This 3-Bedroom North Center SFH Is Now Priced Under $330,000: 2255 W. Montrose
We last chattered about this 3-bedroom single family home at 2255 W. Montrose on the border of North Center/Lincoln Square in March 2011.
See our prior chatter here.
Many of you thought the house should just be torn down.
Some of you said it made you sad.
Those who guessed about the selling price estimated between $250k and $275k.
Since our March chatter, the price has been reduced $70,000.
It is now listed $20,000 under the 2005 purchase price at $329,000.
If you recall, while it is a 3 bedroom, all 3 bedrooms are in the lower level.
Located across from Welles Park, the listing says it was recently “remodeled” and has new appliances, floors, walls, ceilings, bathrooms and has not been occupied since completion of the remodel.
The kitchen has stainless steel appliances, white counters and white cabinets.
Built on a 24×125 lot, the brick “step ranch” appears to have at least a 1-car garage. But the house does not have central air.
The listing says it is NOT a short sale or a foreclosure.
How low will this go before it finds a buyer?
Or WILL it even find one?
Valdir Barion at @Properties still has the listing. See the pictures here.
2255 W. Montrose: 3 bedrooms, 2 baths, 1350 square feet, 1 car garage
- Sold in September 2005 for $349,000
- Originally listed in February 2011 for $399,900
- Was listed in March 2011 for $399,900
- Reduced several times
- Currently listed for $329,000
- Taxes of $5006
- No central air (window units only)
- Bedroom #1: 9×12 (lower level)
- Bedroom #2: 10×9 (lower level)
- Bedroom #3: 10×9 (lower level)
- Family room: 11×15 (lower level)
- Laundry room: 6×12 (lower level)
This home has about the worst street presence of any property I’ve seen on CC.
Think of the nice properties available in this price range or lower on better streets in the same area and tell me why anyone would buy this place, unless it was $50,000 and you could tear it down and build something else.
It has the curb appeal of a muffler shop. Kill it with fire!
“Think of the nice properties available in this price range or lower on better streets in the same area”
Um, show me? Must be on a standard lot, and in Coonely attendance area or better. TIA!
Could always re-facade it to make it more attractive, but the bedrooms all in the basement is the real killer. Otherwise, thrown on a pitched roof and a nice covered porch to the front…
hillbilly house
OK, Anon. You got me there. I didn’t do much research before saying that about other properties in the area. But I do know friends who live not far away in a very nice condo that would sell for less than this.
The inside is almost as bad as the outside. The bedroom with that one window has all the ambience of a prison cell.
why the tax discrepancy with the listing (which says $7K)?
it’s definitely a fugmo, what’s the lot worth, $200 – 250K? Could you just build a frame addition on top, assuming the existing brickwork is solid?
I agree that is a Muffler Shop Facade and not many renters would accept this kitchen. And not many people, outside of logan square tattooed types agree to sleep in basements. Like Newt, this property is “game over” before it even began.
I say roof top deck it and have the agent only list pics of the killer roof top deck and pics of the park infront. hey even have the “agent” throw in some pics of the nearby gym equipment and a random pic of Buckingham fountain
list it for 600k with some granite and SS will be all set, the yuppies will flock.
“it’s definitely a fugmo, what’s the lot worth, $200 – 250K?”
32′ lot at 4306 Richmond recently sold for $95k, so that’s the right ballpark for a floor. Maybe a bit more, but I wouldn’t bet.
“Could you just build a frame addition on top, assuming the existing brickwork is solid?”
From a building/zoning code perspective, yes. Practically, I dunno.
Location on Montrose seems to make it destined as a teardown/rental rebuild.
They’re still living in a dream world. This place is never going to get even $300k.
I thought this was a two flat. I don’t know why the seller bothered to remodel
“I thought this was a two flat. ”
Assessor has it as a single-story one unit. 798 sf. AV is $45,323
Actual 2009 taxes = $7,067, making this place even worse, if possible.
an ambitious person could make this place interesting.
price need to come down 75000
Yck again
“This home has about the worst street presence of any property I’ve seen on CC.”
Exactly…what is to discuss…this shouldn’t sell for more than the land value in any market.
Working class housing that most blue-collar types would flee. Places like this inspired people to move out to cookie-cutter subdivisions in places like Schaumburg.
It’s everything you struggle to get into a good college to escape.
Can’t see paying more than the price of the lot less the cost of demolition and site prep.
Interior is as bad as the exterior. Ugly, small rooms with awkwardly placed windows and no decent finishes.
Kick it down.
How about two beauts of pocket doors AND walking distance to Hot Dougs, for under $260?
http://www.redfin.com/IL/Chicago/3543-N-Albany-Ave-60618/home/13452329
I’d buy that in a heartbeat over this pos roma!
3543 N Albany
Great house, but that little pocket between the target, elston and addison is a bit sketch. My significant other rented a unit over there a few years ago. it’s slowly gentrifying, one house at time. This will be the next house.
This house only needs a creative facade to justify its price.
..and needs a roofdeck too.
Roma – That Albany house is very intriguing. I’m with HD on the location, but the price seems appealing for the size and extensive original detail. I feel like I’ve been seeing a lot of estate sale listings over the past year.
That Albany place is amazing. The doors alone are breathtaking.
This place is a joke. I can’t believe anyone could keep a straight face calling that kitchen remodeled, my parents tore those cabinets out in an early 90s remodel because they were dated.
The Albany house also desperately needs siding (and not vinyl on a victorian!), has no AC, plaster walls, and a kitchen from probably the 1960’s with metal cabinets. It probably needs new electrial and plumbing behind those walls. $259,000 is a great starting point to start working down from. But even at $200,000 it still needs probably $100k at least in work. And you have to decide whether or not it’s worth spending that kind of money to live off elston.
