When is bottom of highrise condo market in Loop & River North? (Chicago: sales, real estate)

[CondoHunter2011]

This thread invites wild speculation about the price of condos near the Loop. I'm attracted by the stellar views from high floors, and I'm finding many cases of 1BD condos well under $200 that sold for $400K+ only 4-6 years ago. There is an ample supply of such condos at 200 N Dearborn, 10 E Ontario, 345 LaSalle, Marina Towers, and even 400 E Randolph. Of course, watch the assessments and taxes -- those may run $300tax + $400asst = $700/month.

Do you feel like these condos are great deals? If so, do you throw in some lowball offers now and see what sticks? I'll bet you could get lake views from the 30th story for $150k.

[chet everett]

A couple of night / evenings in the past months I have been in the vicinity of those building and when you look at them at 7 or 8 PM and what should be a glowing sea of units are dark...

The biggest issue is the shear number of these developments with problems in the HOAs and overall ability of folks to obtain financing for purchases is dismal.

My guess is that if the President's lean back to the center is serious the prices will stabilize at least somewhat until his re-election...

[emathias]

BUY BUY NOW! Next year they'll all be worth $1,000,000 and unaffordable!!

I think we're close to bottom downtown. I don't think we're anywhere close to a rapid climb, but I do think we'll drift now, not plummet anymore.

I think the cheapest units aren't necessarily a great value when you factor in the HOA issues and potential rehab work necessary (even on relatively newer units if they had a bad owner).

I also think that whot he President is has ****-all to do with home prices in downtown Chicago. The housing market, including rentals, in the downtown area is fairly strong. It's just the condos, especially in buildings of marginal quality and governance, that are having issues that exceed the issues of the U.S. housing market in general. I don't live in a high-rise, but units in my building haven't fallen anywhere near 50% in value (and yes, I'm basing that assertion on recent sales within the past two months).

[knitgirl]

Chet has an excellent point. I am a loan processor and lenders are really scrutinizing condos right now. They don't want to see a lot of owners behind on their assessments and the HOA reserves need to be strong. They also can't have too high a percentage of renters. I would be very leery of buying a condo right now. Not that I wouldn't, but I would really examine the HOA first.

[meatpuff]

There is that argument, and truism really concerning more liquid investments, that the time to buy is when things look the grimmest. When the conventional wisdom is that things are very bad and likely to get worse is often when the turnaround is.

This thing has been grinding along for a little while. The inventory isn't growing anymore. When prices first started dropping, people just refused to sell into it, propping up prices. But now 3+ years later, there has to be more than a trickle of folks who need to get out for lifestyle reasons NOW, at what price they can get. In the bigger picture, it looks like the Chicago economy has been muddling along and will continue to; I don't see a crash in downtown employment. The neighborhoods in question, except for real estate prices, by most measures seem to be holding steady or still improving.

I don't think I'm the guy to call a bottom, because I don't have much of a record timing markets. But how much risk to the downside is there at this point? It's tough to see how prices go up 20% in the next two years; but I have more trouble imagining how they drop 20% in that time.


Caveats: There is still substantial risk with individual buildings, condo boards becoming weakened or insolvent, buildings losing their grip and going all rental, etc. This has been discussed a few times on this board, Chet has brought a lot of clarity to these discussions IMO, and I agree about this. I'm talking about condo prices in general. One more caveat is I'm thinking of only of the the direction of real estate prices, not rent versus buy. For personal reasons, I would probably rent in that area, due to irritatingly high assessments, the tendancy of people to stay only a few years in those neighborhoods, good rental market, and personal biases.

[gobearsgo]

Some of the condos that are languishing on the market are there because no lender will write a mortgage for them, no matter what the buyer's qualifications.

See this post re: one no lend list. I'm sure there are others:

Chicago Condos On The No Lend List: Why A Mortgage May Be Hard To Get - Getting Real

[CondoHunter2011]

If under $200k, I could pay cash. But should I? One of the key points is the lack of an active market. It works for me, but could be my undoing, too That is the problem right now. If you HAD to sell right now, you've got to about give it away. Hence my cash offer could be powerful to the right seller. I need to convince myself we are not going down (a lot) further.

[tonythetuna]

"When is bottom of highrise condo market in Loop & River North?"

I am sure if someone somehow knew the answer to this question they would not post it online for the world to see.

[CondoHunter2011]

Ah yes, I beg for omniscience and generosity.

[cump]

A cash buyer is very attractive to REO sellers. You might want to look at REOs that have been on the market for a while in buildings that aren't too screwed up. I've purchased three units, all for cash, and sold one of them. Make sure that you know what you are doing. The contracts for REOs are one sided and as a condo buyer in a foreclosure situation you are liable for some back assessments as well as association attorneys fees. They also hang you with junk fees and title charges so factor that in to your price.

Best of luck.