Darn Fine Rentals: 340 On The Park
We’ve been chattering about renting instead of buying. And why not? There are plenty of lovely rentals in all of the new buildings.
340 On the Park, at 340 E. Randolph, near Millennium Park seems especially popular as the rents are cheaper than what it would cost to buy the same unit.
This one bedroom rental especially caught my eye (thanks to the tipster who brought it to my attention.)
You have not one, but TWO, south facing balconies because it’s a duplex.
Unit #2702: 1 bedroom, 1.5 baths, 1314 square feet
- Sold in January 2008 for $626,500
- Available to rent for $3500 a month plus $300 for parking
- Market time of 76 days
- Prudential Preferred has the rental listing
The bedroom is 14 x 13. The livingroom is 21 x 13.
Look fabulous! I would rent it if I could afford it!
$3800 a month (including parking) for a 1-bedroom apartment and it has the same cheap $35 Home Depot wire racks in the closet as my low-class studio apartment.
For $626,500, I’d think the developer could have thrown in something a little nicer.
Yep – It is pretty vanilla. Wait until you see the $500 washer/dryer combo that was installed in this unit. Don’t know why people do cheap stuff like that and expect $3,800/month? For $2,800/month I’d rent it.
I also can’t stand that carpet. If u have hardwood go all the way in the units.
I also can’t stand that carpet. If u have hardwood go all the way in the units. That kitchen doesn’t look too big for a 1300 aq. ft place either..
Renting still bothers me though. Isn’t it still better to be building equity? As a friend of mine put it, you are going to spend money anyway on a place to live. Thoughts?
You’d be bother a lot more if you bought now and lost $50K in equity over the next 12 months…. That’s not building equity.
Jason,
you must be pretty bad at math, did you get past 6th grade? I think the recent housing bubble was a good way to separate the mathematically challenged from the rest.
Jason,
It all depends on your situation. If you want to live in the same place for a substantial period (6-10 years) of time and your career/life allow for it, then buying make sense. If you’re a person that desires change and convenience and faces opportunities that require moving to another city or even other locations within the city.
Your first couple years of payments are predominantly interest, and you only get 20-30% back on your tax returnfor those payments, the rest is an expense you will never recover. So you dont build real equity until the latter years of your mortgage.
Assessments can also offset any gains from principal paydowns during the first few years as well.
Thoughts? Yes. You were forced to take many years of math classes in school. Money is normally represented as a bunch of numbers, which is quite convenient, because numbers go really well with math.
If math isn’t really your thing and you would rather just follow someone else’s lead, then perhaps you would be interested to know that Warren Buffett sold his vacation house in 2005. Who’s smarter, your friend, or Warren Buffett?
What equity will you build by buying today? Not much principal is retired on a mortgage in the early years. Any equity from principal reduction would be exceeded by the negative equity created by certain price declines anyway.
Then there is the obvious fact that you can currently rent for a great discount from the cost of owning. It used to be that this type of comparison was not perfect, since it was not a direct comparison between rental or condo buildings. Today, the fence-sitter can choose to ‘test drive’ a unit by renting in the very same building (and likely the same unit type) that they might consider buying. Don’t forget that even rents are experiencing declines, so their are many “bargains” available. The good thing about the rent “bargains” today is that when they become even better “bargains” next year, you can then enjoy the new savings. The same cannot be said for purchasing now.
I would also consider that a lot of occupants of downtown buildings are employed in fields that require mobility for job security, moreso now than ever before. Why get tied down with an illiquid depreciating “asset”?
This development provides some great rentals as Sabrina points out. The carpet IS awful, I have seen it up-close!
I am sure they will be negotiable on all of these units so dont anticipate paying asking price for rent, especially if you have good credit and two months security deposit.
Jason, right now I think you can rent something and invest the savings to come out ahead. Most people see their house as an investment because it forces them to save by building equity. If you have the discipline to direct deposit money elsewhere then renting may be better now. Calculate your assesments and taxes and other costs of ownership and then make a determination.
