3 Years Later and Still No Buyer for This Lakeview Short Sale Loft: 811 W. Aldine

We last chattered about this brick and timber triplex loft in the Mandel Brothers Lofts at 811 W. Aldine in Lakeview in July 2010.

See our prior chatter here.

That was 18 months ago.

Since then, it has been reduced $58,500 and is now a short sale.

The listing says to “bring all offers.”

If you recall, the living room/kitchen and dining areas are on the main floor. The kitchen has granite counter tops and white appliances.

The two bedrooms are on the second floor.

The third level sports the den and a private terrace.

This loft also has a highly coveted Lakeview feature: not just 1 but 2 deeded parking spaces.

It also has the other features buyers look for including central air and washer/dryer in the unit.

After being on and off the market for 3 years, will this loft finally sell in 2012?

Saul Castaneda at Estaneia Realty has the listing. See the pictures here.

Unit #1N: 2 bedrooms, 2 baths, den, triplex, 2 car parking, 1940 square feet

  • Sold in September 1995 for $245,000
  • Sold in August 1997 for $352,500
  • Sold in June 2000 for $479,000
  • Sold in July 2004 for $528,000
  • Originally listed in February 2009
  • Withdrawn in June 2009
  • Re-listed in May 2010 for $548,000
  • Reduced
  • Was listed in July 2010 at $497,500 (included 2 car parking)
  • Reduced
  • Currently listed as a “short sale” for $439,000 (includes 2 car parking)
  • Assessments of $409 a month (includes cable)
  • Taxes of $8823 (was $7250 in 2010)
  • Central Air
  • Washer/Dryer in the unit
  • Bedroom #1: 15×12 (second level)
  • Bedroom #2: 14×11 (second level)
  • Den: 10×10 (third level)
  • Living room: 24×17 (main level)
  • Kitchen: 21×8 (main level)

112 Responses to “3 Years Later and Still No Buyer for This Lakeview Short Sale Loft: 811 W. Aldine”

  1. Isn’t this loft what is wrong with this market right now? For all the talk of it “improving”- the housing market is still completely dysfunctional.

    First of all, no property should be on the market for 3 years. Once sellers figure out that they’re underwater and they’re going to have to do a short sale- it usually takes FOREVER for that process to go through. Heck, one of my friends abandoned his Edgewater condo to move to Cincinnati 2 years ago (he’s not paying the mortgage) and it is STILL on the market and “pending”. It STILL hasn’t sold. After 2 years!

    There can be no improvement in the housing market until all of these types of properties wind their way through the system. How many more years will that take? From the looks of properties like this one- at least another couple.

    I’m beginning to think it won’t be until about 2015 that we could see “normal” market conditions.

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  2. Sabrina,

    I have to respectfully disagree with you. Many people are doing short sales because they want a “way out” – it is not necessarily that they don’t have the money to pay for the house – they just don’t want to (remember Rihanna’s house which is a short sale? R Kelly? etc.). With the economy improving, many of these short sellers may actually take their place off the market because either they have more income or they realize that the housing market is improving and they can hold on for a little longer. I don’t see this huge inventory making a big difference at all in the market in the years to come (also, remember that many foreclosures are unlivable and many are being sold to investors/investor groups). This shadow inventory will not materialize to the extent you (and G, HD, etc.) think it will….

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  3. Well Sabrina you are in luck. Apparently the government is ready to sell foreclosures in bulk
    http://www.cnbc.com/id/45925851

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  4. If these people had a 20% down payment in 2004, they wouldn’t be in a short sale situation.

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  5. “remember that many foreclosures are unlivable and many are being sold to investors/investor groups”

    Two of them were the land that made up the 2521 Ashland development. 70% off ’05 price.

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  6. This is a good example of how early the bubble started in at least some hoods–the ’95 price + [3%/year to now] is just over $400k. If this were an open market sale (ie no lender approval) this would sell quick at $399, no?

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  7. The real estate market is the aggregate supply and demand, and is affected by the cost of money, carrying and maintenance costs, taxes and tax laws, etc. One property has virtually zero effect on the market. This one is simply overpriced, and it has crappy photos. No one wants to go through the hassle of a short sale to try to by a property which is still short-sale priced at well over its market value and which would likely be inferior in material respects to many other properties. To answer your question, Sabrina, no, the existence of one property owner who is unwilling to sell his or her property for the market price does not meaningfully measure or predict the state of the real estate market in general.

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  8. the shadow inventory is scary, people really dont know how deep it goes. if you look at the 20 people physically closest to right now i can bet 1 of them is in some sort of foreclosure process, another 10 are about one or two paychecks from being in the same boat.

    dont kid yourself its there people, its just when will it hit the fan and how much of an impact will it cause.

    in a neck of the woods i had been looking, Norwood (north of NW hwy, east of harlem) short sales are popping up more frequently and i would check the CCRD of the listed houses neighbors and always find one “Lis Pendens”

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  9. anon still thinks that 3% appreciation should be the norm. Boy is he in for a shocker if he ever decides to sell

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  10. Groove, we are a product of our surroundings. I am at one extreme and you are at another – I’m sure the truth is somewhere in the middle (but more towards my side – again, just look at the economy, stock market, and contract activity over the past week)

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  11. “anon still thinks that 3% appreciation should be the norm.”

    What’s 100 years of history tell us, Bob? Hmmmmmmmm?

    Yes, we could construct a more accurate, year to year, model, but are you offering to either do it or pay for it? I’ll stick with 3%, from a non-bubble price, as a rough guidepost. Note that that 3% leads to a price almost 10% off the current, short-sale-depressed, asking price.

    Also, are you *really* saying that this place wouldn’t sell, quickly, if the ask were $399 and there were no lender approval involved?

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  12. “Also, are you *really* saying that this place wouldn’t sell, quickly, if the ask were $399 and there were no lender approval involved?”

    anon, this place would sell quickly at the current price if there were no lender approval involved. Think about it – an extra 40k price at 4% a year is only 133 dollars per month extra.

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  13. “anon, this place would sell quickly at the current price if there were no lender approval involved.”

