Market Conditions: Bulk Condo Buy in 757 N. Orleans While Zillow Reports Homeowners Still Underwater
Crain’s recently reported on a recent bulk buy of condos in 757 N. Orleans in River North to an investor.
Not surprisingly, the investor is going to wait out the downturn by renting the units.
A Florida investor with foreign capital is diving into the Chicago condominium market, paying nearly $11 million for 39 unsold units in a River North tower.
A venture by led Aventura, Fla.-based Gamla Cedron Group is paying $252 a square foot for the 39 unsold condos at 757 N. Orleans St., a 198-unit tower finished in 2008, sources said. The new owner plans to rent out the units for the time being.
The deal marks an exit for the project’s developer, La Grange-based Gammonley Group, which turned to a bulk offering amid slow sales, a common move among developers and banks in today’s distressed condo market.
Yet it’s unclear whether the sale will generate enough money to allow Gammonley to pay off the remaining principal on its construction loan. The developer originally borrowed $46.3 million.
It is the Gamla Cedron Group’s first foray into the Chicago market.
Mr. Mishal says he was drawn to units in the building that include balconies, floor-to-ceiling windows and other features “you don’t see in the rental community.” He plans to rent the units for “no less than the marketplace,” or around $2.60 per square foot, until the condo market improves, allowing for resales.
Gammonley first offered 52 condos in February, but some of those units since sold to individuals, says Susan Lawson of Apartment Realty Advisors Inc., which brokered the bulk sale. Individual sales averaged $313 per square foot during the first quarter, according to real estate consulting firm Appraisal Research Counselors.
Investor buys 39 units in River North condo tower [Crain’s Chicago Business, David Lee Matthews, May 24, 2012]
Meanwhile, Zillow is reporting that 41.1% of Chicago-area homes have “negative equity”- up from 39.2% in the fourth quarter of last year.
Also, 12.7% of local mortgage borrowers were at least 90 days past-due in their mortgage payments in the first quarter (more shadow inventory waiting to come on the market?).
Zillow doesn’t say what it means by the “Chicago-area.” The IAR uses a 9-county definition.
You can do a search by zip code on Zillow’s interactive negative equity map here.
How far underwater are homes in your neighborhood?
Price cut to $7.9 million on Pinnacle listing [Crain’s Chicago Business, David Lee Matthews, May 24, 2012]
Zillow?
“Meanwhile, Zillow is reporting that 41.1% of Chicago-area homes have “negative equity”- up from 39.2% in the fourth quarter of last year”
HAHAHAHAHA – zillow is as credible as me on this site. Anyone who actually believes what they list is a complete and total idiot. Honestly, of the dozen or so properties I own, they only are in the ballpark of value on one (they seriously, laughingly undervalued my private residence – and my neighbors here, and seriously, ridiculously overestimated the value on a few of my houses in Hinsdale) – complete idiotic BS from that site. They honestly should be shut down or sent to jail for providing false information. Isn’t there some type of regulation/law for that?
Anyone who pays over $200 psf for these units is a fool.
Not for me, but doesn’t seem that it is inherently a bad building.
Anyone know the total number of units?
Zillow’s market value is over 1B
http://www.google.com/finance?q=zillow
Off topic:
I couldn’t find an “interesting” third property to cover for later today (and it just got too late in the evening when I was looking around.)
Since most people will be starting their 3 day weekend early anyway- there won’t be a third post today. But I have some ideas for next week that should be fun. I feel badly for anyone looking to buy right now. There seriously is little on the market right now (and nothing all that “interesting.”)
I have to agree Sabrina… I’m on the sideline for a 3/2 with as much unicorn criteria as possible under $450 and the options that qualify are minuscule – and I’m not as strict on the UC boundary lines either.
I recall Crains article yesterday stating that 44% of Chicago homes w/mortgages are underwater.
“I have to agree Sabrina… I’m on the sideline for a 3/2 with as much unicorn criteria as possible under $450 and the options that qualify are minuscule – and I’m not as strict on the UC boundary lines either.”
Yep. The inventory just blows. Anything “decent” and with a “decent” price will go under contract right away.
zillow, really?
architect, do you mean this Crains story?
http://www.chicagorealestatedaily.com/article/20120524/CRED0701/120529871/price-cut-to-7-9-million-in-pinnacle-listing
Same crappy source, zillow.