Oh yeah, then factor in any losses from selling within your 5 years and you have yourself a terrible investment. The only way you can build equity is by paying down your mortgage. Appreciation is directly derived from demand and supply. Demand is also indirectly derived from interest rates, mortgage products, and our economy.
Since all of the factors I mentioned are in terrible shape, unless you put down 40%, building substantial equity will not occur in the first few years.
Thanks for the comments. And yes, I did get past the sixth grade. No reason to be an &*^*.
Darn, I wanted to just say “do the math” too. Maybe I’m not such a curmudgeon afterall?
Hi all –
Anyone seen units @ 340 they particularly like? Really like lower (lowest possible) floors, but those seem scare for rent.
Jason,
The country is entering a hyper-inflationary environment. In a year, mortgages will sky rocket to double digit interests. At that point in time (just like in the late 70s-early 80s) real estate will go down the drain (as it should). At that point, those who still have $$ will be able to buy in and “build-up” equity at tramendous discounts. Till then, suggest you keep on the sidelines.
Well all the units have the same finishes so you either like it or you do not. Of course, there is some difference in view and layout among the one bedrooms. The lower floors rented a bit back as they were the first to close.
That closet would be offensive at $300/ft, but is unforgiveable at over $450/ft. Is it really the same closet fixtures in the $1mm++ units?
Yep, love the finishes in the building, just want to stick to a low floor (scary heights!) Also, can’t do without some sort of outdoor space. Any info. would be helpful. Was planning to visit this weekend, but with Easter, not sure will be open houses.
you guys are really nasty… honestly. i don’t see any real reason to berate someone who came in with an honest question.
to its defense G00 fairbanks have crappy closets too
Deidre,
low floor units rented. You stuck with a high floor. haha
Finishes are the same throughout all units, but I believe some of the larger units (maybe only higher floors??) have fireplaces. That’s the only difference I’ve detected so far.
As far as this particular 1bd, views are great, two balconies is great, and duplex as a concept is great. But in a 1bd a duplex is a terrible idea. The bedroom is oversized and the living/dining/kitchen relatively undersized. You lose a lot of square footage on the staircase too. And your closet has a window??
This unit has a very poor use of space. The person who paid 625k+ just lost lost a lot of money.
The closet is what it is. It’s very rare to get a closet system as a standard in any building. This is usually offered as an upgrade though the developmer
I saw a 2 br in there and had an awesome closet system.. Upgrade perhaps?
Just where I need a panoramic window, in my closet.
And yeah, the closet is a joke for this kind of rental.
The building is all glass. Should they have walled off that portion of the closet so that it WOULDN’T have a window in there?
Tony, no. They should have redrawn the floorplan such that the closet is in the interior of the unit….and not a long, thin walk-in that loses a lot of functional space.
The floorplan here is ust abominable.
PS good luck with your investment, you’ll need it.
The buyer probably had an option to have the floor plan re-drawn per his specs anyway. Personally, I like the window in the closet and don’t know what other options would have been available to the buyer. I’m not sure I would call the floor “abomibale” either. I mean, the way people nit pick on this website is insane. “closet rack isn’t right.” I have a feeling that whomever bought the place didnt buy it for the closet rack, or the window in the closet – probably for the location. Yes, the kitchen looks small but I’ve seen a lot worse on here!
Ja – are you implying that I purchased that unit, or ANY unit in that building? Did I say they got a good price or something?
Good luck with your penis enlarger…you’ll need it.
G, curmudgeons are lovable. Curmudgeons never attack–they just knock around those who mostly deserve it in a cranky way. Sam and Tipster were not being curmudgeons, they were being jerks.
Jason, read through some of the archives on this site. You’ll get very good information about when and whether it is a “good time to buy.”
On another post, someone mentioned getting rental prices paid from the MLS. Where could I find that information?
(Any suggestions other than Craigslist for rental listings also appreciated.)
Thanks!
