21 w chestnut

Did the Remodel Pay Off? Gold Coast 1-Bedroom Sells: 21 W. Chestnut

Dec 2 • Gold Coast • 1632 Views • 133 Comments

We last chattered about this completely customized 1-bedroom in 21 W. Chestnut in the Gold Coast in October 2013.

See our prior chatter here.

If you recall, it had extensive built-ins in both the living room/kitchen and the bedroom which created a ton of extra storage space.

This unit was also remodeled with luxury finishes.

It had 6-inch hand-scrapped white oak floors.

There was Lagamorph custom white cabinetry.

The kitchen had luxury appliances such as Miele and Viking.

There was also Ann Sacks tile and marble.

The unit had all the features buyers look for including central air, in-unit washer/dryer and parking was available for $35,000 extra.

However, the property still recently sold for $390,000 which was $25,000 under the 2006 purchase price.

Does it pay to remodel condos with luxury finishes in this market?

Deborah Hess at Conlon had the listing. You can see one of the interior pictures here. (Or if you have a Redfin account, sign on there.)

Unit #1704: 1 bedroom, 1.5 baths, 878 square feet

  • Sold in September 1999 for $216,000
  • Sold in November 2000 for $305,000
  • Sold in August 2001 for $285,000
  • Sold in August 2006 for $415,000 (included the parking)
  • Was listed in October 2013 for $375,000 (parking is $35,000 extra)
  • Sold in December 2013 for $390,000 (included the parking)
  • Assessments of $584 a month (includes heat, a/c, doorman, cable)
  • Taxes of $4691
  • Central Air
  • Washer/Dryer in the unit
  • Bedroom: 17×12
  • Foyer: 6×5

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133 Responses to Did the Remodel Pay Off? Gold Coast 1-Bedroom Sells: 21 W. Chestnut

  1. ChiTownGal says:

    Bottom line: IT’S A ONE-BEDROOM! People are going to spend only so much for a ONE-BEDROOM no matter how tricked-out it is! We talk a lot about “over-improving” a single-family home with swimming pool, tennis court, library, etc., but what about the ONE-BEDROOM bread-and-butter condos that have built-in obsolescence once the occupant (owner or renter) gets married, becomes a parent, etc.?

  2. Sabrina says:

    So why buy one at all? I don’t get it. Chicago isn’t Manhattan where you might live in a 1-bedroom for 30 years.

  3. chuk says:

    “So why buy one at all?”

    Because maybe it makes financial sense for some people if they plan on staying for more than 5 years. Why are you so emotional about housing? It is simple math combined with some probabilities. If someone thinks it will cost them $100k to rent for 5 years, and $80k to own, why is it so wrong for them to buy? And if they think it will cost $120k to buy, then they will likely decide to rent.

    “Chicago isn’t Manhattan where you might live in a 1-bedroom for 30 years.”

    Why not? Single people only live in NYC?

  4. chuk says:

    “Sales of new single family homes jumped to a seasonally adjusted annual rate of 444,000 in October, up 25.4% from the previous month’s revised rate, according to a report issued by the Commerce Department. The rate was the highest level in six months.

    On a year-over-year basis, sales rose nearly 22%.”

    There goes another one of Sabrina’s predictions…

  5. chuk says:

    “The average debt load for the class of 2012 was $29,400 — up more than 10% from the previous year, according to a report released Wednesday by the Institute for College Access & Success’ Project on Student Debt.”

    What?!?! I thought everyone had over 100k in debt when they graduated? Another Sabrina myth debunked.

    ps, this is average for students that actually have debt. Not average of all students.

  6. vlajos says:

    Chuk, and what % have debt? Half?

  7. chuk says:

    “Chuk, and what % have debt? Half?”

    70%

  8. homedelete says:

    You’d be foolish to deny the impact of student loans on future home purchasing and consumer purchasing power.

  9. chuk says:

    “You’d be foolish to deny the impact of student loans on future home purchasing and consumer purchasing power.”

    And you would be just as foolish to exaggerate the impact of student loans on future home purchasing and consumer purchasing power.

  10. homedelete says:

    Maybe you don’t know anyone in the 20′s and early 30′s cohort with moderate to large student loan balances, but from my limited perspective and in the social circles in which I run, I can say that couples in general, with student loans, are waiting longer to buy homes, as in middle 30′s instead of late 20′s, and they’re buying smaller, cheaper homes. In fact, in my office, only about 10% of the unmarried associate attorneys under 40 own homes. And of the handful of attorneys that do own, they’re married with dual incomes, and they’ve all bought sub-$400k. We’re talking lawyers here and $400k hardly buys a decent anything in the GZ. I know from my situation, the student loans knocked about $100,000 off of my purchasing power after factoring in DTI ratios and outstanding balances. $100,000 buys a lot of house. In fact, student loans and my lower income was a determinative factor (along with crappy schools) for me to leave the city and move to the suburbs.

  11. Vlajos says:

    I know quite a few 20-30 year olds. Most have no student loans.

  12. Sabrina says:

    “And you would be just as foolish to exaggerate the impact of student loans on future home purchasing and consumer purchasing power.”

    Student loans are HUGE and will definitely impact purchasing power going forward. Too many people have them and they’re too high now. Average amount of debt just went up to $29,000 for the most recent grads. That knocks off $500 or more a month in what they can “afford”.

    I know someone still paying off his loans in his mid-30s. In order to buy the $425,000 townhouse in the GZ, the bank required that he and his wife pay off their two cars (monthly payments were $700 combined) or else they wouldn’t give him the loan. They got the inlaws to pay off the cars for them so they could buy the property.

    As rates rise, it will only take purchasing power down another notch.

    Prices are too high for the millenials. They don’t have the savings and they’ve got student debt. They can’t afford $400,000 houses.

  13. homedelete says:

    “I know quite a few 20-30 year olds. Most have no student loans.”

    • There are approximately 37 million student loan borrowers with outstanding student loans today. (Source: Federal Reserve Board of New York)

    • As of the first Quarter of 2012, the under 30 age group has the most borrowers at 14 million, followed by 10.6 million for the 30-39 group, 5.7 million in the 40-49 category, 4.6 million in the 50-59 age group and the over 60 category with the least number of borrowers at 2.2 million for an overall total of 37.1 million. (Source: FRBNY)

  14. Sabrina says:

    “On a year-over-year basis, sales rose nearly 22%.”

    “There goes another one of Sabrina’s predictions…”

    It was coming off of a record low last year. It is way, way under what is considered “normal” levels. Sales ARE slowing. You can see it in most of the data. And the ten year has risen again to 2.87%. Does anyone really question that within the next 6 months we’ll go above 3% on the ten year? If the Fed doesn’t begin taper in two weeks, they will in the spring. It’s inevitable (unless the economy REALLY tanks and then that’s a whole other story.)

    So once again, we’ll have the scenario we’ve had the last few months of rising prices AND rising rates. We haven’t seen that in decades. I presume that sales will slow because it will be an affordability issue. We are BARELY off the mat here in Chicago with mortgage rates at record lows. I’m assuming, with rates rising, that sales will slow again.

    The Fed can’t save housing unless it offers record low mortgage rates. That’s how crushed the American consumer is with debt and no salary increases in years. And even then- housing hasn’t really been saved because of the distortion of the private equity funds and other investors. The NYT just had an article about how 70% of all buyers in Brooklyn in the last 6 months were investors. Is that “normal”? What do sales look like if you actually have live-in purchasers?

