Slow Bleed of Foreclosures Still Going On In The GreenZone: A 1-Bedroom at 160 E. Illinois in Streeterville
Every day I am reminded of just how long this housing bust will last by the sheer number of short sales and foreclosures that continue to trickle out onto the market even in the most prime neighborhoods.
This 1-bedroom in Avenue East at 160 E. Illinois in Streeterville is one of them.
It is Fannie Mae owned.
It has been on the market since June 2012 and has been reduced once.
The kitchen and bathroom are intact. The kitchen has granite counter tops, black appliance and cherry cabinets.
There are hardwood floors in the main living space.
The bathroom is marble.
It has central air and in-unit washer/dryer. There is no mention of parking (although the building has it.)
All of these foreclosures and short sales are setting new comps for the building.
The unit is now listed 39% under the 2007 price.
Is this a deal?
Benjamin Beaty at Jameson Sotheby’s has the listing. See the pictures here.
Unit #1904: 1 bedroom, 1 bath, 805 square feet
- Sold in November 2007 for $401,500 (doesn’t look like any parking was included)
- Lis pendens foreclosure filed in July 2010
- Bank owned in May 2012
- Originally listed in June 2012 for $262,000
- Reduced
- Currently listed at $245,500
- Assessments of $444 a month (includes a/c, doorman)
- Taxes of $4187
- Central Air
- Bedroom #1: 12×14
foreclosure deserved for buying in building which blocked that awesome whale mural. which was esp loved by gringo ze I believe
poor lost whales
http://farm1.staticflickr.com/64/202949309_366136a0e7_o.jpg
So, ignoring HOA rental limitations, what would this place rent for?
Unit # Rented Amt
2004 7/12/2012 $1,990
2004 10/25/2010 $1,900
1704 4/1/2010 $1,750
1804 3/18/2009 $1,900
2204 8/8/2008 $2,000
1504 7/20/2008 $1,850
1804 1/29/2008 $1,900
“Pending”
G: thanks
Crazy what these sold for in ’07. That’d be a Macklowe-worthy pro forma cap rate.
CH – awesome
those rents seem pretty stagnant.
thanks sonies. hard to believe some heartless bastard thumbs downed the whales. lulz
“Every day I am reminded of just how long this housing bust will last by the sheer number of short sales and foreclosures”
Objection, assumes facts not in evidence.
“Objection, assumes facts not in evidence.”
I could write this blog on only short sales and foreclosures on every post on properties in the GreenZone for months. For this building, there have been numerous short sales/foreclosures over the last few years. Basically, EVERY UNIT in the building will have to sell for less than the 2007-2008 sales. It will take years to work through all the distress properties just in this building alone.
But eventually you’ll come out to the other side as we’ve seen in buildings like The Sterling. The Sterling was the first building in River North to really get hit hard by foreclosures. At one point, the 2/2s were selling for as little as $240,000. But in the last 5 years, its worked through dozens of units in the building and is coming out the other side. Without the foreclosures, the prices of the 2/2s have been inching up. I think I saw some listed as high as $290,000. Not sure if they’re selling for that but you can no longer get them for $240k as you could in 2010.
But hundreds of high rise buildings still have to go through this process. It’s going to be a long, dragged out process.
Mortgage on $200K = $900 per month, RE Taxes another $400, Assessments at $450, let’s say around $1700-$1800 total, so the rent covers the expenses.
We recently pursued a unit in this building for a client and there’s more to the story of this building. Yes, it has it’s issues. It’s right around 50% rentals, which is a huge concern. There was a 9 month period a short while ago where almost every sale in the building was distressed. However, in the last 12 months only 2 out of 7 closings were distressed. And it’s got an awesome location.
Unit 2302 at 2327 sq ft is under contract for around $875K and it’s essentially a foreclosure – owned by an investor who bought it as part of a bulk bank purchase. It had multiple bids. Penthouse unit 2502 also with 2327 sq ft recently sold for $1.255 MM. Penthouse unit 2505 with 2600 sq ft recently sold for $1.3 MM. Why unit 2502 sold for such a premium over 2302 is beyond me, despite the fact that it was fully furnished and had an extra parking space.