Zillow might be a crappy source and the figures might be off, but there’s no denying the negative equity problem. Especially in the suburbs, it’s all 2000’s pricing these days. So if you bought in the last 12 years, your house is probably worthless than you paid for it. Now that in and of itself doesn’t make for negative equity, but it makes for a pretty sticky situation.
Sabrina should focus on modern country estates for the landed gentry of lincoln park:
http://www.redfin.com/IL/Barrington/22-W-County-Line-Rd-60010/home/17660949
Or the ‘summer residences’ of the Lincoln Park 1%
http://realestate.yahoo.com/Wisconsin/Lake_Geneva/w4345-n-lake-shore-dr:79da68d9db168264333925dc4cf9edf1
Or my other favorite game, here’s what $500 psf buy you on Long Island 20 miles outside of Manhattan
http://www.redfin.com/NY/Flushing/3860-Douglaston-Pkwy-11363/home/20802495
“Or my other favorite game, here’s what $500 psf buy you on Long Island 20 miles outside of Manhattan”
..and that’s on the wrong side of the tracks… A few miles East and it’s a heck of a lot more.
Sabrina – go ahead and take the afternoon off. You earned it. At some point, please start a brunch open thread so we can decide which neighborhood has the best brunch options.
How about “real people living” on the SW Side?
http://www.trulia.com/property/3085138092-3806-S-Honore-St-Chicago-IL-60609
“..and that’s on the wrong side of the tracks”
could work on your tennis game…
“I couldn’t find an “interesting” third property to cover for later today (and it just got too late in the evening when I was looking around.)”
so do we discuss strollers or balance bikes versus training wheels?
I think we should discuss the precise boundaries of the Green Zone.
“I think we should discuss the precise boundaries of the Green Zone.”
Easy: Western Ave.
We could also comment extensively on the random musings of a girl named jenny.
Green Zone-Schmeen Zone. : P I have friends looking nearby and like Sabrina mentions, there just isn’t squat out there anyone really wants, a house on an oddly-shaped corner lot near Barry & Kimball apparently got 3 cash offers the first day it listed, my friend never even got in the door!
we are very fortunate that even though our home recently appraised for $30K under what we paid for it in 2002, that still left us with $85K of equity and Greenchoice Bank approved $150K of financing our renovation project (we are bringing $50K to the table).
“We could also comment extensively on the random musings of a girl named jenny.”
+1 sorry HD, hit the wrong thumb. Sabrina, need to have your
winged monkeestech crew configure it so people can change their vote.Sabrina said:
“I feel badly for anyone looking to buy right now. There seriously is little on the market right now (and nothing all that “interesting.”)”
I’ve been looking around LP and LV for a decent single family home relatively close to public transportation, and agree that there’s not much around that’s both interesting and well priced. Probably the one I found most interesting was 1526 W George. Also, my prediction is that this lack of inventory will be the new norm for a least a decade or so, much like reduced prices will be the new norm.
I also had been looking at North Shore properties (primarily Wilmette and Winnetka) and do think there’s a better selection there than around LP/LV, but that may just reflect my own personal preferences.
Permabear said:
“At some point, please start a brunch open thread so we can decide which neighborhood has the best brunch options”
While I know this is a joke, I do renew my respectful request for an open thread to discuss houses people are interested in. The CC commentariat often can point out negatives (and even the occasional positive) about homes that a potential buyer might not consider. Perhaps have the last post each Friday be an open thread and declare certain homes Sabrina intends to cover in the near future off limits.
the is a way better selection of properties in the suburbs than the city. the suburbs tend to have older folks with more equity; the city trends towards younger underwater couples. That’s not to say that the reverse is also true; but I seemed to find far more homes with substantial equity in the cook county suburbs than in the city.
In my neighborhood (about a 4 block radius), within the last 6 months at least 6 homes have sold, from old retirees to young families. The sellers had lots of equity.
” I do renew my respectful request for an open thread to discuss houses people are interested in”
If you click on my name, you’ll see a blog post about the homes we looked at last weeekend, though only DZ seems interested in my life. We considered this one but decided the living room was too small for our furniture and the bedrooms just too small.
http://www.redfin.com/IL/Chicago/4018-N-Leclaire-Ave-60641/home/13476884
“Green Zone-Schmeen Zone. : P I have friends looking nearby and like Sabrina mentions, there just isn’t squat out there anyone really wants, a house on an oddly-shaped corner lot near Barry & Kimball apparently got 3 cash offers the first day it listed, my friend never even got in the door!”
