Market Conditions: October Sales Fall 8.6% in Chicago YOY While Median Price Rose Again

2733 n hampden

The October sales numbers are out. As expected, sales fell year over year as the Chicago housing market took a break.

The city of Chicago saw an 8.6 percent year-over-year decrease in home sales in October 2014 with 2,082 sales, down from 2,279 in October 2013. The median price rose to $237,500 versus $218,000 in October 2013, an annual increase of 8.9 percent.

Thanks to G for all the data on October sales going back to 1997:

October Chicago sfh/condo/th sales and median

  • 1997 1,731 $129,900
  • 1998 1,855 $138,000
  • 1999 1,978 $159,500
  • 2000 2,106 $174,710
  • 2001 2,177 $200,000
  • 2002 2,503 $215,000
  • 2003 2,996 $236,000
  • 2004 2,651 $241,000
  • 2005 2,846 $268,500
  • 2006 2,630 $278,000
  • 2007 2,007 $285,000
  • 2008 1,564 $261,000
  • 2009 2,068 $215,000
  • 2010 1,225 $183,000
  • 2011 1,324 $162,000 (44% short/REO sales)
  • 2012 2,009 $175,000
  • 2013: 2,231 $218,500
  • 2014: 2,082 $237,500

“Heading into the holiday season, what many see as an off-peak time for the housing market actually offers many incentives for buyers and sellers. Buyers who purchase a home now still have time to deduct home purchase costs on their taxes to reap benefits,” said Hugh Rider, president of the Chicago Association of REALTORS® and co-president of Realty & Mortgage Co. “Median home prices continue to be strong, and sales times are swift. Less competition from other buyers also is a great motivator to put your home on the market now.”

“The housing market appears to be pausing in its positive sales growth trends, not unusual for this time of the year,” noted Geoffrey J.D. Hewings, Director of the Regional Economics Applications Laboratory of the University of Illinois.  “Prices continue to improve and the forecasts suggest growth in the next three months.  Recent declines in the reduction in the foreclosure housing inventory suggest that we may have to wait until 2016 at the earliest for a return to pre-bubble levels.”

The average 30-year mortgage was 4.03 in the month, down from 4.2% last year.

Will this unseasonably cold November have an impact on home sales in the next few months?

Or do Chicago buyers not care about the weather?

Illinois home sales see slight gain in October; Statewide home prices increase 6.0 percent annually [Illinois Association of Realtors, Press Release, November 20, 2014]

327 Responses to “Market Conditions: October Sales Fall 8.6% in Chicago YOY While Median Price Rose Again”

  1. “Buyers who purchase a home now still have time to deduct home purchase costs on their taxes to reap benefits”

    what? can someone please explain… though only mortgage interest and taxes were deductible, am I missing something here? Can you deduct down payments or huh?

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  2. Origination points on mortgages for purchases are deductible.

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  3. with rates so low are people still paying for points?

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  4. Yes. All lender associated fees are considered ‘origination fees” now, not just bona fide discount points used to buy down the rate. Lines 801, 802, & 803 on the HUD settlement statement. On purchases, the origination fee is fully deductible. On refinances, it is amortized over 30 years.

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  5. Great article in Chicago Magazine about income equality in Chicago neighborhoods. Maybe this will help Sabrina understand why some of us claim the GZ has exploding incomes.

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  6. http://www.chicagomag.com/city-life/November-2014/Chicagolands-Vanishing-Middle-Class-Neighborhoods/

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  7. Interestingly enough I read an article yesterday about how Chicago is the 2nd most affordable middle class housing market in the country

    http://chicagoagentmagazine.com/chicagoland-2nd-affordable-metro-area-middle-class-buyers/

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  8. “Chicago is the 2nd most affordable middle class housing market”

    Facile comparisons of data lead to dubious conclusions.

    Median metro income to Median metro home price is a very blunt instrument. Can we get a median income for *employed* 25-60 year olds, and a median home price for owner-occupied units, *only*? That is, only look at those likely to be buying a house, and only at the houses that people buy to live in.

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  9. oh, and ps:

    That Median Home price is brought way down by the growth (shown in the Chi-Mag article) of the poor neighborhoods.

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  10. Here is the source of the article sonies posted.

    http://www.trulia.com/trends/2014/11/middle-class-millennials-report/

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  11. “Here is the source of the article sonies posted.”

    I’d forgotten that was the methodology–percentage of houses *listed* on a particular day that are affordable at asking price. And at the end of the selling season, too. A small step up from anecdata.

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  12. well it was from chicagoagentmag lol I never said I agreed with it

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  13. Before I clicked the link, I was thinking: “this is either going to be a bunch of garbage…or a Whet Moser post.”

