Market Conditions: Chicago Sales Rise 5.7% But Median Price Falls YOY Again in January
It’s that time of the month again when the Illinois Association of Realtors tells us if the housing market is recovering or not.
From the Illinois Association of Realtors:
In the city of Chicago, January 2012 home sales (single family and condominiums) totaled 1,093, up 5.7 percent from 1,034 homes sold in January 2011. The city of Chicago median home sale price for January 2012 was $149,000, down -0.7 percent compared to January 2011 when it was $150,000.
Here’s the data since 2006 (thanks to G):
- January 2006: 2009 sales and median price of $258,000
- January 2007: 1850 sales and median price of $279,900
- January 2008: 1203 sales and median price of $290,000
- January 2009: 918 sales and median price of $205,000
- January 2010: 1237 sales and median price of $195,000
- January 2011: 1034 sales and median price of $150,000
- January 2012: 1093 sales and median price of $149,000
The percentage of total January Chicago sales that were REO/Short Sales:
- 2009: 25%
- 2010: 42%
- 2011: 50%
- 2012: 49%
Chicago condo/townhouse sales:
- January 2009: 474 sales and median price of $308,625
- January 2010: 675 sales and median price of $279,000
- January 2011: 585 sales and median price of $180,000
- January 2012: 623 sales and median price of $185,000
Remember, the median price can be misleading. It doesn’t really tell you much about what is happening out there with prices except that more is selling on the low end than the high.
The official IAR statement about what is going on in Chicago doesn’t tell us much.
“January gave 2012 a solid start in sales of homes in the city of Chicago,” said REALTOR® Bob Floss, president of the Chicago Association of REALTORS® and Broker-Owner of Bob Floss and Son Realty. “Motivated buyers and sellers moving in what has been a mild Chicago winter has helped move both distressed and traditional properties. We will be closely watching the impact of pricing on the market and how homebuyers and investors react to what could be a new norm.”
While there was some bullishness about the overall state of the market around the state.
“Whether you’re a seller or a buyer, there are positives to this data, said Loretta Alonzo, CRB, GRI, president of the Illinois Association of REALTORS® and Broker-Owner of Century 21 Alonzo & Associates in La Grange Park. “After years of standing on the sidelines, buyers are finding this is the right time to get into affordable housing. While sellers may not be getting all of the money they want for a house, they are getting traffic and interest at levels that haven’t been seen in several years.”
Dr. Geoffrey J.D. Hewings, director of the Regional Economics Applications Laboratory (REAL) of the University of Illinois, said the Feb. 7 settlement between states and five large banks relating to foreclosure abuses could speed pending cases through the court system.
“Now that the major legal bottlenecks for processing foreclosed properties appear to have been resolved, it is likely that these properties will assume a significant share of sales in 2012,” Hewings said. “This provides mixed news for the housing market; it is positive in the sense that the large backlog can now begin to be removed from the inventory. However, it is likely to continue to dampen any prospect of near-term housing price recovery.”
I hate to say it, but could the mild weather have played a much larger role in these numbers?
Are sales being pulled forward from the normal spring market?
Illinois sees 16.1 percent increase in home sales; strongest January sales report since 2007, data show [Illinois Association of Realtors, Press Release, February 22, 2012]
Sorry for the delay. The server was down so I couldn’t get on to post anything.
We already know the numbers, thanks to G posting them a few weeks ago, but it’s interesting to see the multi-year numbers nevertheless.
“could the mild weather have played a much larger role in these numbers?”
Numbers are, realistically, flat, and given the much nicer weather than last year, that’s hardly “a solid start”, unless Jan-11 counted as “a solid start”, too.
How many actual owner-occupant buyers close quickly enough that the mild winter would have an effect on January *closings*?
A couple of weeks ago when I looked at this data I continued to see a huge disconnect between contracts and closings. So I checked the contracts not closed at the end of January (as of Feb 7) and it was 4377 (many of which will never close). However, compare that to the previous January where it was 2299, most of which have closed and a few of which are still out there. Contracts that fell apart in the last year are not included in that 2299. However, even if you assume that 25% of those 4377 will fall apart (historically a high percentage) there is still a huge backlog of contracts out there. This will eventually be reflected in the sales data.
While it is purely anecdoctal, I’ve noticed way more open houses than previous years (at least in Oak Park). Open Houses all but dried up after 2008, but now I see several signs it seems every weekend. I’ve even noticed a few in the city as well.
I’ve noticed more open houses to.
On a separate subject and please let me know if this is inappropriate.
Does anyone have any experience with EIFS exteriors in Chicagoland? Does anyone know of an inspector that specializes and has the equipment to check on it? Or at least honest enough to tell me that the only for sure way to inspect the substrate of a building clad with a EIFS is to take it off…..
Suggesting a mild winter impacts January closings seems like a par-for-the-course specious argument. But it was mild in November too!
I personally think Feb and March are going to be huge months. We are presently looking to buy and bumping into lots of multiple bid offers. Doesn’t mean that the median price will go up, but units closed should be strong.
Feb+March are bound to be huge months vs. last year. We had a long, cold, drawn out winter last year all the way through March.
“I personally think Feb and March are going to be huge months. We are presently looking to buy and bumping into lots of multiple bid offers. Doesn’t mean that the median price will go up, but units closed should be strong.’
There’s little on the market that’s decent in the prime neighborhoods (even in the unprime neighborhoods- that is move-in-able.) So instead of having 50 properties to choose from, you have 25. And now only 10 of those are priced correctly and “new” enough to attract buyers. The 20 buyers now have just 10 properties instead of 20 or 30 to choose from.
I’ve heard of multiple bid situations on SFHs in Bucktown recently (for this very reason.) I’m also getting e-mails from “frustrated” buyers who can’t find anything they even want to put an offer on (because there simply isn’t anything on the market.)
I don’t know when this will change. New listings are still slow.
I had a second broker confirm for me last night, that the market I am trying to sell into is strengthening. This, after years of nothing but horror stories.
Been sayin for months (while still believing prices would fall) – all the risk is on the renters side right now. These rates – these prices – gotsta be nuts staying short here.
Markets are a funny thing… They hate the weak. Eventually they dish out to them all the pain they deserve. This will end with the “I was 100% correct but in the end lost” (said while lying against an alley wall – holding bottle of Roses Irish Red – pulling out 400 pages of printouts that document all the bearish posts of 2008).
There are people in the world that just never get to win – even when they are right. It is such an interesting phenomena.
” So instead of having 50 properties to choose from, you have 25. ”
Aka supply and demand.
“I don’t know when this will change.”
I do. When prices start to go UP. That will bring out even more buyers who are afraid of missing “the bottom”. That in turn will bring out more sellers. The HD’s of the world are getting at least a little nervous.
The real questions I have are these –
1. why aren’t rates even lower than they are now, considering the drop in 5 and 10 year treasury yields compared to last year? Spreads seem too wide despite rates being at record lows, because banks’ cost of money is so low
2. Is there enough income out there for potential buyers in order to qualify under the new lending standards?
3. What about the down payments as well under the new lending standards?
I don’t think you are going to see a 10-15% rally in one year here that all the people that are long real estate are really hoping for.
Feb will end up with less than a 10% YOY increase in sales, which still is very low total historically.
Gary’s contract analysis is flawed. No surprise to those paying attention to previous performances. His implication that there is a 50% increase in contracts that “will eventually be reflected in the sale data” is wrong.
There’s also a big increase in REO coming here now that robo immunity has been granted.
Good to see more bottom callers. Nothing has been fixed as far as incomes and shadow inventory. “Shadow buyers” will not make a recovery.
New listings will keep getting worse, and yes, that includes the large number of foreclosures, with their now years of deferred maintenance and possibly trashed. That deferred maintenance, like a leaky roof, basement, windows, can cause lots of damage.
cannot say that I’ve noticed more open houses, at least not in the areas I’m interested in. or maybe it’s like Sabrina said, there’s nothing out there i’d want to put an offer on.
I think there will be a few quick sales early spring for some lucky sellers and then things will level off as people wait to see how the election goes. Also keep in mind, all my predictions are usually wrong. ;D
“1. why aren’t rates even lower than they are now, considering the drop in 5 and 10 year treasury yields compared to last year? Spreads seem too wide despite rates being at record lows, because banks’ cost of money is so low”
rate = mkt interest + risk premium + profit
so even if mkt interest goes to 0.. the other components don’t.
“I do. When prices start to go UP. That will bring out even more buyers who are afraid of missing “the bottom”. That in turn will bring out more sellers. The HD’s of the world are getting at least a little nervous.”
But that isn’t happening. Prices continue to go DOWN. How do you figure?
Sales also are at multi-decade lows still. Even if sales jump 10% YOY in February (as G says they are doing)- isn’t that also still near the lows? I would assume so.
So, no. HD isn’t getting nervous. There are few buyers. No one has a downpayment. No one can get a mortgage. It’s still cheaper to rent (for most people) and renting gives you much more freedom (especially if you’re in your 20s and 30s.) Prices aren’t going to go up with foreclosures 50% of all sales.
“There are few buyers. No one has a downpayment. No one can get a mortgage.”
If no one has a downpayment and no one can get a mortage, how are there a few buyers?
“Prices continue to go DOWN”
On condos and REO’s in bad shape. The good ol’ SFH in a good neighborhood still holds.
DaveM, one reason is that there is fat being baked into rates right now because of regulations.
