South Bend Real Estate Report: January-February 2011

by Nick Molnar on March 21, 2011

The South Bend Area MLS records reflect that:

  • In January 2011, there were 138 sales for ~ $12.1 million in volume.
  • In February 2011, there were 124 sales for ~ $10 million in volume.

Those numbers are much lower than 2001-8 , though they do compare with 2009 and 2010, see the long term graph below.

Personally, I am starting to see a considerable increase in “activity,” with potential buyers wanting to see condos or houses and homeowners investigating listing their properties for sale. But there is still a considerable gap between buyer and seller price expectations, which is keeping the number of actual sales low.

The high price sale so far this year is 13336 Kern Road in Mishawaka. It’s a 3,316 square foot 4 bedroom, 2.5 bath home on 20 acres. It was listed for $700,000 in September 2010 and sold for $450,000 January 25th, 2011.

13336 Kern Road, Mishawaka, IN

 

Here is a scatter graph, reflecting every reported sales price for January and February 2011:

Sales Prices from January and February 2011

and here is the long term graph of monthly sales volume:

Long Term Sales Graph for South Bend Area Real Estate

 

 

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Eddy Street Commons is the epicenter of development near Notre Dame:

  • It’s the largest and most ambitious development with restaurants, retail, offices, apartments, townhomes and condos.
  • It’s in the location most tied in with the campus,  Eddy Street runs through the university and the development.
  • It’s backed by the biggest players: Notre Dame supplied the land and participates in marketing the project, the city of South Bend removed the ash that had been dumped on the site and built a parking garage, Kite Realty of Indianapolis led the development efforts.

Housing at Eddy Street Commons

And though the site plan contains four types of residences, the only ways to live at Eddy Street Commons now are to lease an apartment or buy at the first housing project being built, Champions Way.

Champions Way consists of 62 units in 9 buildings. It fronts to Angela Blvd and wraps around a small pond with a footbridge.

Here are a few unretouched photos I took on January 3rd, 2011:

And here are a few more photos.

Sales at Champions Way

Notre Dame bought the first building of 9 units fronting to Angela. One is currently used as the sales model. The others are rented as transitional housing to visiting professors, coaches, etc. I was quoted rent for University employees to be about $2,500/month + utilities.

The 16 units in buildings 2, 3 and 4 are sold. According to the developers, 15 of the 16 units are complete and have been delivered to the buyers and the 16th will close in February. I was able to locate disclosures for 10 of the sales in the county records:

building 2 / 1246 Duey
  • unit 22, 12/30/2010. $460,917.18 / personal property$15,352
  • unit 23, 10/1/2010. $448,770.
  • unit 24, 6/29/2010. $404,232.85 /personal property $55,044
  • unit 25, 6/16/2010.  $460,639.57 / personal property $4,225
building 3 / 1238 Angela
  • unit 31, 6/11/2010. $472,446 /personal property $4,900
  • unit 32, 7/19/2010. $426,983 / personal property$8,366
  • unit 33, 5/14/2010. $712,102.44 / personal property $23,000
  • unit 34, 5/7/2010. $443,785 / personal property $3,500
  • unit 35, 5/20/2010. $481,016 / personal property $3,000
building 4 / 1240 Duey
  • unit 41, 9/24/2010. $448,205.13 / personal property $4,225

That’s 10 verified sales for not quite $5 million. Include the 9 units Notre Dame bought and it’s 19 of 62 total units, or ~31% of the project. Use the developers figures of 15+9 and you get 24 sold, or ~39% of the project complete.

Champions Way and Other Communities Near Notre Dame

I believe Champions Way has the highest average sales price of the new developments near Notre Dame, falling in the mid $400s. (Stadium Village possibly has a higher average sales price at this point, but their numbers are skewed by the low number of sales and a single high price sale that was  really two combined units). For that premium, you get a prime location, units that each have a different look/style than those next to them, and of course many options and upgrades. What you lose at Champions Way compared to other communities at the same price is outdoor space (size of the patio/sunroom/deck), a few parking spaces, and some square footage.

Champions Way is the hot development now. That may change when Eddy Street Commons begins construction on the condos that will wrap the garage or other housing options. Look past that temporary excitement and compare the communities on their features. Champions Way has some compelling advantages. And it falls short of its competition in other areas. It may be the best fit for your needs – it depends on the intended use of your ND home. What’s best for an investment isn’t necessarily the same as what’s best for occasional use, and that isn’t the same as what’s best to live in full-time. Compare your options and shop smart. Call me if you want help.