    Whet is the best thing to happen to Chicago Magazine in a long time.


    steve heitman on November 21st, 2014 at 1:20 pm

    http://www.chicagomag.com/city-life/November-2014/Chicagolands-Vanishing-Middle-Class-Neighborhoods/

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  14. “well it was from chicagoagentmag lol I never said I agreed with it”

    And I wasn’t shooting the messenger.

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  15. Yeah those cost of housing studies rarely normalize for the quality of the home. People in Chicago (most expensive urban areas for that matter) live in squalor compared to the rest of the country.

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  16. Chicago is a sanctuary city, a city of immigrants most of whom are uneducated. These people are willing to work for practically the minimum wage, which essentially becomes the maximum wage for everyone else. That’s the decline of the middle class in a nutshell. Vast stretches of the NW side and SW side of Chicago were once white ethnic middle class. Their replacement is a lower economic class of hispanics. Properties in these areas are as well kept as they were in the 70’s. It’s easy to see.

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  17. typo: meant not as well kept.

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  18. “Maybe this will help Sabrina understand why some of us claim the GZ has exploding incomes.”

    Really Steve? This is the best you’ve got?

    If you were arguing incomes were “exploding” in Portage Park, I might actually believe you. But to say they’re “exploding” in Lincoln Park and Lakeview- two of the neighborhoods that already have the highest wealth concentrations in the city (and have for the past 10 years) is a joke.

    Please- get your story straight.

    “Exploding” is not more rich people moving into a certain area. It’s actually those rich people getting richer. And you said “incomes.” There’s absolutely NO evidence that the upper middle class has exploding incomes right now. Other assets rising? Certainly. Just look at the stock market. But incomes? Nope.

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  19. By the way- this blog is like a running commentary on how the housing market is doing in Chicago and if you watch it closely, you can see changes in the market quite clearly.

    1. In 2008-2009 lots of people posted on here about how prices would NEVER go down. Then, as they did in the non-GZ areas, they argued that the GZ wouldn’t be impacted.
    2. The bears, like G, were also prevalent during 2008-2010 or so.
    3. During 2008-2010, owners/friends of owners/realtors on certain properties would come on this blog and anonymously post something good about the property or call out everyone else and say they didn’t know what they were talking about (this pretty much went away from 2010-2013).
    4. From 2010-2012, the bulls, like Steve Heitman, vanished from the site.
    5. Starting in 2013, Steve and others came back.
    6. In late 2014, anonymous postings started appearing again on some of the properties- talking up the property.

    You can clearly see the cycles in real estate.

    When the anonymous posts start appearing in favor of properties, that’s a sign to me. It’s been a long, long time since that has happened.

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  20. “When the anonymous posts start appearing in favor of properties, that’s a sign to me. It’s been a long, long time since that has happened.”

    Anecdotally, I noticed that in 2011/2012, most of my posts got negatives/thumbs down and yours and G got thumbs up. Now it is the opposite.

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  21. gringozecarioca on November 24th, 2014 at 9:57 am

    “Anecdotally, I noticed that in 2011/2012, most of my posts got negatives/thumbs down and yours and G got thumbs up. Now it is the opposite.”

    No, I just stopped giving all your comments negatives because I now have to save my energy for the math problems.

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  22. “Anecdotally, I noticed that in 2011/2012, most of my posts got negatives/thumbs down and yours and G got thumbs up. Now it is the opposite.”

    Denial.

    It’s a sad thing.

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  23. Hi Sabrina,

    How’s the economy and market doing?

    Does 4 + 5 = 9? These match questions are killing me.

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  24. man look at those rising rates!

    9x? =81

    come on man!

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  25. “How’s the economy and market doing?”

    Steve: I thought you read this blog? I guess not.

    The US economy is doing exactly as I said it has been doing all year: amazing. As I’ve said many, many times, unemployment is at its lowest since 2007. Job creation is at its highest since 1999. The stock market is at record highs. We have the lowest interest rates in the last 100 years. Bonds are in a bull like they’ve never been in their entire existence.

    How can it go wrong?

    It can’t!

    So why have housing sales been down in 9 of the last 10 months?

    Why aren’t housing prices rising anymore?

    Why is the Chicago housing market dead?

    Why?

    Can anyone please tell me why?

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  26. “So why have housing sales been down in 9 of the last 10 months?”

    I have told you why. Fewer distressed properties available and
    selling.

    “Why aren’t housing prices rising anymore?”

    They’re not doing too badly. Still up over last year, though by a much smaller amount.

    “Why is the Chicago housing market dead?”

    It’s not.

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  27. “I have told you why. Fewer distressed properties available and selling.”

    But Gary- this doesn’t make any sense. Those were investors buying those. Those were Blackstone. They are renting those out. That wasn’t “the market.” That wasn’t the average 20-something from Indiana U buying their first condo.

    By the way- Crain’s said today that the percentage of sales to those institutional investors fell from 10% in Q1 of 2013 to just 4.6% in Q3 this last quarter.

