We Love Authentic Lofts: $120K Reduction at 711 S. Dearborn in Printers Row
We keep chattering about this 2 bedroom brick and timber loft in The Donohue Building at 711 S. Dearborn in Printers Row.
It has been reduced another $20,000 for a total of $120,000 since it came on the market in 2008.
Several of you commented, when we first chattered about the unit in May 2008, that it would sell for under its 2002 selling price. It is now listed below that, and then some.
See the pictures and read our original chatter here.
Urban Search still has the listing. See more pictures here.
Unit #505: 2 bedrooms, 2 baths, den, 1650 square feet
- Sold in April 2002 for $426,500
- Was listed in May 2008 for $499,000 (parking can be purchased in 801 S. Plymouth just to the south of the building for $35,000 to $50,000)
- Reduced
- Was listed on November 11, 2008 at $410,000
- Reduced
- Was listed in November 18, 2008 for $390,000
- Reduced
- Currently listed at $379,000
- Assessments of $815 a month
- Taxes of $4,767
- Central Air
Oh this is that one with the funky ass kitchen. Needs to come down at least another 120k.
I reread some of the previous discussion. A few months ago I said this unit was too expensive. I basically said that if dink couples like me cannot afford this particular unit then I don’t know who they plan on selling to. I said they needed to reduce the price by 50% off of $499k to get things moving along. a’s 120k reduction puts the price at or about 50% of ther $499k selling price.
Funny how my opinion back then wasn’t taken seriously and in some cases I was even insulted…….read below:
“Jim on May 27th, 2008 at 10:11 pm
Homesite, no offense or anything, but if you can’t comfortably afford a $500K home and want people to slash their prices by half… why don’t you look for a $250K place to buy as a starting point?
It is your opinion that no one can earn enough money to pay the mortgage… Let’s face it, a lot of people work in professional jobs in Chicago and there are a lot of dual earning couples in the city that do make enough money to buy a 2bd/2ba unit. We personally know a lot of them. We are all in our late 20’s and early 30’s and no, we are not Lawyers, doctors, investment bankers… etc. We are IT professionals, project managers, Engineers, Consultants, nurses etc…
I don’t know what you consider a high combined salary, but with a combined income of $160K, you should be able to buy a place like this especially if you have planned and put away money diligently for a down payment. I think $75-80K a year for a 30 something in chicago is not too out of the ordinary for a corporate position.
uhhh.. ok… 10 years ago, your salary would also have been a lot lower than combined $80K for the same positions. I don’t understand this “idea” that this house “should” be in your price point? What gives you the right to say this? You either can afford it or not. If you can’t afford a place in your price point in an area, look some where else or like Steve said, find a higher paying job…
I know there a lot of over-priced condos out there and prices will correct more, but reality is reality. I find this idea that prices should fall down to the pre-bubble level so that SOMEONE here can FINALLY afford it just a bit far fetched.
“
One more hilarious comment from the previous thread:
“Steven Heitman on May 28th, 2008 at 9:16 am
50% haircut? If you are right our country will be bankrupt, the stock market will crash, and are financial system will collapse. My opinion is your salary level may be right on target with what you have to offer.”
Yeah, Heitman wrong again. Surprise surprise. Wont someone flush that piece of shit?
Those assessments are insane! Is there a doorman and a pool and a fitness room? Even so, $815/month for assessments seems quite high.
I don’t know building, and i’m not a big fan of south loop at all (although printers row itself has cool arthitecture), but the above-conjectured $259K seems really cheap to me.
the current list of $379K plus $35 or so for parking puts them just under 2002 sale price, which seems like a competitive price right about now.
seems like quite a few listings in the building – anyone know if it is having problems?
$390 is a far cry from $250, homedelete. Not even close.
Nor is $379 for that matter!
It’s a far cry but whowuddathunk that the price would have been reduced 25% between May and January??? Why not another 25%?
heitman is kind of right though. they’ve lowered the price 25% so far… and so far the stock market has crashed. his other predictions don’t seem too outlandish.
When the asking (or even sale) drops to $250K, feel free to crow. In the meantime, you are grossly premature.
If I’m grossly premature then so is the first post which asks for an additional $120k reduction … but at least we’re on a way towards consensus! This property is still overpriced.
The basic fact is that it is still overpriced for a 2br. And with 800/month assessments…why should I purchase here instead of going 3 blocks to the South Loop where there are tons of lofts for a cheaper asking price and 1/2 to 1/3rd the cost in assessments?