This poor house has nothing going for it. Unless the location is ok. I have no idea about that part of town.
location certainly isn’t hoppin or yuppified, and not an ideal area for small kids exactly. but it’s not really violence or crime-prone, either. it’s just kinda blah.
otoh, looks like some beautiful, relatively untouched interior features (staircase, fp, doors), a double lot, plenty of head room on the 2nd floor, garage, etc. seems like a lot of potential –obviously, may need extensive plaster work, surely needs new plumbing and electric, etc etc.
I take that back the kitchen cabinets are not metal, I thought they looked metal and then painted white.
The Albany house is pretty cute for that price. If the amount of works that needs to go into it is not crazy, it will make someone a very nice home.
miumiu — I think Roma was answering about the house she posted (which is awesome for the price, BTW). The Montrose house, while having little to recommend it architecturally, is in an amazing location. Lincoln Square has really come into its own in the last decade or so, and even being right on Montrose isn’t bad there.
If that front window outside wasn’t so clean, I would think this was a a crack house.
If the location on Montrose is nice, it makes sense for someone to buy it for the land and then make a SFH or 2 flat IMHO. As is, it is one sad house.
“Lincoln Square has really come into its own in the last decade or so, and even being right on Montrose isn’t bad there.”
No one is going to buy this intact, so this has to get to lot value – demo cost, so I don’t think that anyone is buying this at anything over $220k or so. Those property taxes are brutal so that adds to the carrying costs and you have to deal with getting them appealed as well.
“Lincoln Square has really come into its own in the last decade or so, and even being right on Montrose isn’t bad there.”
“If the location on Montrose is nice, it makes sense for someone to buy it for the land and then make a SFH or 2 flat IMHO. As is, it is one sad house.”
I dunno, Lincoln Sq is nice (women love it) although I don’t know if this is Lincoln Sq proper (maybe it’s close enough), overlooking the park seems like it would be nice, but Montrose seems way too busy for SFH (I think there are some nice SFHs on Sunnyside on the other side, but that’s a less busy street). Maybe if you can do a 3 flat or something.
“If the location on Montrose is nice, it makes sense for someone to buy it for the land and then make a SFH or 2 flat IMHO. As is, it is one sad house.”
Land value isn’t as much as one on a sidestreet: this is right on Montrose. What’s this lot worth these days 250k? Then you have to knock this monstrosity down which is another 40-50k?
“(women love it)”
I’ve noticed that, too. I think, generally, its on the Brown line north of Belmont but before Kedzie, and they seem to like those areas and the El! SWPLs LOVE RAIL TRANSIT! (so long as it’s not the metra).
But Davis theater sucks and its 70mins to the loop from here on the El.
Oh yeah and noone is going to buy this place. On a busy street = not as much privacy and at some point in the lifecycle paying 400k to live in a dumpy looking SFH with zero curb appeal on a busy street a half mile from the El loses it’s appeal.
This property is totally riding the coattails of the bubble. Too bad for the owners it’s 2011 not 2007.
roof top deck this and it will sell!
what do you think you can rent this for?
Bob: I took the brown line from Quincy to Western last week, getting on at 6:30 and I got to Western at 7:10. I then walked to the block that borders the park here on the north by 7:15. I was specifically timing the trip as I was going to meet friends to figure out what life would be like if I moved there.
Are you exaggerating with the 70 min number or is that a time that I should expect?
70 min to the loop from Western is an exaggeration. As regular rider at both peak and non peak times, 40 min non peak and 50 min peak are far more typical.
“what do you think you can rent this for?”
$7300
I dunno, Rick – the Brown line sluggishness was a major factor is going to the Blue line. Yeah, Lincoln Square is nicer, but add up (easily) a lost hour a day in transit time, and it’s like getting a free day off every week.
I wish our place was as nice as that Albany place was when we bought it – Elston doesn’t have any stigma right there outside of being close to Chief O’Neill’s, and in my case I would have welcomed being able to jump on that bike lane to get downtown. A DYI/fixer-upper who doesn’t know how much work he’s getting into is going to grab that and end up very, very happy.
40min non peak Rick?? Also how does peak differ from non-peak, given the stops are fixed?
I would think anyone living here would also take the Montrose stop, skipping the Western (almost equidistant) & Damen stops. After Montrose you have Irving Park, Addison, Paulina, Southport, then Belmont.
When I used to take the Brown line from Belmont to Quincy it was around 40mins.
After Belmont you have either a transfer to the Red line, or Wellington, Diversey, Fullerton, Armitage, Sedgwick, Chicago, Merch Mart, then finally the loop.
I seriously doubt you’re going from Western to the loop in 40mins, peak or non peak. Closer to 60-70.
Bob, I did go from Quincy to Western in 40-45 mins (I started timing from when I stepped on the train, didn’t include wait) at roughly 6:45 last Thursday. I didn’t transfer if that helps, and not many people were entering and exiting from what I could tell at each stop.
I agree with skeptic, I’ve gotten very used to the Blue line helping me get door to door in under 30 mins routinely (and I sometimes take a bus, oh noes!) so moving north is not so easy of a decision.
Guess I’ll just spend more practice runs to various hoods.
Isn’t the brown line better than it was some years ago (don’t know exactly, I’m not sure I’ve ever taken the brown line, but I thought there were all those station closings for improvements)? 15-20 min a big deal to me though and I’m literally door to door in under 30 on blue line. Getting to/from O’Hare is a big plus in favor on logan/bucktown/wicker too.