My point is that the problems this building has are not being reflected in some of the recent sales and some people are willing to pay a lot of money to live there still. This is the kind of building that might be turning the corner.
“My point is that the problems this building has are not being reflected in some of the recent sales and some people are willing to pay a lot of money to live there still. This is the kind of building that might be turning the corner.”
Gary, what impact do you think the new rental building that is going up across the street is going to have on prices?
While it’s not directly blocking views (like The Silver blocked the north views of the units in 300 W. Grand)- it IS blocking views to the east. How many recent buyers of penthouses didn’t realize that they’d be looking directly into a luxury rental building in a year? I wonder.
By the way- properties in some form of distress were up in July (year over year).
http://www.chicagotribune.com/business/breaking/chi-number-of-homes-facing-foreclosure-rose-in-july-20120809,0,2594356.story
As I said, this is the slow bleed, even in the GreenZone. Prices aren’t going to rebound for years. When you’re 25% or 30% underwater, and you see your next door neighbor’s condo sell for 40% off what you paid, it’s never a good thing.
“While it’s not directly blocking views (like The Silver blocked the north views of the units in 300 W. Grand)- it IS blocking views to the east. How many recent buyers of penthouses didn’t realize that they’d be looking directly into a luxury rental building in a year? I wonder.”
I’ve got to believe that the people that bought these units were well aware of the construction. The penthouses do not have east exposures though. They are north/south units, going through the building.
Looks like I need to update my long term RealtyTrac numbers later today but when you look at the long term trend the foreclosures don’t look so bad. The media focuses on year over year comparisons, which don’t mean anything because I’m not convinced there’s seasonality in these numbers.
Meanwhile, the indicators are looking really strong: http://www.chicagonow.com/getting-real/2012/08/chicago-home-sales-show-largest-gain-in-2-years/ And you will also notice that the % distressed sales were a little high last month but I suspect that’s because there are so few good properties available right now. And I just did a post on market times in Chicago (can’t post a link here because the spam filter doesn’t allow 2 links). They are really plummeting.
” The media focuses on year over year comparisons, which don’t mean anything because I’m not convinced there’s seasonality in these numbers.”
What I think would be intersting is the cumulative number of f/cs since the bust, compared to the same length of time pre-bust, to see a longer term incremental number. And then compare that to aggregate before/after bust percentage f/cs in the other big f/c markets. Among FL, CA, AZ, NV and IL, we have *by far* the most arduous f/c process, and so MoM and YoY numbers and changes are less relevant than aggregate numbers, imo.
This property is a million miles away from the wild, wild 100’s.
http://www.suntimes.com/14348576-761/wheres-the-public-outcry-over-chicago-boys-raunchy-rap-video.html
Do you think it is a good time to sell if you have a nice property because most of what is on the market is crap? Are buyers paying a premium for better properties right now or are they still looking for a “deal”?
“Are buyers paying a premium for better properties right now or are they still looking for a “deal”?”
Both.
Would you be listing above your (assuming post-2000) purchase price? Lotsa people will expect to pay less than you paid.
“Do you think it is a good time to sell if you have a nice property because most of what is on the market is crap? Are buyers paying a premium for better properties right now or are they still looking for a “deal”?”
I think it’s the best time to be selling in 2 years. Now I can post the link to the market time data I just pulled this morning: http://www.chicagonow.com/getting-real/2012/08/beware-of-realtors-claiming-special-powers/ The data is compelling. If you have a desirable property that is priced according to recent closings and you respond to the feedback you get from the Web data and showings you should be able to get an offer within 60 days – even 30 days. But a premium? Premium relative to what? Relative to this time last year? Probably a small premium.
Oh…and someone might correctly point out that the decline in market times might be related to properties being priced more realistically now than 2 years ago. That is certainly part of it but it’s hard to separate out. It certainly doesn’t “feel like” that’s all there is to it.