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Oak Hill Condo Listed For Lowest Price in 5 Years

by Nick Molnar on January 24, 2011

Oak Hill is not fancy. In fact, nearly every other condo/townhouse complex near Notre Dame is bigger, nicer and offers better parking. But Oak Hill is generally the most affordable.  Oak Hill, which was built around 1988, was the the first popular condo complex next to Notre Dame. New London Lake, built around 1978 has age and rental restrictions that prevent it from really appealing to students, Jamison, built around 1984 never gained the same level of visibility and demand, and the other options like North Shore Club (~1971) and Woodbridge (~1972) are further from campus.

And Oak Hill’s position as the place to buy if you wanted a condo near Notre Dame was reflected in the prices it commanded.  From 2001 to 2003, prices trended from about $70,000 to about $90,000. In 2004 they entered six figure territory. By 2006, sales were commonly above $150,000 and a few units sold above $180,000. In March of 2008, one Oak Hill condo sold for $230,000.

But many new maintenance-free communities have developed near Notre Dame:

  • Dublin Village, about 2005/6
  • Wexford Place, about 2007
  • Irish Crossings, first sales about 2007
  • North Douglas Condos, first sales about 2007
  • Keenan Court, first sales about 2007
  • Stadium Village, first sales about 2008
  • Ivy Quad, first sales about 2009
  • Champions Way (at Eddy Street Commons), first sales about 2010

Those new options, combined with upscale rental apartments now available at Irish Row and The Foundry at Eddy Street Commons, have  put tremendous pressure on the prices at Oak Hill. In 2010, there were four sales, from $125,000 to $145,000. There are currently 11 Oak Hill condos listed for sale with Realtors, 10 of those are priced between $117,000 to $149,900.

The eleventh Oak Hill condo currently for sale  is noteworthy: 1525 Oak Hill Drive recently cut its asking price to $99,900. That’s the first time a price at Oak Hill has dipped below $100,000 since May of 2005 when one condo listed for $90k sold for $84k and another listed at $93k sold at full price. 1525 Oak Hill Drive has been for sale since March 2008, when it was priced at $189,900.

1525 Oak Hill Drive is not in bad shape. Here are some candid photos I took today. In its fair condition, the price is a significant test for Oak Hill. There is a place within the broader Notre Dame market for affordable condos. But the price that will quickly sell an Oak Hill condo hasn’t been found. With price cuts like this, we should find it this Spring.

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Ivy Quad Update: January 2011

by Nick Molnar on January 21, 2011

Ivy Quad is one of several new developments building condominiums and townhouses near the University of Notre Dame, and the first I’ll  profile in what I plan to write as a series on the various projects building housing around campus.

It is east of and adjacent to campus, on Twyckenham Drive across from the Eck Tennis Pavillion.

The total development calls for 60 units in ten buildings on the 2.6 acre site, spread over three phases.

Here are a few candid and never retouched photos I took on January 3rd. The grass shown is the Quad in the siteplan above.

As you can see, phase 1 is mostly built. There are two units left in the “drywall stage” so that the buyers can select their own cabinets, colors and other finishes. They’ll take about six weeks to complete once sold. The developer told me he has closed 21 sales and has one contract that hasn’t yet closed. Here are the closed sales that I have independently confirmed in the county’s public records:

  • 18424 Killeen Ct in May of 2009 for $238,765
  • 18426 Killeen Ct in June 2009 for $222,840
  • 18430 Killeen Ct in July 2009 for $261,100
  • 18420 Killeen Ct in August 2009 for 246,445
  • 18428 Killeen Ct in March 2010 for $320,000 / $100,000 in personal property
  • 18414 Killeen Ct in May 2010 for $385,000
  • 18418 Killeen Ct in May 2010 for $385,000
  • 18428 Killeen Ct (again) in June 2010 for $350,000 / $25,000 in personal property
  • 18422 Killeen Ct in July 2010 for $375,000
  • 18408 Killeen Ct in July 2010 for $268,476.87
  • 18421 Tulla Ct in August 2010 for $254,000
  • 18425 Tulla Ct in August 2010 for $270,000
  • 18417 Tulla Ct in August 2010 for $388,345
  • 18416 Killeen Ct in September 2010 for $487,689.01 / $10,000 in personal property
  • 18412 Killeen Ct in October 2010 for $236,660 / $5,000 in personal property
  • 18415 Tulla Ct in November 2010 for $389,800 / $70,000 in personal property

That’s about $5 million in confirmed, closed sales. I also have copies of another 4 deeds, indicating closed sales, but I don’t yet have the sales prices. So, whether you use my confirmed number of 19 closed sales, or the developer’s 21, I think you can call phase 1 a success. It’s mostly built and mostly sold.

