Predictions: What Will Happen With Chicago’s Fall Housing Market?
All summer long, sales in Chicago have been lower month over month compared to a year ago.
It wasn’t supposed to be like this.
A year ago, mortgage rates spiked on fears of the Fed’s QE taper, which came in 2014 instead. The higher mortgage rates put the kibosh on the hot housing market in the second half of 2014.
In 2014, the mortgage rates have come back down but for some reason sales have not recovered.
Nationally, mortgage applications still remain weak, falling year over year by the double digits. Applications are still at 19-year lows. The applications are forward looking and usually indicate that home sales will remain low for several months into the future.
Now that September has arrived, what will happen with Chicago’s fall housing market?
- 1. Will buyers jump in as rates remain low and boost the sales numbers?
- 2. Will sellers take the opportunity to sell during the low rate environment?
- 3. Will sellers just wait until next spring in the hope of continuing rising housing prices even though mortgage rates will likely be higher again? (since most economists are forecasting the Fed to raise rates sometime in the first half of 2015.)
What would boost this housing market again?
As you can see, I have removed the “most recent comments” from the sidebar.
Sorry for the inconvenience. But I want to see if that is somehow behind the lag. I’m just trying to eliminate possibilities. Obviously, we have used this template for years before without the lag problem. I also have the same hosting service. So I don’t believe either of those things are the issue.
But what IS?
I know it’s annoying because now you’ll have to click on posts to see what is going on. But let’s see if there’s a difference today.
As for what I believe will happen with the housing market this fall:
I’m not encouraged because the summer was so rotten. The slowing was noticeable in August. Sellers are listing too high and then they’re either lowering their prices within a week of listing (probably due to no or few showings) or some are sticking it out like a month before simply withdrawing from the market.
Properties priced decently that are fully upgraded are selling within a few days, however, especially in the “right” school district.
And the luxury level- over $1 million- is still pretty strong.
But what good is a few $3 million houses selling in Lincoln Park when sales are super slow in Portage Park etc.? The upper end is being supported by the red hot stock market.
1) People will buy when it makes financial sense for their situation
2) yes, what other choice do they have?
3) *facepalm*
Also the ‘recent comments’ thing is not behind the lag, I saw that there were 2 comments on the article, clicked the article and nothing no comments until I posted something.
1. Will buyers jump in as rates remain low and boost the sales numbers?
No.
2. Will sellers take the opportunity to sell during the low rate environment?
Yes.
3. Will sellers just wait until next spring in the hope of continuing rising housing prices even though mortgage rates will likely be higher again? (since most economists are forecasting the Fed to raise rates sometime in the first half of 2015.)
YES!!
Greedy sellers want to rip off today’s younger generation of buyers. It’s shameful.
“Also the ‘recent comments’ thing is not behind the lag, I saw that there were 2 comments on the article, clicked the article and nothing no comments until I posted something.”
In olden days, the Name and Mail fields would remain populated indefinitely. Now they “time out” and become blank. When you post something, the fields become populated until they time out again. Is there any setting that controls how long those fields can retain their prior entries?
Housing price changes are essentially a zero sum game for current owners.
So which is better:
1) Universal price drop – My condo drops 10% in value, but so does the more expensive condo I want to move into, but lower sell price on the current place results in less equity for new down-payment
2) Universal price increase – I can sell my condo for more which increases my down-payment, but I will have a bigger mortgage on the new property.
Sadly, I think 1 is probably the preferred scenario.
“Sadly, I think 1 is probably the preferred scenario.”
It depends. Lets take an easy example:
Own–$500k place, owe $400k
Want–$1mm place.
If down 20%–$0 equity, need $160k more for DP. Mtg = $640k
Up 20%–$200k equity, need $40k more for DP. Mtg = $960k
So, sorta depends if you make it a now problem, or a future problem (ignoring the fact that it is basically always better to pay less for the same thing).
Happy to see the old format back..
DZ’ing to see if anything new…
I think prices flatline. The “hot” space in the GZ seems to be the 3BR condos in the $600-800k range – they go under contract quickly. The upper end SFHs seem to be sitting on the market longer now ($2mm+) – partly a function of overly optimistic sellers and partially because prices are getting a bit toppy. There are so many apt buildings coming in the next couple of years I think the rental market will soften – how much I don’t know. This would affect the 2BR places in the GZ the most. I think it will be healthy for the market to tread water for awhile and I welcome the new rental buildings going up – I think its important for the health of Chicago in general to attract younger people downtown. As always I have no clue what rates will do or how they will affect prices.
I’m not very good at math, but in the opposite scenario where one wants to downsize and pay cash for a smaller place, I think it would be better to wait for prices to increase. Because, even though the lower-priced home will rise in price along with the higher-priced one, won’t the higher-priced home likely increase more $$$ than the cheaper one? And thus the downsizer will be able to purchase a nicer small home with the proceeds from the larger one.
“DZ’ing to see if anything new…”
To the best of my understanding, DZ’ing refers to posting to see a comment that is shown on the ticker but which you have to be logged in to read in full. What you’re doing, here–posting to see if someone might have posted in the prior 20-40 minutes even though clearly no one had posted anything in the 15 or so hours prior to that–reflects an entirely different level of idleness. What I’m doing–taking note of what you’re doing–is yet something beyond that. (In my defense, the main alternative activity that seems to be available is the episode of SYTYCD showing on the plane.)
“the episode of SYTYCD showing on the plane”
Perhaps I was unfair. It may be the season finale.
taxes still too high
too much violence in the city
its not getting better with obama welcoming more illegals right around election time no less,hmmmm
and fighting for no voter id
“its not getting better with obama welcoming more illegals right around election time no less,hmmmm”
Yes- all those 10 year olds are going to be voting. And all those illegals are what is causing the violence in Chicago.
Let’s stay on topic- shall we?
Taxes are the same as they were last year when sales were jumping- the hottest in 7 years. Violence is the same as last year. Job market is WAY better. Stock market even higher.
So why aren’t people buying this year?
“The “hot” space in the GZ seems to be the 3BR condos in the $600-800k range – they go under contract quickly.”
Really?
I’m seeing a LOT of 2/2s downtown in the $550k to $800k range selling very quickly. The 2/2s at the lower end of the range, even downtown, are not.
Could it be simply the difference in having a downpayment and not? Those in that higher bracket are probably 1.) older buyers 2) dual income and are able to come up with the $80,000 easier than the younger, single buyers who would be interested in the $400k 2/2 in River North. So those buyers are simply renting in a luxury building instead.
1) Universal price drop – My condo drops 10% in value, but so does the more expensive condo I want to move into, but lower sell price on the current place results in less equity for new down-payment
Fred: #1 scenario is what all the real estate agents were saying was “fantastic” during the bust because buyers were getting such a “deal” on the new property they bought (implying that it made up for the loss of $$$ they had on the first property.)
“Also the ‘recent comments’ thing is not behind the lag, I saw that there were 2 comments on the article, clicked the article and nothing no comments until I posted something.”
Like I said- I’ve never seen the lag when I’ve been using the site, so I’m not sure why some of you see that and I don’t. The comments are always there but that could be because I’m the administrator.
I’ll restore the most recent comment toolbar then since that isn’t causing it. Otherwise, I can’t figure it out.
“1) People will buy when it makes financial sense for their situation”
That’s right. So if no one is buying because it makes no financial sense to do so- then prices will come down to where it makes sense for them to do so.
That’s why we’re seeing the slowing now.
A lot of sellers are being told by their realtors “the housing market is hot. Multiple bids. You can list for 30% over what you paid in 2007 and sell.” But then, in most cases, it just sits there.
The housing market has changed again. Today’s comments from Toll Brothers on their conference call were kind of eerie. Toll Brothers is the biggest rah-rah in the industry. In 2006, Bob Toll actually said in an interview that the high prices were a new paradigm in housing and that many younger people were going to be priced out of housing for the rest of their lives (and living in their parents basements.)
Today, he was saying that the housing market wasn’t great (and they are luxury builders.) They haven’t had to do incentives and they are getting foot traffic into their showrooms, but less people are buying.
So when do the incentives finally start? In Spring 2015?
I would rather see prices stagnate or drop, and get a better deal on the “move up” property even though my current property sells for less, especially in an era of stagnating or dropping incomes for most of the population.
As someone else pointed out, the move-up buyer will have to assume less debt for the new property. Additionally, property taxes are more likely to stay level.
When prices rise, the tide floats all boats, and your “move up” home has moved that much further away. Nobody benefits from inflation but the people positioned to skim every transaction.
By the way- I have updated every one of my plugins and checked the settings because I think the lag problem can be found there. But I’m still not sure which is causing it. Let’s see if the hours I spent trying to fix it last night does anything.
There’s a lot of properties being listed this week (although at least half of those are retreads from last summer) but at least something appears to be happening in the market this month. I’ll have a new property post up tomorrow.
So nice to have the old site back! Thanks Sabrina!