By the way, curmudgeonly G, speaker of truth about the housing downturn:
“A curmudgeon’s reputation for malevolence is undeserved. They’re neither warped nor evil at heart. They don’t hate mankind, just mankind’s absurdities. They’re just as sensitive and soft-hearted as the next guy, but they hide their vulnerability beneath a crust of misanthropy. They ease the pain by turning hurt into humor. . . . . . They attack maudlinism because it devalues genuine sentiment. . . . . . Nature, having failed to equip them with a servicable denial mechanism, has endowed them with astute perception and sly wit.
Curmudgeons are mockers and debunkers whose bitterness is a symptom rather than a disease. They can’t compromise their standards and can’t manage the suspension of disbelief necessary for feigned cheerfulness. Their awareness is a curse.
Perhaps curmudgeons have gotten a bad rap in the same way that the messenger is blamed for the message: They have the temerity to comment on the human condition without apology. They not only refuse to applaud mediocrity, they howl it down with morose glee. Their versions of the truth unsettle us, and we hold it against them, even though they soften it with humor.”
– JON WINOKUR
Deep man, deep.
Well, Jason, I called him a curmudgeon a month or so ago, and I think he took it the wrong way, so I was trying to make him feel better.
Then again, curmudgeons always take things the wrong way, and they tend to resent it when you try to make them feel better.
😉
Yeah, I like the window in the closet as well…it gives my clothes the chance to appreciate the great views.
Never heard of a builder accomodating redrawing of floorplans in a building this size, but could be. They certainly should have given how much they took this guy for.
The NYT buy v rent calculator linked on this site is a great resource. The answer depends on the inputs. If you think housing prices will go up 10% a year before you sell (NOT!) then buying is great. If you think they will go down, then buying is a terrible idea. Especially with condos v rentals, you really can compare very similar options. Find out how much a rental versus purchase would be, put in the other assumptions, and check out the answer. It’s a little more difficult with single family homes, which are much less liquid in the rental market.
The only real critique I have of that calculator is that it doesn’t take into account the value of waiting. If you know you wouldn’t want to move (if you bought) for a long time, the calculator will show you better off buying. But, in truth, you’d be better off waiting a couple years to buy and then holding for a long time.
ja, well ya, i agree – they took this guy for a lot!! not arguing that point. And yes, as long as its not a structural wall (this one might be, hard to tell), you can have them moved around a bit. If this were my unit, i probably would have widened this several feet.
I honestly don’t think the window in the closet is the issue. Nor is the floorplan, or the carpet, or the closet rack – it’s that the guy got raped on the price!!! Our arguement over the window pales in comparison to the real problem at hand.
What is it about 340 OTP that causes such interest? The amount of posts any 340 article gets shows that many us might find this building desirable and at the right price would buy or rent. It really is the best situated new tower to come around in the last couple of years. 340 definitly trumps the Trump!
The wall is not a supporting wall. I have been in the unit. The second floor floorplan could have been better but the first floor floorplan there isn’t really much you can do with it.
I’m confused, who wouldnt want a window in their closet. To have natural light in a closet is a positive.
Also to add, the problem with this unit and a several other 1 BR’s here is that they are a little too big. In 1300 SF you can normally fit a 2BR/2BA. At $480/sf this adds up. If the unit is 1100 SF, more of a typical 1 BR thats almost $100k less.
marco – I liked the large sized 1 br in 340 OTP, but the floorplan could have been a little bit better. They really need some sort of built in storage closet.
Marco, nothing wrong with a window in a closet by itself. The problem is what they did to the floorplan to achieve this. They really cut up the bedroom, and there’s an additional utility closet on the bedroom level with a little hallway. Terrible use of space.
And this is the better of the two duplex layouts. The other one went 550 N St Clair style and has a kitchen along a wall with no island.
You really have to see the unit in person to see what I’m talking about. They definitely don’t feel like even remotely close to 1300sqft.
But the views and balconies are great, I’ll give them that.
Hey, I like the building and the location. I’d live there if it wasn’t so expensive.
