We Love Authentic Lofts: More Reductions in 711 S. Dearborn
Prices are coming down in The Donohue, at 711 S. Dearborn, in Printers Row.
There has been another $20,000 reduction on Unit #505 (we chattered about it only last week.)
Unit #602, which we chattered about last September, has also been reduced $5,000.
Here’s the update on Unit #505 again:
Urban Search Chicago has the listing. See more pictures here.
Unit #505: 2 bedrooms, 2 baths, den, 1650 square feet
- Sold in April 2002 for $426,500
- Was listed in May 2008 for $499,000 (parking can be purchased in 801 S. Plymouth just to the south of the building for $35,000 to $50,000)
- Reduced
- Was listed on November 11, 2008 at $410,000
- Reduced
- Currently listed for $390,000
- Assessments of $815 a month
- Taxes of $4,767
- Central Air
Unit #602 does not have central air:
Tom Feddor at Keller Williams has the listing. See more pictures and a virtual tour here.
Unit #602: 1 bedroom, 1 bath, 1500 square feet
- Sold in September 2003 for $290,000
- Sold in September 2005 for $320,000
- Was listed in September 2008 for $384,900
- Reduced
- Currently listed for $379,900
- Assessments of $670 a month
- Taxes of $4502
- No central air (one window unit)
- No parking (but available for rent or purchase in the neighborhood)
Funny.. hehe… I thought forealestate… hehe was buying this place hehe.
Looks like.. hehe… Only becoming a better time to be a buyer.. hehe 😉
…and from across the pond. in the UK.
“Rents fell for the first time in five years between July and October as home-movers flooded the rental market with properties that they could not sell.”
“It is the first time since 2003 that the gauge of rental yields has turned negative. “Many vendors have been forced to become amateur landlords, creating an inevitable downward pressure on rents.”
No central air (#602)? Well, at least the cool air from window units will pool at the floor. Just don’t stand up.
Unit #505 is heading back towards 1999 pricing, whatever that is. Anybody want to guess where it goes from there? What might 97/98 pricing look like? $350,000? $300,000? Would it be scandalous if I said that prices might go into the $200,000’s? But wait, this is a desirable building….it has great blah blah blah and blah blah blah it’s different in this building even though the rest of the south loop is tanking blah blah blah. hahahahahahahahha!
“Unit #505: 2 bedrooms, 2 baths, den, 1650 square feet
Sold in April 2002 for $426,500
Was listed in May 2008 for $499,000 (parking can be purchased in 801 S. Plymouth just to the south of the building for $35,000 to $50,000)
Reduced
Was listed on November 11, 2008 at $410,000
Reduced
Currently listed for $390,000
Assessments of $815 a month
Taxes of $4,767
Central Air “
Unless you absolutely have to sell, why bother selling at this price (2bd / 2bth)? There are no buyers and as I have said before, price drops are simply a negotiation against yourself. I think prices are starting to overcorrect in some cases….when you cannot sell for 2002 prices, there is an over correction IMHO.
Prices are starting to overcorrect? HAHAHHAHA! Oh man this is going to be a one hell of a day.
It’s not that there are no buyers it’s that there are no buyers at this price! The days of funny money financing are over and the party isn’t coming back. Don’t forget this bozo of an owner paid $426,500 for 1,650 square feet…in 2002! What a dumbass! Well, how long should he hold onto the unit? Don’t bet against yourself, and continue to hold an overpriced expensive anchor all the way to the bottom of the ocean? Yeah, that’s great advice. What other nuggets of great advice do you have? Let me guess, “we’re near the bottom” and “real estate only goes up on the long run?” Maybe he should threaten to raise the price unless someone buys in the next two weeks. We know how well that strategy works. Can I hire you as my investment advisor? Hhahahahah! Sorry to be such an ass, cause I know I’m being one…but wow, that’s classic. 2002 prices are an overcorrection, there are no buyers, and prices drops are negotiation against yourself. Wow.