Hah–I think I know the place you’re talking about ($300k list, right)? I went with clients and–yes–rather odd place. Wasn’t that great but, again, one of the few decent options so, of course, went CTG in a couple days. Didn’t realize there were cash offers though–unless we are talking about different places.
I think we also should vote on whether to refer to the commentors here as :
Chatarati
CC commentariat
Crib–geiose
Crib-letariat
Vlajos – what hood?
yoss, I will be like HD and not divulge. However, it’s in the City, probably not GZ (I don’t know the borders) but close. North side.
Barry & Gresham. Just outside the new definition of the Green Zone:
http://logansquareh2o.org/?page_id=152
Which as you can see, is quite literally a green zone!
“Hah–I think I know the place you’re talking about ($300k list, right)? I went with clients and–yes–rather odd place. Wasn’t that great but, again, one of the few decent options so, of course, went CTG in a couple days. Didn’t realize there were cash offers though–unless we are talking about different places.”
Vj you must not live in a hip area if its all old people. That’s ok though, my neighbors on 2 sides are in their 80’s and behind me, 60’s.
HD, the oldies are moving out. Selling and making out decently. New young families moving in. It’s all good.
“I have to agree Sabrina… I’m on the sideline for a 3/2 with as much unicorn criteria as possible under $450 and the options that qualify are minuscule – and I’m not as strict on the UC boundary lines either.”
Shamalamadingdong – you have $450 to spend on a unicorn list for a 3/2, and can’t find it? What is your list?
I am selling my 3/2 and I think my condo has a list that you will find attractive. Only thing is I have not listed it – maybe a lot of people are like me.
“I am selling my 3/2 and I think my condo has a list that you will find attractive. Only thing is I have not listed it – maybe a lot of people are like me.”
Huh?
btw, regarding this:
“I do renew my respectful request for an open thread to discuss houses people are interested in”
The message seems clear that there simply aren’t many of these properties available. The new reality may simply be that unless you are buying new construction you should expect that you are going to have to do some work, there is no magic rehab fairy out there looking to take a loss to do it for bargain hunters.
I’m not sure why this is such a shocking concept. Talk to older folks & they will tell you this has always been the norm in Chicago, my parents bought homes in Lake View in the 70s that were dated, they fixed them up and lived in them for decades. When they sold, the new owners did exactly the same thing.
The easy credit of the boom is gone and isn’t coming back any time soon – my wife and I have credit scores around 820, had cash in the bank, equity, retirement assets, and it took months and months to find a financing solution.
Sad440: the key word is “decent”. I remember ayear or two ago there was a 525k SFH in Lakeview near the Belmont stop and was ridiculed on here for mentioning it as it was not up to the snooty CC regulars standards. The chatterati are a funny bunch indeed.
“Shamalamadingdong – you have $450 to spend on a unicorn list for a 3/2, and can’t find it? What is your list? I am selling my 3/2 and I think my condo has a list that you will find attractive.”
Maybe the unicorn list is similar to the Unicorn Criteria? If so, I can confirm that finding a three bed that meets the UC for $450k is tall order. (Finding a two bed is hard enough.)
If you’ve got a three bed in the $450k range, I’d be curious to hear your list.
“was ridiculed on here for mentioning it as it was not up to the snooty CC regulars standards. The chatterati are a funny bunch indeed.”
Is Bob actually ridiculing others for ridiculing something? Isn’t Bob our CC king of ridicule?
“could work on your tennis game…”
Surprised you knew that? Grew up out there or grew up a Johnny Mac fan? Johnny Mac, still my all time favorite. Ze plays a lot of tennis… all clay these days.
I was thinking about the Great Neck North kids who will not hesitate to call you poor. I had a Supra in High School and actually had a girl from GN North tell me “I must really like you to be dating you, normally I don’t go out with anyone that doesn’t have a Porsche” That year her bro got arrested in the airport with 60k of blow on his way to the family home in Aspen…
“Talk to older folks & they will tell you this has always been the norm in Chicago, my parents bought homes in Lake View in the 70s that were dated, they fixed them up and lived in them for decades. When they sold, the new owners did exactly the same thing.”