A big one that didn’t get much media attention is that early last year (April 2011), the Fed dictated that LO compensation had to be a fixed percentage on all transactions regardless of loan size, product type, or how much work is required.
http://www.federalreserve.gov/bankinforeg/regzcg.htm
The end result is that a lot of the transaction risks LOs use to bear which directly affected their compensation has been pushed on to the company directly. As a result, rates are up a bit (i’d guess .125-.25%) over where they would be had those regulations not been implemented.
It used to be that individual LOs would have to personally eat losses on some loans. Now because of the rules, no matter how much loss is incurred, the LOs must make their commission. Naturally, banks have had to pad rates on all deals now to make up for the losses that the LO no longer individually is responsible for.
The intent was to remove the incentive for steering based on which products pay the most commission. Unfortunatley, all the rule did is basically force everyone else to pay more to protect the small minority.
I recently read a WSJ article on the spread recently Russ and it never mentioned what you did. Instead it spun it as those greedy bankers holding back to keep up their margins. It didn’t seem to make sense to me as there are enough banks out there to break rank. Shows how shoddy WSJ reporting has become since Murdoch took over, if you ask me.
“But that isn’t happening. Prices continue to go DOWN. How do you figure?”
Who said it was?
“So, no. HD isn’t getting nervous.”
Sure he is.
“There are few buyers.”
Wrong.
“No one has a downpayment.”
Wrong
“No one can get a mortgage.”
Wrong
“It’s still cheaper to rent (for most people)”
Wrong
In Sabrina’s defense, she was speaking in hyperbole when she said “no one” but her point that ‘few’ people have down payments or can get a mortgage is well taken. It’s only cheaper to rent on the low end of the market. But who wants to buy a 3 bedroom townhome in Bloomingdale for $90,000? That’s at rental parity. $1,000 PITI+HOA but $1,200 to $1,400 to rent.
You don’t have the correct formula for rent vs own. And neither does Sabrina. Which is why she is wrong.
“but her point that ‘few’ people have down payments or can get a mortgage is well taken”
Why? Because volume isn’t at bubble levels?
What are you trying to articulate chuk? You seem best at wrong ‘wrong’ with nothing more.
“Because volume isn’t at bubble levels?’
It’s not even at pre-bubble levels, Chuk. It’s at pre-pre-pre bubble levels.
And yes, no one has the downpayment anymore. Some are still able to do the FHA (as we’ve seen recently with several 2010 sales going bust because they only put down $3,000 on a $300,000 property), but most are not.
Heck, if you look at the national stats- 31% of January sales were ALL CASH. Were those “normal” buyers? I don’t think so. Many were investors. Some were the rich. I doubt the 20-something Big Ten grad is in that category.
This housing market cannot recover without the first time homebuyer. And they are on the sidelines having a good time renting. Or- if they ARE buying, it’s the single family home (predominantly in the suburbs). The smaller condo market will be dead for many, many more years. It doesn’t make any sense to buy the 2/2 in River North when I can rent the 2/2 for less hassle (only $500 down moves you in) and I can move at any time.
Chuk: If there were buyers, we would see the sales.
Whoops- no sales= no buyers.
Also- mortgage applications keep falling when rates continue to be among the lowest ever. Why isn’t everyone jumping on board? Oh- because they can’t get a loan. They don’t have downpayments or their credit sucks.
“Prices continue to go DOWN”
“On condos and REO’s in bad shape. The good ol’ SFH in a good neighborhood still holds.”
Been to Edgebrook lately? Sauganash?
Prices just getting demolished and continuing to go down (especially in the upper range over $500,000.) So- no- the SFH isn’t “holding.”
“Heck, if you look at the national stats- 31% of January sales were ALL CASH”
Sounds like a lot of people have the down payments…and then some.
“If no one has a downpayment and no one can get a mortage, how are there a few buyers?”
Cash investors.
Bob, the market is very efficient. Sometimes we see an individual bank intentionally raise rates to control volume but as you say there are plenty that will break rank. The reg I’m talking absolutely raised rates. Unfortunately it is kind of inside baseball and thus never got any real coverage outside of the lending industry yet it was one of the most significant and hurtful to consumer regs passed in regards to real estate ever.
It was spun like it helps consumers but all it did was just raise base mortgage rates. Like most govt action it fixed a problem that had already fixed itself with no regard to the consequences.
“What are you trying to articulate chuk?”
That what Sabrina said was wrong. Was that not clear enough?
Sabrina is trying to argue that this isn’t a bottom, and no one is arguing with her. She said:
“I don’t know when this will change. New listings are still slow.”
I told her:
“When prices start to go UP.”
Many of you are looking for volume to increase when prices go down. I believe the opposite. Ask yourself why volume was so high in the bubble.
“Many of you are looking for volume to increase when prices go down. I believe the opposite. Ask yourself why volume was so high in the bubble.”
I don’t believe volume will increase for many many years. Because of the following:
1. Too much individual debt- can’t come up with downpayments
2. The bull is over. Whenever that happens the asset class becomes hated. Housing still isn’t hated – as is evidenced by this blog. When no one shows up here to discuss the market, then it will be the bottom.
Not enough people realize that housing isn’t coming “back.” Heck, if prices even bottom that will be a triumph. So all those people sitting on mortgages for $400,000 condos that are now worth $300,000 are screwed. They don’t yet understand that housing prices “rising” means it will take them 20 years to “get back” to where they need to be to not take a loss. (at the normal appreciation of, say 1% or 2%.)
But give it a few more years and then we’ll have been in this bust for 10 years and maybe they’ll get it. I don’t know. We’ll see more stories like the one over the weekend with people with 2 or 3 school aged kids stuck in the condo and they’ll also be saying, “we’ve been trying to sell for 4 years, blah, blah.”
“I don’t believe volume will increase for many many years.”
Sure, that may be. I’m not saying it is happening now. But I am saying that the people who are looking for LOWER prices to increase volume are barking up the wrong tree. I’m not arguing anything about timing at all.
The problem with that view Sabrina is that people don’t need stocks and other investments. They do need a place to live and while you can rent most people prefer to be able to do what they want with their house. Yes, renting allows you to move when you want but you can’t paint the walls or update the place when you want. There are definite advantages to owning a home that are different than owning a piece of stock or other investment.
I’m with meu amigo ZeCarioca on this. Seems to me if you see a third of sales in cash, you’re likely just seeing the market wearing out the weak hands.
“Heck, if you look at the national stats- 31% of January sales were ALL CASH. Were those “normal” buyers? I don’t think so. Many were investors. Some were the rich. I doubt the 20-something Big Ten grad is in that category.”
“But I am saying that the people who are looking for LOWER prices to increase volume are barking up the wrong tree.”
Oh, okay. I get what you’re saying and that makes sense. I think the listings will pick up once those trapped in their homes get a whiff that things are “improving” and they rush to list at unrealistic prices (wherein they won’t be able to sell anyway). We’ll see if that happens in Chicago shortly because the media is really pushing the whole “housing is improving” story right now.
And as far as there being “no buyers”
“Statewide home sales (including single-family homes and condominiums) in January 2012 totaled 6,435 homes sold, up 16.1 percent from 5,543 home sales in January 2011.”
“In January 2007, 8,584 homes were sold statewide. As the recession began to take hold in 2008, the number of home sales statewide dropped to 6,045. The weakest January in the past decade was 2009 when 4,809 homes were sold, according to the association’s data.”
The problem is, you are greatly over exaggerating. What if I posted “There are tons of buyers. Everyone has a down payment, everyone can get a mortgage”. That would be just as absurd.
How about “sales volume is a little below historical average”? Or are your only comparisons to the few bubbles years out of the last 100? You need to go back to 1998 if you want to compare to a “normal” housing market.
Credit to Gary:
“To put this number in historic perspective it’s 12% below January 2010 (with the “benefit” of government interference) but 18% above January 2009. But then you have to go back to 1998 to find a lower level of sales in January. In other words, Chicago home sales were only higher during the bubble years so we are at the new normal.”
http://www.chicagonow.com/getting-real/2012/02/chicago-january-home-sales-slighty-up/
chuk is arguing for increase in volume of sales not listings though I believe….
People are scared to buy when the market is going down. When the market starts going up, buyers will buy to be “near” the bottom. (At least if I am reading chuk right….)
“Yes, renting allows you to move when you want but you can’t paint the walls or update the place when you want.”
All my walls are painted and I rent. And most buyers simply want “new”. Whether or not they rent the 2/2 with granite counter tops or buy it – what’s the difference? They’re not going to tear down walls in their River North or Lincoln Park condo anyway. Without a downpayment, most are simply renting it. On the single family home market the calculation is different because there are fewer to rent and they usually have substandard finishes. So more people will choose to buy that.
“People are scared to buy when the market is going down. When the market starts going up, buyers will buy to be “near” the bottom. (At least if I am reading chuk right….)”
Yes. When prices eventually start to rise, that will bring out more buyers who were too scared to buy when the market was going down. People are sheep like that, it is human nature. And as those prices rise, that will bring out more sellers to match those buyers. Hence, there will be an increase in volume.
“Yes. When prices eventually start to rise, that will bring out more buyers who were too scared to buy when the market was going down. People are sheep like that, it is human nature. And as those prices rise, that will bring out more sellers to match those buyers. Hence, there will be an increase in volume.”
Similar to what I was saying the other day. Currently the market is so negative no one wants to buy. If there becomes a positive spin, more people will want to buy. The populace follows the general attitude. It takes a rare person to buy in a down market or not to buy in an up one.
