Price Decline Coming to America's Richest Areas

It’s a similar story in Lincoln Park, where single-family home prices slipped only 2.2% last year, far less than in the rest of Chicago. But inventory has since tripled. Wagner Appraisal Group figures there’s a 16-month supply. A year ago “I was almost cocky about our position compared to the rest of the market,” says Jennifer Ames. No longer. After 11 months of lowering the $2.1 million asking price on her 3,400-square-foot house, Ames sold it in June for $1.6 million.

Given the glut of unsold homes, Lincoln Park’s prices may well slide at least 15% this year–as Chicago’s did in 2008. If you look at Fiserv data going back many years, you find values in Lincoln Park track the rest of Chicago pretty closely with a one-year lag.

By the way- even the once mighty Manhattan looks to be in for a large correction.

Unsold inventories in Manhattan are at their highest levels in a decade. You can’t tell by looking at data about its condo market. According to Radar Logic, which generates national realty info from its New York City office, condo values fell only 4% last year–far less than the 12% drop for the city as a whole. It’s been held aloft by new-construction condo sales above the $1,200-per-square-foot level, says Radar Logic founder Michael Feder, reflecting deals struck a year or two ago. Once they pass through the system, the average price of a condo will plummet to $900 a square foot, reckons Feder.

America’s Most Troubled Luxury Neighborhoods [Forbes Magazine, Stephane Fitch and Matthew Woolsey, June 24, 2009]

There is Justice

Crain’s reports that the Feds have indicted 10 people in a mortgage fraud scheme involving purchases of condos at 33 W. Ontario, or Millennium Centre, the River North high rise developed by American Invsco.

Acting together, the investors provided false information about their employment, income and assets to secure the loans to finance seven condos and two townhomes at Millennium Centre, a 59-story tower at 33 W. Ontario St., according to the U.S. Attorney’s Office. The indictment is one of five mortgage-fraud cases involving more than $48 million in loans that the U.S. attorney’s office announced Tuesday.

According to the indictment, Mhde Askar, 23, of Chicago, and Mahmoud Saleh, 35, of Hinsdale, formed a company to buy units in the 363-unit tower and profited by collecting mortgage rebates from the developer and flipping the units for a profit to handpicked buyers.

To obtain the fraudulent loans, the pair enlisted the help of Ahmad Karkukly, 33, of Palatine, a loan officer at Countrywide Home Loans Inc., the indictment says.

Mr. Askar was originally arrested in 2008 and is free on bail, court records show. One of his lawyers, Loop attorney Michael F. Clancy, could not be reached for comment. An attorney representing Messrs. Saleh and Karkukly was unavailable.

Fed: Fraud used to get loans for Streeterville condos [Crain’s, Alby Gallun and Thomas A. Corfman, June 23, 2

Foreclosure and Short Sale Timing

I have been involved in several distressed property purchases this year. Even with willing and able buyers these properties and the buying process many times are handled in strange ways. For instance, lender's make it tough to buy due to over stringent and changing rules, real estate brokers don't answer calls, banks take too long to negotiate and accept offers, etc...

David Hanna, the 2009 Chicago Association of Realtors President, recently commented on the REO (bank owned property) situation in Illinois. Here's a excerpt below from David's full post:

"In Chicago (and the overall metropolitan area) we are already adding REO inventory at a pace well in excess of the absorption rate. We hear anecdotally that there is a backlog of foreclosed property being held off market by banks and asset management companies in response to the unforeseen precipitous fall in average and median sales price in many areas.

Yes, inventory is dropping, albeit slowly. The biggest factor in the dip is the number of owners taking property off the market because they cannot sell it right now for a price they are willing to accept.

Yet many of the same banks now selling these foreclosed homes are loath to consider a purchase offer with any type of financing contingency, and they continue to accept lower cash offers on property, effectively closing the door on many buyers looking to pay fair market price for a home.

Plus, added governmental regulation created daily to deal with vacant property adds a burden of time and cost to each transaction.

The solution to clearing out the REO inventory is to prevent it (as much as possible) from entering into the system by:

1. Having people working--and providing access to lending based on rational criteria;

2. Having adequate resources directed to the implementation and support of the Obama Loan Modification program;

3. Leveling the playing field so home buyers have an equal opportunity to buy foreclosed property with investors and speculators; and

4. Allowing for governmental policy that weighs the economic and social costs of widespread displacement of millions of American households."

To be in bloom

This is the best time of year in France. Can you smell the lavender? I am booking my flight for my next trip tonight. Have a great sunny day.