The problem with buying a dated home and doing a little work each year, is that at the end of a decade, you’ll see how little work you’ve accomplished. IMHO you have to do as much as you can as quickly as you can. That’s why some homes have had 4 owners since the 50’s but still have the pink bathroom.
I would rather live near old people than young people.
“you’ll see how little work you’ve accomplished.”
You just need better tools.. get yourself an air compressor and a set of Senco nail guns… Sawzall and a bag of kind… Actually I can sell you my nail guns next month when i get back to the states… everything down here is brick and concrete..
“everything down here is brick and concrete..”
Which is crazy because a few miles to the west is milions of sq miles of old growth rain forest.
“The problem with buying a dated home and doing a little work each year, is that at the end of a decade, you’ll see how little work you’ve accomplished. IMHO you have to do as much as you can as quickly as you can. ”
Agree. But also agree with Ze.
‘The new reality may simply be that unless you are buying new construction you should expect that you are going to have to do some work, there is no magic rehab fairy out there looking to take a loss to do it for bargain hunters.’
Dead on! I can guarantee you that this was also the case in LP in the 80’s and the early 90’s. The charming old houses on the better streets were either in their original state (preferred) and needed updating as the original owners never had the money to renovate in the first place (these were not wealthy people, far from it), or you had to rip out 60/s/70’s horrid ‘improvements’ – dropped ceilings, barn wood paneling, spiral staircases, laminated floors, glued on ceiling beams, insane floor plan reconfigurations… all things I’ve seen. You either did the renovations yourself over time, or hired an architect/contractor to do it for you. New construction was available in great areas, but I assure you it was mostly crap as it is today and you paid top dollar for it.
Most of the places that this crowd finds affordable is nothing more than credit boom garbage and they know it; someone bought a ’03 Taurus at a Mercedes markup and wonders what happened when the steroids finally wore off. The problem is that now too many want a 2012 Mercedes at ’03 Taurus prices. I don’t see an inventory problem out there, I see an expectation problem out there.
Is the home in question in Boys Town? I kid, I kid. Seriously, that’s definitely the truth, we worked our asses off the first few years, then that got pretty old and we decided what we had done was good enough. After 7 more years of “good enough,” we now know exactly what we want and we’re willing to spend what it takes to get it. The real misery is we have to move while the work is being done, now that is a serious PIA, but we lucked out and found a place on the next block.
“The problem with buying a dated home and doing a little work each year, is that at the end of a decade, you’ll see how little work you’ve accomplished. IMHO you have to do as much as you can as quickly as you can. That’s why some homes have had 4 owners since the 50?s but still have the pink bathroom.”
Oh yes, I grew up visiting friends in LP all the time, I still remember those old Victorians, they often had little sunlight which exacerbated the dark wood trim, but they were huge and a blast to wander around in – you’d see a 12 year old living in a bedroom half the size of your average new construction condo.
“I can guarantee you that this was also the case in LP in the 80?s and the early 90?s. The charming old houses on the better streets were either in their original state (preferred) and needed updating as the original owners never had the money to renovate in the first place (these were not wealthy people, far from it), or you had to rip out 60/s/70?s horrid ‘improvements’ – dropped ceilings, barn wood paneling, spiral staircases, laminated floors, glued on ceiling beams, insane floor plan reconfigurations… all things I’ve seen. You either did the renovations yourself over time, or hired an architect/contractor to do it for you. New construction was available in great areas, but I assure you it was mostly crap as it is today and you paid top dollar for it. “
Drop ceilings are pretty awful, so is shag carpet. Paneling is a scourge.
The problem is actually having enough money left over after the down payment to be able to afford the renovations. I can imagine how nice a place would look “if only” I could afford to fix it up. I hate how on shows like House Hunters, they say things like, “This one is under budget so you can afford to fix it up.” If the person was paying cash, that would be true, but not if the deal is being financed. After I bought my place, I didn’t have much left over except for an emergency stash. I certainly didn’t have the money to re-do one of the bathrooms. Even if my place had cost $50k less, it wasn’t as though that $50k was going to be sitting in my bank. With 20% down, that would have left only $10k extra in my account….certainly not enough to do much renovating.
In short, if you buy a move in ready home, you’re able to finance the updates in a sense. I wouldn’t feel comfortable taking out a loan for renovations outside of my mortgage. For someone with more money, buying a fixer upper makes sense, but not for the majority of people.