    So the “recovery” wasn’t really real after all. Last year’s sales were fake. They were investors buying and not regular buyers.

    So what happens now? How do you get the normal buyers to buy again so that this housing market can normalize? As I’ve said over and over- without the investor this market is dead as a doornail (which is what we’re seeing right now.) The rich are still buying their $3.9 million condos but everyone else? Dead.

    There’s an affordability issue even though rates are the lowest they’re ever going to be. STILL buyers can’t afford it. What happens when rates go up? (which they inevitably will with the economy growing at nearly 4% – wow)

    It becomes even MORE unaffordable (and don’t think the Fed doesn’t know this. They KNOW they will crush down the entire east and west coast housing markets if they normalize rates.) We all saw what happened last year when mortgage rates rose even 1%. Sales fell sharply. And they never really recovered even though rates came back down again.

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  28. I don’t get it. Housing should be hotter than even last year. It is PERFECT conditions. Ideal conditions. The best conditions ever (other than the fact that you actually DO need a down payment- if only 3%.)

    Yet- few are listing their condo that they’ve been stuck in for 7 years.

    Developers aren’t hardly building new supply. We’ve seen only 2 lower end condo buildings announced so far – any other announcements have been “luxury” buildings. And it’s just a couple hundred total units (compared to over 6,000 apartments.)

    Why???

    Where are all the eager buyers flocking to get their piece of the American dream as the job market picks up steam?

    Where are they?

    Missing.

    Why?

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  29. “Why aren’t housing prices rising anymore?”

    “They’re not doing too badly. Still up over last year, though by a much smaller amount.”

    Case Shiller for September showed the price increase was the smallest since 2012 and the third worst out of the 20 metro areas. By next year price increases won’t exist- and we could easily see it declining. Of course Case Shiller includes the entire metro area and is for single family homes.

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  30. Mortgage applications declined again last week, year over year.

    Purchase applications were down 10% compared to last year. They’ve been down every single week this year (compared to last year.)

    Mortgage applications declining yoy every month = housing sales declining year over year every month

    THAT is an indication of the health of the housing market. Once the institutional investors get out of the game (which has now happened – as they are down to under 5% in the Chicago area now), and they pay all cash, you’re dependent on those getting mortgages. And they’re not getting them.

    Purchase applications are at a 13-year low.

    The mortgage applications indicate a weak November, December and probably January. Sales will be down again.

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  31. “But Gary- this doesn’t make any sense. Those were investors buying those. Those were Blackstone. They are renting those out. That wasn’t “the market.” That wasn’t the average 20-something from Indiana U buying their first condo.

    So the “recovery” wasn’t really real after all. Last year’s sales were fake. They were investors buying and not regular buyers.

    So what happens now? How do you get the normal buyers to buy again so that this housing market can normalize? As I’ve said over and over- without the investor this market is dead as a doornail (which is what we’re seeing right now.)”

    No, no, no. There are two markets. The market for distressed properties and the market for non-distressed. The distressed market that I track in the MLS is not Blackstone buying properties. That is individual buyers getting those. No one sells one listing to Blackstone. They buy 100 at a time. I don’t even think that’s in the data. Nevertheless, those sales are down.

    Then there is the market for non-distressed properties and Blackstone is not in there either. And those sales are NOT down at all. So what is the problem?

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  32. “There’s an affordability issue even though rates are the lowest they’re ever going to be. STILL buyers can’t afford it.”

    How can there be an affordability problem when prices are still 28% below peak. People could afford them then they can certainly afford them now.

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  33. “Purchase applications were down 10% compared to last year. They’ve been down every single week this year (compared to last year.) ”

    There you go with that national data again.

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  34. “Developers aren’t hardly building new supply”

    Sure, they may not be building huge 200+ unit condo buildings but drive through any neighborhood and there are a ton of multi-unit buildings being built. Many of them sell out before completion. I live in Bucktown so I’m familiar with what’s going on there. Drive Armitage from the highway to Western and there must be 5-10 buildings built or under construction. Not the best street to live on but they’re all selling. Lots of condos being build on Damen and Milwaukee as well.

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  35. “Where are all the eager buyers flocking to get their piece of the American dream as the job market picks up steam?”

    “Where are they?”

    Probably sitting next to me on the sidelines waiting for prices to come down. I keep kicking myself for not having bought in early/mid 2012 when prices seemed to be realistic, still expensive, but realistically expensive. Today (in Southern CA where I’m looking, Chicago is a very different animal), prices are easily 25%-30% above where they would have been in 2012, and I could fill up the page with dozens of examples in any given neighborhood – that is, any neighborhood you or I would be interested in.

    Why does 2012’ish stick with me and others I’ve talked to? Because that was a time when it seemed that bubble prices where finally behind us, sellers were still making money from what they originally paid pre-bubble (a nice profit but not a killing), flippers had vanished for the most part, *qualified* buyers were coming out of hibernation at a healthy clip. It seemed safe to go back into the water and all seemed fair, not a fire sale, but just fair. Those days are over at least for now.

