How Hot Is the Market? Trying to Sell Just 9 Months Later In Lincoln Park: 1312 W. Webster
We first chattered about this 9 unit new construction building at 1310-1312 W. Webster in Lincoln Park in November 2011 when it was under construction.
See our previous chatter here.
The units sold pretty quickly but you’re in luck if you really wanted to buy there.
A 4-bedroom duplex down just came back on the market only 9 months after its previous sale.
At 2600 square feet, it is on an extra wide lot with both front and rear decks as well as a private deck on top of the garage.
The unit has upscale finishes such as crown molding, heated floors and stone baths.
The kitchen has dark wood cabinets, granite counter tops and Viking and Wolf appliances.
It’s a little bit of a different floor plan than we usually see in the duplex downs.
All four bedrooms are in the lower level instead of having one or two on the main level.
The family room is also on the main level next to the kitchen (usually it’s in the lower level) so the living/dining room is actually a separate space in this unit- not open to the kitchen.
It has a 1-car garage.
It came on the market listed $49,900 above the March 2012 purchase price.
Is the market so hot that someone will pay nearly $50,000 more than just 9 months ago?
John Vossoughi at @Properties has the listing. See the pictures here.
Unit #1W: 4 bedrooms, 2.5 baths, 2600 square feet, duplex down, 1 car garage
- Sold in March 2012 for $830,000
- Currently listed at $879,900
- Assessments of $190 a month
- Taxes are still “new”
- Central Air
- Bedroom #1: 17×14 (lower level)
- Bedroom #2: 12×11 (lower level)
- Bedroom #3: 13×11 (lower level)
- Bedroom #4: 13×11 (lower level)
- Family room: 17×17 (main level)
It’s very nice, but I do think there is such a thing as over-improving a duplex down, even in a really great location. Someone spent $830k on it before, though, so I guess there is a market. Also assessments seem WAY off.
“Is the market so hot that someone will pay nearly $50,000 more than just 9 months ago?”
To state the obvious, it’s list vs closing price. About 5 percent off current list would put it right around the prior close (in nominal terms).
Nice looking place, but no way in hell I’d pay almost $900k to have a basement master bedroom. I don’t care how nice the finishes are in the place or if it is in the Greenzone of the Greenzone. I wouldn’t even pay $500k for a basement master bedroom. I know in theory it shouldn’t matter, as bedrooms are usually where you spend the least amount of time, but there is just something wrong about paying that amount of money and when you strip away everything, you are sleeping still just sleeping in a basement.
I wonder if this is the developer’s unit which explains the quick sale?
Yeah, unless this was a prime location, many would never want to live in a basement, let alone pay $800K+ for it. Are the low interest rates driving crazy purchases these days, or are people just in the clouds?
“Also assessments seem WAY off.”
I disagree with that. I own a unit in a building like this not too far away and the assesment is $225/month for the duplex downs that are around 2500sqft, self managed and we run a water pressure pump to increase water pressure for all the units.
Perhaps the owner just lost his/her job.
I would say pricing is a tough call for the unit/area. With a double lot, the interior is wider than most townhomes/sfh and that extra couple of feet makes a BIG difference. The layout is also very funcitonal for a family except what everyone here is saying about the basement. Finally everything is new new new.
Overpriced by about 200k
“I know in theory it shouldn’t matter, as bedrooms are usually where you spend the least amount of time, but there is just something wrong about paying that amount of money and when you strip away everything, you are sleeping still just sleeping in a basement.”
I agree. When you break this place down….the LR will probably not be used. The DR? maybe. So, at the end of the day, you have bedrooms in the basement, and the only space you’ll spend time is the Kitchen/FR combo area. Not what I would spend $900K on.
What these developers should do: Put a small office/den/library up front where the LR is. Make the library 1/3 of the size of the LR. Then push up the kitchen towards the front, and put the DR and Family room behind the kitchen, increasing the size of the room people will actually use. Living rooms are wasted space.
“What these developers should do: Put a small office/den/library up front where the LR is. Make the library 1/3 of the size of the LR. Then push up the kitchen towards the front, and put the DR and Family room behind the kitchen, increasing the size of the room people will actually use. Living rooms are wasted space.”