My beef is this: I can’t stand developers that advertise a luxury building and then give you sub-par stuff that’s more or less out of sight. Cheap closet racks (which, by the way, start to sag if you actually put stuff on the shelf), cheap washers & dryers, etc. It’s as if the building is built for flipping, not living. If it looks good in photos, then it’s a luxury unit.
Yeah right. And then people say that everyone else does it too. Well, great. That doesn’t make it a luxury unit. In fact, I’d argue that it makes it even less of a luxury unit.
I’ve been involved in enough construction and manufacturing to have a pretty good idea when something is being done to cut corners and pad the profits. And I have to say that an awful lot of what was built in the last few years had a lot of corner cutting built in. Doesn’t mean I won’t live there, just that I’d have to fix a bunch of stuff – and that will be reflected in what I’d be willing to pay.
The developer did not supply sub-par stuff. Closet upgrades were available, appliances and cabinets are pretty high end. I put an extra 12 inch towel rod in my bathroom from the same collection the developer used and it cost me $240 at Studio 41. That doesn’t sound like sub-par either. Washers and dryer were not included at all.
There are plenty of less expensive places to rent or buy. If you want a view of parks and the lake you can live here but it may cost you more.
I towel bar for $240? Got a picture of that? I have seen several units and never noticed the towel bars were anything special. I do like the building if you have a balcony. The large sheet mirror in the bathrooms seem to be from times past however. You are correct about the washer and dryers not being included. But the closet shelving is pathetic….
Washer and dryers are almost never included by the developer in these big highrise developments. You have to pay extra for that (to install your own.) Many people like having the option on which brand to buy.
I think some posters here focus too much on getting the absolute best/lowest price possible as the only criteria for buying a particular unit. Market timing is impossible, and there are myriad reasons why a particular person/couple/family buy a particular place at a particular time. Not everyone wants a landlord. Not everyone wants the uncertainty of the timing of their departure from a particular living space and face the prospect of having to move every year or two or three. Not everyone wants the inflexibility of not being able to materially alter their physical living space because they dont own it. And not everyone makes decisions based purely on how much money they can make on their home when they sell it. Plenty of people are looking for homes in which they will live for the next 20+ years and, even if they decide to buy at 340 OTP today for top dollar, they can enjoy a wonderful home over that time period, pay off their mortgage and live happily ever after. There are far too many variables that calculators dont take into account…for some people using such a calculator and basing ones decision primarily (or solely) on the economic wisdom of the decision makes sense, for many, many others it does not. I think 340 OTP is a great building for many reasons, and for many people. Obviously, it is not for everyone…but critisizing people for buying there without knowing anything about them or the reasons for their decisions is ludicrous. P.S. I do not own a unit in that building.
Pete9441 – Are you a Realtor®? Buying a home is a huge financial decision and there is nothing wrong with renting, esp. in this market. Yes, people usually do pay more to own then rent, but the point is prices are declining and that can have devastating effects on people’s finances, future plans, marriages, etc. You don’t need to own to still enjoy the exact same unit. Why burden yourself with a debt-trap on a declining asset in this market? During The Great Housing Bubble there was a euphoria where people gave little concern to such huge debt obligations. Now it is time to emphasize the costs so that people can make prudent decisions going forward. There is so much denial out there right now, most owners need a good “slap in the face” to sober up. Chicago isn’t as bad as other markets out there that I have examined, but it isn’t good that’s for sure.
And another thing, with units $500K+ in 340 OTP with nice sized s.f., you’d expect whoever did the floor plans to put a separate shower and tub in the master bathroom. Unbelievable to have combo units in this building, unbelievable really.
I have to agree with Pete here. While I’m as nervous as anyone about this housing market, I continue to look around, and may buy something soon. I’m looking in the 300k range, and I figure that while I can lose money, the risks in this range, dollar-wise, are not as high as those in the upper brackets. But right now I’m renting a condo, and dealing with a slimy landlord who I think is trying to sell my unit out from under me (I saw it listed on Craigslist). I miss the stability of knowing that you can stay where you are as long as you like, even if the re-sale value declines. And I’d like to paint/improve/buy new appliances, etc.