And to the dolt who said this:
“taxes still too high
too much violence in the city
its not getting better with obama welcoming more illegals right around election time no less,hmmmm
and fighting for no voter id”
Basically you are a fucking moron. Taxes have not changed in last few years, Violence is down, to 50 year lows actually, and what?
yay thumbs up/downs!
“That’s right. So if no one is buying because it makes no financial sense to do so- then prices will come down to where it makes sense for them to do so. ”
People could be buying because rents are too high in the neighborhoods they want to live too. I think the rent vs. buy spread needs to widen even more so, I don’t see it happening because all the builders are doing is throwing up rentals, even though prices for rentals on these new builds are out of this world crazy, people are still living in them. The fact that a shit location K2 can charge $3 a sqft is beyond crazy to me. Hubbard place is practically full, I’m sure 111 wacker will lease quick too… its nuts out there in the rental market.
Back in 2012 or so the rent vs buy spread was huge and smart buyers scooped up properties at good prices, now there is equilibrium happening and less places are selling at these higher prices because they aren’t “deals” comparatively speaking.
I expect mortgage rates to continue to decline through 2015 and maybe beyond. Early next summer should be a good time to be a seller I think. I will probably list my place then. Not sure yet.
“Additionally, property taxes are more likely to stay level.”
Maybe in another state, but not in Cook County. That’s simply not how the property tax system works here.
At least 16 minutes of lag, still, as Vlajos’ 9:26 comment wasn’t visible until I submitted the 9:41 comment.
DZ’ing
Me’ing.
Posting in this thread bc the 4107 Greenview one won’t accept any single digit answer for 9+__=11
Weird. I can see @fo’s comment in the other thread without being “logged in” and less than 5 min after he posted, but not the comment here, which seems to have been posted before the other comment.
Sabrina – have you tried viewing the site from a browser or computer from which you have never logged in as administrator? Try downloading Opera browser and viewing the site and see if you can see the lag.
Sabrina,
Toll Brothers is struggling because the burbs are dead. Everyone with money is moving back to the city. Told you that a long time ago. Suburbs are for dying…
“Toll Brothers is struggling because the burbs are dead. Everyone with money is moving back to the city. Told you that a long time ago. Suburbs are for dying…”
Um…no. You are very, very wrong.
Toll Brothers two biggest markets are the Los Angeles area (which IS large and sprawling, I grant you that) and URBAN NEW YORK. They are building high rises right in the middle of Manhattan.
Go figure.
And even that business is not good right now.
“At least 16 minutes of lag, still, as Vlajos’ 9:26 comment wasn’t visible until I submitted the 9:41 comment.”
Thanks for letting me know what it’s doing. So everything I did with the plugins was for naught. No one seems to know what the issue is (not even wordpress) or how to fix it. It’s obviously not the theme.
“I expect mortgage rates to continue to decline through 2015 and maybe beyond. Early next summer should be a good time to be a seller I think. I will probably list my place then. Not sure yet.”
What????
So you’re assuming that the Fed will NOT be raising rates for at a minimum of another 18 months?
With the most job creation in 17 years???
Toll Brothers, by the way, is also considered one of the best managed of the publicly traded home builders. It has the best land in the best locations and, of course, it is at the “luxury” price point so they don’t have to worry as much about first time home buyers trying to come up with a down payment.
That’s what’s so surprising. Their conference call was almost depressing. They’re not doing incentives (yet) but I wouldn’t be surprised if they had to resort to that by early next year unless things improve considerably in February when the spring buying season begins.
“I’m seeing a LOT of 2/2s downtown in the $550k to $800k range selling very quickly. The 2/2s at the lower end of the range, even downtown, are not.
Could it be simply the difference in having a downpayment and not? Those in that higher bracket are probably 1.) older buyers 2) dual income and are able to come up with the $80,000 easier than the younger, single buyers who would be interested in the $400k 2/2 in River North. So those buyers are simply renting in a luxury building instead.”
Hey! That’s me! Kinda…except I’m single income. And 29. I lived in a cheap downtown apartment and a “luxury” downtown apartment. It shows. I picked my place because it has a 2,000 square footish private terrace with east and west views. However the biggest reason I’m buying is to lock in a really cheap mortgage rate. I will have to buy eventually, might as well do it when I can get a 3.5% mortgage.
“I will have to buy eventually, might as well do it when I can get a 3.5% mortgage.”
Why do you have to buy “eventually”?
Whatever you buy at 29 probably won’t be what you will be living in by 39 if you’re buying a condo so why does it matter if you lock in the low rate? It won’t be around when you go to move anyway.
But I DO think that a lack of down payment is hurting a certain segment of the market. There are a bunch of the cheaper 1-bedrooms sitting on the market for months in key GZ locations. But who has $25,000 to buy one?
This makes it sound like Toll is blowing the doors off, and expecting it to continue:
http://www.forbes.com/sites/maggiemcgrath/2014/09/03/toll-brothers-doubles-profit-on-higher-home-prices-says-more-demand-is-still-to-come/
We are currently under contract on a West Bucktown townhouse after looking for about 8 weeks over the summer. We were looking at 3BR townhouses and condos in Lincoln Park, Lakeview, Wicker Park, Bucktown, West Bucktown/Logan Sq. $500k and below. There wasn’t a lot of inventory, and most of the best units were coming and going in a matter of days… a couple we were couldn’t even get a chance to see before they were under contract, or I’d see during an open house (while wife was working) and her she should see with our agent, and it’d be gone before she could see it.
Jobs report sucked today sabrina
“The economy added 142,000 jobs in August, well below the 225,000 estimate that economists polled by The Wall Street Journal had expected. As expected, the unemployment rate dropped to 6.1% after ticking up to 6.2% in July.
”
as for this…
“So you’re assuming that the Fed will NOT be raising rates for at a minimum of another 18 months?
With the most job creation in 17 years???”
the fed controls short term rates mostly when talking about “raising rates” raising them from 0 to .5% isn’t going to effect the 10 year treasury or 30 year very much at all when foreign bonds are yeilding much less even though our currency and economy is stronger. Europe is struggling so badly they are talking about doing QE themselves, you think people are going to put their money in bonds like that with super low yields while their currency gets devalued compared to the dollar?
Look to see a flatter yield curve in 2015 and 16, short term rates will rise slightly but longer term rates will remain where they are today
Sonies, props on the interest rate analysis. Why on Earth would anyone buy a 10 year Spanish bond yielding 2.04% with a weakening currency and terrible unemployment rate with QE in the future from the European Central Bank? The Dollar /Euro exchange rate was 1.38 just a short time ago and is now around 1.30. You can get a yield of 2.43% from U.S. ten year bonds. Rates will slowly rise over the next two years, but the idea that mortgage rates are going to take off and never come back is a fallacy.
“The Dollar /Euro exchange rate was 1.38 just a short time ago and is now around 1.30.”
Damn, we were Europe in July and the exchange rate was 1.40. Wish we were there now.
West Bucktown as in East Humboldt Park Realtor speak, or actually the side of Bucktown that’s east of Western?
“the side of Bucktown that’s east of Western?”
That’s “heart of Bucktown”
The “West Bucktown” that’s west of Western, south of Armitage, near the new 606 and technically Logan Square but within the boundaries of the “West Bucktown Neighbors Association.”
“actually the side of Bucktown that’s east of Western”
does anyone refer to that as west bucktown? anyone at all?
“the biggest reason I’m buying is to lock in a really cheap mortgage rate. I will have to buy eventually, might as well do it when I can get a 3.5% mortgage.”
That is the logic behind “carry” trades the world over.
“Rates will slowly rise over the next two years, but the idea that mortgage rates are going to take off and never come back is a fallacy.”
They spiked quickly last year. Mortgage rates rose over 1% within weeks. Crushed the housing “recovery” in its tracks. And that was without rates moving to even 5%.
Whether or not they go up “slowly” or “quickly” doesn’t seem to matter because no one is buying right now with rates the lowest in the last year. I shudder to think what it will be like when rates move even higher.
“the fed controls short term rates mostly when talking about “raising rates” raising them from 0 to .5% isn’t going to effect the 10 year treasury or 30 year very much at all when foreign bonds are yeilding much less even though our currency and economy is stronger. Europe is struggling so badly they are talking about doing QE themselves, you think people are going to put their money in bonds like that with super low yields while their currency gets devalued compared to the dollar?”
We’re in a bond bubble and coming off a 30-year bond bull. Why wouldn’t you think that it’s “different this time”?
But it won’t be.
The only time we’ve had an inverted yield curve is during a recession. We’re not in one- so the 10-year rates will rise when the Fed starts raising rates. Do you think they’re going to raise .25% and then be like, “okay- we’re done for the next 5 years everyone”?
Historically, that’s NOT what they’ve done.
Of course, these are unprecedented times. The Fed’s policy is still indicating that we are in a financial crisis. And the Fed has never intervened as it has the last 7 years. No one knows how it will all end.
