Crib Chatter

The Wall Street Journal is talking about the tightening lending standards in today’s issue.

According to the article, the entire Chicagoland area is now designated a “declining market” by 4 out of 5 of the largest mortgage insurers.

That means that mortgage insurers are routinely requiring at least a 10% downpayment to purchase a house, and sometimes more. From the WSJ:

“To put this blanket overlay on my marketplace and say it’s all a declining market, it’s not true,” says David Hanna, managing partner of Prudential SourceOne Realty in Chicago. City neighborhoods such as Lincoln Park and Hyde Park, as well as affluent suburbs such as Hinsdale, still are seeing home prices appreciate, he says.

Mr. Hanna points out the declining-market tag has hit such unlikely transactions as a $1.1 million sale of a home in Wilmette, a well-to-do suburb. The buyer had to come up with an extra 5% down payment.

In another case, a two-unit building in Chicago was ready to be sold to an investor for $449,000, when the required down payment again was boosted. The buyer still is trying to come up with the funds. It turned out that a different investor in that neighborhood had defaulted on seven properties, driving down comparable prices.

Mr. Hanna says such circumstances should be taken into account. “Maybe one project, because of past history, you have issues, but you’re impacting literally thousands of other people,” he says.

Mortgage insurers say the data they receive on home sales aren’t conclusive enough to be more precise in designating declining markets.

Other costs of obtaining a loan are also increasing.

Next month, for example, MGIC plans to charge an annualized premium of up to 0.75% of the loan balance for fixed-rate, 30-year mortgages with a 10% down payment, up from 0.67% this month. The company doesn’t plan to change course anytime soon.

“Housing cycles don’t correct quickly,” says MGIC’s Mr. Zimmerman.

Has anyone heard of mortgage insurers requiring more than the 10%?

Mortgage Insurers Raise Bar [Wall Street Journal, July 15, 2008]

Remember the vintage with good bones but an older kitchen on lovely Pine Grove at 2724 N. Pine Grove in Lincoln Park that we chattered about in early June? 

It’s still on the market and has been reduced again.

Unit #3: 2 bedrooms, 1 bath, diningroom

• Sold in August 1999 for $210,000
• Originally listed for $325,000
• Reduced
• Was listed in June 2008 for $309,000 (parking is rental nearby for $225 a month)
• Reduced
• Currently listed for $299,000
• Assessments of $382 a month
• Taxes of $3072
• Window units  (no central air)
• No Washer/Dryer in the unit
• The Jelinek Group at Coldwell Banker has the listing

This vintage unit that we chattered about last April at 2523 N. Burling has also been reduced. But it still sits on the market.

Unit #2: 3 bedroom, 2 baths, 1625 square feet

• Sold in June 2006 for $595,000
• Was listed in April 2008 for $599,000 (parking included)
• Reduced
• Currently listed at $579,000 (parking included)
• Washer/dryer in the unit
• Back porch
• Central air
• Assessments of $100 a month
• Taxes of $5936
• Coldwell Banker has the listing

1305 S. Michigan, the Museum Park Lofts, in the South Loop were built in 2006.

This two bedroom unit is now bank-owned.  There are no interior pictures.

Unit #1212: 2 bedrooms, 2 baths, no square footage given

• Sold in November 2006 for $389,500
• Foreclosure
• Bank owned and currently listed for $329,900 (includes the parking)
• Assessments of $271 a month
• Taxes of $2941
• Prudential Old English has the listing

This other ’12’ tier unit is also currently on the market.  There are some interior pictures:

Unit #512: 2 bedrooms, 2 baths, no square footage given

• Sold in June 2006 for $359,000
• Currently listed for $350,000 (plus $35,000 for parking)
• Assessments of $323 a month
• No taxes yet
• Coldwell Banker has the listing

An ’12’ tier unit recently closed. Unit #1512 sold in June 2008 for $398,000.

Yes, properties are still selling quickly if they are priced right and are unique.