I used to think the bottom would come in spring 2015. But the govt intervention continues, keeping people in houses they used funny loans to get that they cannot afford. It will prevent the market from correcting and finding it’s true equilibrium.
http://www.bloomberg.com/news/2012-02-24/why-renters-rule-housing-market-part-3-commentary-by-a-gary-shilling.html
Maybe Chicago will still bottom by then as we are currently overshooting the national average, especially on the condo side. But I am betting bombs away for high cost metro townhouses/condos in areas like: DC, Baltimore, Boston, NYC, SF & LA.
These govt interventions are just keeping the fantasy that a household earning 75k in one of these high cost metro areas can hold onto their 550k home they purchased during the bubble with funny financing when in reality they cannot, short of hundreds of thousands of dollars of debt forgiveness. And the thing with that is noone likes to give away hundreds of thousands of dollars (but Uncle Sam).
“How about “sales volume is a little below historical average”? Or are your only comparisons to the few bubbles years out of the last 100? You need to go back to 1998 if you want to compare to a “normal” housing market.”
I don’t use statewide data. I use city of Chicago data.
We are at pre-pre-pre bubble sales levels (as is obvious from the data provided by G below).
Anything else you’d like to know?
City of Chicago condo/TH/SFH closed totals January
year/closed/median/% REO-Short Sales
1997 953 $122,500
1998 999 $128,000
1999 1,236 $147,000
2000 1,186 $149,850
2001 1,277 $180,000
2002 1,517 $182,900
2003 1,751 $205,000
2004 1,693 $230,000
2005 2,113 $250,000
2006 2,009 $258,000
2007 1,850 $279,900
2008 1,203 $290,000
2009 918 $205,000 25%
2010 1,237 $195,000 42%
2011 1,060 $149,500 50%
2012 1,094 $148,500 49%
“We are at pre-pre-pre bubble sales levels”
No we are not. According to what you just posted. Do you know when/why the bubble STARTED? Hint: it involves the dotcom bubble.
“Anything else you’d like to know?”
Yes. The point you are trying to make. Because you are making my point for me. We are at/near historical norms now.
Chuk: You know all. I’m stupid. You’re smart. You win.
Party on.
“Do you know when/why the bubble STARTED? Hint: it involves the dotcom bubble.”
Hint: It actually involves 9/11.
“DC, Baltimore, Boston, NYC, SF & LA.”
DC, Boston, NYC, SF, & LA have been calling all morning wanting to know how Baltimore got in there.
I’ve said for years (in a very bearish way) America is the really nice S Class, stuck in the mud, spinning it’s wheels, trying to hit something that will give it traction. That it would have to wait til the developing world at least starts getting into a C class. Me thinkith, money be sayin’, a few of dem wheels are hittin sometin’. Never good to stand in front of the car laughing at it for being stuck…. Even a stoner knows that just ain’t the place to be standing…
Just ask Sonies.. He was seen last week mud water skiing from the back of his Landy.
“Looking good, Billy Ray!”
8:30 in the morning down here… Looking out my window. 2 guys rock climbing. Carnaval over but no one told anyone down here Carnaval has something to do with Lent. So another weekend of closed streets with more parties to come.
Hostilities over what day the bubble started.. LOL. Who cares! Life is short and doesn’t end well. Enjoy it while you can!
“8:30 in the morning down here”
I thought the time zones were sliced vertically. Are you saying horizontally? 😀
Charles you better get your shit together if we are to believe you’re really rich livin’ the dream down there.
Bob, Rio is 4 hours ahead of Chicago….
“Hint: It actually involves 9/11.”
Ok. So take a look at the volume from 98,99,00, and 01 from your own post. Now take a look at 2012. Do you still think we are below “pre-pre-pre bubble levels”? In 98-01 would you have been saying that there are “no buyers”?
“Also- mortgage applications keep falling when rates continue to be among the lowest ever. Why isn’t everyone jumping on board? Oh- because they can’t get a loan.”
Huh?
“He said this January will be his best January since 1999.”
“People have been on the fence for several years,” said Wood, who doesn’t handle refinancings”
Hmm, 1999. What a coincidence…
http://www.tampabay.com/news/business/realestate/rise-in-mortgage-applications-fueled-by-low-rates-refis-lower-home-prices/1211174
“Bob, Rio is 4 hours ahead of Chicago….”
Don’t discourage him. He’s funnier this way.
Back in the day, I always attributed it to the alcohol. Clearly, I was wrong.
See Bob.. It’s summer here, so you spring ahead when we fall back – and vice versa. Plus we are kinda between NY and London which makes us East of you. Put it all together and that’s why my post is always 4 am CST, sitting with a mug of coffee in my hand, thinking about what to say to you, while appropriately taking a shit!
“He said this January will be his best January since 1999.”
“People have been on the fence for several years,” said Wood, who doesn’t handle refinancings”
Refis Chuk. NOT new purchases. New purchase applications continue to lag. But that’s what we’re seeing nationally right now.
By the way- if you’re a mortgage broker and your best year was 1999, you’re not a very good mortgage broker.
Its another instance of where the globe lied to me in the similar vein that I thought Greenland was the size of Europe.
“Refis Chuk. NOT new purchases”
Did you even read what you quoted?
“said Wood, who doesn’t handle refinancings”
Besides, if everyone has such bad credit and no down payment (equity), how are they refinancing?
“New purchase applications continue to lag. But that’s what we’re seeing nationally right now.”
Of course. And that is why you have a disproportionate amount of cash buyers. Which is how all markets work. Who do you think was buying when the stock market went to 666? The common man buys tops and sells bottom. The cash buyer is not the common man. When there are a SMALL % of sales that are foreclosures (2005-2008), that is when you should be wary. When everyone can get a mortgage (2005-2008), that is when you should be wary. When sales volume is well above historical average, that is when you should be wary. Those are signs of a TOP. So, what do you think the opposite of all that is? All the things you point at being “negatives” for the market are important signs. As the saying goes, when you’re crying, you should be buying. When you’re yelling, you should be selling.
“As the saying goes, when you’re crying, you should be buying. When you’re yelling, you should be selling.”
You’re great at the market maxims. Which seminar did you attend to gain such market wisdom?
“Which seminar did you attend to gain such market wisdom?”
The one that made me more than 1mm profit in the stock market for my retirement account. You?
So you’re an internet millionaire? Amazing. Everyone here’s an internet millionaire. Clio drives a lambo too. JMM comes from old money and Joe Z has flipped every building in LP at one point in his life. The rest of us are just haters. uh-huh.
“So you’re an internet millionaire?”
No, a real one. I just made the million in internet stocks.
Sure you did chuk. Either way, I don’t really care.
Chuk the thing is I doubt most real millionaires are passionate about high RE valuations. That set is mostly people who have a substantial portion of their net worth (like well above 100%) tied up in their primary residence or instead they are poseurs without the means to otherwise acquire such a sum of money without leveraged real estate gains. I suspect you and Mike in Bucktown fall into this latter category and I doubt your claim is truthful.
“Chuk the thing is I doubt most real millionaires are passionate about high RE valuations.”
Huh?
“That set is mostly people who have a substantial portion of their net worth (like well above 100%) tied up in their primary residence”
I do have a large part of my NON retirement funds tied up in my main house. Probably 75%. Most of my large stock gains are in my retirement account. As I am still 20+ years away from retirement, that money doesn’t do me much good now. So while I have around 1.5m in retirement funds, I am not a “real life” millionaire because I don’t have anywhere near that kind of money in my regular accounts. It just sits there as a number on my monthly statement. So, I can’t go buying fancy cars, and live like a millionaire. I live off my wife’s and my salary, and I live middle class life like most of you. I just happen to have a lot saved for retirement due to my gains in the stock market.
1.5MM in tax deferred retirement accounts? Would only be remotely possible if you were a principal in a biz and always maxed out (limit is ~40k iirc). Can’t get there with 401k as investment choices are limited & limit is 15k now (10k a decade ago). Can’t get there with IRAs either given the low limit. So my BS meter is going off at full tilt chunky boy.
“Chuk the thing is I doubt most real millionaires are passionate about high RE valuations.”
Why is it if someone isn’t super bearish, that means they are super bullish? Can’t someone just think that we are near the bottom? I’m certainly not predicting huge real estate gains any time soon. But I am not predicting huge losses either. Just because I don’t think it will go down much, doesn’t mean I think it will go up. How does that make me “passionate about high RE valuations”?
“1.5MM in tax deferred retirement accounts?”
Do you not read? I didn’t contribute 1.5mm. I made over 1 mil in profit. I made a good chunk in IPO’s in the 2000’s (this part is a much longer story), and I parlayed that into bigger gains later on. I took some big risks, and also had some big losses. I actually had even bigger gains than that, but made some big bearish bets too soon in 2005 and lost over 1/2mil (oddly enough, many of them were bets against housing stocks). After that, I cut back my risk, and just try to preserve and build my nestegg. My days of swinging for the fences are over.
Yea its possible you rolled your 250k 401k into an IRA and perfectly timed tech stocks to arrive at 1.5mm. You could be among the top 1% of deferred retirement accounts having taken wild risks with your life’s nest egg. Just as I could sleep with Victorias Secret models after buying them $1 beers on a regular basis. Neither claim defies the laws of physics. The laws of realistic probability though? LMAO
who was the poster who attached an image of his brokerage statement to a post? I cant remember what /who provoked him. maybe westloop or heitmen bc it was a while ago
“Yea its possible you rolled your 250k 401k into an IRA and perfectly timed tech stocks to arrive at 1.5mm.”
