Another Price Reduction on Dream River North Terrace: 375 W. Erie
We’ve chattered about this loft with its own massive private terrace at 375 W. Erie in River North several times.
It was actually under contract several months ago but that contract fell through.
It’s been reduced again.
Unit #610: 2 bedrooms, 2 baths, 1800 square feet
- Sold in April 2003 for $560,000
- Listed in January 2008 for $680,000 (plus $35,000 for parking)
- Reduced
- Was listed in March 2008 for $655,000 (plus $35k for parking)
- Reduced
- Currently listed for $585,000 (plus $35k for parking)
- Assessments of $511 a month
- Taxes of $4,460
- 11 foot high ceilings
- Skylights
- Prudential Preferred Properties has the listing
And they’re still not caught up to the market. At this point, cut another 100K and throw in the parking, and I might bother to come and look. Seriously. Don’t these people read the news? Jumbos pushing 8%, 20% down required now…
$520k gets you into a conforming mortgage with 20% down, so I guess it is $100k off the current ask including the parking. But, yeah, $485k including the parking should get it sold quickly.
Perhaps I over-reacted on the price here. But I’m getting more and more pessimistic about prices in Chicago–and more and more frustrated with sellers. In a stand-off between buyers and sellers, guess who always, always wins?
Then again, maybe these people can’t afford to bring cash to the table. This probably explains many of the cases of fantasy-pricing we see. But if so, it’s really not worth wasting everyone’s time. And it just slows down the inevitable bottoming of the market.
Sabrina,
Did you see this on Yo?
http://yochicago.com/today/new-construction/what-happened-to-marquees-roof_7376/#201839
“Crib Chatter is, to all appearances, a good site.”
“But all we have are appearances – no contact info, no indication whatsoever who is behind the site or what their interests are.”
“Until someone puts their name and contact info behind the site and discloses what they’re about there is no reason to believe anything on Crib Chatter that you don’t independently verify.”
Apparently Zekass feels you need to be and RE “pro” and have you name, address, phone & SS# to comment real estate.
Zekas is just bitter because this site is way better than Yo.
Kenworthey,
I check the financial status of every home I look at. Lots of people could substantially reduce their asking price and still make a good profit. This is especially true in Hyde Park, for instance, one of the hoods I am considering. Instead, the sellers prefer to let their properties sit (often empty).
Very frustrating to me: I can afford to buy and want to buy – but not when I’d have to give sellers 10% a year… This bubble is going to take a loooong time to unwind.
Zekas on yochicago (an advertising site for new developments) says, “We are a world away from CribChatter.”
Amen, brother! And would that it will always be so.
Funny thing is that Zekass sites the blog “Calculated Risk”, a very good blog btw, on a regular basis but that site gives no more info as far as name, rank and serial # as Sabrina does.
re:yo
I just lost any respect I had for that site.
Yep, why would I read independent, objective facts and discussion here, when I could be spoon-fed propaganda by developers and Realtors?
I, too, am amused by the fact that their problem with this site is that it has no personal agenda.
Paul: I lost my respect back here: http://yochicago.com/today/condo-conversions/upgraded-metropolitan-tower-condos-available-in-60-days_6776/
Money quote: “Developers are my customers; flippers aren’t.”
I genuinely had thought the site was an independent source about Chicago real estate, with no agenda to push. Which is why I just didn’t get so many of the posts…
Oh well, lesson learned.
The sales and foreclosurs and loan dates and amounts are as factual as you get. These are the stone cold facts and no amount of developer shilling will get around them.
Yo Chicago would rather not talk about what places are really selling for and Zekas surely doesn’t want to discuss vacancies or foreclosures.
Yo is just advertising, no more and no less. Zeke is all about being “positive”, which means glossing over the truths a potential buyer needs to know before he plunks down a hunk of cash and commits his life to some overpriced shoebox in the middle of the worst housing market since the GD.
The thing about Joe Z is that he is easy to bait on that site. It does make the commentary very interesting some times. A treasure trove for trolls.
I do like the pics he has as much as I do here, but for an unbiased view that site is far from it. Its essentially a cheerleader site for developers.
