2206 all had delayed closings and appear to have fha financing (based on very low down payments only.) 2609 delayed even longer so I am not sure that it sold to the auction winner.
chitowninvestor, here are the 45 units from the Vetro auction with original list price (if I have it), starting auction price, final bid amount and % over starting bid. They are organized by tier and the 31st floor units are penthouses. Please note that some of the closing prices were higher by a few thousand dollars than what the auction results indicate. I will get that updated for future reference.
3105 $899,900 $415,000 $556,000 34%
3101 $799,000 $400,000 $485,000 21%
2603 $567,900 $360,000 $429,000 19%
2503 $567,900 $360,000 $421,000 17%
2403 $555,900 $360,000 $420,000 17%
2303 $553,900 $360,000 $419,000 16%
2203 $551,900 $360,000 $412,000 14%
2604 $360,900 $210,000 $257,000 22%
2504 $358,900 $210,000 $266,000 27%
2704 $357,900 $210,000 $269,000 28%
2304 $0 $210,000 $270,000 29%
2204 $0 $210,000 $265,000 26%
2104 $0 $210,000 $259,000 23%
2705 $399,900 $245,000 $300,000 22%
2605 $397,900 $245,000 $278,000 13%
2405 $383,900 $245,000 $278,000 13%
2205 $389,900 $245,000 $275,000 12%
2909 $438,900 $270,000 $321,000 19%
2809 $459,900 $270,000 $326,000 21%
2609 $451,900 $270,000 $317,000 17%
2509 $449,900 $270,000 $320,000 19%
2706 $421,900 $290,000 $320,000 10%
2606 $419,900 $290,000 $322,000 11%
2306 $409,900 $290,000 $322,000 11%
2206 $407,900 $290,000 $323,000 11%
1905 $381,900 $245,000 $273,000 11%
1805 $379,900 $245,000 $276,000 13%
2301 $244,900 $140,000 $188,000 34%
1501 $222,900 $140,000 $162,000 16%
1601 $0 $140,000 $162,000 16%
1401 $0 $140,000 $160,000 14%
1909 $269,900 $160,000 $198,000 24%
1809 $266,900 $160,000 $194,000 21%
1709 $264,900 $160,000 $210,000 31%
2210 $194,900 $115,000 $151,000 31%
2010 $190,900 $115,000 $163,000 42%
1810 $209,900 $115,000 $149,000 30%
1710 $199,900 $115,000 $145,000 26%
1609 $248,900 $160,000 $196,000 23%
1509 $246,900 $160,000 $195,000 22%
1409 $244,900 $160,000 $194,000 21%
1209 $239,900 $160,000 $192,000 20%
1402 $225,900 $150,000 $171,000 14%
1302 $223,900 $150,000 $171,000 14%
1202 $221,900 $150,000 $177,000 18%
Note to Dire-straits Developer: Is forcing potential investors to register at your website a good marketing move at this point?
wow, the comment thread from that #708 post is like a time capsule back to the peak panic.
G, Wow, you’re right, I could have swore I won the bid at $144K, but it was $145K. Keep in mind the seller kicked in $2500 if you closed in 2 weeks. And $1000 if you used one of their lenders with pre-approval.
Luke, Yes it seems to be a good idea for them as there was no shortage of bidders last time. If you don’t want to put your email address into the site, I’m guessing you’ll not want to put up the $5000 cashiers check either to show you’re a serious bidder. For the Vetro auction they brought in more chairs and still had people standing along the back and sides of the ballroom at the W hotel.
Hidden Gem: The first unit in each tier was usually the nicest one, and yet it usually went for the lowest price. People apparently were waiting to see what the first one went for, then would outbid it by a couple thousand dollars as in their minds they now thought they knew the “market price”. If you want the best unit at the best price, get the first one in each tier.
From that old thread:
“Gary Lucido on September 29th, 2008 at 9:06 pm
Good point JL. And the cost of the bailout was not $700B. I think a lot of the ordinary folks didn’t get that. If the treasury lost 10% on the purchase of these assets the cost would only be $70B and there was even a reasonable chance that the government could have made money on the deal.”
There was a lot of nonsense on that thread (like JL’s post that Gary refers to,) but I wonder if the extraordinary folks still believe this. Well, Gary, do you?
“Well, Gary, do you?”
