I am updating my blog theme. Main post content is available now and fine tuning will occur over the next few days…weeks.
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Revised plans for the former Peerless Confection Company site are up for further neighborhood discussion and review. Looking at the Hostess site and Peerless site plans side-by-side as they face one another across Lakewood Avenue, they seem to complement one another nicely.
The Hostess site’s very symmetrical, uniform lines seem softened by the Peerless site’s softer, almost organic plan due to the varied building types, shapes, and sizes. Large setbacks along Lakewood used in both plans and even a park run by NeighborSpace at the southwest corner of the Hostess plan allow for ample green space.
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Absorption rate is a fancy term for sales rate or how long it will take to sell unsold inventory. These days as condo lending pre-sale requirements to close a unit are extremely restrictive (51% sold for FHA, Near 70% sold for Conventional) sales rate is more important than ever in assessing whether a new construction purchase is feasable or a wise investment.
Working with a recent buyer, we uncovered the perfect new construction condo. My client loved the floor plans and finishes. At first look sales looked OK as the project had 100 units total and at our viewing there were 25 under contract. Construction crews were working feverishly while we were there.
Digging deeper however, the picture was not so rosy. A bit of research revealed that at this very time last year, the project had 23 units under contract. So 2 units had been sold in the last 12 months. Running the numbers, this yields a sales rate of .16 units/month, in other words, holding all factors constant it would take 37 years to sell the remaining inventory. Just reaching pre-sales guidelines, let alone, selling out the project would be difficult. Of course many factors could change to influence sales velocity such an improved economic outlook, loosened lending guidelines, price, and incentives, etc.
Finishes and floor plans are important but only if the units will be delivered in a reasonable time frame if ever.
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I recently had a buyer client ask me whether he really needed a pre-purchase inspection of his new Lincoln Park condo. He said…
“It’s a condo, what could possibly be wrong with the place?”
A lot, and yes, condo inspections are worth every penny. That said, an individual condo unit inspection alone is not sufficient. Most major issues will arise with the building limited-common and common systems such as windows, tuckpointing, roof, elevator, parking garage, deck, etc. So how do you uncover these issues?
In my post Trust, But Verify When Making a Condo Purchase I touched on this issue. To uncover issues with building common elements, a thorough review of meeting minutes and budget can yield a wealth of information.
So while the unit home inspection may reveal that a GFCI near the kitchen sink needs replacement, a review of the association meeting minutes may reveal that the building roof needs to be replaced.
Inspections are important but don’t miss the forest through the trees.
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When working with buyers who plan to purchase a condo in Chicago and obtain financing via an FHA loan, I often get the following request…
Can you send me the complete list of FHA approved condo buildings in Chicago.
Not a problem. The HUD website provides a great tool allowing buyers to search for FHA approved condo buildings. This is a great place to start but it is incomplete and can overly-restrict the home search. Many buildings are not officially “approved” but meet FHA criteria and qualify for something called a spot approval. A small sample of the requirements that must be satisfied include:
- The condominium project must be complete. There should be no ongoing or anticipated addition of any units, common elements, and/or facilities.
- Control of the common areas of the project must have been turned over to the unit owners association for at least one year.
- At least 90 percent of the total units in the project have been sold and at least 51 percent of the total units in the project are owner-occupied.
The checklist is detailed and requires verification by the condo association so always a good idea to get your lender involved in the process early.
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