I certainly didn’t time it perfectly. Far from it. The #1 boost to my account was I had access to IPO’s early on in 99/00. I quickly turned about 80k into 500k with IPO’s. Much of that literally overnight. This was back in the day when Wit Capital, and E*Trade would allow small investors access to IPO’s 50 or 100 shares at a time. I ended up opening close to 100 different brokerage accounts with those 2 companies, and I wrote a piece of software that allowed me to enter IPO orders automatically, since they were handed out on a first come first serve basis. So instead of just getting 50 or 100 shares, I was sometimes getting 2-3k shares. Through an affinity program, I was also able to get 3k shares of RHAT at the IPO in my SEP account which I of course flipped right away. After the IPO bubble burst and they dried up, I got heavily into options for the next 7 or so years. That is when I turned the 500k into almost 2mil (and then back to 1.5m). There were individual days where I would make or lose 200k.
Fair enough then & congrats. You have such an amount deferred it makes sense for to load up on lower interest fixed debt (like a big mortgage/HELOC) to fund a nice lifestyle but obviously your situation is very uncommon and unique on here. Can’t say I’m not jealous!
So before the RE bubble, sales in Chicago were about 1000 in January. What were sales in January 2012?
“What were sales in January 2012?”
There were none. Apparently there are no buyers.
“Credit to Gary:”
chuk, you seem like someone who likes to figure things out for yourself.
“To put this number in historic perspective it’s 12% below January 2010 (with the “benefit” of government interference) but 18% above January 2009. But then you have to go back to 1998 to find a lower level of sales in January. In other words, Chicago home sales were only higher during the bubble years so we are at the new normal.”
How can he claim that is a “historic perspective”? Half of all sales are distressed, compared to less than 5% in 1998. So, does this mean that we should expect a steady 50% level of distressed sales, which “new normal” implies? We are nowhere near the end of the foreclosures, including in the areas covered on CC. Besides, what does this “new normal” even mean without consideration of the increase in the number of individual housing units from 1998 to present? Market supply was built to meet bubble demand, which was heralded by many as the “new normal” at the time. Until it wasn’t. If we (incorrectly) assume that all of the distressed sales are correcting the oversupply by returning them to rentals, then we are at half the sales of 1998. Nevermind that switching the oversupply to rental (and currently building additional new rental units like crazy) will impact future rents and rent vs own calculations, thus pushing market stabilization further out. If we assume that they are not correcting the oversupply, then the sales rate is much lower today than pre bubble. Obviously, the answer lies between the extremes, but whatever it is it certainly is not that a comparison to pre bubble sales means the market is at normal sales levels. Actually, when really giving it some perspective, it looks like a coincidence.
” Everyone here’s an internet millionaire. … The rest of us are just haters.”
I’m not. Now I feel left out.
I’m long 7 shares of apple. Easy street is just around the corner.
“Half of all sales are distressed, compared to less than 5% in 1998. So, does this mean that we should expect a steady 50% level of distressed sales, which “new normal” implies?”
I think the distress sales simply steal from the “regular” sales. I think the sales levels will remain relatively flat, but the mix will slowly start change back to normal levels. Again, the NUMBER of units sold is the “new normal” now IMO, but the makeup of that number is anything but normal.
“Actually, when really giving it some perspective, it looks like a coincidence.”
That may be. All I was saying is that the absolute number of sales is roughly equal to pre-bubble levels. For Sabrina to say there are “no buyers” is just nonsensical.
Chuk. That story just needs getting 25,000 miles per account opened up. That would have been hilarious.
“That story just needs getting 25,000 miles per account opened up. That would have been hilarious.”
Even better. For a while I was getting $200 credit per account with E*Trade. I believe it was $2k initial deposit per account. Then they changed it to $200 gift certificate to “Zones” for a while. I think I still have a couple K in GC’s that expired worthless.
Nonsensical? It’s called hyperbole. You look foolish with your inability to detect the obvious.
“I think the distress sales simply steal from the “regular” sales.”
With all of the investor sales that weren’t present pre bubble? No way. Regardless, declaring the coincidental return of pre bubble sales levels as “normal” demand, after years of increasing supply, only means that the virtuous cycle of affordability will continue.
“Nonsensical? It’s called hyperbole.”
But even her hyperbole is wrong. Of course I didn’t think she really meant “no buyers”. But saying “no buyers” implies some large deviation from the norm. And THAT is what is nonsense.
“declaring the coincidental return of pre bubble sales levels as “normal” demand”
No one said it was normal demand. All I said was it was the same volume as pre-bubble levels.
“But saying “no buyers” implies some large deviation from the norm. And THAT is what is nonsense.”
What’s the normal rate?
“No one said it was normal demand. All I said was it was the same volume as pre-bubble levels.”
Sorry for digging deeper, then, if that’s the level of insight you seek. I posted that weeks ago.
Demand is way off, as was highlighted by Sabrina’s hyperbole.
“1.5MM in tax deferred retirement accounts? Would only be remotely possible if you were a principal in a biz and always maxed out (limit is ~40k iirc).”
Self employed individuals, such as attorneys, can contribute the 415(c)(1)(A) max which is now $50k. These folks almost always have significant 401(k) balances (as 20 years of maxing gets you $1M without any appreciation). 401(k) plans became commonplace in the 1980s, so you do have many a baby boomer with assets in this range or even higher. Many corporations also provide profit sharing contributions to qualified plans in their own stock. This became a huge issue over a decade ago at one very large consumer products company where the stock lost 40% on one day. The CEO found himself out of a job shortly thereafter.
“Self employed individuals, such as attorneys, can contribute the 415(c)(1)(A) max which is now $50k. These folks almost always have significant 401(k) balances (as 20 years of maxing gets you $1M without any appreciation). 401(k) plans became commonplace in the 1980s, so you do have many a baby boomer with assets in this range or even higher. Many corporations also provide profit sharing contributions to qualified plans in their own stock. This became a huge issue over a decade ago at one very large consumer products company where the stock lost 40% on one day. The CEO found himself out of a job shortly thereafter.”
Only 2% of all retirement accounts are worth over $1 million. So it’s very, very few Americans who have this level of savings.
That being said, if Chuk had played the tech rally correctly starting in the early to mid-1990s, he could have gotten his nest egg up to the level he says even with the bear market of the last ten years.
Stocks like Dell, despite doing nothing for a decade (or even going down slightly) are still up 4,000% from 20 years ago. Even $50,000 invested in some of the big tech titans 20 years ago would be worth over $1 million today. You might have also done well if you had done health care as the late 1990s saw a surge in the big pharma stocks. So, it was do-able for Chuk to accumulate $1.5 million in the last 20 years even WITHOUT maxing out like $40k a year for a decade (but he would have had to be in the “right” stocks and sectors.)
The Oracle admits he was wrong about housing when he said last year it would recover within a year.
Nope.
Still in a “depression.”
http://blogs.wsj.com/deals/2012/02/25/warren-buffett-housing-remains-in-a-depression/?mod=wsj_share_twitter
“So, it was do-able for Chuk to accumulate $1.5 million in the last 20 years even WITHOUT maxing out like $40k a year for a decade (but he would have had to be in the “right” stocks and sectors.)”
More than anything, my results were due to being leveraged (options). You can go from 500k to 1.5mil in a day (I did not). Most stocks do not triple in a day, but every day lots of options do. Time was not a factor at all in my returns. The bulk of my gains were over the course of 2 years.
“he could have gotten his nest egg up to the level he says even with the bear market of the last ten years.”
Most of my gains were due to puts.
Thanks for the explanation Chuk.
But you could have also done it by buying 20 years ago (certain stocks) and holding. You didn’t need options.
Since 1987, Microsoft is up 9,000%.
“But you could have also done it by buying 20 years ago (certain stocks) and holding. You didn’t need options.”
Yes, but I’m not that lucky. Most people aren’t either as evidenced by the average market return since 2001. S&P roughly flat since then.
Yes, but I’m not that lucky. Most people aren’t either as evidenced by the average market return since 2001. S&P roughly flat since then.
I didn’t say 2001. I said 20 years. If you were 25 in 1990 and bought some technology stocks and never sold them- you are doing just fine (even with the last 10 years.) That’s the thing about being a LONG TERM investor. It works out pretty well in the end.
The problem is, most people don’t “hold.”
“I didn’t say 2001”
But I did. The returns I mentioned were from 2001 to 2011. You are saying someone else could have done that by buying MSFT 20 years ago. What if they bought NOVL or BORL instead? Cherry picking one of the greatest stocks of all time at it’s IPO price is just plain silly.
I take all my investing advice from movies and songs… Once upon a time I used to listen to E.F. Hutton as well…
So I handed him my bottle
And he drank down my last swallow
Then he bummed a cigarette
And asked me for a light
And the night got deathly quiet
And his faced lost all expression
He said, “If you’re gonna play the game, boy
You gotta learn to play it right
You’ve got to know when to hold ’em
Know when to fold ’em
Know when to walk away
Know when to run
You never count your money
When you’re sittin’ at the table
There’ll be time enough for countin’
When the dealin’s done
Now every gambler knows the secret to survivin’
Is knowin’ what to throw away
And knowin’ what to keep
‘Cause every hand’s a winner
And every hand’s a loser
And the best that you can hope for
Is to die in your sleep”
“But I did. The returns I mentioned were from 2001 to 2011. You are saying someone else could have done that by buying MSFT 20 years ago. What if they bought NOVL or BORL instead? Cherry picking one of the greatest stocks of all time at it’s IPO price is just plain silly.”
