Sue Fox, @Properties. Direct 773.816.1788
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Lincoln Park is one of the most desirable neighborhoods in Chicago, with such prime real estate that many buyers assume they can’t afford it and begin their search in Lakeview or North Center instead. But recently, prices have fallen to the extent that there are now more than 60 Lincoln Park condos with at least 3 bedrooms available for less than $500,000. Most of them are townhomes or duplex units.
I was just searching for 3-bedroom condos in Lincoln Park, and came across several that have been on the market for more than a year — taking steep price cuts in the meantime. Like 2743 N Wolcott #43, a modern townhouse with a full finished basement and attached garage. Listed for sale a year and a half ago, at $535,000, it is now priced at a much more reasonable $439,900.
Or 1956 N Burling St, Unit B, which has been on the market for 539 days. The price tag for this townhouse, which has a 28-foot private rooftop deck and two wo0d-burning fireplaces, went from $525,000 to $449,000. Many others have been sitting on the market for at least six months, enduring price drops of $75,000 to $100,000.
If you’re looking for a townhouse or condo in Lincoln Park, now is the time to strike. There are some great deals out there this fall, and not enough buyers to absorb them. The imbalance between supply and demand has pushed prices down, to the point where we’re now seeing fabulous, renovated units like 2639 N Sheffield #2, an extra-wide 3-bedroom, 2-bath with garage parking, for just $469,000. This simplex condo is packed with features that today’s buyers want, like a gourmet eat-in kitchen with cherry cabinets, a master suite with a marble bath, separate shower and double vanity, high ceilings, lots of windows, a balcony and a back deck.
It’s been on the market since June, when it was priced at $574,900.
Happy Halloween! As the Chicago streets fill with little pirates and princesses, this time of year is often particularly scary for people trying to sell their homes. Many of them listed the property in the spring, waited all summer in hopes of a buyer, and now are facing a fading autumn with increasing desperation.
That’s why the fall is such a great time for serious buyers to find deals. Sellers have been knocked to their senses, with a brutal market showing them just how few homes are selling and at what prices. Some of them are doing the math and realizing that if they don’t sell now, they will likely be holding onto their homes through the winter and into the spring, paying another six months of mortgage payments and taxes. Serious sellers are ready to cut a deal.
In the last week alone, almost 900 new listings — 293 single-family houses, 434 condos, and 155 multi-unit buildings — hit the market in Chicago. But just 298 home sales closed. Multiply those trends over the autumn months and you’ve got thousands of homes out there in search of buyers — not to mention all the ones listed earlier in the year that still haven’t sold.
Qualified buyers remain a rarity. So if you are considering a home purchase anytime in the near future, remember that the fall season offers unusual treats for buyers ready to pounce. Wait until spring, and you’ll be out house-hunting with hundreds of competing buyers, amid sellers who aren’t so motivated to bargain.
Has the Chicago market hit bottom? This week, a national home index showed Chicago prices increased more in August than most other cities in the country — a welcome sign that our market has finally found its footing after five years of sinking prices.
The Standard & Poor’s/Case-Shiller index showed that August home prices rose in half of the 20 cities tracked. The biggest price increases were in Chicago — which was up 1.4% over the previous month — as well as in Washington and Detroit. It was the fifth consecutive month that Chicago notched a monthly gain. (Year over year, however, Chicago prices were still down 5.8%, bringing us back to median Chicago home prices last seen in 2002.)
Right now, the inventory of homes for sale is rather low in Chicago. Many would-be sellers are keeping their homes off the market for the time being, because they are unwilling (and often unable financially) to sell at today’s prices. Inventory in the Chicago area has plunged almost 50% from a year ago, according to a recent story in the Chicago Tribune. The short supply of homes may be helping to firm up prices.
This week I’ve already met with two potential buyers who are looking for a 3-bedroom home — one hopes to find a condo near Little Italy and the other either a single-family house or a condo somewhere along the Red line from Lakeview to Edgewater. Even as the weather turns chilly, Chicago buyers are getting the message that 2002 prices and 1960s interest rates make 2011 a great time to buy property.
The Illinois Assn.of Realtors released its latest data today, showing that Chicago home prices and sales both rose somewhat in September, compared to the same month a year ago. On the face of it, that’s good news. It seems that prices — and the number of homes changing hands — are finally starting to stabilize in Chicago.
There were 1,498 home sales (single family and condominiums) in September, up 6.8% from the previous year. Chicago’s median home price rose 5.6%, from $180,000 to $190,000.