” I wouldn’t feel comfortable taking out a loan for renovations outside of my mortgage.”
If you go the reno loan route, and get a cheap enough place that needs enouygh work, you start with the two loans, but end up–post-reno–with effectively w/o a “lona outside your mortgage”.
I bought a fairly cheap older home that was in good condition but very dated. Paneling in half the rooms, older bathrooms, kitchen cabinets made in the 1950’s. Windows in odd places. landscaping is awful – lots of bushes and hostas.
I got a renovation loan and fixed all these things before moving in. fortunately some things were already updated – windows, hvac, laundry, roof, etc. The hardwood floors had been under carpet for 60 years so they were like new with few nail or staple holes. The house with all the renovations appraised out so that all together it was a conventional loan LTV loan to value mortgage. The key is ‘cheaper house’ so that it makes sense to renovate. you can’t over pay for the house and expect the renovations to appraise. i did what the rehabbers do, look for value, and fix it up. thats getting harder to do though. I see houses in my area listed now, less than a year after I bought, and they asking my final appraised value, for the same house, yet its all so very dated. I
“The problem with buying a dated home and doing a little work each year, is that at the end of a decade, you’ll see how little work you’ve accomplished. IMHO you have to do as much as you can as quickly as you can. That’s why some homes have had 4 owners since the 50?s but still have the pink bathroom.”
Got it so do all the updating/rehabbing before you move in or buy new construction
“The new reality may simply be that unless you are buying new construction you should expect that you are going to have to do some work, there is no magic rehab fairy out there looking to take a loss to do it for bargain hunters.”
Got it so new construction is crap because they have to take short cuts to make money. Maybe you could buy a cheap fixer upper so you could use the savings to update?
” If the person was paying cash, that would be true, but not if the deal is being financed. ”
Maybe one should look outside the green zone?
“Most of the places that this crowd finds affordable is nothing more than credit boom garbage and they know it”
UGH!
Just became a homeowner for the first time, after about 3 years of reading CC. (Well, I will be an owner when we close next month…) Bought a 3/2 in the green zone after about four years of passively looking, actively saving, and trying to decide buy/rent/city/burbs. Went to see the place on its 4th day on the market, made an offer early the next morning…struggled through 21 more showings of the place over the next two days and now find myself with a good piece of property at a fair price. And maybe I’m naive, but I can’t wait to make a few (small) changes and turn it into “mine”.
“I don’t see an inventory problem out there, I see an expectation problem out there.”
Don’t worry, seller expectations are always slow to change, but change they will. The early adapters will get the best results. Sell now or be priced lower later.
Homedelete:
I’m curious to know which suburb you’re in (though I don’t suppose you’ll ever tell anyone). I get the feeling it’s one of the inner ones to the northwest of the city, perhaps Park Ridge.
Pink Bathrooms – LUV ‘EM! (At least for the ladies in the house). Too bad it’s so #*@+/! hard to find pink (or any other pastel) bathroom tissue to match!
Icarus: Just a couple blocks north on LeClaire, there’s a lady who throws a weekend-long holiday craft and bake sale in mid-November, so the neighbors can do their shopping early.
Oh, and please check your spelling on the simians. So far only Davy has earned his “wings.”
LL you are the only one. Pink bathrooms, and in fact any color bathrooms make me sick to my stomach. Pink makes me think I’m in some sort of nightmare. White is the only acceptable color to me and likely most others.
So good luck with that resale with those oddly colored bathrooms.
“I get the feeling it’s one of the inner ones to the northwest of the city, perhaps Park Ridge.”
I think it’s PR too. Let’s go searching property records and find out who HD is hahaha.
Huh?
“Oh, and please check your spelling on the simians. So far only Davy has earned his “wings.”‘
“A venture by led Aventura, Fla.-based Gamla Cedron Group is paying $252 a square foot for the 39 unsold condos at 757 N. Orleans St.”
“Anyone who pays over $200 psf for these units is a fool.”
We’ll have to see, but I think in South FL average condos like this Gammonley product are back up in price to the $400 psf range. Maybe the buyer sees this and thinks he’s getting a good buy. There’s a broker that covers SoFL called CondoVultures.com and they track all of the prices down there, if anyone’s interested in looking at their website and take on the market there.