I agree. However, how would deal with natural light in the entryway? You could do french doors on the office/library but most would want it closed off especially if it’s the first think you see when you enter the apartment. Alternatively, you could just enter into the hallway like a lot of the bowling alleys out there.
make the entire first floor one big kitchen and FR great room. The bar stools could be right up there by the front windows, lots of light pouring into a massive truly chef’s kitchen, and then have a DR and FR with alot of built-ins. Powder room on the side where the stairs are.
The duplex down in my building is very similar in terms of finishes, but is not extra wide (only 3BR, 2.5BA) and not in this nice of a LP location. It sold for ~$790 this past summer.
The price seems about right. They will probably get multiple bidders for that property. Inventory is low, interest rates are at historical lows, the economy is in an upswing, the stock market is making new highs, we are the beginning of a bull market. Never count America out. I challenge anyone to refute my facts. Those who are not going to buy real estate will be kicking themselves on the foot in a few years.
This is under contract. Cant say the price just yet, but Ill just say there was minimal negotiating done. Client had to move because of a different job opportunity. Thanks for posting.
John
How hot is the market? Pretty damn hot. I’ll do my normal update on Thursday but I can tell you already that preliminary January numbers look like it hit the ball out of the park. Where will the housing bears hibernate?
“Where will the housing bears hibernate?”
Why is it bad to want housing to be affordable for people? Where I feel really bad for buyers is in California. Median home price jumped in December to $360k from $280k the year before. Yeah- I know median can be impacted by a lot of sales at the high end- but both the Bay Area and the LA area are insane again (i.e. $600k for a 800 square foot shack.) Who wants to live like that?
With all the headlines in Chicago talking about the surge in sales- why aren’t people listing then? Oh wait- they’re still underwater and CAN’T list. This housing market is going to be interesting this spring. More buyers than we’ve seen in the last 5 years but way, way less inventory unless something dramatic happens soon. I personally think the developers are behind the curve in building apartment buildings downtown. They should be building condo buildings now (even though I thought it would take 10 years before we would see a new one.) If South Loop inventory is really only 100 units- what are they waiting for?
Sabrina, it’s not bad to want housing to be affordable but more than anything one has to have a realistic view of the market – whether or not it corresponds to what we want. And before I bought a house I sure wanted prices to go down – go figure! Personally, I think Chicago is way too expensive to live in and I never understood why people live here. We had this debate on Cribchatter a long time ago. My personal view is that in the long run people and businesses will migrate to places where housing is affordable. I think cities are overrated.
We agree on why people aren’t listing but for sure markets always equilibrate, right?
As for South Loop inventory…there is a huge shadow inventory owned by Related in the Museum Park developments. It will be interesting to see what they do with that.
“This is under contract. Cant say the price just yet, but Ill just say there was minimal negotiating done.”
Thanks for posting John. So the seller likely will break even or thereabouts.
And it shows that the Lincoln Park market IS very, very hot because nothing is on the market. Why aren’t people listing their properties to sell? My gosh. It’s a no brainer to me.
And yes- there are buyers out there who don’t mind if 4 bedrooms are in the basement apparently. Question: if you were looking at a $850k single family home in Winnetka with 2 stories (a ranch type home with a basement) and ALL of the bedrooms including the master bedroom were in the basement would you be okay with that? Or would you be “that’s the weirdest thing I’ve ever seen.”
I don’t get this kind of set up for that kind of money. There are garden units in Lakeview selling for like $250k. Why aren’t those selling then?
Sabrina, you have to be a renter, right? You may have revealed this before and I missed it. Nothing wrong with that. I rented for 12 years.
“They will probably get multiple bidders for that property. Inventory is low, interest rates are at historical lows, the economy is in an upswing, the stock market is making new highs, we are the beginning of a bull market.”
Bull market in what? Stocks? That’s been happening for 4 years now. Anyone who doesn’t get that is pretty clueless. Thank you Federal Reserve!
And we’re back to the “buy now or be priced out forever” mantra, huh? Wow. It didn’t take long for people to get very, very bullish about real estate again. This is an asset class that has returned very little for your money historically (and it’s a pretty long history.) You’d be far better off owning stocks over that same time period. But you gotta have a place to live, after all.
