Sue Fox, @Properties. Direct 773.816.1788
Subscribe to Site
- FHA loans
- Market conditions
- Tax credits
Real Estate radio
Archive for the 'Rogers Park' Category
This week, one of my buyers made an offer on a foreclosed 2-bedroom, 2-bath condo in Rogers Park. In years past, I did a healthy business in Rogers Park; it was a popular destination for first-time home buyers who wanted to live in an affordable area close to the lake.
But Rogers Park, like so many other up-and-coming neighborhoods throughout Chicago, has been just about crushed by the real estate downturn, resulting in a massive tide of foreclosures and short sales. This has made Rogers Park something of a buyer’s banquet, with deals you can only dream of in other North side areas, like newly-rehabbed 2-bedroom condos with parking for well under $200,000.
There are now 99 condos with at least 2 bedrooms and 2 baths listed for sale for less than $200,000 in Rogers Park (and more than 20 of them have 3 bedrooms.) But the truly shocking part is that nearly all of them are distressed properties, either foreclosures or short sales seeking to avoid a foreclosure. I just combed through all 99 listings, and I only counted 28 that were NOT foreclosures or short sales.
In fact, it’s so rare to find an ordinary seller selling a ordinary home in Rogers Park these days that it’s become a selling point: “REGULAR SALE!!!!” shouts the description for 1900 W Touhy Ave #1C, a rehabbed condo priced at $135,000.
The flip side of so many great deals is that most of them, unfortunately, will be difficult to actually buy. At least half of them are short sales, which require lender approval that takes months and often never comes. Many of these will eventually slide into foreclosure and be seized by a bank. Even the foreclosed condos can be tough to buy, though, because if they are located in a troubled building with other distressed units, lenders will not want to loan in that building.
So if you are a buyer considering Rogers Park — especially if you’re a condo buyer — please tread carefully. The neighborhood’s housing market has become a veritable thicket of problem properties, and you need to make sure you are well represented as you sort through the real estate rubble looking for a gem.
When will it end?
Not in 2010, apparently. The latest round of real estate data shows that Chicago home prices fell 5% to a median $199,250 in December 2010, compared to the same month a year earlier, according to the Illinois Assn. of Realtors. And substantially fewer homes changed hands: Chicago home sales (single family and condominiums) totaled 1,444 sales in December, an 18% decline from the 1,767 homes sold in December 2009.
The housing numbers look different, however, if you survey the entire year’s activity. For the year, Chicago home sales dropped only slightly; they fell 1.6% with 19,089 sales in 2010, compared to 19,398 sales for 2009. This stability was undoubtedly due to the giant pillar propping up the housing market all spring — the federal tax credits for home buyers. Once that artificial support was removed, both sales and prices plunged. For the year, Chicago’s median sales price fell 8% to $207,000.
“Buyers are finding value and opportunities in the marketplace and making long-term investments in real estate due to compelling pricing and low interest rates,” said Mabel Guzman, president of the Chicago Assn. of Realtors. “The median price for the city of Chicago in 2010 was $207,000, down from $225,000 the previous year, reflecting the influence of distressed properties in communities across Chicago.”
I’m beginning to hear both buyers and sellers ask the obvious question: Are we at the bottom? We could be bumping along it, I think. Across the country, the average home prices in major cities have fallen to their lowest point in many years, according to a recent New York Times story. The latest Standard & Poor’s Case-Shiller Home Price Index show home prices in nine of 20 cities — including Chicago — have fallen to new lows for this economic cycle. The Chicago index has slipped 7.6% from November 2009, with most of that decline happening since September.
ChaNell Marshall, a 31-year-old urban planner in Chicago, didn’t have her heart set on a foreclosure when she contacted me earlier this year about buying a condo. She just wanted to find a 2-bedroom home, preferably with a dining room, that fit her budget: $150,000 or less. We focused on Rogers Park and Albany Park, two North side neighborhoods where 2-bedroom units can be found in this price range, but it soon became apparent that many condo buildings here had been bruised (if not maimed) by the housing bust.
Every other condo, it seemed, was either a short sale or a foreclosed property. Because ChaNell was hoping to qualify for the first-time home buyer’s tax credit, she needed to get a property under contract by April 30 — which did not leave enough time to navigate a short sale. Some of the foreclosures were attractively priced, but many were in disrepair and more than a few were missing all the kitchen appliances. Finally we found a large, almost new 2-bedroom, 2-bath condo (with an intact kitchen and even a washer and dryer) on Hermitage Ave. in Rogers Park, a foreclosure priced below market value at $121,500.
Then the fun really began. For the next two months, the seller — an affiliate of Chase bank — and its attorney proceeded to delay, deny, fail to respond, and otherwise not lift a finger to help get this deal closed. “There were a lot of things that stalled the process,” said ChaNell. “Dealing with a seller that’s a bank means you’re dealing with a whole bureaucracy. You want to get an answer but there’s nobody who can provide it.”
For those of you out there contemplating buying a foreclosure (particularly a condo, which involves more extensive requirements that the building must meet in order to secure a loan), take note: Foreclosures are not for the faint-hearted. Not only do they require much patience and persistence to prod the deal forward, but they can be riskier as well. Extra costs for repairs, attorney fees or unpaid special assessments can spring up, and buyers do not receive the standard disclosures about the property from the seller, an absentee bank who knows nothing about the home.