I thought you said early 1990s. But I see you said 1999. So you were buying all the crazy IPOs during the dotcom bubble.
Ah- yes- the old “what if you had bought Enron?” argument. What a stupid argument. Don’t put all your eggs in one basket- and you’ll be fine.
But actually I wasn’t cherry picking. Microsoft went public in the 1980s so you didn’t have to buy it at the IPO price to get rich off of it over the last 25 years. You could have waited 10 years into it and still gotten rich (much like Walmart.) A $1,000 investment in Walmart in 1980 was worth $10 million by 2000. But if you had bought in 1990, it was still worth $1 million. Wow! Imagine that.
And, by the way, Microsoft ISN’T one of the greatest stocks of all time. hee-hee. Not even close Chuk. Since 1987, several of the manufacturers and healthcare stocks have WELL outperformed Microsoft. Fastenal returned over 30,000% in that time versus just 9,000% for Microsoft.
Actually, probably the best performing stock since the 1950s in the S&P is Altria Group. But it pays that enormous dividend so it just keeps compounding and compounding. The other top performers are the drug companies like Merck (also because of the dividend) and the industrials like GE.
“Ah- yes- the old “what if you had bought Enron?” argument. What a stupid argument.”
Agree… Think I sold mine up in the 80’s.. cue up Kenny Rodgers lyrics again.. 🙂
“I thought you said early 1990s. But I see you said 1999. So you were buying all the crazy IPOs during the dotcom bubble.”
I started around 1994. But I only had around 80k in retirement by 1999. I wasn’t really “buying” crazy IPO’s, I was getting allocated them at the offering price. Going from 80k in 1999 to 500k in 2001 was done mostly by getting IPO’s and flipping them. I’m the first to admit that that didn’t take an investing genius to do (although I did write the software to do it). The 500k to 1.5mil was done from 2001 up. Arguably a much harder period of time to get 300% return.
“Ah- yes- the old “what if you had bought Enron?” argument. What a stupid argument.”
Which is the argument you just made. In reverse.
“But actually I wasn’t cherry picking.”
Of course you were. You were cherry picking both the stock and the timeframe. You can’t have it both ways. Find me a basket of stocks (S&P 500, etc) that has equaled the returns you claim.
“Microsoft ISN’T one of the greatest stocks of all time”
Really. REALLY? MSFT up 32,000% since it’s IPO. In 2000, it was up 75,000%
“Ah- yes- the old “what if you had bought Enron?” argument. What a stupid argument.”
Sad fact, I lost of ton of money SHORTING Enron. Timing is everything….
G, where are you with the February data? I’ve got a data discrepancy from 2 different sources. I think 1245 is the right number, which would be almost an 18% increase, but I’ve got another source telling me 1188.
City of Chicago condo/TH/SFH closed totals February
year/closed/median/% REO-Short Sales
1997 881 $117,000
1998 991 $132,000
1999 1,124 $143,750
2000 1,383 $161,500
2001 1,151 $180,200
2002 1,677 $212,000
2003 1,566 $215,000
2004 1,814 $229,900
2005 2,228 $268,900
2006 1,855 $267,500
2007 1,703 $270,000
2008 1,454 $290,000
2009 870 $218,125 31%
2010 1,257 $176,000 46%
2011 1,092 $150,250 50%
2012 1,224 $140,300 52%
City of Chicago condo/TH closed totals February
year/closed/median/% REO-Short Sales
1997 447 $128,500
1998 527 $139,000
1999 622 $169,950
2000 770 $192,442
2001 654 $222,395
2002 977 $250,755
2003 906 $250,950
2004 1,075 $262,000
2005 1,538 $292,021
2006 1,269 $282,769
2007 1,179 $282,900
2008 1,087 $314,900
2009 451 $280,000 18%
2010 660 $250,000 33%
2011 604 $193,500 46%
2012 692 $165,250 50%
Lake View condo/TH closed February
year/closed/% REO-Short Sales
1988 31
1989 41
1990 31
1991 26
1992 68
1993 58
1994 52
1995 57
1996 75
1997 87
1998 89
1999 91
2000 98
2001 91
2002 123
2003 94
2004 112
2005 123
2006 126
2007 134
2008 102
2009 39 5%
2010 52 12%
2011 62 37%
2012 63 27%
Lincoln Park condo/TH closed February
year/closed/% REO-Short Sales
1988 34
1989 38
1990 58
1991 32
1992 38
1993 51
1994 73
1995 42
1996 60
1997 50
1998 75
1999 54
2000 90
2001 49
2002 68
2003 56
2004 71
2005 69
2006 76
2007 70
2008 36
2009 19 5%
2010 39 5%
2011 27 22%
2012 37 30%
Near North condo/TH closed February
year/closed/% REO-Short Sales
1997 88
1998 105
1999 88
2000 120
2001 116
2002 294
2003 160
2004 228
2005 532
2006 204
2007 175
2008 208
2009 82 17%
2010 107 16%
2011 102 26%
2012 110 25%
Loop condo/TH closed February
year/closed/% REO-Short Sales
1997 14
1998 20
1999 26
2000 30
2001 22
2002 30
2003 27
2004 95
2005 28
2006 32
2007 35
2008 81
2009 21 10%
2010 59 8%
2011 43 26%
2012 43 40%
Near South condo/TH closed February
year/closed/% REO-Short Sales
1997 5
1998 7
1999 30
2000 65
2001 12
2002 28
2003 33
2004 64
2005 91
2006 62
2007 49
2008 70
2009 31 6%
2010 41 15%
2011 31 32%
2012 32 50%
Amazing.
I’m pretty surprised the #’s are still so low considering all of the supposed increase in market activity that is going on. Too much cheerleading is not a good thing realtors.
Great, so now I have 3 numbers. Contract activity skyrocketed in February even after whacking 20% off the number for cancellations: http://www.chicagonow.com/getting-real/2012/03/chicago-home-sale-activity-skyrockets-in-february/ and inventories plummeted as shown in the post immediately after that one which I can’t link to because it will trigger Sabrina’s spam filter.
Dave, it’s not cheerleading at this point. The data speaks for itself. There’s also an enormous backglog of contracts out there, some of which will fall apart, but most of which will close. Even Robert Shiller just said yesterday that this could be the bottom and he’s been pretty bearish up until now.
I’ve been hearing hopeful condo owners saying there will be a 15-20% bounce in prices within the year on the north side. Total wishful thinking. The increase in volume is a good thing, but the lending community is making it difficult to get a mortgage at this point without true solid income, and solid down payments.
“The increase in volume is a good thing, but the lending community is making it difficult to get a mortgage at this point without true solid income, and solid down payments.”
All of which seems prudent.
“Great, so now I have 3 numbers.”
Mine are accurate as of today.
Don’t get me wrong here. While I think we may be bottoming in prices I don’t see any significant increases for years. The consensus forecast is like 8% over the next 5 years cumulative. 15 – 20% in one year is outrageously ridiculous.
ALL I SEE ARE 1999 PRICES MEDIAN EVERYWHERE!!!!
“ALL I SEE ARE 1999 PRICES MEDIAN EVERYWHERE!!!!”
Doesn’t that mean it’s time for you to buy, HD?
The median sale in Chicago wlast month also happened to a REO/Short Sale.
G: Do you have the median price with the REO/Short extracted?
“Doesn’t that mean it’s time for you to buy, HD?
It does!
but anon, you can’t really exclude short sale / reo because that’s such a major part of the market. that’s like saying “please give us the bulls stats minus all players other than derrick rose” you can’t cherry pick stats. reos are the market and will be for a long time. It makes sense to buy in some areas now, especially for townhomes or sfh in some middle class suburbs or exurbs. You can rent a home for 1,500 or you can buy it for 1,300; or you can rent a townhome for $1,200 or buy it for less than $900 PITI+HOA. it starts to suck a little bit in some of the nicer suburbs but that’s a reflection of the rich getting richer and the larger amount of money competing for a slice of the good life.
Yes, anon. I’ll post that later if I get a chance. Otherwise, Monday.
But that being said, it’s not a ‘bad’ time to buy, but waiting longer will yield better deals. And it will keep yielding better deals. the question you have to honestly ask yourself if is this the right time for you and your family to buy. because now’s as good as time as any because it’s not like you’re going to be priced out! But you will lose money. Just be thankful you didn’t buy in 2004.
“The consensus forecast is like 8% over the next 5 years cumulative.”
Ah, a consensus of people who are never correct. Comforting.
“you can’t really exclude short sale / reo because that’s such a major part of the market”
Sure I can. It’s about looking at the prices obtained by two different types of sellers. Can I not look at the median housing cost just for owners in Chicago, simply because the median household in Chicago rents, and that will also be true for a long time?
You can discriminate but the data is meaningless!
I’m ready to buy, now, but I’m looking for 3000 sq ft new construction homes in Lincoln park. I can’t find one for the price I want to pay: $300,000. I may consider moving to Bolingbrook, it’s less than $100 psf for these enormous recently constructed homes. I can have like 4 more kids with my wife.
“G: Do you have the median price with the REO/Short extracted?”
Why would you want to extract it when it IS the market?
If you do that- then you have to extract all of them from the sales info as well. And then where would that put sales? Back to 1960s levels? Or worse?