    We could see a double whammy of sales getting crushed down when both the investors AND the regular investors boycott home buying.

    We are a long way away from any kind of “normal” housing market.

  15. Sabrina says:

    “Why are you so emotional about housing?”

    Because I’ve been writing this blog for 6 years and have seen loss, after loss, after loss, after loss, after loss on 1 and 2-bedroom condos. People literally getting CRUSHED down and losing $50,000 and $100,000. Now much did this seller lose? My god. Wake up people. Buying isn’t always better unless you’re going to live there a long, long time. And this seller benefitted by the upswing in the market! Thank god for that or else it really would have been a blood bath.

  16. Sabrina says:

    “Chicago isn’t Manhattan where you might live in a 1-bedroom for 30 years.”

    “Why not? Single people only live in NYC?”

    No- because for the price of one of their 1-bedrooms you can buy a 3-bedroom here in Chicago. So there is no reason to stay in a 1-bedroom for 30 years in Chicago. Thank goodness.

    Our real estate is much more affordable even with lower average incomes.

  17. chuk says:

    “Student loans are HUGE and will definitely impact purchasing power going forward. ”

    Student loans have been around for decades. Yes they have risen, but it’s not like they were $0 before. So is a 10k increase over the last 8 years is going to completely derail the housing market? More nonsense.

  18. chuk says:

    “Because I’ve been writing this blog for 6 years and have seen loss, after loss, after loss, after loss, after loss on 1 and 2-bedroom condos.”

    The problem is, you are a perma-bear. You are no different than the perma-bulls that got crushed buying. You do not have the ability to change your stance based on changing information. Plenty of people have been making money that bought in the last 3 years. But you do not allow yourself to see that.

  19. chuk says:

    “That knocks off $500 or more a month in what they can “afford”.”

    The only difference is it knocks $500 a month off what they can afford, instead of the $300 a month it used to knock off a decade ago. So, the real impact of higher student loan debt is $200 a month. I’m not saying it has no impact, but I’m saying you are wrong about the degree of impact it has.

  20. chuk says:

    “So, the real impact of higher student loan debt is $200 a month. ”

    What you also don’t seem to realize is that the increase in student loan debt is more than offset by the lower mortgage rates today vs 10 years ago. Which scenario is more affordable?

    $300+1700
    or
    $500+1300

  21. homedelete says:

    Chuk, so I guess $1T in student loan debt concentrated in prospective home purchasers b/w 22-40 is no big deal. Case closed! Let’s just agree to disagree. You’re a permabull if Sabrina is a permabear.

  22. anonny says:

    Does student loan debt limit buying power (for housing and other things)? For people with student loan debt, of course. We have massive student loan debt ($2k/mo, and it’s not going anywhere). Obviously that reduced both what we were able to save for a down and what we could pay each month. But we still bought a place a few years ago, a two bed (as did about 95 percent of junior associates at my firm).

    I know lots of young professionals with massive student loan debt, and lots of young professionals with no student loan debt (they either had family pay for their entire education, paid off their loans within a few years of working (not an impossible feat if single and frugal) and/or had a full-ride in law school and lived frugally while attending). I’d say I know equal numbers from both groups.

    As for one beds (or tiny two beds) in the most desirable hoods, if I were a boomer living in the burbs with a kid attending grad school and/or starting a career in the city, I’d buy one, let the kid live there for some years, then move into down the road or use it as an intown once the kid moved out. Or some variation of that scenario.

    I also know a few people who bought semi-pricey one beds as junior associates (very convenient to work), and are now renting them out for more than the monthly carrying costs, with no intention of selling them. Buying during 08-10 (maybe into 11), with the low rates (then or re-fi-ing), in a premium location, was not such a bad idea.

  23. chuk says:

    “Chuk, so I guess $1T in student loan debt concentrated in prospective home purchasers b/w 22-40 is no big deal.”

    No big deal? Who said that? I said that Sabrina is EXAGGERATING the problem. And she is. She is pretending that student loan debt is something new.

    “Let’s just agree to disagree. You’re a permabull if Sabrina is a permabear.”

    I am ANYTHING but a permabull. I was bearish from 2006-2010. I have been bullish since 2010. I will turn bearish again when the time is right. I take emotion out of my financial decisions. I am able to gauge fear/greed in markets.

  24. anon (tfo) says:

    “In fact, in my office, only about 10% of the unmarried associate attorneys under 40 own homes.”

    So, is that 1? or 2? I’m dubious that there are as many as 30 (nevermind more) unmarried, under 40, associates in your office, given how you’ve described your practice (even accounting for the acknowledged misinformation).

  25. chuk says:

    “I know from my situation, the student loans knocked about $100,000 off of my purchasing power after factoring in DTI ratios and outstanding balances. ”

    Yet you still bought a house. I rest my case.

  26. steve heitman says:

    Please stop already… who the hell cares about attorneys and their hard times paying their debt. If you went to law school over the past 10 years and were not the top 10% of your class then you wasted your money. Attorneys are parasites comparable to real estate developers. enough said!

  27. JP$ says:

    Ok all, it has been some time since I have commented, but I would like to chime in on the student debt conversation. I know plenty of folks that still have student debt in their late 20s and early 30s. Most of the folks that I know that have debt fall into the following categories:
    1) Didn’t have their parents help pay for undergraduate education (or couldn’t help to cover the cost of private schools)
    2) Went to graduate school
    The only way for these folks to save enough cash for a down payment (and to have some savings on the side) in the 5-10 years after graduation is to either have a great paying job, or to live very frugally and consistently chip away at their debt (or a combination of the two).
    Over the past 5 years, I think it is unlikely that most people just out of school or grad school were able to get great paying jobs, and with the tough job market, the income they have produced has not enabled them to chip away at their debt the way they expected when they went to school… that coupled with increasing energy costs and rent has also had an impact (incomes not rising along with costs). So, do I think that this has an impact on home purchasing power for people that are currently in their late 20s to early 30s? Yes. However, I don’t think this is a total paradigm shift. I think it is just going to delay total student debt payoffs, home purchases, and potentially other “milestones” like the decision to get married or to have children.
    Again, I haven’t posted in a while so I am guessing this discussion is old news.

  28. Sabrina says:

    “What you also don’t seem to realize is that the increase in student loan debt is more than offset by the lower mortgage rates today vs 10 years ago. Which scenario is more affordable?”

    We are back to 2006 bubble prices in many areas in the GZ. With mortgage rates rising- how is that affordable? Don’t make me laugh Chuk. When in history has a bubble reinflated within 7 years of it bursting? Never.

    Let’s just say- it’s going to get real rough out there.

  29. Sabrina says:

    Here’s some more juicy housing tidbits:

    1. About half of all states are within 10% of their peak bubble prices and several states are close to surpassing it. The bubble is back!

    2. As soon as rates spiked in May, new home sales inventories rose pretty dramatically. As I’ve been saying for awhile, even on existing homes, inventory may not be great, but it bottomed in the spring and has been slowly rising. That indicates that price increases will also moderate.

    October: 4.9 months
    September: 6.4 months
    August: 5.6 months
    July: 5.6 months
    June: 4.3 months
    May: 4.5 months

    3. October new home sales will likely be revised down significantly next month. In this month’s report, the summer months were revised lower. Summer sales just weren’t that great after all (because rates were rising).