“Its essentially a cheerleader site for developers.”
And realtors! Don’t forget the realtors.
The “experts” he uses are realtors and developers for the most part and Joe (based on the many times he has been pressed by posters) doesn’t seem to think those people have an agenda or bias. They are justed experienced RE people who say like it is.
If you disagree with his experts or him you have to list your credentials. If you agree with him he requires no resume.
BTW, sorry for hijacking this thread Sabrina.
This is definitely priced below other condos on the market for what you get. I think this seller “gets it” and realizes cutting prices a lot to sell now will be better than holding and getting hurt by lower and lower comps.
As a side note, I think it’s funny that sellers suddenly get more realistic (dropping the price) when they get to taste the sale (contract closing) and then have it taken away from them.
On the other hand, if this unit languishes at this price I would be even more pessimistic of the housing market than before.
Yochicago is owned by New Homes Magazine, as you can see by the site’s tiny copyright notice at the bottom of the page. This should make their agenda perfectly clear. What good would a New Homes Magazine be if people are bearish on real estate?
Anyone who wants to paint YoChicago as a cheerleading site doesn’t a) read the many bearish and negative articles we link to on a daily basis and b) doesn’t read our comments.
I find it amusing that we’re criticized for our transparency while this site’s lack of it is taken as an indicator of credibility. Rather than a “tiny copyright notice” we have an entire “About us” page and many more disclosures of who we are on the site.
And, yes, there’s no doubt that the real estate developers I talk to know far more about the state of the market and what drives it than any commenter on this site.
You almost certainly don’t want to hear this, but most real home buyers could care less about hte negatives that nourish many of your souls.
Please keep these posts on topic!
Kenworthey: Do you really think most sellers are willing to cut $100k and throw in the parking to make the sale?
That would be a huge loss to this seller of over $100k.
How many sellers, even if being “realistic” would be willing to do that? Wouldn’t they simply let it go into foreclosure rather than write a check to the bank for that amount? (even if it hurt their credit for a few years?)
I’m just throwing out these questions- and don’t have any answers.
I keep seeing a lot of sellers hovering right around the “break even” point with their prices in the hope that they can walk away without writing a check.
That’s why there appears to be a stalemate in the market. The buyers, like yourself, are now expecting much lower prices. But the sellers can’t really deliver those prices without losing all they have (let’s be honest- how many people could write a check to the bank for $100k?)
So they list it high and hope they get a buyer.
Someone else said that things are going to get interesting come the winter. I agree. Once you’ve had your property listed for a year (or more) the reality starts to hit.
You’re right, Sabrina, I doubt sellers could come to the table with that kind of cash. (And I was being churlish in saying the place was only worth $485 with parking–though I haven’t seen it, and some earlier posts suggest the place needs some work.) Those that don’t go into foreclosure, will be simply staying put for a much longer time than they’d like. Or else, they’ll be renting it out at a loss, which someone at this price point can probably do for a good long time.
Especially given that the tax code makes it much better off to be an unintentional landlord losing $1k/month than to have a capital loss of $100k. The tax code doesn’t offer many incentives for huge capital losses. You get a 3k/year deduction forever …whoopee.
Accidental landlords can at least deduct all expenses associated with the property as a business expense. This includes mileage family vacation trips to whever so long as they visit a local hardware store. Theres a lot of leeway to underpay taxes when you’re talking about small businesses.
“Anyone who wants to paint YoChicago as a cheerleading site doesn’t a) read the many bearish and negative articles we link to on a daily basis…”
Our course none of the articles are actually highlited with their own post and discussed they are only accessable by clicking another link on your site…Cha-ching!
“…and b) doesn’t read our comments.”
Which are shouted down by the sites dictator who even bans people from his site not neccessarily for language or personal attacks but what are in his opinion, “…readers who repeatedly contribute nothing but pointless, mindless negatives.”
Keep suppressing those commentors go and maybe all the bad housing karma will go away.
“You almost certainly don’t want to hear this, but most real home buyers could care less about hte negatives that nourish many of your souls.”
