Sue Fox, @Properties. Direct 773.816.1788
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Archive for the 'Portage Park' Category
Hundreds of investors, it seems, are now spotting opportunity in Chicago’s rejuvenated housing market.
House-flipping, a practice where someone buys a house (presumably at a discount) and quickly resells it for a profit, is once again on the rise. According to RealtyTrac, a real estate data firm, there were 1,067 homes flipped in the seven-county Chicago area during the first half of 2012 — a 30% jump from the previous year.
Investors often buy these homes as foreclosures and then fix them up, sometimes with cosmetic improvements like new paint, but often by gutting and replacing much of the interior and mechanicals. In many Chicago neighborhoods, the houses look almost new by the time they hit the market again three to six months later.
Over the past year, I’ve seen a good deal of flipping in areas like Irving Park, Logan Square, and Portage Park. These aren’t necessarily the hottest North side neighborhoods, but they are solid middle-class enclaves close to public transit and full of houses in the affordable $250,000 to $350,000 range.
Competition for distressed homes, which often sell below $150,000 in these neighborhoods, can be very fierce, and many ordinary buyers are outbid by investors willing to pay cash. But once the homes are rehabbed and offered for sale, they can be appealing deals for the end buyer. After all, it’s not easy to find a 3 or 4-bedroom house with a finished basement and new plumbing, electric, roof, paint, kitchen, baths etc. for $300,000 on Chicago’s North side.
I helped some first-time buyers find just such a house this year in Portage Park. This particular couple started out looking at condos in Uptown, but once they discovered they could afford a house if they were willing to move a few miles west, the house search was on. We looked at dozens of old and often rundown bungalows, Victorians, and ranch houses until we finally came across a lovely, fully rehabbed 4-bedroom Portage Park house for $279,000.
It was a great deal for my buyers, who knew how difficult it was to find a renovated house in their price range, and they snapped it up quickly. And it was apparently a great deal for the investor who flipped it as well. He bought it as a short sale for $115,000, renovated it, and sold it about five months later for more than double the price.
With home buyers streaming through Chicago neighborhoods this spring in search of a bargain, I’m beginning to see a phenomenon that hasn’t reared its head much in recent years: the “multiple offer situation.”
Dreaded by home buyers but embraced by sellers, this pulse-racing affair occurs when more than one buyer makes an offer on a property at the same time, sometimes within the space of hours (or even minutes). The seller’s realtor will then advise all parties of the “multiple offer situation” and often ask everyone to submit their so-called “best and final offers.” Sometimes, however, one offer is so outstanding that the sellers will decide to negotiate further with only that buyer, leaving the others by the wayside.
I have been extremely busy during the last month, taking various buyers out to see properties as soon as they hit the market and helping submit dozens of offers (hence my recent lack of blog posts!) Many of our offers have been negotiated and accepted, but I can think of at least five that wound up competing against stronger offers and losing out. The bidding wars weren’t confined to a single price range, either; I saw them cropping up anywhere from a $130,000 condo in Edgewater to a $650,000 house in Ravenswood. In two situations, I was representing an investor who was bidding against five to ten other offers (often cash offers) for houses in Irving Park or Portage Park.
It is becoming commonplace to run into other buyers looking at the same property, and to hear the seller’s realtor mention that he/she has showed the home seven or eight times in one day. By the end of March, I was advising my buyers to move quickly if they really liked a home — especially if it was priced well and in good condition. It’s always better to be the first one in and get the property under contract than to wind up paying more because someone else wants it too.
I’ve witnessed an interesting trend emerging in recent months, just by watching my own buyers as they move through the home-hunting process. And now I have some hard data to prove it: Chicago buyers are increasingly buying single-family houses, often skipping right past the condo stage that was once the point of entry for first-time buyers.