    June revised down 0.9%
    July revised down 4.4%
    August new home sales revised down 10%

    New home sales are a better indicator of the overall market because investors aren’t in that game and there are fewer cash buyers. They need mortgages and monthly payment matters.

  30. Sabrina says:

    “Yet you still bought a house. I rest my case.”

    Sure- just not in the GZ.

    Where will the market be for the GZ? The Chinese and other foreign buyers? Maybe we’ll leave it to them and their “in-towns.”

  31. chuk says:

    “We are back to 2006 bubble prices in many areas in the GZ”

    How can that be? You told me everyone is underwater and everyone has lost money buying. Are you changing your story to fit your argument?

    “Don’t make me laugh Chuk. When in history has a bubble reinflated within 7 years of it bursting? Never.”

    Umm, 2008-2013 stock market? 2000-2007 stock market?

  32. chuk says:

    “1. About half of all states are within 10% of their peak bubble prices and several states are close to surpassing it. The bubble is back!”

    Since you are admitting here that you were COMPLETELY wrong about the housing market for the last 3 years, what makes you think you are right now?

  33. chuk says:

    “Sure- just not in the GZ.”

    Why didn’t he rent? What does it matter WHERE he bought? He had student loans and he bought a house. Something that is inconceivable in your world. Your problem is you look at renting vs buying as an emotional decision rather than a financial one. And even when you make a 1/2 assed attempt to look at the numbers, you purposely use incorrect inputs to try to “prove” your point.

    “Where will the market be for the GZ?”

    People that make more money than HD, or are less conservative.

  34. chuk says:

    “We are back to 2006 bubble prices in many areas in the GZ. With mortgage rates rising- how is that affordable? ”

    Because we are still below in many places, and rates are much lower. It is MORE affordable now than in 2006. It is LESS affordable than it was in 2012. The market does not just consist of tops and bottoms. There are many places in the middle.

  35. sonies says:

    “We are back to 2006 bubble prices in many areas in the GZ. With mortgage rates rising- how is that affordable?”

    Um we are nowhere close to bubble prices anywhere, do you remember the insanity at all? Mortgage rates are also not rising to any significant level. There is massive resistance on the 10 year treasury at the 3% level. Not gonna happen any time soon.

    average 30 year mortgage rates in 2006 were between 6.25% and 6.75%
    compared to 2013 where they have varied between 3.35% and 4.58%

    That difference on a 250k loan between the high ends of those spectrums is $1621.50 vs $1278.62
    That coupled with actual QUALIFIED people getting these loans, and not ninja/no doc/no income 105% financed and we are nowhere near bubble times.

    Also since 2006 incomes are up for the home purchasing segment of incomes
    http://www.advisorperspectives.com/dshort/charts/census/household-income.html?household-incomes-mean-nominal.gif

    Affordability is the lowest in 5 years, however 5 years ago was the height of the financial crisis! And affordability is STILL lower than it has been since the affordability index was kept track of in 1980
    http://research.stlouisfed.org/fred2/data/COMPHAI_Max_630_378.png

  36. homedelete says:

    I bought with student loans but I bought a home $100k less than what I would have paid but for student loans. My down payment was smaller because of my years of payments to Aunt Sallie too.

  37. chuk says:

    “I bought with student loans but I bought a home $100k less than what I would have paid but for student loans.”

    And? I bought a home that was $50k less because I owned two cars. And I had $1k less per month for my mortgage because my family needed to eat food. Yes student loans (like all expenses) affect the house you can afford. But it’s not the death of the housing market.

  38. anon (tfo) says:

    “And?”

    And he spent *more than* $100k less bc he didn’t want to take out a FHA minimum-down loan.

    HD: I don’t believe that you would have spent $100k more than you did (all in after reno, before ejector system) if you’re student loans had magically disappeared. Perhaps if you had never had them at all, but assuming you paid what you paid pre-house, and that had paid them off in full (that is, no additional savings, but zero continuing obligation), the only thing I think would have changed is you would have spent a little more on the reno.

  39. homedelete says:

    anon(Tfo), I disagree with you. I qualified for a $600,000 mortgage; I wanted to buy a $400k house; but I instead bought a $300k house (including reno) instead. $400k buys a lot more house than $300k. That’s an extra bedroom, an extra bath (maybe a master) and more.

  40. AnonIDGAF says:

    I’m 25 and bought instead of rented… It made financial sense. Am I aware that asset prices are probably on the higher end? Yeah… But so is the alternative which is investing the down payment in the stock market… I’m aware that returns are likely to be lackluster in the housing market buying at these prices, but the alternatives exhibit a similar risk. We are approaching a period of lower returns in pretty much every financial market… Accept this reality and move on with life. Will risk be taken off the table as rates rise? Duh, in every financial market… The fact is, there will be more dollars in circulation 10-15 years from now than today, so as long as my money’s invested in something dollar denominated that holds value, should be in ok shape.

    Costly home renos / additions are rarely ever a good investment… But who the F cares?!?! If you intend on living in it then so what? People buy things that offer no to negative return all the time. Automobiles, TVs, the list goes on. Not everything in life has to be an investment, enjoy some of your excess wealth. Enjoy sitting on the sidelines biting your nails. In the event that you come out ahead, I’m happy for ya. I have a nice home that I can call mine and finish the way I want without landlord restrictions.

    Somebody made a great purchase with this unit, the previous owner did an awesome job with finishes.

  41. anon (tfo) says:

    Wait–are the forums gone? And the login system?

  42. sonies says:

    who cares, nobody used them anyway

  43. chuk says:

    “Wait–are the forums gone? And the login system?”

    And soon the site will be gone as well.

  44. DZ says:

    “Wait–are the forums gone? And the login system?”

    Site does seem a little faster. Not taht I have compared much lately.

    Sonies/CDC/lauralou, quick what about AAPL? And where is D#2 and what has he done about AAPL?

  45. Vlajos says:

    I think Chuk is right. Sabrina is slowly winding this thing down as the housing market is back to a more normal operation and the view she espouses becomes harder and harder to defend.

  46. Sparky says:

    Below is the best post of 2013 on CC

    V

    I’m 25 and bought instead of rented… It made financial sense. Am I aware that asset prices are probably on the higher end? Yeah… But so is the alternative which is investing the down payment in the stock market… I’m aware that returns are likely to be lackluster in the housing market buying at these prices, but the alternatives exhibit a similar risk. We are approaching a period of lower returns in pretty much every financial market… Accept this reality and move on with life. Will risk be taken off the table as rates rise? Duh, in every financial market… The fact is, there will be more dollars in circulation 10-15 years from now than today, so as long as my money’s invested in something dollar denominated that holds value, should be in ok shape.

    Costly home renos / additions are rarely ever a good investment… But who the F cares?!?! If you intend on living in it then so what? People buy things that offer no to negative return all the time. Automobiles, TVs, the list goes on. Not everything in life has to be an investment, enjoy some of your excess wealth. Enjoy sitting on the sidelines biting your nails. In the event that you come out ahead, I’m happy for ya. I have a nice home that I can call mine and finish the way I want without landlord restrictions.

    Somebody made a great purchase with this unit, the previous owner did an awesome job with finishes.

  47. Sparky says:

    LOL this forum sucks!

  48. chuk says:

    “Sonies/CDC/lauralou, quick what about AAPL?”

    AAPL should be shorted.

  49. Sabrina says:

    “Sabrina is slowly winding this thing down as the housing market is back to a more normal operation and the view she espouses becomes harder and harder to defend.”