“We were looking at 3BR townhouses and condos in Lincoln Park, Lakeview, Wicker Park, Bucktown, West Bucktown/Logan Sq. $500k and below. There wasn’t a lot of inventory, and most of the best units were coming and going in a matter of days… a couple we were couldn’t even get a chance to see before they were under contract, or I’d see during an open house (while wife was working) and her she should see with our agent, and it’d be gone before she could see it.”
Benjy: Isn’t this quest similar to the old Unicorn Criteria that was on this site several years ago (which involved a long list of must haves in East Lincoln Park all under a certain price.) It was a unicorn- because it really didn’t exist. Not at that price.
I’m not surprised that there was very little inventory for a 3-bedroom townhouse in those neighborhoods you were looking at – and what did come on the market sold quickly. You were looking in the best neighborhoods of the GZ and all of Chicago (some would argue- of the entire Midwest.) And you’re looking at an unrealistic price point for a market where the prices have rebounded in the GZ back to the peak 2007 prices (and in some cases, beyond.) This is the top of the market- again.
You want that 3rd bedroom for UNDER $500k? Good luck. I’m sure you discovered at that price point- the properties that WERE available – the location wasn’t ideal (near the El tracks or Metra) or the third bedroom was “small” or really a den or the kitchen hadn’t been renovated since 1995.
Nicer, larger 3-bedroom townhouses in the GZ are selling over $500,000 now. Do you have $600,000 to spend? You would probably have a much nicer selection.
That, unfortunately for you, is the reality.
Most of the townhouses under $500k are 2-bedrooms.
You can see why some buyers simply buy 3-bedroom duplex downs instead, although there aren’t that many of those in the GZ priced under $500k anymore either.
Here’s a question for everyone:
What would cause you to list your property for sale right now (go through the pain of getting the pictures taken, cleaning it up etc.) and then end up withdrawing it after just a week or two?
I’ve seen multiple properties like this in the GZ in recent weeks.
Most were condos.
Is it simply that they got absolutely NO showings and the agent says “we have to lower the price because no one is interested” and the seller is like, “no- I won’t do that.” So they yank it off the market?
Or were they really testing the market at some crazy price and realized after just a week that it wasn’t going to work (shrug) and so they withdrew it?
Seems like a lot of work to just withdraw it like that.
And on the other side, why are agents taking these listings? Shouldn’t they know that they aren’t going to sell at that price and not to waste their time?
Could be that the agents are getting very hungry right now, and that there is a superfluity of agents in the business in any case. These people work on straight commission, and the name of the game is getting as many listings as possible. While a prosperous, well-established agent with decades in the business may be in a position to turn away listings, most agents, especially those relatively new in the business, will grasp at any listing in desperation.
Sabrina, that’s why we ended up making the jump west of Western… As you stated, most of the townhouses listed as 3BR’s in the GZ under $500k we saw were near the L, or the 3rd BR was really a ground floor den w/ no closet, or the living room was completely unusable as a living space, etc. My wife refused to consider a duplex down (too dark, flood risk) while a top floor duplex up made little sense if one intends to have kids and will need to lug them in carriers (plus their gear, or groceries, etc.) up 3 flights of stairs.
I had been watching prices climb over the past 2 years, as my wife suffered a medical set-back approaching the finish line for grad school that delayed the job & home buying process for us. We certainly missed out on getting exactly what we wanted because of the delay. But heading less than 2 blocks west of Western into Logan Square, we were able to get 3 bedrooms on the top floor, 2.5 baths, granite/stainless kitchen, family room, 2-car garage, giant roof deck townhouse in the mid-400’s. And we’re 100 feet from the new 606 park. The biggest compromise we made with the location is the schools, but we don’t even have kids yet so we’ve got time to see if they improve, learn how to play the lottery system into a better school, or make our next move back into the GZ (or, shudder, the suburbs) in 6 years.
Good job, Benjy, good luck, figure out your CPS tier and get cracking.
“or make our next move back into the GZ (or, shudder, the suburbs) in 6 years.”
My money’s on the suburbs. No offense meant. Hope none was taken.
“or make our next move back into the GZ (or, shudder, the suburbs) in 6 years.”
Yep- I’m with HD on this. Sorry to be a pessimist Benjy before you even move in. But I’ve been writing this blog for too long. I’ve seen too many properties bought and then put back on the market just 1 to 3 years later with a crib in the second bedroom.
I’m glad you didn’t end up with a top floor unit, however. Those are resold the quickest however (along with lofts- as many of those don’t have enclosed bedrooms) as the reality of carrying a 20 pound child up and down the stairs becomes quickly apparent. At least with a townhouse, you don’t have that issue. Good luck!
The suburbs ain’t all that bad. I live walking/biking distance from three large parks filled with Kids and older parents, most of whom are city transplants. The neighborhood is safe and most of the homes are well kept. There’s a ton going on with the park district and there’s a new large pool in town. It’s a 5 minute drive to the community center, shopping, the elementary/jr high/high school. I dreaded returning to the suburbs from the moment I left back in college, but it’s not all that bad.
That being said, some suburbs are better than others. God forbid I’d have to move somewhere far out, or somewhere crappy like cicero, or carpentersville. But if you do it right, and you have kids, it’s not all that bad.
The funny thing is, my kids’ non-magnet, non-lottery CPS school when filtered for non-income level students, performs better than Park Ridge schools non-low income students.
“The suburbs ain’t all that bad.”
I was just in downtown Oak Park, went to the movies at that lovely Lake Cinema, walked to a free crafts fair in the nearby park and had lunch at an Italian restaurant where we ate out on a great patio.
What’s the difference between what I did there and, say, hanging out for the day in Lincoln Square? Actually, if you blindfolded someone who wasn’t from the area and plopped them down in both neighborhoods, other than the German emphasis in LS, you wouldn’t really know the difference.
Potbelly’s? Check.
Starbucks? Check.
Italian restaurants with outdoor seating? Check.
Yogurt shop? Check.
Movie theater that is 100 years old? Check.
The El stop? Check.
People riding bikes? Check.
Independent bookstore? Check.
I could go on with the similarities.
But obviously there is a big difference between living in Schaumburg or even Lockport (which DOES have a historic core) and Oak Park, Park Ridge, Flossmoor, LaGrange, etc.
Basically, you want to be in a suburb that is on one of the train lines because they have historic downtowns (for the most part.)
“What’s the difference between what I did there and, say, hanging out for the day in Lincoln Square?”
If you’re hanging out for the day, you could live in Berwyn, too, and save a ton of money.
When you cross-shop OP and the not-quite-GZ (but not scary-uptown) north side, and properly account for the difference in the property taxes, the two have pretty similar prices. OP gets you a bit more yard, and an automatic HS that is (at least) acceptable. Some people prefer the city, and some people (coff HD coff) can’t handle the People’s Republic of OP (but then, for them: River Forest).
“The funny thing is, my kids’ non-magnet, non-lottery CPS school when filtered for non-income level students, performs better than Park Ridge schools non-low income students.”
How is your school doing w teh poorz?
“Flossmoor”
Where? Do people actually live there?
“Where? Do people actually live there?”
I just thought that was something the dental hygienist said.
If I could get access to the intern, this would be better formatted and I would probably sort by the NFL percentage but also report the FL percentage on the same row. Anyway, FWIW, here are the top percent exceeds on ISAT 3-8th for schools by NFL/FL groupings.
SKINNER NORTH Not Free Lunch 87.9
YOUNG HS Not Free Lunch 86.3
YOUNG HS Free Lunch 84.5
LANE HS Not Free Lunch 84.3
EDISON, T Not Free Lunch 80.1
EDISON, T Free Lunch 79.4
DECATUR Not Free Lunch 78.5
KELLER Not Free Lunch 78.3
SKINNER NORTH Free Lunch 73.4
LENART Free Lunch 72.3
DECATUR Free Lunch 71.2
LANE HS Free Lunch 68.9
LENART Not Free Lunch 67.3
SKINNER Not Free Lunch 67
KELLER Free Lunch 63.2
LINCOLN Not Free Lunch 61.2
SKINNER Free Lunch 59.6
COONLEY Not Free Lunch 59.6
MCDADE Not Free Lunch 59.3
JENSEN Not Free Lunch 59.1
HAWTHORNE Not Free Lunch 58.9
TAFT HS Not Free Lunch 58.7
MCDOWELL Not Free Lunch 56.5
MCDADE Free Lunch 56.1
PRITZKER Not Free Lunch 54.7
MCCLELLAN Not Free Lunch 54.5
POE Free Lunch 53.3
BELL Not Free Lunch 53.1
BEAUBIEN Not Free Lunch 51.6
ORIOLE PARK Not Free Lunch 50.5
LASALLE Not Free Lunch 50.2
BURLEY Not Free Lunch 49.1
FRANKLIN Not Free Lunch 48.3
TAFT HS Free Lunch 48.2
JACKSON, A Not Free Lunch 47.8
STEM ES Not Free Lunch 46.9
EDGEBROOK Not Free Lunch 46.7
UNO CHTR-MARQUEZ Not Free Lunch 46.2
COURTENAY Not Free Lunch 46
POE Not Free Lunch 45.8
BLAINE Not Free Lunch 45.1
DISNEY Not Free Lunch 45.1
COLUMBUS Not Free Lunch 44.6
PETERSON Not Free Lunch 43.8
BRIGHTON PARK Not Free Lunch 43.5
SOUTH LOOP Not Free Lunch 42.9
SOLOMON Not Free Lunch 42.2
OGDEN HS Not Free Lunch 42.2
AGASSIZ Not Free Lunch 41.7
DISNEY II Not Free Lunch 41.2
NEWBERRY Not Free Lunch 41
STONE Not Free Lunch 40.4
OROZCO Not Free Lunch 40
PERSHING Not Free Lunch 40
I included FLs if they ranked in the list above. Here is a list of the top schools ranking by FL ISAT 3-8th exceeds.