    Still, it amazes me that some overpriced houses still sell today (lots of foreign/drunk with your first big paying job money out there to warp the selling price averages), but the “where are they” people, the bulk of people that really move the numbers Sabrina is looking for, are just waiting to this nonsense to retreat. Bubble? Not so sure about that as inflated prices seem to be concentrated in just the GZs; maybe there’s just a lot of qualified (overly?) cautious buyers who actually learned something during the bubble years.

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  36. gringozecarioca on November 27th, 2014 at 4:40 am

    “Where are all the eager buyers flocking to get their piece of the American dream as the job market picks up steam?
    Where are they?
    Missing.
    Why?”

    Maybe you answered your own question. Maybe it really is the perfect time to buy. So since when do retail consumers buy at the best time? They like to buy at tops!

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  37. “Probably sitting next to me on the sidelines waiting for prices to come down. I keep kicking myself for not having bought in early/mid 2012 when prices seemed to be realistic, still expensive, but realistically expensive. ”

    While I generally agree with nothing you say, I must wholeheartedly agree with your insight here.

    I actually bought in early/mid 2012. i knew things were expensive, but realistically expense, and the homes I looked at all went under contract soon after listing, even though it was still pretty slow out there. My wife and I with 20% down and 800+ credit scores were as qualified as anyone can be, and yet everyone else looking to buy seemed equally as qualified as myself. One house I looked at in Old Irving sold for $350,000 and it needed a ton of work, I thought maybe $300,000 was the highest price I would pay – but a DINK couple bought it up at $350,000. and it was at that point I recognized that the bottom was getting close, and when I’m competing against other buyers like myself (rather than investors, NINJA loans, etc), that it was time to buy before the bounce off the bottom, I had a feeling stuff was still expensive – and I feel that I still overpaid for my house – but I don’t feel so bad about it today: a rehabbed special on my block – same size house/lot/finishes is listed $240,000 more thanI paid for my house three years ago.

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  38. “a rehabbed special on my block – same size house/lot/finishes is listed $240,000 more thanI paid for my house three years ago.”

    we really have no manner in which to validate this statement.

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  39. “Sure, they may not be building huge 200+ unit condo buildings but drive through any neighborhood and there are a ton of multi-unit buildings being built. Many of them sell out before completion. I live in Bucktown so I’m familiar with what’s going on there. Drive Armitage from the highway to Western and there must be 5-10 buildings built or under construction. Not the best street to live on but they’re all selling. Lots of condos being build on Damen and Milwaukee as well.”

    It’s easy to drive around a very small area like Bucktown or Lakeview and see 10 houses or 3-flats under construction and think “they’re really building.” When that is soooooo small it’s basically meaningless in the grand scheme of the housing market.

    Consider that 6,000 to 9,000 apartments are being planned or are already under construction just in the downtown area and those 10 new buildings are a drop in the bucket.

    I think it’s great that developers are building again though. They are building across the street from Lane Tech high school (near the Western Avenue intersection) and on Ashland Avenue. I cribbed on those new construction condos on Milwaukee near Division. One building is basically sold out at very high price points but the units across the street aren’t selling quickly. It’s hit or miss.

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  40. There you go with that national data again.”

    Yep. Because, you know, sales in Chicago have been down every month year over year so far this year except one. And November and December will be lower yet again. So basically the entire year was well under last year.

    Oh- and institutional investors, those prone to pay cash, have fallen off a cliff to just about 5% of the market now. Who’s going to replace them? Those applying for mortgages? Are they applying?

    Um…no.

    Sales will be down well into the spring unless something dramatic happens to move buyers off the sidelines. Fannie and Freddie are desperately trying to loosen mortgage requirements (because, you know, they’re just too restrictive). So in some areas, especially in California, you can buy an even MORE expensive home with less money down. Unfortunately in the Chicago area, the Fannie/Freddie limit is still $417,000.

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  41. “No, no, no. There are two markets. The market for distressed properties and the market for non-distressed. The distressed market that I track in the MLS is not Blackstone buying properties. That is individual buyers getting those. No one sells one listing to Blackstone. They buy 100 at a time. I don’t even think that’s in the data. Nevertheless, those sales are down.”

    What???? Please listen to what you are saying. If Blackstone buys a house in Albany Park in cash it doesn’t show up in that monthly sales report from the IAR? Are you nuts???

    This is why the sales numbers were artificially inflated over the last 2 years and why sales have slowed down. Without the investor buyer, the market actually sucks in many neighborhoods. In the GZ, it’s hot because that’s where the stock market money is concentrated. Although, the GZ has slowed considerably over the past year.

    It’s just not the market it was in 2013.