    Um…no. Perhaps you should learn to read.

    I have stated clearly why I have put CribChatter on hiatus.

    The housing market is boring. The new inventory coming on right now is AWFUL and it’s not worth my time to see if the 2 new listings in all of the north side that come on the market every day are worthwhile to write about. I have a life and other things to worry about. I love Chicago real estate- but not when it’s this boring.

    Therefore, because I have a life, I am taking a hiatus until things pick up (but they may not do so for years- who knows.)

    Do you know what it’s like running a blog 5 days a week every week for 6 years? I thought not.

    When there is NOTHING to blog about, it becomes even more difficult to write it. As I’ve said many times, I feel sorry for those looking to buy right now. It is brutal out there. There’s nothing to choose from. I’d only be buying if I positively HAD to. I know some people are in that situation. Good luck to them. I hope they have a great buyers real estate agent.

  50. Sabrina says:

    “who cares, nobody used them anyway”

    Right. Thank you sonies. Since no one was using them and they appeared to be slowing down the site, I removed them. I hope this helps with the speed.

  51. Sabrina says:

    “But it’s not the death of the housing market.”

    It’s the “death” of housing appreciation (as we knew it.) Mortgages will never again be as cheap as we had them. Loans will get more expensive from here. Combined with the debt the millenials already have, and many will be shut out of anything resembling an upper class lifestyle (and housing.) They can afford housing, but instead of buying the $500,000 condo they will have to buy the $375,000 condo.

    Ask any mortgage broker who deals with “normal” buyers. I know several and they all tell me the same story. The student debt the millenials have is a game changer for housing.

  52. Sabrina says:

    “Um we are nowhere close to bubble prices anywhere, do you remember the insanity at all? Mortgage rates are also not rising to any significant level. There is massive resistance on the 10 year treasury at the 3% level.”

    Many properties are selling AT or above 2006 prices in the GZ. We have documented several here. That is bubble level prices. I never said anything about there being a mania in people’s attitudes (although in some cities like Miami where investors are buying up to 90% of condos and they are building 35 new high rises again- there likely is.)

    As for mortgage rates, I guess it depends on what “significant level” means to you.

    December 2012: 30 year fixed was 3.67%
    December 2013: 30 year fixed is 4.45%

    In August, thanks to fears about the Fed taper, it averaged 4.72%.

    If that’s not a “significant” increase- then I don’t know what is.

  53. Sabrina says:

    “Your problem is you look at renting vs buying as an emotional decision rather than a financial one.”

    Nope. Not at all. That’s your problem Chuk. I ONLY look at it as a financial decision. That’s what you don’t understand. YOU’RE the one that gets all emotional about it.

    That’s why I’m renting. It is WAY cheaper for me than buying (in my circumstances at this particular time.) But every person is different and has a different time table and life goals.

  54. Sabrina says:

    “Since you are admitting here that you were COMPLETELY wrong about the housing market for the last 3 years, what makes you think you are right now?”

    How can I be wrong? I’ve told people for 5 years that if they are going to live in a property for 10 years they should be buying. I’ve told them that there are deals out there, so why not get one? If they knew where they were going to be and had stable jobs, why not? You have to live somewhere.

    The problem is, a lot of people AREN’T going to live there for 10 years. Sadly. And I continue to see some of those buyers, who have been in their properties just 2 or 3 years, losing money (again) because real estate isn’t a short term type of thing.

    When will we learn that it’s not short term?

    I guess after prices drop again in the next few years as mortgage rates rise.

  55. Sabrina says:

    Here’s some more actual housing news for those of you who actually are interested in where the market is headed in 2014.

    The FHA announced it was lowering the loan limit in a bunch of counties because it has been losing money hand over fist and it’s trying to limit what percentage of the mortgage market it is. Why subsidize expensive loans?

    Chicago will fall to $365,700 from $410,000 as of Jan 1.

    http://online.wsj.com/news/articles/SB10001424052702303997604579242563662229536

  56. Sabrina says:

    “as the housing market is back to a more normal operation”

    The housing market is so far from “normal” it is the extreme opposite of what we had before. Government making 90% of all loans. Cash buyers making up 30% of all sales because they’re investors. Private equity firms and hedge funds buying up whole neighborhoods. Mortgage rates near record lows. Fed doing years of QE “emergency” stimulus.

    You’re joking, right?

    None of that is “normal.”

  57. bobbydigi says:

    “So why buy one at all? I don’t get it. Chicago isn’t Manhattan where you might live in a 1-bedroom for 30 years.”

    - Not all buyers have the same situation as you Sabrina. Many reason to buy this place. Personally I think the buyer got a tremendous deal.

    “You’d be foolish to deny the impact of student loans on future home purchasing and consumer purchasing power.”

    - Of course it’s a factor, but the extent and impact of it is certainly an unknown. Keep in mind it is just one variable of many. As it pertains to Chicago, what about corporations migrating to city, paradigm shift from suburb to city living, overseas money pouring in, retiring baby boomers with cash. Oh yeah, and the natural gas and oil boom and all the ancillary services associated with it which have the potential to absolutely transform Midwestern wealth over the next 20 years.

    Average amount of debt just went up to $29,000 for the most recent grads. That knocks off $500 or more a month in what they can “afford”.

    - You cannot know how much it knocks off what someone can afford unless you knew how much their income was.

    There are approximately 37 million student loan borrowers with outstanding student loans today

    - In regards to student loans as a whole, a large population of people with student loans debts have the financial means to pay them off immediately but do not choose to because there interest rate is around the rate of inflation and would rather invest the money than pay off student loans.
    - I certainly feel credit card debt is a far worse deterrent to consumer purchasing power than student loan debt.

    1. The Fed can’t save housing unless it offers record low mortgage rates. That’s how crushed the American consumer is with debt and no salary increases in years. And even then- housing hasn’t really been saved because of the distortion of the private equity funds and other investors. The NYT just had an article about how 70% of all buyers in Brooklyn in the last 6 months were investors. Is that “normal”? What do sales look like if you actually have live-in purchasers? We could see a double whammy of sales getting crushed down when both the investors AND the regular investors boycott home buying. We are a long way away from any kind of “normal” housing market.
    - What’s your point here. Economies change after economic crisis. The crisis was global. Our economy has rebounded better than any of our European counterparts and so called emerging powers are still shell shocked. The Fed has been able to save housing because we have the privilege of the world being denominated in our currency. As long as the rest of the world continues to allow it and more importantly as long as OPEC petrocurrency is denominated in US dollars the FED will be in a position to intervene without causing hyperinflation. No other country in the world has that opportunity. The housing market isn’t the same as the 2000, nor the 90’s, 80s, 70s and so on. That doesn’t necessarily mean it’s a bad thing or a good thing. Time will tell.

  58. jfmiii says:

    Goodnight, sweet prince(ss).

    ive been reading cribchatter for 5 years. it took me 3 years to finally buy my place in 2011 and ive recently had offers from realtors wanting to list my home for 20% more than i paid. i have learned a ton on here and know exactly what too look for in a home and what makes it valuable to the next buyer. if cribchatter is going on hiatus, and that hiatus becomes permanent, then that is sad and i will miss my daily visits to the site. thank you to all the posters and, especially, thank you to sabrina for making this site so worthwhile. i think we are in a historic bull market for stocks, real estate, art, watches, etc. this bull mkt will last years and while it is not “normal,” the endless loop up competing central banks providing easy money will lift assets worldwide for the forseeable future. theyll crash but that crash could be 30% after theyve gone up another 50% from here. rates will be low for YEARS, maybe not 1.50% in 10s but a sub-5% 30yr mortgage aint going anywhere for a long, long time.

    but, in closing, dont go sabrina! maybe expand to the suburbs?

