Foreclosures and Short Sales Devastate The Sterling
The #1 high rise building for foreclosures in Chicago continues to live up to its name. Foreclosures and attempted short sales are just crushing condo values in the The Sterling at 345 N. LaSalle.
Case in point: I currently count seven “01” tier 2 bedroom, 2 baths on the market. These are 1160 square feet and are on the curve at the back of the building (looking north down LaSalle.)
They are identical units except for any upgrades an owner has done. Originally, the units came with carpeting (hardwood floors were an upgrade.) The kitchens also had standard oak cabinets, corian countertops (no granite) and white appliances.
Out of the seven, 2 are short sales and the sellers are “motivated” and 2 other units have gone into foreclosure and are already bank owned.
The Short Sales:
Unit #1801: 2 bedroom, 2 bath, 1160 square feet (for all units, parking is available as rental only in the adjacent public parking garage)
- Sold in September 2003 for $458,000
- Currently listed at $369,000
- @Properties has the listing
Unit #1501:
- Sold in January 2003 for $433,000
- Currently listed for $369,000
- @Properties has the listing
But why buy a short sale when you can get it even cheaper now that it’s in foreclosure?
Bank Owned:
Unit #2101:
- Sold in October 2003 for $452,000
- Currently listed for $349,900
- Century 21 Sussex & Reilly has the listing
Unit #401: Just came on the market
- Sold in January 2002 for $354,000
- Sold in August 2004 for $494,000
- Currently listed for $300,000
- Jax Realtors has the listing
No, the $300,000 is not a mistake. That’s a two bedroom, two bath condo in River North. Assessment of $438 a month.
What do you think that $300,000 price does to ALL the other units in this same tier?
Yep- they’re pretty much screwed.
Three others are trying to sell the old fashioned way.
Regular Sales:
Unit #801:
- Sold in December 2002 for $413,000
- Currently listed for $425,000
- Coldwell Banker has the listing
Unit #1401:
- Sold in May 2003 for $424,000
- Currently listed for $449,000
- Rizzo Realty has the listing
Unit #1901:
- Sold in April 2003 for $448,000
- Currently listed for $469,000
- Rizzo Realty has the listing
The odds of these sellers getting anything even remotely close to their asking price? Slim to none.
The new comp on the “01” tier is going to be under $300,000. Anyone who buys an 01 tier unit without siginificant upgrades of some sort (gold plated sinks, for instance) for much more than $300,000 (I will concede that is on a low floor with no view) seems not to be a very smart buyer.
What are the options for current Sterling owners? You either live in the building a very long time and try and ride out the downturn or some will just turn over the keys to their banks and walk away.
Looks like turning over the keys is winning right now.
There were two more foreclosure auctions this week.
Unit #3802: 3 bedroom, 2 bath
- Sold in November 2004 for $842,500
- Auction price of $738,372
Unit #3907: 2 bedroom, 2 bath
- Sold in April 2004 for $606,800
- Auction price of $592,629
Given how fast prices are dropping in the building, I doubt either of these sold at auction. Stay tuned to see what the bank lists them for.
Also, I’ll monitor to see how quickly Unit #401, the 2/2 at $300,000, sells.
I think 300K for a 2/2 (with windows in both bedrooms), a balcony, and In Unit Laundry, is a good deal. Sabrina wasn’t very clear about the parking. It is attached to the building but rental, meaning an outside company (not the owners/building) owns it.
I may go look at and possibly make an offer on unit 401. I will report back! I may be able to get it for 270K or so…
Streeterville Realtor: That’s the question, right? Who wants to own in a building that is 20% (possibly?) or more foreclosures? (I don’t know the exact number but it has been massive. Probably 40+ foreclosures already in the building.)
How far will prices fall? This $300,000 can’t be the bottom, right? We are only in the first wave of foreclosures. Or maybe it will be. Maybe $300,000 for a two bedroom in there really IS the bottom.
But the building has not returned a dime to an owner since at least 2004 (as most of these units were bought in 2004 and all of these owners are losing money.) So what are the odds going forward that you’ll see any money?
