Crib Chatter

If you read the Crain’s article I posted about previously about the slowdown in sales in the South Loop (and the sale of a big piece of land by Lennar to AvalonBay, an apartment company that is going to build 984 apartments there instead of condos) and compare it to this Chicago Tribune article talking about the incredible luxury market in downtown, you might be confused.

The numbers that each article recites are a bit different:

• Crain’s: 7,689 units unsold as of the end of 2Q 2007
• Tribune: 5,772 units unsold as of the end of 2Q 2007

Both numbers were provided by Appraisal Research Counselors, a firm that tracks the downtown real estate market.

Maybe the 7,689 number includes older construction units (it’s not clear from the article.)  Because 2,000 is a big difference in inventory.

The Tribune article acknowledges the slowdown but paints it as orderly:

“We’ve moved into a slower pace of sales and a slower pace of new development activity,” she said. “We’ve had only 1,700 new construction units brought online this year, to date. Last year we had 6,600 [newly announced projects] that were marketing.”

Times obviously have changed from the go-go days a few years ago when people — especially investors — lined up at developers’ sales trailers to put down money on newly announced condo projects.

But no particular price range has taken a hit, Lissner said. “People ask me, ‘Is there one segment of the market that’s outperforming another?’ I don’t know,” she said. “All segments have certainly slowed together.

“We’re definitely at a different annual absorption level, but developers and the market are adapting,” she said. “The well-located projects with strong ‘view’ amenities are going to be the ones that, long-term, continue to do well.”

The articles states that out of 1500 ultra-luxury units for sale (those priced at $700 a square foot and higher), 845 have sold.

As you recall, I recently posted about a $3 million Hinsdale McMansion that was going to foreclosure after 3 years on the market.  It sold.

805 W Hickory:

• Originally listed for $3.198 million in 2004
• Previously listed for $1.799 million in September 2007
• Went to auction for $1.301 million
• Sold on September 12, 2007 for $1.65 million (the auction date)

Crain’s Chicago Business is reporting that the south loop condo market is slowing and some projects are now being canceled. From Crain’s:

Downtown condo developers scrapped or deferred pro-jects comprising 485 units by the end of the second quarter, the report says. That includes a 146-unit high-rise at 2039 S. Prairie Ave. in the South Loop, first called Aristrocrat Tower, then renamed Hom Chicago.

“The market’s been slow,” says William Warman, the project’s developer. “In the South Loop, there are a lot of new buildings online.”

Mr. Warman is canceling purchase contracts for about 35 units and returning the buyers’ earnest money, but he may restart the project next year if the market improves. He also has put the development site up for sale with an asking price of $12 million.

Anyone who walks around the south loop can see that construction continues unabated. How can there be buyers for all of those units? There aren’t. Yet many of the buildings are going up with only 60% sold (Vetro, Burnham Pointe, Library Towers).

According to the Crain’s article, there is already a glut of condos for sale in all of downtown:

Downtown developers are on pace to sell about 4,000 condos and townhouses this year, less than half the 8,162 units they sold in 2005, a record year, according to Appraisal Research. Total unsold units rose more than 50% over the past two years, to 7,689 — a number that could fall as more developers scuttle projects.

But the glut isn’t detering some developers. CMK just launched a sales center for 235 W Van Buren, about 700 new condos priced from $179,000.

The flippers are coming out of the woodwork at Helmut Jahn’s new high rise in Streeterville.  Just last week the first flips were listed.  Two more have appeared on Craigslist for higher floors, both by these by the same flipper/owner.

Can the prices get any more outrageous?

The flipper is asking $529,000 for a one bedroom on the 25th floor (remember, the one bedrooms in this building are around 875 square feet) that faces north.

The Craigslist ad doesn’t say anything about parking (which would be $40,000 or more extra.)

Would you pay $575,000 for a one bedroom condo that is less than 900 square feet in Streeterville?

Neither would I.  Don’t make me laugh. The greed is incredible.

You can find the one bedroom here.  There is also a two bedroom listed for an outrageous price of $749,000. Both will be available this spring.

Pearson on the Park was a conversion, begun last year,  from an older apartment building into condos at 222 E. Pearson near the Magnificent Mile.