Obviously not Gary, but I’m of the view that it’s still a big “who knows” but that the eventual outcome will depend on whether you’re looking at constant $$ and–even then–could easily be *more* than the face amount of the bailout.
“Obviously not Gary”
No, but obviously extraordinary.
I can’t comment on this post because I am still in shock that someone paid $357,500 for a 750-square-foot one bedroom in the South Loop. Financial suicide. JUST. WALK. AWAY.
Re: $1700/mo rent, you could easily get an extra 200 square feet, a usable office and a balcony (not sure if this one had one) for $1500 in a nicer building.
to “a” –
I just rented my 1br at museum park for 1700 without parking. its a 1br with 900 sq ft. It took me 3 weeks to rent it using Craigslist.
gary was referring to a program that never got enacted, as it was stated; it was on of O’Neil first plans but got modified.
given how it might of work that was a possible scenario.
Does anyone know what the parking situation is for this building? Are spaces available? If so, are they to be auctioned as well? How did it work at Vetro?
bridget, did you open up a bottle of champagne?
revassal, are you suggesting the first plan was the best and the plan(s) enacted are actually worse for taxpayers? Please, help us ordinary folks out because we would like to know if the crap unloaded on us will also have “a reasonable chance” that the govt will turn a profit on those “assets.”
Bridget – nice job on the rent and I think you are very lucky. You found someone looking at the right place at the right time. 1700 per month will get you a one bed any where. People are stuck in Streeterville, Gold Coast, everywhere and I’ve seen nice 1 beds listed all over the city for that price. Pat yourself on the back for finding that renter!
Well I don’t think OMP is a good comp for the rest of the south loop, that is a fairly unique building and while I am surprised that a shill signed a lease for 1700 a month in that place, it isn’t that outrageous for that particular building. But for most south loop 1 bedrooms you would be lucky to bring in 1k a month for rent.
Only an amateur landlord would celebrate renting a unit. That should come only after the lease is paid in full with no damage done.
“it isn’t that outrageous for that particular building”
doode the prices in museum park are still insanely high for reason i guess good views?
i have been waiting for a 2br there to drop in rental prices for like a year now and nothing. I would like to rent a in-town with a good view for a year or 6 months. i thought with the market flipper will get desperate and take .50 on the dollar for rent. hasnt happend YET
“For the second time this year”
Or possibly the third time this year depending on the time of the auction as Motor Row lofts are auctioning off 20 units that same day.
This building isn’t my style but it will be interesting to see how much per square foot these fetch. Vetro still has units for sale for as low as $232 per square foot and thats much closer to downtown.
g,
not defending it as a plan (better than the giveaway-now (nop warrents/few @ lower intrest rate), only as a possibility, I know how you feel about re but if the gov’t just ask for as much as warren buffet 10% interests among other things (even though they could have nationalized the whole system, made or lost what the banks would have) would have made it a good possibility of not losing as much money. nearly everybody is going to lose, the economy is going to lose if trillions of dollars are disappearing, whether paper or real..
if you hold it long enough it can mitigate loss, and if we followed and improved upon the S&L plus Swedish models plus acted sooner, would have help even more.
as far as I know your plan is to let all those who touch re-fools gold to suffer, so how would your plan be better?
“Swedish models”
Mmmmm……
On a more serious note our government and country is in trouble because they are spending massive amounts to maintain the status quo, when the market just wants to reprice the trillions of dollars of malinvestment made during the bubble.
I’m making an assumption here but I think his plan would be better in that our government deficit chart would not look like this:
http://research.stlouisfed.org/fred2/graph/?s%5B1%5D%5Bid%5D=FYFSD
And our currency would not headed to oblivion.
how much of that is due to spending to help the economy vs the housing market? not all of the tarp $ or the fed balance sheet is for the housing market.
My god. Why did I buy my condo in early 2008?!! :(((
This time, the deal looks even better than Vetro.
Sorry, didn’t see the questions directed at me until now, but perhaps they were rhetorical anyway. Nevertheless, it got me to thinking about what happened to TARP and I guess the problem is that the program evolved into a bunch of different programs with various social goals, including the saving of GM, Chrysler, AIG, mortgage modifications – basically handouts. The ROI on those are usually negative. If they had just bought assets, that could have been profitable. Hell, I made money buying depressed assets back then.
so – can you buy an auctioned condo with an FHA loan on this property?