    If you didn’t sell in 2013, you’re out of luck. And if rates start to rise next year, you’re even more out of luck. If buyers aren’t buying now, they certainly aren’t going to be when rates are rising.

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  42. “If Blackstone buys a house in Albany Park in cash it doesn’t show up in that monthly sales report from the IAR? Are you nuts???”

    No, I said that they typically buy large quantities and they’re not listed. The IAR numbers only include listed properties. If they buy a single property that is listed it will be included.

    And, again, there is no decline in sales of the non-distressed properties so what are you worried about? The supply of distressed properties is way down.

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  43. “If they buy a single property that is listed it will be included.”

    Blackstone and American Homes for rent are buying regular listed properties. These are included in the sales numbers. If they go to the bank and buy up 1000 distressed properties directly from the bank- then no- those wouldn’t be included.

    This is why sales numbers are dropping Gary. The investors are out of the game. Even the “investors” who were buying 2 and 3-flats seem out of it right now. I guess they got too expensive to make the rents work. You can’t get blood from a stone. The rents can only go so high in certain neighborhoods especially with thousands of more units coming on the market.

    You’re honestly telling me that non-distressed home sales aren’t down? You’re kidding, right? That Lincoln Park and Lakeview are like they were in 2013? It’s not even close. It’s night and day. Ask any seller who is sitting there with their property on the market for months. They’re asking their agents: “but I thought the market was hot?”

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  44. “You’re honestly telling me that non-distressed home sales aren’t down? You’re kidding, right?”

    Yes, I’ve been trying to tell you that for months. Example: October 2014 had 1646 non-distressed sales vs. 1574 in 2013. Also, keep in mind that the IAR numbers exaggerate the declines by a couple of percentage points each month.

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  45. “Yes, I’ve been trying to tell you that for months. Example: October 2014 had 1646 non-distressed sales vs. 1574 in 2013. Also, keep in mind that the IAR numbers exaggerate the declines by a couple of percentage points each month.”

    I’m referring to the GZ where non-distressed sales (because that’s MOST of the sales) have slowly since last year. It could be that in the non GZ neighborhoods, sales are treading water.

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  46. “I’m referring to the GZ where non-distressed sales (because that’s MOST of the sales) have slowly since last year. It could be that in the non GZ neighborhoods, sales are treading water.”

    Ha, so you say they are down in the GZ, and “treading water” elsewhere. Meanwhile, the reality is sales of non-distressed were up about 5% overall. Please define “treading water” for me.

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  47. “If you didn’t sell in 2013, you’re out of luck.”

    Really? I sold in 2014 and got more than I would have in 2013. Of course I am only speaking from experience, not bias.

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  48. “I’m referring to the GZ where non-distressed sales (because that’s MOST of the sales) have slowly since last year.”

    Lincoln Park non distressed sales for October = 1380 vs. 1311 in 2013

    Lake View non-distressed sales = 1914 v 1839 in 2013

    Drawing conclusions from limited personal experiences is extremely dangerous.

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  49. Sabrina,

    Honestly you have to relax and stop this madness. The market is not as crazy as in 2013 because prices are no longer as low as they were in 2013. Do you want to sit down for a quick econ talk over a cup of coffee? I will be happy to help you see the light!

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  50. “Honestly you have to relax and stop this madness. The market is not as crazy as in 2013 because prices are no longer as low as they were in 2013. Do you want to sit down for a quick econ talk over a cup of coffee? I will be happy to help you see the light!”

    That’s right. Prices are now too high. There’s an affordability problem. Real estate has gone up double digits but incomes have not. Falling mortgage rates solved the “problem” for awhile but they likely won’t go much lower and the odds are that they go higher (unless we go into a recession- in which case it won’t really matter because the real estate market will REALLY slow down then.)

    So the housing market is at a standstill.

    You can’t get blood from a stone.

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  51. “Drawing conclusions from limited personal experiences is extremely dangerous.”

    Ha! Limited Gary?

    Really. Don’t even make me laugh.

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  52. “Really? I sold in 2014 and got more than I would have in 2013. Of course I am only speaking from experience, not bias.”

    But Chuk- we all know you’re a GENIUS. A real estate fricking genius.

    No one else can compare.

    The average mortal isn’t making more by selling this year. They’re making less.

    It’s a weird market though. The first time, starter type of properties are sitting and sitting. Properties listed under $500k especially. Those buyers just can’t afford the prices/downpayments etc. And they want everything “new.” Heaven forbid you try and re-sell if you haven’t updated the bathrooms in 10 years.

    There’s still some strength above $500k to $750k though.

    The spring will be interesting. I’m expecting quite a few properties to be coming on the market to try and get out while they can.

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  53. “There’s an affordability problem. Real estate has gone up double digits but incomes have not.”

    Prices in Chicago are down 22%/19% from the peak but incomes have not dropped that much.