YOUNG HS Free Lunch 84.5
EDISON, T Free Lunch 79.4
SKINNER NORTH Free Lunch 73.4
LENART Free Lunch 72.3
DECATUR Free Lunch 71.2
LANE HS Free Lunch 68.9
KELLER Free Lunch 63.2
SKINNER Free Lunch 59.6
MCDADE Free Lunch 56.1
POE Free Lunch 53.3
TAFT HS Free Lunch 48.2
STEM ES Free Lunch 34.3
ORIOLE PARK Free Lunch 32.5
LINDBLOM HS Free Lunch 30.5
SHERIDAN Free Lunch 29.9
LINCOLN Free Lunch 28.4
JACKSON, A Free Lunch 28.1
HAWTHORNE Free Lunch 28.0
HEALY Free Lunch 26.9
KENWOOD HS Free Lunch 25.3
DISNEY Free Lunch 24.1
MORGAN PARK HS Free Lunch 23.9
LELAND Free Lunch 23.2
BLAINE Free Lunch 23.0
BELL Free Lunch 22.9
EBINGER Free Lunch 22.2
SOLOMON Free Lunch 21.4
THORP, O Free Lunch 20.9
FRANKLIN Free Lunch 20.8
ROGERS Free Lunch 20.7
WARD, J Free Lunch 20.5
GREGORY Free Lunch 20.2
Which year?
“Which year?”
2013 for grades 3-8. I took the spreadsheet off the cps site just now. And I took the option using the new ISAT thresholds (or something like that, dunno what that means exactly).
“And I took the option using the new ISAT thresholds (or something like that, dunno what that means exactly).”
They made the meets and exceeds cutoffs higher.
Looking at the Park Ridge numbers, for both NFL + FL, PR would not make either list. They do quite well on the M+E total, but aren’t great at Exceeds, especially in math.
“Looking at the Park Ridge numbers, for both NFL + FL, PR would not make either list.”
What’s the point of moving to PR then? Would be better off in oriole park, which is impressively high on both lists. But prob too many non-professionals for HD.
“What’s the point of moving to PR then?”
The Oriole Park a-a has mostly ugly houses and is 100% in the ORD approach zone.
But you’re right, can’t be about the elementary schools. Maine South is better than Taft, tho.
“And I took the option using the new ISAT thresholds (or something like that, dunno what that means exactly).”
The State of IL adjusted ISAT to align more closely with Common Core in 2013, which reduced scores across the board from previous years (the new test is harder).
11:44 lag check-in
[LAG]
Oriole Park is also a very high percentage of cops and city workers. Nothing wrong with that, of course.
“What’s the point of moving to PR then? ”
Why would anyone want to live west of Western (or no more than a few blocks west)….
“If you’re hanging out for the day, you could live in Berwyn, too, and save a ton of money.”
Berwyn is cheap because it sucks, i was at the car show over the weekend and my god what a shithole full of ugly strange people. Like imagine dan’s description of Montrose beach, and well, thats the population at the berywn auto show… lol terrible.
Also the food there sucks ass, just god awful
Having the 2d post LAG issue…
“Benjy: Isn’t this quest similar to the old Unicorn Criteria that was on this site several years ago (which involved a long list of must haves in East Lincoln Park all under a certain price.) It was a unicorn- because it really didn’t exist. Not at that price.”
I don’t think that’s an entirely accurate description of the UC. Yes, I had some very specific criteria in mind, and within a specific price range. However, I did in fact find a place that not only met, but exceeded the original UC (the original UC did not require a powder room; once we found a place that had all of the UC, plus a powder room, I did in fact modify the UC to include a powder room, and also added the requirement of having a sep TV viewing area). What really drove the whole UC thing was that, once we found a place for sale that met all of the UC, because of the uncertainty that persisted after the crash, I wanted to see if I couldn’t instead simply rent such a place, at the same monthly cost. I could not, and so we purchased the place that met the UC, and as a result we were able to (i) improve the condo slightly to our tastes (which we couldn’t or wouldn’t have done on a rental), (ii) take the take deductions and (iii) three years later, leave the closing on the sale of that condo with more than what we brought to the purchase. Sure, we had to…gasp…walk up a couple flights of stairs (with kids…and groceries…and stuff…oh my!!!), which was less than ideal. But we knew the place was short term (which is why we did a 5/1…again, what a stair-climbing financial lunatic I was!).
“we knew the place was short term”
am sad that I no longer keep an eye out for nonny when we walk around elp, which we do often of course, bc it is the greatest place in chicagoland.
Benjy, congratulations. Now do us a favor and cut out that West Bucktown stuff. You’re west of Western, son. The 606 is gonna make you money.
“The 606 is gonna make you money.”
Like Millennium Park made all of those buyers money? Lol.
It IS nearly 3 miles long though. I guess a LOT of homeowners are betting on it. And I think it will be great for the city (especially with that new hotel going in in Wicker Park/Bucktown to lure tourists to the neighborhood.)
“am sad that I no longer keep an eye out for nonny when we walk around elp, which we do often of course, bc it is the greatest place in chicagoland.”
Exactly why walk anywhere else when your feet deserve the best?
“Like Millennium Park made all of those buyers money?”
1. it was priced in to most of the condos, when they became condos.
2. 340 OTP original buyers have made a mint, and part of that is attributable to the park.
3. Yeah, no $$ for the folks east of western, see #1.
4. But if you’re buying west of [wherever], and paying basically Humboldt standard prices, then there is quite a bit of upside possible.
Weird, can see @fo post in IE but not chrome. it also told me my arithmetic was wrong.
Really need to know what to do about aapl options (sold some already).
“Berwyn is cheap because it sucks, i was at the car show over the weekend and my god what a shithole full of ugly strange people. Like imagine dan’s description of Montrose beach, and well, thats the population at the berywn auto show… lol terrible.”
Huh! Try taking the Montrose bus late on a Friday night. There were illegal immigrants, baby mamas, a couple of mentally challenged having a loud debate, the heavily tattooed, morbidly obese, some drunks, dirty people scratching themselves, some guy sitting in his own piss and ME! I was afraid I’d catch lice or bedbugs. What is with buses in Chicago? Everyone takes them in NY. Here it’s only the retreads and abnormal.
“Huh! Try taking the Montrose bus late on a Friday night. There were illegal immigrants, baby mamas, a couple of mentally challenged having a loud debate, the heavily tattooed, morbidly obese, some drunks, dirty people scratching themselves, some guy sitting in his own piss and ME! I was afraid I’d catch lice or bedbugs. What is with buses in Chicago? Everyone takes them in NY. Here it’s only the retreads and abnormal.”
Reminds me, I meant to ask, what happened to Bobbo?
“Reminds me, I meant to ask, what happened to Bobbo?”
http://chicago.curbed.com/users/103071
^ not racist/fratboy enough to be ol bobbo
“not racist/fratboy enough to be ol bobbo”
The raaaaa-cism really only came out of bobbo after nickel beers–quite possibly bc of concern about monitoring, but still.
The casual misogyny was much more frequent.
“What is with buses in Chicago?”
The “normals” take the El. 🙂
“2. 340 OTP original buyers have made a mint, and part of that is attributable to the park.”
Wow. Thanks anon(tfo). What about the older buildings right next to 340 OTP with the same exact views of the park? No increases there. What about the Heritage? What about 6 N. Michigan that they’re still trying to sell units in? What about the Legacy? What about Metropolitan Place?
I could go on and on.
Multiple foreclosures in many of those buildings.
The Park has had NO impact on prices in those buildings.
“But if you’re buying west of [wherever], and paying basically Humboldt standard prices, then there is quite a bit of upside possible.”
But no one is. That’s the problem. People are paying $450k for that 3-bedroom, instead of $550k. Where’s the upside – especially as mortgage rates rise?
“Where’s the upside – especially as mortgage rates rise?”
because if mortgage rates rise, there will likely be a lot of inflation as the cause? but we all know that isn’t happening without wage growth.
“because if mortgage rates rise, there will likely be a lot of inflation as the cause?”
Was there inflation last year when mortgage rates rose 1%? No.
