How’s this for an April Fools: There’s $33 million missing! Well, sorta. What follows is a detailed analysis of the value of our property(s) here at 111 East Chestnut Condominiums. Looks like we’ve been punked! Fact is, despite our Magnificent footprint, we are not what we think we are, and what’s missing is whole lots of real value.
According to a recent article in the Chicago Tribune (2-12-16), downtown condo prices have risen above peak 2008 levels. “‘With very little new condo construction in the Chicago downtown area, condo prices finally have rebounded,’ said Appraisal Research Counselors in a report Tuesday. ‘The average price at the end of last year was $421 a square foot, or 1.7 percent above the 2008 level.'”
So where are we? In the last 12 months, 24 Units sold with an average price per square foot of about $350. And in 2008, 14 sold with an average price per square foot of $416. Bottom line: we’ve missed the market’s rebound price per square foot by some $66, i.e. we are subpar by some 16 percent.
Now for context: There’s a recurring theme that’s come from the Milazzo-directed Board here. Recently seen in the cover letter to the 2016 Budget and repeated in the Fall 2015 Newsletter the Board said: “We believe that the sound fiscal strategy outlined in this budget will enhance our building’s status, value and appearance. By working in concert with our competent management team from Sudler, we intend to secure your investment as a premier Gold Coast residence.”
Much like the recurring ruse that “The budget also shows full debt repayment by the end of 2016,” the Board’s claim is puff, meant to mislead. Status and appearance aside, indeed, the Board has enhanced our building’s value. Since Milazzo & Friends took control here in 2011, our value per square foot has increased by a measly 11 bucks… in five years! That’s the difference between the 2011 price per square foot of $399 and present value. Now, measured by 47 floors and approximately 10,525 residential space per floor, in five years the Board increased the building’s value by a mere $5.4 million. But, if we had been aligned and competitive with the market (i.e. strategic business plan in hand), returning to the 2008 levels would have yielded some $38 million. Regrettably, we have no such plan. There are no plans to even develop a strategic plan. And while the Board with knit brow debates LED light bulbs, Artium leaks, pool deck paint and a smoking ban, we as an Association meander.
What does that mean to you? For an average home here (1000 sqft), there’s about $66,000 missing from the table at closing. And as April Fools jokes go, that’s just not funny.
Ask our own everyman, Vince Scott. Scott, the owner of Unit 11A, is kinda the 111 bellwether. He’s lived here forever. He’s the representative first in the series listed on our documents. He’s our outspoken “Concerned Homeowner.” He’s also a successful real estate broker with some 30-plus years experience who has been trying to unload his Unit for over a year. So how’s he doing? He’s gotta be cryin’.
Vince’s saga selling his Unit has been painful to watch. According to the MLS, he started selling his Unit May 16, 2014 listing it for some $624,900. Then he dropped his price May 13, 2015, and again June 10, and again July 2, and again last December and most recently on March 30. It’s now listed for $575,000. That’s 686 days on the market and a drop of approximately $50,000. And by our estimates, he still can give up another $15K. Zillow has him giving up even more estimating his Unit at $514,772.
Again, consider Scott’s predicament in context. According the Trib article cited above: “Condo owners selling existing condos are likely to continue to benefit from selling into a market with very little new supply.” Not poor Vince. Not the majority of us really.
And again the punchline: “By working in concert with our competent management team from Sudler, we intend to secure your investment as a premier Gold Coast residence.”
In retrospect, having bought that the first time is enough to make any owner feel a little foolish.
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EDITOR’S NOTE: Of course, given floor, low rise versus high rise, East or West view, renovations, etc., prices do vary.
STORY UPDATE 4/7/16: Re-activated – 111 E Chestnut St Unit 12A Chicago, Illinois 60611 – MLS #: 09100866 – $499,000.