“JL on November 18th, 2008 at 8:49 am
Unless you absolutely have to sell, why bother selling at this price (2bd / 2bth)? There are no buyers and as I have said before, price drops are simply a negotiation against yourself. I think prices are starting to overcorrect in some cases….when you cannot sell for 2002 prices, there is an over correction IMHO.”
Well, if rents are dropping too, then breakeven will drop. The bottom will be rent arbitrage between living in the city center vs outside and commute, and ownership costs will follow the rent yield. Pullman thought that any investment should yield 6% p.a. the natural IR. Set it at 4% if you want and do the maths.
Homedelete, your response essentially cheers for unemployment of 30%, no billable hours for you and the complete erasing of the middle class.
You can have your opinion and I can have mine. It is the great part about a democracy.
Also homedelete, have you sold any real estate lately? Do you know anyone who has sold real estate lately?
It is a negotiation against yourself as there are hardly any people walking through any properties.
Think of a home like a barrel of oil. Do you want to sell it in October 2008 (trading in $50’s) or July 2008 (trading over $140)? This is dip in the real estate market and you should not sell your home unless you have to. The loss you take today will be far greater than the loss you will take in a couple years.
This is simple logic.
Wow–looks like the Donohue is finally capitulating. Can other landmark buildings be far behind?
You would have to hold likely 4 years or more based upon a current Chicago inventory of over 99,000 available homes, and a selling rate of approx. 24,000 per year. This disregards new inventory that comes available as people move up. Good luck with that “hope the market rebounds despite all of the facts” methodology.
“It’s not that there are no buyers it’s that there are no buyers at this price! ”
I don’t think there are buyers for this place right now at any price. People are in panic mode now. They don’t even want to buy an LCD TV.
A couple of months ago, buyers were those looking for a deal. Now even they have hunkered down.
OK, you can sell anything if the price is low enough but whatever that number is you are not going to see any seller or bank accept it. They will wait it out, even if it takes until 2010.
The 505 owner paid about $150k for central air and 150 sq ft (if the sq ft is accurate)–as compared to the ’03 price for 602. That ’02 was insanity–the prior owner found a sucker.
JL… The problem with your logic is that that logic would have been used against selling oil at $148 if you paid $150 for it, and that would have saved you $98. Your logic never lets you get out of a failing asset class unless it is for a profit. You will eventually ride a loss to its death.
No I don’t sell real estate but I used to do some closings until the market dried up. Now I’m on the other side of the coin. Sorry I was such an ass, I can sometimes get that way. Especially in this anonymous internet format I don’t show any restraint.
But in all seriousness and all due respect, this isn’t a dip in the market. This is a fundamental change in the way homes are financed and sold. Toxic financing is gone. People cannot and will not (and can no longer get financing) to overpay for real estate with the expectation of outsized appreciation. It comes down to what people can afford. This unit may have been worth $426,500 in 2002 when there were large numbers of people with income to support that price. But now and definitely for the forseeable future there are no enough high income earning households to afford all the overpriced $450k units on the market. Something has to give. The stalemate cannot last forever.
I think the best advice for sellers right now would be to sell for whatever you can get. It’s only going to get worse, and it’s going to get worse for a long time. (This is especially true for sellers of loft condos in areas like the South Loop.) It’s a tough pill to swallow, but I would have thought that the current economic crisis might have shocked these sellers into a sense of reality – it’s strange that it hasn’t happened quite yet.
P.S. I take no pleasure in this at all. Many well-intentioned people will be facing a very painful reality.
You have to take the sour with the sweet. Many boom buyers will feel pain but the rest of us who sat out of the mania will be rewarded. Prices will return to affordability, people will spend less of their income towards housing and that will free up additional cash for consumer spending which stimulates the economy.
“P.S. I take no pleasure in this at all. Many well-intentioned people will be facing a very painful reality.”
