Condos Over $500k Struggling to Sell in Lincoln Park’s Ranch Triangle
The condo price point over $500,000 seems to be a hard sale right now.
Two units are for sale in 1887 N. Poe in the Ranch Triangle area of Lincoln Park, more commonly known as the Clybourn Corridor.
The building was built in 2005 and appears to have four units.
Two first floor duplexes are currently on the market.
Unit #1F: 2 bedrooms, 2.5 baths, 1700 square feet
- Sold in August 2005 for $510,000
- Was originally listed for $624,999
- Reduced $59,999
- Currently listed for $565,000 (parking included)
- Assessments of $120 a month
- Prudential Preferred has the listing
Unit #1R: 3 bedrooms, 3 baths
- Sold in April 2005 for $577,500
- Originally listed at $599,899 in October 2007
- Reduced
- Currently listed for $559,900 (parking included)
- Assessments of $140 a month
- Koenig & Strey has the parking
Looks OK. I’m glad they used nicer cabinets than the usual new construction.
The 3/3 unit seems like a reasonable price for that location. The 2/2.5 unit’s owner is delusional as he is listing his unit for a similar price as the 3/3 and a good 10% over the ’05 price.
Why is the 2/2.5 even on the market at that price when there is a better alternative for the same price in the same building? Silly flippers.
Seems like things will get tougher:
http://www.chicagotribune.com/business/chi-re-harney-condo-loan-0420apr20,0,701570.story
WASHINGTON—If you own or plan to buy a condo, a new phase of the mortgage credit squeeze could be looming.
Because of underwriting changes by giant investors Fannie Mae and Freddie Mac, plus new restrictions by private-mortgage insurers, getting a loan on a condo or refinancing one you own could prove tougher than you imagined.
For example, starting May 1, AIG United Guaranty, a private-mortgage insurer, no longer will write coverage on condos in hundreds of ZIP Codes that it designates as “declining” markets. Applicants’ credit scores, assets or equity stakes don’t matter. Even in the healthiest real estate markets, United Guaranty will require buyers to put at least a 10 percent down and will reject applications in buildings where more than 30 percent of the owners are investors.
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10% down. Hmmm, where is that $60g’s I had laying around….
Must be a pretty large king-size mattress.. 😀
I like how you take this Poe property and turn it into the general market direction of Lincoln Park. The front unit is over priced and the rear will be under contract in a couple of days.
I just ran the numbers on Lincoln Park. There are 129 properties on the market between $500k – $600K. Of the 128 properties, 39 are under contract and pending closing. I don’t know what you refer to as a strong market but having 31% of all available properties under contract is a very healthy market.
Take a look at the south loop and the same ratio may be closer to 10%. South Loop bad and Lincoln Park good!
Comments?
Wow, that first owner thought he would get $115,000 more than the already inflated 2005 price? What was he smoking? His reduced price is still way too high. That is a nice place, but I think it will have to take another huge reduction in price (less than the 2005 price) before it will sell. This wannabe flipper will flop.
Dan the Man, you wrote “I like how you take this Poe property and turn it into the general market direction of Lincoln Park.”
Did I miss something, because I don’t see where anyone has done what you claim?
Let’s wait and see how many of the contracts actually close and at what prices. I think quite a few of them will be below $500K, which I think was the “general market direction” implied by this topic.
The sale prices from the past month are getting closer and closer to prior sale prices. Some listed properties, such as 1R above, already are below the prior sale price (when it was not a new unit at the time.) You claimed previously here that “Prices in Lincoln Park have continued to rise. There has been no price decline and there will be no price decline.” You did qualify that statement with something along the lines of “except for those that do drop,” so what was your point? Do you believe it is a great time to buy because they aren’t making any more land in Lincoln Park and fence-sitters will be priced out forever?
Comments?
SITC, you won’t be the only one stuck when other mortgage insurance companies follow suit. Here is what the declining market designation means (and for AIG it appears to include every Chicago zip code, including Lincoln Park 60614 where “it is different.”)
Ineligible:
LTV/CLTV greater than 90%.
Cash-out refinance.
A-minus loans.
