When assessments kill sales prices

Top-tier condo and co-op buildings in prime locations command high sales prices despite high monthly assessments. The assessments are a result of the scope and quality of the services that building residents expect and wouldn’t forgo.

Less desirable buildings and neighborhoods often see prices punitively battered by assessment levels.

Take 5000 South East End Ave, a co-op in the Hyde Park / Kenwood neighborhood, as an example.

Unit 15C has been on the market for over 1,000 days. It has two generously-sized bedrooms, 2.5 baths, large living and dining rooms and a library. The unit has been rehabbed, has hardwood floors throughout, and includes parking. The monthly assessment: $2,621. The asking price: $30,000.

A few floors down, the three-bedroom, 2.5-bath, 2,000 square-foot Unit 11A is being offered for $49,000. The monthly assessment is $1,724, which may not include a special assessment currently in effect. The listing describes the unit as a condo, which it’s not.

You can also step up to the penthouse level where $140,000 will fetch a two-bedroom, two-bath unit that’s said to include $200,000 in upgrades and a “built-in wine captain.” The monthly assessment tab: $1,653.

COMMENTS

WORDPRESS: 7
  • MK 8 years

    Joe, I thought this was an interesting post. My jaw dropped when I saw the assessments you mentioned. Wow. I have been looking around for a condo to purchase and have been turned-off by some of the monthly assessments the current owner is paying for some of them. I ask myself, “what kind of expenses does this building have in order to justify such high fees?” However, they were nowhere near like the ones in this article. I understand that some buildings go all out and have pools, exercise rooms, etc. which adds on to a monthly cost. Your post put some things in perspective. haha. Do you see a growing trend of buyers/developers foregoing alot of “fluff” such as olympic-sized pools that probably only a small percentage of residents would take advantage of using and instead opting for just a well-constructed place with less amenities and lower maintenance cost? I find myself in the latter. For example, I really liked the Optima condos in Skokie but I felt that the pool, jacuzzis, tennis courts, etc. were a bit of a waste (for me at least). Obviously the developer didn’t have me in his target audience when he designed this place. haha 🙂 Oh well, thanks for posting!

    MK

  • MK,

    Once developers start building again different ones will take different approaches, some offering full-amenity packages, some offering low-amenity, low-service buildings. That’s what they had been doing, and the market in most locales offers a range of alternatives.

    It’s interesting that one of the Optima buildings in Evanston started out with low assessments and the owners added in a bunch of services after taking over, including door staff, and raised their assessments substantially.

    • Matayman 8 years

      The developer built a 200+ unit 28 floor high rise, if it’s the building I think you’re referring to, then equipped and tried to run it as if it were a 4 story walk-up. That’s my guess why the additional services were added — they were needed !

  • Dan Pepper 8 years

    Joe – I don’t think you are grasping that there is a different thought process on these Hyde Park and Kenwood CO-OPS, which are NOT structured for outright purchase like condos. Basically, you are paying a fee of $10,000 – $30,000 to rent in a high-end building for however long and when you exit, you hope to get your “bait” back – hopefully with a premium.

    The co-op board holds approval power over each new co-op member, which makes it different than a rental or a condo. Yes, this is a different investment calculus than NYC, but it helps to maintain the standards of the building and co-op members and that is not different than NYC.

    The tax treatment is also different for co-ops and condos. Different strokes for different folks.

  • Wilson 8 years

    This post is probably a little confusing to some people since it focuses on a Co-op and not a Condo building. The assessments for a Co-op will appear much higher then a condo building since the buildings taxes are included in the assessments. Whereas in a condo building you will pay taxes individually.

  • Wilson,

    You’re correct. I should have clarified that.

    For further clarity, a co-op assessment may also include principal and interest payments on a common mortgage on the building.

  • Sheridan B 8 years

    5000 EE is also no longer a co-op.

    Dan is confusing a certain kind of co-op from a typical co-op where units are sold on the open market (which this was). These low prices were an anomoly. The assessments will only drop by the amount of the tax, buildings like this take a lot of $$$ to keep in good shape whether co-op OR condo.