The blue line rocks. No half eaten chicken wings on the floor, lots of available seating, fast through the subway. I spent 10 years off teh red/brown/purple lines and i’ll tell you this much: the blue is my fav.
“I agree with skeptic, I’ve gotten very used to the Blue line helping me get door to door in under 30 mins routinely (and I sometimes take
a bus, oh noes!) so moving north is not so easy of a decision.”
The Brown line will never be as fast as the Blue line or Red as it has to slow down to make all those L-curves as it goes SE. That said, I do think it’s faster than it used to be.
Also, getting to wait for your train in a protected subway stop (I’m at Belmont) when it’s 15 degrees in January is tough to beat.
otoh, I’d guess that if you get on the Brown line at Western you likely can get a seat, even during rush hour – that’s definitely worth something, as if you can sit you can actually read or get some work done.
blue line is not really that clean compared to the brown
The Nastiest CTA lines
1) Green
2) Red
3) Pink
4) Blue
5) Orange
6) Brown
7) Purple
this list is based upon observations of 7 years of taking public transit almost all the time
Sonies – I lived off the Blue Line for about 6 years before moving to Oak Park. I now take the Green Line to work. It goes through some rougher parts of town but it’s actually pretty clean. I haven’t noticed a significant difference in terms of “nastiness” between the Green and most of the other lines. Although I agree that Orange, Brown, and Purple seem to have the most pleasant trains…they seem to have newer cars than the other lines.
the elevated lines have slowed down a lot. 20 yrs ago I remember watching the speedometer on a ride to howard when they had a stops and b stops. It surprised me how fast they’d get those trains up to. at least 65mph iirc. now they just putter along.
OM…I have caught that train from down town to O’Hare and its takes an eternity. I mean cannot they have some more expensive express version of it to serve the airport? After all this is US not Uganda!
“i’ll tell you this much: the blue is my fav.”
Bob, the schedules are fixed but experience tells me the elapsed time isn’t. I think it’s because it takes more people more time to get on/off at each stop during the peak. It seems like there are fewer delays now than a year or two ago with some of the construction finishing. As skeptic pointed out, it’s not as fast as the improved Blue line, but it’s still a whole lot better than when I had to drive to the north burbs every day. At least I can do something useful in the +/-45 min on the train. It’s a bit ironic that we split hairs over transit time on trains/busses, when most of the country doesn’t have that option. Having a variety of transit options is one of the things that makes urban living in Chicago a great lifestyle choice.
I get on the purple line at quincy transfer to the brown at Belmont and get off at Rockwell in about 40-50 min. Regularly
“I mean cannot they have some more expensive express version of it to serve the airport?”
Daley wanted (and still wants) an express train between ORD and the Loop, but it’s unlikely to happen. The city and the CTA are currently in a financial mess and I highly doubt the Asian investors that Daley tried to court a few months ago are willing to get involved either.
GOd some of your commutes suck
20 minutes door to door for me
+1 on the idea for an express train from the airport to the loop. Even if it made 3-4 total stops, it would be sooooo much better.
“I have caught that train from down town to O’Hare and its takes an eternity. I mean cannot they have some more expensive express version of it to serve the airport? After all this is US not Uganda!”
Just be happy there is a train that takes you to the airport. Not true in a lot of major US cities. Also, and this is partly b/c I arrange my travel to avoid the very worst of the traffic, but cab is better option than el most of the time (leaving cost and the environment aside). And that’s from someone who basically works above a blue line stop.
Best city – airport train link – Amsterdam Schiphol. About 3 euros and 15 minutes. Not sure what the worst is but it’s not O’Hare.
“I get on the purple line at quincy transfer to the brown at Belmont and get off at Rockwell in about 40-50 min. Regularly”
You’re wrong frv. Bob used to take the Brown Line–before the completion of construction–and it took him that long from Quincy to *Belmont*. You can’t possibly know what you’re talking about.
Of course, who the hell takes the *Brown* from Quincy to Belmont? Unless they enjoy the scenic route the long way around the loop. Purple, as you do, or Red, depending on where you’re walking from, to Belmont, then switch.
I live a little further than this place from the IPR/Addison brown stop, get on the red at lake instead of Jackson and, on those occasional days that everything works perfectly, including the bus, can go door to door (including a little less than .5 mile total walking) in ~35-40 minutes. I have had it take 75, but that’s when there’s a jumper or the driver gets off the train for 30 minutes to fix something.
“Not sure what the worst [city – airport train link] is but it’s not O’Hare.”
I’d nominate the various NYC options.
“Best city – airport train link – Amsterdam Schiphol. About 3 euros and 15 minutes.”
Yeah but then you get out at the station and a cab driver tries to rip you off, you insist on getting out of the cab, wife is tired and just wants to get to the hotel with all the bags, you say it’s a matter of principle, big fight ensues. Oh wait, maybe that was idiosyncratic to me.
The cab lobby would squash any attempt to get an express from O’hare to the loop. The Olympics was our only hope.
We definitely need one… I would bet 90/94 traffic would be cut by at least a 3rd with a O’Hare – Loop express train.
We definitely need one… I would bet 90/94 traffic would be cut by at least a 3rd with a O’Hare – Loop express train.
Judging by how many cabs there are out there on that stretch I’d say you’re right – on both counts.
DZ your mistake was getting in a cab in Amsterdam. They’re all Benzes for a reason.
I’ll second the Schiphol nomination; great transit situation.
As for O’Hare the blue line isn’t horrid though it definitely helps that I live near a stop. When landing and getting back I try to watch to see how 90/94 is. During rush hour times cabs take 1-1.25 hrs ORD to North & Damen. Blue line I have in my head as 45 but its actually a bit shorter.