So while I understand that the market may have further to fall (and probably does), those other less tangible factors are leading me to consider owning, even in this market.
I am bearish on the condo market in Chicago, but does anyone think that the opinions on this site are a little to negative? And how many of the people posting responses actually own real estate, or are they just wishing that prices fall to some unrealistic level?
I can only speak for myself: I, too, am bearish, but if the right condo came along and I thought the seller would accept 2003 prices, I’d def. buy. Now that prices are finally started (though just starting) to drop, I’m less bearish than I used to be.
Still, I think it would be hard to be “too negative” right now on real estate. This is only compounded by our slide into recession, and by a credit market collapse/bank panic of the type that is all too familiar to economic historians. Ben may pull off a rescue, but I see little downside to waiting and seeing if he actually manages it.
John – No, I am not a realtor and my profession does not involve real estate in any way. Perhaps I wasnt clear enough in my original post – all I am saying is that buying now is a bad idea for some, but not for others. There are too many variables in each individual circumstance to make a blanket statement that no one should buy now unless they can find the deal of the century. And Valasko, I too am bearish on the condo market in Chicago (and almost everywhere else), but there is undoubtedly a overly negative vibe to the comments on this site. For some people, now is the right time to buy, even if they could get the same house for less in two years. Timing the bottom is not everything to all people.
Pete9441 – I do agree that there is a value to owning above rents paid. Is that 10% more, probably since that seems to be around the long term historic norm. Overall, owning usually is more expensive then renting, unless of course homes are appreciating more than historic norms. So yes, people do put a value on owning. This blog seems to be more of a critical analysis of the market versus the cheerleaders that dominate residential real estate so it may seem more negative then it really is. I think it is more sobering realistic than anything. For many people, waiting for the real estate market to bottom will be one of the smartest financial decisions of their lifetime (other than putting money into diversified equities for the long-term). The market is going down and just like when it went up people were made richer, when it goes down people will be made poorer…and many people can’t afford that type of loss especially if circumstances require them to move. Buying a home is a heck of a lot different than buying stocks so the issue of “timing the market” is vastly different for both. Residential real estate prices will continue to slide for 2 years and when it reaches a bottom, it will stay there for at least 6 months (probably much longer in real dollar terms). So, most potential buyers won’t “miss the bottom” if they try to “time the market”. If I found a place that I really liked that had a long-term strategic advantage that was priced reasonably (2003 prices would be nice!), then I’d buy if that is a place I wanted to own or at least 5 years. I am a cash buyer that can afford just about anything Chicago has to offer….but I don’t want to be house rich and cash poor, esp. in this market. Many many people plowed money into residential real estate and are getting burned. So being cautious is the smart way to navigate through this historic financial mess. But then again, I’ve been looking at S. Florida properties too and that situation is truly catastrophic…
I want to agree with John as I “enjoy” a spring flu laying at home. I sold in San Francisco at the TOP of the market there (late 05), and am also someone who is not anti home ownership, but just censorious about buying right now, and could buy many of the units highlighted here all cash with money left over from my S.F. sale. I am leasing a condo in a building where my rent is only giving the owner’s taxes and HOA dues if he were to purchase my unit at todays prices. Who would know I am “renting” in my tower? Built in plama screens, sub zero fridge, assigned parking, new washer and dryer, and access to building health club with pool, gym, etc. If I were to buy the unit I am renting it would cost me 3x as much with 25% down. With the money I made selling in San Francisco, the interest (even in today’s terrible investment enviroemnt) pays my rent and then some, even after taxes. There are many options to consider when you look at housing as only housing, and not an investment. This site has been very helpful from saving me from loosing a lot of money from initially being very unfamiliar with the Chicago condo market when I moved here. Everything looked so “cheap” compared to California that I was ready to jump in without doing any research.
340 Owner,
I wouldn’t say the developer supplied a lot of subpar stuff, but much of it is par.
