Sue Fox, @Properties. Direct 773.816.1788
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New construction in Lincoln Square and North Center: Condos for under $400,000
NEARLY NEW, BUT STILL SHORT: This Lincoln Square condo, located at 2472 W Foster Ave . #2, is listed at just $194,000. It is almost new, but already a short sale. It originally sold in late 2007 for $284,900.
With financing for development so tight, it’s gotten quite hard to find new condos under construction throughout Chicago’s North side. What you can find, however, are hundreds of condos built in the last five years — where the value has fallen so far from what the original owner paid that many of them are nearing or already in foreclosure.
That means there are plenty of almost new condos in almost new buildings, many of them being sold at bargain prices. In Lincoln Square and North Center, two popular areas that include Ravenswood and Roscoe Village, there are more than 50 condos with at least 2-bedrooms that fit this description — all for sale at prices under $400,000.
At the lower end of the scale you have distressed (meaning financially troubled, not necessarily physically damaged) properties like 2472 W Foster Ave. #206, a 2-bedroom, 2-bath unit with garage parking for only $194,000. This empty unit is a short sale, which requires bank approval (and patience on the part of a buyer). The 1300-square-foot condo boasts limestone baths and a balcony, and it is located in a 5-year-old building where similar units sold for $280,000 to $335,000 in late 2006 and early 2007.
Meanwhile, there are several properties for sale in the $300,000 range with considerably more space. Consider 4809 N California Ave. #2W, also in Lincoln Square, a 3-bedroom, 2-bath with Brazilian cherry floors, a master bath with a steam shower and jacuzzi tub, and a large deck. Parking is $20,000 extra. Or 4313 N Western Ave. #2 in North Center, a 3-bedroom, 2-bath unit with parking. It features cherry cabinets and granite counters, stone baths and hardwood floors, located in an intimate 3-unit building built in 2008.
At the upper end of the range, there’s a 3-bedroom, 2-bath Roscoe Village condo with two parking spaces, a large deck and a balcony. Located at 2332 W Belmont Ave. #2, this is a 1700-square-feet unit featuring a separate dining room, gourmet kitchen, limestone baths and custom closets. It is priced at $398,500.
So if you’re looking for new construction in this age of scant construction, don’t despair. There are some wonderful, slightly used condos out there, available for much less than the first owner paid.
A HAVEN IN ROSCOE VILLAGE: This lovely 400-square-foot deck, along with two parking spaces, comes with a 3-bedroom condo at 2332 W Belmont Ave. #2. Now priced at $398,500, the same unit sold new for $411,500 in 2007.
The return of the Chicago two-flat
A SOLID INVESTMENT: This Chicago two-flat, located at 1300 W Norwood St. in Edgewater, sold in April for $370,500 -- a price that makes sense for a buyer hoping to rent out one or both units. It was originally priced at $600,000.
Chicago two-flats are back… as a good investment option, that is. For much of the last decade, their price had climbed so high as to no longer make sense for many owners. As I had warned in previous posts, it is ludicrous to pay $500,000 or $600,000 (or more) for a two-flat when each unit will only rent for $1,200 or $1,300 a month.
And once the recession hit, this obvious math finally caught up with many two-flat owners. Suddenly people were scrambling to unload these properties, and the price of multi-unit buildings plunged. Now that they are priced more realistically — meaning that if an owner were to rent out both units, it would come close to covering the mortgage and other expenses — Chicago two-flats are suddenly in demand once more.
In Edgewater, for instance, a classic red brick two-flat located at 1300 W Norwood Street recently sold for $370,500. The math here makes sense: Assuming the buyer put down 10% and got a 30-year loan at a 4.5% interest rate, the monthly payment (including property taxes and insurance) would be about $2,525. Each unit has 3 bedrooms and a bath, which in Edgewater would rent for around $1,400 per month, giving the owner $2,800 in income. That’s enough to cover the expenses… which indicates that this purchase is a sound investment. (And in my example, the buyer didn’t even put down 20 percent! The numbers would work even better if he/she had.)
