There's a growing tragedy here in bustling Chicago.
Previously, abandoned housing was a serious problem in only the most depressed neighborhoods here. As the Real Estate Downturn continues, however, it seems that even more affluent Chicago Neighborhoods - including Rogers Park, West Ridge, Kenwood, Chicago Lawn, and even tony Lincoln Park - are not immune to the problems the economic downturn has created.
It was only a couple of years ago that builders would get loans to rehab old, 1920's-era Chicago Courtyard Buildings. Older houses were purchased by investors across the city, either extensively renovated, or torn down with new, yet vintage-look homes built in their places.
And the properties or condo units would sell. In condo buildings, after 50% of the units changed hands, they were turned over to the newly-formed condo board, who would oversee the project, assuming the builders completed a relatively-intact and professionally-remodeled building with little maintenance required for a few years. They would then manage the building, and fund future maintenance needs from collected assessments.
Everything flowed. Neatly!
Apparently - not so much anymore, according to Chicago Tribune Reporters Azam Ahmed and Darnell Little in Sunday's paper. This is especially true for several buildings in some of the Neighborhoods in Chicago distant from Downtown and The Loop. Neighborhoods recently bustling - like Rogers Park, Albany Park, and West Ridge on the North Side, or those with bustle-potential, like Kenwood or Chicago Lawn on the South Side, or Humboldt Park on the Northwest Side.
Presently, our Team is working with an out-of-town client who owns a condo in an unfinished building on the 1600 Block of West Fullerton Avenue, in the swanky Lincoln Park Neighborhood, on the North Side of Chicago. Since less than 50% of the buildings total units have been sold - those units, along with common-area hallways and outer facade, sit unfinished.
Sale without an in-place condo association is impossible to buyers needing financing - the only option available is to rent the units, and hope for an improving financial picture down the road to spur an investor to buy, at a deep discount, the remaining units, finish off the decaying common elements, and complete and resell the units themselves.
Today, the residential blocks are littered with as-yet incomplete buildings whose developers were forced into bankruptcy or foreclosure before they could find enough financially-qualified buyers. Those unit owners who did close encounter mechanical system breakdowns - of heating systems, roofs, masonry, or electrical wiring. Plumbing pipes leak. Common area amenities - such as carpeting and hallway paint - sit unfinished for months, even years!
Often thieves or squatters invade the properties - making a bad problem far worse for the few tenants who remain!
During the boom years, few buildings and houses would sit abandoned, as investors snapped them up as short sale properties, fixed up the buildings or homes, and quickly resold them at a profit. Within the past year however, according to The Woodstock Institute in Chicago, a research firm, nearly 99% of all foreclosed homes went back to the bank rather than being sold to a third party investor. That's nearly $1.9 Billion worth of property in the City of Chicago alone!
Since banks become landlords only reluctantly, many bank-acquired properties sit largely vacant and boarded up. According to the U.S. Census Bureau, vacant properties across Chicago spiked 20% between 2000 and 2007. Today, there are nearly 166,000 vacant housing units in neighborhoods across Chicago.
In 2009, foreclosure filings are likely to pile on last year's numbers. According to national estimates, an additional 2.7 Million foreclosures are likely this year.
Is help on the way? Perhaps, but in a small way. President Obama's new Neighborhood Stabilization Program will pump over $55 Million into Chicago to help renovate and sell approximately 1,500 units in boarded up buildings, as well as abandoned and vacant single-family homes. Most of the money will go to properties on the economically-depressed South and West Sides of Chicago, sidestepping, for now, some of the North Side Neighborhood Properties who can also benefit from the funding.
But what of the other owners? They just bide their time, mostly, and keep up on repairs impacting their unit as best they can. One day soon, they hope, an investor will acquire and complete their properties, and repair common infrastructure.
Until then, however, their unanticipated misery remains!
Ahmed and Little's story also links to accompanying video and photos.
Please see our post today via BlogChicagoHomes.com.
DEAN & DEAN'S TEAM CHICAGO