“This is an asset class that has returned very little for your money historically (and it’s a pretty long history.) You’d be far better off owning stocks over that same time period. But you gotta have a place to live, after all.”
This pretty much sums it up. Your house is not an investment. There are only 4 reasons I can think of to buy vs. rent:
1) When buying is cheaper than renting over your time frame.
2) You want to be able to do stuff to the place you live in that you can’t do to a rental
3) You want the stability that comes with home ownership
4) You can find something in the home you buy that you can’t get in a rental
Any one of these 4 can be enough to push someone from being a renter to being a homeowner.
“Any one of these 4 can be enough to push someone from being a renter to being a homeowner.”
I agree Gary. If you’re going to be there 10 years and raising your kids and whatnot- then it makes complete sense to buy something. Why give your money to a landlord? You might as well come out with it with something on the back side after paying all those years.
But housing is no longer a “get rich” scheme. It never should have been in the first place. But I’m wondering if people are going to return back to that mentality? It took 2 big downturns in stocks in the last 13 years to turn people off to those. Maybe one big downturn in housing isn’t enough to change behavior either. We’ll soon see.
“Sabrina, you have to be a renter, right? You may have revealed this before and I missed it. Nothing wrong with that. I rented for 12 years.”
I have been a homeowner in the past. But it made no sense for me to own financially (and job-wise etc. as I have moved from city to city) over the last 10 years. I have said that when buying is cheaper than renting- then I will buy. We are right at that tipping point right now. My lease is up in a couple of months but this could be the year where it goes the other way. And then I’ll be looking to buy.
I do agree with all of those who have said over the years that the rental market has poor product as well. If you’re looking outside of the new downtown high rises, the rentals in Lincoln Park and Lakeview pretty much suck (unless you can rent a condo.) The finishes are old and awful (vintage apartments with wood painted over 20 times etc.) It’s also tiring living in very close proximity to 22 year olds (although buying a condo or a townhouse or a house in those same neighborhoods is no guarantee that that still won’t happen.) So there DOES come a time when buying makes sense. Having more space, better finishes, an easier commute etc. – some of which can now be achieved by buying- makes more sense with record low interest rates.
“I rented for 12 years.”
That’s kinda funny since you were a Realtor.
“Bull market in what? Stocks? That’s been happening for 4 years now. Anyone who doesn’t get that is pretty clueless.”
Mish called a top on his blog, based on the Barron’s cover. He says, how can stocks be up 100% in a few years and we’re only now beginning a 1st inning bull market?
When I was residing and working in Chicago I saw a number of these condos and at first glance I thought they were well laid out but the more of them I was in the more I started to dislike the layouts which were all basically the same.
During a tour to one of the last ones I saw, I was able to walk through one of the top level duplexes that was going to be retained by the builder for his daughter to use as her residence. The entire first level (2nd fl) was one large living space with the kitchen laid out galley style along the outer wall. It couldn’t have been more than 10′ wide by maybe 18 – 20 ft long and on the other side of the dividing wall was more living space. It was very well laid out as one could see from front to back with outdoor spaces at both ends of the living space.
I have to say it was a brilliant idea as when the kitchen appliances/counters were not in use they were hidden by a sliding panel wall that concealed everything. Once closed you had no idea that you were in a kitchen it just felt like you were walking through a gallery. That what the daughter had in mind as she was not a cook at all and needed every available bit of wall space she could come up with for her many pieces of large scale art work. I know it took a lot of work to figure out how to make the panels ‘disappear’ without the art work being disturbed. I only wish I was there once the building was finished to see exactly how their work turned out…on paper and in concept it was a fantastic idea.
“That’s kinda funny since you were a Realtor.”
Only the last 5 – 6 years. And I started seriously looking at places more than 2 years ago. I was waiting for the rent/ buy equation to flip. I didn’t have any of the other motivating factors that many people do.
“Mish called a top on his blog, based on the Barron’s cover. He says, how can stocks be up 100% in a few years and we’re only now beginning a 1st inning bull market?”
The S&P 500 was up 100% by the end of 2011. Was anyone calling a top a year ago? Not that I saw.
People called a “top” at 100%, 200%, 300% etc. in every single bull market. That’s the point of the bull. No one believes it.