I wonder.
If a building doesn’t see price increases during the biggest boom in history, what will it do during a bust?
Let us know what the bank says!
#2001 appears to be asking $2300/month for rent. Using really basic assumptions for mortgage rates, and 20% down, #401 is negative cashflow from day one, even at $270k and $2300/month rent (which you’d never get on the 4th floor), unless your taxes are only about $2k/year.
second anon’s comment above.
obviously, with a 2BR/2BA destroying comps at all size/price levels, even foreclosures can easily start a cascading price war as sellers try to get out at any price.
Another problem with 345 is that construction (300 Lasalle, 400 LaSalle, 300 block of North Clark, etc) is crowding the views of the 2001-04 buyers.
Amazed that people don’t get it…..the Daley administration rubber stamps virtually every new development so if your unit overlooks a parking lot or a decrepit building, expect to lose your view someday.
I currently live in the building. Its a great location, has a pool and two tennis courts on the roof of the parking garage. How many condos in river north have tennis courts. Under 300k for any 2br in the area would be a steal. The building has issues because of American Invesco did there typical pump and dump scheme. An investor group went in and bought around 20 units. This has caused the excess number of foreslosures.
Valasko–
I wasn’t saying that 401 would be a bad buy if you were going to live in it, but as an investment/rental unit, it’s a little suspect.
Valasko: There have been more than 20 units that have gone into foreclosure though. That’s the problem. Once it starts in a building, the prices on all of the other units get pushed down so that the entire building is affected.
There was recently a 2/2 in the building that was listed by the bank at $299,000 and went under contract in a few days. Apparently, $300,000 is now the new comp for a 2/2 in the building.
What is happening in the building is unfortunate. I DO think it’s a good location actually.
Not many buildings have tennis courts in River North. The Grand Ohio (which is technically in Streeterville) has tennis courts. They actually have a basketball court as well.
I completely agree that all the foreclosers are a problem, and greatly effect resale value. For someone looking to buy, who is willing to wait out all the negatives will be rewarded. If you look at comps with the building across the street, they don’t compare.
Here is someone who is looking to buy a 2/2 in the building for $400,000. The sellers should all be contacting him!
http://chicago.craigslist.org/chc/rfs/509213393.html
“If you look at comps with the building across the street, they don’t compare.”
Jump throug the looking glass valasko, the Sterling units aren’t cheap. The units across the street are expensive.
The Sterling isn’t an anomaly, it is just early. We are being given a glimpse into the future here, whether it is due to the high investor participation or some other factors. But all buildings will eventualy be back in balance between rental rates and purchase price. Some will just get to that balance faster than others.
John
He’s talking about 400 N. LaSalle which is running those ads in the Tribune that say “The End is Near” with the “near” crossed out and “here” is put in its place.
It implies that prices have hit the bottom in River North so you should buy now.
This is after 400 N. LaSalle lowered prices on its unsold units (it is also a conversion building). They still have about 35% of that building to sell. I’ve posted about it before. Some owners who bought in there two years ago are lucky to get out of there breaking even (and some are losing money as well.)
JKD’s right on…..don’t understand why some people still don’t get the concept that your mortgage/assessment/taxes should bear some sort of reasonable relationship to market rent.
JKD and me: Truer words could not be written.
I agree with you both totally
Renting is mighty cheap right now. Nearly 40% to 50% less in some buildings.
What is a good source to obtain records for foreclosures and bank owned homes in downtown Chicago? Thanks
John: I think the pay for listing services like foreclosures.com or realtytrac.com can provide you that information.
You can get the list of what properties are going to auction on the Chicago Tribune everyday for free (in the real estate section on-line under “foreclosures.”) I have also found the Sheriff’s office at the Cook County Courthouse to be helpful in providing information for the auctions (the phone number and info is also on the Chicago Tribune site under foreclosures.)
An agent might also be able to get you a list of properties that are in short sale or owned by the bank. Agents?
Thanks Sabrina. Keep up the great work with the site, it’s very informative.
epilogue….the $300k unit is gone from MLS last time a checked. Big question now….will the $369k-ish 2BR/2BA unit come down to the $325k range?