If REOs/shorts were just 5% of the sales or something- then it would make sense. But in many neighborhoods (and buildings)- these are setting the comps. It would make more sense to extract it from the neighborhood data (as that’s what you really want to see anyway- isn’t it?) You want to know if LP or Lakeview or Bucktown are back to 1999 prices without the REOs/shorts.
“I’m pretty surprised the #’s are still so low considering all of the supposed increase in market activity that is going on. Too much cheerleading is not a good thing realtors.”
Me too. Everyone is going crazy over how “crazy” it is out there and yet the February numbers didn’t show that much improvement (not what everyone is saying is going on out there.)
In 2011, we had a blizzard! And the weather was nasty in January AND February (when those closings would have gone into contract.)
“Great, so now I have 3 numbers. Contract activity skyrocketed in February even after whacking 20% off the number for cancellations.”
I wonder how much of the recent contract activity is just normal spring buying being moved forward because of the awesome weather. And I’m not asking that sarcastically. I really DO wonder.
All of February was WAY warmer than usual and without any snow, it was really easy to get in the car with the realtor and start looking. In other years, buyers might have waited at least another month before starting to look. But with spring coming early (basically), it seems like buyers are jumping in quickly.
Several people have told me of multiple offer situations on properties in the GreenZone (and these were NOT foreclosure/short sales.) The inventory is low and there are only so many 3-bedroom top floor condos with rooftop decks in certain neighborhoods on the market. There are still buyers for the townhouses as well.
“I’ve been hearing hopeful condo owners saying there will be a 15-20% bounce in prices within the year on the north side. Total wishful thinking.”
Dave M: I am totally aghast that some condo owners actually think that there could be a 15% to 20% rise in prices in ONE YEAR. This is the problem with the housing market going forward. Those who bought during the boom don’t actually know what a “regular” housing market looks like. They don’t get it that Chicago prices rise about 1% to 3% a year (pretty consistently). And that’s only when they actually start rising again.
So many property owners are waiting for the boom to “return” so they can return to break even. Wow. It’s just stunning that so many people don’t understand that the housing market is never going back to the boom. Not for decades.
The market seems to have picked up, there are a lot more contracts signed; I know my office is getting contracts in right and left – but like a paralegal asked me when I handed her a contract last week, “Please DON’T tell me it’s another short sale with an FHA buyer!” (It was!)
Despite the pick up in activity, few homes are actually closing. Feb was pretty slow and March seems even slower. I have a feeling that the end of March and into April it’s going to pick up and we’re going to see a real POP in closings; with a correspondence big decrease in median sales price.
We just have to wait for the backlog of under contract homes to actually close…so many homes I see in the MLS has been languishing under contract for months on end, for whatever reason.
“We just have to wait for the backlog of under contract homes to actually close…so many homes I see in the MLS has been languishing under contract for months on end, for whatever reason.”
The short sales are taking months and months to close (if they even do.) Ugh.
I believe the backlog of open contracts is almost twice as high as it was last year at this time. It’s impossible to know for sure but that’s my estimate and all you have to do is look at the trend in contracts vs. closings and the cumulative discrepancy is getting pretty big.
“I believe the backlog of open contracts is almost twice as high as it was last year at this time.”
Good. Maybe some sellers will be listing (who otherwise wouldn’t) once they start hearing better things about the housing market.
http://www.redfin.com/IL/Park-Ridge/635-Park-Plaine-Ave-60068/home/13647056
It’s a little dumpy house, yet it’s listed as an REO at $177 psf and went under K in exactly 2 weeks – just the way homepath likes it. It’s been on the market for 104 days now and subtract out those two weeks: 90 days listing time.
“It’s a little dumpy house”
But, HD, it’s a true 10!
“as that’s what you really want to see anyway- isn’t it?”
If that’s what i wanted to see, that’s what I would have asked for. No, I actually want to see how bifurcatedrhe overall market is, not what the split bt 26 “regular” and 11 “distressed” sales in LP is.
“If that’s what i wanted to see, that’s what I would have asked for. No, I actually want to see how bifurcatedrhe overall market is, not what the split bt 26 “regular” and 11 “distressed” sales in LP is.”
Isn’t it obvious without even having the data pulled out?
You have the $800,000 non-distressed LP condo selling and then you have five $40,000 REO Albany Park condos selling. It’s not hard to figure it out.
“Isn’t it obvious without even having the data pulled out?” ” It’s not hard to figure it out.”
Maybe he wants it to the 7th decimal?
“Isn’t it obvious without even having the data pulled out?
You have the $800,000 non-distressed LP condo selling and then you have five $40,000 REO Albany Park condos selling. It’s not hard to figure it out.”
So, you know the medians with knowing the medians? Why is it useful to know the percentage of “distressed” sales, since it’s “obvious” that half the market is “distressed”? Why bother with any numbers at all, since we all “know” what the market is doing?
“We just have to wait for the backlog of under contract homes to actually close…so many homes I see in the MLS has been languishing under contract for months on end, for whatever reason.”
Why ARE so many homes under contract for so long? These are not just short sales, but many high-priced places I follow in Old Town/LP or on the North Shore seem to be under contract for months before finally closing. Is this likely appraisers valuing the homes at well under the sale prices, leading to financing issues? Or something else?
“Is this likely appraisers valuing the homes at well under the sale prices, leading to financing issues?”
This certain has an effect.
“Why ARE so many homes under contract for so long? These are not just short sales, but many high-priced places I follow in Old Town/LP or on the North Shore seem to be under contract for months before finally closing.”
For the non-short sales it’s a bit of a mystery to me. In the very few cases I’m familiar with it’s that there are “complications”: association needs to work out an issue with the seller, buyer needs some event to occur. Nothing is easy. In fact, one of the attorneys I work with just commented on this on Saturday – every deal has issues.
I haven’t seen too many issues with appraisers appraising properties lower than the purchase price. In fact, my last couple of purchase closings have all had appraisal value opinions higher than the contract price. Short sales and foreclosures take forever. On regular transactions, buyers are just being more demanding. Deals drag on over inspection disputes that probably would have never even come up in the past. Buyers are being a lot more cautious, even after they decide to pull the trigger.
Here you go, anon. The Feb Chicago sfh/condo/th data with and without short sale/foreclosures. I also added the days on market (list to contract) and days under contract (to closing) data.
ALL 2012 2011 2010 2009
count 1,224 1,092 1,257 870
median $140,300 $150,250 $176,000 $218,125
average $215,305 $229,875 $250,577 $268,928
DOM med 101 108 84 125
DOM ave 167 174 152 175
C-C med 46 40 39 37
C-C ave 62 55 65 66
NO SS/F 2012 2011 2010 2009
count 587 542 680 599
median $237,000 $269,000 $290,000 $265,000
average $337,499 $351,892 $378,019 $332,678
DOM med 128 130 100 129
DOM ave 191 206 172 180
C-C med 46 42 42 38
C-C ave 56 55 78 77
SS/F 2012 2011 2010 2009
count 637 550 577 271
median $75,000 $72,500 $60,000 $68,500
average $102,703 $109,632 $100,386 $128,020
DOM med 84 88 69 119
DOM ave 146 143 130 165
C-C med 46 36 33 34
C-C ave 67 54 50 43
“I haven’t seen too many issues with appraisers appraising properties lower than the purchase price. In fact, my last couple of purchase closings have all had appraisal value opinions higher than the contract price. Short sales and foreclosures take forever. On regular transactions, buyers are just being more demanding. Deals drag on over inspection disputes that probably would have never even come up in the past. Buyers are being a lot more cautious, even after they decide to pull the trigger.”
Buyers should be more cautious at this point. It’s a very large purchase and will affect their lives for many years to come. So many people blindly bought in 2005 and 2006 and they ruined their lives financially if they need to get out now.
To your point on short sales, I know of a short sale that recently closed in less than 60 days start to finish (not a B of A short sale). I think it depends on the lender and the overall nature of the short sale including the percentage below mortgage value the offer price is.
I know of places that have been under contract for 3-4 months before they closed due to sellers needing time to find a new place. Nothing to do with financing or negotiating.
“I know of a short sale that recently closed in less than 60 days start to finish”
By chance, was there a previous contract that fell through? Often the first buyer comes in and gets the wheels turning and gets a solid price from the bank. If that happens the next buyer gets an expedited process because the bank has already run most of the red tape.
“I know of a short sale that recently closed in less than 60 days start to finish”
“By chance, was there a previous contract that fell through? Often the first buyer comes in and gets the wheels turning and gets a solid price from the bank. If that happens the next buyer gets an expedited process because the bank has already run most of the red tape.”
No, the buyers just had a good realtor on their end, and the selling realtor was good at short sales too. The bank was a large one (not B of A or Chase) who had a good process in place to make the decisions in a reasonable time frame.
Thanks, G!
Hugely bifurcated market.
“By chance, was there a previous contract that fell through? Often the first buyer comes in and gets the wheels turning and gets a solid price from the bank. If that happens the next buyer gets an expedited process because the bank has already run most of the red tape.”
The DOM and contract to closing data could support that it is happening a lot. That might also explain why some are underestimating the number of contracts that are falling through.
“The consensus forecast is like 8% over the next 5 years cumulative. ”
I don’t agree with the consensus. Hence it isn’t the consensus.
Oh wait it’s the consensus of a salesperson’s lobbying organization (IAR) that was caught either deliberately falsifying statistical data releases, or so incompetent they could not truly even compile them correctly or detect them within a reasonable amount of time.