This just isnt any kind of comparable deal to the other cheaper lofts in the area.
When you consider the super high assessments for a place like this, I don’t think 260k is necessarily low. Remember huge assessments detract from the price of a place. And they don’t get much bigger than 800/month for a 2/2.
Sounds like hipster urbanites are bleeding cash due to the assessments on their ancient, energy inefficient domicile.
Well, the Chicago FHA loan limit is now $365,700. So $377k purchase price, with 3% down. Still need an income of ~$125k and should have an expectation of staying for 5+ years (and it works much better if your w/o a car), but it’s no longer an insane asking price. Of course, there will be a much bigger pool of potential buyers at $250k, but they only need one, and it now seems possible, rather than wishful thinking.
Homedelete makes an excellent point: who exactly do the sellers think will buy this place? Just about anyone who could comfortable afford it wouldn’t want it, as they could take their money and get something nicer elsewhere. $379,000 is more in the ballpark, but at that price I still think the place will lose value in the next couple of years. Why? One simple reason: inventory. The South Loop area is flooded with about a 10 year condo supply and things are only getting worse right now.
This being said, I think Printer’s Row will be one of the city’s nicer neighborhoods once the bubble fully deflates and prices stabilize. You could probably buy there now and do OK so long as you don’t need to sell for a decade or more. But is it worth the risk?
anon(tfo):
If someone with an income of 125k can only come up with a 3% downpayment for a place like this that leeds credence to my suspicion that they can’t afford to live here.
The whole problem with the bubble is not only that it allowed people with bad credit access to the mortgage market, but it also removed the prerequisite that you have to be a diligent saver or fiscally responsible.
Someone who earns 125k/yr and can’t come up with a 50k downpayment I would say should remain a renter.
Do the assessments include heat? The heating expense for an uninsulated loft in winter time could easily push $500+ monthly, so even when amortized over the whole year it still adds a lot.
If heat isn’t included in the assessment, then this thing is a lemon.
CH, you seem to have missed this one:
Steve Heitman on August 28th, 2008 at 8:46 am
“Looks like the economy is in better shape than all have suggested. Growing economy in the face of a financial crisis? Looks like your prediction for a crash in pricing has little merit.”
Q: “Do the assessments include heat?”
A: Assessment “includes heat, water, common insurance, tv/cable, exercise facilities, exterior maintenance, scavenger”
Bob:
“Someone who earns 125k/yr and can’t come up with a 50k downpayment I would say should remain a renter.”
Bah, a pox on your judgments. We bought with less than $50k down, while making more (not an FHA (or any other fed) loan, tho). Eight years ago.
FHA exists for a reason and the limits are also there for a reason; if someone abuses the system, there should be consequences, but the $125k earner w/ ~$15k in housing savings to buy a first home is indeed in the group FHA is intended to help.
G, I should have added “in this instance”.
HD, $250,000.00 and count me in….
The South Loop is way over saturated with condos.
Oh, BTW, SRS is way up today…
Doesn’t the fact that this is a historic brick-and-timber loft dating from pre-1900 differentiate it from the rest of the newly developed white box condos in the rest of the South Loop in terms of pricing and the ability to hold value over the next decade? (Which is not to say that it’s not still overpriced … I just wonder if it’s comparing apples to oranges by lumping the Donohue building in with the white boxes?)
One of the main reasons SRS was hurting during the second half of December was the fact that all the shorters were taking gains to offset their losses during the 2008 tax year.
Expect SRS to continue its climb.
Why would they do that? I am not an expert.
Actually, I think I get it now.
AD, your assertion is incorrect (since Dec. 15 it was already at 61):
SRS is a double leveraged ETF which doubles the respective daily gain or loss of the index it tracks. Therefore, if the underlying index is up 2%, yours goes up 4% and vice-versa. It’s based on daily tracking, though. But, the thing that is screwy, is that if the underlying index is basically flat, you lose money whether or not the index actually goes up or down. THat’s how it went from 260 – 60 (74% loss) in 1 month even though the underlying index didn’t lose 37%.
It’s a really good play on days like today or back when I sold part at $200. Good when people are trading… losing your shirt when no one is trading it. Gotta catch the swings.
I’m glad I sold that January 60 put on SRS for 10.50 a share, bought it back today for a fat profit. I almost want to buy it outright but I don’t think it will be below the strike come Friday anyway.