“As I said, this is the slow bleed, even in the GreenZone. Prices aren’t going to rebound for years. When you’re 25% or 30% underwater, and you see your next door neighbor’s condo sell for 40% off what you paid, it’s never a good thing.”
I am interested in data and analysis based on that data, and I don’t think that you can demonstrate any causal relationship that suggests that more, longer, lower-priced distressed properties result in lower prices in the market at large. I’m not really moved by anecdotes or how stuff makes people feel.
My view is that the fact that foreclosures and short sales are such a hassle and have so many issues tends to differentiate them from the rest of real property, and really lowers the supply of properties most buyers are interested in – at least until someone buys one and “rehabilitates” it via physical work, making it available to most buyers through a normal process, etc. If anything all these foreclosures and the length they hang around may have positive effects on sales volume per unit and price on the “normal” market. The clearing of all these distressed properties will clearly lag, probably significantly, the recovery of prices and volume in the normal market, as it will need to get to the point where the prices of these distressed properties are so attractive that they’re once again worth it to the average buyer.
How is a short sale accounted for when being used as comps?
Two hypothetical scenarios:
1) I have a highrise condo unit that I want to sell for $250,000. The units directly above and below mine with the exact same floorplan and nominally similar finishes both recently sold as short sales for ~$220,000. I get an offer at $220,000 because of those other units are now comps. Is that what my unit is now worth that even tho the buyers of the two other units had to wait 4mo to hear back from the bank and couldn’t close for 6mo? Would a buyer even be able to get financing for anything above a $220k valuation?
2) Same 3 condos, but the unit above sold for $220,00 as a short sale, mine is listed at $250,000, the unit below is listed at $220,000 but is also a short sale. I get a $240,000 offer that I want to take because the buyer is willing to pay the extra money not to deal hassles of a short sale. Again, is my unit now worth $220,000 because that’s what similar units sold for/are selling for?
Is there a “correction factor” for short sales and the added headache involved when being used as a comp?
“Is there a “correction factor” for short sales and the added headache involved when being used as a comp?”
I typically look at the entire building to see if there is a difference between short sales and non-short sales – usually there is but not always. But it’s safe to assume that a short sale has to be discounted 10 – 20% for the PITA factor.
Fred –
Scenario 1: It’s worth $220k based on the previous sale. The buyer will not get financing above $220k unless they come up with a larger down payment. Contracts die all the time because of this.
Scenario 2: Yes, your unit is worth only $220,000. A habitable foreclosure is a ‘comp’ in the appraiser’s mind and he’ll add or subtract valuation for updates (newer kitchen, etc) and usually it’s just an arbitrary number like $20,000 even if you spent $50k on your kitchen because you have nicer granite or you had to do extensive pipe/wall removal etc. Your $240k buyer will need to come to closing with an extra $20,000 if he wants to buy your unit.
what line in an appraisal worksheet is the line for PITA? I’m looking at my appraisal right now. I see upgrades, ‘other’, fireplace, value adjustments for fireplaces, patio etc but no line for ‘PITA b/c short sale’.
JJJ – I understand your point, but, I think you need to expand your horizons beyond the GZ. Someone once mentioned that there are so few good foreclosures properties in the desirable GZ because the normal market takes care of them before they reach the REO stage. Loan mods, quitclaims, short sales, deeds in lieu, ‘we buy ugly houses’ sorts of things. It’s the outlying areas where the foreclosure and short sale IS the market price. Townhome subdivisions in the suburbs, non-GZ hoods, middle class to lower middle class suburbs – Berwyn, Schaumburg, much of Will County, a good chunk of Kane County, same with McHenry County, a lot of northern and western lake county, and virtually teh entire south side and south suburbs. Quality wise, many foreclosures and short sales are absolutely comparable to regular homes. Not every family pours concrete into the plumbing fixtures prior to returning to an REO. Not all of course, but many, especially in more recently developed areas. The GZ is a little pocket of the Chicagoland MLS with a lot of wealth and high density housing which is about what 10% or 15% of the entire housing stock? You can’t just say “foreclosures are all crappy and shouldn’t affect regular housing prices.” My buddy lives in a high rise along LSD and he can’t sell his unit because he’ll lose a lot of money from the early 2000’s price because there are a lot of short sales and foreclosures. Nobody will even look at his property if he listed for what he paid, or even owes!