“your mistake was getting in a cab in Amsterdam. They’re all Benzes for a reason.
I think my mistake was not just getting a cab at the airport or car service. I can think of only a couple of places where I’m not inclined toward cab these days.
“During rush hour times cabs take 1-1.25 hrs ORD to North & Damen. Blue line I have in my head as 45 but its actually a bit shorter.”
For me, using California stop, including a ~5 min walk from my home, I have it at about 45 min door to door to terminal 1. I dunno, 1.25 hours by car seems exceptional to me even by highway. Also, taking local routes by taxi can almost always do it within 50 min to where I am.
Best US city to airport train link?
Reagan National Metro service is nice.
I like Reagan too, although doesn’t it have that monorail change? Or is that before baggage claim?
yup DC metro rocks and I am a frequent user.
SF Bart is ok too.
Heathrow express as everything else British is fab. too.
BWI, IAD, and National. DC has to be the most convenient city to fly out of in the country.
Problem with DC Metro is it only works to National which forces connections that can all too often set up things like the evil dilemma of DC > ORD > PARIS flight for $200 less than the DC > NYC > PARIS flight.
Heathrow Express is quick but way overpriced. Gatwick Express meanwhile is a joke.
“Of course, who the hell takes the *Brown* from Quincy to Belmont? ”
Genius, during construction the Purple line followed the same loop path as the Brown line. Big shocker on 1/2/2009 when reverted back to normal and noone told me. I thought someone slipped me some hallucinogenics at first.
Also not everyone works hours that accommodate the Purple line. Some people occasionally _do_ work later than 7pm.
Err maybe it was 1/2/2010 it reverted back.
For anyone intersted there is a great story in the Trib about strategic defaulters.
Went looking for that article in the Tribune and came across this: http://www.chicagotribune.com/classified/realestate/sc-cons-0519-umberger-case-shiller-20110520,0,7672127.column
“The housing market appears to be close to putting down the shovel, according to a new analysis from Fiserv, a Boston-based provider of financial data that’s perhaps most widely known as a partner in the much-watched Case-Shiller home price indexes. As such, the company hasn’t exactly been known for being Pollyanna-ish about a housing recovery.
Yet, Fiserv recently went on the record declaring that housing prices in most parts of the country appear to be in the last loop of their death spiral; they’re on the verge of stabilizing.
Not that its chief economist, David Stiff, is breaking out the champagne. He explained where he thinks home prices will go from here, which is — and this is a relatively good thing, he said — pretty much nowhere.
In Chicago, we see a price decline of 0.3 percent through the fourth quarter of 2011, then, starting in the fourth quarter of 2012, we see a 3.4 percent increase. Metros in Texas are somewhat comparable to Chicago over the next two years. Dallas and Houston never really had a bubble or crashed. We see them essentially flattening out over the next two years.
Bottom callers abound.
Can you post the link for the Tribune article?
http://www.chicagotribune.com/business/ct-biz-0522-strategic-defaults–20110522,0,3910292.story
Homedelete:
Did you see this comment posted by whambam1007 on the strategic default article?
“Short sales are now the norm in the Chicago market. Example: I recently listed (been a Realtor for 41 years, and am still making it, but not by much) a condo in the 36th Ward for an old friend. Built as a 200+ condo development in 1975. Well and professionally managed. Good financial reserves. Almost all owner occupied units.
Unit is 1 bed room plus a garage parking space. Sold in 2005 just under the market (at the time) at $129,000. Value today? $30 to $33 thousand. About what the unit sold for 1/3rd of a century ago. This is not only due to market forces. It’s also due in large part to the zoning and building activities encouraged by the former alderman in this ward.
The bank initiated foreclosure a year ago. SUSPENDED foreclosure in November, 2010. They do NOT want the home. Whatever it sells for, it will be cheaper than taking it back. I am actually doing this because I am acquainted with the owner. Most Realtors do not or will not list a short sale under $100K in value. It costs more to handle the transaction than it’s worth.
You may ask, why not rent the unit out? Well the mortgage, HOA dues, HOA special assessment and taxes total $1100 a month. You can already rent a similar unit here for $650-$700. (Rents have also fallen as the market has flooded.) Banks were NOT guaranteed a return. It’s called “underwriting a risk.” They lost.”
Fannie Mae put out the results of its recent survey a few days ago:
“Forty-four percent of homeowners believe that the value of their home today is worth 20 percent or more than what they originally paid for it, declining from 46 percent in June 2010 and 51 percent in January 2010.
One in three Americans (30 percent) expect home prices to strengthen over the next year, up four percentage points from the fourth quarter of 2010, but virtually unchanged from a year ago.
Fifty-nine percent of Generation Y Americans (ages 18-34) expect their personal financial situation to improve over the next year, compared to 49 percent among Generation X (ages 35-44) and 37 percent among Baby Boomers (ages 45-64).”
http://rismedia.com/2011-05-12/fannie-maes-national-housing-survey-shows-uptick-in-consumer-attitudes/
Also- the “dream” that homeownership is a good “investment” lives on.
Doesn’t sound like a bottom to me. Not many people are hating on housing right now.
Also from the Fannie Mae survey:
“Despite consumer caution, 57 percent of Americans still believe that buying a home has a lot of potential as an investment— ranking higher than other investments, such as buying stocks and putting money into and IRA or 401(k) plan.”
Sabrina: I did see that comment. I was shocked at how low the units are selling for. He in particular was complaining about real estate in the ward in general and blamed a lot on the previous alderman, and I have no formed opinion on that position one way or the other.