Yes, which is why so many of them got in over their heads and are now facing foreclosure.
I think I have Zekas (or should I say “Zekas”) figured out at this point. My armchair analysis/guess:
a) he must be losing some revenue from the developers who are his “customers.” As the market slows, so slows his business model.
b) he must be losing a great deal of readership, both because he is such a nasty, paranoid man, but also because his site really does stink compared to this one.
c) therefore, he finds a scapegoat to hate: cribchatter.
Honestly, why would anyone care that Sabrina (or should I say “Sabrina”) is making a buck on her site, and is running it in a professional/reliable manner? His main objection to her site is that she is not obviously captured by a special interest (developers–as he is), that she almost certainly *is* captured by some special interest he can’t identify (which one? If Sabrina is shilling for some group, she sure doesn’t do a very good job of it), that she provides a valued service (highlighting publicly available information), and that some of this information is damaging to the very special interest to which his own site is beholden.
Hey, dissatisfied yochicago-ers, come on in, the water here is fine (and unpolluted)!
I couldn’t believe he said that either Pete.
If that’s true then there are still a ton of uneducated buyers who aren’t researching the most important purchase of their life.
The writing is on the wall for the likes of Mr. Zekas’ business model. I think G posted a little while ago that the median Chicagoland home price is 4.0x the median Chicagoland income.
Who these median idiots are that over-leveraged themselves is probably a broad cross-section of stupidity in society. From the 26-yr old paralegal who bought a 360k condo to those paying outrageous developer pricing. If you’re spending 4x your income on a home purchase you suffer from ol’ the ID10T error.
Sorry Joe Elvis has left the building. And you can update that high-rise map to reflect the highrises that developers are walking away from and leaving partially constructed.
Bob, the IRS regulations limit the amount of losses for passive rental activity above a certain income. Even renting will not help some….
YoChicago is about as trustworthy as Pravda.
It just closed at $585K – probably without parking.
The Sale closed at $585,000 with parking and received 5 offers during the listing period. http://www.Sold-375wErie-610.com
It sold for 2003/04 prices.
If the # of offers was correct, 4 out of 5 would only pay less.
2003 prices obviously aren’t low enough here.
I can’t figure out why people want to pay Gold Coast prices for gritty city living in River North / River West.
I am pretty sure I am the one that keeps saying the winter will be the real tell for prices here. I just sold a place and the buyer needed 80/10/10. His Realtor could not get it for him so I had to go ask a favor to get it for the buyer. I was told that 1 week later even as a favor it couldn’t be done. Credit is just evaporating right now.
IB – Maybe your 80/10/10 is gone but anyone lender in chicago can still do 90% financing with PMI. Look for this to continue as the the government takes control of Fannie/Freddie. There role is to make lending easier and not harder.
“Maybe your 80/10/10 is gone but anyone lender in chicago can still do 90% financing with PMI.”
Are there still any PMI insurers offering PMI for condos in Chicago? AIG United Guaranty stopped writing such policies in May, and requires at least 10% down (and less than 30% investors) for condos in non-declining markets.
Kevin,
I hate to agree with Steve but I’d bet AIG will still write the loan so long as its 80% and they receive priority over the piggyback mortgage of the secondary lender.
In another six months or a year when those still underwriting risky piggyback mortgages start to go under do I think we will finally see this sort of risky misbehavior stop.
AIG’s official eligibility guidelines (that changed on May 1st) are at https://www.ugcorp.com/rates/EligibilityGuidelineChanges_5-1-08.pdf
Note that they defined Chicago as a declining market.
AIG claims that they won’t touch a 90% LTV loan, like Steve was proposing. They also claim that CLTVs can’t be higher than the LTV limits, which would tend to prevent the 80/10/10 in lieu of a 90/10.
I would expect that they will stick close to these guidelines, to avoid discrimination suits, but I could be wrong. Also, I haven’t found similar statements from other PMI insurers, so it could be that AIG is far more conservative than the others.
Hence my (serious) question — can you get PMI for condos in Chicago? What are the terms under which it is available?