  59. chuk says:

    “I ONLY look at it as a financial decision.”

    Ummm. No…

  60. anon (tfo) says:

    ““who cares, nobody used them anyway”

    Right. Thank you sonies. Since no one was using them and they appeared to be slowing down the site, I removed them. I hope this helps with the speed.”

    That’s what *EVERYONE* said when they were rolled out (including the ‘WTF, why is this so goddam slow’). But someone—can’t seem to remember who–insisted that there had been a giant clamor amongst the Chatterati for forums. Seems we now know that that someone was wrong about the demand.

  61. anon (tfo) says:

    Also, any chance we can change back to the ‘Recent posts with Comments’, rather than ‘Recent Comments’?

  62. chuk says:

    “When will we learn that it’s not short term?

    I guess after prices drop again in the next few years as mortgage rates rise.”

    But what if you are wrong…..again?

  63. sonies says:

    you are such a troll anon lol

  64. vlajos says:

    Sabrina, the market is not boring. Places come on the market and sell within 60 days. I find that interesting. It just doesn’t fit your narative.

  65. DZ says:

    “AAPL should be shorted.”

    Sonies?

  66. sonies says:

    only thing I short is options… that being said, AAPL was mostly called away at 550

  67. Sabrina says:

    “Sabrina, the market is not boring. Places come on the market and sell within 60 days. I find that interesting. It just doesn’t fit your narative.”

    No- my “narrative” is to show awesome Chicago housing. Those neat tudors in Edgebrook, the Mediterranean in Beverly, the historic rowhouse in Lincoln Park. Those properties are missing. They aren’t being listed. Inventory is simply too low.

    Instead, there are the new construction duplex downs being listed. The high rise condos. The bland square boxes.

    I need variety to run this site. 5 properties coming on a day isn’t going to do it.

  68. Sabrina says:

    “Seems we now know that that someone was wrong about the demand.”

    Nope. Still a demand for it- but not in the way it is set up here. I would have to create an entirely separate (and new) site in which to run the forums effectively and I don’t have the time to do that.

  69. Sabrina says:

    More actual real estate facts:

    1. Mortgage purchase applications are now down 10% for the year. (This is NOT refis which are down even more.) In the spring they were actually up 14% year over year so you can really see what happened when mortgage rates rose.

    2. The percentage of ARMs rose to 8.1% in November, the highest of this cycle. Affordability is becoming an issue. Purchasers can’t afford the properties at even 4.6% rates.

  70. Sabrina says:

    We won’t get Chicago’s November sales until next week (and I expect them to be pretty good) but the sales numbers in the “hot” markets of Las Vegas and Phoenix have started going the other way (aka down.)

    Sales plunged in both cities compared to November of last year (so you can’t blame “seasonality”).

    The problem now is that prices have risen so fast and now mortgage rates have risen that unless investors are buying, the average buyer is priced out (again.) Private equity firms have slowed down purchases in both Las Vegas and Phoenix because prices are too high so the 30% cash buyer is also going missing. Without the cash buyer- the market is really weak.

    As I’ve been saying, the spring buying season will be interesting. Much higher prices and much higher mortgage rates. Not a good combination. You can’t get blood from a stone.

  71. anon (tfo) says:

    ” I would have to create an entirely separate (and new) site in which to run the forums effectively ”

    Aaah, the Heitman. Natch. Changing the terms.

  72. Fred says:

    “Nope. Still a demand for it- but not in the way it is set up here.”

    Sabrina is correct. There is (and was) demand for a forum, its just that the implementation did not work out. Instead of a true forum as everyone was expecting, we got a confusing blog/forum mashup hybrid that was not really good at either. In order to set up a proper forum, she would likely have to start from scratch on a new site that does not include the blog component.

  73. homedelete says:

    She should just add the disqus commenting system to the blog. That seems to work pretty well, and there’s sub replies and so forth. At this point, why reinvent the wheel.

  74. Sabrina says:

    “In order to set up a proper forum, she would likely have to start from scratch on a new site that does not include the blog component.”

    That is correct. You either get the forums or the blog but not both. WordPress tried to create the forum function (as we saw) but it doesn’t work well with the wordpress template.

  75. Sabrina says:

    “She should just add the disqus commenting system to the blog.”

    That’s even more complicated. You have to sign in to do it.

  76. Sabrina says:

    I will see if I can add the old comments widget in there which told you which post someone was commenting on. That’s more helpful than just the “most recent.”

  77. DZ says:

    “only thing I short is options”

    Interesting. I’m not up on terminology. When you say short an option, do you mean write an option wo holding the underlying or covered?

    And however it’s defined, when should I short options?

  78. sonies says:

    about 95% of the time I write covered options (cash collateralized puts, or stock covered calls) every once in a while I will do some way out of the money naked options for margin clients.

    You should write (sell open) puts when you want to buy a stock at a certain price. You should write calls when you want to sell a stock at a certain price. Free money about 75% of the time, but you have to be selective in this bull market or else you can leave some serious profits on the table so don’t cover everything, only things you are willing to sell at that price and think are ‘toppy’. Also, upward or downward volatility will lead to timely option premiums for shorting them.

  79. DZ says:

    Thanks, sonies. Why don’t you believe in shorting stocks? And do you believe in buying options? If I have a view that a stock is e.g. going down in price, what would you advise?

  80. Sabrina says:

    Here’s some more real estate info.

    Just saw a listing for an apartment rental in the new high rise at 200 E. Illinois in Streeterville.

    1 bedroom, 1 bath: 773 square feet
    Laminate wood floors in living room/kitchen but carpet in the bedroom
    Washer/dryer in the unit (of course)
    Room sizes:
    Living/dining combo: 13×24
    Kitchen: 8×8
    Laundry: 2×2
    Bedroom: 10×17

    Parking is extra.

    $2746 a month.

    Who is renting that?

  81. AnonIDGAF says:

    Wow cheaper to rent a 1br in Trump based on PSF pricing… And theres a dozen of those sitting on the market for quite a while not rented. They better have some good incentive deals.

  82. homedelete says:

    “They better have some good incentive deals”

    They can’t just give them away!

  83. sonies says:

    “Thanks, sonies. Why don’t you believe in shorting stocks? And do you believe in buying options? If I have a view that a stock is e.g. going down in price, what would you advise?”

    I don’t like shorting stocks, because I dont like paying margin interest and I am better at making money on the long side in the current market, but buying options you’ll have a very good chance to lose all your money as you run out of time at least thats what happens when I buy options. I use puts to hedge sometimes on purchases but thats about it. But if you have the means to wait out your idea, short away!

  84. anon (tfo) says:

    “if you have the means to wait out your idea, short away!”

    Market can stay irrational longer than you can stay solvent.

  85. Sabrina says:

    “And theres a dozen of those sitting on the market for quite a while not rented. They better have some good incentive deals.”

    This is a whole building of units priced at this level. And there are a half a dozen more buildings under construction with more of the same. We shall see how fast they are able to rent these and at what prices.

    By the way- the November sales data is out on Thursday so I will cover that. It should be interesting given the numbers coming out from other major metro areas.