Investment properties (including owner-occupied 3- to 4-unit dwellings).
Limited documentation (this does not include GSE AUS doc waivers).
Manufactured housing.
ARMs with first rate adjustment of less than 5 years.
ARMs with interest-only period less than 0 years.
Second homes.
Condominiums.
Co-ops.
Construction-to-permanent loans.
Potential negative amortization.
Loan amounts greater than $650,000. (Loans under the GSE Conforming
Jumbo product greater than $650,000 are eligible for insurance with
maximum 85% LTV.)
So I can’t get like a 95LTV loan anymore?
Editor’s Note re Dan the Man’s comment: “The front unit is over priced and the rear will be under contract in a couple of days.”
#1R, the “rear” unit, has been on the market over 200 days. It has been listed at the recently “reduced” price of $559,900 for 27 days.
I understand there are a minority of properties that people paid too much for back in 2005. I can list 100 properties in Lincoln Park that were purchased in ’04 & ’05 that have now resold at higher values. I would bet the overall number would be around 90%. Those that purchased new construction on Ashland, Irving Park Rd. and Diversey will sell today at a loss. The rest of us are looking good
5% down payments will be limited in areas within a declining market. Cook county is not included in this group so it does not currently have any affect on us.
Lincoln Park Appreciates at 3.5% annually from 2005 – 2008. 1130 w Armitage sold back in 11/2004 for 500,000. The unit sold again last month for $550,000 clearly pointing to continued appreciation in Lincoln Park’s triangle district.
Yes this is true but no it means nothing. If you want to chat about markets at least talk about the positves as well as the negatives. Your very shallow readers will end up renting the rest of their lives…
Lincoln Park appreciates at 7% annually since 2003!
1846 N halsted. Purchased in late 2002 for $424K and is now under contract with an asking price of $624K in just under 40 days. Holy appreciation!
G – The average closing price for all properties in the past 6 months is 2% below the ask. Do you really think that is going to change over the past 30 days?
The average close price of each of these units will stay within the historical average of 2 – 3 % below the ask.
Dan: Cook County is included in the “declining” markets.
You’d better believe they’re going to tighten lending requirements in the city. Yes- even in Lincoln Park.
Jason on April 22nd, 2008 at 4:23 pm
So I can’t get like a 95LTV loan anymore?
&
Dan
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No more zero down, period. I have been hunting around and it is gone. Freddie Mac wants 3%, all the brokers I called have a min of 5%.
As i read that article, most condos cannot/ will not get PMI for anything less than 10% dp. I (and most of us probably) can still could dp 5% then get a 15-80 loan. But, I will go on a limb and call 10% dp mandatory by year end.
Dan, yes Chicago / Cook Cnty too. You will be Da Man if you can post me a mortgage brkr that can do me 100% fin. PLEASE.
Cook county is not included in Fannie Mae’s decling markets. Maybe the GF but not Fannie Mae. The credit markets are tight right now but money will come easier to come by in 2008. The worst of the credit crisis is out there. The south loop is about as close to california as we will get.
Anyone here buy int he SL? I hope not…
Market Definitions:
Homecomings will classify a property as being located in an A, B, C or D market. This classification will appear on the Assetwise Findings report and is also available through our Declining Markets Policy Tool.
Properties designated in an “A” or “B” market are considered low risk and do not require maximum financing restrictions.
Properties designated in a “C” or “D” market are considered high risk and must follow the LTV/CLTV requirements in the tables below (for non-conforming programs). In addition to the Declining Markets Policy Tool and as noted on the Assetwise findings report, properties may also be considered a “D” market as follows:
If more than one comparable used in the appraisal report is over six months old
The appraiser indicates on the appraisal report that the property is located in a declining market
To find out if your zip code is in one of the “declining market” zones- you can use this GMAC tracker:
Declining Markets
Both 60612 and 60614 are labeled a “C”- which is a declining market as far as GMAC is concerned.
Each lender may have different designations.
Not yet. I’m sitting on a fence watching the SL. Which is good because by the time I have 10% down it will be approx 18 months away.
