Mr. Big Stuff Eats Crow

List Price: $749,900
Sale Price: $685,000
The Property: In June, Scott Sasse, a real-estate agent who specializes in the West Loop, e-mailed me the listing for his own condo, which he had just put on the market…

Scott Sasse's West Loop condo

List Price: $749,900
Sale Price: $685,000
The Property: In June, Scott Sasse, a real-estate agent who specializes in the West Loop, e-mailed me the listing for his own condo, which he had just put on the market. He thought I might be interested in writing about it.

I wasn’t. Public records showed he was asking 9 percent more than he and his wife, Amanda, had paid for the place in 2007. “Prices have fallen at least 20 percent since that time,” I told Sasse in my reply. That suggested his asking price was nearly 30 percent above where the market was for his condo.

Boy, was I wrong. Last week, Sasse reported that the condo had sold for $685,000—the same amount he and his wife had paid five years earlier. In other words, his asking price had been a perfectly acceptable 9 percent above what they would ultimately get for the place, not the 30 percent I had pessimistically estimated. And the fact that the condo sold for its exact 2007 sale price indicated that some of the neighborhood’s price erosion had come back. And unlike overpriced homes that tend to linger on the market, this one went under contract in 18 days. (The sale closed on September 13.)

I promised to eat a plate of crow that day for lunch, but Sasse was forgiving. “If you look all over the West Loop, I agree the numbers were more in line with 2003 prices [in June],” he said. “We’ve had a bump since then and are up to 2004. But if you look at the high-end category, there’s very little supply and a lot of people looking. That’s driving that category’s prices up.” With three bedrooms and a den, 2.5 baths, and a private roof deck, Sasse’s condo was a magnet for urban families who couldn’t squeeze into the two-bedroom condos that are more the norm in the West Loop.

A decade ago, when Sasse moved to the West Loop, redevelopment there was in its infancy, and most new residents were singles or young couples. But the neighborhood has matured, with an array of retailers, some of the city’s hottest restaurants, a terrific park, and even a museum about the history of Greeks in America.

And Sasse notes that his condo is across the street from one of the neighborhood’s best amenities for families: Skinner West Elementary School, which Chicago identified as the city’s seventh-best grade school in its September issue.

All that growth factored into the pricing of the condo, Sasse told me. He said that the buyers, whom he would not identify, plan to have kids soon and stay in the neighborhood. Sasse and his wife are staying, too, but in a townhouse.

Meanwhile, to commemorate my overly gloomy estimate of what the condo would sell for, I’ve adopted a new theme song for Deal Estate: “Mr. Big Stuff: Who do you think you are?”

Price Points: Sasse said that he was also encouraged in his pricing by the comps, including the building’s fifth-floor unit, which went on the market in May at $799,000 and sold in August at $755,000. (Those sellers had paid $802,000 in 2008; they sold at a 6 percent loss.) “We had gotten ourselves a strong deal [back in 2007],” Sasse said, “and this summer, we took the market for what it is.” Recouping their 2007 price is a noteworthy feat when Zillow shows that, in August, 43.9 percent of Chicago sellers sold at a loss.

Listing Agent: Scott Sasse of Quest Realty Group; 312-854-8522 or scott@questchicago.com.

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comments
2 years ago
Posted by Aaron G

Thanks for sharing Dennis. It takes a great reporter to know when he is wrong and admit it. It gives added credibility to everything you write/report. There has certainly been a pickup in the market in the past 120 days, especially in the high end market in prime locations It's going to get even better next spring/summer season.

2 years ago
Posted by Ali A

Hey Dennis,
I actually am the buyer and I find it interesting you thought the property was overvalued when I in fact believe I got a good deal. I'm not saying you are wrong or that I am right but I do think this unit is beautiful for the price.

At the time, I was comparing it vs CA23 (16 n carpenter unit 2S) which for 1900 sq ft with parking and a terrace with no view was costing like 595k. Also the delivery date for this new construction was April 2013. Prices were high as it was one of the last units left in CA23 but the units here didn't have all high end appliances and other nicer touches that 1259 W Adams has. This unit would have cost me about 310 sq ft but it did have a 600 sq ft terrace which unfortunately had no view though so didn't appeal to me.

Then I was also looking at 15 S Racine unit 3N. It actually relisted on the market this week for 615k a month after being sold for 560k. I could have gotten this unit for 545k. I really liked it but it was a little small at 1800 sq ft, it didn't have the extra half bathroom, had no rooftop deck, the elevator/parking situation was strange, and lastly it had commercial space at the bottom which I hate. All in all I still thought it was decent value for 300 sq ft as it had high end appliances and finishes and high ceilings. I just opted for 1259 W Adams as it had the complete package in my opinion.

Lastly this brought me to 1259 w Adams which I thought was the best deal. I was getting high end appliances, elevator entry, unique features like bamboo wood ceiling, polished concrete floors, really nice bathrooms, built in speakers, great wiring already in place and a rooftop deck of 300 sq ft with great city views. The location was also great with the park and school right there. At 2200 sq ft this unit cost me about $310 sq ft but with the deck and unique aspects I thought it was a great deal. The only things I didn't like were that the ceilings are a little low and that it was a second floor unit.

I think high end units like this offer great value in the west loop. With the current projects and future development prospects I think it's one of the few areas where there is opportunity for appreciation currently. You can see this with how quickly nicer units have been selling in the West Loop.

I was previously renting in a beautiful boutique building, 156 w superior. But to purchase in a unit like that in river north would cost me almost $500 sq ft which I think is too much. In the West Loop I was able to get a boutique building that is very nice and in a nice location but at about $300 sq ft so I feel like its a much safer investment that at the same time has more upside potential based on continued improvement in the area.

I know your argument is simply looking at Scott's 2007 purchase price of $685k and thinking that me purchasing for that same price is high but I think Scott actually got a good deal on this unit as he was the broker for the real estate developer on this project. For example this unit was not really worth over 100k less than the unit on the 5th floor when they originally sold in my opinion as Scott's unit was more unique and had nicer finishes. The only benefit of unit 5 is being on a higher floor but the view isn't really much better to be honest.

Even looking at the most recent sale in unit 5 of $755k vs my unit for $685k I think you can look at the price the previous owners paid and assume unit 5 got a better deal but I think for the features in my unit I got a better value. The unit was even appraised for 705k. I'm not saying unit 5 got a bad deal but rather I think I got a good deal unlike what you seemed to believe in your article.


I'm not trying to justify my purchase to you as I am confident in it and happy with my decision. I simply wanted to share the buyers perspective on this.

2 years ago
Posted by iam360

Dennis, I sent you an earlier email about the image you are using, you need to at least provide photo credit to me or remove it from your article. © 2012 Robert Harshman, All Rights Reserved.

As noted, here's a link to a full set of images of Scott's listing. Also made by me.

http://www.robertharshman.com/QR/1259

Step up and credit were due, how would you feel if I started to copy and paste your words on a RE blog?

Robert

2 years ago
Posted by Dennis Rodkin

Robert, I shot the photo. It's not one of yours.

I have not received your email, or I would have responded and told you the same thing.

2 years ago
Posted by iam360

Dennis, sorry about that, you are correct, at least it's not mine, but apparently a silver 4 door car always parks on the side street as there is a very similar one in my shot too.

Sorry for the confusion,

Robert

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