Steve,
Liquidity is not the issue to be restored by this receivership of Fannie and Freddie, this is all bad. I bet the books showed some real ugly stuff on an external audit. Almost every one of the banks out there are and have been for almost a year now all but by FASB tricks insolvent!
IB, Steve, Kevin, et al:
Do you think the goverment’s recommendation/promulgation to FIRS accounting standards in a few years is at all related to this crisis?
I am curious as to this.
I think lending standards at 80% was a good norm and is a good place to go back to. 80:20 leverage for Joe and Jill 6 pack is enough for them to ever be allowed to play with.
FIRS?
Okay maybe I stretched with that acronynm, but I’m a consultant so quote them without doing due diligence all the time:
http://www.iht.com/articles/2008/08/27/business/sec.php
FIRS = international accounting standards. Its huge actually and severely undereported by the business press these days. Probably due to the mortgage crisis.
“Do you think the goverment’s recommendation/promulgation to FIRS accounting standards in a few years is at all related to this crisis?”
Is IFRS causing the crisis? — I would tend to doubt it, but that may be because I am used to dealing with multinationals. Those companies already are keeping several versions of their books (internal, US GAAP for SEC, US tax, various foreign GAAP, IFRS), so losing US GAAP probably makes things easier. Plus, the key accounting issues behind the crisis seem to be tied to Tier 1 and 2 capital (largely defined by Basel) and fair value (like FAS 157). While “Held to maturity” assets are drawing out the liquidity crisis, this category didn’t seem to be horribly abused previously. IFRS may have different requirements for valuing assets (e.g., mark-to-market issues), but almost anything other than “value at cost” would be dragging down banks these days.
Is the crisis driving adoption of IFRS? — Possibly. If Cox and other SEC folks were out in public blaming FASB for the crisis, then I could believe that they were allowing companies out of US GAAP as a bit of political posturing. Since they are keeping fairly quiet, I’m leaning more towards this simply being a recognition that IFRS is a de facto requirement for most large US corporations.
I can say first hand that changes to mark-to-market accounting definitely allows manipulation and losses to mount and be hidden against some future gain. Seen that played before until it runs into an inevitable cash flow financing issue. Do i think it caused the problem though, No. This problem is simply a velocity of leverage issue extended too far as well as in the wrong place, and we are going to have to contract significantly right now. boom-bust… been going on forever, this one’s just a biggie. It will be done again, sooner than anyone thinks.
“It will be done again, sooner than anyone thinks.”
No doubt about that. I feel that there is a decent chance that the “bottom” of the real estate market will be when some deep-pocketed types believe that they have found a way to provide correct incentives to mortgage originators so that “safe” CDOs can be created. (CDOs of properly underwritten loans are a brilliant idea for transferring risk; CDOs of poorly underwritten loans just seem to multiply it.)
There is also a concern I have about what the Fed will do if we start to see serious risls of deflation. Bernanke styles himself as an expert on the monetary and non-monetary causes of the Great Depression (see, for example, his 1983 AER paper or his 2007 speech on the “financial accelerator”). A good story can be told that the credit crisis we are seeing today is another instance of the financial accelerator, so Bernanke may believe that he knows how to turn things around. I fear that his medicine will be quite drastic (like reducing reserve ratios or encouraging extremely high interest rates) and liable to cause a bout of inflation and another asset bubble.
(I haven’t read much of Bernanke’s papers lately, so I can’t recall what monetary policy he proposes to break a credit crunch like this. I do recall that he blames Regulation Q for problems in the 60s and 70s, because it capped interest rates on checking accounts and thus reduced the capital banks had to lend. And his basic Great Depression story is that banks stopped lending to preserve liquidity while consumers became less creditworthy as unemployment rose and incomes fell. Bernanke may well believe that the solution is to get banks to lend more, whether by increasing their assets or by increasing the loans they can make.)
The NYT is reporting that the losses were far more severe than previously revealed and would have come out by first quarter 2009 anyway. Basically- despite assurances- they apparently are NOT adequately capitalized.
Who knows what is going on at these institutions? Apparently NO ONE!