“This building isn’t my style but it will be interesting to see how much per square foot these fetch. Vetro still has units for sale for as low as $232 per square foot and thats much closer to downtown.”
…but at least this is Michigan Ave. vs. having the empty post office and River City as neighbors.
So if you assume these go around 20% over min bid — that’s approx. $225/sq. ft., on Michigan, not too far south — starting to sound reasonable, no?
I’m renting a unit in that building…. an 02 floorplan (ibed/1bath….around 800sq feet).. I’m paying 1400 a month — and that includes parking. The building is full of renters….
Reasonable is subjective. If you find it reasonable to pay $225/sf when the equivalent will be available later for under
Reasonable is subjective. If you find it reasonable to pay $225/sf when the equivalent will be available later for under $200/sf, have at it.
There is also the matter of the auction verifying the FB status of prior buyers and what that will do for bldg stability in the future. It’s pretty hard for current debtors to ignore their malinvestment when these reductions occur.
These auctions are not the end of the correction, just a verifiable step down.
Does anyone know the % sold for Silver Tower in RN? Any potential for auction there?
“Does anyone know the % sold for Silver Tower in RN? Any potential for auction there?”
I live near there and can see the building from my living room and it looks jam packed at night in comparison to the Trump or many south loop buildings.
Lots of lights on in that building. It looks to be well over 50% sold and occupied so doubtful that they will have auctions is my best guess.
Sonies:
Interesting that you see it that way. From our view of it, it doesn’t look very occupied at all. Of course we haven’t been there for several weeks. We are going to Chicago today right after work so I’ll be sure and check it out.
Maybe just my side of the building (curved glass side) is the only side with living rooms or units sold?
Is the curved side the one that would overlook Orleans? We see the sides that face towards Grand and Fairbanks(?).
” Fairbanks(?).”
Franklin.
EJ,
I was there about 3 weeks ago and I have the list of units sold and available but I don’t have it with me. If memory serves they are around 50%. They are very willing to negotiate on price and have some nice financing options, money towards closing, and maybe paid assessments (I would ignore the expiration date they keep putting on these offers as they seem to keep extending it). I visited 757 Orleans before there, and they had recently reduced pricing and silver tower seems aware that they are priced high. I wouldn’t anticipate an auction anytime soon though.
Someone here might be able to tell you about the details of the loan or the financial health of the developer, Stonegate.
The Silver may be 50% sold, but based on our observation coming in on Ohio last night and from our unit at Orleans and Grand which looks directly at the Silver, it appears to be only 5%, or less, occupied.
“Does anyone know the % sold for Silver Tower in RN? Any potential for auction there?”
It appears that MB Financial (the holder of the Silver Tower construction loan) is taking a different approach to getting the units sold – http://www.chicagobusiness.com/cgi-bin/article.pl?article_id=32450&seenIt=1
It will be interesting to see if this works.
Hmm…typically these things blow up 2-3 years after the E-Z credit. I like SoNo the building and will keep an eye in a few years for foreclosures.
Yep….probably just pushing the foreclosure down the road a little along with tranferring the pain from the bank/developer to the buyers.
Existential question – Are many small foreclosures better/worse than 1 big foreclosure?
“Existential question”
This is actually an economic question. Given it makes you look lot less foolish or naieve than an existential question.
It also makes you look a lot less foolish or naive, when you spell naive correctly.
“Given it makes you look lot less foolish or naieve than an existential question.”
And you had once almost used an Occam’s razor reference correctly!!!
Wikipedia – “Existential can be defined as relating to existence”. Paints a broad brush.
PS – the internet can help with spelling too.
I am not sophisticated enough to use the internet, a red squiggly line helps me out.
MB acquired Corus Bank so now they have all these crap developments on their books. Seems a like a smart move to offer decent financing to buyers to get the units moved instead of having unsold units on the books. The loans are being kept on the books, so no need to deal with Fannie/Freddie/FHA guidelines. Makes sense since they already own the development. Can’t be that much more riskier.
However, they apparently are allowing investors to buy with just 5% down. That alone would scare me. These buildings are going to be over run with renters and broke landlords.
