The Starter 1-Bedroom Southport Condo: 3458 N. Janssen
A lot of first time homebuyers who want to be in Lakeview look to the Southport Corridor and condos like this 1-bedroom at 3458 N. Janssen.
It is in a courtyard building only a block from all the bars and restaurants on Southport and within minutes of the Southport El line stop.
The unit has a den with french doors that can also be used as an office.
It has central air and a washer/dryer in the unit. Alas, it doesn’t have parking but in this location, who needs a car anyway?
The unit has been on the market since June and has now been reduced by $23,000.
It is also now listed for $100 under its 2005 purchase price.
Will the $8,000 home buyers tax credit (soon to be extended, it appears) help boost sales of these starter condos?
Michael Kreuser at Sudler Sotheby’s has the listing. See the pictures here.
Unit #I3: 1 bedroom plus den, 1 bath, no square footage listed
- Sold in July 1998 for $135,000
- Sold in May 2005 for $260,000
- Originally listed in June 2009 for $282,900
- Reduced several times
- Currently listed for $259,900
- Assessments of $171 a month
- Taxes of $2756
- Central Air
- Washer/Dryer in the unit
- No deeded parking available
- Bedroom: 12×10
- Den: 7×7
- Living room: 16×12
- Kitchen: 10×7
- Dining room: 8×7
Such a deal for your typical Lakeview-median-income young professional just starting out! Median income for 60613 is $48,300, for 60657 it is 60657. A single professional just “starting” to accumulate equity is unlikely to be able to afford more than about $180, figuring a mortgage no more than 3X his income (the most you should EVER borrow) and a 20% downpayment. A 3.5% downpayment would mean a bigger mortgage that is out of this person’s bracket.
Earth to Seller: 2005 is OVER and we are in a deflating economy, despite the “growth” rate of 3.5%, all driven by BORROWED tax money. Get real already. Nobody is going to give you the 2005 price just on principle. If you want to sell this place, you will have to mark it to reality. There are no more pick-a-pay loans out there, and lending standards are much tighter even for FHA loans.
This little growth spurt is driven by government borrowing and spending, and on crap that is intrinsically unsustainable at that, namely the housing market and cars. 2005 prices only happened because of the unbelievably lax lending standards, and anything lower or mid bracket will henceforth have to be priced according to the shrunken buying power of its likely buyer.
Having said all that, I’ll add that it’s a cute one-bed apartment…. for about $75000 less.
Laura – you were going to write the median income for 60657 and had a typo. I’m curious what the number is if you have the data?
I live in the area. Parking is not very easy any time let alone during Cubs games.
I remember when courtyard apartments were just that APARTMENTS! I never understood or saw the value of BUYING a 1br condo even in the bubble.
1br and and small 2br are to be RENTED in my opinion.
besides my little rant the place is nice a great place for a college kid or just out of college.
I agree with Laura the 2005 price was too high and all bubbled up
I don’t think the list price is way off base, esp since the taxes and assessments are quite reasonable. I bet this sells for $230K or so.
“1br and and small 2br are to be RENTED in my opinion.”
I would argue that now is the time to buy units of this size. To your point, these units are of optimal size for a rental, so there will always be demand. If you buy the unit on a cash flow positive basis and have a longer term holding period, this could work out well.
Buy the unit, live in it a few years, then rent it out. The government is keeping rates artificially low, so why not lock in 30 year debt at 5% and then sit back and clip coupons once inflation sets in. Of course, you have to buy the unit right and not overpay by 20%.
Please tell, exactly how many people in this country have become miniature land barons from buying single unit condos in converted buildings and then renting them out?
#MJ on October 30th, 2009 at 8:09 am
“1br and and small 2br are to be RENTED in my opinion.”
I would argue that now is the time to buy units of this size. To your point, these units are of optimal size for a rental, so there will always be demand. If you buy the unit on a cash flow positive basis and have a longer term holding period, this could work out well.
Buy the unit, live in it a few years, then rent it out. The government is keeping rates artificially low, so why not lock in 30 year debt at 5% and then sit back and clip coupons once inflation sets in. Of course, you have to buy the unit right and not overpay by 20%.”
This place would be a good deal if it came with a parking space, since it doesn’t… FAIL!
But some realtard will sucker someone into buying this place I’m sure.
The point isn’t to become a “mini land baron.” The point is that buying a unit of this size in this market isn’t idiotic. In fact, it could be financially prudent as you would reap tax benefits, have a quasi inflation hedge, and be making payments less than or equal to market rents. This unit doesn’t fit the bill as it is overpriced, but there are other 1bed or small 2beds in prime areas that do.