The Fed has to “normalize” monetary policy at some point. That would be the 10-year around 4%. Anyone who thinks otherwise is crazy (although if you had told me the Fed would have $4.5 trillion on their books in just 6 years I would have said you were crazy too.) So anything can happen when the Fed is distorting the market as it is doing.
But I hazard to guess that the Fed’s actions are going to have unintended consequences that no one could have foreseen. Heck, pushing prices back over the peak pricing in just 7 years is something no one foresaw.
Now what?
Prices continue to rise even though incomes aren’t?
I think we already have the answer to that with slowing sales. You can’t get blood from a stone.
> Why do you have to buy “eventually”?
Because save for a few corners of our country it is a severe economic disincentive to rent until I die? Paying rent on an apartment in retirement is a terrible idea. You will lose more money than by buying. If buying weren’t economically a good idea, there would be no landlords and no rental market. Not like we know it today anyway.
I’m tired of 10% year over year rent increases. I’m tired of paying for a 1 bedroom that’s the price of a 2 bedroom mortgage. I’m tired of moving every 3-5 years. And I’ll live here for at least 10-15 years if I have kids and if not, longer.
Unbeknownst to a bunch of bug up their ass right wing anxiety disordered “OH MY GOD KIDS NEED GRASS!” suburbanites, kids can and do just fine being raised in the city.
Also it helps when your job pays out massive bonuses during financial crashes, so if shit hits the fan again it will only do me good.
“Paying rent on an apartment in retirement is a terrible idea.”
Usually. There’s a small percentage of people who are in rent controlled apartments in both San Francisco and New York who come out way ahead by renting for their lives. But, again, this is a small percentage of people.
I have no problem with people buying for the long haul. The problem is- they buy the 1-bedroom or 2/2 condo thinking “I’ll be here 5 years” and have a kid and want to move in 3 years (yeah- lugging the 20 pound child up and down 3 flights of stairs in that vintage building is a pain.)
But if people would just start off with the 3-bedroom property that’s not on the top floor of a building, as their parents did, they might be able to live there for 10 years.
“And I’ll live here for at least 10-15 years if I have kids and if not, longer.” “kids can and do just fine being raised in the city.”
What are you, French? There’s a transplanted Parisian couple who live down the street from me: two kids, 2BR/2BA, 1200 sq ft, purchased a few years ago for under $400K, and somehow they’re doing just fine – their words, not mine. The kids walk to a good school (LP), there are two major parks within a few blocks, dad is home from work in time for their all important family dinners, their apartment is void of mindless clutter, they have no plans on moving even though their kids are approaching teenage years.
They just don’t comprehend the typical American model of sacrificing family time (hours of daily commuting) and finances (bigger place, more things, and more debt) all in the name of better living for THE CHILDREN. They understand city living. Still, $400K is a lot of money no matter where you live, but it’s a far cry from the $MMs people think they need to raise their family in a good urban neighborhood.
Been out of the country so I’m running behind. Just posted my monthly update – 1 week late but the data is only 3 days late: http://www.chicagonow.com/getting-real/2014/09/august-chicago-real-estate-market-update-home-sales-plunge-once-again/
Although sales fell a LOT it’s completely attributable to the decline in distressed properties – i.e. there is no decline in the sales of non-distressed properties. Inventories remain exceptionally low and market times very short.
Also, someone asked why agents take over priced listings…it’s because they want to get their signs out there because potential sellers want to list with agents who have a lot of signs out there – dumb but true. Also, it’s a way for agents to pick up buyers who don’t already have agents when they call about the property.
“Although sales fell a LOT it’s completely attributable to the decline in distressed properties – i.e. there is no decline in the sales of non-distressed properties. Inventories remain exceptionally low and market times very short.”
Would be interesting if you had the time sometime to see a graph of non-distressed and distressed separately, over time.
This will provide an anecdatum on the market over the last half year:
https://www.redfin.com/IL/Chicago/4914-N-Seeley-Ave-60625/unit-2/home/13403535
Yeah, but I will tell you that throughout the time period this year when sales have been down they’ve actually been flat for non-distressed properties.
“Paying rent on an apartment in retirement is a terrible idea.”
Why is that? I understand the school of thought that renting is terrible generally, but why particularly terrible in retirement, when you may not want to build up equity and when you may want some flexibility in changing type of housing quickly? (I can kinda see the Ze “you’re short housing” argument, but anything beyond that?)
““Paying rent on an apartment in retirement is a terrible idea.””
Depends on what you think of your life expectancy.
So was CC down for a few weeks??? I thought it went away, without a goodbye party.
Oh god, I have to calculate 4-2 to post this… now where did i put that calculator.
lagging in (9:49 post last visible)
[very laggy]
“an anecdatum on the market”
Something hinky there. Nothing in ccrd reflecting sale–bet it was a transfer to set a marker, rather than a real sale.
“1/2 BLOCK FROM WINNEMAC PARK”
They should have called it “across the street”.
“Something hinky there. Nothing in ccrd reflecting sale–bet it was a transfer to set a marker, rather than a real sale.”
That 4/21 warranty deed is not a sale?
Lag (11:02 last)
lag is driving me crazy
“Lag (11:02 last)”
maybe we should jsut have the discussion off board and post it here. laggity lag.
That’s odd.. Because of the lag I did not see DZ invite king the name of ‘ze’ until after I posted. Stranger still is I had directly commented about dz helping me with math, then changed it to calculator. Maybe I should talk about Bob. I miss him.
Damn spell check invoking became invite king.
Oh crap, I am now being asked for multiplication??? What’s next, the square root of pi?
“Maybe I should talk about Bob. I miss him.”
I miss bob too. That is the truest thing anyone has said here in a while.
Guess I’m slow on Monday AM. Looked at something wrong or mistyped.
Funny that he priced to exactly break even. Doesn’t realize that there’s a used house discount, too. Not nearly as bad as driving a new car off the lot, but still real. Don’t see how he gets more than he paid.
What does anyone think of these places:
https://www.redfin.com/IL/Chicago/4534-N-Damen-AVE-60640/home/56347761
$2.1m for one of three interesting (but kinda weird) places right in a row *on* Damen (and across from a parking lot that is staying a parking lot)??
Yes, wonder if Bobbo got a better job (with internet monitoring), finally bought in McKinley Park or something, or moved back to the hollow.
“$2.1m for one of three interesting (but kinda weird) places right in a row *on* Damen (and across from a parking lot that is staying a parking lot)??”
Yikes. Especially when the outdoor space for two of them seem to be open to each other. WTH?
Lag–12:39 last.
anon, I drove by that development this weekend. I was wondering what the list prices would be. That’s steep.
“Especially when the outdoor space for two of them seem to be open to each other. WTH?”
Have to expect that a fence will go up, but the render looks better w/o it.
double thread lag
very interesting anon, I haven’t seen anything quite like that development before!
“I haven’t seen anything quite like that development before!”
Seems like a high-end (and cohesive) interpretation of those places on Sheridan that everyone hates:
http://cribchatter.com/?p=18039
“Have to expect that a fence will go up”
feels pretty dark as is. also, is this the outer limit of “walk to marianos”?
here you go anon this one is sure to be a cribchatter classic
http://www.koenigrubloff.com/homes-for-sale/IL/Chicago/60614/2607-N-Ashland-Avenue-UNIT-1W-128246957
the elusive 875k duplex down ON ashland
“the outer limit of “walk to marianos””
I would walk to/from metra from here, so totes ok to Mariano’s, too, provided it is for minor shop. Would prob bike instead of walk, tho, as minor shop usually means “need something right now for meal”. might consider a folding wagon or cart, tho, too; it’s .5 mile, so right at that edge, yep.
“the elusive 875k duplex down ON ashland”
Interesting building, weird layout for the duplexes.
Will be fun if/when the BRT goes in, and there is a permanent traffic jam out front.
“I would walk to/from metra from here, so totes ok to Mariano’s, too, provided it is for minor shop.”
all the NE ravenswood listings state walk to marianos as amenity. it’s like a frickin town center for that crowd.
“the elusive 875k duplex down ON Ashland”
We’ve chattered about this building before on CribChatter (a year or so ago.) It’s taken awhile to finish this building and sell these.
A top floor unit in a nearby building that was 3-bedrooms was asking $850,000 and that went under contract in about 45 days, I believe. So why not a duplex down nearby?
I don’t get it but expensive properties on Ashland DO sell.
“maybe we should jsut have the discussion off board and post it here. laggity lag.”
Have you tried a different browser DZ? Lots of other people have told me that they don’t have the lag at all.
I don’t know how to fix it. I’ve updated the wordpress to the latest configuration. No one else is complaining about it on the wordpress boards. Everything else is updated.
It’s a mystery. But try another browser.
“So was CC down for a few weeks??? I thought it went away, without a goodbye party.”
It was being attacked by spammers. It was so bad my hosting service shut the site down.
It should be better now but that’s why you have to calculate something to post.