“MB acquired Corus Bank so now they have all these crap developments on their books. ”
No, MB doesn’t. Most of Corus’ crap development assets were sold to an entity owned by Starwood Capital, TPG Capital, Perry Capital and WLR LeFrak. They bought all the REO, and 100 non-performing or near-non-performing loans “worth” a total of $4.5 B.
revassal,
The red squiggly line did indeed help me out and I knew it was misspelled. But after several iterations and still seeing the line I gave up. I was tired of being mocked by the red squiggly line.
Bob, if you are using Firefox or Safari (and probably even IE), if you right-click on the squiggly line word it will offer suggestions from the internal dictionary.
DDR,
Just called the office and none of the units come with parking. Parking is being sold separately for a flat $35K.
Thanks for the update Gary. I was wondering about the parking as well. The Vetro sale included the parking space.
Can anyone predict the of wining bid for 1 bed / 1 bath 783 sq feets at 10 S Michigan?
I would say somewhere in the range of 170k to 200k.
thanks
Sunny!
If you look at Vetro’s listing price today, it’s about the same as or lower than their auction price back in March. Vetro’s 2B+Den 2.5 Bath 1667 sqft is $383,000 now, with parking and storage. If you count parking as $35,000 (like 1400 S. Michigan), then that’s $347,000 without parking or storage. That’s $208 per sqft for condo without parking.
So, Sunny, I think 1bed/1bath 783 sqft should be $162,900. Above $170K seems to be overpriced. If you pay $200K for condo and $36,000 for parking and storage, then total is $236,000. For that price (above $300/sqft for 1bed condo with parking), you can find many condos in South Loop without even going to auction.
The parking of $35,000 thing is kind of tricky, and the latest additional of that 3-bed room unit (1500 something sqft) was really sneaky. All other units had starting bid of about $170 something/sqft, but that newly added unit started from $240 something / sqft. That’s starting bid is already 15% more than Vetro’s listing price (price/sqft wise, $240 vs. $208). I wonder if any one would bid on that unit.
It will be interesting to find out what exactly happens on Nov. 15.
Tom
Dear Tom,
Appreciate your response & thanks for writing in.
Is it right to compare Vetro with 1400 S Michigan? Also, based on that come up with the pricing strategy? This auction is more hyped up than Vetro’s auction.
It seems 450 bidders had already registered around 10 days back, the day when I went to 1400 S Michigan. It will not be a very bad deal to get 1 bed / 1 bath with parking below 200k (165k for the unit plus 35 for the parking) – I wonder if that would be possible though.
Which is your favorite unit?
Regards
Sunny!
Sunny,
I looked at both Vetro and 1400 S. Michigan yesterday. They have different styles, but I think they are comparable, in terms of prices.
There are many condos for sales in South Loop area and some might be better deals than this auction. I may bid on 06 and 08 units. As long as you go to auction with the upper limit in mind, you have got nothing to lose anyway. For myself, I’ll definitely stop bidding if one bedroom is higher than $170K.
Good luck and wish you get what you want at a good price !
Tom
Thanks again Tom for writing in.
All the very best for the auction.
I am ineterested in 06’s and 2 bedrooms with 1260 sq feet. I was just wondering, what’s you viewpoint on 2 bedrooms with 1260 sq feet. Any approx price in your mind?
Sunny!
Sunny and Tom:
Be sure to fill us all in here on what happens at the auction this weekend.
I’ll be posting special posts on the weekend so that everyone can discuss what goes on.
Same with those attending the Motor Row Loft auction on the same day.
Yes I will notify all with the experience @ 1400 S Michigan on Nov 15.
Regards
Sunny!
Sabrina, same question for you – how much would you pay for 1 bed / 1 bath 783 sq feet @ 1400 S Michigan?
Thanks
Sunny!
Sunny and Tom, a little advice from someone who got the lowest price at Vetro. I didn’t see this discussed this time but was glad someone pointed it out on Vetro.
Buyer’s curse is the concept that the person who wins at auction has essentially overestimated the property higher than anyone else who shows up. Determine your limit price for each unit before the auction.
Before the Vetro auction I took pictures of every unit, and put together a spreadsheet of what I liked or didn’t like about each one, what I considered a good price and what price I was willing to go to. In the end there were people who got caught up in the hype and paid more (relative to other buyers) for units with less desriable aspects (crappy white-taped pipes running along their ceiling, views of brick walls, significant granite stains, plain tubs/features, etc.)