Plans call for the construction of phase 2 to begin in February. It will consist of 18 units in three buildings. The plans have been tweaked for phase 2: the smaller units are gone – now they will have 4 bedrooms and 3.5 or 4.5 baths and a different floor plan than earlier units. I’m told prices for phase 2 units will start in the low or mid $300’s.

Phase 3 is currently slated for 2012.

Depending how you calculate, Ivy Qad is about 1/3 complete: one of three phases is nearly done and at least 19 of 60 units have sold at prices from the $230s to almost $500k.

At this point I’d call Ivy Quad viable. While the plans may continue to be adjusted as future phases are built, you can get a clear sense of what the community will feel like upon completion. And even if construction stopped now, Ivy Quad should work as a community with continuing appeal. It’s important to understand how long construction might continue around you, both for noise issues and because it is difficult to resell if you are competing against the builder selling brand new units. But now, it’s probably more important to compare the costs, covenants, location, floorplans and other facets of the development with the other communities near Notre Dame.

If you’re looking at homes near Notre Dame, I’d like to hear from you. After a quick chat or exchange of e-mails to help you understand your options, we can see if there’s a way for me to help you. I try to make these posts informative and useful, but I hope you’ll take note of this very smart, if generic, advice.  Do your research before you part with your money, even if it’s not by calling me.

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The fall in real estate prices has been tough on many people who purchaed homes near the peak of
the market, especially those who bought with little or no downpayment. And it’s going to take some time before we regain any balance between the demand for homes and the number for sale.

It’s a well covered story, and it’s easy to find articles highlighting how the distress in the housing market has decimated communities, leaving vacant and abandoned houses, increasing crime,and generally creating a downward spiral for the neighborhood. The coverage ranges from the lively, to the scholarly, to the picturesque.

But, foreclosures and other distressed sales have been a net positive for neighborhoods with resale demand and have led to the rehab of many homes. In some places, once prices fall enough to be considered a bargain purchase, houses quickly sell to people with the ability to make repairs and upgrades – either for themselves or as an investment which is rented or resold.

In South Bend, the neighborhoods of Twyckenham Hills and Broadmoor are examples of this healthy phenomenon. I’ve seen homes that sold around the peak in 2006 go into foreclosure, sell for about half their earlier sales price, then undergo a complete renovation including new furnace and a/c, and finally sell for less than the 2006 sale. The investor is rewarded for her/his efforts and the end buyer gets a better house at a lower price. There are other scenarios, but they generally yield homes that are better than before and neighborhoods that have more attractive, updated homes.

Here is one example, at 2910 Hilltop Drive:



Slideshow of “Before and After” photos

The house was empty for at least two years and owned by an individual in Hollywood who neglected it while waiting for someone to lease-option it. It was an eyesore to the neighbors and had several code violations that weren’t being addressed. Eventually the house went into foreclosure, attracted multiple offers and quickly sold. With partners, my wife and I bought it and we spent two months and one third of the purchase price making it a nice home again. It is for sale now for $85k and I’d expect it to sell within a few months. Final result: an empty, ugly house turns into a nice home for someone, the neighborhood looks a little better and with some luck, we make a small profit for our work. When this happens ten or twenty times within a few blocks it can transform a whole neighborhood.

Here is a map on which I marked homes which I know have had extensive renovations in the last
few years:

They aren’t all foreclosures, a few are estate sales in which the owners wanted to make no repairs. But those often have similar prices and needs as foreclosed houses. I’d estimate 3/4 of the renovations on this map are for resale, 1/8 for rentals and 1/8 someone bought for their own use.

Those are just the homes I know about because I was involved, know the people who were, or watched the work as I walked the neighborhood and followed sales in the MLS. I am sure there are more that I missed or that could be found with some analysis of sheriff’s sales, MLS and public records. But those 24 examples alone are enough to improve the whole area. And if they hadn’t sold and had fallen into disrepair, they might have been enough to push the area towards a decline.

In short, in neighborhoods like Broadmoore and Twyckenham Hills, foreclosures lead to improved housing stock and more attractive neighborhoods.

The mission for rehab-focused-investors is to locate the neighborhoods that have bargain purchase opportunities and can also justify higher sales prices after cost effective upgrades.
The question for policymakers is what leads to this fortunate situation and can it be replicated in other neighborhoods?

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