“Although sales fell a LOT it’s completely attributable to the decline in distressed properties – i.e. there is no decline in the sales of non-distressed properties. Inventories remain exceptionally low and market times very short.”
That’s a crap argument. Who was buying the distressed properties? Investors. Where did they go? Oh yeah- bye-bye. What happens to the market when 20% of the buyers go bye-bye and everyone else is priced out? It collapses (which is what we’re seeing right now.)
That’s why you see realtors around the country saying “prices have gotten ahead of themselves and now we’re seeing some cooling in the market.”
ha!
Yeah. You could say that.
The mortgage applications tell the tale. Still at 14 year lows and still 10% or more under a year ago levels. That means sales will be weak for the next two months (at a minimum.) Those aren’t investor buyers, obviously.
Oh- another interesting tidbit.
Jumbo mortgages are now at their highest level of the total market ever. Or about 20% of all mortgages. (With “jumbo” being above the $417,000)
You keep mixing national statistics in with a discussion of Chicago.
Anyway, the reason distressed sales are down is not because no one is buying them but because the inventory of them is way down also. We once had a 60 month supply of short sales. Now there is only a 5.5 month supply. REOs are down to 2.9 months. And there are plenty of buyers who are not priced out as evidenced by the short market times.
BTW, I’m getting a lag as evidenced by the fact that I get the email notification of your post but it’s not visible to me on the site until I post my comment.
“Have you tried a different browser DZ? Lots of other people have told me that they don’t have the lag at all.”
Seems like every regular here has commented that there is a lag. @fo has a whole dataset by now. Is there any regular here who says there is not a lag?
Keep in mind you have to be trying to access a post within 30 or 40 minutes of when it was posted to see the lag. Otherwise it will appear fine.
I have tried chrome and IE.
This listing should go in the CC Hall of Fame.
Best decoration of a column ever!
https://www.redfin.com/IL/Chicago/523-S-Plymouth-Ct-60605/unit-404/home/14092693
WHY did they design the kitchen like that (obviously, I am presuming the column is structural)??
The last 10 photos are all of neighborhood “amenities.” Beautiful Target shot!
“…but that’s why you have to calculate something to post.”
So that explains why HD posts so rarely now.
@roma
was wondering if the assessments included that sweet gym, good to know that they do! lol
“What would cause you to list your property for sale right now (go through the pain of getting the pictures taken, cleaning it up etc.) and then end up withdrawing it after just a week or two?
I’ve seen multiple properties like this in the GZ in recent weeks.”
Sabrina — I can answer this as I am doing this. I just purchased a SFH and had enough for a 20% downpayment and we can carry the monthly mortgage no problem. Our GZ condo in full service builidng will list in a week or two. We plan to keep it on the market until end of October. If we get an offer w/in 5% of ask or close, we will sell it. If not, we will take it off the market and rent it. The real estate downturn forced us to stay, and we now have about 50% equity in the property. Based on comps in our building we can rent it out for at least 2K more per month than our mortgage (low interest rate), taxes and assessment combined. We feel this is sufficient padding to carry it long-term if need be, even if rents begin to decline and taxes go up. Thus, while we would like to sell, we don’t have to and would be just fine renting it. I suspect that many people saved for a downpayment these last few years and are fine with just renting out their places. This might explain why there is not much inventory, why sellers are refusing to lower prices despite no movement on their listing, and why people try to sell but then take it off the market. If I rent it, I may try to sell again in a year or two…will list between tenants.
The notion that prices have to decrease across the board because not enough buyers can afford it, doesn’t play out when the seller can rent for fare more than monthly carrying costs. We aren’t asking for more than the 2004 price, but we aren’t going to sell at a huge loss either. Thus, the day of rock bottom deals are over I think. There may be good deals to be had but they are less likely to be hot GZ areas, and are fewer and far between (i.e., relo package situations, divorce, death….).
Interesting comment Urban mommy.
What’s your best guess as to:
1. the likely offer price on your GZ condo?
2. the interest rate on that GZ condo’s mortgage?
3. the interest rate on your new house’s mortgage, 4% ?
1. I have no idea. We will have a few brokers weigh in on pricing. We have a number that we won’t dip below but again that this the beauty of being able to rent it.
2. 4.25-4.75
3. It was 4.25.
Thanks UM. I’m surprised that you have no idea where you’ll list your GZ condo, but not surprised that you “have a number that you won’t dip below.” I think Sabrina’s complaint (in the general sense, not as it regards your particular case) is that the asking prices sellers won’t dip below is still too high, therefore listing/trading volumes are depressed.
“I just purchased a SFH”
w urban mommy and (formerly urban) nonny in SFHs, who is left to stand up for the ideals of real city living?
wojo — I have a range but utimately will defer to the agent who will base it off of comps. I’m not someone listing without advice or making up my own number. I’m not entirely detached from the market. I’m just in a position that I can wait it out if I choose.
And Sabrina’s point is well taken. There may be lots of sellers who won’t go below a certain price and therefore it does not sell. But the reason is that the seller is not distressed and can now profit since rents have escalated. I agree with her point, I just disagree about what that means for prices. I think her view is that prices will have to come tumbling down. I don’t think they will for newish, well built, good buildng GZ properties. Yes, developers are starting to build new condos and SFHs but they won’t be putting new product out there at 2008-2012 prices.
quick multi thread lag out.
“w urban mommy and (formerly urban) nonny in SFHs, who is left to stand up for the ideals of real city living?”
Our SFH is in one of the most “urban” hoods in our area. But I’d happily live in a building, if we could have the same amount of space for the same cost.
“Our SFH is in one of the most “urban” hoods in our area”
Which sounds like rationalization, from someone who found the SFH areas of Chicago–still with 24, 25, 30 foot lots–to be suburban feeling.
So, is “urban” just a relative concept, and something that is “suburban” in Chicago qualifies as “urban” in Houston? Brooklyn isn’t urban because it’s not Manhattan?
I’m seeing the lag as well. I received an e-mail update with Anon’s latest comment, but it does not appear on the website.
“Brooklyn isn’t urban because it’s not Manhattan?”
I took a stroll around Myrtle and Knickerbocker to see what was up in Bushwick this weekend. It was like watching a movie about NY in the 70s. Pimp hats and cuchifritos for sale, people hanging out windows and leaning on cars on corners and zombies staggering around under the el. Meanwhile, because hipsters love Bushwick, you can’t buy anything but major fixer-uppers for $1 million plus.
You people are so, SO lucky. It is just amazing what your money buys in Chicago as opposed to NY. I started my NY home search in dicey areas because I thought it would be cheaper, but it’s all basically the same. Everything’s run down and everything’s expensive. It’s all the same price. There’s no ghetto discount.
I wish I could move to ‘Cago permanently but I am seriously afraid of losing my funky fresh flavor and street style. I love ‘Cago, but the Zumba classes are terrible! Don’t know if I can make that leap, so I’ve got to keep one foot in each city. I love both places for completely different reasons. I love the comfort and beauty of Chicago, and I love the grit of NY. You constantly learn something from the daily struggle to live and it’s never boring.
UM – SFH in the city or the burbs? I am familiar with your situation because I experienced the exact same thing in 2012. I listed my RN place and got one bid that was 25% below ask. Rented it out for an obscene amount (which would be a steal today) and the renter ended up buying my place after renting for a couple of months for my original asking price.
Milkster – I love NYC too but the prices are just outrageous and even though BKN is close geographically its still a 40-45 min commute into the city in many instances which is basically suburbia here. Also – at least for me – most of the NYC stuff I liked most would disappear after marriage and kids.
I definitely think the RE market in Chicago is cooling off. That is a natural thing given how far / fast it has come. I don’t think the bottom is suddenly going to fall out or that prices are going to continue dramatically increasing – we will just grind here for awhile.
Bushwick: too far from God, too close to Williamsburg, as Porfirio Diaz might have said.
Milkster, if you want ghetto discount, shop in ghetto, not soon-to-be-ex-please-oh-pleez-ghetto. Every gentrifier’s faith in the apotheosis of Brooklyn is priced in already. Meanwhile, ghetto discounts are available. Interesting data about Brooklyn, including map of income and real estate price trends here:
http://xenocrypt.blogspot.com/2013/05/brooklyn-and-park-slope-are-getting.html
Urban Mommy: I agree with you: “rents have escalated.” Certainly the cap rates applied to cash flows has dropped in recent years, as evidenced by the Golub Group selling their portfolio of 143 Lincoln Park apartments for nearly twice as much as they paid for it just two years ago.
http://www.chicagobusiness.com/realestate/20140917/CRED03/140919855/golub-poised-for-big-gain-in-lincoln-park-apartment-sale
“I agree with her point, I just disagree about what that means for prices. I think her view is that prices will have to come tumbling down. I don’t think they will for newish, well built, good buildng GZ properties.”
I never said prices will “tumble” down. But they WILL decline. It’s inevitable as day turns into night because the mortgage rates are going to rise.