Take this three bedroom unit at 3020 N. Sheridan, a 9-unit 1903 graystone building, in East Lakeview. The room sizes are all enormous (as was common at that time period.)

• Living room: 28 x 20
• Dining room: 22 x 14
• Family room: 17 x 10
• Kitchen: 18 x 11
• Bedroom: 16 x 11

Here’s the listing for Unit #2N:

Stunning updated and upgraded 3 bedroom, 2.5 bathroom greystone condo in very desirable walk to everything location! Gorgeous spacious rooms with glistening refinished hardwood floors. Beautiful granite, cherry, stainless steel kitchen with island, open to family room with built-ins.

Elegant dining room with coffered ceilings, luxury master suite with marble bathroom, whirlpool tub, separate shower, walk-in closet. Living room with majestic moldings. Close to lake, shops, transportation.

This is in the hard-to-sell price range over $500,000 and doesn’t have parking (rental available down the street.) Yet it has gone under contract after being on the market only about a month.

Unit#2N: 3 bedrooms, 2.5 baths

• Sold in September 2006 for $565,000
• Currently listed for $599,000 (no parking)
• Assessments of $341 a month
• Taxes of $6763
• Central air
• Coldwell Banker has the listing

Mary Umberger, the Tribune’s real estate reporter, talked about the increase in sales of upper bracket properties in the Sunday real estate section. Apparently, Barrington is seeing a spike in sales of luxury homes. And Chicago is seeing the same thing:

I rang up Jim Kinney, president of Rubloff Residential Properties in Chicago, who said the numbers are improving at the highest end in the city too.

Kinney said Chicago has had 103 closings in the $2-million-plus bracket in Chicago since the beginning of the year; up from 89 a year earlier. And in the next rung down—$1 million to $2 million—there were 372 closings in the first six months of 2008, up from 309 in the year-ago period.

Untch theorizes that pricey purchases have picked up because consumers lying in wait have decided it’s time to move.

“I sold a $3.5 million property, and the buyer flat-out told me, ‘Oh, yeah, we’ve been watching it since September,’ ” Untch said. When the price dropped $200,000 recently, the buyer pounced, he said.

But while the rich might not have to worry so much about little things like obtaining a mortgage or actually saving for a 10% or 20% downpayment, does this mean that the market has bottomed and that the lower priced homes will start moving soon?

Unfortunately, in Chicago, there is a little thing called “inventory.”

“The high end comes back first,” Kinney said. “It’s the last to turn down and the first to pick back up. They go to the sidelines when they feel things are going to tumble. They can afford to buy but don’t want to catch a falling knife.”

Neither Kinney nor Untch are doing handsprings, however, because there remains the nagging little issue of a bumper crop of homes still for sale.

“Inventory is up, but at least we’re making a dent in it,” Untch said.

Kinney said top-quality resale properties have held their own in the city, but new construction “is deathly.”

He said the city has 13,000 new units in the pipeline, yet just 200 purchase contracts were signed in the first quarter.

Though he sees the upper-bracket sales as encouraging, they don’t herald a turnaround, he said.

“There is no tsunami coming,” Kinney said. “It’s more like a tidal pool.”

I agree with these realtors that many higher priced properties seem to be moving. In 55 E. Erie, a luxury highrise in River North, 3 units priced over $3 million have sold in the last 7 months.

Remember this unit at 30 W. Oak in the Gold Coast that we chattered about in May?

It sold.

Unit #22B: 3 bedrooms, 2.5 baths, 2 car parking

• Sold in May 2007 for $1.489 million
• Originally listed for $2.999 million
• Reduced
• Listed in May 2008 for $2.849 million
• Sold in June 2008 for $2.35 million

Will ‘high’ tide raise all boats? [Chicago Tribune]

As Kenworthey posted in another thread, IndyMac has been shutdown and will be taken over by FDIC.

It is the second largest bank failure in U.S. history, second only to the failure in in 1984 of Continental Bank which was $40 billion.