    Please don’t; you’re hurting my point.

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  14. anon- if my post can “hurt” your point, then your point wasn’t strong enough to stand on its own.

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  15. No doubt a RE monkey like clio would buy it near ask if no lender approval involved. But this is 2012 not 2016 where ever more monkeys won’t be in a position to buy.

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  16. “This shadow inventory will not materialize to the extent you (and G, HD, etc.) think it will….”

    How could you possibly know what anyone else thinks when you never get anything right?

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  17. Bob, G, HD, anon, all I have to say is that things look pretty good from where I am sitting right NOW. Can you say the same thing?!! Yeah, so stfu

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  18. “again, just look at stock market, and contract activity over the past week”

    look at GDP and Unemployment, and look at your neighbors, look at upcoming policies going to be put through thats what is going to happen.

    its not doom and gloom, all can be fixed we just need to take the lump now and take it hard. the kicking the can down the road/slow pulling of the band-aid is whats making things worse long term.

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  19. Things look rosy to me now Clio: this year I’ll be able to save quite a bit more and luxe condos are sitting downtown and not selling. In fact most HOAs have to br turned over this year for the last crop that opened up in 2009. I’ll get there, but I don’t think too many Realtors(r) will.

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  20. “I’ll be able to save quite a bit more and luxe condos are sitting downtown and not selling.”

    HA! – we’ll see about that…..

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  21. Clio when I wind up in one of these places as a gesture of goodwill I’ll even invite you over to utilize the pool, but only IF you shine my shoes first.

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  22. “Bob, G, HD, anon, all I have to say is that things look pretty good from where I am sitting right NOW. Can you say the same thing?!! Yeah, so stfu”

    Things are looking great for me, too. I celebrate the increasing housing affordability and know it is one good thing we can offer the future generations to ease the burden of the steaming pile of debt that is somehow their responsibility.

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  23. Clio its easy to check the Chicago tribune’s RE website against the propaganda put out by the Appraisal Research Council. Didn’t another RE lobbying group already get caught falsifying data lately???

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  24. “I’ll be able to save quite a bit more and luxe condos are sitting downtown and not selling.”

    “HA! – we’ll see about that…..”

    When?

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  25. The pictures of this place are so itsy bitsy, it’s hard to tell what the place is like. Those high bedroom windows make it look like a basement room. Yuck. Obviously the place is way overpriced. What buyer would bother with a short sale unless the price is really really good?

    Buyers need to change their thinking in this market. Only buy something that you can see yourself living in for at least 10 years. Young couples should only buy in a good school district now in case they have kids later on. Young singles should not even buy unless they are confirmed to singlehood. Is that a word? Sellers need to reduce their expectations. As long as a seller buys another place, they will pay less in basically the same proporation that they lost on the former olace. So it’s a wash. The loser is the seller who doesn’t buy a new place. But what do I know?

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  26. one thing that’s always struck me as odd, or maybe interesting, about this building is there aren’t really a lot of windows… and this is a north facing unit. what is the interior like?

    white appliances? that $4k to upgrade to newer appliances might change buyer perception way more than the $4k investment..

    also, only in cook county could the taxes jump $1500/yr in a down market… crooks. it’s really time to flee this land.

    “If these people had a 20% down payment in 2004, they wouldn’t be in a short sale situation.”

    no, but they’d still be losing money on the transaction. actually they’d be losing MORE money on the transaction.

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  27. “The loser is the seller who doesn’t buy a new place.”

    Not while prices continue to decline.

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  28. “Not while prices continue to decline.”

    Wake me up when a new episode is on…….

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  29. Clio if I thought for a second we could get rid of you until the year/year case Schiller decline streak is over this would feel a lot more like Friday.

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  30. gringozecarioca on January 10th, 2012 at 11:59 am

    Clio (10:30 am) : “things look pretty good from where I am sitting right NOW. ”

    C’mon Clio.. The ex-wife hates you, your kids hate you. If you have a dog, even it, probably hates you. Sittin on the toilet, lookin down, watchin one float past would probably look pretty good to you right now..

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  31. “The ex-wife hates you, your kids hate you. If you have a dog, even it, probably hates you. ”

    I have two dogs…..

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  32. “C’mon Clio.. The ex-wife hates you, your kids hate you. If you have a dog, even it, probably hates you. Sittin on the toilet, lookin down, watchin one float past would probably look pretty good to you right now.”

    gold i tell you, just plain gold!

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  33. “the shadow inventory is scary, people really dont know how deep it goes. if you look at the 20 people physically closest to right now i can bet 1 of them is in some sort of foreclosure process, another 10 are about one or two paychecks from being in the same boat.

    dont kid yourself its there people, its just when will it hit the fan and how much of an impact will it cause.”

    I guess we can continue to be scared by statements like this and do what, hide? For investors (myself included) these scare tactics of shadow inventory which cause would be buyers to continue to rent THRILL us. Rent increases are clearly outpacing inflation and that in addition to buying a unbelievably low prices makes for a very nice financial equation—for those of us who aren’t scared of shadow inventory…

    What about shadow buyers? Or—those people who want to buy and will buy as soon as they know it is ‘ok’ to buy (the media deems RE as improving and they are not scared anymore…). Shadow inventory = shadow buyers? +/- ??

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  34. [Groove stands up and applauds]

    thank you cooper, because you as an investor is the majority of the world and thats the yard stick we should measure by. thank you, and thank you again.

    or reality is average joe who will by 1 home to live in and would like to move into a larger home as his family grows the shadow inventory is what will affect him and his future which actually is the bulk of America.

    the fact that you look past this aspect and isnt a variable in your decision making show how great of an “investor” you are.

    i say good day

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  35. Cooper, get your rents while you can. Have you driven around downtown lately? Notice all those construction cranes? They are all massive rental buildings. And half a dozen more will start construction in 2012. Best of luck to you.