Historically, for every 1% increase in mortgage rates, prices have fallen 4%. And incomes aren’t even rising so we may see prices fall even further.
Do I think it will be “fast” or “tumble”? No. It didn’t even do that in 2007-2009. Sellers are stubborn and don’t understand that market conditions have changed. All they read and hear about from their agents is that the market is hot and that they can sell for $100,000 more than they paid just 2 years ago. So they list it and it sits there. So they un-list it and re-list it with a $5,000 price reduction. (Have you all been seeing a lot of that lately? I saw one today that was reduced $1. I mean, come on.)
They sit with it on the market for 2 months and then they yank it off. Either they decide they’re not selling OR they are renting it out. I don’t know.
But they’re not going to give it away- you know?
The former head of Goldman Sachs housing market research team just put together a report for the White House on the state of housing right now.
He’s calling for a 15% decline in prices over the next 3 years. This would be unprecedented because up until 2007 there hadn’t been a national housing market decline in like 70 years. So he’s saying we’re going to have another one right on the heels of the one we just had.
He says we’re 16 months into the first stage already.
Sales have declined year over year every month this year in many (most?) markets. Mortgage purchase applications, actually, have also declined every week this year compared to last year. They were down 10% year-over-year again last week.
California just had its worst August in 4 years. Sales were the lowest since 2010.
http://www.4-traders.com/GOLDMAN-SACHS-GROUP-INC-12831/news/Goldman-Sachs–Former-Goldman-Sachs-Executive-Joshua-Pollard-Warns-Washington-Home-Prices-Will-Dec-19061947/
3 Stages of the home price decline
Unless the calculus of history is a poor guide, there is a 60% chance that home values decline materially, in fact, the correction
is already underway. This probability rises when new negative shocks emerges. The home price decline will be defined by 3
Stages:
Stage I: Hot to Cool: Active since Summer 2013*, Price growth slides across the country as flippers lose money outright in
the red-hot investor markets (NYC, San Francisco and Las Vegas); New home absorption rates – sales per community – are
declining; investors slow their home purchases; total home sales decline year over year; developers lose pricing power, press
outlets shift from positive to mixed about the health of the housing market.
Stage II: Demand to Supply: Small shocks convert demand pools into supply ripples. A first wave of investors begin trimming
prices to get ahead of future declines; discounts increase to incentivize purchasers as purchasers increase their delays for
better deals; developers reduce land budgets as cancellations tick up; major financial press outlets take a more negative tone
toward housing lowering confidence overall.
Stage III: Deflation & Response: Falling home prices create a negative deflationary feedback loop that foreshadows a
once-in-a-lifetime policy response. Deflationary economics take full hold; leveraged bets on real estate unwind in quarterly
ripples due to the public reporting cycle & asset manager redemption schedules; willingness to lend shrinks; the broader
consumer finally understands it is a bad time to buy a home, a shrinking housing market negatively impacts jobs causing
recession; the estimated effect of never-before-seen public policy reactions determine when and where prices eventually
trough.
“Historically, for every 1% increase in mortgage rates, prices have fallen 4%. ”
Show me where you got this from. I don’t see this in Robert Shiller’s data.
“He’s calling for a 15% decline in prices over the next 3 years.”
So why aren’t you shorting the Case Shiller futures? Easy money, right?
“So why aren’t you shorting the Case Shiller futures? Easy money, right?”
Case Shiller is already turning over and has been for months. Go look at his report. He has a Case Shiller chart in there for the last 20 years. SF, Las Vegas, NY are all moving lower.
The data doesn’t lie. We have had falling sales every single month this year and the next 3 months won’t be any different. Falling sales are the first sign of distress in the housing market. Prices will soon follow. They’re just sticky on the way down (just like in 2007-2008.) Sellers don’t believe that they can’t get what they thought they can get. So they let it sit there on the market and don’t reduce. There are plenty of these properties out there right now- even in a low inventory environment.
I do concede that it will probably take longer for prices to decline because the inventory is much less than the last time we saw this in the Great Recession. So it’s going to take sellers even longer to figure it out.
But if you listen to the agents out in California, you’ll see the reality. People are priced out. Incomes haven’t risen and now rates are higher (and will go higher still.)
I said a few months ago that if you haven’t already sold you’d regret it. 2012 was another dead cat bounce similar to the first time home buyers programs. The market has gone cold again and prices are going to go lower. Good luck to future sellers.
Housing starts down 14% in August.
Can’t blame the weather.
Also, has anyone else noticed that there are almost more price reductions every day than “new” listings? I’ve never seen that before in all of the years I’ve been running this site.
Redfin said a couple of weeks ago that price reductions were on about 30% of all properties nationally. I wonder if that’s now rising even further?
But you didn’t really answer the question. The Case Shiller futures are still pointing up for Chicago: http://homepricefutures.com/blog/wp-content/uploads/2010/04/2014_08-CME-CS-recap.pdf
Why not short it? You will make SO much money.
And you keep bringing up California. You can say anything you want about California and I don’t have an opinion. You can claim it’s going to fall into the ocean tomorrow and I’ll say “fine”.
“You people are so, SO lucky. It is just amazing what your money buys in Chicago as opposed to NY.”
Yep. And this is what all of my west coast friends say as well. Chicago is the only “affordable” large walkable city left.
Milkster- our Zumba classes are terrible? I didn’t even know we HAD Zumba classes (which I’ve been wanting to try for some time.) Business opportunity?
“Milkster- our Zumba classes are terrible? I didn’t even know we HAD Zumba classes (which I’ve been wanting to try for some time.) Business opportunity?”
They were doing the GRAPEVINE, with nary a shake, wind, drop or twerk to be found!
Sabrina–
1. “The former head of Goldman Sachs housing market research team just put together a report for the White House on the state of housing right now.
He’s calling for a 15% decline in prices over the next 3 years. This would be unprecedented because up until 2007 there hadn’t been a national housing market decline in like 70 years. So he’s saying we’re going to have another one right on the heels of the one we just had.” I seriously question the neutrality and objectivity of this report…banks have been trying everything to keep interest rates low. Predicting another disaster only increases the likelihood of continuing low interest rates. Banks are looking to keep the continued stimulus for as long as they can — thus no incentive to say the market might dip a little now the pent up demand has been satisfied and we are back to a more normal market (i.e, people buying houses to live in for personal reasons, and not solely for investment).
2. Much of the above talk is about how flippers and investors will cut their prices. I think they will…they need to sell. But these are less expensive commodity type houses. I was referring to houses and large, luxury apartments (over 1 million) in GZ areas. I don’t think prices will fall here. The market is segmented and the higher end is not affected as greatly by interest rates and flippers/investors lowering prices b/c much of their inventory is lower priced, non-GZ stuff. Arguably, the move up buyer like myself is affected, except most of us either already cut bait or, thanks to the recession, have enough equity that we can rent out our old places at a profit and move on with our new purchase. I was surprised how easy it was to get a jumbo (1.5+million) on the new place and still carry the old. Lending criteria has loosed up for buyers who have a lot of equity in their old places and can put 20-30% down.
3. I think prices may go down 3-6% but this affects investors more than your typical family. Families move when the timing fits their life (new job, baby, new school for kids etc…). Individual buyers should never buy solely for the purpose of flipping a few years later unless they are prepared to deal with possible negative market changes. I think this lesson was learned in the last downturn and now people are buying houses for reasons other than profit.
“But they WILL decline. It’s inevitable as day turns into night because the mortgage rates are going to rise.”
NO! FFS – when will you understand that it depends on WHY rates rise? A great way to look at it is from 2007-2011 mortgage rates dropped along with housing prices. According to your theory mortgage rates dropping = housing prices increasing.
“The former head of Goldman Sachs housing market research team just put together a report for the White House on the state of housing right now.”
This makes it sound like the WH asked for it. In fact this is an open letter the WH by a guy who doesn’t seem to have a job and is trying to drum up interest / people to pay for his services.
The funny thing is that I agree with you about housing cooling off. You are just making your argument poorly in my opinion.
” According to your theory mortgage rates dropping = housing prices increasing.”
It onnly works one way. And not in a consistently testable fashion. And only in real(-ish) dollars, not nominal.
“But if you listen to the agents out in California, you’ll see the reality. People are priced out.”
It depends on where you’re looking. People are priced out because they want the best areas.
After years of renting, I’ve been actively looking for a place to buy in southern CA. Now if I wanted a place in Riverside, Anaheim, or some other typical burb (call them the far West/Southwest suburbs of Chicago), all of us CC readers would be fine as houses there are pretty affordable. But since that’s not where I’m looking, the houses we’d all like to have in the GZs of Orange County, LA, and even the Deserts, are *easily* up in price by 20% from where they would have been in 2012 – the year where things really began to take off again as people felt comfortable with the asking prices. But “affordable” housing in the areas where you’d want to live, just isn’t on the market because in many cases, why sell when you can rent?
