Attn: Chicago Condo Buyers
Killer Deals ONLY… Drive Today’s
Chicago Real Estate Market!
Up to 37% recent sales are short
sales, foreclosures, bank-owned or
other “distressed properties”… and
Dramatically SLASHED listing prices.
Right Now, after you sign up for an
MLS Property Search… Smart Chicago
Buyers are doing these three things
before they even look at a property…
1. Search Chicago Foreclosures
2. Search Chicago Short Sales
3. Check status of condo building.
Are there “distressed” units? Some
Popular buildings have underwater
Owners, pending foreclosures and
short Sales.
Be Smart… Research Fully…
Don’t Get Ripped Off…
Drive a hard bargain for your best deal.
July 12, 2010
Chicago Condos Summer Trends & News
For the past 18 months or so, the big news stories in the Chicago real estate market have focused on foreclosures, auctions, price reductions and declining home values instead of new condo construction. Some of the bigger condo developments switched to rental towers due to lagging sales and the first major auction of a Gold Coast high-rise took place. More developers sought FHA approval in a effort to boost sales with the low down payment offered to qualified buyers. And while there is a glut of new construction Chicago condos right now, the surplus should start to be absorbed in the next two to three years, according to most analysts.
There are only three Chicago new construction projects due to deliver in 2010 with a combined total of around 1,133 units. Next year (2011) has even fewer with only eighty-six units in the Ritz-Carlton Residences set to be completed. After that, no new developments are currently in the pipeline and buyers shouldn’t expect to see any pre-construction deals for another two or three years. The Ritz-carlton Residences finally landed a $242 million construction loan from Kuwait Finance House in December of last year and only recently began above ground construction. That loan came with a 95% ownership steak in the project for Kuwait and prices on those luxury condos have remained unchanged with no concessions, although total sales are still just between 40% and 50%.
During the fourth quarter of last year (2009), sales of downtown Chicago condos crept up slightly, mostly due to some drastic price cuts from developers and an increasing number of short sales. There were 148 town homes and condos that sold in October, November and December. The total number of Chicago condo and town home sales for 2009 was only 571 units. There were 1,900 units that actually closed in 2009, but most of those sales contracts were signed in 2008 or earlier.
The rate of buyers who opted to walk away from purchase contracts was also up in the fourth quarter of last year, creating a net sales loss of 253 units according to data from Appraisal Research Counselors. By February of this year (2010), ARC was reporting that the walk away rate was between 25% and 50% at many Chicago real estate developments.
In the first quarter of this year (2010) there were 256 downtown Chicago condos and town homes that were sold. According to the Illinois Association of Realtors, April 2010 sales of condos and single-family homes in Chicago were up 41.1% from the same month last year. The median price of single-family homes also increased from April ’09 to April ’10 by 3.2%. But the median price of Chicago condos fell almost 4% from April ’09 to April ’10. That’s still an improvement over the 12% in median price that condos had in January and February of 2010.
For the month of May 2010, the Illinois Association of Realtors reported that there was a 32.1% increase in sales of Chicago condos and single-family homes from the same month last year. The median price also rose 2.2%.
Statistics from MRED, which is the regional MLS service, showed that for the first half of 2010 (January through June) there has been a 45% increase over the same period last year in the number of Chicago condo sales that actually closed. About 5,630 Chicago condos closed in the first six months of this year. But the median price dropped 6% over the same time last year, bringing the sales price down to an average of $263,700. Sales of luxury Chicago condos continue to lag because of a lack of price reductions in that tier.
The federal first-time homebuyer tax credit of $8,000 and the repeat buyer credit of $6,500 boosted condo sales during the first half of the year. The April 30, 2010 deadline for signing a sales contract helped push April and May Chicago sales upwards, although nationally there was a 33% drop in home sales from April to May of this year, according to the Commerce Department.
With lenders in short supply for buyers and developers alike, as well as banks being reluctant to renegotiate construction loans when they come due, some developers began to switch their market rate condos to rental units. The Lofts at Roosevelt Collection was the first big development to make the switch late last summer. By December 2009 the fist building was 97% leased and pre-leasing on the second building under construction was well under way.
The developers of the Mondial and Trio considered going rental as well, but the Mondial has since settled on 30% price reductions. Trio still has units both for sale and for rent though.
Mod is another development that converted to apartments. Originally planned as a 96 unit project with two towers, weak sales in the first phase prompted the switch to renting all of the 56 units in the first tower. Whether or not the second tower will be built remains to be seen as a foreclosure suit is pending.
Other well-known Chicago real estate developments that were hit with foreclosure suits include the The Columbian in February. Control of the 46 story tower reverted to a lender. The high-rise was about 71% sold and 25% price reductions with units starting in the $240,000s plus free parking have since been in effect on the remaining unsold condos.
In March of this year news broke that Silver Tower was hit with a $40 million foreclosure suit from its lender, making it the largest development to be foreclosed at that point. Sales at the River North high-rise had stalled at 33% and a high buyer walk away rate was reported to have caused further financial problems for the development. As is usually the case, price major cuts have since gone into effect, with condos at Silver Tower now starting in the $170,000s. Those price cuts have resulted in about fifty new sales.