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  36. I was in the condo about 18 months ago. It’s a cool space and is/was well maintained. The downside is that it’s completely impractical. It’s an awesome entertaining space with the kitchen/living/dining rooms all open, but you have to go up a lot of stairs to get to a bathroom. The master bedroom overlooks the living room and is not enclosed. (The 4-post bed you see in the photo is the 2nd level and the rail in the back looks over the living room – not in the basement.) The second bedroom is enclosed – go figure. The sun room is really nice, but that’s after climbing two flights of really high stairs – esp if you want to eat outside and the kitchen is on the first level.

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  37. Pent up demand and delayed changeover of homes will have some positive effect this spring. Media will be again focused on reelecting King Barack and will try and paint the news and economic outlook as improving. This will lead unhappy nagging wives to hit the streets en masse this spring with checkbooks in hand.

    Im confident that If banks and appraisal companies will allow it there will be a strong market this spring and summer!

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  38. “get your rents while you can. Have you driven around downtown lately? Notice all those construction cranes”

    yup, I’ve noticed all those buildings—all the people who are too scared to buy will be living in them—paying the owners high rents because they are new. I think I’ll be ok–buying condo’s at $50-$75K ish — my rents will be lower cost alternatives to the new buildings. Even if this glut of shadow inventory comes on the market–and my value drops, it goes from what….$58 down 20% (ha) to $46. Since I don’t plan to sell in the short term, it doesn’t matter. BTW–the condo bought at $58K–had a first timer bought it with 5% down, their total payment would have been $850 — I rented it in one week for $1175.

    I don’t look past the average joe at all–reading between the lines—my commentary on this topic sort of indicates that I’m shocked they are not buying with prices so low–they should be….but many (media, CC) continue to scare them with stories about the sky falling (shadow inventory). And so they continue to rent, and banks build rentals, banks turn in record profits and joe pays rent that increases at 10%+. Joe continues to play victim.

    Maybe it is time for Joe to buy instead of being scared? What about the shadow buyers like Joe who (once convinced) will start buying? Hopefully there will still be good deals out there…

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  39. Even ignoring the price, the taxes + assessment hit for this are going to be deal breakers for many folks.

    I agree with anon below – inflation is as inescapable as death and taxes, and there’s no reason to ever believe housing will be immune from it. I said pre-2008 and I say now, if home prices had increased nice and smoothly at 3% and we hadn’t had the infusion of speculator dollars (in no small part caused by money fleeing the collapse of the tech bubble) we’d all be better off.

    Bubble economies = bad.

    “Yes, we could construct a more accurate, year to year, model, but are you offering to either do it or pay for it? I’ll stick with 3%, from a non-bubble price, as a rough guidepost. Note that that 3% leads to a price almost 10% off the current, short-sale-depressed, asking price. “

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  40. gringozecarioca on January 10th, 2012 at 1:26 pm

    Clio and Cooper are both cars.

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  41. gringozecarioca on January 10th, 2012 at 1:27 pm

    “Bubble economies = bad.”

    Nah… would be so boring without bubbles.. Liked ’em in the bathtub as a kid. Like them now.

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  42. Copper dont get my words as dont buy. i promote informed buying.

    one needs to look at ALL aspects (upkeep, utilities going up, prop taxes rising, neighbors defaulting, extra crooked alderman in the ward).

    i swear some people will research harder buying an iPad or dishwasher than a condo or SFH. a home is not a disposable good and as of late not an easy asset to dump. one needs to look at all the variables and make the best decision for them

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  43. “Nah… would be so boring without bubbles.. Liked ‘em in the bathtub as a kid. Like them now.”

    If, counterfactually, you’d been on the flip side of those bubbles, you wouldn’t like them as much.

    Also, if you feel like it, check your email.

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  44. Sabrina,

    Same hood – have you posted this one for discssion?

    http://www.redfin.com/IL/Chicago/540-W-Aldine-Ave-60657/unit-D/home/13373647\

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  45. Sabrina -same hood – have you ever posted?

    http://www.redfin.com/IL/Chicago/540-W-Aldine-Ave-60657/unit-D/home/13373647

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  46. Slow clap for Groove’s comment above. I actually think people *should* buy now.

    Provided that they think they will be there for over five years, they’ve checked out the construction and association, they have a significant down payment, they have emergency funds and are securely employed. What percentage of people meet those criteria?

    Groove is spot on: run the numbers, dig up all the info you can, look at the risks vs. rewards and pull the trigger if is makes sense. During the bubble, my attitude was widely regarded as idiotic fear mongering. After all, if you waited 24 hours and did your homework, that “dream home” was already under contract.

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  47. “Provided that they think they will be there for over five years, they’ve checked out the construction and association, they have a significant down payment, they have emergency funds and are securely employed. What percentage of people meet those criteria? ”

    Other than the “significant down payment” part, I tend to agree. Unless you can put enough DP to own the place outright much, much sooner than typical, I’d rather not outlay the money. That’s the unfortunate lesson Mrs icarus and I learned about our DP during the boom.

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  48. Some lady in my office recently bought and meets all those criteria. She’s not some 20-something livin’ the urban dream though–shes 50.

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  49. “”Other than the “significant down payment” part, I tend to agree. Unless you can put enough DP to own the place outright much, much sooner than typical, I’d rather not outlay the money.”

    so are you suggesting that unless a prop can be bought for cash or with a small loan, it is better to pay more for rent that to own (see my earlier example where my tenant is paying $325/mo more to rent vs buy)..? What about the tax implication / or lack of via the rental or outright ownership option?

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  50. This prop under contract as of today :)

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  51. Who knows how long it will be pending though as it is a short sale. It may be one of those that still hasn’t closed by 2013….

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  52. ” are you suggesting that unless a prop can be bought for cash or with a small loan, it is better to pay more for rent that to own”

    No, he’s saying rather than put down X%, put down .5*X% and stay liquid.

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  53. “Heck, one of my friends abandoned his Edgewater condo to move to Cincinnati 2 years ago (he’s not paying the mortgage) and it is STILL on the market and “pending”. It STILL hasn’t sold. After 2 years!”

    Hahaha hows your deadbeat Proctoid friend enjoying the Queen City? It is comforting to know that deadbeat’s quality of life likely sucks there unless he has kids. And of course good ol’ PnG isn’t covering his moving expenses.