I was surprised at the cheap level of a few items in 340 OTP. I fully understand the developer game of base units plus upgrades…I’ve developed land myself and worked with builders. But, at the prices for 340 OTP, the standard closet shelving should have been better. I know that is just one minor issue. The biggest complaint is the master bathroom floorplans not having a separate tub and walk-in shower let alone a seperate water closet for the toilet. That was simply very poor planning and will have a negative long effect on values going forward. That being said, I am interested in buying at 340 OTP, but there’s no rush. Instead I’m headed to Florida where I’m renting a brand new place right on the beach for less than half the cost of owning (not including the decline in home prices)…and less than renting the vast majority of the rentals in 340 OTP in a condo in Florida that is larger with a direct uninterrupted view of the ocean. Florida is a bloodbath.
Let me clarify, some (probably 2/3’s) of the units in 340 OTP have a separate tub and walk-in shower. 1/3 don’t. I didn’t see any that had a water closet for the toilet.
Subpar: Carpet is bad, non-functional closet wire (will rip off the wall if you actually use it), cheap track-lighting (they could have at least recessed the kitchen), the lack of separate tub and showers in 1/3 of the units (per John’s claim).
Par: Virtually everything else in the interior. Quartz isn’t that expensive, same with bamboo flooring, and I certainly wouldn’t call the kitchens high-end (you want high-end look at Boffi, to take one example). Honestly, there isn’t one thing high-end about the interiors.
Noteworthy: The exterior (great design).
Maybe that will lay this discussion to rest.
Pete9441: I don’t think anyone has a problem with people buying in this market if they intend to live in the property for 20 years.
The problem is, the market psychology has been that you could buy a one bedroom condo and live it in for only two years and then, voila, you’ll sell and have made $50,000. So then you buy the 2/2 and sell two years later and voila, you now have $150,000 (just from appreciation.)
What’s the benefit of buying a one bedroom condo right now when the rents are so much less? Is that buyer really going to live in the one bedroom for 20 years? Let alone 5 years?
There have been studies done of the downtown market and the average time in a loft condo is two years. Can any of those buyers buying right now make money in two years? That’s the unknown but given what we know about prior housing busts, probably not.
Expectations have to be changed about what kind of money you can make off of housing.
Yes- it’s a place to LIVE. Not to make money.
If they are only staying for two years the only way ownership makes sense is with appreciating property values. Even in a stable market they won’t break even on the transaction costs alone associate with purchase & sale.
There are three minor benefits for the risk averse associated with ownership that are always present, however: its a hedge against unanticipated price increases (with fixed rate loans), its knowing that you won’t be evicted from any outside party at any time so long as your good on your financial obligations and its provides visibility to your largest monthly expense going out indefinitely (again, fixed rate loans). So for the risk averse that aren’t that good at math these three things may factor into their decision (along with the “pride of ownership” intangible :).
For the rest of us we can easily see that several hundred dollars a month in savings easily outweighs these minor benefits. Generally a person/couple that can afford a 650k condo probably earns 200k/year–whats a 50-100k capital loss to them?
Another big problem with the housing bubble is that these gains were never cashed out due to tax law. So that 150k appreciation mentioned above was rolled over into a similarly price-inflated property with more bedrooms and baths. Its like a casino that charges a 30% fee at the cashier.
If you don’t pay your rent, you get evicted and are out very little. If you don’t pay your mortgage or property taxes, you get evicted and are out a whole lot. Homeownership (do people with a mortgage really “own” their homes?) is pretty overrated.
Sabrina – I totally agree with the analysis regarding short term flips on one bedroom (and larger) condos. I dont think we will see this sort of investment psychology again for some time. My only observation was that the comments posted on many of these properties, and for some reason 340 OTP in particular, are not limited to flips…I have not read one comment saying “congratulations on your purchase, you must be very excited to move in to your new home”. The vitriol from some of the posters is a unnecessary.