What wouldn’t make any sense at all is paying $600,000 for the same property, which is where it was originally priced in January 2010. The seller had to reduce the price seven times over the next year, finally settling at $429,000. Still, this two-flat closed for nearly $60,000 less when it sold in April 2011.
In Chicago, people sometimes buy two-flats with the intention of converting them into a single-family house. But even then, the property must be obtained for a reasonable price to make financial sense. These days, dozens of affordable two-flats can be found in appealing neighborhoods. I just searched the MLS in four North side neighborhoods relatively close to the lake — Edgewater, Uptown, Lincoln Square and North Center — and found 29 two-flats for sale from $149,000 (a foreclosure in Lincoln Square) to $400,000.
Is it time to jump back into the two-flat market? If the numbers make sense, I say yes.
Lovely duplex-up condo in Lincoln Square
SUN-SPLASHED: Because this duplex is on the second and third floors, the whole condo gets plenty of light. It feels like a townhouse... at a much lower price.
Check out my new listing, an elegant duplex-up condo in the heart of Lincoln Square. In real estate parlance, a duplex-up is a two-story condo unit where the bedrooms are upstairs, rather than tucked below grade on the basement level in a duplex-down unit. Duplex-up condos are much harder to find than duplex-downs, and they are prized because the bedrooms feel light and airy since they are often on the third floor or above.
This duplex, located at 2646 W Gunnison #2, is nearly new and packed with upgrades. The building was gut rehabbed and converted to condos in 2007, and this unit features a gourmet kitchen with cherry cabinets, granite counters, a tile backsplash, a breakfast bar, and all stainless-steel appliances. The kitchen opens to a striking living/dining area with classic recessed ceilings, a gas fireplace, and large windows that let in the sunlight. There are hardwood floors, crown molding, and elegant finishes throughout. You can check out more photos here.
On the upper level, there are two bedrooms and two luxury baths, each ensconced in a private suite. There is also a laundry room down the hall, making it easy to wash and fold clothes without trekking up and down stairs.
The condo is located in an intimate 10-unit building that is across the street from a park. It’s close to the Brown line and all the restaurants and shops of Lincoln Square. This is a beautiful, modern home, priced to sell at $299,900. If you would like to see this duplex, or any of my other listings, please call me at 773-816-1788. Thanks!
Chicago sellers adjust to new reality
LINCOLN SQUARE AFFAIR: This 5-bedroom Bowmanville house sold last week for $450,000, considerably less than its original price tag of nearly $570,000 when it hit the market last May. It had a new second floor, a custom kitchen and updated electric, plumbing and zoned HVAC. The seller had purchased the home just two years ago for $550,000.
This spring, it seems that Chicago homeowners have gotten the message that housing prices have dropped considerably — and they’re not coming back anytime soon. As I meet with prospective sellers this month, I’m sensing a sober new attitude towards selling their homes. People are being realistic, thoughtful, even calm as they digest the latest sales figures in their neighborhood and decide on a reasonable price.
It’s a noticeable change from recent years, when sellers were apt to be more skeptical of the comps, and more insistent that their home must be worth more. Chicago home prices have been falling steadily for about five years now, with each year worse than the last, and at this point many of those folks who wanted to sell in 2007 and 2008 but kept waiting until the market recovered have finally concluded that a rebound could be years off. Do they want to keep waiting?
Some of them, the ones who really need to sell, are deciding to bite the bullet. I have four new listings on or about to hit the market, and all of the sellers know that they are not going to make any money on their sale. Three of them are listing their homes for less than what they paid four or five years ago.
While the circumstances vary, it’s not uncommon these days for people selling an ordinary, run-of-the-mill condo to lose $50,000 on their sale, when you factor in the commissions and closing costs. That’s why inventory in Chicago is so low right now — the month’s supply in January was 30% lower than it was a year ago. People who can’t afford to sell simply aren’t selling (or else they are attempting a short sale.) People who can afford to sell are, it seems, finally pricing their homes to actually sell them.
