Foreclosure Alert: $210k Below Prior Sale Price at 1250 S. Michigan
Michigan Avenue Tower, at 1250 S. Michigan, in the South Loop is part of the wave of new construction around Michigan Avenue and Roosevelt Road. It was built in 2005 and has 229 units.
Perhaps you’ve seen the Craigslist ad for this three bedroom unit.
Previously for sale at 659K. Bank is asking 525K!
Spectacular 3 BR, 2 BA newer construction Condo on high floor w/ many upgrades & fabulous views. Hrdwd Flrs, Granite & Stainless, FP, 2 Balconies, Master BA w/ sep Shower, 2 Deeded Prkng Spaces in Gar, Doorman, Pool & Sundeck. Walk to Park, Lake Museums. Property is sold “as is” but in great condition.
Don’t blame me for the pictures!
Unit #2604: 3 bedrooms, 2 baths, 2 car parking
- Sold in March 2006 for $735,000
- Was listed for $659,000 prior to foreclosure
- Now listed at $525,000 (parking included? It sounds like it from the listing)
- Assessments of $600 a month
- Chicago Realty Partners
The most expensive unit for sale in the building is Unit #2706, 3 bedrooms, 2 baths, 1800 square feet:
- Currently listed for $719,000 plus $39,000 for parking
It looks like the high-end of the S Loop market is starting to tumble. I’m waiting for the low end.
Looks like foreclosure is the way to go as eventually the bank realizes they can’t keep paying the carrying costs of a portfolio of vacant units.
Still overpriced. Wait for the 5900 units coming online in downtown this year.
I have a strong feeling the South Loop will crash hard, like Miami. It is becoming very overbuilt and very overpriced for what it is. It originally became popular since it is close to downtown and was a lot cheaper than the north side neighborhoods. Now that prices have caught up, and stopped rising on the north side, it loses that advantage. Plus parts of it are still pretty rough and devoid of neighborhood features like restaurants and stores. I’m sure it will be a viable neighborhood long-term, but prices will crash hard in the next few years in many buildings.
Pete you are exactly right. I am waiting for the eventual collapse and bottom. I think the bottom for this area will occur in mid-2009 to mid-2010. Absolutely no sense in buying now as who would pick it over River North or Streeterville for the same price/sqft.
Just as Miami got overbuilt with expensive condos and is collapsing so will this area. If you read the thread here on 1502 S state it is apparent the vast majority of condo owners in this area are already or will be underwater on their mortgages before the bottom.
Today the WSJ has a chart showing that they expect 24% of all mortgages to be underwater by mid-2009. I think in areas like the S Loop and Miami it will be far higher than 24%.
I would choose the South Loop over Streeterville. There is too much chaos in Streeterville. I like the relative calm of the South Loop. I am living with family in a University Village townhouse. I would like to buy somewhere in the South Loop, but with everyone talking about the eventually collapse of the market, I might wait at least 6 months or so to see what happens.
I came close to purchasing a balcony unit in 1720 S. Michigan for $229,000 including parking. I worried that the condo would end up losing value though, so I passed up that opportunity. Does anyone know if that’s even a good price?
from what I can tell, chicago market is 2 years behind florida/california which are seeing capitulation this year. So 2010 sounds about right.
Jenny, you could rent in most of south loop buildings for much cheaper, just make sure the landlord has solid financials.
Isn’t that part of the problem with renting in any of these new construction buildings? How do you know your landlord won’t go into foreclosure?
It seems risky to me- especially as we move into 2009. Most of those renting out the new construction condos aren’t getting anything even close to covering their monthly costs.
You are right Sabrina, renting is quite risky too. Wouldn’t it be poetic justice if renters have to do a background check on landlords 🙂
But buying in some of these buildings may be even worse. With large number of forclosures, the associations could face substiantial liabilities (its already happening in miami) and if a building get a lien placed, selling will become especially cumbersome.
I think the risk Sabrina is highlighting is part of the package deal of having a flipper subsidize your rent. Sure you might not be in your luxury apt more than a year or two, but it is much nicer paying $1500 for a luxury 1bd/1ba with parking thatn it is paying $1,800 in a true rental. The rent savings over the course of even a 1 year lease will more than cover moving fees. Of course this is strictly financial, nothing can cover the hassle of being forced to move.
Don’t worry, the apartment buildings will be lowering rents. More condos yet to come with lots of flippers or stuck developers. The flood of rentals will create some serious competition for renters downtown. Bob is absolutely correct, you will get a better deal in a condo in exchange for the “risk.” They will draw tenants away from the apartment buildings, which are also being overbuilt. The prices will keep getting better until the supply stabilizes, which won’t be anytime soon.
The downward spiral is in effect and the gurgle at the bottom is not yet audible.
While the supply is increasing, the demand for rentals is also increasing. I think as gas will approach $5/gallon this summer and it looks like it will continue to rise in the near future, many people would rather live in the city/downtown then out in the suburbs and commuting.