The location is excellent. Many of the units look out over the Museum of Contemporary Art and many have lake views across the park. Pearson is a quiet street which is surprising given its location right near the Mag Mile and numerous restaurants.

The building is older and needed a lot of work.  But the developer smartly put washer/dryers in every unit, and re-did the hallways and lobby.  Parking, which is key in Streeterville/Gold Coast, is available for $39,000.

One bedrooms originally sold for as low as $199,000 (with 700 or so square feet and no outdoor space) in what was a great deal for the neighborhood.  Even the larger units were deals for the location.  The building is almost completely sold out.

A resale of one of the larger units has just come on the market.

Unit #2402: 3 bedrooms, 2 baths, with no square footage listed but they weren’t large units so I would estimate about 1250-1300 square feet.

• Original sale price: $515,647 in July 2006
• Currently listed for: $629,000 plus $39,000 for parking

That is 22% appreciation in a little over one year (if the seller gets the asking price- not including the parking.)

Would you pay 22% more only a year later?  Just wondering.

Closings have begun at The Columbian, 1160 s. Michigan, the building that anchors the end of the row of highrises flanking the west side of Grant Park at Michigan and Roosevelt Road.

The building had a lower price point than some of the other new construction going up near Grant Park so the flippers are out in full-force.

For instance, the following one bedrooms are being flipped:

#1106: 1 bedroom, 1 bath, 760 square feet

• Originally sold for $262,000
• Currently listed for $399,000 including the parking

#1506: 1 bedroom, 1 bath,  760 square feet

• Originally sold for $268,000
• Currently listed for $385,000 plus $35,000 for the parking

#1806: 1 bedroom, 1 bath, 760 square feet

• Original sale price isn’t known, but probably around $271,000
• Currently listed for $425,000 with parking included

The “flipper premium” in the building, so far, seems to be about $140,000- $160,000.

Would you pay an extra $140,000 to live in a 760 square foot one bedroom with a so-so  view?

Unit 1006 is still on the market through the developer for $336,700.

I’m also interested in people’s comments on the kitchens.  Do these cabinets and granite seem like $425,000 type cabinets and granite to you?  The pictures above are from Unit 1806.

There are several one bedroom and two bedroom rentals on Craigslist.  You can rent a one bedroom for only $1800 (parking included.)

Apparently, some two bedroom flippers are trying to unload their units for less than what the developer is selling them for (as about 20% of the building was still available as of when the first closings began.)  This is the listing for Unit #1301:

UNIQUE OPPORTUNITY–FIRST & ONLY RE-SALE IN THE NEW COLUMBIAN–AND PRICED UNDER MARKET! COMPARE! EXCEPTIONAL LAKE VIEWS(NAVY PIER, MUSEUM CAMPUS, ETC!) THAT WILL NEVER BE OBSTRUCTED!!! SE CORNER LOCATION–HUGE BALCONY

Unit #1301 is a 2 bedroom, 2.5 bath at 1571 square feet

• Originally sold for $675,000
• Currently listed for $784,000 with parking extra at $35,000
• The developer is currently trying to sell Unit #1401 for $788,500 and Unit #1001 for $770,500

Seems to me with all that competition in the building- these flippers are going to need all the help they can get.

When a condo in a good location is on the market for over 500 days, you would think you would start looking at the price as the reason it’s not selling.  Or, to be blunt, it’s priced too high.  Still, sellers remain stubborn thinking this is 2005 instead of 2007.

Take listing #106 in 20 E. Goethe.  It is a smaller vintage building in the Gold Coast that has coin laundry, no parking and semi-smallish vintage units (some are remodeled, some are not.)  It’s the type of building you would buy in for a 20-something daughter right out of college who wants to be in a good neighborhood.

• Original list price: $270,000
• Current list price:  $255,000

The unit was listed for over a year at $270,000.  Obviously, the owner isn’t too serious about selling. 

It has an interesting duplex down into the master bedroom and second bath.  I don’t know the square footage but it’s not huge.  It’s not a horrible set-up if you don’t care if you can open your bedroom windows (being that they are in the basement of the building).  There are no pictures of the bathrooms in the listing but the kitchen is redone.  It is one of the few units with a washer/dryer and two bathrooms.