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  54. “No, he’s saying rather than put down X%, put down .5*X% and stay liquid.’

    exactly. Take a $400K home for example. Say your choices are put down $25K or 50K at 3.9%. Your payments are $1650 or $1768 respectively. Over the life of the loan, you save $17K by putting down a larger down payment but your payment is $118 more. If you lose your job, money becomes tight and every dollar counts. That $25k in the bank could be enough to hold you over, with other savings and unemployment until you are working again. Sure there are other factors to consider. If Interest rates go up, I believe the numbers get larger. And the older you are the harder it will be to find a new job, etc.

    I used this calculator for my numbers

    http://mortgagemavin.com/calc/mortgage-calculator.aspx?goal=compare-two-mortgages&mort=0

    YMMV

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  55. “It is comforting to know that deadbeat’s quality of life likely sucks there unless he has kids. And of course good ol’ PnG isn’t covering his moving expenses.”

    Nope- not PnG. And yes- he has kids. 3 now actually! So Cincinnati is fine. They actually bought a house for not much more than what he paid for his Edgewater 700 square foot 1-bedroom (using her credit/name since he’s walking away from the condo.)

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  56. “This prop under contract as of today”

    ANON- I guess you were wrong – it DIDN’T need to be reduced to 399k to go under contract!!! HEY G- PUT THIS IN YOUR DATA BANK!!!

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  57. My personal view is Cincinnati is terrible in a way that places like Des Moines, Kansas City and Cleveland don’t get anywhere near, so even if he’s as smug are about it was you are I wouldn’t envy him and his real estate default windfalls.

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  58. “HEY G- PUT THIS IN YOUR DATA BANK!!!”

    There are numerous properties I’ve been watching for months that have been under contract for months. I don’t believe the data until they actually close. It’s taking forever with most properties (especially short sales.) As I said- my friend has had his Edgewater condo under contract as a short sale for 2 years and it still hasn’t sold. ha! ha!

    Yes- that’s what this market has come to.

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  59. I’m still living in my ex-landlord’s foreclosure. Bank hasn’t collected a payment in years. And they seem to have stopped asking me who’s living here (I am.) Guess after another 17 years or so of rent free living, perhaps I’ll file an adverse possession claim for official title. (all while building a next egg, seven figures and climbing)

    Shadow inventory depth? Yes it’s deep people. Think Grand Canyon deep. So deep that no financial institution wants to confront it and thus expose their insolvency.

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  60. Brad F! Thanks for checking in. I was wondering what had happened with your situation. In some buildings the banks simply don’t want the units back because of other foreclosures in the building etc. Believe it or not, I have friends living in a foreclosed unit in the West Loop. Their landlord hadn’t paid in like 3 years. They are paying the assessment and some rent to the condo association (to cover back assessments that the landlord never paid.)

    Otherwise- again- it’s been years and years. Bank of America owns it now. They haven’t told them when they’re even going to put it back on the market. They are paying WAY below market rent (although it sounds like you have an even better deal- as you’re not paying at all.)

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  61. “My personal view is Cincinnati is terrible in a way that places like Des Moines, Kansas City and Cleveland don’t get anywhere near,”

    I lived there for many years. For families it’s alright. For single people notsomuch.

    Oh and BTW Brad F is my financial savvy/lucky/prudent hero. I have friends in the same position as him. They’re enjoying it as well. I don’t hate as they give me free beer all the time with the ridiculous amount of rent they’re saving each month from not paying rent!!

    Welcome to squatter nation America! Hate all you want this is the new normal to prevent the banks from marking to market and admitting insolvency and undergoing liquidation!

    The financial caste must be protected (with taxpayer monies) at all costs so lets blame the little guy! Yeah I get all you haters schtick and go fcuk yourselfs and/or get in a car wreck. See if ol’ Bobbo cares. I will laugh though.

    Kudos to them. We need to LIQUIDATE THE INSOLVENT TBTF BANKS and this crap wouldn’t be happening. If you’re blaming people getting free rent it’s either because you’re jealous or just a stupid Fing numbskull, likely some combination of both.

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  62. Oh snap forgot this little tidbit with that last comment:

    Freddie Mac Now Permits Up To 12 Months Forbearance To Unemployed Borrowers

    http://freddiemac.mediaroom.com/index.php?s=12329&item=106028

    Who needs an emergency fund when “uncle sugar” provides. Just another step of America towards turd worlder status where those not capable of saving that emergency job loss fund are bailed out.

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  63. gringozecarioca on January 11th, 2012 at 3:58 am

    “Oh and BTW Brad F is my financial savvy/lucky/prudent hero.”

    Ditto. Stick it to the man!

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  64. anon, as per your comment: “What’s 100 years of history tell us, Bob? Hmmmmmmmm?”

    Consider what Robert Shiller says in his book “The Subprime Solution” (p. 147):

    “If we had been accustomed to quoting home prices in baskets since 1890, then people would generally have known that home prices haven’t basically changed in a hundred years (until the recent bubble), and they would never have gotten the idea—as they did in the early 2000s—that home prices always go up.”

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  65. gringozecarioca on January 11th, 2012 at 5:58 am

    “If we had been accustomed to quoting home prices in baskets”

    Wojo. Can you define, what he defines as a basket?

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  66. Please tell me this is adjusting for inflation, otherwise it’s the single stupidest comment I’ve read this millennium.

    “If we had been accustomed to quoting home prices in baskets since 1890, then people would generally have known that home prices haven’t basically changed in a hundred years (until the recent bubble), and they would never have gotten the idea—as they did in the early 2000s—that home prices always go up.”

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  67. “Can you define, what he defines as a basket?”

    Container, typically woven from wicker, sufficient to contain an older but trim economist and his slightly less trim sidekick.

    “Please tell me this is adjusting for inflation, otherwise it’s the single stupidest comment I’ve read this millennium.”

    Yes, it’s adjusting for inflation, and that’s the thing. Without using constant dollars, I don’t think baskets would have made much of any difference.

