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Why Are the Prices at River City Condos So Low?

  • July 21, 2011

by Erin Calandriello

River City Condos

Situated alongside the Chicago River in the South Loop is the River City Condo project, where a number of the units are notably priced to sell. And the reason for this is short. Literally.

Of the 30 units for sale in the 448-unit building, over 53 percent are short sales, according to a comparative market analysis by the Chicago Multiple Listing Service. The median price for these units is $87,762, but some are listed as low as $49,900. Many of the units have been reduced by 70 percent or more since being listed in the mid-2000’s, according to Redfin statistics.

Ted Guarnero, a Chicago real estate agent with Baird & Warner, who is a listing agent for several of the units, said there are a number of reasons for the low prices.

“It was the perfect storm,” Guarnero explained, pointing out that developer American Invsco purchased several condos in the project about six years ago and sold them under the “2-2-2” deal — two years of free assessments, two years of free taxes, and two years guaranteed rent. He noted that, like the rest of the country at that time, “anyone could get financed.”

Between relaxed financing requirements and mortgage companies appraising units at the inflated prices, owners got in over their heads, Guarnero said. When the recession hit, they either couldn’t pay their mortgages or couldn’t sell their places for a profit. Guarnero also said that last summer’s flood contributed to the lower prices.

“Not only did the parking lot get flooded, but so did the transformers and generators,” he said. “Tenants were evicted for a month and the building was hit with a special assessment of about $1.7 million, which was split between the units in the building, including the commercial ones, so it was about a $3,000 assessment per unit.”

To purchase one of the short sale units, one must pay all in cash, which may limit the buying pool. However, for the other low-priced units, Guarnero noted that it could be cheaper than renting, as one could end up paying $600 to $1,000 a month, depending on the price and size of the unit and its assessments.

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