Older and wiser people from previous RE busts have told me to buy a pre-foreclosure and thats exactly what I plan to do. Also just like used car buying: don’t ever fall in love with a specific place (ie: car & color for the car). True indifference = leverage.
GMAC does not run the market. Check with Wells Fargo, Bank of America, WaMu, and others to find cook county not designated as a “declining market” Just because GMAC goes conservative does not mean the other will as well.
In 18 months the north side will be up 5% and the SL down 20%. Who in the world would pay $300+ per sq ft in an area that is completely undefined? Stay away from new construction on the edge of a neighborhood and for god sakes stay away from the SL. High rises blow as well unless of course they are high end and not in the museum campus.
Sabrina – Your GMAC reference was similar to your Poe reference. In each you took a samll sample of the market and tried to apply it to the entire market.
I agree that lending standards should tighten, which they already have. 100% financing was part of the home ownership push from the Bush admin. The admin set the policy for Fannie & Freddie back in 2001 to help minorities become home owners. The system was abused and now here we are. It was irresponsible and now the market will return to pre-2000 lending standards. Similar to the Nasdaq back in 2000, the inflated home prices will return to the historical averages. The world is not coming to an end and many markets will continue to appreciate. The general trend is for Urban areas (true walkable cities) to continue to see increased demand.
Thoughts?
Per GMAC the following Zip Codes are graded “C” or declining markets:
60630, 60631, 60646, 60656, 60634, 60707
These Zips are the working class and up safe neighborhoods of the NW side. From Belmont Ave to Niles, from Pulaski to Park Ridge. They encompass such expensive places like Norwood Pk, Edison Pk, Edgebrook, and Sauganash.
Dan the Man on April 22nd, 2008 at 8:08 pm wrote:
“G – The average closing price for all properties in the past 6 months is 2% below the ask. Do you really think that is going to change over the past 30 days?
The average close price of each of these units will stay within the historical average of 2 – 3 % below the ask.”
Here are the attached single family sales results in the mls since 1/1/08 for Lincoln Park (calculated on total list and sale prices for each price category):
Sale Price Range No. Sales %
under $200K 18 89.7%
$200-299.5K 45 93.3%
under $300K 63 92.5%
$300-399K 44 94.8%
under $400K 107 93.7%
$400-499K 30 93.9%
under $500K 137 93.7%
$500-599K 28 95.7%
under $600K 165 94.3%
$600-699K 18 96.4%
under $700K 183 94.6%
$700-799K 10 95.3%
under $800K 193 94.7%
$800K+ 21 99.1%
grand total 214 95.6%
Only the high end of the market is near the so called “historical average of 2 – 3 % below the ask.” These numbers are also distorted to the high side by the inclusion of new construction sales which are often entered as a listing at the time of contract. They are also distorted upward by the common listing practice of not including the parking in the list price (although I adjusted the obvious ones.) A further upward distortion is created by properties which were previously listed and taken off the market long enough to “reset” the market time.
In response to DtM, it looks like it already changed (if he calculated the % correctly to begin with, that is.)
Not sure where you received your data but in Lincoln Park the average is 2 -3% of the final listing price. I can send you them all if you would like.
Past 3 months in Lincoln Park –
Statistics Total Properties: 124
List Price Sold Pr Approx SF Beds Baths Mkt Tm List Mkt Tm
Minimum $134,900 $129,500 * 0 1 1 1
Maximum $1,250,000 $1,311,053 * 5 5.2 639 336
Average $438,533 $428,454 * 2 2 127 83
Sold properties closed averaging 97.7% of their Final List Price (FLP).
This reflects a 2.3% difference between property sale prices and their FLP’s.
The last was for condos. This is for Single families
Statistics Total Properties: 13
List Price Sold Pr Approx SF Beds Baths Mkt Tm List Mkt Tm
Minimum $850,000 $814,000 * 3 2.1 2 2
Maximum $2,599,500 $2,375,000 * 6 5.1 539 470
Average $1,711,269 $1,633,769 * 4 4 219 110
Sold properties closed averaging 95.47% of their Final List Price (FLP).
This reflects a 4.53% difference between property sale prices and their FLP’s.