  86. Vlajos says:

    Sabrina, could you post what’s going on in other metro housing markets? Looks like Chicago is still chugging along with decent price growth, though sales are slowing.

  87. Fred says:

    For $2746 a month I don’t want in unit washer/dryer; I want in building laundry service! Seriously, what kind of amenities do these buildings offer? You can buy 2/2s in River North for a smaller monthly nut.

  88. Sabrina says:

    “Sabrina, could you post what’s going on in other metro housing markets?”

    Sure- here’s Phoenix through October. I can’t find November’s numbers so they might not be out yet. The investors are done with Phoenix as prices have risen too high. Inventory is now starting to build.

    http://www.housingwire.com/articles/28298-phoenix-housing-market-loses-momentum

    “I anticipate sales will be way down in November and through the holidays, when some people even take their homes off the market until late January,” says Mike Orr, director of the center for real estate theory and practice at the W. P. Carey School of Business.

    “We also anticipate a much slower rate of price appreciation in 2014 than the furious pace we have witnessed over the last two years,” Orr added.

    Phoenix-area home prices have been growing since they hit a low in September 2011, with the median single-family home price increasing 71% from October 2011 to October 2013.

    Meanwhile, market conditions are improving for buyers but worsening for sellers as the supply of homes available for sale starts to drastically rise.

    While there is a 40% increase in active listings from Nov. 1 last year to Nov. 1 of 2013, the demand has tumbled, with the amount of single-family home sales activity falling 19% from October a year ago to this year.

  89. Sabrina says:

    Here’s Las Vegas’ November numbers. Sales plunged compared to last year.

    But, again, the investors are leaving Las Vegas as well. Nothing is cheap anymore. Some agents are blaming November’s sales dip on the time of the year. But wouldn’t LAST November been just as seasonal and weak? How can you say it’s the “seasonal slowdown” when it’s the same seasonal slowdown every November?

    Could it be that, gasp, rising prices AND rising mortgage rates have caught up to buyers?

    http://lasvegas.cbslocal.com/2013/12/10/home-sale-prices-in-las-vegas-drop/

    The latest numbers from the Greater Las Vegas Association of Realtors show a 1.1% dip from October to November where the average price tag on a house was $183,000.

    But that’s still way up – 25.3% up – from November 2012.

    Total home sales dropped from October to November as well as year-over-year.

    The month-to-month drop was 16.2% with just over 2200 homes sold last month. That’s a 17.9% slide compared to November of last year.

  90. Sabrina says:

    Washington DC also saw November sales fall year over year but the October government shutdown could have spooked buyers. We’ll have to see how the next few months play out there.

    November sales down 13.7% YOY- largest decline in 2 years.
    November sales down 21.2% from October
    Median sales price up 8.1% year over year
    Median days on the market was 20 days. Median days on the market in November 2012 was 22 days.
    Active listings up 5.7% year over year but still 31.9% below the 2007 peak.

    http://cra.gmu.edu/pdfs/Washington_Metro_Housing_Market_Update.pdf

  91. Sabrina says:

    9 county Bay Area also saw November sales decline. A fluke? Or is price now becoming an issue? Percentage of “investor” buyers also fell year over year.

    November sales down 10.9% year over year- also 15.1% below the November average since records began being kept in 1988.
    Average price up 25.6% to $550,000- price peaked at $665,000 in June/July 2007.
    FHA loans down to 10.2% from 14.7% a year ago (so maybe the changes in loan limits starting on Jan 1 won’t really matter much to the Bay Area?)
    ARMs now 20.1% of loans, up from 12% in November 2012. Since 2000, ARMs have accounted for 47.7% of all purchase loans- so still below historic norms.

    http://www.dqnews.com/Articles/2013/News/California/Bay-Area/RRBay131217.aspx

  92. Sabrina says:

    November sales also fell in Southern California, including LA County which was down 11.3%. California has an affordability issue, obviously. But this is what I’ve been saying. You can’t get blood from a stone. Prices and mortgage rates have risen dramatically. Buyers can no longer afford to buy.

    “November sales were pretty underwhelming. The exact cause is tough to pinpoint, but we see likely culprits: The inventory of homes for sale still falls short of demand. Also, any pullback in home buying during the early-October fiasco in Washington D.C. would have undermined November closings, and we know investor and cash buying continued to drop,” said John Walsh, DataQuick president.

    “Meanwhile, home prices aren’t soaring anymore but they’re also proving to be sticky,” Walsh said. “The price jumps we saw earlier this year were driven in large part by the supply-demand mismatch. This spring could bring a substantial surge in inventory as more homeowners look to cash in on higher values. If that happens it’s going to make big price jumps less likely.”

    November sales down 14.2% year over year- also 19.8% below average November sales since 1988.
    Median price was $385,000 up 19.9%. Peak median prices was $505,000 in the spring/summer of 2007.
    ARMs now 11.2% up from 5.6% in November 2012. Still below the 31% average since 2000.

    http://www.dqnews.com/Articles/2013/News/California/Southern-CA/RRSCA131216.aspx

  93. vlajos says:

    Thanks Sabrina! Very interesting.

  94. chuk says:

    Well, so much for the taper…

  95. Sabrina says:

    Yes Chuk. So much for it. The 10-year is back to September highs and is going to 3% and beyond. That is the “normal” rate. Without the Fed buying bonds it would be closer to 3.5%. But the Fed has been messing around in the housing market for several years now. The problem will be what happens when it gets out of it.

    When Congress messed around in it with two tax credit programs, the “recovery” was only temporary. As soon as the stimulus ended, so did the recovery.

    I think we’ve worked through a lot of inventory this time, so that helps. But affordability is going to be the problem going forward. If you looked at those statements put out about California, the average monthly mortgage payment was $400 to $500 more this November than last.

    We’ve never seen rising housing prices AND rising mortgage rates. Hasn’t happened in decades.

    As I’ve been saying, 2014 is going to be very, very interesting.

  96. homedelete says:

    “As I’ve been saying, 2014 is going to be very, very interesting.”

    Exactly. It will be a great time to both *buy* or *sell* a home!

  97. anon (tfo) says:

    “We’ve never seen rising housing prices AND rising mortgage rates.”

    We’ve had that conversation numerous times, and there are many around here who believe that we have had rising prices and rising mortgage rates.

  98. chuk says:

    “As I’ve been saying, 2014 is going to be very, very interesting.”

    Are you predicting a large drop in prices? What are you predicting that will be so “interesting”?

  99. homedelete says:

    It’s a pattern
    inventory falls, prices rise
    inventory rises, prices rise more slowly
    inventory keeps rising, prices stagnate the fall a little
    inventory rises, then prices fall precipitously
    inventory falls, prices fall more slowly
    inventory falls, prices stop falling, and rise slowly
    inventory falls, prices rise precipitously
    and right now, where we are is:
    inventory starts to rise, and prices to start rise slowly or stagnate;
    next inventory starts to rise, and prices start to fall

    I mean heck, I could sell my house and clear $100k profit because completely rehabbed homes sell at a premium these days in my area. The buyer wouldn’t need to fix a thing after moving in; but they’ll need to pay close to $275 a sq ft for that privilege. and buyers down the street are doing that very same thing. I’ve even considered selling my house, but the wife won’t let me.

  100. chuk says:

    “It’s a pattern….”

    aka, supply and demand

  101. anon (tfo) says:

    “I mean heck, I could sell my house and clear $100k profit because completely rehabbed homes sell at a premium these days in my area.”