Five to ten years ago, if you were a North side buyer approved for a loan of $200,000 to $400,000, your best option was often to buy a condo if you wanted to live in a lively neighborhood with plenty of restaurants and shops (and sometimes even the lake) within walking distance. The Loop, South Loop, River North, Bucktown, Wicker Park, Lincoln Park, Lakeview, North Center, Roscoe Village, Lincoln Square, Andersonville, Uptown, Edgewater — all of these areas were bursting with new condo developments that made the most of city living at prices that were affordable for first-time buyers. Most of these folks never even considered buying a single-family house.
But today, Chicago housing prices have fallen so far that decent 3-bedroom houses can now be had for the price of a condo. The demand for single-family houses has climbed rapidly, with 37 percent of Chicago buyers choosing a house in 2011, according to data gathered by the National Assn. of Realtors. Two years ago, only 27 percent of buyers made a similar choice.
Likewise, the appetite for condos has waned. Just 39 percent of Chicago buyers opted for a condo in a building with at least five units in 2011, compared with 54 percent in 2009. (The rest presumably bought townhouses, two-flats or some other type of residential property.)
Among my buyers, the shift seems to be happening because they realize that by compromising a bit on the neighborhood, they are able to find a house for $200,000 to $300,000. These houses generally are neither large nor new. They tend to be around 1200 to 1600 square feet (often a bungalow, a ranch house, or an A-frame home) and they often need some cosmetic updating, especially things like refinishing the floors and renovating the kitchen and baths. But they usually offer all the appeal of a single-family house — including a backyard, garage, and basement, while NOT including a condo association, upstairs or downstairs neighbors, or monthly assessments.
“I never dreamed we would be able to afford a house,” one of my buyers recently told me. But more and more buyers can — particularly if they are willing to look a bit further west than they may have lived previously. Instead of the neighborhoods mentioned above, areas like Irving Park, Albany Park, Avondale, Logan Square, Portage Park and Jefferson Park are now attracting Northsiders who want a house but may only have $250,000 or so to spend. At price points around $300,000 and above, you can sometimes find newly rehabbed houses with finished basements in these neighborhoods. There is literally nothing to do but move in (which, in years past, was often the appeal of many new and gut-rehabbed condos.)
I love bungalows. As the former owner of a 1913 Craftsman bungalow, I know well the joys of living in a cozy house with old oak floors and built-in bookshelves flanking the fireplace. Entire neighborhoods of bungalows were built in Chicago in the 1920s and ’30s, and today — thanks to the efforts of the Historic Chicago Bungalow Association — most are still standing and many have been updated in keeping with their historic charm.
But many have not! About six months ago, I helped my buyers Anne and Mark Diffenderffer find a rundown brick bungalow on Warwick Ave. in Portage Park. The house had great bones — and it was on a double lot — but it had been neglected. The hardwood floors were badly scuffed and stained, the kitchen was very outdated, and even the walls seemed dirty.
“We were like, uggghhh. It was overwhelming,” Anne said. “We knew we had a lot of work to do.” So they called in a painter and some hardwood floor restoration companies to get estimates before they even closed. Then they had the floors sanded and refinished, all the rooms and some exterior trim repainted, some ceilings patched and doors refinished, and they added beadboard wainscoting to the kitchen.
So far, the new owners have spent about $6,000 on the house. But I would say that they have added at least $20,000 in value, because now their bungalow sparkles rather than sags. When you walk in the door, you see gorgeous hardwood floors and fresh paint coloring the walls. It looks beautiful!
“It definitely feels like a nice, new house,” Anne said this week. She advises other buyers to try to look past the grimy walls, floors, and furniture that so often dulls the shine of older homes. “If everything just needs a fresh touch, that is not a huge investment to make in a house. You don’t have to be a genius at home improvement,” she said.
Even better, now that the house looks lovely, the change has boosted the owners’ spirits so that future upgrades and repairs now feel more manageable. “Once the aesthetics are taken care of, the rest of it seems totally doable,” Anne said. “There’s some psychological impact it has that makes you have more stamina.”
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