The most interesting aspect I found about the article were the three paragraphs shilling the party line that strategic defaults are wrong. Personally, I find the strategically default to be one of the most under appreciated yet one of the most significant risk factors going forward. So many shills are calling the bottom but they don’t recognize that their neighbor who is 40% underwater can walk away at anytime, and when his last child graduates high school, he probably will just walk away, even though it’s still 4 or 5 years in the future. That walk-away 5 years from now will still sell as a foreclosure, will still be competing with the other walk-aways and prices will still be contained. Like I’ve said, we basically need to work through a majority of the mortgages issued between 2000-2008, that are underwater today, before anyone can accurately call a bottom and say that things are looking forward from here.
“The fact that others are doing it doesn’t make it moral, because a borrower signed a contract that said he will pay, Zingales said. And the problem is bigger than individual borrowers, he adds. “The cost long-term to society is very large and not just for the housing market. Moving forward, promises will be a different thing and contracts will be a different thing if they can be broken so easily.”
The decision to walk away carries long-lasting repercussions. A foreclosure strikes the same blow whether it was voluntary or involuntary, decreasing a credit score as much as 250 points, a drop that it may take an otherwise creditworthy consumer up to seven years to recoup.
That lower score will affect a consumer’s ability to access additional credit, whether it is credit cards, an automobile or rental housing. Landlords pull credit reports too. Auto insurance premiums also would increase. “We’re not sure that consumers understand the ramifications of it,” FICO’s Gaskin said.”
What struck me was how long the people were living in (or not paying on their mortgage) and the properties still weren’t foreclosed on yet.
I know this to be true (from all the posts I do here)- but you don’t realize just how massive the shadow inventory is until you see these actual examples and their time frames laid out in black and white.
They’ve stopped paying in 2011?
That property may not come back on the market until late 2012 or possibly even 2013.
Bob: “during construction”
Don’t think that affected the train speed at all? Might be a little faster kniw that construction is over?
most insightful for me was finding out promises and contracts were always, up until this point, one and the same. Professor at U of C never heard of strategic breech… Which banks do daily.
Maybe that’s it.. Declare force majeure and then you don’t sound like a deadbeat but like a white collar multimillionaire corporate officer.
But yeah… Crazy how banks want to avoid taking the asset and recognizing they are insolvent.
“That property may not come back on the market until late 2012 or possibly even 2013.”
And? Is there some law that every foreclosed property has to sell for less than the one before it?
“You may ask, why not rent the unit out? Well the mortgage, HOA dues, HOA special assessment and taxes total $1100 a month.”
And? Even in a bull market, that property is a loser.
The law is called ‘the law of supply and demand’. As the supply of foreclosed homes increases and as demand decreases – prices will inevitably decrease.
It is not inherent to foreclosures that prices will forever decline, but given the tremendous loss banks take on individual properties when they sell in foreclosure, I don’t see that trend changing anytime soon.
“And? Is there some law that every foreclosed property has to sell for less than the one before it?”
“And? Is there some law that every foreclosed property has to sell for less than the one before it?”
Nope. But even if they list it at exactly what the other foreclosures are listed for now- that will still be anywhere from 30% to 50% below the non-distressed properties in the area. How are those people EVER going to sell and move up (or down)?
They’re not. Not without a huge loss.
The foreclosures will keep prices depressed for years until the % of them declines. But with the huge shadow inventory- when will that be?
As many of the agents have said on this site- there are many, many homeowners electing to rent out their condos instead of selling and taking the loss. They think in 2 or 3 or 4 years- they can then sell.
So far, that has not been the reality. Are all those accidental landlords really going to rent out their properties for 5 to 10 years (many taking a loss every single month)? Carrying costs rise then as well- including having to clean/repair the property, new furnaces, washing machines, dishwashers, etc. All just eating away at the cash flow.
In the article, at least one guy decided to just walk away even after renting it out. Because, surprise, surprise, who knows when he’ll be able to sell it without a loss? Why not stop the bleeding?
If you’re thinking of housing as truly an investment- then it makes complete financial sense to simply walk away.
I’m assuming more people will be making this decision in the next few years.
It’s only going to pressure house prices further. Oh- and interst rates will likely be higher by then too.
Good times.
And, according to those graphs Bob linked to a few days ago- 15% of mortgages in Illinois are 90 days or more delinquent.
So- the shadow inventory is huge- and it’s not going to come onto the market until probably 2013.
Sorry- I just looked at the chart again. It’s about 15% are in some form of distress (either already in foreclosure- which looks like about 7% of the total) or 30 to 90 days delinquent (which is the other 8%).
Only Arizona, California and New Jersey were higher in the first quarter.
And how mny of the 85% are not in distress but underwater?
“So- the shadow inventory is huge- and it’s not going to come onto the market until probably 2013.”
WRONG again for so many reasons:
1. 15% is not that HUGE of a number – remember 85% are not delinquent – now add the increased demand over the next few years because builders are no longer building condos/houses anywhere near the rate they used to and you will see that this number isn’t that big.
2. The condition of these delinquent properties is likely going to be very very poor – most people won’t be able to (or want to) get a mortgage to buy them. Seriously, you are already starting off with irresponsible people – now add the fact that they are living free – do you think that they are going to keep up their properties when they have no incentive to do so?
3. The majority of these delinquent properties are likely in areas in which nobody wants to live.
4. Many of these properties are starter properties – again that are not that popular
5. You are assuming that the governmnet is not going to step in with some type of program to help these people who have defaulted stay in their homes.
When you look at all of this – you will realize that we are NOT going to see any significant deluge of very cheap desirable properties in good condition in good areas- EVER. If you don’t realize this, then…. well, I have to say it – you are an idiot.
“Only Arizona, California and New Jersey were higher in the first quarter.”
