In March when my Columbus home sold after ten months on the market, I thought that the hard part was over. The sale netted enough to make shopping for a new place in Chicago easy and I after about a year’s worth of looking around, I had pinned down the street on which I wanted to live.
Amidst varying tax rates and assessments, I narrowed my search to two buildings both of which I had not been in previously. One was quickly eliminated when it became obvious that the building’s low monthly assessments could be seen in the public spaces of the buildings. Old carpet. Unpainted plaster repairs and a drabness that made the place feel like a Catholic hospital from the 1970’s. Additionally, the building was not FHA qualified because residency required board approval. This would make re-sale difficult.
Two blocks north sat the other building. Built around the same time as the first, this 1950’s building had been renovated and converted to condos in 2002. The building is clean, fresh and modern with new kitchens, new windows, a subtly timeless lobby of marble, wood and glass. Even a bicycle room was finished for the more modern residents. It does not appear to be 50 years old.
I looked at several units, priced from $39k to $110k, settling upon a one-bedroom on a floor high enough to provide a view of the lake. I offered 61 cents on the dollar and less than two weeks later the seller accepted my offer. That was in May of this year.
The seller had entered a short-sale with their bank and although they had accepted the offer, I now had to wait for their bank to accept my offer. Bank of America is their mortgage holder, but little did I know at the time that BofA was drowning in sea of short-sales and foreclosures. So much so that BofA moved to a soft-ware system to handle the work load which placed the majority of the work on the two real-estate agents – mine and theirs.
In mid July I received word that we’d likely close the deal at the end of the month. July came and went and in mid August a request for proof of funds came in and the necessary documents were sent over. “We’ve got to be really close now,” was the conclusion agreed upon. August came and went. So did most of September.
In mid September I learned that there is a special assessment on the unit that was not mentioned in the initial MLS listing. Then I learned that the management company has a lien on the unit for $1100 in unpaid monthly assessments. Still not a deal breaker, I’ll be paying for the special assessment upfront and the lien should be paid by the seller.
During these months of waiting I discovered more about this building. Converted into condos in July of 2002, one and two-bedroom units began selling for $120k-$182k. Fifty-one units sold in 2002. In 2003 the sales picked up and 83 units sold, though the lower-priced units were going up in price.
By 2005 prices in this building ranged from $118-$230k. Statistically, all of the 261 units had been sold by this time. Sales dropped in ’06 and remained relatively stable until 2008 when prices began to fall. By the end of 2008 the smallest one bedrooms (west facing) began selling for as little as $77k.
It appears as if those who purchased in this building were riding the wave of the ever-increasing real-estate prices prior to the “bust”. Unlike the buildings across the street where prices are still down but relatively stable (and populated with owners in the late 1960’s and early 1970’s), many owners at 6030 Sheridan appear to be ready to rid themselves of their losses as quickly as possible.
On the unit I’m buying specifically, the current owner put down about $36k and took out a $99k mortgage. Then like many, the owner extracted some of the market gains (in perceived value) by taking out a $40k home equity loan. By the end of 2005 they had $175k invested in this unit.
Truthfully I hadn’t expected my low-balll offer to gain acceptance from the seller. However, with a similarly sized one-bedroom with an asking price of $39k, I also knew that the offer wasn’t unreasonable under the current circumstances. If this owner wouldn’t accept, another would.
I have yet to close on the sale although we’re proceeding with an inspection later this month and are tentatively set to close on November 5th. The circumstances for the seller are so very unfortunate. I suspect that they had considered this an investment, with a lake view and only few steps from a beach on Lake Michigan, few would have felt differently.
This seller, however is not alone and this circumstance is not isolated to Chicago. It is what’s happening. And while I’ve listened to reports such as these on the radio, for me, this is a first-hand look at just how dramatically things have changed in just a few short years.
If there is to be a silver lining in all of this, the low prices now being offered are going to make available housing stock that was previously unattainable to many. In my circumstance, the purchase of this unit will enable me to forego a mortgage, eliminate my automobile and move to 100% public-transportation use, thus freeing up income to be spent elsewhere in the economy.
As similar circumstances take root for other buyers, the influx of dollars into the economy should help rebuild the jobs market. Ironically, the creators of this stalled economy – the banks that fueled the loans that then fueled the “boom” are now stalling the buying process. If in fact I close on this unit in November, it will have been six-month process to simply give them my money.
Urban In-Fill 