Sue Fox, @Properties. Direct 773.816.1788
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It’s already March 17 — Happy St. Patrick’s Day! — which means Chicago’s spring home-buying season is well underway. And the market is truly bustling right now, with buyers out in droves, making offers and getting ready to close on their new homes.
The government’s first-time home buyer’s tax credit has done wonders for the Chicago housing market, but it expires in six weeks. And that’s exactly why anyone hoping to sell a home in 2010 ought to be hustling that property onto the market as soon as humanly possible.
It’s not just to take advantage of the wave of first-time buyers, who make up half of all buyers nationwide, by some estimates. Many buyers seeking the $8,000 tax credit (or earlier versions of the credit) have already found homes, and hundreds of thousands of them have already closed. But that means that hundreds of thousands of home sellers are now free to go buy something else.
This what I call the move-up theory: When someone sells her $300,000 condo, for example, she is now free to go buy that $450,000 house. Which then frees up the next seller to go buy something else, and so on.
Of course, not every seller has the equity, or perhaps the desire, to buy a more expensive property. But once some people are able to sell, the market loosens up again, breaking the massive real estate logjam that has been strangling our market since 2007. Properties start changing hands again. Sales volume increases. We are already seeing this happening on a broad scale in Chicago.
So if you are considering selling this year, the time is NOW! Many of those move-up buyers are already out and about hunting for their next home, which could mean a healthy late spring/summer for mid-range home sales in the Chicago area.
“INCREDIBLE financing incentive!! Spectacular views!! Great values!! Location, location, location!!” So went the email I recently received from the team marketing the SoNo development in Lincoln Park, where the developer and MB Financial have just teamed up to offer an extremely low interest rate for buyers who are able to put at least 10% down.
I’ve written about the price cuts at SoNo in the past (see my June 16, 2009 post), but this new mortgage deal should really light a fire under the remaining units. The developer and MB Financial are now offering a 3.99% interest rate on a 30-year, fixed rate mortgage with no PMI (private mortgage insurance), which is, I must admit, a fabulous deal. But do you want to buy at SoNo?
Almost 70% of the building’s 232 units have now been sold, and prices are quite competitive, with 1-bedrooms starting at $250,900 and 2-bedrooms at $421,900. According to one agent marketing the project, “The developer and building isn’t in any kind of trouble. In fact it’s quite the opposite…It’s a last push to get the project closed out in conjunction with the home buyer tax credit.”
Let it be said that although my @properties colleagues are marketing the project, I have absolutely nothing to do with this development. If you’re interested in living in a new high-rise in Lincoln Park (in this case, a pair of towers near North and Halsted) this could be a good opportunity. The low mortgage rate would save you hundreds of dollars per month, depending on the price of the unit.
If you’re interested in checking out SoNo, give me a call at 773-816-1788.
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.
Goodbye, Thybony Paint. Hello… Walgreens?
That’s what Crain’s Chicago Business is reporting, at least. The rambling paint and wallpaper store anchoring the corner of Clark Street and Catalpa Avenue in Andersonville is soon to be replaced by a Walgreens pharmacy.
Andersonville, thus far, is largely free of ubiquitous chain stores (with the exception of Starbucks, Einstein Bros. Bagels, Jewel-Osco and a couple other shops.) Will a corner Walgreens, right across the street from the aforementioned Jewel-Osco, give our mom-and-pop city neighborhood more of a suburban big-box flavor?
The store is slated to open this fall, a spokeswoman for Deerfield-based Walgreen Co. told Crain’s. The existing 16,000-square-foot building will soon be remodeled to accommodate its new occupant. It is not known whether the family-owned Thybony, which was founded in Chicago in 1886 and now has another location at 3545 N. Kedzie Avenue, plans to relocate its Andersonville store.
But in the meantime… does Andersonville need another pharmacy? There are two literally right across the street: the Gordono Pharmacy (and sandwich shop) on the other side of Clark Street, and the Jewel-Osco across Catalpa Avenue. Meanwhile, there are three other Walgreens located within roughly a mile (at 5625 N Ridge Avenue, 1500 W Wilson Avenue, and 4720 N Marine Drive).
But a century-old paint store? Now that’s something every realtor (and her home-buyers) could use.
After slogging through two years of sluggish sales, many local developers seem to be finally getting the message and deeply cutting prices on downtown Chicago condos. The downtown area was rapidly overbuilt during the boom with thousands of new condo units hitting the market each year, and when demand suddenly stalled developers were left with huge numbers of spanking new, but unsold, condos.
The Chicago Tribune ran a story about the trend this weekend, pointing out that from 2008 to 2009 there were 7,750 condo units built downtown, an area that includes the Gold Coast, River North, Streeterville, Loop, West Loop and South Loop. About 2,200 new-construction units are still available for sale by developers. And that doesn’t count the 3,000 or so downtown condos on the market that aren’t brand new, but are resales.
“The market presents an excellent buying opportunity, certainly unmatched by anything we’ve seen recently,” Gail Lissner, vice president at Appraisal Research Counselors, told the Tribune. “For anyone with a job, who feels good about their employment, this is a great time to buy. There are some outstanding values in the market.”
