Chicago’s University Commons development in University Village has a lot to offer – great spaces, and fantastic amenities. However, the development has been plagued with a host of distressed sales – short sales and foreclosures – in the last year. I was actually shocked to discover that, of the 21 2 bedroom/ 2 bath units sold in the last 12 months, fully 11 were either short sales or foreclosures.
If you look closely at the data (sorted above by selling price) you will see that there is a higher concentration of distressed sales at the low end. In other words the lofts that sold were the ones that sold at the biggest losses. However, if you also sort the data by closed date you would see that there is a higher concentration of distressed sales as time progressed. My interpretation of that is also fairly negative – i.e. as time goes on sellers in University Commons are getting increasingly desperate and being forced to sell under distressed circumstances.
Having recently listed and sold one of those 21 units (1000 W 15th #414), I can speak first hand of the challenge in selling the lofts there. You just can’t get the traffic. Part of the problem is that University Commons is just not that well known. People looking for lofts in that price range typically think of either the West Loop or the South Loop and may not even be aware that very nice loft options exist in that area. So when you set up the listing you find out that it does not match the criteria of very many people and very few of the people whose criteria do match the listing will express an interest. You have to really work hard to find a buyer.
However, another problem is that the people who bought these units from the developer received a substantial 8 year property tax benefit – e.g. taxes of $1000/year on a $450,000 purchase. Doesn’t sound like a problem? Well, this tax benefit allowed the developer to charge a premium for the condos. But the tax benefit can’t be passed along to the next buyer so that premium is lost upon resale. I think this has contributed mightily to the losses that sellers are experiencing.
The good news is that if you are interested in buying in University Commons there could be bargains to be had because there is a lot of inventory available relative to the rate at which it is selling.