If you look at Robert Shiller’s CAPE ratio the market looks like it’s at the high end of the range. Not as high as the previous bubbles but high enough to know that I want to cut back my equity exposure as it rises.
“Not as high as the previous bubbles but high enough to know that I want to cut back my equity exposure as it rises.”
Why do people assume that a new high in something means a “bubble.” Was it a bubble in 1984? 1985? 1986? 1990? 1992? 1996? 1997? My god- the Dow and S&P hit new highs nearly every year for 18 years in the 1982-2000 time period. Should you have been “cutting back” then?
People are nuts.
You shouldn’t be in bonds. That is at the end of a 30-year bull. It’s going to end badly.
Stocks trade on earnings. The S&P 500 is trading about 13.5x forward earnings. It was at 15x in 2007 when it last hit highs. It was at 25x in 2000 when it was peaking. Historically, it has traded about 15-16x. That would suggest stocks aren’t expensive right now.
We’ll find out soon, there is big resistance at the 2000 and 2007 highs, if it busts through then you’re right.
“Why do people assume that a new high in something means a “bubble.” ”
I’m not talking about a high in the market but a high in the CAPE ratio. Basically prices have gotten ahead of long run earnings. It’s OK to have a high in the market if the earnings are there to support it.
“It’s OK to have a high in the market if the earnings are there to support it.”
There earnings ARE there to support it. That’s what I said. 13.5x. Under the historic average. Earnings are at records and have been since 2010. Companies are firing on all cylinders. So what’s the problem? There isn’t one.
“We’ll find out soon, there is big resistance at the 2000 and 2007 highs, if it busts through then you’re right.”
It HAS busted through. Small and mid-caps (over 2500 stocks) have been at new all-time highs for weeks. They busted through the first week of January. There was NO resistance to old levels.
“There earnings ARE there to support it.”
Today there are but the whole point of the CAPE ratio is to look at where earnings have been historically and base the P/E ratio on that instead of current earnings. The problem with current earnings is that they too can be at bubble highs. That’s what happened just before the housing bubble burst. There were all these bogus earnings being reported but you could tell they were bogus by looking at where earnings had historically been and concluding that they had gotten ahead of themselves. In the long run earnings can only grow so fast. When they grow faster than that something is wrong.
“As for South Loop inventory…there is a huge shadow inventory owned by Related in the Museum Park developments. It will be interesting to see what they do with that.”
Related has clearly said they will marketing the units for sale.
“And it shows that the Lincoln Park market IS very, very hot because nothing is on the market. Why aren’t people listing their properties to sell? My gosh. It’s a no brainer to me.”
It’s tempting to list now, but we’re just not ready, nor is there much of anything on the market for us to purchase. We’re looking at spring 14 at the soonest or spring 15 at the latest. I don’t see things (rates and prices) changing too radically between then and now.
“Related has clearly said they will marketing the units for sale.”
Right, but at what prices? I read somewhere that they did not intend to cut the prices from what they were previously listed at. Should be interesting to watch.
I read that as well Gary. It will be a slow trickle to maintain pricing, unless the economy really picks up, which I think is a possibility. The Goverment has put out revised job growth numbers that were upwardedly revised by a good amount.
Here’s a related new 2/2 listing today from the GZ. Will be interesting to see how many days (hours?) it remains available. Seems very reasonably priced. I predict under contract this week. What do others think?
http://www.redfin.com/IL/Chicago/837-W-Wrightwood-Ave-60614/unit-2/home/39705067#property-history
I’ll tell you where there’s a bubble forming…investment properties. I’m working with a number of investors and every reasonably priced property I call on the story is the same: 50 showings requested, can’t disturb the tenants, basically holding a giant open house for a few hours. We got outbid on one last week that I swear is just not worth what they are being offered by some buyers.
And the scary thing is, these buyers that are paying crazy amounts of money for investment properties are mostly doing it with cash. It would be one thing if banks were offering zero-down financing for dumb buyers, but what exactly is causing people to put their hard-earned money into (often-times) highly priced rental/investment housing?
We found ourselves competing against FHA buyers (not really viable) and conventional financing buyers. It’s the record low interest rates that are inducing frothy behavior. Wannabe landlords are willing to earn 6 and 7% cap rates in marginal neighborhoods and 5% and less cap rates in better neighborhoods.