“I am interested in data and analysis based on that data, and I don’t think that you can demonstrate any causal relationship that suggests that more, longer, lower-priced distressed properties result in lower prices in the market at large. I’m not really moved by anecdotes or how stuff makes people feel.”
G has put the data on here many, many times.
What don’t people get about short sales and foreclosures? They ARE the market. There is NO MARKET without them. They’ve made up anywhere from 30% to 50% of all sales the last year in most of the Chicagoland area. Take out the distress sales and you have NO market. That hot market everyone is talking about? It’s no longer hot. Sales collapse under the 2009 level without the distress sales.
And “normal” sales can’t compete against them. Sure- there are the completely renovated, new looking properties that are selling fast. But most are back to 2000-2002 prices. As HD said in one of his comments, many of the foreclosures are perfectly normal. They all don’t have water damage or missing kitchens. For some, all you have to do is paint and move in.
How is that NOT the comp for the rest of the neighborhood? It is.
“And “normal” sales can’t compete against them. Sure- there are the completely renovated, new looking properties that are selling fast. But most are back to 2000-2002 prices. As HD said in one of his comments, many of the foreclosures are perfectly normal. They all don’t have water damage or missing kitchens. For some, all you have to do is paint and move in.
How is that NOT the comp for the rest of the neighborhood? It is.”
Normal sales do compete against them. I don’t typically see deals on foreclosures. They have normal closing cycles and the banks want the highest price they can get. As for short sales…they routinely sell for decent discounts to “normal” sales. Look at 1619 S Indiana that you posted on the other day. That will sell below what it would have had it not been a short sale. And you can also see it in the price indices (e.g. CoreLogic) for the total market vs. the market without distressed sales. There are significant differences.
” I don’t typically see deals on foreclosures. ”
This is crazy. The best deals I have found have been on foreclosures.
“This is crazy. The best deals I have found have been on foreclosures.”
Well, let’s get our terminology straight. When I say foreclosure I’m talking about bank owned properties, not properties going to auction. What are you talking about? And what part of the market? Locations? Price range? I’m talking about green zone above $300K.
“Normal sales do compete against them. I don’t typically see deals on foreclosures.”
That is crazy. Where are you looking? Lincoln Park? (which actually still DOES have deals on foreclosures- just fewer of them.)
The media has been reporting on a lack of inventory all over the nation and what’s to blame? Not enough foreclosures. That’s what everyone wants to buy (investors etc.) Like I said- without the distress sales, the sales level would be even lower than during the height of the financial crisis. That townhouse at 1619 S. Indiana is about to set the comp for all the other townhouses in that complex. That’s the reality.
The foreclosures and short sales are deals all over the place. I know buyers who will ONLY look at them (and they’re not flipper/investors.)
“What are you talking about?”
Bank owned foreclosures.
“And what part of the market? Locations? Price range? I’m talking about green zone above $300K.”
Green Zone. 200-350k.
So short sale is now a realtor buzzword that buyers are actively seeking? As a seller are you better off doing a short sale on an underwater property even if you have cash in the bank to do a normal sale? How does a short sale work on a loan that is not in default?
“So short sale is now a realtor buzzword that buyers are actively seeking? As a seller are you better off doing a short sale on an underwater property even if you have cash in the bank to do a normal sale? How does a short sale work on a loan that is not in default?”
Some buyers do actively seek short sales. Have been for a while.
It gets really tricky to do a short sale on a property that is not in default and if the seller has assets. The seller is going to need a really good attorney to help negotiate the deficiency judgment away/ down. I won’t handle those types of sales without the seller having really good legal counsel and no one is going to recommend that the seller go into default, though that might in fact help their case.