From Marketwatch:

U.S. banking regulators said Friday they have closed IndyMac Banorp Inc., the biggest retail bank to succumb to the ongoing U.S. subprime mortgage crisis. The Federal Deposit Insurance Corp. said in a statement it will take over operations of IndyMac (IMB) which had total assets of $33.01 billion and total deposits of $19.06 billion as of March 31.

If you have deposits in the bank, you can still withdraw money from the ATMs. The bank will re-open on Monday as IndyMac Federal Bank.

As for Freddie and Fannie:

According to analysts, Freddie Mac and Fannie Mae appear to have adequate capitalization. Or do they? Also from Marketwatch:

As of March 31, 2008, Fannie Mae had $42.7 billion in core capital, which represented a $5.1 billion surplus over the requirements of its regulator, the Office of Federal Housing Enterprise Oversight, according to Barclays. Freddie Mac also raised $7.4 billion in May, bringing its aggregate surplus capital to roughly $15.6 billion by the third quarter.

How will these developments affect Chicago’s Housing Market (if at all)?

IndyMac, before it shutdown its mortgage division, was among the largest mortgage companies and one of the largest issuers of Alt-A mortgages in the country.

The FDIC is reporting that about $1 billion in deposits are above the $100,000 FDIC limit and “uninsured”.

Tired of the same old bland townhouses?

Check out 2218 W. Potomac in Wicker Park. It combines the feel of a loft in a three story rowhouse.

But what IS this room? The listing labels it a “family room”. Hm…

Here’s the listing:

LARGE MULTI-LEVEL WICKER PARK LOFT ROW HOME-1/2 GLASS BLOCK WINDOWS FOR INCREDIBLE LIGHT,PRIVACY & EXPOSED BRICK. CUSTOM DESIGNED HOME W/NEUTRAL TASTE. ULTRA CONTEMPORARY W/ INCREDIBLE FIXTURES

FEAT TRAULSEN FRIDGE,VIKING OVEN & 6 BURNER RANGE-FISHER/PAYKEL DW,MAHOGANY CABINETRY,WALNUT FLOORS & BLT-INS. SAUNA,SPA LIKE BATHS-ONLY NICER! PKG IS INCL IN ASSESSMENT. DURAVIT TUBS AXOR & FIXTURES. YOU MUST SEE IT

2218 W. Potomac: 3 bedrooms, 2 baths, 2250 square feet

• Sold in August 1999 for $285,000
• Sold in April 2002 for $314,000
• Sold in July 2003 for $355,000
• Currently listed for $769,000
• Assessments of $104
• Taxes of $3903
• Rubloff has the listing

Several penthouse properties are in distress in 40 E. 9th, Burnham Park Plaza Condos, in the South Loop. The building was built in 1912 and converted into condominiums earlier in this decade. It has 290 units.

One penthouse is already bank owned and now listed 55% less than its previous sale. Another has a lis pendens filed against it.

A third penthouse is on the market after selling just last year.  Here’s the listing:

DUPLEX PENTHOUSE CONDO! HUGE LIVING/DINING ROOM COMBO WITH HARDWOOD FLOORS. KITCHEN FEATURES SS APPLIANCES AND 1 1/4 GRANITE COUNTER OPEN FLOOR PLAN. LOFT MASTER BEDROOM WITH LARGE DECK WITH FANTASTIC VIEWS. ONE CAR GARAGE PARKING INCLUDED

Unit #1902: 2 bedrooms, 2 baths, 2500 square feet, rooftop terrace

• Sold in April 2007 for $1.1 million
• Currently listed for $1.2 million (parking included)
• Assessments of $541 a month
• Taxes of $578 (this is what it says…)
• Sudler Sothebys has the listing

Unit #1906 is already bank-owned and drastically reduced from the last sale. (Sorry- no interior pictures.)