JL: “The loss you take today will be far greater than the loss you will take in a couple years.”
RunnerRunner: “They will wait it out, even if it takes until 2010.”
Joe: “It’s only going to get worse, and it’s going to get worse for a long time.”
Joe gets it.
Gleefully I do. I know I’m not going to win any awards for altruism but I rather watch with bemused detachment when someone overpays for something then comes to that realization over time.
Best of intentions surely, but look at the affect on our economy these ‘best of intentions’ boom buyers had by overpaying for real estate? Worst of outcomes I say. And I judge people on outcomes not intentions. I’d much rather live through an attempted murder plot than have someone accidently run me over in their car. Best of intentions..LOL.
“P.S. I take no pleasure in this at all. Many well-intentioned people will be facing a very painful reality.”
Also, the $426.5k for #505 (deed dated 4/12/02) included a parking spot at 801 S Plymouth. This price is **over** 19%/year higher than the prior price which was:
The 1999 price (deed dated 7/20/99) was $251k, including the parking. If we say the parking was $20k of the price (which is in line with the rest of the calc), then this was 1.8% higher than the prior price which was:
The 1988 price (deed dated 11/11/98) was $190k, NOT including the parking. They bought the parking spot for $17,250 in April ’93.
Round that 1.8% up to 2% and extend it from ’99 to now, you get a price of $300k, including the parking. Give them 2%/year from 88 to now, you get $282k for the unit, $23k for the parking.
Maybe they added the AC, so possibly give them a small basis credit for that; still they ridiculously overpaid.
Homedelete, no offense taken. I deal with much angrier people in my current profession.
I agree that the 2002 price was too high, but in 2008 one should be able to sell a unit for $282 a sqft when new construction of a reasonable quality cannot be delivered for under $400 a sqft. At the current price of $390k, the price per sqft would only be $236.
I am not s fan of the South Loop, but Printers Row at least appears to be a little more of a community with restaurants and services than the developments on Michigan South of Roosevelt.
As a country, we need to unify toward a common cause of fixing this problem becasue people taking $100k losses on homes, banks taking losses and Fortune 500 companies on the verge of bankruptcy will be too much to handle at once.
While I know this might sound crazy, I wonder if the would move up the swearing in of Obama because that actually might help stabilize this country since people start planning for the future around his policy? I thought he might start to announce policy plans after the election, but he has essentially been silent on what he will do (I know….political speak).
“I wonder if the would move up the swearing in of Obama”
Can’t, it’s in the constitution (amendment 20, actually–used to be in March).
That sounds crazy. He’s not the saviour. He’s a cog in the Chicago political machine that now runs the white house, along with Rahm and everybody else.
“While I know this might sound crazy, I wonder if the would move up the swearing in of Obama because that actually might help stabilize this country since people start planning for the future around his policy? I thought he might start to announce policy plans after the election, but he has essentially been silent on what he will do (I know….political speak).”
We have a crisis of confidence. He is our leader. He needs to tell the financial world what he plans to do since the financial companies run this world in reality. Those who control the purse strings of this country (the 65% of Americans who pay taxes – top 1% pay approximately 40$) are sitting on their hands right now.
If they changed it from March to January, it could be changed again.
40%
“If they changed it from March to January, it could be changed again.”
Not in 6 weeks they can’t. Needs to pass on the federal level with 2/3 majorities in House and Senate (and Bush wouldn’t sign it) and then 3/4 of state legislatures need to pass it–I don’t think that 3/4 of state legislatures meet b/t now and Jan 20. So, it could certainly be cahnged, but not in time to affect this transition.
It’s so sad that people think the world is ending. The excess was extreme and now the compression will be tough BUT The world is not literally ending. Going to have to live within newly defined means will suck for lots of people but people have lived for thousands of years often in much greater hardship. Just not everyone is going to be entitled to two cars and a boat and granite countertops anymore. To effin bad!! People wrote checks they couldn’t back up. Game over.