Again, there is no parking with the building but there is parking in the neighborhood.

540 N. Lake Shore Drive is the only loft building that faces the lake in Streeterville, the Gold Coast or the South Loop (that is directly lake facing.)

Built in 1912, it was originally the home of Borg-Warner Company.  In 1983, it was renovated into apartments and in 1992 became a condo conversion.  There is a leased parking garage attached where you can rent a space for $195.  Washer/Dryers were not in the original conversion but many of the units have now added them (only allowed in the kitchen apparently.)  The ceilings are 13 foot high timber.  The units do not, for the most part, have outdoor space.

The building has seen a sharp increase in price appreciation in the recent years because new development has encroached out to its location (it used to be considered the boonies out there near the lake).  For instance, Unit #321 sold in 1998 for $167,000 and is now listed for $399,000.  Unit #405 sold in 2004 for $241,000 and is now listed for $339,000.

You used to be able to get a one bedroom in the building for the upper $200,000s only two years ago but that has apparently changed.

Some of the units on the market:

• #321: 1 bedroom, 1 bath, 1100 square feet, new kitchen and baths, stainless, granite: listed for $399,000
• #324: 2 bedroom, 1 bath, 1052 square feet,  stainless, granite: listed for $369,000
• #221: 1 bedroom, 1 bath, 1110 square feet, granite in the kitchen: listed for $350,000
• #716: 1 bedroom, 1 bath, 1000 square feet, top floor with skylights, new kitchen: listed for $350,000
• #405: 1 bedroom, 1 bath, 1000 square feet,  new kitchen: listed for $339,000 (just reduced the price)

But nothing compares to the newly listed #625.

Unit #625: 1 bedroom, 1 bath, 1200 square feet, remodeled kitchen and bath

• Sold in August 2005 for $280,000
• Currently listed for $535,000

Yep, nearly double what it went for only two years ago (remodeled kitchen or not.)

I know what you’re thinking that the square footage is comparable to other buildings in the area where the two bedrooms are going for $550,000 to $600,000.  Therefore, these units should also be selling for that amount.

In two years time???

Reality check!  There is a lot of competition in that building.  The other units on the market are quite nice for nearly $200,000 less (and some people would argue the other slightly smaller units are also overpriced.)

When will sellers (and their agents) start to understand that the market has changed?

And on a side note- who is now able to afford a $350,000 one bedroom?  That’s a discussion for another post.

I will be watching this unit to see how long it stays on the market.

Following on the heels of the $4.6 million foreclosure in Lincoln Park, another huge McMansion home, this time in ritzy Hinsdale, is going on the auction block today.

The home’s MLS listing describes it as the following:

5 bedroom, 5+ bath with elegant foyer and reception hall. Well-designed kitchen and stunning family room. Rich in details and perfect for entertaining. Hardwood floors, Viking, Subzero, Bosch and Dacor in great kitchen. The family room and office with fireplace, built-ins add drama. Large bedroom suites add comfort and finished lower level. Professionally landscaped yard and great patio.

805 W Hickory, Hinsdale:

• Originally bought from the builder in 2000
• First listed for sale in 2004 for $3.198 million
• Massive price reductions over the last three years to the current list price
• Currently listed for: $1.799 million
• Auction price of $1.301 million in the Wheaton County Courthouse

That’s a price reduction of at least 50% since it was first listed in 2004.

Will someone “rescue” this house as they did the $4.6 million Lincoln Park home prior to auction?  Stay tuned.

[Ed. note: Thanks to the tipster who alerted me to this property and its listing history.]

The highly anticipated glass enclosed Helmut Jahn building at 600 N. Fairbanks is ready to begin closings as soon as the beginning of October.

The first flips and rentals are appearing on Craigslist and the MLS.

The rental is for a 900 sq. foot one bedroom for $2200 a month.  That does not include parking.  The owner wants at least a 6 month lease, preferably a 12 month lease.

The flipped unit:

Unit #1808: 1 bedroom, 1.1 baths, 926 square feet

• Original price: Unknown exactly but probably around $350,000
• Current list price: $459,900 plus $55,000 for parking

Mark up so far: about $100,000

We’ll have a better sense of the flipper profits as more of them are listed, especially in the two bedroom units.