The Sterling should be an interesting bellwether as to the extent of price declines and looming supply that will come onto MLS as the spring selling season approaches.
Unit 401 is under contract. There is also another short sale 2/2 that was listed for 349K and is now under contract. As far as I am concerned, 299K is the going rate for a 2/2 in that building.
At least two of the 2/2 units have sold for under $300,000 in the last month or two. I agree. $300,000 (or less) appears to be the going rate in the building.
Tried to look at 401 on Friday night but was already under contract. Sabrina which other 2/2 sold for 300K? Thanks for the info
Hi Sabrina and Investor,
I just ran a CMA for the building for only 2 bed 2 bath units.
Unit 206 in under contract/pending for $299,000. I looked at this unit and considered buying it.
Unit 3001 closed in 8/07 for $325,000
Unit 2006 closed in 12/11/07 for $333,000 (I also looked at this unit)
In general, I think the building is in a great location and you can get a 2 bedroom (windows in both bedrooms) 2 bath unit with in unit laundry and a balcony for around 300K. Yes, the unit needs some work but for River North/Loop and the windows, I think it is a fair price.
The building recently did a Special to raise funds to redo the facade. It should not have been cracking/falling off this soon (only 7 years old or so) but Inscamco is a crap builder.
Thanks for the info Streeterville Realtor.
How much was the special, does anyone know?
The Sterling was originally built to be an apartment building. To me, that matters in the quality of the construction. (But that’s just me.)
Sabrina is correct in that this was built as an apartment building by Charles E. Smith (don’t remember if it was before merger with Archstone Properties.) American Invesco purchased it for $89M right about the time that construction was completed (not including the parking lot.) At the time, they claimed that they were “discouraging” speculators.
http://www.appraisalresearch.com/news/pressquotes/88.pdf
fyi….#1902 (1br/1ba/725 sq ft) is for on sale on ebay…
http://cgi.ebay.com/1902-test_W0QQitemZ120183362099QQihZ002QQcategoryZ12605QQtcZphotoQQcmdZViewItem
Me: Thanks for the info. More ebay sales! Excellent.
If you ever see any condo development being converted by American Invesco, run the other way. Check out 10 E Ontario 20% of that building is now in Pre-Foreclosure. At Ontario Place (10 E Ontario) 1 Bedrooms are reselling for approximately 100,000 less than the American Invesco original sale price. There are units at the Sterling (345 LaSalle) originally purchased for 800,000 and now being sold in foreclosure for 450k. Who in their right mind would would want to take a 350k loss. People are just letting them go. I have never seen a building done by American Invesco that didn’t have problems. Probably the worst company to ever purchase from in the City of Chicago. They price property like new construction with high end finishes and then deliver a sub-standard conversion. Any good buyer’s agent will recommend staying away from American Invesco. I’m surprised more people from 345 LaSalle and 10 E Ontario haven’t sued yet. The only buildings in downtown/Steeterville/Gold Coast/River North that I have seen with multiple foreclosures or pre-foreclosures were converted by American Invesco. Where’s the class action lawsuit by owners? Now there’s 200 N Dearborn – buyer BEWARE! NEVER EVER BUY FROM A DEVELOPER UNLESS YOU HAVE A GOOD KNOWLEDGABLE BUYER’S AGENT.
Unit #206 had a price drop from $299000 to $259000! Ouch! for a 2br 2bath!
If I remember correctly #206 was on MLS for literally one or two days before it went under contract for $299k as stated above.
Perhaps buyers’s loan didn’t come through? Or a foreclosure flipper had cold feet?
Mike: Thanks for the update.
This unit DID go under contract almost instantly but then fell out of contract and then has been sitting there for weeks.
Interesting that the bank has chosen to cut the price that dramatically.
What I’ve noticed about the foreclosures is that there is a group of investors who are trolling the lists and putting in offers in the first few days when a unit comes on the market (like the unit at 300 W. Grand).