John – I agree with you that home ownership may be overrated as an investment vehicle, but I believe that our culture places a value on home ownership, and that many individuals/couples place a value on home ownership, that cannot be measured in dollar terms. I think we all agree here that flipping is not a wise investment move today. I think we all agree that developers are in the real estate business to make money and do not give units away. The developers of 340 OTP/Lakeshore East know exactly what they are doing…they offer view, architecture, location, some nice amenities and reasonable finishes for an above average price – the highest they believe they can get. You are right that one should not buy here (or anywhere, for the most party) if the goal is to make money in the short term. But if your horizon is 5+ years (or 10+ years for sure), then I do not believe that home ownership is overrated as a general proposition (although that may differ on a case by case basis). I will admit my bias though – I own multiple homes, and to be honest, the thought of renting would never occur to me.
Pete9441 –
I remember a few years back when 20/20 (I think it was John Stossel) did financial reviews of two income families. They all thought they were much better off with two incomes. After crunching the numbers, the after expense income for the second income earner was very very low (maybe $1/hour). Mom’s cried on TV, etc. when they realized all this work and stress really didn’t amount to much and that all along the could have lived their dream of being a stay at home mom (some dad’s could have been stay at home dad’s too), but thought they had to work. It was an eye opener for sure. It’s also an eye opener when looking at the financial benefits of owning residential properties…including condos. In a declining price environment, the cost of buying and owning is pretty darn high. Price increases around the rate of inflation (maybe +1%) made the cost of owning “fair” especially in the 5+ year time frame when factoring in transaction costs. The frenzy came when prices increased far ahead of historic norms and people continued to buy based on payments (because of low rates) versus the actual price. Buying on payments is OK if you plan on owning long enough to make all the payments (such as for a 3-5 year car loan), but fact is the vast majority of people don’t own the place for 30 years. One solution is to make mortgages assumable….that would solve a LOT of the problems right now. I don’t think that has been proposed by anyone, but it would help. Anyway, enough of my rambling. I would naturally tend to want to own, but after a 2+ month of evaluation and reflection, renting is really the smart financial move right now for many.
340 OTP is a nice building and there are a few units there that I probably would buy at the pre-construction price if the owners would sell at that price….although I know such a purchase isn’t really wise since even those prices are probably inflated. At those prices, I would have expected the developer to not have done a few things on the cheap…I could name a few other things I saw that were subpar…but I do like the building.
Pete9441: I wasn’t talking so much about the flipping being over (though that IS going to be over going forward.)
I’m talking about normal homebuyers who buy the one or two bedroom condo and basically will only live there for 2 years. Either they get bored of it, they get a new job in another city, they get married or they have a kid.
It’s this group of homebuyers for whom the market psychology has not yet changed. They treat buying a condo akin to looking at apartments. All of their friends have done it so they do it too. Many times with help on the downpayment from their parents who think buying is a “good” thing.
If you look at enough of the data on condos in Lincoln Park, River North, Lakeview etc. you’ll see a pattern of many of them changing hands about every two to three years.
What happens to this group of buyers going forward? Will they walk away from underwater condos? Sell for a loss? Stay and try to wait it out?
It’s really going to change the whole market dynamics as others who have not yet bought hear stories from their friends who are now “stuck” in their condos and can’t move. Renting is going to look mighty appetizing to many people in a few years.
We could see a big change in sentiment towards buying condos and instead see much bigger demand in the single family home market when people realize that buying actually DOES mean living in the property for ten years. But that is several years off. We’ll have to wait and see.
John and Sabrina – I agree with both of you. Especially the part about people considering buying something when the great likelihood is they will move in a couple of years. Even in a “good” market this would rarely make sense.
John – $240 towel bar is Dornbracht Tara Classic. Actually, the bar was only $180. The door hook and tax brought the order to $240.
I think what is being ignored in this discussion about 340 is the one feature that really matters. Greater than 50% of the units in the building have an absolutely stunning view, regardless of floor. We were looking for vacation/retirement property within walking distance of cultural sites that had the view.
That’s just us, and we are happy.
340 Owner – I may join you in buying in that building, but would like to buy around pre-construction prices. The views are great but there is a limit to what that is worth.