Wow, really? People are trying to buy investment properties with multiple units to rent out with FHA loans and conventional financing?
“Wow, really? People are trying to buy investment properties with multiple units to rent out with FHA loans and conventional financing?”
Oh yeah- this is happening all the time. I don’t get it. Many people think they’re mini-Donald Trumps. I don’t understand it, frankly.
Well, the conventional financing is not such a stretch. If you can get 4:1 leverage at 3.75% on an asset that is yielding 8% that would be good. 7% maybe. Less than 7% it’s a fool’s game.
“It’s also tiring living in very close proximity to 22 year olds (although buying a condo or a townhouse or a house in those same neighborhoods is no guarantee that that still won’t happen.)”
This happens a bit downtown with rentals as well. I have friends who complain about the 20-somethings partying “EVERY!” Saturday night and I have to remind them that 1) they’re now the old people they used to hate and 2) they choose to live in a downtown rental highrise and that’s what happens.
“Well, the conventional financing is not such a stretch. If you can get 4:1 leverage at 3.75% on an asset that is yielding 8% that would be good. 7% maybe. Less than 7% it’s a fool’s game.”
Optionshouse has 3% margin for 50-500k balances. And you can find semi-safe stocks/ETFs that yield ~6-8%. No it’s not 4:1, but you’re not tied to the RE monkey. After getting dinged on my taxes with Lendingclub (interest income is treated differently than charge-offs (!) making peer-to-peer funding non-viable for non-tax-advantaged monies), I’m going over to optionshouse. Buy some big oil and pay them 3%.
In my new gig, I hear co-workers giving other coworkers stuck with an investment property advice about management companies, how to landlord, etc. It’s the new water-cooler talk for everyone who got caught up in this. And confirms my suspicion that trying one’s hand as an amateur landlord if one has a day gig as a desk jockey really sucks.
“We found ourselves competing against FHA buyers (not really viable) and conventional financing buyers. It’s the record low interest rates that are inducing frothy behavior. Wannabe landlords are willing to earn 6 and 7% cap rates in marginal neighborhoods and 5% and less cap rates in better neighborhoods.”
We should do an entire thread devoted to discussing this. I have a buddy who owned 5 properties during the boom, combo of 2-3 flats and a 1bd. GC condo unit. He got his clock cleaned, got out of all of them about 2 years ago, and really only made money on the Roscoe Village purchase made in the 1990’s. At one point properties were selling for cash flow breakeven or loss after debt service with a std. loan, People were willing to feed a $200 or more negative every month, a few thousand per year cash flow loss, because the property was appreciating by $25,000 or more per year. They thought.
At least now there’s some positive cash flow.
Who are all these investors? Are they newbies? What about all those investors who lost their asses?
I knew of one investor who kept doing cash out refis on his buildings and living off that cash. When the music stopped he lost all his buildings. I helped a friend of mine buy one of these buildings just so he could knock it down.
The investors I’m working with now have been doing this for a while and are not stupid. So far the numbers look really good for them. I don’t think rents are going down any time soon. But I think it’s getting harder and harder to find good buildings.
From the financial times:
http://www.ft.com/cms/s/0/44f1d746-6c56-11e2-b774-00144feab49a.html#ixzz2K017meKa
“The National Association of Realtors reckon more than one-third of purchases in 2010 were investment purchases. Some of the early institutional investors, such as Daniel Och’s hedge fund Och-Ziff, have already signalled their retreat from the market, but smaller buyers still appear hopefully active. CoreLogic reports that 13.6 per cent of mortgages taken out in December were from buyers who said they were purchasing a second home or investment property. That beats the previous record of 13.4 per cent at the peak of the market frenzy in January 2006.”
Sabrina, you asked what the developers are waiting for, why they aren’t building more since the inventory is so tight?
Maybe because they know that there is still a lot of “shadow” inventory- foreclosures, delinquencies, and pre-foreclosures just dying to come onto the market with just a few more bumps in the price. I searched foreclosures at Cook County and found many, many properties that are REO or in some stage of foreclosure that I had assumed were sold, still available even though they don’t appear on the multilist. I really don’t believe for a minute that there are only 100 units available in the South Loop.