But if a foreclosure doesn’t sell within that first few day window- it will sit and sit and sit. Maybe because it falls off the investor radar or because it then becomes tainted.
That might be what happened to this unit.
Interestingly- there was a 2/2 that sold earlier for the $299k (also a foreclosure.) So I wonder what that buyer is going to think now?
These buyers are catching a falling knife. What looks like a “deal” quickly turns out not to be.
I guess $260k is the new comp for a 2/2 in that building. Good luck to the 1 bedroom sellers.
It’s only the new comp if it sells for that.
Frankly, I’m starting to get interested in this building, now that it’s getting cheap enough. The location is just terrific. Valasko, what’s it like to live there? Noise, etc? (Meaning, how big of a problem IS the crappy construction?)
Of course, pretty much nobody is paying assessments at this point, it sounds like, which is a problem! Maybe that would convince them to fill in the cash-sucking swimming pool!
Go sit in the lobby for a while Kenworthey, interesting mix of people. I don’t like rental parking in nonheated garage.
Thanks David, I forgot that the parking was rental!
10 listings Under Contract waiting to Close. 23 more to go!!! Any Renters? 17 rental listings to pick from?
PEND 345 N Lasalle Blvd 608 Chicago 8008 $239,900
PEND 345 N Lasalle St 206 Chicago 8008 $259,900
PEND 345 N Lasalle St 4104 Chicago 8008 $475,000
PEND 345 N Lasalle St 3302 Chicago 8008 $497,900
PEND 345 N Lasalle St 2801 Chicago 8008 $800,000
A/I 345 N Lasalle 1501 Chicago 8008 $369,000
A/I 345 N Lasalle Ave 1010 Chicago 8008 $201,500
FIN 345 N Lasalle St 2305 Chicago 8008 $219,900
A/I 345 N Lasalle St 1910 Chicago 8008 $220,001
FIN 345 N Lasalle Blvd 1503 Chicago 8008 $265,000
I like the building, the location is great, you can walk to work.
Play tennis, swim or barbaque on the parking deck roof. My on probem with the building is that the water supply in the bathroom and kitchen is noisy. You can hear when your neighbor turns on the water in his bath. So if your neighbor gets up early to shower this becomes your alarm clock.
My parents (near retirement) purchased a condo at 10E Ontario. They will be taking it over in January. Because it is selling for far less than they paid, the going rent in that building is significantly less than the mortgage—they cant afford this….what can I help them do? How do we go about getting approval to short-sale this? Do we need to foreclose?( we don;t want to). Are there any law-suits going on for this building that we can take part in….so they can walk away with the loss of their investment without ruining their credit??? I really need advise! Thanks!
Michelle:
Your parents need to talk to the bank- pronto. 10 E. Ontario has suffered a lot of foreclosures already. Those are making new comps in the building (unfortunately for your parents.)
Anyone else been through the short-sale process?
Actually, I’ve been writing on this subject lately. My first installment is here: http://blog.lucidrealty.com/2008/12/02/taking-the-short-route/
I’m posting a second installment tomorrow.
The thing is that in all likelihood there is no way to preserve your credit unless you are willing to sign a note for the difference. I’m also not sure if the bank would take a deed in lieu of foreclosure as a complete settlement of the debt. If this is a primary residence they might be safe from the dreaded 1099 C.
I just posted the second part of this, which covers the early stage of the process:
http://blog.lucidrealty.com/2008/12/10/taking-the-short-route-the-process/
First of all…Guys keep up the good job; the information on this website far exceeds what Realtors are prepared to answer.
Couple of Questions:
1. What are the going rates for 345 N. Lasalle(10-15th floor+NW corner+Balcony) with unobstructed view of downtown.
2. How do i obtain association notes(specifically budget, structural problems, etc?)
3. IF association budget is at deficit are there any impacts on the owners outside of raise in assessment.
4. If 30% or more of owners are in default or unable to pay for assessment/mortgage what impact is there on those that are paying regularly?
Hello,
I’m hoping to find a deal on a 1br in this building. Know anyone who is looking for a renter?
Thanks!