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  54. “And they want everything “new.” Heaven forbid you try and re-sell if you haven’t updated the bathrooms in 10 years.”

    Now this I agree with. Over the last couple of years this has become a huge issue. I think it depends on the area and the type of home. In areas where there is a fair amount of new construction buyers will discount heavily for outdated bathrooms and kitchens.

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  55. “Prices in Chicago are down 22%/19% from the peak but incomes have not dropped that much.”

    They are past peak in many parts of the GreenZone. Well past it in some buildings downtown. But it depends on the highrise. It’s hit or miss.

    And most sellers in the GZ are now trying to get the peak pricing or more (even if they can’t get it because they did nothing to upgrade the property.)

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  56. The $400,000 2/2 is once again the $400,000 2/2. The only reason this is possible is because of the drop in mortgage rates. When (if?) those mortgage rates rise- good luck selling the $400,000 2/2 with a higher monthly mortgage payment. It won’t be happening unless incomes rise dramatically.

    But who knows what will happen. Did anyone foresee Portugal’s record low 10-year treasury yields with its debt levels? Did anyone think Spain’s 10-year would EVER trade at just 1.9% when it is broke and still has 20% unemployment?

    No one foresaw this year’s crude decline either.

    So who knows?

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  57. As Crain’s discussed 2 months ago, condos in the GreenZone high rises are basically back at peak. And in many buildings- they exceed it. It just all depends on if you’re in a building that allows rentals/investors and the Chinese are buying.

    http://www.chicagobusiness.com/realestate/20140923/CRED0701/140929972/downtown-condo-prices-back-near-2008-peak

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  58. “And they want everything “new.” Heaven forbid you try and re-sell if you haven’t updated the bathrooms in 10 years.”

    Yeah- don’t try to sell for peak pricing if your bathrooms haven’t been touched in 10 to 20 years. I see this all the time in condos. Just buy a new vanity at Home Depot for goodness sakes! Get rid of the Hollywood lighting too. It doesn’t take much, but people don’t do it.

    Same with the kitchen. If you still have black appliances, you’re telling me that the refrigerator is at least 15 years old because black appliances were last “in” around 2000.

    Buyers just don’t want to deal with replacing anything. They don’t even want a “credit” for it at the close. They just want to move in and start living in it. If you’re a seller- you have to be aware that this is how buyers are thinking. If you don’t want to upgrade things yourself, then you’re going to have to reduce the price accordingly- but even THAT may not get the job done because, again, buyers really don’t want to do anything- even if the property is cheaply priced.

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  59. sellers should update. a house with no updates since the last purchase means the seller did nothing to the bones either. same pipes, same mechanicals, same (maybe leaky) roof, same tired driveway, etc. outdated often means old and reaching the end of a useful lifespan or worse, in need to repair. my wife and I laugh when we see a realtor state in a listing ‘one owner’ which usually means ‘owner did DIY repairs for 40 years and everything needs replacement”. my house had one previous owner and it needed new ‘everything’. $150,000 in 24 months later I have a new everything but I’ve still got a 60’s bathroom, a garage that has issues and landscaping that needs a lot of work.

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  60. “But Chuk- we all know you’re a GENIUS. A real estate fricking genius.
    No one else can compare.
    The average mortal isn’t making more by selling this year. They’re making less.”

    Then a few minutes later….

    “As Crain’s discussed 2 months ago, condos in the GreenZone high rises are basically back at peak.”

    Do you even read your own nonsense?

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  61. Here’s some good news.

    Crain’s is reporting that the “super loop” (which is 11 zip codes in the downtown) is at the highest employment level since 1991 at 540,000. That is up 63,000 from the 2010 recession low.

    The “hot” areas aren’t what you think though. They are professional services, healthcare and dining/restaurants. Tech, while a factor, wasn’t one of the big driving forces behind the increase (at least- not yet.)

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  62. “The spring will be interesting. I’m expecting quite a few properties to be coming on the market to try and get out while they can.”

    You say this every year. Broken clock?

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  63. Sabrina,

    What would make you happy. Crashing economy? Ebola outbreak, everyone renting? Let us into the world of Sabrina the negative… we’re knocking!

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  64. Sabrina,

    you realize that if everyone listed to over the past 4 years they would have missed out on the biggest economic recovery since the great depression? You should come straight and tell everyone the following:

    “While I have WRONG over the past 4 years, I do think housing is now overpriced and may stagnate or fall going forward”.

    People would respect you a lot more if you ponied up to reality. You may be right going forward (although I don’t agree) but you have been wrong about everything from the stock market to jobs, to the housing market. You remind me of Rick Santeli on CNBC. He was been on his soap-box for 5 years yelling that inflation would run wold and we are all doomed. The funny thing is that although you have both been very wrong with your predictions, you both return everyday and pretend spew the same crap. Yes, someday you may be right, but for now you are very wrong and anyone who listened to you has lost a lot of money.