My friend bought a nice house in the Hollywood Hills in 2006 for $1.6MM. In 2009 he would have been lucky to get $1.1MM for it. Today it’s worth about $1.6MM again, and he could get that price, but why should he sell as he’s getting $10K a month in rent – he said it costs him $6K a month to own. A house I really like is overpriced by 25% from where it should be based on comps in the neighborhood. When I asked the agent why it was listed so high, I was told it has a great rental history. So in a way I’m priced out too – sure I could bite the bullet and pay too much and worry for years about it (and have my property taxes based on that inflated price), or I could just wait it out and see what happens, which is exactly what I’m doing. Other nice houses that aren’t being rented/have no rental history and are still listed way too high just sit there; the *moment* they drop (if they drop) to 12’ish levels, (which is still expensive but not absurd) they sell right away. You see and here this all-the-time.
I don’t see a big difference between the GZs of southern CA, nor the GZs of Chicago, other than CA has much more of an international renter/buyer pool. The nice houses that are “fairly” priced in the desirable areas sell quickly (and not at rock bottom 09 prices – those days are long gone), the best houses in desirable areas sell at very high prices that make you scratch your head in disbelief, and everything else just floats in limbo. People, including myself, have these very high housing expectations that require more money than you’d think to obtain… that’s why we’re priced out.
I think you have said it well Jay. This is why I’m fine with renting it out if need be. Keeping a property in the GZ that is profitable when I cannot purchase the equivalent is not a terrible place to be.
Funny, I was just remarking to my partner that it seemed there were more price drops today than any day I can remember, and a lot of big $ drops…and it’s Thursday, which is weird. Also a ton of listings removed; not even counting the ones removed and relisted at lower prices. Maybe they were spooked by the Fed meeting and mortgage rate hikes?
We had been thinking of listing our place and going back to renting (as long as you’re not set on the loop you can ALWAYS find a good rental deal if you’re willing to put in the work), but ultimately decided even a significant financial gain wouldn’t be worth the hell of moving (twice).
Gary or others with access to MLS data,
Any way to run the numbers and see today’s/this week’s price drops and de-listings, and how they compare (total and as % of total inventory on market) to other relevant days/periods? I am now really curious about this!
Price drops are damn near impossible to look at historically because the data is lost once the price drop is history. And it doesn’t really tell you anything about the market – only that they started out too high for the market.
I actually did a post on cancellations a while back and it did seem as though there were more than last year: http://www.chicagonow.com/getting-real/2014/06/more-chicago-homeowners-try-selling-but-not-happy-with-results/
What we know is that more properties are being listed than last year but on an absolute basis only slightly more ARE listed. There have to be a lot of cancellations.
Gary, perusing your handout from John H Dolan, what jumped out at me is this (from page 3):
“Trading picked up to 19 contracts.”
Wow!
Dolan reports that total open interest shrank from 89 to 77.
Wow again.
God bless Case & Shiller (and John H Dolan) for trying, but if each contract represents ~ $41,000 worth of US real estate, and the total volume traded was 19 contracts, that’s total notional value of ~ $790,000. And the total value of US resi real estate is something like, what, $25 trillion?
What a shame CS futures died on the vine. It is clearly not something that anyone could make a serious wager with.
http://homepricefutures.com/blog/wp-content/uploads/2010/04/2014_08-CME-CS-recap.pdf
Yeah, I know. It’s pretty disappointing. Don’t know why it didn’t take off. Thought it was a great concept. But someone like Sabrina could still short a few contracts and pocket some extra change.
“The Case Shiller futures are still pointing up for Chicago: … Why not short it? You will make SO much money.”
When you say CS futures are “pointing up” are you referring to Dolan’s slide (p. 20) entitled “One-year forward HPA using X14/X15” ?
Dolan says the futures market sez the implied one year home price appreciation for Chicago’s CS index will be 5.1%.
Hmm . . . 5.1% . . . (strokes beard) — that’s almost high enough to induce me to bet against it.
Yeah, I’ll take unders.
Yeah, and if you’re also bearish long term look at the longer term values for Chicago.
@Sabrina
Thanks for bringing back the old format
You say “Incomes haven’t risen and now rates are higher (and will go higher still.)”
The following is an interesting quote
“Limited supply has helped the $5.4 trillion market for government-backed mortgage securities withstand the Federal Reserve’s reduction of its bond purchases this year, contributing to lower interest rates on new mortgages”
rest here
http://www.bloomberg.com/news/2014-09-18/bofa-gets-6-billion-bond-boost-from-fannie-and-freddie.html
In this environment banks are continuing to increase their capital ratios and one way is to hold onto MBS’s which keeps the MBS market tight which keeps interest rates low despite any unwinding of QE123
“In this environment banks are continuing to increase their capital ratios and one way is to hold onto MBS’s which keeps the MBS market tight which keeps interest rates low despite any unwinding of QE123.”
If you think that rates are going to stay low, I have a bridge in Brooklyn to sell you.
The denial about interest rates is amazing. Not just by home buyers/sellers but also by those who own bonds. The 30-year bond bull is coming to an end. It’s just a matter of time. If not this year, then next and then the year after that. Rates are going up- and significantly if the economy continues to heat up.
Yes- the economy, other than housing, is actually GOOD.
By the way- Next week I’m going to try again to get to the bottom of the lag. I’ll be deactivating a different plug-in every day so we can see if one of them is causing it.
So let’s see what happens with the lag starting on Monday (fingers crossed.)
“If you think that rates are going to stay low, I have a bridge in Brooklyn to sell you.”
US 10yr = 2.6%. Spain 10yr = 2.2% France 10yr = 1.9% Japan 10yr = 0.7%
“Yes- the economy, other than housing, is actually GOOD.”
So you are saying that 1. rates are going to rise because the economy is getting better 2. housing prices will drop because rates are higher even though the economy is better? Is it conceivable to you that rates go higher, the economy is better and housing appreciates? Cause that seems like a reasonable (if not probable) scenario to me.
Also – there was an article in Crain’s saying that Chicago was the most “moved to” city in the US over the summer. We’re gonna need those bodies to fill up the new apartment towers!
http://www.chicagobusiness.com/article/20140912/BLOGS02/140919953/chicago-takes-top-spot-on-move-in-list-believe-it-or-not
Just wondering if anyone is going to try out this recipe?
http://www.nytimes.com/2014/09/21/magazine/the-ultimate-cuban-comfort-food-picadillo.html?
“Is it conceivable to you that rates go higher, the economy is better and housing appreciates?”
Even more likely is that housing (nationally–ie not looking only at “unique” GZ areas in prime locales) only appears to appreciate, while losing ground (even if only marginally) in real dollar terms.
Dz.., funny, I am working on a paper right now arguing that increasing interest rates causes inflation.
@ Sabrina
” It’s just a matter of time. If not this year, then next and then the year after that. Rates are going up- ”
you’re not actually saying anything…
and the sun comes up and down
and a stuck clock is right 2x a day
At least HD drew a line in the sand in terms of where was the bottom.
if not the year after next next next at that point you are 4 years out. And if you are going to hold for a least 5 years and you need a place to live anyways then your statement is non material.
“Don’t know why [Case-Shiller futures trading] didn’t take off.”
Shiller originally envisioned his futures being used by builders, developers & lenders, who (like farmers) should be natural users for risk control. Obviously, almost nobody hedges housing value with futures. And prior to the bubble & bust, there was little reason to do so, since there was little volatility. Shiller tells us in “Irrational Exuberance” that residential real estate prices, in real terms, rose by only 66% between 1890 and 2004 — a mere 0.4% a year. (Between 1997 and 2005 they leapt by 52% — 6.2% a year, also in real terms.)
So, one reason futures trading hasn’t taken off is becasue the risk isn’t perceived to be worth the cost of insurance.
Institutional (private-equity) investors also should hedge their downside. As DePaul’s institute for housing studies reports:
“It is estimated that institutional investors purchased as many as 200,000 single family homes nationwide, spending $20 billion since the beginning of 2012.
“In 2013, Blackstone acquired more than 1,300 single family properties in Cook County.
“In the first quarter of 2014, purchases of single family homes in Cook County by the largest [P-E] investors were down 63 percent compared to the same time in 2013….
“As [PE] buying slows … positive price stabilizing effects on local housing markets may fade….
http://www.housingstudies.org/news/blog/examining-patterns-concentrated-institutional-inve/
“the risk isn’t perceived to be worth the cost of insurance.”
In a liquid futures market the cost would be zero. Of course, this is not that liquid of a market.
The August IAR data is out Monday morning but I can’t get to it until Monday night. So I’ll have a post up on it on Tuesday and we can discuss it then.
Illinois always puts it out so late. They knew the data weeks ago. I never understood that- but it is what it is.
From Gary’s data, we already know that sales have weakened again.
Gary,
I think Wojo means cost=time and effort and sense of necessity.
I’m pretty sure Chicago will report sales down at least 14.9%. My estimate was 3 days late this month: http://www.chicagonow.com/getting-real/2014/09/august-chicago-real-estate-market-update-home-sales-plunge-once-again/