Sue Fox, @Properties. Direct 773.816.1788
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Archive for the 'Edgewater' Category
As I’ve noted in past posts, we are now seeing more short sales and foreclosures in areas like Edgewater, Andersonville, Uptown, Lakeview and Lincon Park. While this has been the norm for more than a year in some distressed South side and West side neighborhoods, it’s a recent — and growing — problem in the more affluent neighborhoods up north.
WBEZ, the Chicago public radio station, interviewed me about the trend and broadcast the story this morning. As I tried to point out, buyers should be careful about buying in condo projects where prices have been deeply slashed. I used Catalpa Gardens in Edgewater as an example; there are already 14 short sales and 6 foreclosure filings underway at this nearly new 126-unit building.
Unfortunately, dramatic price cuts by a desperate developer often spell financial ruin for the existing owners. These folks who bought the first units in the building end up so deeply underwater — having paid perhaps 50-100% more than the units now cost — that most of them will be forced into short sales or foreclosures if they need to sell anytime soon. They simply won’t have any other way to repay their loan, with prices so decimated.
That’s not going to be pretty for the newer buyers either, the ones who thought they got a great deal when the developer cut prices. Short sales and foreclosures throughout the building can lead to even lower sales prices if too many units are distressed, and the condo association may also run into trouble if some cash-strapped owners stop paying their monthly assessments.
So be careful out there, all you hungry condo buyers! And call me before you make a move, so we can check out the health of the building first.
In what has become a seller’s nightmare — and a buyer’s dream — the median price of a Chicago two-flat has continued to plummet. And more buyers are taking notice, picking up these stalwart Chicago homes for a fraction of what they were worth a few years back.
I’ve written about this phenomenon before (see my Sept. 30, 2009 post, “The collapse of the Chicago two-flat”), but I keep seeing more sales data showing major price declines. Of the 47 multi-unit properties (mostly two-flats and three-flats) that closed last week in Chicago, the median price was just $80,100, according to Midwest Real Estate Data LLC. Two years ago that same week, 25 of these multi-unit buildings closed at a median price of $310,000.
That is a 75% price drop over just two years!!! Of course, the number of Chicago two-flats changing hands appears to have roughly doubled during that time, but that’s to be expected when prices have fallen so dramatically. What sane buyer wouldn’t want to own two units for $80,000?
Unfortunately for owners who bought their two-flats two to six years ago, they are now in very deep trouble. I’m seeing more and more of these buildings offered as short sales as they slide towards foreclosure, with owners who paid upwards of $500,000 now so far underwater that defaulting on their mortgage may be the only way out.
In Edgewater, 1672 W Edgewater Avenue is a fairly typical example. The owners bought it for $550,000 in June 2006. It looks like they intended to convert it to a single-family home (according to the MLS description) and they gutted the first floor and upgraded the heating and electric systems. A year ago, they put it on the market for $415,000 but it didn’t sell. It’s now listed as a short sale — which requires the lender’s approval — for $240,000.
This sad story has a flip side: It is now an excellent time to buy a Chicago two-flat. In Edgewater alone, I just counted 13 two-flats that are either foreclosures or short sales for $400,000 or less. In Andersonville, there are at least four that fit this description. Even in pricey Lakeview there are three, including a graystone two-flat in foreclosure, now priced at $284,000.
Illinois, however, remains one of the hardest-hit states nationwide. It landed at Number 7 on the list of states with the most foreclosure filings last month, according to Realty Trac’s Foreclosure Market Report. There were 16,422 homes in foreclosure statewide.
While this destructive trend seems to be improving, if you look at the entire year rather than just a month-to-month snapshot, you can see the magnitude of our state’s tidal wave of foreclosures. Foreclosure filings have more than doubled since November 2008 in Illinois.
It seems like just yesterday that we were watching that colorful new mid-rise development go up east of Broadway and Catalpa in Edgewater, promising modern kitchens and green rooftops, a cool urban oasis just a few blocks from the lake. Built in 2007, this 126-unit complex is already faltering, with some initial buyers clamoring to get out even as the developer struggles to sell the remaining units.
In the course of researching short sales in the neighborhood, I came across 13 units at 1122 W Catalpa (Catalpa Gardens) where the owner is attempting to sell for less than what he/she owes on the mortgage. There’s a 4th-floor, 1-bedroom condo, which that owner bought in January 2008 for $155,900, now being offered for $129,500. Or a 2-bedroom, 2-bath unit on the 7th floor that went for nearly $440,000 in July 2008 — and is now for sale for $192,000, according to the MLS.
This is a shocking, sad destruction of equity in a very short amount of time! No wonder the building’s developer, Catalpa Partners LLC, recently slashed prices by $50,000 to $150,000 to sell the remaining 14 units. But selling at such steep reductions badly hurts the value for existing owners, probably pushing more of them into short sales or foreclosures.
If you are a buyer, I would be extremely cautious about buying in a troubled building with so many short sales, even if the price seems sweet. Unfortunately, some buyers today are winging it themselves without realtors, negotiating directly with developers (or other sellers) without any information about what similar properties have sold for, how long they have been on the market, what the seller paid for the home, how many short sales or foreclosures there have been in the building, etc.
They may think they are getting a great deal, but they can easily wind up owning something that quickly loses value, making it nearly impossible to sell. Condos can be risky investments, because your fate is linked to that of your fellow residents. If too many of them start to sell short, or fall into foreclosure, it can rapidly wipe out the value of your investment as well.
Please visit Sue Fox’s other blog posts at www.hometochicago.com!
Festive Streets, Storefronts, and Shopping
Noon-4pm: Two free trolleys along Broadway & Devon
Enjoy roaming carolers, a storefront decorating contest, and special holidays promotions from area businesses.
Holiday Fair & Community Tree Lighting
2pm-5pm: Broadway Armory Park, 5917 N. Broadway
Join us and local ethnic organizations to celebrate with food, crafts, music, and information about how the winter holidays are experienced around the world and participate in a holiday sing-along! The entertainment program will begin promptly at 4 pm with the tree lighting immediately following.
Edgewater Artists in Motion Holiday Art Fest
11am-6pm: Two locations, 5501 N. Broadway & 6056 N. Broadway
Enjoy an art fair from the Edgewater Artists in Motion and purchase work from local artists for the holidays.
Every third Saturday, the Edgewater Community Council throws a mini-street fair to highlight a different corner of Broadway. With free music, sidewalk sales, special deals from local businesses, and a free trolley cruising up the street, the June 20 event will spotlight the stretch of Broadway between Granville and Thorndale.
That has been a busy strip lately, what with The Clarovista mixed-use development (formerly known as The Granville) stirring up debate as it hunts for commercial tenants in a soft market. Now Aldi is planning a new store there, to the chagrin of some neighbors who were hoping for a Trader Joe’s instead.
But unity will be on tap Saturday, with a raft of local businesses from spas to liquor stores promoting their wares with discounts and giveaways. Among the deals:
Ole St. Andrew’s Inn will be handing out free rib tips on Saturday, and the Ethiopian Diamond restaurant will have free coupons for the taking. The Edgewater Wellness Clinic will be offering free 15-minute massages, and the local farmer’s market is kicking off its summer season. The Edgewater Green Market runs from 7am to 1pm Saturday at the corner of Broadway and Norwood, just outside True Nature Foods.
For more information about “Third Saturdays,” check out the Edgewater Chamber of Commerce at www.edgewater.org
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