Unit #1906: 3 bedrooms, 3 baths, no square footage listed

• Sold in December 2006 for $1.65 million
• Foreclosure
• Bank owned and listed for $754,900 (parking included)
• Assessments of $1532 a month
• Taxes of $1,717 (this is what it says)
• Amalgamated Real Estate has the listing

Unit #1916 has a lis pendens filed against it.

Unit #1916:

• Sold in October 2006 for $1.55 million
• Lis pendens filed in June 2008 by the Bank of New York
• Foreclosure amount of $989,595

Stay tuned.

How realistic is it to list in this market for more than you paid for a property less than a year ago?  (if no extensive renovations were done?)

We’ll soon find out.

Take this two bedroom unit at 615 W. Deming in East Lincoln Park.

It last sold in August 2007 and is back on the market 11 months later for $50,000 more.

Here’s the listing:

PRIME LINCOLN PK LOCATION! GRACIOUS DUPLEX IN SMALL ELEVATOR BLDG OVERLOOKS LAWN & TREE-LINED STREET . 2-CAR GAR INCL. ABUNDANT UPGRADES & CUSTOM BUILT-INS. 1ST FL: LR/DR W/ FPL & VAULTED CEILING; LARGE TERRACE; OPEN GRANITE KIT W/ BREAKFAST BAR; FULL BR & BA.

2ND FL: MASTER SUITE W/MRBL BATH, SEP SHOWER, WALK-IN CLST; HUGE FAM RM/DEN W/COMPUTER WORKSTATION. HRDWD FLRS. W/D IN-UNIT. PETS OK. NEAR PARK

There are no pictures of the kitchen (outside of the partial you see above) or the baths.

Unit #302: 2 bedrooms, 2 baths, 2000 square feet, family room

• Sold in August 1999 for $415,000
• Sold in August 2007 for $725,000
• Currently listed for $775,000 (includes 2 parking spots)
• Assessments of $466 a month
• Taxes of $7928
• Koenig & Strey has the listing

We’ve been chattering about a lot of new construction concrete units lately. These vintage beauties at 3800 N. Lake Shore Drive in Lakeview are about as far away from that as you can get.

The building has 95 units and was built in 1927. It’s the standard type of layout for the period-with  separate dining rooms and many have “maid quarters” off the kitchens.

This building has no pool but it does have parking. Washer/dryers appeared to be allowed in the unit and some of the units either have central air or spac pak.

Several of the listings refer to a special assessment but otherwise the assessments appear quite reasonable for a building of this era and for units of this size.

Why aren’t these selling?

Unit #14E is currently vacant (as you can see from the pictures below.) But I saw this unit at an open house TWO years ago when it was still fully furnished! 

Unit #14E: 3 bedrooms, 2 baths, 2150 square feet

• Sold in January 2001 for $372,500
• Currently listed for $539,000
• Assessments of $1048 a month
• Taxes of $5794
• Listing doesn’t say it has a w/d but others in the building have one
• 2 car parking
• Original carved mantel
• Seller to pay special assessment
• Listing says central air
• @Properties has the listing

The listing for Unit #3G says it was renovated:

YOU MUST SEE THIS CLASSIC VINTAGE HOME WITH MODERN STYLE – 2BED/2 BATH-GRACIOUS, RENOVATED TURN-KEY RESIDENCE IN PRESTIGIOUS LSD BUILDING. TREE TOP VIEWS, WELL-PROPORTIONED ROOMS, COVE MOLDING DETAILS, RICH HERRINGBONE HDWD, LRG AMPLE CLOSETS AND STORAGE. NEWER KITCHEN WITH GRANITE,SS APPS. UPDATES INCL BOTH BATHS FULLY RENOVATED, NEW SPACE PAC 200AMP ELEC, WIRED FOR SOUND,W/D IN UNIT. PET-FRIENDLY!

Unit #3G: 2 bedrooms, 2 baths

• I couldn’t find a prior sales price
• It was recently reduced
• Currently listed for $524,900
• Assessments of $830 a month
• Taxes of $4145
• Has w/d in the unit
• 2 car parking included
• Prudential Preferred has the listing