For ChaNell, the challenges included a seller who took nine days to accept her offer, but then refused to extend the closing date by nine days, forcing her to cancel the original contract and start over; a seller’s attorney who often refused to negotiate or even respond to her attorney’s requests; a condo board that never produced many of the documents a buyer would typically receive; and about $1300 in unpaid assessments that the seller was supposed to pay, but the condo board had no record of receiving, an impasse which delayed closing by nearly three weeks.
“Attorney review was a mess,” she recalled. “We never got direct responses to anything.” But ChaNell had an ideal temperament for dealing with all the hurdles a foreclosed condo presents. She always stayed calm and didn’t let the seller’s lack of cooperation rattle her, because at the end of the day she knew she would get the condo she loved at a fantastic price. And eventually, she did.
For other buyers who might be considering a foreclosure, ChaNell cautioned: “It’s not going to be a quick sale. It can be time-consuming. There’s a lot of risk involved.”
Not to mention inconvenience. Because the seller delayed closing for weeks, ChaNell’s lease ended and she had to move out of her apartment and put her furniture in storage while she waited for the deal to close.
This week, I went to visit ChaNell in her new condo. It looked great, with the floors redone and the walls freshly painted. With a full living room and dining room, she had plenty of space to spread out, and she was getting ready to set up her entertainment center, complete with the Wii, in the second bedroom.
All things considered, ChaNell said, “I think you can get a great deal on a foreclosure.”
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.
Check out this new listing in West Ridge: A studio condo for $28,500. Which is less than some people pay for their cars!
So , what kind of a home can you buy on Chicago’s North Side for less than $30,000? A foreclosure, for one. This condo, located at 6148 N Ravenswood in West Ridge, is also a garden unit consisting of just two rooms: a 14×10 “living room,” which appears to double as the dining room and bedroom, and a 10×10 kitchen. It’s tiny, but hey, it’s still a condo.
The building is apparently in some financial trouble. Another foreclosed condo there, a 2-bedroom, 2-bath unit, just closed for $81,ooo.
The studio is a Fannie Mae Homepath property, meaning that a buyer could enjoy special financing terms such as putting just 3% down. (Which, in this case, would be under $1000.)
And if you act fast, you could even qualify for the first-time home buyer’s credit! This is normally $8,000, but that’s only for properties priced at $80,ooo or higher (pretty much everything on Chicago’s North Side.) But for cheaper homes, the tax credit would be equal to 10% of the purchase price.
I spent the weekend wedging my car into dubious parking spots and wading through the snow to show condos in Rogers Park, Lincoln Park and Old Town. Once again, I am mildly astounded by some of the deals I’m seeing, particularly in affordable neighborhoods like Rogers Park.
Not even a year ago, I was helping some other buyers find a 2-bedroom, 2-bath unit in Rogers Park in the $200K range. At the time, there were a zillion condos with one bath that made the cut, but adding that second bathroom dramatically narrowed the field. There were only about six or seven places to see.
Now, however, there are 69 listings on the MLS that match this criteria! And many of them can be had for a good bit less than $200K. We saw a 3rd-floor unit at 7465 N Seeley, a new conversion where the 2nd-floor unit sold for $204,900 in June 2008, for just $169,900. When you consider that the 3rd-floor tier is more desirable and usually priced slightly higher than the lower floors, this means we’re looking at roughly a 20% price cut over 18 months ago.
Rogers Park is full of great deals for the cost-conscious buyer. It’s also speckled with a lot of foreclosures and short sales, and investors are now coming in and buying some of these distressed properties, polishing them up and popping them back on the market. This phenomenon can result in sweet deals for the end buyer, because the investor is often willing to sell them below market value because he/she got them at such a steep discount.
I took my buyer to see one such property on Touhy, now priced at $125,000. That’s right, $125,000 for a 2-bedroom, 2-bath in fairly good condition just blocks from the lake.
As with any property, the trick these days is getting a mortgage. Some of the Rogers Park condos might not work with FHA loans, because they have strict requirements for the building’s condo association. And condos in mostly vacant buildings — and unfortunately there are a good deal of them — will be tough to finance at all, FHA or otherwise. Cash buyers will have the upper-hand in those situations.
Being the bungalow lover that I am, I thought I’d kick off the new year with a new feature… The Bungalow of the Week! The idea is to highlight a lovely, classic Chicago bungalow, with all its bungalow-ness reasonably intact, that is actually for sale at a reasonable price. I’ve been seeing a lot of these during my travels lately, so I thought I’d share a few online in the hopes that my fellow bungalow-philes might find a bargain in this buyer’s market.
So, for January, check out my first pick: 6313 N Rockwell Ave in West Rogers Park (aka West Ridge). This is a classic octogon yellow-brick bungalow, with 3 bedrooms and 1-and-a-half baths. It has a wide living room flanked by windows and a separate dining room with cute French doors. The hardwood floor and crown molding are intact, and the kitchen has been updated. So has the electrical system (now 200 amps) and the windows (now Thermopane), which are often a concern in older homes.
This 1926 house is priced at $314,500, about $10,000 less than its original asking price when it hit the market in August. Judging from the recent sales in the neighborhood, I’d say this bungalow is reasonably priced, but it should ultimately sell for $300,000 or slightly less. The homes selling in the $300-320K range are a little bigger, with a 4th bedroom.
But after five months on the market, these sellers just may be willing to make a deal! To see this bungalow, or any home, please give me a call at 773-816-1788.
- Sizzle is back in the South Loop
- How to Buy a Chicago Foreclosure (as Supply Steadily Shrinks)
- Home prices jump 15% in 2014, but cold weather chills sales
- Lincoln Square on a Tear as Average House Price Tops $600,000
- More choices ahead for Chicago buyers as rally cools