211 West Fouth vs 403 South Grant

Photos courtesy of MLS Connect


I post this yesterday as being under contract with a listing price of $ 259,000. Listed by American Realtors& Associates,Janusz Glinski, this is pursuant of a short sale on the property. It is on a 65x61 lot and taxes are $4705.00.
We need to compare this to a new listing of 403 South Grant, listed by Bush Hill Realtors, Beth Burtt. The property is on a 60x100 lot , taxes are $13,303.00. It is a 4 bedroom and 3.1 bathrooms, built in 1994. The house has a list price of $1,245,000.00. Again this house is in move in condition.
Now to see what the market plays out on purchase pric

211 West Fourth

This we talked about earlier this year. It has finally gone under contract. It is a bank owned property and was one of the 5 lowest priced properties in Hinsdale. Lot size is 61x65. 3 bedrooms and 2 bathrooms. taxes: $4705.00. The house is an "as is" sale and this is a rehabbers delight project. The property has been listed for over 200 days. We will see what the sold price is when it closes. This could be the lowest in town price to date. Stay tuned.

New Kitchen Hardware

I have had a desire to change my 1950 ranch kitchen. SO I have been painting the cupboards, and now am looking for the Christopher Peacock Hardware. This has been a difficult task. But I have discovered a few resources to share. This handle is from Roseland Ice Box Company. it is from the 1900's series and you will use it on your larger handles for refrigerators and pantries.

616 N Vine,5 bed,5.1 baths,

this is another short sale that is currently under contract.
12/2/07 listed for $2550000.
Went into foreclosure and owned by the bank,cancelled 2/20/08.
Relisted 11/6/08 Bank owned for $1298000.Reduced 1/26/09 TO $1150000.
Reduced 2/18/09 to $ 1000000. Reduced again 2/26/09 to $850.000.
Cancelled 3/13/09.Relisted 5/22/09 for $820,000. Under contract 6/08/09.
This is a classic example of a 65% drop in price.WOW..
80x286 lot size. and taxes $18,051
Picture and listed by North Shore Capital Realty,Oksana Chura

Market Conditions

Market Conditions: April Sales Down 26.9% Year Over Year

Sales continued to decline in Chicago in April while prices are also down sharply from the year ago period.

From the Illinois Association of Realtors:

In the city of Chicago, April total home sales (single-family and condominiums) were up 16.7 percent to 1,378 sales compared to March 2009 sales of 1,181; sales were down 26.9 percent from 1,886 in April 2008.

The city of Chicago median price remained unchanged at $220,000 in April and March 2009; the city of Chicago median price in April was down 26.7 percent from $300,000 in April 2008.

“We continue to see homes in foreclosure and short sales driving prices lower in many areas of the city,” said David Hanna, president of the Chicago Association of REALTORS®.

“Policy changes such as allowing first-time homebuyers to use the $8,000 tax credit at closing and a streamlined process for short sales will help, but the critical issues are the rising numbers of foreclosures and restrictive lending guidelines not crafted for our urban market. The federal loan modification program has not yet slowed the pace of foreclosures, a must for turning housing around in the Chicago metropolitan area. Regulators and lenders need guidance and latitude in creating a lending environment that addresses regional and in particular urban housing differences. That is not happening right now, and our numbers reflect the result.”

For the entire state, sales were down 20.9% year over year. In the 9-county Chicagoland area, sales fell 22.1% from April 2008.

“Illinois home sales are showing some signs of life as people take advantage of the favorable buyer’s market conditions and the federal stimulus package incentives,” said REALTOR® Pat Callan, president of the Illinois Association of REALTORS®.

“Those waiting on the sidelines should act now while the window of opportunity is still open and before mortgage interest rates rise above these lows. The $8,000 first-time homebuyer tax credit ends December 1, 2009, and we anticipate details soon to be released by the U.S. Department of Housing and Urban Development allowing FHA consumers to use this credit as a down payment at the closing table.”

April Illinois Home Sales Signal Buyers Getting Off the Sidelines
Statewide Sales Up 9 Percent; Median Price at $150,000 [Illinois Association of Realtors Press Release, May 27, 2009]

Area Property Report April 2009

This is a good example of the area market reports:
Burr Ridge # of houses sold in 2008: 5; in 2009:2 down -60%
Hinsdale # of houses sold in 2008:12: in 2009 : 21 up 75.0%
La Grange # of Houses sold in 2008:8 in 2009: 10 up 25.0%
Western Springs # of Houses sold in 2008: 14; in 2009: 14, same
Oak Brook # of Houses sold in 2008:1 ; in 2009: 2 up 100.0%
Downers Grove # of Houses sold in 2008: 24; in 2009: 21 down -12.5%
Clarendon Hills # of Houses sold in 2008: 5; in 2009: 6 up 20.0%
this is from the Midwest Real Estate Data LLC. for the month of April.