Florida, Nevada & New Jersey. Nonetheless this is a huge dark cloud over the Illinois RE market, insofar as valuations go.
15% of people can’t pay their mortgages and we’re supposed to believe that things are stabilizing? LOL.
This chart shows that the banks haven’t made any headway on delinquent loans in Illinois over the past year:
http://cr4re.com/charts/chart-images/StatesPercentDelinquentWorst10.jpg
They are playing kick the can in Illinois and most states. Interesting to note they have made some headway in the worst hit states of Florida & Nevada.
“3. The majority of these delinquent properties are likely in areas in which nobody wants to live. ”
Total guess here.
“4. Many of these properties are starter properties – again that are not that popular”
Don’t forget the serial HELOCers.
“You are assuming that the governmnet is not going to step in with some type of program to help these people who have defaulted stay in their homes.”
Government already did this a few times before.
1) 2007 tax free loan of $7,500 for buying a property.
2) 2008 tax credit of 8k for first time homebuyers.
3) HAMP
4) 2009 tax credit of 8k for first time homebuyers and expanded to 6.5k tax credit for first time homebuyers.
The outrage birthed the tea party movement. Prudent citizens don’t want taxpayer dollars to bail out spendthrift citizens and I think policy makers are out of options as it pertains to housing, at the very least until the next election cycle. The can cannot be kicked down the road any longer it seems.
Only HAMP remains in effect (through 12/31/2012) however it has one criteria that very much restricts its eligibility:
“Must not be more than 5% underwater – Example: 200k must be worth at least 190k.”
What’s going to be the death knell for the banking sector isn’t going to be properties that are only underwater by up to 5% or above water.
The government never meddled in the bubble on the way up its about time they become bubble neutral and let it deflate on it’s own.
err expanded to 6.5k tax credit for existing homeowners buying a new property.
Oh I did some research on HAMP, it appears the government buckled and expanded the LTVs to 125% in 2010.
So HAMP will be there to allow those deep underwater to refinance, but they don’t write down much principal in HAMP so your neighbor who refis into a 40-year fixed is just kicking the can.
Reports that say how bad things are in “California” are even less valuable than reports discussing the poor real estate market conditions in “Chicago.”
Want to live in a really nice area in CA? Don’t hold your breath for too many steals. CA is huge: in so many ways (good and bad), it could be considered a nation in its own right. The areas in CA – from smaller places like Mendicino or Carmel or whatever, to places within and immediately surrounding SD, LA and SF – are an entirely different world than the rest of that massive state. And then within each of those places, there is range of desirability.
During this current downturn, as well as CA’s infamous previous real estate crash, lots of folks took beating…and many of them thought they were making a wise choice by buying within an area that was “close to” a highly desirable area.
“And then within each of those places, there is range of desirability. ”
Check out doctorhousingbubble.com for a discussion of the LA real estate market. He is pretty good at showing that even the most desirable areas in LA the market is in the tank.
Location is clearly an important factor in 2 ways: one because it genuinely provides some value (think better schools, great view, proximity to public transport, parks and so on); two because of some brand name effect (I guess more along the lines of what Clio calls psychological).
While definitely the illogical second aspect above is important, I don’t believe it is nearly as crucial as the first one. That is why I find it interesting the folks think a no view, no amenity building with high assessments in Gold Coast or Streeterville will keep its 2006 prices but a building like MPE will loose 50% of its value just because it is in SL.
Unless the rents will go up quite a bit, I cannot see the prices going up in short term. In fact, I am leaning more and more towards predicting a second spiral down’s arrival. I don’t know as much about SFH and town homes, but condos with high assessments are even more at rent-own disparity so I cannot see why should old buildings keep their high prices. The only advantage old buildings have is that the sellers might not have been investors so they are not in with 5% down payments and hence can hold on a bit longer, but no one is immune.
“Want to live in a really nice area in CA? Don’t hold your breath for too many steals. CA is huge: in so many ways (good and bad), it could be considered a nation in its own right. The areas in CA – from smaller places like Mendicino or Carmel or whatever, to places within and immediately surrounding SD, LA and SF – are an entirely different world than the rest of that massive state. And then within each of those places, there is range of desirability.”
So you’re saying all the Illinois foreclosures are downstate and not in the GZ? I would argue differently. In fact, the farming communities are doing so well right now that real estate has hardly gone down in some areas (Peoria area is one. Caterpillar is doing really, really well right now.)
I would argue that the foreclosure story is the same in every city in every state.
People took on too much debt relative to their incomes. Doesn’t matter if you’re in Pacific Heights or Sacramento.
Case in point- I know someone who bought in the Glen Park neighborhood of San Francisco. It is equivalent to, say, Roscoe Village. So it’s nice- but it’s not LP.
Bought in 2005 near the height of the bubble. 3 beds/1.5 baths for $1.2 million. Put nearly $300k down.
Wants to sell and move to the burbs because they now have 2 kids, it’s too small for them (1500 square feet) and the schools suck. But…like everywhere…property values have dropped. They think they can get maybe a million for it. But that wipes out nearly all of their downpayment which they were going to put on the second house.
So what are they to do – even though they make $300k a year? The houses in the suburbs are also a million dollars.
So- They’re raiding their 401k. Yes- paying the penalties and everything (they’re in their 40s)- just to buy another house.
Bad decision begats even worse decision.
So- while there may not be massive foreclosures in the “prime” areas (although, there are quite a few of those too)- and it’s not crashing like, say, Riverside, CA is (where values are down 50%)- homeowners who bought during the boom years are getting burned just the same.
How long will it take this family to “make up” the difference from these financial mistakes? I would guess at least a decade (that is- if they EVER recover from it.)