Okay, $190,000 is better than $180,000. But it’s much worse than $225,000, which is where Chicago’s median price stood just two years ago, or $268,600, where it was three years ago. Check out the dramatic decline — in both prices and sales — over the past four years in Chicago:
- 2007: $267,750
- 2008: $268,600
- 2009: $225,000
- 2010: $180,000
- 2011: $190,000
- 2007: 2172 sales
- 2008: 1816 sales
- 2009: 1918 sales
- 2010: 1403 sales
- 2011: 1498 sales
So it’s a little premature to break out the hallelujah chorus. Even though things seem to be improving a bit, Chicago home prices are down 29% and sales have fallen 31% in just four years. The drop in sales volume was particularly steep in the autumn of 2010, after the federal tax credits for home buyers expired and demand dried up. Now Chicago’s market has recovered slightly from that abysmal season, giving us a pretty good idea of what the new normal looks like.
“September home sales in the city of Chicago show signs of stabilization, with an increase in the units sold for both single family and condominiums,” said Bob Floss, president of the Chicago Association of Realtors. “While interest rates remain historically low and prices compelling, we remain concerned about the overall economic stability of our marketplace with unemployment numbers and job creation still top of mind for so many buyers and homeowners, alike.”
It’s quite rare to find a house for sale in Andersonville’s beautiful Lakewood-Balmoral historic district for under $1 million. But every real estate downturn has an upside, and today there are several homes — including a genuine fixer-upper — priced closer to the half-million mark here.
The handyman’s special, a dilapidated three-story, turn-of-the-century Victorian complete with a turret, is in such lousy shape that the realtor didn’t bother to post any interior photos. “Not in move-in condition,” the listing advises. “Ideal for complete rehab or build new.” Located at 5453 N Magnolia, this 5-bedroom home has already been on the market for five months and is currently priced at $580,000 (a screaming deal for Lakewood-Balmoral, where a similar home in restored condition would fetch perhaps $1.4 million.)
On the same block, another faded beauty — this one with a third-floor ballroom in need of major work — is for sale at $675,000. Located at 5426 N Magnolia, this 1901 house retains some of its original splendor (the photos depict gorgeous wainscoting and stained glass in the dining room) but, again, the listing warns off casual house hunters. “House needs work, serious investors only,” it says. This home recently went under contract, after more than 6 months on the market.
And right across the street (what is it with this block?) there’s another home for sale, this one a brick 1906 house that looks a bit like a 2-flat from the outside. Priced at $720,000, it has just 3 bedrooms (plus one in the basement), but it also boasts the original staircase, leaded glass windows and built-in cabinetry. It’s been updated, with a newer kitchen and partially finished basement, and it’s been on the market since June.
Recent sales indicate that Lakewood-Balmoral bargains are often quickly snapped up. An updated 4-bedroom at 5410 N Wayne sold for $665,000 in May, while another updated 4-bedroom — this one at 5441 N Wayne on an extra-wide lot with a finished basement — sold for $750,000.
So if you’re in the market for a historic home in one of Chicago’s nicest neighborhoods, now is an uncommonly good time to make your move.
This has been an odd and uncertain year for Chicago real estate. Deals are still getting done, but absolutely every element has to be in place in order to get to the closing table. As a realtor on the ground day in and day out, I have seen some strange standoffs unfolding this year, with both buyers and sellers hesitating at crucial moments and sometimes deciding to stay put. No wonder sales are so scarce!
Here is what I’m observing from buyers: There is little urgency. With mortgage rates hovering at a record low of 4% and home prices in the gutter, most would-be buyers realize this is a golden moment to buy a home. However, they are also somewhat casual about the opportunity, since from their perspective this has been going on for at least a couple years. Neither interest rates nor home prices seem to be in any danger of quickly shooting up, so what’s the hurry?
In the last few months, I have witnessed at least five buyers wade halfway into a deal, only to change their minds. I have had some buyers who are pretty sure they want to make an offer, only to reconsider and decide against it. Others look around for a couple months and then opt to keep renting for another year. I have even seen two buyers (neither of whom I was representing; in both cases I was the seller’s agent) who wrote up offers and then, for lack of a better word, freaked out. One went so far as to negotiate a price and then refused to sign the contract, while the other actually did sign the contract — and then a day later changed his mind. Under the attorney review period, he was still able to withdraw from the deal.
Things look mighty different, on the other hand, from the point of view of many sellers. I can’t tell you how many listing appointments I’ve gone on this year where — once I explained the recent comps and showed the owners what their home was likely to sell for — they suddenly realized just how bleak their situation was. I met with one lovely woman last week who exclaimed, “Oh my god, Sue! I knew the market was bad. But I had no idea how bad it was.”