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  68. gringozecarioca on January 11th, 2012 at 9:20 am

    “Yes, it’s adjusting for inflation”

    DZ, please don’t be so hasty. Let Wojo respond. Maybe this really is the stupidest thing ever said on CC. We would not want to ruin that moment for Wojo, or Mr. Shiller.

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  69. “ANON- I guess you were wrong – it DIDN’T need to be reduced to 399k to go under contract!!!”

    Reading comp fail. As usual.

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  70. “Guess after another 17 years or so of rent free living, perhaps I’ll file an adverse possession claim for official title.”

    Your maintenance of the unit that the Bank is obviously valuing at zero currently is not adverse to their interests.

    Have you had the tax bill info switched to your name?

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  71. “Consider what Robert Shiller says in his book “The Subprime Solution””

    Fine, using cpi instead, it’s $363k (2011), based on the $245k (1995). ’95 was pretty close to the post-80s, real dollar, trough in Chicago resi real estate, so if this place sells for ~$360 in 2012 USD, then we’re close enough to the bottom to not worry one way or the other.

    Still faster–and close enough–to use 3%.

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  72. danny (lower case D) on January 11th, 2012 at 10:12 am

    Speaking of squatter nation, I just read an article about “organized” squatting in the Bronx.

    The mortgage securitizers and MERS have so damaged the integrity of millions of property titles, that their standing to foreclose is for shit.

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  73. “The mortgage securitizers and MERS have so damaged the integrity of millions of property titles, that their standing to foreclose is for shit.”

    Totally, absolutely, untrue. Just utter BS.

    Most of the issues are wrt transfers (and possession, and just simple *locating*) of the actual promissory note, not with the “property title”.

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  74. Brad F — “Shadow inventory depth? Yes it’s deep people. Think Grand Canyon deep. So deep that no financial institution wants to confront it and thus expose their insolvency.”

    How do you know? Have you personally seen a banks balance sheet to know what they are holding and/or the number of loans in default?

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  75. “How do you know? Have you personally seen a banks balance sheet to know what they are holding and/or the number of loans in default?”

    pretend i coughed but made it sound like the word shill came out.

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  76. Anon: “Your maintenance of the unit that the Bank is obviously valuing at zero currently is not adverse to their interests.”

    Interesting point, but your analysis is wrong. Under your theory that “maintenance” precludes adverse possession, then adverse possession would have never have existed. Maintaining a property is part of possessing or living in it. Call it adverse maintenance instead of adverse possession if that makes it more understandable. If you don’t think it is adverse to ones interests to have someone living in your property rent free without your permission, then please provide the addresses of any residential units you own.

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  77. “Have you personally seen a banks balance sheet to know what they are holding and/or the number of loans in default?”

    Cooper: Seriously? A bank balance sheet vs. what one can actually see all around them with their own eyes? Where have you been for the past seven years?

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  78. Sabrina: nice to hear that your friend has managed a ride on the same gravy train as me. I was in a very similar circumstance too in that I agreed to pay some rent to the association (in addition to dues) to pay off my landlords past-due debt. But what was really fishy was that after the association was fully paid off and paid up, the management co still wanted me to pay an amount above the monthly dues. I of course said fat chance. I paid off all of my landlord’s association debt, and I keep the account current, so why in the world would I pay them MORE than what they are owed. The manager threatened to kick me out if I did’t pay the extra amount per month, even though he could not state any reason why I should pay other than his threat, and he could not refute my statement that they are not entitled to anything over the current and past dues. I think he took me for a sucker and was just wanted to pocket the extra dough for himself. So it was perhaps attempted fraud. So we screamed it out on the phone, then I sent him a nasty letter explaining the legal issues and also threatening to get his ridiculously over priced management deal revoked. That was about two years ago, he never replied and fortunately I haven’t heard from him since, hehe. My analysis is that if the association is fully paid up, they cannot legally get possession of the unit. And even i they got an order of possession when the dues were outstanding, those orders expire after six-months. So the management could not follow up on this threat to kick me out for not continuing to pay extra after I paid them off in full. Perhaps your friend will face a similar confrontation.

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  79. “without your permission”

    They know you are there and haven’t initiated eviction; seems pretty permissive to me. You’re there on a mtm lease, with the rent being the association dues you are paying, plus whatever maintenance you are doing to the place–if nothing else, you are saving teh lender from having to secure the place.

    Can’t remember–the lender actually completed the f/c and took title?

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  80. A recent paper from the FRB has an interesting factoid on Chicago REOs. (See the top of page 10 of the text.)

    “Fannie Mae, Freddie Mac, and the FHA together hold about half of the outstanding REO inventory and so might be able to aggregate enough properties to facilitate a cost-effective rental program in many rental markets. As of early November 2011, about 60 metropolitan areas each had at least 250 REO properties currently for sale by the GSEs and FHA—a scale that could be large enough to realize efficiency gains. Atlanta has the largest number of REO properties for sale by these institutions with about 5,000 units. The next-largest inventories are in the metropolitan areas of Chicago; Detroit; Phoenix; Riverside, California; and Los Angeles, each of which have between 2,000 and 3,000 units.”

    http://www.federalreserve.gov/publications/other-reports/files/housing-white-paper-20120104.pdf

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  81. ” Atlanta has the largest number of REO properties … about 5,000 units. The next-largest inventories are in the metropolitan areas of Chicago … [about] 3,000 units.”

    ATL metro is 55% Chicago metro population, but has 60%+ more GSE REO props? Is this just a result of faster fc and remarketing in GA, or something else?

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  82. anon, I have no idea.

    But as per your earlier comment, I agree ” ’95 was pretty close to the post-80s, real dollar, trough in Chicago resi real estate….”

    I’ve always thought that Chgo resi re prices bottomed somewhere between 90-94, around that cycle’s nadir. I want to say that by 95 the worst had passed, but we’re splitting hairs. What does surprise me about the cycle is how G’s data always indicates that an uptick—at least in transaction volume—began sooner—in 91, 92—than I recollect occurring to prices. The Fed cut rates from early 89 until late 94, which would explain increased volume in 90, 91. But I can’t decide if an uptick in volume equates to an uptick in prices, then or now.