Show me examples of bank owned properties in the green zone above 300K that have closed well below their market value. I’m sure it might happen here or there but I don’t typically see them.
“Show me examples of bank owned properties in the green zone above 300K that have closed well below their market value.”
I’m too lazy. Show me the ones that have closed at/above their market value.
“I’m too lazy. Show me the ones that have closed at/above their market value.”
I hear you. The most recent example I have is actually in this building. Unit 2302 that I mentioned above. We did not find it to be a particularly attractive deal and felt like the sellers got a good deal on it.
“As a seller are you better off doing a short sale on an underwater property even if you have cash in the bank to do a normal sale? How does a short sale work on a loan that is not in default?”
As Gary says, it’s pretty tough to get this done. Banks need to see that you have a hardship in order to sign off on a short sale, and they will want signed letters, bank statements, taxes and a blood sample to prove it.
Banks are starting to get wise to the decreased inventory, and I don’t know that short sales are going for the discount they used to (assuming good condition, location). This may not satisfy some of the fact-ier commenters here, but it’s what I’ve seen and started hearing. As Sabrina says, you can’t avoid them, so why should banks put up with a 20% discount off market value? Curious if anyone else has noticed the same thing. Short sales are “short” because they’re priced for less than the amount owed, not necessarily less than the market value.
“Curious if anyone else has noticed the same thing. Short sales are “short” because they’re priced for less than the amount owed, not necessarily less than the market value.”
Mike, I do think short sales go for less than market value. It’s the bank owned properties that I don’t see going for discounts.
Gary, that last short sale you closed appraised at $90k above the closing price…
Most buyers do not have the patience to deal with short sales so there is an inherent discount factored in. Pretty much every appraisal I’ve seen on short sales is quite a bit higher than the contract price (5-25%) . Higher than contract appraisals almost never happen on normal sales.
Russ – this is what I was asking about when I presented the scenarios earlier in this thread. Can’t this only happen once? If a short sale goes for 10% less than it is later appraised at, this is new value. The next unit that sells will sell at that same “10% below market value” price meaning that that value IS now the market. Does that mean if there is another short sale that it will have to be discounted another 10% below that?
“Gary, that last short sale you closed appraised at $90k above the closing price…
Most buyers do not have the patience to deal with short sales so there is an inherent discount factored in. Pretty much every appraisal I’ve seen on short sales is quite a bit higher than the contract price (5-25%) . Higher than contract appraisals almost never happen on normal sales.”
Yeah, that’s what I’m saying. Now what about bank owned properties? You see more of these than I do. Do you see them selling for big discounts?
To answer Fred’s question. I see where you are coming from but I don’t think the market sees short sales as “the market”.
Fred, it depends on the timing of the next sale and a host of other factors. Typically, one short sale is not going to set the market in a building as it is a distressed sale. Will it hurt? Yes, but there is no way to know exactly how much because it depends on the other comparables too. Most appraisals will have three closed sales and three listings of like/best comps from the past six months. Generally, a one off distressed sale will not have an exorbidant influence on value. However, if there are multiple distressed sales in a particular building(especially in the same period) then that is the market and will in all likelihood bring down the values of the normal sales with them.
Morbid and somewhat off topic: As an unmarried owner of condo without a will, the state of IL says my siblings inherit my stuff. If I am killed by a Megabus on the way home from work today and they inherit my underwater condo, are they on the hook for that negative equity or can they liquidate the rest of my assets, drain all the money out of my accounts then chuck the keys into my condo and forget about it? Are they on the hook for my toxic asset, or can they let the bank foreclose on my broke estate without ruining their credit?
Gary – You and Sabrina clearly disagree on this.
Fred – Your siblings will not be resposnible for the mortgage personally. Your estate, however, would be responsible for the mortgage loan, and if your siblings just took the cash and ran the bank could force probate, seek to attach any of your estate’s other assets, etc. (and could be entitled to recover assets from your siblings). Your siblings’ best bet would be to negotiate a deal with the bank – they will actually work with executors and heirs on this stuff.