Know the units and establish your price points ahead of time. For each unit, typically the first unit auctioned in a particular layout will go for the lowest price. When each round of bidding dropped to only two bidders it usually went back and forth at least three times each, and the fourth or fifth play was when one backed out (except for the penthouses, those often went back and forth much more.)
Also get there early and sit on one side or the other so you can see everything from one direction. And write down the winning bids on each auction for two reasons: 1. You may spot another trend in the bidding prices such as the first unit in a tier selling lower. And 2. you can share the winning bids here afterward.
Good luck.
Thanks you so much BriBri for such a valuable advice.
Have you seen the units at 1400 S Michigan? If yes, please share the price you woild like to pay for 2 bedrooms with 1260 sq feets. Also, for the 1 bed rooms with 783 sq feets.
Regards
Sunny!
I visited some units last Friday and share the info I received and some observations.
A “salesman” for the developer was in attendance. THere were probably 15 people looking at units during the hour I was there. Of 257 units, 62% have closed or 161. 41 are up for auction, the developer has leased some units (he did not know how many) and a number supposedly are under contract but have not closed (queery if they close in light of the auction).
Assessments for auctioned units range from 277.37-374.51/month for one bedrooms to 380.91-524.11 for the 2 bedrooms. No info on taxes available (supposedly) but I find that unlikely.
Vacant lot due north of 1400 is reasonably unpleasant. I think north views are the nicest (no east views available for auction) but you better be at least the 15th floor or higher. As noted above, parking is at 35,000 per space and 1000 for storage. I assume parking will be available at lower costs if you dont buy now, but who knows.
Small balconies in units…fairly small units. I think any bid within 20% of minimums is fairly reasonable even though south loop prices continue to plummet and probably have more plummeting to go.
I really did not like the area….the walk down Mich Ave is pretty…to a point…and then some iffy storefronts and iffy areas. I will NOT attend the auction.
Hi Norm,
I agree with you when you say;
1) Vacant lot due north of 1400 is reasonably unpleasant.
2) I think any bid within 20% of minimums is fairly reasonable.
Regards
Sunny!
BriBri, Thanks for your advice! I’ll give it a best try. I’ll try to record the winning bids and report back here.
Sunny, I didn’t really study the 1260 sqft units. I guess maybe $270,000 is my top bid.
Thanks Tom,
I am all set for the auction. The best part is the mortgage rate. If you look it on Sunday after the auction- You will get 4.875% for 30 year fixed mortgage. I spoke to Metlife’s agent who is covering the auction at 1400 S Michigan; he tld me that Friday’s rate will be applied for the auction.
Yes for the
1260 sq feets – My guess is the same…around 270k. so let’s see.
I am going tomorrow for the practice auction.
My concern is that still they have not told anything about the sequence of the bidding – which unit will be auctioned first…will they start with the studio first or the 3 bed/bath units. I think still they haven’t decided yet. They may finalized that on Saturday night.
Thanks
Sunny!
Keep in mind, folks, that the auction will not set the bottom for future prices.
But it sure will help others buy at lower prices in the future.
I concur with G that the auction likely will set the ceiling at this location and should provide significant downward pressure at others in the south loop. My guess is that other 1400 S Mich units the developer holds not being auctioned will be available shortly thereafter at average sq foot auction prices, which I would be surprised if came in beyond the 200-210 sq foot range. Further, if I attended the auction (I am not) and bought a unit, I would NOT pay 35,000 for parking….more downward pressure to come on that as well.
Dear G & Norm, thanks again for the advice.
Please can you guys suggest some other buildings in the same location those are better than 1400 S Michigan? Please name 5 of them available at similar price range?
How about 1841 S Calumet & 1600 S Prarie?
Regards
Sunny!
To rent or buy, Sunny? There isn’t a building in the SL today that is a deal to buy. They will all go lower in price. In the case of the southern SL, MUCH lower in price.
It is the perfect time to be a potential buyer in the SL. You can rent whatever you would like to buy, enjoy the test drive for less than the cost of ownership, and watch prices decline further without entering into debt slavery. Remember, too, that rents are declining and your mortgage/taxes/assessments never will. What could be better?
Now, if you are someone who imagines some sort of premium should be paid for owning, buy now because that opportunity will likely disappear in the future.
Sunny:
Your question is loaded, because you assume that current prices by definition reflect market vale but I see things going only lower. I agree that now is a great time to be a tenant, particularly if your preference is the south loop. And frankly, (personal preference only) I would have no interest in anything south of 1400. A block east of here has great views but still way overpriced.