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  83. (Sabrina, I’ll understand if you delete this comment.)

    “Wojo. Can you define, what [Shiller] defines as a basket?”

    Ze, no, I can only guess at his definition. If CC permits I’ll post the relevant text from his book. Then you can decide for yourself if indeed it “Maybe … really is the stupidest thing ever said on CC.”

    In a section of The Subprime Solution entitled “A New System of Economic Units of Measurement” Shiller writes:

    “So many people find understanding our economic system a challenging task. To help them, the government needs to set up a new system of economic units of measurement. This part of the subprime solution would be a truly revolutionary step, akin to the creation of the metric system after the French Revolution. Such a system would help prevent human error in economic thinking, which underlies many economic problems, including the subprime crisis.

    Units of measurement would be defined for many common economic values, including income, profits, and wages. But of greatest importance would be new units of measurement for inflation.

    I have been arguing for years that we can help avoid confused thinking about inflation by adopting an inflation-indexed unit of account, like the unidad de fomento (UF) that the government of Chile created in 1967 and that has since been adopted by other Latin American governments.

    The UF is just the daily price of a market basket of goods and services, as measured by an interpolated Chilean consumer price index. But it has been singled out for publication by the government as a unit of account for commerce, replacing money. People in Chile commonly quote prices in UFs, although they still make actual payments in pesos using the peso-UF exchange rate (which is commonly available, in particular on a web site). By giving this unit of account a simple name, encouraging people to use it as a standard of value for commerce, and training them to think in indexed terms, its government has made Chile the most inflation-aware country in the world.

    In contrast, the traditional currency units used by countries all over the world are a poor measure of value, since their buying power changes unpredictably over time. Measuring value in pesos or dollars is like measuring length with a ruler that expands or contracts from year to year. Engineers would find design a daunting task indeed with a meter rod that changed constantly—but that is exactly what people have to contend with when they deal in terms of money. No wonder they become confused. In the modern information-rich economy, there is no reason why the medium of exchange and the unit of value measurement need still be the same.

    I would give these inflation-indexed units a simple name, “baskets,” to make clear that they represent the value of the market basket of goods and services upon which the consumer price index is calculated. If sellers name their prices in baskets, they are effectively asking to be paid in terms of the real goods and services that underlie the consumer price index—to be paid in real things rather than unstable currency. When we have a simple word to describe inflation-indexed quantities, even young children will learn to do inflation indexation, merely by using the word.

    The government should write the tax code in terms of baskets, rather than dollars, to fully index the tax system and to force people to learn the new units. Credit card point-of-sale terminals and other electronic payment systems could be programmed to accept payments in baskets.

    If people had become accustomed to such inflation-indexed units of measurement, the recent housing boom might have been averted. One of the most significant errors that has infected the housing market in recent decades has been the failure on the part of the general public to understand inflation. The governments of the major countries of the world have been publishing consumer price indices for nearly a century now, and the public at some level is able to use them. But confusion about inflation remains widespread and causes huge errors.

    When U.S. inflation was very high, in the early 1980s, people could hardly afford to buy a home with conventional mortgages, since the inflation-zapped interest rates often approached 20% a year, and the purchase of a house worth just three years’ income would entail mortgage payments approaching 60% of one’s income. As inflation continued, mortgage payments would eventually come down dramatically in real terms, but that would not happen for years. Few could afford the early payments in those years, and so it became very difficult to buy a home. Home prices dropped, though the price drop was limited because there was an intense supply response to the high interest rates: residential investment as a share of U.S. GDP fell to 3.2%, the lowest point ever recorded in the period since World War II. All this could have been prevented if people had simply adopted inflation-indexed mortgages, but the public seemed unable to grasp the concept. Yet it would have been perfectly natural for them to do so had they already become accustomed to dealing in baskets.

    This outcome is called the Modigliani-Kohn effect after the economists Franco Modigliani and Richard Kohn, who documented it in the late 1970s. (The late Franco Modigliani, who was the inventor of the price-level-adjusted mortgage, was also my teacher, mentor, and occasional co-author, and ultimately the inspiration for this book.)

    As inflation came down after the early 1980s, the stock market went up. This excessive movement of the stock market might have been prevented if accounting had been performed in terms of baskets, so that the public would have been less confused by so-called money illusion, the tendency to think of money in nominal, not real, terms.

    The housing boom since the 1990s is also due in part to the public’s difficulty with understanding inflation. We remember home prices from long ago since they are such important purchases for us, and so the contrast between those prices and the prices today attracts our attention much more than the contrast between the price of a loaf of bread then and now. We get the false impression that homes have been a spectacular investment when in fact their increase in value, measured in baskets, even over many decades, would generally have been—at least until the recent housing boom—nil.

    In 2008 the National Association of Realtors (NAR) launched a $40 million public awareness campaign entitled “Home Values.” The campaign was designed to put thousands of advertising spots on radio and television, as well as ads in the print media, on billboards, and on bus shelters, These repeat the slogan “On average home values nearly double every ten years.” The association claims that this statement is supported by their data for the past thirty years. Indeed it should be, for in the past thirty years consumer prices have nearly doubled twice, and we are at the end of a home-price bubble that caused real values to double once: that’s three decades of doubling in nominal terms. It is highly deceptive to suggest from these data that homes will be spectacular investments, but the NAR can get away with it because of public confusion about inflation.

    Indeed, even the Great Depression of the 1930s was intimately related to confusion about inflation. As Ben Bernanke points out in his 2000 book “Essays on the Great Depression,” it is now well known that, while prices in general were falling in the early 1930s, real wages (wages corrected for inflation) were high, and higher in countries that were harder hit by unemployment.

    A simple story of the Great Depression is that employers could not cut the nominal wages of their workers enough to keep real wages constant, because cutting nominal wages would be misperceived by employees and their unions as a terrible insult, as an invitation to a fight. As a result, companies could not remain profitable while keeping their entire labor forces employed: their revenues would have fallen more than their costs did. The effects of the Great Depression would never have been as severe as they were if it weren’t for confusion over inflation.