* Some of the Sold comparables do not have Approx. Sq. Ft. data on file. If you have access to this information, click on
the Comps. Adjustments tab to enter the missing values. They will be used for purposes of comparison and calculation.
Dan the Man: 2-3% of the FINAL LISTING PRICE.
Isn’t that the point here?
I’m seeing reductions all over the place- even in LP.
These units on Poe may finally sell for 2-3% of their final listing prices- but those prices are UNDER what these sellers paid several years ago and significantly under the original list (in some cases-10%-20% under the original list.)
If DtM is right, then buyer’s agents aren’t doing their job. There’s no reason for a buyer to that close to list price with the current asking prices for most properties. Right now, if you pay more than a prior sale from ’05 or later, the buyer is essentially paying the realtor’s comission.
That’s part of why the realtor’s need to be such boosters–if prices are flat, sellers will start wondering what they’re getting for the $30k+ that’s coming straight out of their pocket.
Sabrina – The point of this thread was to point out that the units under contract in LP will sell for 2 -3 % below where they are CURRENTLY listed. And for Anon – Buyer agents are doing there job as they are not allowing thier clients to purchase a property until the seller drops the price to fair market value. The reason we have so many price drops is that sellers are still unrealistic and price their properties high to start. They adjust their price only after 10 – 15 potential buyers walk through and reject the property.
It is all about the seller coming to their senses and listing at current market values. Sure there are a few properties where the seller will lose money, but that is because they paid too much when they bought. The premium people pay for new construction cannot be passed on when it comes time to sell. These are the people that end up losing out. Make sure you buy new construction carefully so you don’t have the same fate…
“It is all about the seller coming to their senses and listing at current market values.”
“In 18 months the north side will be up 5%”
How do you advise your sellers in LP? If the market is rising, how can one justify any loss, even on first re-sales? (that second question is rhetorical–I get it, but how do you convince your sellers?)
What’s FMV compared to ’05 or ’06 prices? Down 3%, like the property above you think will sell quickly? And it should close 2-3% below that? So, with transaction costs, it’s a 10%+ (i.e. $60k+) loss? That’s a tough nut for anyone who bought in ’05/’06, especially when over half of the loss is going to realtor charges.
DtM, perhaps unknowingly, is utilizing a misleading stat in order to perpetuate a ponzi scheme.
The “push an mls button and get market stats” result that DtM promotes is distorted upward due to the reasons that I mentioned in my last post. Why won’t he address that fact?
I don’t know if he exhibits cognitive dissonance or is simply a con man. Is there another explanation for his prior claim that “Prices in Lincoln Park have continued to rise. There has been no price decline and there will be no price decline”?
Show me anything that points to prices following in Lincoln Park. For every property shows a loss I will show you 2 that shows a gain over the past couple of year.
Con Man?
“Prices in Lincoln Park have continued to rise. There has been no price decline and there will be no price decline.”
Cognitive dissonance?
It just went under contract. Looks like DTM was correct,
As of this morning, the MLS shows 1F, and 1R as active (not under contract), and no units are pending sale.
Which unit went under contract?
2R is listed for rent at $5,200/mo
“It just went under contract”
What’s the price? Has to be at least $543k (I’m giving the $103) for DtM to be correct.
Even then, how does it square with DtM’s quote?
“Prices in Lincoln Park have continued to rise. There has been no price decline and there will be no price decline.”
Well, I guess he’d need to find two properties that are selling for more than ’05 prices (“For every property shows a loss I will show you 2 that shows a gain over the past couple of year”) and then, depending on the actual purchase and sale prices of those two properties, he might be able to say that the median, mean or both have gone up.
Lies, damn lies and statistics–the milieu of real estate price trend discussions.
All the while leading knife-catchers to their fate.
I called to schedule a showing and the lister said they have accepted a contract. That is all I know.
Looks like 1R is under contract.
So, DtM, what’s the price? I assume you’ll follow-up after closing to show that you were right.
I saw both Poe properties and I think they are not selling or at least the 3 bedroom is b/c of alleged possible mold and water damage..DISCLAIMER.. I say alleged b/c I do not know that to be 100% true..just a rumor going around.