You have to start investing somewhere if you want to be any type of land baron, I would agree with MJ, this wouldn’t be a bad place to start with.
And Sonies, come on. It’s naive to think that buyers aren’t responsible for their actions and that it’s always the agent’s smarmy salesmanship that’s the problem. There are buyers out there that are still simply paying too much because they can and will.
I believe I have come to the point where I now value housing investments the same way I do antique furniture. When I see a piece I like and need to have I will pay the asking price no matter how high as it is something that I am interested in having.
Using the philosophy, only the seller and the buyer can really determine if the price they are asking is an appropriate to both parties price.
While there is always a few comps for every property, I don’t think all purchasers use those figures as a basis for pricing something they are truly interested in. I know many times in the past I overlooked the comp prices and went forward with my purchase. Only once or twice have I realized that I made an error in paying too much.
What will happen when interest rates go back up? There’s a lot of doubt as to how long we can keep interest rates at current levels, and IMO the major cause of the lending squeeze is that the high risk of lending in a time like this is not priced into the interest rates.
Would YOU lend money long-term at these rates?
That’s why 95% of all mortgages out there now are one way or the other backed by the government, directly or indirectly, including non-FHA loans. Fully 95% of all loans are now sold to Fannie Mae, Freddie Mac, or Ginnie Mae (the backer of all FHA loans). At the bubble peak in 2005, only 50% of all loans were bought and securitized by these agencies, and when they started defaulting, it was enough to put these agencies in a financial pickle, which we taxpayers are being made to cure.
Now the government has reached the end of its borrowing power, which is why the extension of the tax credit is being debated. Bernanke has even admitted that the treasury will not be able to extend more money to rescue the housing market. We can’t afford to extend the tax credit, let alone increase it to $15K or extend it to a larger pool of buyers.
If we cannot put more money into backing up the housing market by providing more capital to these agencies, how will they buy more loans? They won’t, it’s that simple, and that means that the money available for mortgages will simply dry up. Add that to the 7 million foreclosures still pending from the past 2 years, and the current horrifying combined default and delinquency rates of 20-24% for FHA loans generated in the past two years, and you can see that the current housing market is still a house of cards, and that we are due for steep deflation in spite of our government’s attempts to inflate us out our savings and what else remains of the wealth of the population, to prop this crap up.
From where I sit, it looks like a massive mistake to buy at anything like 2005 prices, and that people doing so will be mired in a depreciating asset.
What will happen when interest rates go back up?
I’d argue that when rates go back up, we will be in an inflationary environment. No way the Fed gets the timing right. So rents would increase while your 5% mortgage stays flat. Yes, you can argue higher rates will drive down housing prices, but since there will be virtually no new construction in the next several years, there could be a suppy/demand imbalance (I know, I know..South Loop) and prices could stagnate and not decline. Not to mention construction costs will be increasing, which makes it cost prohibitive to build.
Those of you rah rahing for a deflationary environment, its not going to happen. They are fudging the numbers anyway, and like MJ said, if rates go up, that means we have inflation on our hands and a weaker dollar, which is good for owners of hard assets.
The problem is the Fed will not get it right. they really need to raise rates (and soon), but still keep (some/if not most) of the extra liquidity in the system. Once and as rates rise, they should correspondingly lower liquidity.
I second this, as most likely.
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MJ on October 30th, 2009 at 12:03 pm
What will happen when interest rates go back up?
I’d argue that when rates go back up, we will be in an inflationary environment. No way the Fed gets the timing right. So rents would increase while your 5% mortgage stays flat. Yes, you can argue higher rates will drive down housing prices, but since there will be virtually no new construction in the next several years, there could be a suppy/demand imbalance (I know, I know..South Loop) and prices could stagnate and not decline. Not to mention construction costs will be increasing, which makes it cost prohibitive to build.
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Ah….we will be in a deflatationary period for many years to come. Printing money alone does not create inflation…velocity of money and access to lending is an equally important part of the inflation recipe. We already had our inflationary run…have quicky you forget 5 dollar gas and 100 percent increases in home prices during the early 00’s…
I find it very disturbing news for the economy that nobody is willing to invest in ANYTHING at the moment unless it is some way shape or form backed by the government or benefitting from government stimulus money. And I’d have to include myself in that group since the financial markets are so distorted from government pumping that its impossible at the moment to tell what true “market value” is.