Yes, it really is bad. As in, your home is probably worth 10-35% LESS than what you paid for it, depending on what year you bought it and where it is located. In real terms, this means that sellers who paid $330,000 in 2007 can’t even sell for $285,000. Sellers who bought for $230,000 in 2005 (and put $15,000 in upgrades) would likely have to list their condo for less than $200,000 to get a bite. Owners who paid $450,000 in 2005 sold the same place this year for $95,000 less. I just checked the comps for someone who paid more than $220,000 six years ago in a building where similar units are now selling for $100,000 to $160,000, depending on the condition.
It is routine for sellers to be faced with a diabolical choice such as: Do you want to stay in the cramped two-bedroom condo you have outgrown now that you have a new baby, or do you want to bring $50,000 to closing in order to pay off your lender and closing costs? Many, many people do not have the tens of thousands it would take to close the deal. So they stay put, they decide to rent out their place, they attempt a short sale with their lender, or they overprice their home and stick it on the market anyway, hoping someone out there will pay them not what it’s worth, but what they owe.
Thus, as the winter season approaches, we have a standoff. Many Chicago sellers desperately want to sell, but they simply can’t afford to lower their asking prices to the point where a buyer would be interested. Many buyers theoretically want to buy, but only if they find a place they adore at a price that can’t be beat.
Unfortunately for all Chicago homeowners, the median Chicago home price has plunged over the past four years. According to data just released by the Illinois Assn. of Realtors, the median price was just $192,500 in August, a drop of nearly 4% since last August. Now, a 4% drop doesn’t sound so terrible… but remember, this decrease comes on top of several years worth of steeper declines. Chicago home prices have fallen an astounding 37% since August 2007.
Check out the median price decline:
- August 2007: $305,000
- August 2008: $297,500
- August 2009: $229,900
- August 2010: $200,000
- August 2011: $192,500
Like most realtors, I encounter a lot of sellers who know that “the market is bad” but somehow cling to the hope that maybe their home is still worth what they paid for it, or at least what they still owe. They want to price their Chicago condo or house based on whatever number they calculate will protect them from financial harm.
But if you bought your home anytime in the last five years chances are very good that it is worth considerably less than you paid for it. A realtor can look up the recent sales in your neighborhood and give you a decent idea of just how much less. But even in North Side communities like Uptown, Andersonville and Edgewater, prices overall are down at least 20%. Irving Park, Albany Park, Logan Square, the South Loop and Rogers Park are in even worse shape (particularly Rogers Park, an area decimated by foreclosures where sale prices have dropped more than 60% in recent years). Lincoln Square, Bucktown, Wicker Park, and Lakeview have generally held up better, but they have still taken a haircut.
The volume of home sales is up over last summer, but that number is deceptive because last summer — right after the home buyer’s tax credit had expired — few people were buying homes. In the city of Chicago, home sales totaled 1,787 for August 2011, an increase of 20.3% over last August. But when you look at the number of homes sold each August since 2007, you’ll see sales have fallen too — by about 39%.
- August 2007: 2923 sales
- August 2008: 2078 sales
- August 2009: 1927 sales
- August 2010: 1486 sales
- August 2011: 1787 sales
All things considered, the Chicago market is in pretty dreadful shape, with both sales and prices down nearly 40% in four years. Sellers need to be ruthless in their home pricing and spotless in their home staging to attract a buyer, and for most people who bought their home in recent years it’s useless to imagine selling for what they paid or what they owe. Those numbers have no bearing on what their home is actually worth in today’s crippled market.
Another wave of Chicago-area foreclosures may be ahead, according to recent data gathered by RealtyTrac. The number of homes that received notices of mortgage default in the metro area spiked 30% in August over the previous month.
Some 6,239 delinquent homeowners received notices — the first step in the foreclosure process — in Cook County and the surrounding areas (DuPage, Kane, Kendall, Lake, McHenry and Will counties). The vast majority of the troubled properties, however, were in Cook, the nation’s second-largest county. Foreclosure filings jumped 24% in Cook County.
I see plenty of foreclosures, and most of them need at least a little work (and some of them require a total rehab). Missing or broken kitchen appliances are routine, as are floors that need refinishing and walls that need repainting. Because many foreclosures have been vacant for months, there are frequently leaks that have damaged the floors or drywall (I have seen more than one foreclosed condo where the refrigerator had leaked onto the hardwood floor.)