    If people had been accustomed to quoting wages in baskets before the Depression, employees would have seen their real wages rising and presumably would not have had the same angry response to nominal wage cuts. Employers would not have had to shut down operations to remain solvent.

    If we had been accustomed to quoting home prices in baskets since 1890, then people would generally have known that home prices haven’t basically changed in a hundred years (until the recent bubble), and they would never have gotten the idea—as they did in the early 2000s—that home prices always go up.

    Robert Shiller, “The Subprime Solution” (2008), pp. 141-6, I think.

    I hope that answers the question.

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  84. ““Wojo. Can you define, what [Shiller] defines as a basket?””

    “[long shiller quote]”

    Credits. Or Esperanto Dollars. A unit of currency that has constant PPP, but fluctuating translation (if you will) to USDs.

    Thus, if this unit were priced in “baskets/credits/Esp$” and cost Esp$100k in 1995, when 1.00 Esp$ = 2.45 USD, if there were *zero* appreciation, it would cost Esp$100k in 2012, but now 1.00 ESP$ = ~3.63 USD.

    The current ask is ~Esp$121k, so still with room to regress/overshoot, depending on how one feels about ’95.

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  85. “Credits. Or Esperanto Dollars. A unit of currency that has constant PPP, but fluctuating translation (if you will) to USDs.”

    Ok, but now Ze’s going to want wojo to define what you mean by esperanto dollars, and where’s wojo going to quote from then (with or without permission)? When is this going to end?

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  86. gringozecarioca on January 11th, 2012 at 7:07 pm

    f* me.. I was just going to watch Mr. Bean and now I have to scroll up and read 40 pages cause some idiot had to ask what a basket was.

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  87. gringozecarioca on January 11th, 2012 at 7:36 pm

    But it has been singled out for publication by the government as a unit of account for commerce, *replacing money*……..although they still *make actual payments in pesos* using the peso-UF exchange rate.

    Ah, I see!

    They try that here, only the real po’ use it. They actually get the basket… wrapped in cellophane (ok… saran wrap)… milk, beans, sugar, rice…

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  88. “cause some idiot had to ask what a basket was.”

    What Red China would rather peg to instead of the greenback

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  89. gringozecarioca on January 12th, 2012 at 6:32 am

    “Consider what Robert Shiller says in his book “The Subprime Solution” (p. 147):”

    Shiller is actually the one rambling on about nothing. Just 1 page of an excerpt, terrible work. Irrelevant and does not bring the results he intends to achieve. As well it lacks honesty because how many things in the U.S. are indexed to a basket already. Union contracts, gov’t employment contracts, social security benefits… aren’t these things indexed to CPI? And isn’t this index the basis of determining interest rates (whether that be + or – to CPI%) ? It’s as if he doesn’t see that final piece, the ability for a spread to exist off of that that CAN go NEGATIVE.
    Again, it is used in Brasil. The name is “cesto basico”. Minimum wage is X cesto basicos, people get paid X minimum wages, cesto basico is up about 50% the past 5-6 years, home prices are up 1,000%.

    Kinda pisses on his argument a bit…

    Simple algebra makes the argument ridiculous to begin with.

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  90. gringozecarioca on January 12th, 2012 at 6:36 am

    “Simple algebra makes the argument ridiculous to begin with.”

    My guess is that’s why anon used esperanto dollars.. Ze would index it to oz’s of weed. :-)

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  91. “As well it lacks honesty because how many things in the U.S. are indexed to a basket already.”

    I dunno the merits of his point (or the extent to which it’s implement in Chile or Brazil or whatnot, whehter people really think in those terms), but, as should be completely evident from the comments here, it’s clear people do not think in real dollars or anything else real in the US. His point is also more than indexing. He’s asserting I think that the units of what things are quoted in matters.

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  92. “He’s asserting I think that the units of what things are quoted in matters.”

    1. I agree with your thinking.
    2. I think one part of the subtext is that if houses were priced in constant terms (Esp$ or whatever), that then people wouldn’t expect that “home ownership is a great investment”, as they’d easily see that the pricing was essentially flat for 100+ years, with the greater period of variance being downward, rather than upward.

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  93. gringozecarioca on January 12th, 2012 at 10:09 am

    “He’s asserting I think that the units of what things are quoted in matters.”

    I agree.. That’s the part that is the most ridiculous to me. Nor does he make an effort to demonstrate, beyond expressing a greater consciousness by the consumer, why that should be so.

    You bid 100 baskets, I bid 102..someone else bids 105 baskets and we all read about the new norm of housing at 150 baskets on its way to 200 baskets.. Go speak to an AARP member on Social Security.. my bet is they get the indexed to inflation thing. The reason inflation is so damn important to people here, why they are hypersensitive to it, is they had 3,000% a yr of it before, and don’t want that ever again.

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  94. gringozecarioca on January 12th, 2012 at 10:12 am

    My favorite investment down here are these NTN-B bonds. They pay index + 5.4%. Removes inflation risk from ones life, very nicely. One could even get long inflation which then is fun. Always fun to win when others are getting violated :-)

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  95. “Nor does he make an effort to demonstrate, beyond expressing a greater consciousness by the consumer, why that should be so.”

    That’s the subtext I think he’s hinting at (based on other things by Shiller I’ve read). Don’t know if he delves into it elsewhere in the book (Help me Wojo-wan, you’re my only hope), but if he doesn’t get into that, it’s a major failing.

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  96. “They pay index + 5.4%. Removes inflation risk from ones life, very nicely.”

    What do they use to calculate the index? Your housing costs could blow up way ahead of inflation… course then you exercise your option (your interest-only home loan) and take the profits from there. Have to move to realize them though.

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  97. “Go speak to an AARP member on Social Security.. my bet is they get the indexed to inflation thing.”

    I’m sure they get that there is inflation and that it’s important for their income to keep up with inflation. I’m also pretty sure they don’t really appreciate effects of inflation on appreciation (or lack) in housing prices. This doesn’t prove Shiller’s point wrt housing bubble and indexation. But, he’s apparently been on this indexation unit kick for a while and prob sees the housing stuff as another argument in support, and not as a critical argument.