Ok, SRS still lost over 40% from the 15th to the 31st. It went from 88 (not 61) to 48. Is it ironic that the 52 week low is on NYE? Probably not…
ChiGuy,
Thats an incorrect explanation. The SRS seeks to match 2x the inverse DAILY return of the underlying index. Which means that over a month’s time it won’t necessarily track the index as the daily swings are 2x the index and cumulative.
When you add leverage to daily returns you don’t get 2x the monthly return of the underlying index. It drifts over time based on the daily swings.
Jason,
There are many reasons why a shorter would cover and take gains before year end. A few:
1) Future gains tax increases possible
2) Offset todays losses from their portfolio with todays gains (time value)
3) Most bonuses are lower than the previous year. Many hope this will recover in 2009. Higher salary throws you into a higher tax bracket.
hum. Pretty confusing.
I think there are other factors also. SRS go hit hard the day the FED dropped interest rates to zero. Lower interest rates are good for highly leveraged companies. That was a big part of it too. We need to wait until commercial real estate problems start bubbling into the media more. It seems inevitable with high unemployement and downsizing. Just my view…
The federal funds rate has nothing to do with how a leveraged fund or ETF tracks the underlying.
But yeah when the MSM finally picks up on soured commerical loans that will be the next shoe to drop. It seems the default levels on those (so far) aren’t nearly approaching those of residential loans. Can we say consistent underwriting standards, maybe?
Right now residential mortgage loans are such an abyss that they might overshadow the souring commercial loans for the time being.
I got 3 new bks today. No missed payments on the cc’s. B of a and chase are gonna take it on the chins. Well over 100k in exposed bw the three of them. Combined income between the 100k. See the disconnect?
They just gave up.
Bob won’t buy in Chicago for FIVE years, Pete thinks Printers Row will be down for TEN+ years, and Want to Get Out thinks his place will fall $75K more in FIFTEEN years. Most of the chatterers agree with these outlooks yet post every freaking day about every listing about something they will not participate in for years and years.
Do you guys not think something is strange about this?
Nothing strange. Watching real estate is sort of a hobby of mine. It also helps keeps me abreast of the market for business. 8 months ago I never filed a consumer bk in my life, but as of today I have over 60 on my shelf. Following real estate keeps me appraised of what areas of law are hot and what is slow. The knowledge I’ve gained from blogs and threads like this has been invaluable. Yeah, there is no prestige in chap 7 debtor work but I have a steady secure job. There are a lot of lawyers out there who are very hungry because areas like real estate, litigation, insurance, M and A, and finance is very very slow. I have the rest of my career to expand into more sophisticated areas, right now I want to survive this nasty recession upon us.
Madfly,
Depending on the rate of depreciation that five year estimate could be +/- a year.
In any case, you will be invited to my housewarming party in the future. I guess distant future from your perspective. I’ve learned in my investing life to not live for instant gratification (own now) and prestige labels (pride of ownership, in this case).
Four to six years isn’t really that far away from my view. In fact I moved to Chicago four and a half years ago and my the time has flown.
Lately though I’ve been considering another route, owning a duplex. They are priced cheaper than SFH’s in Chicago, probably because they avoided the idiots in the bubble jacking up prices to retarded levels. I’m not gonna buy a property from any Simple Jack that doesn’t make sense from a CF perspective.
Kenworthey- I didn’t want to single you out in the post- but I thought your prior comments on it were especially noteworthy given how accurate they were.
And some of the other comments were pretty funny too (given what has happened in the months since.)
Why, thank you, Sabrina! I think that makes me about 3-for-50 million in the forecasting game, but I’ll take my props where I can get them. 😉 (Besides, it hasn’t sold, and if Armageddon happens I’ll be back down to 2-for-50 million.)
I had skimmed the old posts and found them fascinating, too–not only the prescient ones, but the inaccurate ones. So much is happening so fast in this economy…
Oh, one of the interesting things was my genius plan to take out a mortgage on my paid-off unit and invest it in a better asset class than real estate. Thank GOD I didn’t do that, and have learned my lesson the easy way.
“Can we say consistent underwriting standards [in commercial RE lending], maybe?”
Nope. Interest reserves, actual (if insufficient) cashflow and secondary sources of cash. To the extent that the underwriting was consistent, it was also consistently bad, over-optimistic and based on faulty assumptions that real estate always goes up (esp. in Manhattan). I don’t think that sub-2% cap rates (Macklowe EOP acquistion, e.g.) and lending based on pro forma rents with sub-50% signed leases is evidence of prudent underwriting, especially when your talking about 9 and 10 figure loans.