Basically No one going to fix this until all the debts are beaten out of the system and then we can move on. Everything possible is being done not to make transparent exactly what most everyone knows exists. Citi from $60 to $8 and they think they are still fooling people?
The naievity of JL that somehow Obama will save them or the greater country is indeed hilarious. Sorry JL, sometimes holes dug are so deep and penetrating into the fabric of the economy that there is no fix.
The financial firms have issues of their own to work out, and saving the world has _never, ever_ been one of them.
100k loss..waaaaah! When you’re done crying you can have a tissue.
But hey the wealth remains all that changes is the name on the mailbox.
JL: “in 2008 one should be able to sell a unit for $282 a sqft when new construction of a reasonable quality cannot be delivered for under $400 a sqft”
The cost of construction has nothing to do with the current market value of a unit.
Ze: “It’s so sad that people think the world is ending.”
This is the part I now find hilarious. The same people who were quick to accuse realists of being “gloom and doomers” months ago are the very same who seem to be wetting their pants in fear today.
Go figure.
From a financial perspective you really should get out of housing investments now.
Even if you think you are selling at a loss and that if you waited a couple of years you would realize less of a loss you should still sell.
Why? Carrying cost and the time value of your money somewhere else. Real estate isn’t the only (or even a decent) asset class right now.
No worries. I did not vote for Obama. We have a crisis of confidence and not fundamentals so he needs to come forward with plans to ease confidence. If you cannot understand this, there is no amount of information I can provide you to help you understand.
A month or two ago Warren Buffet came out and said now was the time to buy stocks. He is supposedly some greek god of stocks, yet he was wrong. The point is that not one expected things to hit the fan as hard as they have so quickly….even Warren Buffet, investment banks, the local tavern, etc.
You all will not be laughing at my posts when unemployment skyrockets over the next six months if lending does not loosen. God bless to all. I am done posting.
“We have a crisis of confidence and not fundamentals”.
you should explain this before you stop posting because I’m pretty sure the fundamentals are f—– up.
kp, what asset classes do you recommend? Equities? Corporate bonds? Munis? Treasurys? Commodities?
I see big problems with all of them. So I prefer cash. No cost of carry. But no upside.
I guess my point is that there is no investment opportunity that I can see that is imposing an opportunity cost on people’s money.
I agree that real estate will get worse from here. The financial world reacts quickly and mercilessly when the situation changes. The long-condo crowd reacts slowly and emotionally.
JL, confidence is hard to win when your targets have recently woken up to the fact that they’ve been played in a decades-long confidence game. The presses keep printing, but no one wants to make a move with their free money.
JL- A month or two ago Warren Buffet came out and said now was the time to buy stocks. He is supposedly some greek god of stocks, yet he was wrong.
How is this being wrong? WB invests for 10-15 years in the future so what has happened in 1 month has no bearing to his strategy. Sure he might have bought more if he waited until now, but he’s not into trying to time the market… at all…
It doesn’t take a dial a psychic to predict higher unemployment. We’re already anticipating skyrocketing unemployment, well maybe 8-9% is my guess.
Lending will NOT loosen nearly to the degree it was during the period of insanity of 2002-2007. In fact the TED spread has been jacked since August 2007 (when I got out of stocks). Of course the banks re-assured everything was okay as they tried futilely to roll over their junk ABCP to no avail. The best possible outcome you can hope for is for the TED spread to drop back to what it was during the 1990s (~50bp premium to the fed funds rate, not the 90bp premium currently). The days of interbank lending for a bps above the FFR are very much over forever. Banks need to make money off lending again because their securitization and IB revenues fell off a cliff.
Also non-creditworthey people will not get loans or not with good terms. I know this is hard to understand but there was a time..lets call it the last millenium where if you were genereally irresponsible you paid a significant premium for the privilege of credit if it was available at all. I’m not talking about 150bps premium no-doc liars loans had but a very real 300-800bps premium that justified their risk of default. This premium will have to return as well as mandatory 20% down for buying a property.