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  98. gringozecarioca on January 12th, 2012 at 11:29 am

    “What do they use to calculate the index?”

    Interestingly one of the major indexes changed today (There are 5 major indexes). Here is a list of what changed. Very comprehensive. They also weight it so that price changes in populated states weigh more.

    http://oglobo.globo.com/infograficos/ipca_itens_entram_x_saem/

    So with all this consciousness of inflation down here. His argument is that we should be moving with inflation, not outpacing it. That housing must always trade at/near 10,000 baskets. That it is not seen as a house but 10,000 baskets. Which also means he assumes all products are simultaneously perfectly correlated to the basket (ridiculous), and that wealth must be made evenly distributed by class and location in relation to current inventory, that there can never be shortages (i.e., new wealth being created as people move up class, and all want to simultaneously move to ELP SFH 25*125 – he clearly neglects this as well.) It’s f’n idiotic!

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  99. gringozecarioca on January 12th, 2012 at 11:32 am

    giardiniera.. If I get in trouble with my housing costs… HD promised me some cat food recipes. He says, cook it right… like eatin fois gras!

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  100. “His argument is that we should be moving with inflation, not outpacing it. That housing must always trade at/near 10,000 baskets.”

    Nah, I don’t think that’s his argument. I believe his argument is that, if instead of (using Chicago from this * study) prices going from $100 in 1Q70 to $263 in 1Q83 in nominal USD, they had gone from Esp$100 to (maybe) Esp$103, then there wouldn’t have been the huge bubble (perhaps a small one), as then there wouldn’t have been any data to support a belief that “real estate always goes up” and that “owning a home is a great investment”. As I beleive someon here once said: you’re underrating the psychological aspects.

    * http://dido.wss.yale.edu/P/cd/d08b/d0851.pdf

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  101. ps: Shiller’s concept are all based on paired sales of individual houses, too.

    HD’s favorite house (1800 sf 3/2 adjacent to a highway on ramp) might be Esp$150,000, this condo might be Esp$245,000, and the Dearborn townhouse/petit-mansion might be Esp$3,000,000. But the point is that they would have been (about) the same Esp$ price in 1920, 1950, now and in 2050 (assuming comparable physical repair and relative-to-the-time improvements).

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  102. gringozecarioca on January 12th, 2012 at 12:20 pm

    “As I beleive someon here once said: you’re underrating the psychological aspects.”

    ROFLMAO! Well now they are being overrated! btw.. appears all the Brasil talk has you now putting your e’s before your i’s… beleza!

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  103. “I believe his argument is that, if instead of (using Chicago from this * study) prices going from $100 in 1Q70 to $263 in 1Q83 in nominal USD, they had gone from Esp$100 to (maybe) Esp$103, then there wouldn’t have been the huge bubble (perhaps a small one)”

    Agree with this. And having finally read the (extensive) quote, it’s pretty clearly stated. Moreover, he’s not saying that there wouldn’t have have been a real estate bubble, or that there can’t be increases in real prices bubbly or otherwise, just that there may not have been a real estate bubble w/o nominal pricing.

    “assuming…relative-to-the-time improvements”

    Always seemed like an odd assumption to me. Not easy to deal with quality improvements, not impossible either. Probably not feasible w/in constraints.

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  104. gringozecarioca on January 12th, 2012 at 12:43 pm

    and theoretically I get what he is saying. Once again, it is not consistent with what is happening here right now. Here, is a parallel of what he uses as his example. I can check Santiago-Chile. I think it is very similar there as well. His argument stands counter factual- TODAY! Simple check had Santiago up 20% in ’10 and Valparaiso (Chile) up over 40%, same year. Yogi Berra woulda gottin it.

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  105. “Always seemed like an odd assumption to me.”

    Separate point from Shiller’s–I was suggesting that the Esp$3,000,000 home would need to have contemporary “improvements”–currently including AC, modern kitchen, etc, etc, etc–roughly matching what a new, similarly-priced house would have.

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  106. “Yogi Berra woulda gottin it.”

    It ain’t over til its over?
    If you come to a fork in the road, take it?
    Baseball is 90% mental, the other half is physical?
    You can observe a lot just by watching?

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  107. “Separate point from Shiller’s–I was suggesting that the Esp$3,000,000 home would need to have contemporary “improvements”–currently including AC, modern kitchen, etc, etc, etc–roughly matching what a new, similarly-priced house would have.”

    Not following. Similarly priced to what? The esp$3MM house? Isn’t that circular?

    I just meant that the case shiller approach doesn’t seem to have any obvious way of dealing with regular upgrades to a house that are beyond maintenance and are not so substantial as to trigger their filters for anomalies. And that thereby prices are inflated over time versus non quality adjusted.

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  108. “Not following. Similarly priced to what? The esp$3MM house? Isn’t that circular? ”

    I was thinking the opposite way–that normal modernization and finish updates are required to avoid esp$ depreciation.

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  109. gringozecarioca on January 12th, 2012 at 3:14 pm

    anon.. you Howie Mandelled… Monty Hall once again…

    “they still make actual payments in pesos using the peso-UF exchange rate ”

    So even if in 1930 a house was 1,000 baskets and every day since a house was 1,000 baskets. In 1930 that basket of goods was $1.. today it is $70.. that house still went from 1,000 to 70,000. But in baskets, stable as can be.

    Your esperantos strip that out… maybe you need a chair at Yale.

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  110. “you Howie Mandelled… Monty Hall once again…”

    Really don’t think that was me. Unless I did something I don’t remember that made me forget.

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  111. no, I think its “a two-bedroom ain’t worth a two-flat anymore”.

    “It ain’t over til its over?
    If you come to a fork in the road, take it?
    Baseball is 90% mental, the other half is physical?
    You can observe a lot just by watching?”

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  112. “Unless I did something I don’t remember that made me forget.”

    Case of bartles and james strawberry daiquiri, while ensconced in your man cave, watching deal no deal and st elsewhere’s marathons on split screen.

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