University Village Sellers Can't Compete With Short Sales And Foreclosures

1454 Emerald.JPEG
Because I live in University Village I really keep a close eye on what is going on with real estate there. In particular, the single family home at 1454 S Emerald caught my eye when it became bank owned and was put back on the market, with the list price eventually dropped to $836,900. Keep in mind that this was a 4300 sq ft house that sold for $1,207,000 in January 2007. It needed some work but it still looked like such a great deal compared to other properties for sale in University Village (more on that later) that my wife and I put a bid in for ourselves. It was way more house than we need so when it looked like we couldn't get a screaming deal on it we let it go to another bidder who closed on it at $801,000 - still, a really good deal. At least they paid a lot more than what it was worth to us.

But this transaction provides a snapshot of what is going on within
University Village, which itself is a microcosm of the entire city of
Chicago. Here are a few other short sale/foreclosure closings that
have occurred in the last 6 months in University Village:

  • 1531 S Halsted, Unit 201, a 1 bedroom/ 1 bath condo that was listed at $169,000 and is currently under contract
  • 1461 S Halsted, Unit 1A, an 1157 sq ft 2 bedroom/ 2 bath condo that sold for $260,000 in a short sale
  • 842 W Village Ct, a 2600 sq ft 3 bedroom/ 2 1/2 bath townhome that sold for $542,000 in a short sale

Excluding the mid-rise buildings in University Village, only 11 sales have closed or gone under contract in the last 6 months and of those 4 were either short sales or foreclosures. Only 4 have closed or gone under contract in the last 3 months and 2 of those were short sales/ foreclosures. So the distressed properties are setting the market prices and this is where the story gets really interesting. First, there are more foreclosures and short sales coming to University Village. Second, during this time period the developer sold 3 single family homes (included in those 11 sales) at prices ranging from $1.1 MM to just over $1.2MM. Now imagine how those buyers will feel when the learn that a similar home just sold for $800K. Granted, 1454 S Emerald was not nearly as nice as any of these more expensive homes but for $300 - 400K you could do a lot of custom renovations and still have money left over.

Now here's the real kicker...look at what's currently for sale in University Village, with short sales or foreclosures highlighted in yellow:

That's 30 listings, when only 11 have sold in the last 6 months - and most of those before the tax credit expired. How can the developer hope to get anywhere near $1.3 MM for 1401 S Emerald, which is in a much worse location than 1454 S Emerald? Or 1461 S Sangamon at $775K when 832 W Village Ct is at 520K? Or for that matter 1448 S Sangamon at $689K when 842 W Village Ct sold for $542K? I think the answer is pretty clear: those prices have to come down.

Comments

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  • "1401 S Emerald, which is in a much worse location than 1454 S Emerald?"

    Are they not on the same block? Can please you elaborate for those of us who aren't in the know what makes the place down the street a worse location

  • It's on the east side of the street, which means it has the Dan Ryan overpass directly across the alley and eye level with your top floor. In addition, it's at the north end of the street on the corner and it is across from a vacant lot and an abandoned (I think) church. That cross street gets a lot of traffic.

  • Hello Gary.

    Very interesting information. I heard that 1401 recently sold. Have you confirmed that this house has in fact been sold. If yes, do you know the sales price?

    Paul

  • I don't have any additional information on 1401. It still shows as available on the MLS. Rumor has it that the developer won't take less than $1 MM

  • My wife and I looked at the Emerald Street single family homes back in early 2007. The model home was the most stunning model I had seen in years, and we were very tempted. But even then, we thought the prices were way too high. Here are the reasons:

    -- We understand there is a single family home premium, but the Emerald houses are cheek by jowl with almost no yard. Might as well get a townhouse and have it be easier to heat.

    -- Detached garages. In February, it is nice to know you are done braving the cold when the garage door closes.

    -- Location. The din of the highway is awful, as is its looming presence to the East. And it's not going anywhere. Neither is the industrial area underneath it and further East. Plus, UV is not really walking distance from the Loop.

    -- The entire neighborhood has the "add water, instant" feel to it simply because it is such a large planned development. It lacks the architectural diversity of a regular neighborhood.

    I think these deficits are showing on the re-sales.

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    Gary Lucido

    After 20 years in the corporate world and running an Internet company, Gary started Lucid Realty with his partner, Sari. The company provides full service, while discounting commissions for sellers and giving buyers rebates.

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