If you absolutely must buy for whatever reason, this property is not bad, but 1) don’t bid more than $200/sq foot for any unit, 2) find out what taxes likely will be (and push further when the developer simply says anywhere from 1.5-2% of purchase price), 3) find out (since the salesman I spoke with claimed not to know, what percent of the 61% closed are owner-occupied, and 4) dont pay for parking if you buy a unit at auction because I suspect prices will be slashed dramatically in the future.
Its looking from the MLS like 1620 S Michigan is going to be the next River City. Indeed buyers there got “CMK’d”..
Thanks G,
I agree with your viewpoint – This may not be the bottom; although we are close to the bottom. Prices may go down further at SL; however down side is very less. Buying option is only good in case we buy at very very low price. This is the only reason people go for these auctions to hunt the bottom. It would not make any sense to buy at 1400 S Michigan over $215 per sq feet. Also, you should leverage on low interest rates (4.875% for 30 years fixed), first time home owner credit etc. If you do not get a deal you are looking for, renting is not a bad option – you are right rents are coming down.
Let’s see what happens during the auction.
Regards
Sunny!
We are not close to the bottom for the SL condo market with the govt interventions you mention in place. No chance of that happening until they are gone. They will go one day and then the bottom will be here for years, not months.
Declining rents mean you have to buy for less than current rental equivalence. NOT bubble era “equivalence” where vacancies, repairs, rising taxes and assessments were not part of the equation. I think there are still too many bubble-headed speculators in the market for that to happen at the auction.
Sunny and all,
I said earlier that above $170K for one-bedroom unit seems to be overpriced. However I predict that auction price for one bedroom will be higher than $170K.
Norm said $200/sqft and Sunny said $215/sqft, that’s all below $170K for one bedroom. I bet auction price will be higher than that, stopping at mid $180K. I am even thinking of not going to auction at all. Maybe I’ll try their post auction sales.
They have done good marketing. The practice session is happening now and it has a room full of people, more chairs are being moved in. It is going to be a more exciting environment tomorrow. If they can manage to serve beer and wine, bid price can go even higher! 🙂
Tom
Tom, I just came back from the practice auction. Tomorrow will be crazier than crazy looking at the number of the people showed up today. There were more than 400 people. Do you agree?
I think you are right they have had been very succesful in creating the hypes – good marketing definitely.
I’ve almost given up; 215k / sq feet is not looking possible. After the practice auction, I would raise my guess to $225 – $230. I will definitely NOT buy on this price. Makes no sense to me at all. On the other hand, builder may be able to achieve their targets.
They will go 20% higher than the minimum bid in few seconds.
I will start looking for other options soon – I don’t see any opportunity tomorrow.
Sunny!
Did anyone go to the auction?
How much did they go for?
This was justa stage show – Terrible.
Doesn’t make any sense at all.
It was a well prepard drama – nothing more than that.
Sunny!
Did anyone attend this auction – results?
I will do this in a while.
UNIT SOLD FOR
2802 317K
2705 37K
2605 296K
2308 212K
2208 208K
2108 212K
2008 204k
1203 601k
2602 457k
2706 327k
2606 338k
2607 336k
1104 326k
703 302k
2510 305k
2509 292k
2309 285k
2009 286k
2507 222k
2107 218k
2505 251k
2205 244k
1507 202k
1107 198k
1509 281k
1409 279k
809 274k
2506 220k
2306 220k
2106 219k
2006 221k
1906 218k
2512 182k
2312 188k
2212 188k
1912 186k
1812 182k
2311 183k
2011 185k
1911 182k
1211 180k
500 160k
This unit was introduced today:
2603 506k
Overall it was a horror show. Just a drama to impress their lenders. I don’t think this was even a real auction. They made fool of lot pf people who showed up. May be lot of investors got into this messed up situation and they paid over 25% the real value. Terrible experience.
Sunny!
Thanks for the info Sunny. I assume they were serving punch since it looks like many bidders were drinking the Kool-aid. Knife catching galore, and by the numbers you reported I would say overpayed by significantly more than just 25%.
I agree Norm – overpayed by significantly more than just 25%.
I think they won’t be able to close all the deals & have to get ready for Auction 2 – I would call it as auction 1 as this was just a stage show.
Sunny!