And deals are getting done. I just sold a house in Evanston last week… for about 10% less than the seller paid for it in 2004.
Chicago home sellers: Should you stay or should you go now?
A couple days ago I met with a group of about 25 seasoned @properties realtors to discuss a weighty topic in our topsy-turvy industry: pricing. Leading the discussion was Paul Boyd, our assistant managing broker and performance coach, who emphasized that Chicago homes that aren’t selling in today’s market are, by definition, over-priced. If they were priced correctly, he pointed out, they would attract a buyer.
THE PRICE IS RIGHT: This 3-bedroom Lincoln Square house sold in October for $504,000. But it was on the market for nearly two years. A classic case of over-pricing, the house was rehabbed and originally listed for $744,000 in 2008. The price was then reduced five times to $725,000; $619,900; $599,000; $575,000; and finally $545,000. Whew!
The realtors gathered around the conference room swapped stories about stubborn sellers who refused to lower their prices, their homes gathering dust without showings for months. We recalled others — the ones who listened to us! — who agreed to a reasonable price right off the bat and quickly found buyers. We lamented the difficulty of telling “the brutal truth” to sellers: Your property is worth much less than you had hoped.
Finally, Paul advised one of us to tell a seller (someone who was unwilling to lower her price, despite being on the market for months with no showings), “I think you should stay here.”
Because that, after all, is what it really comes down to. Do you want to move, or do you want to stay? And if the answer is move, that usually means you are going to have to lower your price. More than you wanted to. More than your neighbor did when she sold two summers ago. Maybe more than you can really afford. But enough so that buyers who are out house-hunting this spring will actually come to visit your home, realize that it is well-priced, and be confident enough to make an offer.
How much is enough? Your realtor should have a pretty good idea. Ask her or him to sit down with you and carefully explain the comps for your neighborhood and type of home, so that you can see clearly what similar properties are selling (or not selling) for. If your home is already on the market, consider how much traffic you’ve been getting and what comments prospective buyers have made.
And whatever you do, do not simply leave your house or condo on the market for months at the same price! If it’s not selling, that means it’s priced too high for the current market. And if you’re not willing to lower the price, as Paul says, maybe you should just stay put.
Chicago for sale: Great houses for under $500,000 in Lincoln Square
A HOUSE FOR THE PRICE OF A CONDO: This adorable turn-of-the-century home in the Bowmanville section of Lincoln Square is now priced at $389,000. Chris Sears of Keller Williams has the listing.
The buyer’s market lives on! Four years into Chicago’s real estate slump, I’m now seeing a handful of historic single-family homes, in generally good condition, on the market in desirable neighborhoods like Lincoln Square, Edgewater and even Andersonville for less than $500,000.
I have some new buyers looking in Lincoln Square, particularly the Bowmanville area north of Foster, between Damen and Western avenues. This is a sweet little pocket of century-old A-frame houses, many of them with porches out front and decks in the backyard.
There are several affordable 3-bedroom homes currently for sale there, including 2209 W Farragut, a handsome house with hardwood floors and an updated kitchen and bath, now priced at $389,000. This house has been on the market since the beginning of February, when it was priced at $435,000.
Then there is 2139 W Berwyn, a pretty Cape Cod house whose roof and mechanicals have been updated and interior has been renovated, including a full finished basement with a family room. Just to give you an idea of how much prices have fallen in recent years, this 3-bedroom home was listed at $589,000 in the summer of 2008. It’s been on and off the market since then, and is now priced at $459,000.
A few of the Lincoln Square houses look like they’ll require a good bit of work, such as 2575 W Argyle, a 4-bedroom house listed just under $400,000. But this house makes up for it with a huge 45 x 160-foot lot, which is 20 feet wider and 35 feet deeper than the standard Chicago lot.
With interest rates still hovering around the 5 to 5.25% mark, this a great time for buyers to take a step up from condo (or apartment) living and find an affordable house with the extra space, grassy yard and a garage that they’ve been missing. Just in time for a summer barbecue!