    What would you do? Move back to an OIP apartment? Move to Crystal Meth Lake? It’s not ‘clearing’ $100k if you turn around and sink it into a bigger/nicer house.

  102. anon (tfo) says:

    “aka, supply and demand”

    Jeez chuk, why use 3 words when you can use 75? It’s like you don’t understand 6 minute increments.

  103. Sabrina says:

    “We’ve had that conversation numerous times, and there are many around here who believe that we have had rising prices and rising mortgage rates.”

    Not in my adult lifetime, anon(tfo) but you may be much, much older than me. My father experienced the 18% mortgage rates but prices would go up just the 1% or whatever. But he’s much older (and it was so long ago- he doesn’t remember it much either.) Mortgage rates have only dropped since around 1992 or 1993 or so. Buyers don’t remember that they can also go up- and quite dramatically (as we’ve seen.)

  104. Sabrina says:

    “Are you predicting a large drop in prices? What are you predicting that will be so “interesting”?”

    I have no idea what’s going to happen. But every time there has been a drop in sales in the last 6 years, price declines follow. The 2013 market could just be a longer version of what we saw with the first time homebuyers tax credits (only this time it was extra low mortgage rates that fueled it). And once that “fuel” was taken away, sales and prices resume falling.

    But- as I’ve said- inventory is much lower than when we had the other two stimuli. Although, if you look at the graph charting sales leading up to the first time tax credit stimulus and when mortgage rates started to rise (this is national sales)- they track almost identically.

    All I know is that homebuyers are going to be spending a lot more in 2014 and that’s not going to be too pleasant for most. Heck, even Lawrence Yun, the biggest cheerleader of them all at NAR, is predicting 5.5% mortgage rates by this time next year.

  105. anon (tfo) says:

    “My father experienced the 18% mortgage rates but prices would go up just the 1% or whatever. But he’s much older (and it was so long ago- he doesn’t remember it much either.) ”

    Premature senility is a tough thing.

    He seriously doesn’t remember 30 years ago? I do, and I was a pre-teen. Do I have *actual* memory of the details? Probably not–but I know it was a fact, and I remember the times pretty clearly.

  106. anon (tfo) says:

    ” Lawrence Yun … is predicting 5.5% mortgage rates by this time next year.”

    In other words, there is *no chance* of 5.5% rates in Dec-14. Yun has a bad track record.

  107. chuk says:

    “I have no idea what’s going to happen.”

    But yet you speak as if you do.

  108. homedelete says:

    FunYun!

  109. chuk says:

    “Heck, even Lawrence Yun, the biggest cheerleader of them all at NAR, is predicting 5.5% mortgage rates by this time next year.”

    What does this tell you about the likelihood of him actually being right?

    http://1.bp.blogspot.com/_SfxDExxUukY/R-he5fB56aI/AAAAAAAAASk/JiIYUiK914o/s1600/nar_rid6.JPG

  110. sonies says:

    “Heck, even Lawrence Yun, the biggest cheerleader of them all at NAR, is predicting 5.5% mortgage rates by this time next year.”

    maybe he’s just saying BUY NOW BEFORE RATES RISE!

    That seems to be his mantra, that sense of urgency thing… and LOL at chuk’s picture above, could anyone possibly be more wrong when the data says otherwise, hes like Baghdad bob of the realtor association!

  111. Sabrina says:

    “He seriously doesn’t remember 30 years ago? I do, and I was a pre-teen. Do I have *actual* memory of the details? Probably not–but I know it was a fact, and I remember the times pretty clearly.”

    He doesn’t remember what it’s like to buy under those conditions because you just did it back then. Although it did take us a year to sell our house in 1979. Prices reflected the rates. They weren’t rising by 15% as rates rose.

    It’s been “cheap” for so long, he’s used to buying at 4% or 5% or 6%. I had a friend who bought in 2001 and she got 7% and that seems really expensive now. Can you even imagine 7% with prices at this level?

    The housing market is in for real trouble when rates “normalize.” We’re a monthly payment nation. Something will have to give. Prices will have to fall.

  112. Sabrina says:

    “maybe he’s just saying BUY NOW BEFORE RATES RISE!”

    Too bad no one IS buying, Sonies. And rates continue to rise. The 10-year is at 2.96% today- but continues to fluctuate.

    Last week, mortgage applications hit 13 year lows. Yes- that’s 13 other seasonally slow Decembers where more people applied for a mortgage than this year. Rates only averaged 4.6% last week. What happens when they are at 5%?

    http://www.reuters.com/article/2013/12/24/us-usa-economy-mortgages-idUSBRE9BH0IK20131224

    They keep blaming the slowdown on rising mortgage rates. How about blaming it on prices that are too high?

    Without the investor (all cash buyer) this housing market would be very, very weak right now. The “investor” buyer is already starting to wane in the parts of the country where there was heavy buying (Arizona, Nevada, California- to name just a few areas). It’s down about 5% in those areas as prices rise. Who will step in to fill the investor shoes if prices continue to rise and mortgage rates continue to rise?

    The data is already telling us 2014 is going to be very interesting. We’ll see falling home sales and then falling prices (if it follows the pattern we’ve seen over the past 6 years when sales have slowed.)

  113. Sabrina says:

    In another sign that this housing market cannot handle higher mortgage rates, the newly appointed head of the FHFA has already said he is postponing the addition of new fees that Fannie and Freddie were to enact on mortgages beginning in March that were set by his predecessor.

    It would have added, on average, another 14 basis points onto a mortgage rate. So that 4.6% rate would have been 4.74% starting in March.

    Why the sudden panic?

    Lol.

  114. chuk says:

    “Too bad no one IS buying, Sonies.”

    Ha, do you even read what you type?

  115. Sabrina says:

    Ha, do you even read what you type?

    Yep- purchase apps down another 4%. Now down 25% from the peak in 2013 (in the spring- which WERE running about 12% higher than last year.) So it’s a huge plunge. Some of it is refis, of course. But a lot of it is people priced out. That will work its way through to sales and then to prices (eventually.) Can’t get blood from a stone.

    Chuk- you remind me of all the people in 2007 and the beginning of 2008 (steve heitman comes to mind on this blog but he was common on other housing sites as well) who kept up the bullish mantra in the face falling sales numbers. The GZ will hold up better than the rest of the overall market for a while but even that will weaken. Higher mortgage rates and the decline of FHA and tighter lending requirements hit even those making $100,000 a year.

  116. chuk says:

    “Chuk- you remind me of all the people in 2007 and the beginning of 2008″

    Except I was bearish then. Do you realize that you do the EXACT same thing as “those people”?

    “who kept up the bullish mantra in the face falling sales numbers.”

    You kept up the bearish mantra in the face of increasing sales numbers. The problem is, perma bulls and perma bears don’t have the ability to change their position. They just stick with it until they are proven right. Like a broken clock.

    For the record, I am not bullish on 2014. I think prices will be relatively flat. I was a super bear in 2008. I was a super bull in 2012. I am neutral now.

  117. Sabrina says:

    “You kept up the bearish mantra in the face of increasing sales numbers. The problem is, perma bulls and perma bears don’t have the ability to change their position. They just stick with it until they are proven right. Like a broken clock.”

    I’ve not been super bearish. Not at all. I’ve been telling people to buy for the last 5 years. I only turned bearish earlier this year when prices jumped too quickly and then mortgage rates did the same. Buyers are getting priced out…again. And the investor interest isn’t “normal.” I just want normal market conditions so that regular buyers (lower, middle and even upper middle class buyers) have somewhere decent to live and raise their families.

