Foreclosures on condo projects rise
Is conversion crush an ominous sign?
The condo slump has put developer Liviu Mihulet in a tight spot.
His lender, Northside Community Bank, filed a lawsuit in August to foreclose on a 32-unit condominium conversion the developer launched in January in West Rogers Park. The bank asserted that the property, at 6500 N. Claremont Ave., had declined in value and demanded that Mr. Mihulet put another $500,000 of equity into the project. When he refused, he says, Northside demanded he repay the $3.1-million loan.
"This was an insult," says Mr. Mihulet, who is trying to refinance the project.
It's an indignity more developers are facing. As weak condo sales make it harder to pay off construction loans and skittish banks try to reduce their exposure to the depressed market, condo developers are increasingly facing a fate similar to that of the thousands of Chicagoans who may lose their homes to foreclosure.
That's what happens once most of everybody buys something and the rest of the population cannot afford what's left over.
3 comments:
Just what West and East Rogers Park need- more icky condo conversions.
Has this fool developer counted all the empty condos around here? Does he get a handle on the local market before he shovels money he doesn't even have into another crap rehab?
Just because you don't see the places listed on the multilist doesn't mean they aren't there. What seems to be the normal practice is to list only a handful of units at a time in a new conversion or new building, then listing a few more once the first listings sell. You can't form any idea of the size of the "market overhang"- i.e. units available but not yet listed- from the multilist.
We have so many half-empty and three-quarters-empty conversions in these two neighborhoods that are moreover ridiculously overpriced, that once the foreclosure auction start in earnest, it will take 3 years to unload them all.
It will also take steep price drops to unload them all. Right now, the ordinary one-bed is priced $140K to $160K, which is way over what the typical single, childless buyer of such a unit can comfortably pay, and WAAAAY out of parity with rents for subtantially similar unit.
I would say the developer still believes that "you can't lose in Chicago real estate."
Furthermore, R.P. is not a very safe hood to live or get stuck in. My friend want to buy west of Clark near Pottowanamee (sp?) Pk. I knew for a fact that the Kings and Vice Lords were shooting it out there. Too many gangbangers and dope hypes for my taste.
MAYBE if a 1 bd was $80-100....but what's the price for saftey?
I think most conversions in all but the best chicago neighborhoods will be all but worthless soon.
Who wants to buy an APARTMENT in a bad/unsafe location with little storage and no parking only to pay and fight with the condo board each month?
Post a Comment