Chicago foreclosures still rising steadily; 3,500 homes lost citywide in Q1
EVEN IN EDGEWATER: Foreclosures are starting to creep into stable Chicago neighborhoods, driving down home prices. This bank-owned foreclosure, a 3-bedroom Victorian at 1248 W Ardmore that used to be a bed & breakfast, is now listed at $497,999. Its former owner paid $720,000 in early 2007.
While home sales have jumped significantly in the Chicago area, another less hopeful housing indicator — home foreclosures — is also on the rise. During the first quarter, more Chicago-area homeowners lost their homes to foreclosure than in any other quarter in the past five years.
Nearly 3,500 homes in the city of Chicago went through a court-ordered auction, the final step in a foreclosure, and 95 percent of them were reclaimed by lenders, according to a recent report by the Woodstock Institute, a Chicago-based think tank. In the six-county Chicago region as a whole, 9,302 homes went to auction during the first quarter.
It looks like the Obama administration’s Making Home Affordable program and other government efforts to stem the foreclosure crisis aren’t working. Loan modification often fails for people who simply can’t afford their homes. Illinois, one of the hardest-hit states in terms of foreclosures, now faces 11.7% unemployment — far worse than the national average. If people are out of work, it becomes pretty hard for them to pay their mortgages.
So what does all this portend for our local market? I see two trends that I expect to continue in Chicago through 2010 and perhaps beyond:
1) The surge in foreclosed homes will continue to push Chicago home prices down across the board, particularly in neighborhoods with lots of distressed properties. In the North side neighborhoods I cover, this would mean falling prices in Rogers Park, Albany Park and perhaps Uptown and Edgewater, and continuing pressure that holds down prices in more affluent areas like Lakeview, Lincoln Square and Andersonville.
2) The foreclosures — at least the ones in decent shape — will present an attractive buying opportunity for both first-time buyers who couldn’t afford a home in years past, and investors who are taking advantage of the bargain prices. I’m even seeing investors who buy foreclosed houses and condos, spruce them up a little, and then flip them back onto the market. Often the end buyer, who still gets a deal on the price, is a first-time home buyer.
A last-minute frenzy as buyer’s tax credit ends
SELLING LIKE HOTCAKES: My sellers sold this lovely 2-bedroom, 2.5 bath duplex in Lincoln Square in just 12 days. The buyer was a first-timer who pushed to sign the deal by April 30, just in time to claim her $8,000 tax credit.
April 2010 was one of the busiest months I’ve ever seen as a realtor! Even though the government’s home buyer tax credits (in one form or another) have been in place for more than a year, there were plenty of Chicago home buyers who waited until the last minute to buy.
April 30 was the deadline for signing a home purchase contract; buyers now have until June 30 to close the deal.
I had four different buyers or sellers go under contract in the last 10 days of April alone. In one deal, the buyer made an offer on my seller’s Lincoln Square condo around 9 pm on April 29. Her realtor and I negotiated the deal until slightly after midnight, and everyone signed the contract the next morning… thereby just making the April 30 deadline. Whew!
Plenty of other real estate agents in my office, and across Chicago, witnessed the same eleventh-hour mania. Now hopefully we can all get the inspections, attorney review periods, and mortgage loans completed in time to close by June 30! Expect a similar frenzy at title companies in June as everyone piles in to close before the deadline.
We should see healthy home sales throughout the Chicago region for April, just like the 50% leap over the previous year we witnessed in March. But now that the government’s home-buying stimulus is a thing of the past, the question on everyone’s mind is… Now what?
Chicago home sales skyrocket 50% in March
The home buyer’s tax credit — which expires tomorrow — has certainly helped light a fire under Chicago home buyers. Home sales shot up again in March compared to March 2009, making this the seventh month in a row of year-over-year gains.
THREE YEARS NEW: After three years on the market, this new luxury home in Lincoln Square finally sold in March for $1.2 million. It was priced at nearly $1.6 million in 2007.
