Who would have thought it possible? Condo sellers actually selling at a profit in this real estate market? Well, take this story with a grain of salt.
Earlier this week Crain's reported that the early buyers in the Trump Tower have actually sold their condos at a profit. Although it seems hard to believe, when you look at the facts, the story seems to make a bit more sense.
Crain's impressively pored through the property records to figure this out. Impressive because my cursory exploration of the property records ended in frustration. The records are a mess with The Sun Times often listed as a party to the individual transactions along with an LLC named L Tomatoes (I kid you not) and multiple buyers listed over the course of a month or two. Someday, when I have more time, I'll dig through this stuff to obtain my own data. But in the meantime, here is the result of Crain's analysis:
- Crain's points out that it was the early buyers that made money.
- 18 out of 31 sales were at a gain
- The gains averaged only 12% and when you take the transaction costs into account those gains shrink quite a bit
- The one example that Crain's provided of a successful seller was one that bought under the friends and family program. The article implies that several of the successful sellers bought under this program.
Well, the friends and family program was a special deal that was not available to the general public so no wonder these folks made money. Also, I suspect that the people who sold a while ago also did better. Condo prices in Chicago have continued to drop through this year so those that sold more recently probably did not do as well. As future sales hit the records I'm fairly certain we're going to see a lot more losers.
Meanwhile, the resales in Trump Tower continue to be listed at substantial discounts to the developer units. It's not at all clear to me why someone would buy from the developer, except that the article does say that the sales staff has been cutting crazy deals. And yet Trump has only sold 55% of the condos - not enough to pay off his lenders. It doesn't help that most mortgage lenders won't touch the project because of the inclusion of the hotel condos.