“You all will not be laughing at my posts when unemployment skyrockets over the next six months if lending does not loosen. God bless to all. I am done posting.”
If all you permabears think RE will continue to go down, put your money where your mouth is… SRS is a an ultrashort fund that shorts the RE index and doubles the returns (or losses). I laugh at anyone keeping cash while my SRS stake has gone from 86 to $191 in 2 months… although now it might be too high (or is it)? like WB said- be greedy when others are cautious and be cautious when others are greedy. Which one am I?
ChiGuy,
I am a permabear, but I am not 200% confident of my predictions. I know about leverage so avoid leveraged ETFs by and large. Do you have a 1x RE short fund to recommend?
I try to make money by earning it. At this point in time my investment strategy is wealth preservation. I don’t have the time or patience to research the market and correctly time my trades.
This is all very depressing. All my wife and I want to do is buy a condo in a good/interesting part of the city, come to town on the weekends, eat at nice restaurants, shop, look out the windows at beautiful urban views, people watch, go to the theater, and hold it for five years.
Our excess money (made btw by selling a house at over 220% what we paid for it 17 years before,) is sitting in money market funds. Current excess salary is being contributed to low earning mm funds supplementing non-contributory pensions from our retirement jobs. I think in the long run my money is better off in real estate especially since I can enjoy the condo and Chicago.
Chris–what’s “The long-condo crowd”?
homedelete —- exacatly! I’ve always made money earning it, investing is hit and miss at times. I’ve been in wealth preservation mode for 22 months….small exposure to stock market through ETF’s representing the total market for tax and expense reasons.
– Also, absent a bunch of fed govt spending to “create” “jobs”, there is no reason the unemployment rate will not exceed. 10%. The macro factors point to bad things ahead…
If you followed the Oracle you would see that this is a good point to start dollar cost averaging into the market at a relatively low point.
If you dollar cost average in over the next year with a 5-10 year (or even more) horizon I am sure you won’t be sorry, even if you started doing it a month ago. As was noted above, WB wasn’t calling a market bottom, but saying that he thought valuations were good. The problem is that many people that follow the market (and it seems many people on here) have a daytrader mentality instead of a long term investor approach.
And yes that would be a much better place to put your cash than in a mattress (or in leveraged ETFs).
John,
Maybe your definition of “wealth preservation” and “investing” are different than mine.
I would call being diversified (including using dollar cost averaging) in various long equity positions as “investing” and not “wealth preservation”. I always thought of wealth preservation as converting into cash and just buying T-bills.
I should caveat my “success” saying that the doubling of SRS has only hedged my losses on other investments, and isn’t necessarily a windfall.
SRPIX is a 1X. From google finance: The investment seeks daily investment results that correspond to the INVERSE of the daily performance of the Dow Jones U.S. Real Estate index.
disclaimer: I do not hold any business degrees or “professional experience” in stock investing. do your own due diligence.
Lately I’ve been considering stuffing money into my mattress just to be safe but my SO thinks I’m nuts. And there’s all those anti-drug/terrorism laws where if you have more than $10k in cash at any ‘financial’ institution they report you to the feds. The last thing I need is to be reported and subsequently investigated by the feds as trying to pay for a new car in $100 bills.
The dividend yield and S&P 500 P/E are barely back to long-term averages, and dividends and earnings will surely fall next year, justifying some of the recent price decline.
HD.. don’t be so paranoid. They are not looking for you on 10k here and there. I have been flying with silly numbers in the backpack for a while now and as long as you declare it, no prob. Fun thing is going to a bank and asking for anything over 10k and seeing how little they keep on hand. You should keep at least that on hand yourself these days.
KP.. Wall St. expression “Averaging down killed more Jews than the Holocaust” – Maybe there is a reason people say it?
They caught Spitzer because they thought he was smurfing….i.e. structuring transactions to avoid the $10k declaration.