“I don’t agree with the consensus. Hence it isn’t the consensus.”
From Wikipedia: “Consensus decision-making is a group decision making process that seeks the consent, not necessarily the agreement, of participants and the resolution of objections”
“Oh wait it’s the consensus of a salesperson’s lobbying organization (IAR) that was caught either deliberately falsifying statistical data releases, or so incompetent they could not truly even compile them correctly or detect them within a reasonable amount of time.”
Nope. I got it from Pulsenomics, sponsored by Macromarkets: https://pulsenomics.com/Sept2011-HPE-Survey.html They’ve actually brought down their forecast from the last one I looked at. It’s more like 5.6% over 5 years.
It’s funny–whenever the weather picks up it brings the bulls out of the woodwork. And it is true there is definitely a correlation between warmer weather and higher RE prices/increased transaction volume.
But everyone always likes to ignore my favorite metric, perhaps because it is so boring: year/year changes in the case shiller index for SFHs or condos, not seasonally adjusted. And the Y/Y chart isn’t looking so good lately, especially without another 8k tax credit to turn the tide.
And families is one thing, but these big swingin’ 20-somethings, I have some advice for you considering buying: it’s a hell of a lot easier to recover from a leveraged financial mistake when you’re in your 40s, and 50s or older than it is when you’re in your 20s and 30s.
Due to the power of compounding the 20-something taking that 50k+ hit on their condo is financially devastated to a degree they can’t easily recover from. You can’t rationalize it by saying those 20-years older made a 150k mistake by buying at the wrong time as well as they have substantially more assets to recover and their assets had time to grow when the going was good.
People that are living the large RE dream now, unless they have other means like family resources, or a large income are destined to basically be poor in almost all other areas of life. Oh and when you’re in your 20’s everyone things they’re income will keep growing at the clip it is currently on or higher. Statistics do not support this: most earning gains are done within the first 10-15 years of one’s career (and the higher the absolute level the less job security/longer periods of unemployment).
But of course Americans are an optimistic lot. Just think of all of the positive feedback the GZ lemmings had in school. Then consider all of the outside influences seeing them as an easy target during the bubble. But not everyone will come out of this ahead of the curve–my guess is far from it.
“It’s more like 5.6% over 5 years.”
This actually seems realistic for a normal, healthy market. However the housing market is so FUBAR at this point due not only to the bubble, but the insane policy decisions to try to re-inflate asset prices undertaken by our government, that I think anything could happen. We could get to 5.6% in 5 years by wild swings in both directions from another policy intervention/tax credit.
“year/year changes in the case shiller index for SFHs or condos, not seasonally adjusted. And the Y/Y chart isn’t looking so good lately, especially without another 8k tax credit to turn the tide.”
It’s a useful concept but consider the lag in that data. The most recent month reported was December, which is really a 3 month trailing average of Oct, Nov, and Dec. So call it November closings. But those went under contract in September and October and here we are 6 months later. By the time you see it in the Case Shiller index it will be too late.
But no one can pick the bottom anyway.
“By the time you see it in the Case Shiller index it will be too late.”
It will be too late for what, exactly, Gary? What will it be too late for, specifically?
“It will be too late for what, exactly, Gary? What will it be too late for, specifically?”
Too late for those who are trying to pick the exact bottom of the market. But your point is well taken. It’s not like prices are going to jump up 10% any time soon.
“it’s a hell of a lot easier to recover from a leveraged financial mistake when you’re in your 40s, and 50s or older than it is when you’re in your 20s and 30s.”
Absurd… exactly the opposite.
“Too late for those who are trying to pick the exact bottom of the market. But your point is well taken. It’s not like prices are going to jump up 10% any time soon.”
I don’t think anyone’s individual purchase is going to highly correlate the overall index to such a degree to make a difference whether if they’re within a month or two.
Also I don’t think once this metric turns positive for one data point or even a couple will that mean an overall turn in the market (ie: June 2010 it was at 0), just a clear sign that the correction will have entered it’s next phase. IE: when we see a summer with Y/Y positive values, exclusive of any sort of gov’t extraordinary intervention like a tax credit.
Up until now it’s been a steep downward trajectory aside from the tax credits. Remember the first tax credit our govt assisted “funny financing” itself via tax policy. $7,500 loan that had to be forgiven. People laughed and prices continued to tumble.
That didn’t have much effect on the market, so after that it was the 8k giveaway loan! But only to new homeowners, because afterall we had to make this look like it was aimed at something other than propping up asset values.
But they were addicted to their dose of transaction volume so they expanded it applying it to move up owners. And those two tax credits, the banks sitting on shadow inventory/not foreclosing and the foreclosure moratorium more or less turned the tide of momentum in March 2009 for a whole year.
So all bets are off with a tax credit.
Otherwise I think a slow bumping/grinding downward.
People/media pundits think since we’re “recovering” from this recession it means it’s going to be like recessions prior to 2001. 2001 was considered a very tough recession to recover from at that time… this one, well take a look:
http://1.bp.blogspot.com/-DQV0n80LaR4/T1oH-OGc_HI/AAAAAAAAMXA/SPgvmGzWLyY/s1600/EmployRecFeb2012.jpg
Err.. had to be repaid not forgiven.
“Absurd… exactly the opposite.”
No. You don’t see people in their 40s and 50s unable to move out of their current homes for a job if they weren’t serial HELOCers or just moved up & maxed out each time.
Take 46yr old 450k net worth taking 150k hit on house vs. 29yr old 90k net worth taking 50k hit on condo.
Also most 28 yr olds I know have far less, as likely do most 45yr olds.
“But your point is well taken. It’s not like prices are going to jump up 10% any time soon.”
Actually, I think you are likely to see a 5-10% jump off “the bottom” within 12-18 months from whenever it happens/happened, and then minimal gains (0-2%) for 5-7 years.
“Actually, I think you are likely to see a 5-10% jump off “the bottom” within 12-18 months from whenever it happens/happened, and then minimal gains (0-2%) for 5-7 years.”
Why?
You’d need massive demand given the number of short sales/REOs still bringing down prices. If we had worked through more of that backlog- then I might be on board with some price increase (of maybe 2% to 4%.)
I don’t see how you would ever get 5% to 10% with these market conditions. But maybe when we truly hit the bottom (work through more of the foreclosures and/or people have saved money for the downpayment.)
What people don’t see right now is that we’re still so far removed from normal market conditions it’s not even funny. 52% of the sales last month were in distress! That’s so NOT normal.
Bob Bob..The 29 yr old is only a few years out of a dorm room. He can still slum a bit if he has too. Lots of energy as well. How about the 45 yr old with 2 kids getting ready for their SAT’s. Old dog is tired. There is a reason people become conservative as they get older. There is a reason portfolios structure more conservatively in age bracket funds. Too hard to do it all over again. Easier when you are young.
“Bob Bob..The 29 yr old is only a few years out of a dorm room. He can still slum a bit if he has too. Lots of energy as well. How about the 45 yr old with 2 kids getting ready for their SAT’s. Old dog is tired.”
This is so true. It’s so much easier to survive a business going under, divorce, a bad real estate investment etc. when you’re young. Less other responsibilities. If you are looking at your kids going to college in 2 years- hwo do you survive a $100,000 loss on a house? It’s WAY too scary. You just don’t have that kind of stress when you’re 29.
“Why?”
Short term supply/demand. Once the bounce off the bottom happens, the sellers will come out of the woodwork to stop further increases.
“Short term supply/demand. Once the bounce off the bottom happens, the sellers will come out of the woodwork to stop further increases.”
Oh- okay. But a 5% to 10% bounce is just enormous in a 12 month to 18 month time period. Other than the boom, Chicago has not seen price increases of that magnitude. I still believe it would take a huge surge of buyers to make that happen (with the low inventory situation you are envisioning.) So far, we aren’t seeing those buyers. But perhaps in a few more months we will.
I honestly can’t even imagine what a price increase would be like given what’s happened in the last 5 years. That would be a $400,000 condo suddenly selling for $440,000. I can’t even imagine it happening that quickly with sales this low. But, again, maybe we’ll see a surge in sales.
” That would be a $400,000 condo suddenly selling for $440,000. I can’t even imagine it happening that quickly with sales this low”
uhhh – sabrina – you might want to check the property you posted this morning…..
That’s NOT a price increase clio.
I think what Tom posted in a prior comment was illustrative of what is going on out there. Properties are sitting on the market until they cut their prices low enough that suddenly the buyers are interested. As we’ve seen many times- price a property too high and it sits and sits.
“As we’ve seen many times- price a property too high and it sits and sits.”
ALMOST 1/3 OF ALL LISTINGS IN CHICAGO ARE CURRENTLY UNDER CONTRACT. Check it out yourself. This is a HUGE increase that has occurred in the past few weeks. Ask any realtor – we haven’t seen this type of volume/contract activity since 2007-2008.
“ALMOST 1/3 OF ALL LISTINGS IN CHICAGO ARE CURRENTLY UNDER CONTRACT. Check it out yourself. This is a HUGE increase that has occurred in the past few weeks. Ask any realtor – we haven’t seen this type of volume/contract activity since 2007-2008.”
But inventory is WAY down. From 2007-2008 inventories- my gosh- I wouldn’t even begin to imagine. Redfin has been putting up some stats lately that in areas like Bucktown- inventories are down 20% from just last year.
Hey G- what’s the sales looking like for March so far? Is what Clio saying correct- that the contracts are similar to 2007-2008? (why do I think the answer will be “no.”)