And so it goes- the same in LP and Lakeview and Roscoe Village and Lincoln Square. If you bought in the last, say, 10 years- and you have to sell for some reason- it’s not looking real good for you even if you don’t have to short sale.
And that’s if you can even sell. There are some single family homes in West Lincoln Park- for instance- that have been on the market seemingly for years. Many look empty and have been that way for months.
So maybe ELP is more “prime” and it is holding up better. But West Lincoln Park is really, really tough right now.
“Roscoe Village. So it’s nice- but it’s not LP. ”
In terms of real estate valuations it’s not noticeably different. That’s why I am/was scratching my head at this bubble: people are/were seemingly willing to pay increasingly larger sums further away from downtown. IE: the 300k 2/2 condo near the Western brown line stop.
I can kinda see the high valuations in Streeterville and River North. And even Old Town/Gold Coast and southern Lincoln Park (for those who want a leafy neighborhood but still want as short a commute as possible to professional, high-wage jobs downtown.
But I cannot see how the valuations make any sense whatsoever when you start going further north. Increased distance to downtown should equate to lower RE valuations. Buckle up.
“But I cannot see how the valuations make any sense whatsoever when you start going further north. Increased distance to downtown should equate to lower RE valuations. Buckle up.”
To me- it’s a sign of the bubble but it will go away (eventually.)
Why is someone paying $1.5 million for a house in the Smith Park neighborhood of West Town/Ukranian Village- when they can get the same identical new construction house for the same, or cheaper, at many locations nearer the lake?
Or has the concept of “best neighborhoods” been thrown away?
Or- why is someone paying $300k for a 2/2 near the Rockwell El stop without parking when you can pay $300k for a 2/2 with parking in prime Lakeview?
Before the bubble, it used to be cheaper to live in the less prestige neighborhoods (because they were, after all, less prestigious.) Not anymore. That concept has not corrected yet.
Or- my favorite- was 2-bedroom lofts in Motor Row selling for $500,000 (this was in 2007) – when you could get a loft in “prime” River North for even CHEAPER. It was then that I knew this was going to be a very bad correction.
But surprisingly- those lofts aren’t much cheaper today than the River North lofts that would be their competitors (which have also come down in price.)
Obviously- everyone has their reason for living in certain neighborhoods and not everyone wants to be in River North or Lakeview. But, again, it used to be cheaper to live in those neighborhoods but now it’s not.
“This chart shows that the banks haven’t made any headway on delinquent loans in Illinois over the past year:”
How is getting moving 1% of loans to f/c, while decreasing 90+ delinquencies by 1% and decreasing overall delinquencies by 1% “not making progress”? Really, explain that to me as a defensible piece of objective analysis and not just part of your narrative on housing.
The progress is overshadowed by the increasing time it takes to process those new dqs and foreclosures. The robosigner scandal is still lingering and new foreclosure filings have dropped because of these issues.
“The progress is overshadowed by the increasing time it takes to process those new dqs and foreclosures. The robosigner scandal is still lingering and new foreclosure filings have dropped because of these issues.”
HD–that’s fair; but given calling that “no headway” is incorrect–they’re converting the seriously delinquent to f/c, and taking a meaningful number of f/c’s to REO. (I’m assuming that the cured defaults are churning with new 30/60s, which appear quite steady, and that the progress is on the seriously delinquent).
“HD–that’s fair; but given calling that “no headway” is incorrect”
Okay little headway.
At the current rate only nine more years to return to Q1 2007 levels. How about that much headway?
“At the current rate only nine more years to return to Q1 2007 levels. How about that much headway?”
But aren’t things still getting worse? That–or some variation–is what you keep saying. Are new foreclosures going to continue to accumulate at the same rate as the past year for each of the next nine? If it’s still getting worse, but the banks are reducing the wreckage, that something, no?
There’s no (or minimal) growth in 30/60 delinquencies and a big-ish drop in 90+, so it seems that things have improved, if slowly.
Still not as much of an improvement as brown line travel times since construction was completed, but you don’t believe in that, either.
“Still not as much of an improvement as brown line travel times since construction was completed, but you don’t believe in that, either.”
I took the Brown line for a bit even after construction was completed: I can categorically state it still sucks from way out there stops like Western, because there are a million stops.
“But aren’t things still getting worse?”
Not worse from that data, but it’s tough to say with any conviction while our government still has HAMP in effect.
All of the government life support programs (ie: HAMP, TLGP) as well as the final round of option-ARMs expire or recast in 2012 so I am hesitant to say things are getting better so long as these events are ahead of us.
Also I have never amended my long-term prediction of a CSINA SFH index value of 94-95 in the 2014-2015 timeframe. If I ever made a statement of the market “getting worse” it was likely pointing to valuation declines. Which for all intents and purposes, are increasing in size and magnitude.
CSINA SFH Index Year/Year % Change
March 2001 Peak: +14.49%
March 2009 Trough: -22.88%
May 2010 Dough 4 Dumps Peak: 11.70%
June 2010: 10.71%
July 2010: 6.233% (aww no more dough4dumps!)
August 2010: 2.76%
September 2010: -1.19% (uh oh we’re y/y – again)
October 2010: -2.644%
November 2010: -4.22%
December 2010: -5.18%
January 2011: -7.62%
February -8.28%
Maybe if you’re a bank analyst considering buying bank stocks things are getting better. They appear to be getting worse as it pertains to real estate pricing to me, however.
on an interesting observational note…
why is the city spending money on solar powered garbage/recycling cans in the loop instead of upgrading the damn EL!
and talk about a bum magnet… they just hover around those things waiting for cans to be thrown in there… someday one’s gonna lose an arm and sue the city
There was an issue with the data, here is an update, the overall message stays the same:
CSINA SFH Index Year/Year % Change
April 2005 Peak: +10.07%
April 2009 Trough: -18.65%
June 2010 dough4dumps peak: -.07%.