They caught Spitzer because he freaking pissed off some serious powerful people and they found him actually doing something illegal (you know kinda glass house and stones stuff). You have no intention of doing anything illegal and my bet is no one is looking at you. It is your money, you are legally entitled to have it.
Yeah I went long a month ago too. Wasn’t necessarily following WB but I’ve paid dearly for it like him. Then again I don’t need to sell any time soon and am confident 10 years from now equity valuations will be higher than when I bought in.
“…the rest of us who sat out of the mania will be rewarded. Prices will return to affordability, …”
Don’t be so sure. Decreasing housing prices does not necessarily bring increased affordability. If we see a return to the 30’s as some here predict, renting a cardboard box underneath Columbus and Wacker might end up costing 33% of the average income.
RR… I bet you could even wire in free basic cable.
“Then again I don’t need to sell any time soon and am confident 10 years from now equity valuations will be higher than when I bought in.”
LOL. Sounds a lot like what many people say about condos. But they are stupid knife catchers. Stocks always go up in the long run, right?
RunnerRunner,
Over the long term stocks have had a rate of return exceeding overall inflation. The same doesn’t hold true for real estate.
kp – Perhaps you misunderstood. I am mostly in cash (high yielding CD’s all FDIC insured in about a dozen banks as POD accounts etc.). I have owned for quite some time a few broad market ETF’s which are very tax efficient (important since not in a tax sheltered retirement account) and very very low cost (and a couple of stocks too). With a low interest environment and deflating assets cost becomes even more important. I had wanted to put some more money in the ETF’s but I saw this coming and decided (regrettably now) to leave what I had in the market in the market and wait to put in additional $$$. I am 70-75% cash of all my assets….had I been more confident I would have cashed out of the ETF”s last year too but didn’t. So got burned like everyone else but my exposure was relatively small compared to my wealth. I have been wanting to invest more into my long term ETF plan but have been holding off since I saw that the deleveraging was going be troublesome so I waited. As of now, it looks like I will still wait as earnings plunge it makes the earnings to price ratio not look as attractive. We’re not at a bottom in the stock market and may not even be close. 7,500 dow is not unreasonable to expect and lower is possible even 5,000 is not out of the question. When the time is right I will start to dollar cost average some more into the ETF plan…I don’t plan on timing it perfectly so won’t beat myself up over that, but right now the indicators don’t signal a bottom yet. If gold reaches $450-$500 I may buy some of that too…. Right now cash is king….
With regard to Spitzer….there were private eyes following him and they knew about his female friends. He got sloppy. The $10,000 reporting isn’t really what got him, it is any suspicious transaction that can be reported and the $10,000 made for an easy excuse. Quite frankly it was a bogus move living in a near police state. Scary that the govt should even get involved, but the big brother govt did. Time to cut it in half.
Finally, owning will be cheaper than renting! I just hope Steven Heitman is not my neighbor. If he is, I’ll just pick my box and move somewhere else. Personally I have fond memories of graffiti bridge on lake-cook road in a northwest suburb where I grew up; maybe i’ll live there.
“#RunnerRunner on November 18th, 2008 at 5:32 pm
“…the rest of us who sat out of the mania will be rewarded. Prices will return to affordability, …”
Don’t be so sure. Decreasing housing prices does not necessarily bring increased affordability. If we see a return to the 30’s as some here predict, renting a cardboard box underneath Columbus and Wacker might end up costing 33% of the average income.”
wow….just read all of these posts, how many here are traders reading this site? Spu’s just took out lows and gapping down overnight…i will start getting long when it hits 500. The “conventional wisdom” keeps telling me it cant go lower, so it must. What are some good Obama plays? will there be a new infrastructure buildout in the US to replace already existing aging bridges, etc?
as for RE….isnt there 10k condo units coming online next year alone? is there anyone receiving the economic signals being shouted now? or can they simply not change their course??