Not much.
“Bob Bob..The 29 yr old is only a few years out of a dorm room. He can still slum a bit if he has too. Lots of energy as well. How about the 45 yr old with 2 kids getting ready for their SAT’s. Old dog is tired. There is a reason people become conservative as they get older. There is a reason portfolios structure more conservatively in age bracket funds”
Doesn’t matter. The only thing mathematically the 29yr old has going for them is their yearly income is a much higher percent of their net worth. Their position being long RE relative to their net worth is still is much higher than the 45yr olds.
And I guess you haven’t met too many people before 30 that have lost a lot (relatively). If anything they typically wind up being more conservative than they should be for their age. Not me, but from my observations.
The reason portfolio’s become more conservative as people get older is to dilute the short term/cyclical vol. In this situation it doesn’t change the fact that the 20-something is more financially screwed even if they tell themselves they’ll work harder to make up for it.
It’s all about the power of compounding. You should know this Ze–your people afterall came up with it.
– sound and fury signifying nothing –
#1 Again, contracts do not equate to closings. Properties go under contract all the time, but often the sale never completes for any number of reasons e.g. bad title, disagreement with bank on appraised value, unable to come to agreement on corrective action post inspection report, etc.
#2 ALL CAPS is not proper netiquette
” That would be a $400,000 condo suddenly selling for $440,000″
Or $420,000, since I said 5-10%.
“So far, we aren’t seeing those buyers. But perhaps in a few more months we will.”
1. Maybe we havent bottomed yet.
2. If we have, it certainly hasn’t been 12-18 months yet.
Bob..I lost it all at 27, so I speak from personal experience. It was hell but by 28 I was fine. If it happened today I would just give up. I would say over 95% of the people I encountered professionally failed completely.
Btw.. arguing that. They are assuming portfolios of lower volatility is agreeing with me.
“Their position being long RE relative to their net worth is still is much higher than the 45yr olds.”
Bob, aren’t you always saying the 45 yr old is maxed out in debt and broke? Why for your example is he suddenly with assets on the side? Lose everything at 29 or 45. Those are the two choices. Not, one is levered but diversified. Core argument is “who has it harder in life from here forward” so bring it to the extreme for both.
Bob has a point. Instead of 50k loss in real estate, say, 50k loss paying student loans.
Its the same thing. The younger generation is starting out far poorer than previous generations, and this will follow them for the rest of their life.
“But a 5% to 10% bounce is just enormous in a 12 month to 18 month time period. Other than the boom, Chicago has not seen price increases of that magnitude.”
The index went up 8.4% from April 2011 to August 2012 but granted some of that was a seasonal effect.
“what’s the sales looking like for March so far? Is what Clio saying correct- that the contracts are similar to 2007-2008? (why do I think the answer will be “no.”) ”
No, it’s not looking like 2007 – 2008 but it is the highest of all the years since, including 2010 where we had the early stages of the government giveaway program.
Thanks Gary. That makes more sense to me. The 2007-2008 volumes (pre-recession) were still quite high.
“The index went up 8.4% from April 2011 to August 2011 but granted some of that was a seasonal effect.”
Only some of that was due to a seasonal effect? Try 75% of it. It’s not like you couldn’t have checked the seasonally adjusted data, Gary. It went up 1.9% over that time.
G- any data on contract activity in March?
“But no one can pick the bottom anyway.”
That’s a funny conclusion to draw from your failed attempts each of the past 3 years.
clio: “This is a HUGE increase that has occurred in the past few weeks. Ask any realtor – we haven’t seen this type of volume/contract activity since 2007-2008.” “G- any data on contract activity in March?”
Gary Lucido: “No, it’s not looking like 2007 – 2008 but it is the highest of all the years since, including 2010 where we had the early stages of the government giveaway program.”
Chicago SFH/condo/TH data for 3/1 – 3/10 of each year:
contracts
2012 894
2011 686
2010 934
2009 576
2008 712
2007 1,100
closed
2012 383
2011 366
2010 503
2009 277
2008 425
2007 655
Keep in mind that current year contract totals are not a direct comparison to previous years since prior years do not include those that fall out and are returned to the market.
We have been hearing about this massive increase in activity since December even though closings are bouncing around at only ~10% more than last year. People should keep in mind that last year was the worst in 15 years and ~10% lower than 2009 & 2010.
Chicago SFH/condo/TH data for 1/1 – 3/10 of each year:
contracts
2012 5,235
2011 3,724
2010 4,536
2009 3,115
2008 4,535
2007 6,530
closed
2012 2,728 49% ss/f
2011 2,532 50% ss/f
2010 2,997 43% ss/f
2009 2,065 29% ss/f
2008 3,082
2007 4,208
“Chicago SFH/condo/TH data for 1/1 – 3/10 of each year:
contracts
2012 5,235
2011 3,724
2010 4,536
2009 3,115
2008 4,535
2007 6,530
EXACTLY – and just wait until march is over.
“EXACTLY – and just wait until march is over.”
Exactly what? There is no sign that a “HUGE increase” of closings will occur.
The market is red hot – red hot for SUCKERS.
Look at what you are cherry-picking Clio….
Contracts are up about 1500 over last year. Closings are only up about 200. What is happening to the other 1300 contracts? Do you really think all of those will close? When?
“The national rent-buy ratio (rent as a percentage of after-tax mortgage payments or ATMP) increased to 114.9% in 4Q11, the highest recorded level in our database which goes back to 1991. This represents an 810bps increase over 3Q11, as a perfect storm of lower home prices and still-rising rents kept the ratio above 100% for the 5th straight Q. Median home prices fell a seasonally-driven 5.8% q/q in 4Q (-6.0% y/y) while effective rents continued to rise, up 0.5% q/q (+2.4% y/y) – Compared to household income, renting is more expensive than buying as well – Renting relative to buying, as measured on a % of household income basis, is more expensive for only the third time in our database. At 9.3%, renting, as a % of HH income, was 80bps higher than the cost of owning in 4Q, up from 0.1% in 3Q. The gap between renting and buying has been 3.1% in favor of renting, on average, dating back to 1991 with 1Q11 and 3Q11 representing the only other two times the traditional rent-buy gap has flipped (both -0.1%). ”
http://pull.db-gmresearch.com/p/36-3AC1/35999536/0900b8c084a6238c.pdf
You can’t avoid reality. The housing market bottom has definitely passed. Sure, there may not be huge huge increases in prices, but there certainly are not going to be any great deals that any normal person could buy. There are SO MANY investor sharks out there right now snapping up anything and everything that is remotely a good deal WITH CASH. A regular buyer doesn’t stand a chance with these desirable properties. It isn’t fair – but it IS reality.
Look at the stock market – billions made just today. The rich get richer ….. again, it’s not fair, but you have to accept it as reality.
Properties ARE going under contract like crazy – buyers are being stupid right now and are panicking and putting in all sorts of ridiculous offers. If there are any other realtors out there, I would love for you to confirm this (as most people here won’t believe me).
chuk: I don’t disagree with you; but, I’m finding the best rent v. own ratios come from 2/3 bedroom attached housing in the suburbs. My buddy bought a townhome in a southwest suburb for under 80k and his PITI+HOA is under $1,000. He would pay $1,200 just to rent the same unit. I’m not finding the same deals with detached housing; but that is probably a function of less detached housing for rent in general.
But good luck finding a renovated house in a decent suburb for $300,000 unless you want half your living space in the basement; and even then, the payment is $1,800 or $2,000 a month, just to get into the market.
http://www.redfin.com/IL/Park-Ridge/1308-Elliott-St-60068/home/13657655
The city is still pretty out of whack in a lot of areas.
– sound and fury signifying nothing –
continued reading comprehension failure NOW
the CLIO poster cites G’s data even though G specifically says:
G:
“Keep in mind that current year contract totals are not a direct comparison to previous years since prior years do not include those that fall out and are returned to the market.”
CLIO:
““Chicago SFH/condo/TH data for 1/1 – 3/10 of each year:
contracts
2012 5,235
2011 3,724
2010 4,536
2009 3,115
2008 4,535
2007 6,530
EXACTLY – and just wait until march is over.”
and continued reading comprehension in the past
“clio (September 20, 2011, 8:15 am)
HD – reading comprehension issues, I guess….(anon where are you?)”
“but that is probably a function of less detached housing for rent in general.”
I agree
@ UIClio
http://www.uic.edu/ucat/courses/ENGL.html
Refer to 071
“chichow (March 13, 2012, 11:38 am)
@ UIClio
http://www.uic.edu/ucat/courses/ENGL.html
Refer to 071″
hahaahhahahaha LOL
hahahaahahaha LOL
Tell ya what, a 10% increase over the next 3 years would be a breath of fresh air IMO
I’m not counting on it!
“Only some of that was due to a seasonal effect? Try 75% of it. It’s not like you couldn’t have checked the seasonally adjusted data, Gary. It went up 1.9% over that time.”
That’s good to know. Maybe I’ll start a business selling homes at seasonally adjusted prices.
LOOK AT CONTRACT ACTIVITY – JUST LOOK.
and then look next week – you are going to be shocked.
“and then look next week – you are going to be shocked.”
I liked looking at last week, when you weren’t here. I was very pleasantly shocked.
“That’s good to know. Maybe I’ll start a business selling homes at seasonally adjusted prices.”
It was you who raised the issue of a seasonal effect. I only raised the issue of your underestimate.