In May of this year the 35 story, 333 unit Lexington Park tower and the smaller loft portion reverted back to its construction loan lender in a deed-in-lieu of foreclosure deal with Irish developer Chieftain Group and ST Residential. That move made Lexington Park the new biggest Chicago development to revert back to a lender. Around 55% of the units are under contract, but only three buyers have closed. It wouldn’t come as a surprise if ST Residential opts to convert this tower into rental units, but we’ll have to wait and see.
July brought news that Odyssey Lofts has also been hit with a foreclosure suit. The overdue construction loan note was sold to investors who so far plan on marketing the remaining unsold 47 condos in the 62 unit building.
The stalled Chicago Spire has made headlines several times this year, although not necessarily in a good way. February brought news that Bank of America filed a lawsuit against Shelbourne Development for unpaid balances on credit cards issued for expenses related to the project. In April we heard that Garrett Kelleher's Shelbourne Property Group was in technical default on numerous loans obtained for early marketing of the planned 150 story Spire as well as the purchase of the building site. Negotiations with the AFL-CIO unions to obtain construction loans from their pension funds fell through and the elaborate full floor sales office and model on level 18 of the NBC Tower was surrendered because of unpaid rent. Shelbourne Development insists the project isn't dead, but it certainly is on life support at this point.
In March there was an auction for thirteen condos at Prairie Point and the event was only moderately successful. Not all of the units up for bid were sold. Ten condos had winning bids, although some sold for only the minimum bid and one was below the minimum. Altogether only about $31,000 above the minimum suggested bids was bid. For the ten that did sell, their previous market price would have totaled around $4.5 million and the auction generated about $2.39 million not counting the parking spaces that sold.
The April auction of condos at 1400 N Lake Shore Drive was more popular with buyers. Nineteen units sold at bid and another seven went under contract at the event. Many of the condos sold for up to 56% off the old market prices, with the lowest winning bid on an one bedroom condo being $117,000. The highest bid was $197,400 on a one bedroom, which was still a hefty 40% reduction from list price.
After an auction last year at Michigan Avenue Tower II , the developer is still advertising what they term auction pricing without the auction. Prices on the last of the units there start in the $190,000s.
Other Chicago real estate developments that have cut prices so far this year include 565 Quincy with 15% to 30% off. That reduction has resulted in around 100 sales and those sales account for 79% of all new construction downtown condo sales so far this year as well as 40% of all Chicago condo sales so far this year (2010). The condos were cut by up to $100,000 by the Belgravia Group and start in the $150,000s.
Union Row , another Belgravia Group development, also has price reductions of up to 30% on the new town homes there, with prices starting at about $374,900.
Emerald, one of the first green or eco-friendly developments, also opted to drop prices this year. Anywhere from 25% to 35% was knocked off the old list prices on the condos in the two towers , with prices starting in the $220,000s.
Astoria Tower ,where deliveries have been going on for a few months, also dropped prices. Studios there now start in the $160,000s.
Low sales at Lake Park Crescent also prompted the developer to drop prices down to that $160,000 range on one bedroom units there.
Chess Lofts is attempting to sell out the remainder of the units in that conversion project and new lower prices start in the $190,000s for a one bedroom condo.
With 714 condos, 235 Van Buren is somewhere just over the 400 unit sale mark and has advertised $10,000 to $20,000 off with as much as $5,000 in closing credits. The studios there start in the $170,000s.
200 North Dearborn also dropped prices on the remaining condos there by 40% with one bedrooms starting in the $150,000s.
VB1224 developer New West Realty also cut prices in April of this year by about 20%. One bedroom condos at this conversion project are now listed from the $230,000s.
Parkside of Old Town has also been struggling with slow sales. There are around 75 condos still left for sale in phase one and those are marked down by around 30% and start in the $170,000s. There are also about 27 town homes left for sale that are reduced by 40% and start in the $330,000s.
Chicago real estate developers have also been using the catch phrase of developer closeout sale or final closeout to entice buyers this year. 550 St. Clair in Streeterville cut prices on the remaining unsold condos there by about 30%, with studios in the $190,000s.
Metropolitan Tower is also advertising final closeout sales with 17% to 34% off old list prices.
Aqua has been one of the year’s success stories, even though deliveries have been ongoing for some time. The 262 Chicago condos in the high-rise are 82% sold and 40% closed, while the 474 apartments are all leased. In May, developer Magellan even managed to sell 18 empty floors to the Carlson Hotels chain which will open a 334 room Radisson Blu hotel in 2011.
Walton on the Park also finally started making first deliveries in June of this year. According to data from Appraisal Research Counselors, 93 of the 198 condos are under contract at this point. No price cuts have been offered, and one bedroom condos start in the $450,000s.
The Fourth of July was welcomed by red, white and blue lights on the Trump Tower spire for the first time. Donald Trump is still trying to restructure his overdue construction loan from Deutsch Bank while sales at the tower have moved along at a painfully slow pace. Of the 486 condos in the tower, 220 are still up for sale from the developer. There are also 184 of the 339 hotel units still for sale as well.
As you can see, the first half of 2010 has brought a lot of changes to the Chicago real estate landscape, as well as a few surprises. As the second half of the year unfolds, we’ll keep you posted on all the latest Chicago condo news and development updates.