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  65. “While I have WRONG over the past 4 years, I do think housing is now overpriced and may stagnate or fall going forward”.

    According to Sabrina, she has been telling everyone to buy for the last 4 years. I must have missed those posts…

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  66. “As Crain’s discussed 2 months ago, condos in the GreenZone high rises are basically back at peak. And in many buildings- they exceed it. It just all depends on if you’re in a building that allows rentals/investors and the Chinese are buying.”

    by god I hope you’re right, I’m putting my place on the market this summer, would love to get above peak pricing lol!

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  67. “Prices are now too high. There’s an affordability problem. Real estate has gone up double digits but incomes have not. Falling mortgage rates solved the “problem” for awhile but they likely won’t go much lower and the odds are that they go higher”

    I don’t think it’s an affordability problem – it’s more of an inventory quality problem.

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  68. Wow! Can’t believe no one called me out on my Lincoln Park and Lake View data. Way too high. I had a setting wrong on the application I used to get the data. Here is the correct non-distressed data:

    Lincoln Park October 2013 = 102 vs. 110 in 2014
    Lake View 159 vs. 164

    Although the numbers are down it’s not like they are falling off the cliff. And when the dust settles on November Lincoln Park is going to be way up. Lake View I’m not sure of yet.

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  69. “Lincoln Park October 2013 = 102 vs. 110 in 2014
    Lake View 159 vs. 164

    Although the numbers are down it’s not like they are falling off the cliff.”

    102 to 110 looks like an increase to me. Same with 159 to 164. Did you get the years backward?

    Also, you need to exclude anything over $1m, or someone [coffcoff] will object that the high-end has been doing great and everything else sux.

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  70. Sorry. I did get the years backwards. The sales are down.

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  71. “Also, you need to exclude anything over $1m, or someone [coffcoff] will object that the high-end has been doing great and everything else sux.”

    Why? We have the most sales over $1.5 million then there has been since the peak of the housing boom in the Chicagoland area. The rich are doing EXTREMELY well. Stock market is at all-time highs so their wealth is too.

    Has anyone else noticed that there are suddenly a lot more properties on the market over $5 million in the city? That price point used to be pretty rare.

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  72. “Although the numbers are down it’s not like they are falling off the cliff. And when the dust settles on November Lincoln Park is going to be way up. Lake View I’m not sure of yet.”

    The $400,000 condos aren’t way up though. Everything on the low end is just sitting there. But yeah- the upper end is stronger.

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  73. “I don’t think it’s an affordability problem – it’s more of an inventory quality problem.”

    Inventory is up from last year but it’s still not great. But it’s better than the low. There are no longer bidding wars. In fact, 3-bedroom townhouses in prime neighborhoods are on the market for longer than they were last year. You no longer have to run out and see it in the first 24 hours. You can wait WEEKS.

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  74. From Crain’s (and this doesn’t even include condos- which are hot as well):

    Sales of single-family homes for $1.5 million or more rose nearly 20 percent through the first 10 months of this year in the Chicago area, according to brokerage Baird & Warner, which analyzed information from Midwest Real Estate Data. The 545 sales recorded so far represent the most sales for at least $1.5 million through 10 months since 2007, when 678 homes sold. The data includes only detached single-family homes, and not condominiums or town homes.

    Kinney expects the luxury rebound to continue amid low interest rates and potentially loosening mortgage credit, which will allow more buyers to move up the housing ladder. Yet Christine Lutz, director of residential brokerage at Chicago-based Kinzie Real Estate Group, doesn’t think interest rates will affect the luxury market much. With one exception, all of her million-dollar sales this year were cash deals.

    One of them was a bank-owned Lincoln Park mansion that sold for nearly $4.5 million in October. The home, which was on the market in 2013, attracted multiple bids and a winning cash offer when it was relisted in October because of the healthier market and its indoor sports court distinguishing it from the rest of the neighborhood homes for sale, Lutz said.

    “People have the money, but they’re being selective,” Lutz said. “I think the good markets are going to continue to be good. As long as you’re bringing something quality and unique to the table, it’s got a pretty good shot.”

    http://www.chicagobusiness.com/realestate/20141202/CRED0701/141209985/the-priciest-listings-and-why-you-need-to-hurry-if-you-want-one

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  75. By the way- this IS the slow time of the year, obviously. We can’t really tell anything about inventory or whatnot right now. There are clearly properties just sitting and sitting though. A lot of that is a price issue. People are still listing too high. The 2013 “boom” is over. Sellers missed that.

    But the real signals will be in January/February when the spring housing market revs up.

    Is there a glut of inventory just waiting to list while the rates are still low?

    Will buyers finally appear?

    It’s going to be a very interesting spring.

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  76. What’s going on in the “lower” end?