What an auction! About 400-500 people were there. Here is the list of final sales price in sequence of biding. I didn’t list last asking price and minimum bid since I don’t think that really matters.
One interesting note is that the studio was listed $135,900 and minimum bid was $99,000, that’s the only studio on auction and the last unit on auction. It was sold for $160,000. Crazy or not, you tell me …..
After auction, they did present 3 more units for “investors” to bid, starting bid maybe a couple of grands lower then previous bid on similar unit. No bid on those at all. I guess post auction (they have 50 some more units) price may go lower.
It was a good auction, well done. Market spoke for itself, which is much higher than many people expected it to be. Lots of people believed that they got good deal in this auction. Again, crazy or not, you tell me ….
Unit bed/bath sqft final$
2802 2/2 1115 317K
2705 2/2 1144 317K
2605 2/2 1144 296K
1203 3/3 2120 601K
2602 3/2 1540 457K
2603 3/2 1540 506K
2706 2/2 1259 327K
2606 2/2 1259 338K
2607 2/2 1259 336K
1104 2/2 1260 326K
703 2/2 1260 302K
2510 2/2 1027 305K
2509 2/2 1027 292K
2309 2/2 1027 285K
2009 2/2 1027 286K
1509 2/2 1027 281K
1409 2/2 1027 279K
809 2/2 1027 274K
2507 1+/1 751 222K
2107 1+/1 751 218K
2308 1+/1 751 212K
2208 1+/1 751 208K
2108 1+/1 751 211K
2008 1+/1 751 204K
2505 1+/1 825 251K
2205 1+/1 825 243K
1507 1+/1 751 202K
1107 1+/1 751 198K
2506 1/1 783 220K
2306 1/1 783 220K
2106 1/1 783 219K
2006 1/1 783 221K
1906 1/1 783 218K
2512 1/1 692 182K
2312 1/1 692 188K
2212 1/1 692 188K
1912 1/1 692 186K
1812 1/1 692 182K
2311 1/1 692 183K
2011 1/1 692 185K
1911 1/1 692 182K
1211 1/1 692 180K
500 1/1 580 160K
To me it was unreal. I am still trying to digest whatever I saw today.
Sunny:
What possible purpose would the developers and auctioneers have in setting up a “stage show,” as you call it, if such an event would just result in a bunch of buyers who couldn’t close on their homes? Occam’s razor does still apply in this market.
Just because you were expecting $215 a square foot or lower and got almost $280 instead is hardly a sign that you’ve been hoodwinked — it’s a sign that there were 43 people in attendance who were okay in footing that bill. I didn’t have the greatest angle on the proceedings, so maybe I missed the marionette strings yanking up unwilling hands, but based on the final tally, I’m guessing it’s more of a case of some people seeing the market slightly higher than you did and being perfectly willing to work with that. I talked to several people who weren’t expecting prices to be as high and who left empty-handed, but to characterize the event as some grotesque sideshow sounds a lot like sour grapes.
If you wanted sub-$200 $/sf out of your auction, you should have been at the Motor Row Lofts auction. Average of $178/square foot, and much larger cuts from the list price than what you saw for MAT2.
I was present at the auction and was very surprised at the closing prices. I would estimate that buyers paid 10-20%, depending on the property, from where I would of expected them to be sold. I suspect that so many where first timer at a real estate auction, the perceived reduction in pricing from list along with a very good hype (marketing) job my AMG brought about these results. It’s important to understand that all commercial borrowers (including condo developers), are coming up for a refinance in 2010 and 2011. The ratios on leverage will be significantly lower, so the prices will have to drop to prepare for the refinance periods. In other words, there will be a need to have more equity (cash) vs. debt, so the smart developers will get ahead of the curve by selling now to either reduce debt or generate equity in order to suurvive the anticipated downturn in commercial values associated to re-financing. So, any one that feels bad that they miised out on this auction, be patient, there will be more opportunities for buyers yet to come over the next 18-24 months.
The auction serves as further proof that the correction is not over and that there will be knife-catchers all the way to the bottom. No big surprise to anyone who has been reading here.
I’ll try to make time for someone to put together the prior sales in this bldg so we can all see how underwater they are. Nothing like an auction to destabilize a bldg in one big swoop.
Joseph Adkins, you’ll have to pepper your statements with more insults if you hope to appease your master.