July 2010: -1.675%
August 2010: -2.95%
September 2010: -5.58%
October 2010: -6.48%
November 2010:-7.57%
December 2010: -7.39%
January 2011: -7.46%
February 2011: -7.6%
It appears without additional dough4dumps Chicago RE is on a downward spiral.
I agree Bob, I too think we are on our way to another downward spiral.
“I can categorically state it still sucks from way out there stops like Western, because there are a million stops.”
I’ll take that as an admission that the claim of “70 minutes” was BS.
“They appear to be getting worse as it pertains to real estate pricing to me, however.”
Which means that, if the banks are *reducing* the %age of 90+ delinquencies and overall distressed properties, they are making *more* progress than it would appear, as the deteriorating conditions would continue to add a higher than normal number of new distressed props to the pile.
“I agree Bob, I too think we are on our way to another downward spiral.”
Yes but that first dataset was Minneapolis and they look at lot more up the creek than we are!
This second leg down will not be anywhere near uniform is my guess.
Absent wasteful government intervention, it’s time to separate the wheat from the chaff when it comes to urban areas. Areas that haven’t returned to near their 2000 levels and aren’t special (only DC & NY) are going to get hit hard this time is my guess.
“aren’t special … only DC”
What’s special about SFHs around DC?
“aren’t special … only … NY”
What’s special about SFHs in the *29* counties in “NY” for CSI? It includes almost 25% of CT, a county in PA, and over half of NJ (it includes Ocean County, ferchrissakes).
“Areas that haven’t returned to near their 2000 levels”
Only NY, DC, Boston and SoCal are above the comp-20 average. And Miami, Seattle and Portland are the others ahead (~5% or less in each case) of CPI-inflation.
“What’s special about SFHs around DC?”
In short: the Obama stash. Have you been asleep as to what has happened to federal spending the past few years? Do you know how many federal bureaucrats are now earning six figures or even 200k+? Do you know where most of them live?
http://www.politicsdaily.com/2011/02/16/boehner-if-spending-cuts-cost-federal-workers-their-jobs-so-b/
200k in federal jobs added. Want to know what’s happened to federal payrolls lately?
H tee tee p http://www.usatoday.com/money/workplace/2009-12-10-federal-pay-salaries_N.htm
Haha glad to break the news to you that you still live in a cow town and DC IS different. It’s that Obama stash.
As for NYC: capitalism was not allowed to drastically cut the financial sector down to size and the Fed still has record low rates. Look for the NYC metro area to continue to be tied to the fortunes of the financial sector. Leverage is at an all time high again and so are WS bonuses. Whether that sector can continue to carry the entire region…who knows. But it’s a guess.
“Do you know how many federal bureaucrats are now earning six figures or even 200k+?”
Not to sound too much like HD, but not enough to buy all the $800k+ homes in metro DC.
“the fortunes of the financial sector”
Not enough to support home prices in over half of NJ. How many people making the big bucks undertake that 2.5 hour each way trip from PA to Wall Street? How many SFHs in Manhattan (yes, those should hold steady or increase, unless the Street collapses or the city tax structure gets punitive)?
some nice SFH’s in DC. Of course you will be living in a Red neighborhood and the city will refuse to remove your snow those rare times it snows more than 2 inches, which of course completely shuts the city down.
One of the reasons DC changed so much is it used to be considered recession proof because of all the low paying Federal jobs. There is so much post 9/11 high tech, high paying, private sector work going on there right now and legal and financial is developing for obvious reasons. So much of the big money presence in DC now is corporate, doing work that 20 years ago never would have been outsourced by the gov’t. City changed.
then throw in NIH and places like Bethesda where everyone has 2 master degrees… 9.5 months of good weather… DC kinda holds its own if it had to.
“9.5 months of good weather”
I used to live in the DC metro area and call BS on this. Yeah the weather is better than Chicago but only marginally, only really noticeable on the -5degree days here.
Chicago: 41° 51′ 0″ N
DC: 38° 53′ 42″ N
bob… I said that to instigate anon, who insists chicago has 11.743 months of temperate weather.
As for BS… No comparison. I thought chicago would bee marginally worse than ny and the winters were much worse. DC i dont remember ever wearing a hat or scarf.
Ok off to finsih building a fence on a mountain… I slid down this thing so many times yesterday, carrying up wood posts, that i don’t think i still have skin on my ass. G’day to all!!
Back to real estate: Subject property reduced to $319k today
“who insists chicago has 11.743 months”
No, you’ve got it all wrong. It’s 11.347.
“As for BS… No comparison. I thought chicago would bee marginally worse than ny and the winters were much worse. DC i dont remember ever wearing a hat or scarf. ”
The worst of the worst in NYC is somewhat comparable to Chicago; the worst of the worst in DC is differently terrible. The “typical” Jan/Feb day is a lot colder in Chicago.
“Subject property reduced to $319k today”
They seem to be serious. Anyone think that $2k/month is not laughable for rent? If so, they’re getting into the ballpark, but still a little high, unless you like it as a landbank prop.
“I recently listed…a condo in the 36th Ward for an old friend…Value today? $30 to $33 thousand.”
In this market, that sounds about right for a condo in Montclare.
“In this market, that sounds about right for a condo in Montclare.”
Even in a “normal” market–both rental and sale–not more than about $75k, unless it’s unusual in some desirable way, no?
For rent sign in front of building.