But for homebuyers seeking a bargain — especially if they have a little cash to put into repairing the property — foreclosures can be a good opportunity. There are a lot of good deals out there right now, and mortgage interest rates are super low.
Chicago’s foreclosure crisis has been uneven, devastating some communities while barely touching others. Even in the more affluent neighborhoods like Lakeview, they tend to be clustered in certain buildings like 655 W Irving Park Road or 3660 N Lake Shore Drive. And in the poorer areas, such as South Shore, you’ll find some blocks — even blocks right by the lake — where it seems that every other house is a boarded-up foreclosure.
What’s harder to find is a single foreclosed property in the middle of an otherwise stable, desirable neighborhood. Those homes tend to sell quickly, especially if they are priced below market value, and they often attract multiple offers.
When it comes to truly high-end real estate, Chicago is worlds away from New York. While the Big Apple has dozens of properties that sell for multiple millions, it’s exceedingly rare to find homes in the Windy City that close for $5 million or more.
How rare? Over the past year, only three single-family homes in the entire city of Chicago have sold for upwards of $5 million, according to Midwest Real Estate Data LLC. Another five houses went for $4 million to $5 million. The most expensive Chicago house to sell was 25 Banks Street, a 13,500-square foot Gold Coast mansion built in 1880. Located a block from the lake, it boasted 8 bedrooms, 11 bathrooms, a media room, a wine vault, staff quarters with a separate entrance, and a rooftop terrace. But even this grandeur came at a bargain price: $6.8 million, about half its original price tag of $13.5 million after more than three years on the market.
Of course, there were also seven Chicago condos that sold for upwards of $5 million over the past year. With the exception of one, they were all at the Elysian, the new luxury building located at 11 E Walton Street. (The other was a top-floor penthouse located above the Four Seasons Hotel at 132 E Delaware Place.) At $8.6 million, the priciest condo cost more than the most expensive house — and both were cash deals, as were the majority of all the $5 million-and-up sales. Hmmmm, I was just wondering what to do with that $5 million just sitting in my bank account…
In any case, multi-million dollar sales of any sort are a rare breed in Chicago. There were only 50 single-family houses and 75 condos that sold for $2 million or more citywide (mainly in the Gold Coast, Streeterville or Lincoln Park) over the past year. On the North Shore, moreover, there were 86 homes that sold for over $2 million, but only six that fetched more than $5 million.
Chicago real estate doesn’t generally bounce along like a perky episode of Flip That House, but now and then you still see a sparkly rehabbed house hit the market a few months after it was plucked from the netherworld of foreclosure. Such is the case with 3339 N Kolmar Ave. in Irving Park, a 5-bedroom checkerboard bungalow that has been completely renovated in the space of three months.
Back in April, this 1926 house was just another forlorn foreclosure, owned by a bank and being sold “as is.” But its interior was still in pretty good shape, although the kitchen needed updating. It sold for $152,000 after three months on the market.
The new owner got straight to work, but made sure to keep many of the charming features that make a bungalow a bungalow: the distinctive curb appeal with its low roof line, the exterior limestone accents, the gorgeous stone fireplace flanked by bookcases in the living room, the hardwood floors and wood trim. In this case, it looks like the original windows had already been replaced, as had the kitchen and baths (probably sometime in the 1980s, from the look of the photos.)
The new kitchen now boasts granite countertops, stainless steel appliances and what appear to be cherry cabinets. It looks shiny and new, but it also looks like every other generic kitchen built by a developer in thousands of condos (and houses) throughout the city. Sometimes I wish the owners of these historic homes would put a little more thought into how they restore them. There’s an entire book on how to renovate bungalow kitchens, the aptly-named “Bungalow Kitchens” by Jane Powell and Linda Svendsen. They also wrote “Bungalow Bathrooms,” and both books feature beautiful photos of updated rooms that preserve historic character without sacrificing modern functionality.
But I digress! The bungalow at 3339 N Kolmar now features bathrooms redone with marble and granite, a renovated basement, and a huge deck in the freshly landscaped backyard. The bedrooms are scattered throughout the home, with two carpeted rooms upstairs, one with hardwood floors on the main level, and two others below grade (with wood laminate floors) in the basement.
The house is now priced at $313,900, down from $334,900 when it hit the market in July. These rehabbed single-family houses tend to sell quickly in Irving Park, but this one may need to drop its price just below $300,000 to attract the buyers in that range.
Let me know if you’d like to see this bungalow, or any other home! I’ll even let you borrow my bungalow books.
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