Relators “enthusiasm” aside,
the free market will always win
the government ( pick your party) that subsidizes etc etc is harming everyone INCLUDING THOSE WHO WILL vote to keep them in power
Sellers (almost) always have the upper hand and the buyer just has to “suck it up”
Now the buyers have the upper hand and its a “catastrophe”
truth in lending / disclosers etc is your only friend WITH A BIGGER DOSE of your own common sense
Buyers agents want the highest price too
good luck
as many of us wait for the next shoe to drop in the markets
My wife and I are considering moving from Oak Park to a Chicago condo and Streeterville is on the top of our list but in addition to Cribchatter (which I’ve followed for years now) I’m very curious to know what other resources are out there that provide honest discussions about neighborhoods, buildings, etc. from people who actually live there.
And to be clear, I’m not interested in Realtor dominated discussion boards etc. like those at Trulia but something populated by people who live in the neighborhoods.
Thanks in advance,
Drew
P.S. My advance apologies if this isn’t the appropriate place to post something like this but without a neighborhood oriented discussion board (I’d love to see one sometime), it’s difficult to figure out exactly where to reach out with questions like this.
@ Drew:
Have you looked at Everyblock? Or taken a look at some of the neighborhood-specific online “papers” like the Center Square Journal? I don’t know much about Streeterville, so I can’t be too helpful with the details. Good luck!
Drew: If you want discussions about specific buildings you’re probably out of luck. There’s not much out there except Crib Chatter. You can check some of the architecture sites, though, for discussion of the buildings. But that won’t tell you much about if people like living there.
By the way- is anyone else disappointed that Redfin now seems not to include the entire listing history of a property (since the site redesign)?
That was one of the coolest things about it. Even if you couldn’t see what it was originally listed for, at least you knew that it was listed 4 years ago and you could see all the price changes. Now, that is all wiped away. Only the most recent listing info is listed.
What gives? Ugh.
“What gives? Ugh.”
Information is power and those with $$$ decided it was better to coerce redfin to hide some historical details.
Don’t fret something else will come along to capture it. It’s getting increasingly harder to finder semi-public info anymore.
“Information is power and those with $$$ decided it was better to coerce redfin to hide some historical details.”
sometimes it is better not to know…..for example what if there was a site that tracked sexual history – would you really like to know how many guys your wife has slept with? No, there is some knowledge and data that you would be better off NOT knowing.
“Don’t fret something else will come along to capture it. It’s getting increasingly harder to finder semi-public info anymore.”
I can find it somewhere else- that’s not the issue. But for Redfin- it means I leave their site. Why would they want me to leave? Stupid.
I’m sure the evil NAR had something to do with it since redfin is bad for their business model
“I can find it somewhere else- that’s not the issue. But for Redfin- it means I leave their site. Why would they want me to leave? Stupid.”
Sabrina … where?
“Sabrina … where?”
Zillow has a more complete listing history on properties than Redfin ever did (even the old Redfin site.) But now? It definitely has more info.
Drew,
You might pick up a few tidbits here: http://soarchicago.org/ but the other thing that you might find helpful is to set up a Google Alert for the term Streeterville.
Many thanks to all for the pointers, I am still quite surprised by the lack of info but have been putting together bits and pieces. For the folks at Crib Chatter, adding a discussion board to your WordPress platform is a piece of cake, let me know if I can help and if anyone runs across some good streeterville building chatter, thank you in advance for letting me know (doubly so if it is about the Hancock).
Drew
There’s already been some cc about the hancock.
“There’s already been some cc about the hancock.”
We’ve talked about the Hancock numerous times over the years. You can search for buildings by address on Crib Chatter by putting the address (or building name) into the search bar. What more is there to say about that building now? It’s been around for forever and is pretty well known (has multiple elevators, has its own supermarket, now allows w/d in the units.)
Drew- if you really want to know more about a big building like the Hancock, it may have a resident’s forum as well. Usually only available to residents but I’m sure there’s a way to check it out if you’re buying in a building.