In the city of Chicago, March total home sales (single-family and condos) rose 49.7% to 1,814 sales compared to 1,212 sales a year ago, according to the Illinois Association of Realtors. For the entire first quarter, home sales were also up considerably, by 41.6% citywide.
But prices have continues to slip. Chicago’s median home price in March was $209,000, a 4.6% drop compared to $219,000 last year.
Dr. Geoffrey J.D. Hewings, director of the Regional Economics Applications Laboratory (REAL) of the University of Illinois, pointed to the latest figures as evidence of an “upward trend.” He told the Realtor’s association that “there is increasing evidence that the housing market is stabilizing; in many parts of the country sales have increased but prices remain stubborn. In places where there have been increases, they are modest; there is no doubt that the downward pressure on prices can be traced to the volume of distressed properties on the market.”
Meanwhile, foreclosures have continued to climb across Chicago and the metropolitan region. Nearly 3,500 Chicago homes went through a court-ordered auction in the first quarter, and 95% of them were acquired by the bank, according to a story in today’s Chicago Tribune.
This flood of bank-owned homes, which I’m now seeing popping up even in trendy neighborhoods like Lakeview and Lincoln Park, is depressing home prices across the board. But at last, homes are finally changing hands again at a healthy pace, and some stability is returning to our Chicago market.
Closing a Chicago condo: A tale of two lenders
LENDER BENDER: My sellers had to wait an extra two months to sell their 2-bedroom Lincoln Square condo, because the buyers' original lender couldn't get the FHA loan approved. The buyers switched to Bank of America and were able to close within six weeks.
This week, my sellers finally closed on the sale of their Lincoln Square condo. I say finally because in this case, unfortunately, the couple who was buying the condo ran into some trouble getting an FHA loan. Everything seemed fine when they made an offer in October, but their first lender — A&N Mortgage — could not get the deal done.
We even gave the buyers an extra month to try to secure their loan. But despite what appeared to be solid jobs, good credit and hard work on the part of their loan officer, the loan was ultimately denied. The property fell out of contract and my sellers had to put it back on the market in January.
But wait! These buyers (and their realtor) did not give up. The realtor referred them to another lender — Bank of America, this time — and somehow the BofA mortgage sales manager Tammy Hajjar managed to get their FHA loan approved and closed six weeks later. Same buyers, same jobs, same down payment, same property … but a totally different outcome.
The difference in mortgage lenders, Hajjar said later, is twofold: how thoroughly the lender assembles the loan file (the front end of the process) and the access she/he has to an underwriter (the back end). “There is no room for a lack of detail these days,” she said. “You need someone who is thorough enough on the front side to really submit a good application and financial statements.”
At the same time, large banks like Bank of America, Chase, Wells Fargo and Citibank have in-house underwriters who work for them, so their mortgage lenders can quickly get questions answered. A broker like A&N Mortgage, Hajjar explained, has to “go through an extra step” of submitting the loan to an outside underwriter. That adds another level of interpretation to the loan file — and another place the process could potentially go awry.
This particular condo deal was a stark example of why it’s so important to choose an experienced lender with a track record of getting deals closed. It’s not all about getting the best interest rate (although, of course, this helps!) But many lenders offer comparable rates, and at the end of the day the interest rate is irrelevant if you can’t close the deal.
A good lender will patiently explain loan products and fees to prospective buyers and identify any red flags they see up front. Securing a loan entails crossing many little hurdles along the way, from the appraisal to underwriting, and an experienced lender will be able to navigate his/her way through them. One of the best ways to find a good lender is actually to ask your realtor, because realtors work with lenders all the time and after a while, most of us develop a go-to list of a couple great lenders that we know can get that loan closed.
I regularly refer buyers to a few good lenders I have worked with for years without a hitch. (I get nothing in return for the referral, by the way — except the knowledge that the loan is going to close.) Buyers should make sure their lender knows the business and has a solid record of closing deals, because it could mean the difference between scrapping the deal or moving into your new home.
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