G:
I speak for myself, friend. And since there was no insult intended, there’s no insult required.
“The auction serves as further proof that the correction is not over and that there will be knife-catchers all the way to the bottom.”
Or it serves as proof that the bottom is past us.
Nobody really knows
Sure thing, Sonies. Whocouldaknown? It’s funny how those who miss the obvious always make that claim.
All is takes is 43 naïve buyers ‘looking for a deal’ to convince the world that we’ve reached the bottom. People forget that the units were auctioned because so few wanted to buy in the first place.
“I speak for myself, friend.”
Typical of a shill to call everyone a friend.
What’s so obvious G? That you don’t know what you’re talking about any more than a clueless real estate bull does?
Truth is, nobody knows what’s going to happen in the future and if you think you know more than anyone else because of what some stupid blogs are telling you, then… hahaha whatever
My record is well documented here, sonies. My clients are pretty pleased as well.
Truth is, that’s all that matters to me.
“My clients are pretty pleased as well.
Truth is, that’s all that matters to me.”
Same here, now back to work
but the truth is G that there are knife catchers in every market its the percentage that changes. but that percent will never reach 100%, therefore your statements are false, and as sonies points out; make you like the shill you battle, much like bush and bin laden.
revassal, I said “there will be knife-catchers all the way to the bottom.” Who said anything about “100%”, on which you base your conclusion that my “statemenets are false”?
Try again.
the bottom will present itself when auctions like this have 90% people who are going to buy AND LIVE THERE and only 10% Investors/Flippers.
you stated this auction as an example of your theory of the re mkt. I also never made any claim about 100% nor made a claim about you except seconding sonies point and using an example
you have done this b4 you can’t really say somebody is underwater until they sell. one point that you bring up that is very germane for re-education people on is transaction cost, people should account for that more often.
why cant you say they are underwater until they sell?
revassal wrote “but that percent will never reach 100%, therefore your statements are false”
revassal then wrote “I also never made any claim about 100% nor made a claim about you except seconding sonies point and using an example”
OK, so you agree that I didn’t claim 100%, yet that is your basis to conclude my statements are false? I guess that I’ll have to chalk this up to my substandard education. Like Russ has pointed out to me, it must be “above my schooling.”
“you can’t really say somebody is underwater until they sell”
Sure I can. Let me guess: another Kellogg MBA?
jesus, fine I take it all back, hope you feel better.
According to Descartes, “Cogito ergo sum” – I think, therefore I am. That’s all we really ‘know’ in life. In theory, we don’t even ‘know’ if the sun will rise tomorrow morning. However, in reality, it’s quite obvious the sun will rise tomorrow morning and each and everyone of us continues on with life ‘knowing’ that tomorrow will bring a new day. This is very similar to watching the bubble burst in real estate. I don’t really ‘know’ that we have reached the bottom in the sense that Descartes ‘knows’ of his existence, but I ‘know’ that the bottom is nowhere near as surely as I ‘know’ the sun will rise tomorrow morning.
i feel better. my head was starting to hurt trying to sort through that
House prices are still too expensive. Price-to-rent ratios, have fallen only 75% as far as they need to to get back to normal levels. To make matters worse, rents are now falling, which will further inflate price-to-rent ratios, suggesting that they could fall even further.
In South loop they have built too many houses.Speculators are jumping in and buying houses to rent, and the increase in rental inventory is putting pressure on rents. This, in turn, is making it more attractive to rent instead of buy, which puts pressure on house prices. This oversupply of the condos , will pressure prices and rents for years.
I do not believe that this auction is a trend reversal. But, the time will tell.
Regards
Sunny!
Sunny, I agree with your post. I mean, I agree with Dan Alpert’s comments that you lifted straight from yahoo finance today.
http://finance.yahoo.com/techticker/article/372877/House-Prices-Still-Have-A-Ways-To-Fall
Not too bright, Sunny.
Sabrina & Co.:
I couldn’t find a thread about the Prairie Pointe auction, but I figured this might be of some interest to readers here. I’ve just posted some facts and figures about today’s auction at YoChicago — http://yochicago.com/prairie-pointe-observations-on-an-auction/14388/ — and will have more info up tomorrow.
Thanks for the info and the link Joseph.
I had forgotten about this auction.
Just goes to show you that the auction craziness that we saw at the first few last year is starting to lose its bite as these become rather common place.