Many downtown developers have recently cut prices by up to 30%, leaving Chicago condo buyers with plenty of bargains to choose from. These properties include 565 Quincy, where prices on a 1-bed/1-bath condo dropped from $312,900 to $219,000, including indoor parking.
But, as always, buyers must be careful! No matter how awesome the “Dramatic Price Reductions!!!” trumpeted on the sales brochures seem, your realtor needs to do her/his homework and research how many short sales and foreclosures are already cropping up in any given building. The massive price cuts do have a dark side, since they chop the legs out from under any early buyers who may have paid much more for a similar unit in the same building. Those buyers — the ones who paid $150,000 more than today’s lucky buyers — are in trouble.
And if there are too many of them in any given building, soon the building is going to be in trouble, too. Do you want to live in a development that will soon be filled with dozens of short sales and foreclosures as those owners try to get out?
I’m not saying that these downtown condos aren’t great deals — many of them are. I just want buyers to remember that however sparkling the sales pitch, they should make sure the building they buy into is stable before signing that contract.
This modern 2-bedroom, 2-bath condo was quickly snapped up by buyers when I listed it in the fall. It was only on the market for about three weeks before it went under contract. But the buyers had trouble getting their loan, and the deal eventually fell through.
Now this Lincoln Square condo, a duplex with two floors of living space, is back on the market. It’s a great unit with exposed brick, hardwood floors, a beautiful kitchen, lots of light and a family room downstairs. Because it’s an end unit, it’s especially quiet.
Located at 2250 W Argyle, it’s just blocks from Winnemac Park or the restaurants and boutiques of Andersonville and Lincoln Square. The 10-unit building is professionally managed and well-run, and there’s a beautiful backyard for relaxation. My sellers loved living here!
And if you’re a first-time buyer, there’s still time to take advantage of the $8,000 tax credit. This government perk is set to expire on April 30.
If you’re interested in seeing this property, or any other Lincoln Square condos, please give me a call at 773-816-1788. Thanks!
Ever wanted to own a century-old Queen Anne Victorian with exquisite woodwork and stained-glass windows, the kind of historic Chicago home that routinely went for around a million dollars? Now may be your chance — at bargain-basement prices unimaginable until recently.
Check out this beautiful Edgewater 4-bedroom house at 6316 N Magnolia, currently a bank-owned foreclosure, for $530,900. The former owners listed it at $899,000 in 2006, and then steadily hacked sizable chunks off the price until the stately home slid into short-sale territory in 2008, and then into foreclosure.
It makes me sad to imagine such a gracious bit of Chicago history in some bank’s hands, abandoned and untended. The only silver lining is that now some ordinary homeowner might actually be able to afford such a gem.
While this Queen Anne stands out, there are now at least 10 turn-of-the-century homes for sale at a similar price point in Edgewater. Many of them would have fetched upwards of $700,000 just two years ago.
In the desirable Lakewood-Balmoral historic district closer to Andersonville, where relatively few homes change hands each year,we have also seen more modest price reductions. There is now a 1903 home listed at $835,000 at 5253 N Lakewood,which has been on the market for more than 9 months. It was originally priced at $925,000.
So if you’ve always dreamed of owning one of these charming Victorian homes but found the prices simply out of reach, it may be time to reach again… especially in Edgewater.
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.
I live in Andersonville, and I love it here. It’s a friendly, easygoing neighborhood nestled away from the Wrigleyville-Lakeview-Lincoln Park bustle a few miles south, it’s got great restaurants and bars, there are plenty of cool antique shops and clothing boutiques, and you can walk everywhere — including the lake.
And lately, you can find dozens of 2-bedroom condos in the $250,000 to $300,000 range in the heart of Andersonville, which was not the case even a couple years ago. This weekend I was out house-hunting with some buyers, and we saw a smattering of recent rehabs in vintage buildings a stone’s throw from Clark Street. All of them had updated kitchens and baths, and some boasted sunrooms and ample rear decks as well.
But as we visited each condo, I noticed that many of these units — for example, 1408 W Foster #3, 5204 W Glenwood #3, and 1476 W Carmen #2 — looked very familiar, because they had all been on the market for 8 or 9 months and I’d shown them before to other buyers.
It looks like a classic case of overpricing in a popular neighborhood, hoping that buyers will pay 2006 prices even in a struggling market. All of these condos had been originally priced $15,000 to $25,000 higher when they hit the market last spring and summer, and they did not sell.
As the spring market begins to unfold, I’m now seeing at least 30 Andersonville condos competing for attention in this price range. Most of them are vintage rehabs that were converted maybe 5-10 years ago, but there are also a few new conversions in the mix. Some even boast second bathrooms or a parking space.
All this competition will hold prices down, making it possible to find a nice 2-bedroom condo in Andersonville for perhaps $270,000 — what you would have paid five years ago. Buyers who until recently had to settle for the surrounding areas like Uptown or Edgewater because they were priced out of Andersonville can now find plenty of affordable condos to choose from in Andersonville proper.
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