Sue Fox, @Properties. Direct 773.816.1788
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The pain is spreading. We’ve already seen developers resort to condo auctions downtown to finally rid themselves of unsold units, but now the fallout from Chicago’s condo implosion is spreading north to the Gold Coast.
The developer who converted a 391-unit apartment building at 1400 N. Lake Shore Drive into condos in 2006 just announced an April 25 auction to sell off 30 of the 80 remaining units. “People are going to get a great deal,” Robert Mosky, president of RDM Development & Investment LLC, told Crain’s Chicago Business. “It’s going to help out the building.”
Help out the building? Mosky said that bidding for studios — that once sold for $140,000 to $160,000 — will now begin at $50,000. One-bedroom condos will start at $90,000, a devastating reduction from the original prices of $250,000 to $270,000. This may be an attractive deal for new buyers who value the location, but these fire sale prices will hardly help out the rest of the building’s owners, many of whom are likely now underwater on their mortgages.
With Chicago condo sales sluggish (particularly downtown), some developers are turning to auctions as a last resort to jumpstart sales. It’s so hard to get a condo loan these days in buildings with many unsold units that auctions — where the financing is already lined up for potential buyers — can help get people in the door. Then, the hope is that other buyers will be able to qualify for conventional loans to buy the remaining units.
But at 1400 N Lake Shore, trouble has been brewing for months for many existing owners (see my Dec.16 post). There are now at least four condos being offered as short sales in the building, and many more for sale with price tags well above the planned auction prices.
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