    People should NOT be spending 50% of their income on housing! (either to buy or to rent.) It’s not normal and it will correct. (Although the new mortgage guidelines in 2014 are going to limit it to 43% anyway- but that’s still too high.)

    Our focus on housing has been misplaced. Ask the man on the street. They will STILL tell you that housing is the way to get rich even though stocks are up over 30% this year (on top of the 17% last year.)

    Everyone needs somewhere to live- but the housing market is still not balanced or healthy. And now, heading into 2014, we have thousands of luxury apartments being built with no one to live in those either (where’s the “normal” housing???)

    It’s a mess. I wish the government would get out of the market- but it cannot (at least not yet.)

    Oh- another change coming for 2014 which most people don’t realize- as of right now, Congress has NOT renewed the moratorium on short sales/foreclosures that allows a homeowner to not have to pay income taxes on the difference. A LOT of people are going to be in for a rude awakening as far as a tax bill in April 2015 if Congress doesn’t extend it again (which so far, they are loathe to do.)

  118. chuk says:

    “I’ve not been super bearish.”

    Nonsense. In 2012 you said that prices would continue to go down for years. You said there would be no new construction for a decade. Do you not remember all the discussions about those $99k 1 br’s in the southloop? You know the ones that are now going for almost $200k.

    ” I’ve been telling people to buy for the last 5 years”

    Ha, please…

    ” I only turned bearish earlier this year when prices jumped too quickly and then mortgage rates did the same.”

    I hope you are kidding.

    “People should NOT be spending 50% of their income on housing!”

    Agreed. Who is doing that now?

  119. chuk says:

    Maybe THIS is the reason why places aren’t selling:

    “A New Jersey couple is suing real estate firm Coldwell Banker and two of its New Jersey agents for allegedly sabotaging sales so that the agents could use their vacant home to have sex.”

    http://gawker.com/new-jersey-realtors-caught-on-camera-having-sex-in-a-cl-1488323799

  120. JJJ says:

    “Anecdote, anecdote, anecote! Unsupported conjecture. STRAWMAN!! Mischaracterization of data, etc…”

  121. sonies says:

    its a sellers market!
    shame there is nothing good to buy

  122. homedelete says:

    I’ll stand up for Sabrina and say that she turned bearish earlier this year. She was talking about deals from probably 2010-2012. She regularly pointed them out. The $99k 1 bedroom in the south loop was a strawman, I don’t ever remember her talking about that. She said she turned bearish earlier this year and I’ll back her up on that. heck, I was one of the most bearish people here and I still bought in 2012. She mentioned plenty of deals.

    Unfortunately those days are over. The 40 year HAMP loan mods, the private inside sale to investors, the homepath crappy home remodels, the just plain vacant inventory, the 36 to 48 months it takes to foreclose on a house….the refusal of banks to price short sales to sell within 90 days on the market.

    However I do agree with Sabrina that this is merely a temporary bump in prices and the long term trend will be down.

  123. chuk says:

    “I’ll stand up for Sabrina and say that she turned bearish earlier this year.”

    Umm, when did she turn bullish?

    “The $99k 1 bedroom in the south loop was a strawman, I don’t ever remember her talking about that.”

    Strawman? I was in the market for just such a unit and she regularly posted about them. I also had many discussions with you about it when you were playing your “super bear” character. You had all of your nonsense posts about “prices not going up until the last foreclosure sold” and the “shadow inventory”. It’s funny how everyone tries to revise history to make themselves look better.

  124. sonies says:

    why does it take so long for comments to post, I notice that they are on the front page comment part but then don’t show up in the actual thread until ??? minutes/hours later… certainly makes dialogue difficult if posts aren’t posted immediately.
    whatever

  125. homedelete says:

    ““prices not going up until the last foreclosure sold” ”
    Well, where are the foreclosures? Prices haven’t gone up in ‘hoods with lots of foreclosures but they’ve shot up greatly in the areas where there are few if any. Hardly in foreclosures in park ridge these days, and guess what, the last homepath foreclosures have been sold and I’ve already made (on paper) $100k in pure appreciation. Crazy to think, but true. Yet in awful areas where foreclosures still abound, prices havent’ been so hot.

    Furthermore, what happened to all the foreclosures? Well, a couple of things. A large chunk were sold to investors, large and small, without ever hitting teh MLS. A good chunk of them were also given HAMP or other loan modifications. As part of my former job I was in court on more than a handful of foreclosure cases and loan mods are now common, whereas three years ago, they were rare and unusual. So, yes, prices won’t rise until the last foreclosure is sold, and the shadow inventory is still there. If you have a better explanation, please tell me, because otherwise your criticisms without any analysis ring hollow.

  126. Sabrina says:

    “You said there would be no new construction for a decade.”

    I said there would not be a new construction condo high rise for a decade. So far, we are entering year 6 and that has turned out to be correct.

    But with the low inventory- it might not make it to 10 years. We’ll see. There is an upper bracket high rise proposed in the Gold Coast (Elm and State) but it still needs alderman approval and all of that. If they break ground in 2015, then it will only be 7 years. I will have been off by 3 years.

    They’re breaking ground all over the place on high rises though. Too bad its all apartments. And too bad they’re going to build too many of them. But that could mean we’ll see some conversions sooner rather than later.

    Mortgage rates are key. Get up over 5% and its going to be hard to sell $500,000 2/2s en mass.

  127. Sabrina says:

    “She was talking about deals from probably 2010-2012.”

    There were deals all over the place and Crib Chatter posted on many of them. From million dollar mansion foreclosures (remember the ones that flooded and had mold damage selling for $500,000?) to the West Town 2/2 foreclosures selling for $300,000 on Division (but everyone thought they were “ugly” and wouldn’t touch them)- that’s all I posted on for several years. Heck, at least half my posts ended with “is this a deal?”

    I barely use that phrase now.

    There are still millions of foreclosures in the pipeline but the banks are holding them back and when they do list them they’re not listing them for cheaply like they used to because they don’t have to with low inventory. That’s why the private equity money is drying up. There simply aren’t the 50% off deals anymore. The smart money is leaving that game.

  128. anon (tfo) says:

    “That’s why the private equity money is drying up. There simply aren’t the 50% off deals anymore. The smart money is leaving that game.”

    Perhaps in Chicago, but not everywhere. I know of several large reo2rental acquisitions that have closed/are closing end of ’13/start of ’14. And that’s not something I directly deal with, so it’s unlikely the ones I’ve heard about are the only ones.

  129. gringozecarioca says:

    “And however it’s defined, when should I short options?”

    DZ.. If you are collecting any premium, technically you are short options. and as to when to do it….for you (and pretty much anyone else), the correct answer is never.

    being back to 3 hours ahead of EST makes late night football games tough to watch… damn time zones!

  130. chuk says:

    “DZ.. If you are collecting any premium, technically you are short options. and as to when to do it….for you (and pretty much anyone else), the correct answer is never.”

    So you are against writing covered calls?

  131. gringozecarioca says:

    “So you are against writing covered calls?”

    Personally, I never have nor ever would. A headache for no benefit.

  132. chuk says:

    “A headache for no benefit.”

    Nonsense.

  133. gringozecarioca says:

    “Nonsense.”

    Chuk.. then you have my blessings to sell in the money puts to your hearts content….

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