Also the demand is also increasing due to the large number of students who used to commute but now would rather live on campus. If you look at the South Loop, within 2 miles it can be considered one of the largest aggregation of students in the country. There are probably close to 60,000 students at all of these colleges (Columbia, Roosevelt, UIC, IIT, Robert Morris, Depaul, Art Institute…). In the past most were commuters but as the suburbia pushes further out, many students are deciding to live close to school in the South Loop and Loop. Believe it or not it is cheaper for most of the students to rent and share and apartment then live in the dorms.
Condo Investor, Good luck you are going to need it.
CI, you might want to consider what false demand was created by the student loan bubble. The default rates at some schools you mention are prime contributors to the unsustainable lending. RE wasn’t the only credit bubble.
G
The defaults in student loans occured after they finished school. But while the students are still in school they will need a place to live. The amount of loans a particular student can get is based off their tuition and room and board estimates. While lenders will cut back on lending to real estate or other investment, it would be very politically difficult if Sallie Mae and other lenders stopped loans to students. While the government has cut back on Federal Grants to students they have increased the limits in terms of their loan programs in both subsidized and unsubsidized loans.
The enrollments at these schools has grown significantly in the last 5-10 years and they plan on continued expansion of programs and students. If you look at just number of students, the 1-2 mile radius from the Loop is probably one of the, if not the largest campus towns in America.
While Condo Investor certainly has some valid points, I doubt that the demand for student housing is even going to come close to the supply coming online in the Loop and especially South Loop.
Also are most of these students going to be able to afford a luxury apartment? When I was a student I lived in the cheapest housing available (think roach motel). Maybe the 2 & 3BRs will rent out but I see a very limited market for $1400/mo 1BRs renting to students aside from law/b/med-school grad students which is a much smaller market.
CI, Those schools are very small, Champaign Urbana almost has more students living off campus within 2 miles of campus than ALL(loyola, Depaul, U of C included) of the current students in Chicago. if you were to say city campuses you might be in the top 10 nationwide.
Bob
You are right in that most students can not afford a one bedroom by themselves unless they are in a professional school. The students can easily afford an $1800-$2000/month 2 bedroom because in the student housing that is provided by the colleges they pay around $1000/month and that is usually to share a 3 or 4 bedroom unit. The quality of the condos is also much nicer so for many students they would rather have the freedom and quality of renting on their own.
Also as for the number of students in the 2 mile vacinty here is a quick estimate
Columbia – 11,500
Roosevelt – 7,500
Depaul – 7,500
Robert Morris – 7,000
UIC – 22,000
IIT – 6,500
Don’t forget Rush, Kent Law and a bunch of other small schools as well. While not specifically schools you also have 6 Teaching Hospitals in the area with a large number of medical residents.
Yes, great idea -rent your luxury condo to 19 year olds. That experience itself should cull a lot of amatuer landlords. But overall, when markets get flooded with condo’s for rent, this should put downward pressure on well established rental buildings also. This is where the opportunity will be.
unit #2900 penthouse on 1250 s michigan ave….i wanna put in an offer for around 650k? thoughts?
any idea on the rent i could get on that unit?
average flip value after say 4 years?
thanx guys..
I saw this unit recently as well. I’ll write about it tomorrow.
As for this: “average flip value after say 4 years?”
The south loop is the LAST place you’ll be able to flip anything in that short of time because of the sheer number of units that are still to come on the market. Several more high rises have yet to even begin closings (they’re stalling into 2010 in the hopes the housing and credit markets improve.)
Sabrina, you said: “because of the sheer number of units that are still to come on the market. Several more high rises have yet to even begin closings” – Can you please name some of the up coming high rises in South Loop. I thought Legacy will be the only one which will start delivery may be next year.
Thnx – Sunny!
Sunny,
It seems also YoChicago and Appraisal Research Counselors devote significant effort toward compiling and sifting through this data.
http://yochicago.com/downtown-chicago-weekly-rental-watch/12950/
“We found a total of 1,927 residential rental listings available this week”
&
“We’ll update the count each Friday afternoon in the coming weeks, and try to provide some perspective on the numbers.”
One caveat is they don’t separate out the South Loop but rather focus on condos in the downtown area. This might provide some context of the availability on a more real time basis than indices or reports that can be lagged by a longer period of time.
Also Sunny check out YoChicago’s highrise map here for a list of buildings coming online this year and in 2010 and 2011:
http://yochicago.com/high-rise/
Looks pretty extensive!
Right- follow Bob’s advice Sunny. YoChicago is covering all of the new construction.
There are several new buildings that are just starting closings that will go into 2010- like Astoria Tower on E. 9th Street in the South Loop.
Thanks Bob & Sabrina – This is very useful information.
What do you guys think abt 2 bed/bath unit at 1250 S Michigan (Unit 1809)?
The unit is listed for $399,000. The price excludes parking which is another 35k. what kind of price one should consider for suck kind of units? Please advice!
Regards
Sunny!
The unit is in the market for 55 days. I will go to take a look at the unit this week. Any suggestions/ideas are appreciated?
Regards
Sunny!
Unit 1708 is a 1 bedroom unit listed as a short-sale with an ask of $164,000.