At these prices I would have thought the towel rods cost at least 5k each.
340 Owner: I think it’s a great building to retire in. It’s walkable to most things, you’re by the park and the lake front and you can get easy public transportation.
I’ve seen a few posts here about people wanting pre-construction prices at 340otp. From the resales I’ve seen, the direction is going the other way. There is a premium for being around MP and GP that people are willing to pay for. This isn’t going to change. Being new is an additional advantage. If lower prices is the main consideration, go farther west or south.
Tom: I don’t think we know what the prices are really going to be in the re-sales in 340 OTP because less than a handful have been flipped since closings began.
Those that have re-sold DID sell for more than pre-construction prices however. The flippers did make a profit.
But since some sold last year, a couple dozen more have come on the market.
I think it depends what size unit you’re looking at. Some of the larger three bedroom units are being priced closed to closing prices of the original buyers. That’s not pre-construction in many of the cases, but it will be interesting to see what some of those close for.
Sabrina,
I think it’s a great building to retire in. It’s walkable to most things, you’re by the park and the lake front and you can get easy public transportation.
These qualities appeal to a lot more than just retirees! But on the subject of retirees – do they want to pay for all the amenities in this building, especially the ones that seem more focused on the middle-aged set?
My main issue is that I don’t believe the condos in this building are worth the price. The corners that were cut to maximize developer profit are less readily seen, but they are there. The good thing is that they are fixable – once the price comes down to a reasonable level.
In the meantime, renting is simply a better option – just not at $3800 a month 😉 I don’t mind waiting it out in one of the other buildings in the Lakeshore East area. I have a feeling I can last longer than they can.
Tom, i would wager heavily that prices in this building will come down over the course of this year. Too much inventory, a good deal of interest but no takers – very clearly the problem here is the price.
Luxury buildings in great locations will hold their value better than in other buildings. Generally, Chicago is fairing better than most other places. MP and GP locations hold better than other downtown locations. The big drops people are waiting for are very unlikely. There is a wide variation in prices across the downtown market from less than 400 to over 1,000 dollars per square foot. This reasonable. 340 and others are in the middle to mid upper of this range. This is right on.
Can anyone list all the resales so far, including price paid originally and price paid on resale? Also the units that have rented, what have the gone for, and were they for sale, too? I have noticed units in this building steadily disappearing from the mls, in contrast to many other buildings. I know, I know, that doesn’t mean that prices won’t drop in the next couple of years. But given that most people who buy from flippers are not investors, but people who actually want to live in the building, that these units are selling now (IF they are–I’d like to see data) does give credence to what Tom says.
Kenworthey: Someone sent me the list of the all sales, rentals and properties available in the building.
It’s quite enormous, given the size of the building. In just a quick review, it still looks like less than a handful have been flipped. I only saw one flip that closed in 2008 and another one is pending.
Unit #3301: Closed originally for $1.644 million. Resold in February for $1.6775 million.
Approximately 25 units have been rented (this is only off the MLS- not Craigslist etc.)
It looks like a bunch of units have been removed from the MLS because the listings have been canceled. A few have expired.
Maybe because the flippers aren’t getting their prices? I don’t know. We’ll have to see if some come back on at lower prices or if they’re going to try and rent them.
From what I can tell, nothing is flying off the shelf in this building. It’s similar to all of the other buildings that have closed in the last 8 months.
Tom,
It depends from what point you mean “big drops” and what “big” means %-wise.
Big drops from the original (precon-based) closing prices, probably not if you mean 20% or more. But big drops from the current asking prices – almost certainly.
I think a lot of the units will revert to their original sales prices. The big units seem to have already.
What is meant by saying this unit is a “duplex”?
In Miami, I saw several projects where two bedroom apartments were “twin keyed” – the apartment could be rented out as a 1 bedroom, with the second bedroom having it’s own entrance and could be rented (or stayed in by the owners) separately.
It’s a clever idea.
Nothing like that in Chitown?