    This 3-bedroom end unit townhouse in Old Irving Park near a Metra stop has been on the market since September. Now priced at $409,000. This should be “affordable”- right? This is a starter type of home for most people. And Old Irving Park is a hot neighborhood. It even has stainless steel appliances.

    Why isn’t it selling?

    The market has clearly changed.

    https://www.redfin.com/IL/Chicago/3825-N-Milwaukee-Ave-60641/unit-A/home/12774919

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  77. “There are clearly properties just sitting and sitting though.”

    There are always some so you have to look at the aggregate statistics. When I publish my November update on Monday you’ll see that market times are still very low and so is months of supply.

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  78. “There are always some so you have to look at the aggregate statistics. When I publish my November update on Monday you’ll see that market times are still very low and so is months of supply.”

    The market time data is always messed up. It’s never accurate. People list and take it off and relist to “re-set” the clock or they wait a period and then re-list. Hey- I don’t blame them- but it’s pretty obvious by some of the listings that they’re just being listed again and again.

    Some of the listings that are sitting are also those that are least desirable (busy street, backs up to the EL or Metra, in a building with high HOAs, not in the right school district) but in 2013 these things weren’t an issue. In 2005, 2006, 2007, they weren’t an issue. They only become an issue in a slowing market when the power is turning to the buyer (and not the seller.)

    That’s the market we’re in now.

    That’s why those properties that aren’t upgraded are also taking longer to sell. In a truly “hot” market- buyers don’t care. They just want in.

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  79. “The market time data is always messed up. It’s never accurate. People list and take it off and relist to “re-set” the clock or they wait a period and then re-list. Hey- I don’t blame them- but it’s pretty obvious by some of the listings that they’re just being listed again and again.”

    If it’s relisted within 90 days the market times are added together. This is most of the relistings.

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  80. “This 3-bedroom end unit townhouse in Old Irving Park near a Metra stop”

    Looks like the development was some former industrial site wedged in between two sets of train tracks. Close to six corners at Irving & Cicero, not what usually is thought as Old Irving. I’ll tell you where people should look for SFHs, the quiet neighborhood around St. Hyacinth.

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  81. “That’s the market we’re in now. That’s why those properties that aren’t upgraded are also taking longer to sell. In a truly “hot” market- buyers don’t care. They just want in.”

    Yes, it’s called a “normal” market. Having a “hot” market all the time is not healthy. Undesirable properties SHOULD sit on the market.

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  82. “Has anyone else noticed that there are suddenly a lot more properties on the market over $5 million in the city? That price point used to be pretty rare.”

    I’ve noticed that Jewel charges almost $4 a loaf for Pepperidge farm bread! That price point used to be pretty rare!

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  83. “This 3-bedroom end unit townhouse in Old Irving Park near a Metra stop”

    Those should be in the $300’s. There’s high turnover in those units and the current owners are cramming a family of five in there. I bet the kids are bouncing off the walls. And the stairs, stairs, stairs. Also this is near Shurz.

    Speaking of Shurz, I was at the zoo lights this weekend. There was a craft station I took my family to so we could make ornaments.

    The high school kids running the craft station asked where my family lived and I said Long Grove. They said they lived in Chicago, and then volunteered that they went to Lane Tech.

    I told them that I used to live in the city, but I had to move because the high school near me was Shurz. I asked these two high school kids what they thought of Shurz and a look of immediate distaste came to their face, and they both said, in unison, “Not good”. And then they just smiled, and I said, so now you know why I moved to Lake County in the STevenson School Dist.

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  84. “There was a craft station I took my family to so we could make ornaments.”

    Really? People do that?

    “And then they just smiled, and I said, so now you know why I moved to Lake County in the STevenson School Dist.”

    Bc you didn’t expect your kid to get into lane?

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  85. “I’ve noticed that Jewel charges almost $4 a loaf for Pepperidge farm bread! That price point used to be pretty rare!”

    You’re paying for the brand at that point. There are so many local bakeries in chicago that make fresh bread for half the cost without all the chemicals.

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  86. DZ- there were a ton of people making ornaments at the craft station in the cat house at the zoo.

    “Bc you didn’t expect your kid to get into lane?”

    I wouldn’t let me kids go to Lane. I hear it’s lacrosse team is terrible. They were 8-10 this year. Stevenson is 69-38 since 2007.

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  87. Stevenson is one of the top high schools in the state. All one has to do to get their kids into it is to own a home in the district. What’s not to like?

    http://www.usnews.com/education/best-high-schools/illinois/districts/adlai-e-stevenson-hsd-125/adlai-e-stevenson-high-school-6955

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  88. “I wouldn’t let me kids go to Lane. I hear it’s lacrosse team is terrible.”

    You hear wrong:

    http://freeteams.com/lanetechlacrosse/news.html?story=148285

    Also: Lax is such a rich kid sport, thought you’d hate that.

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  89. Also, you missed talk like a pirate day, HD. That was back in September, me hardy.

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  90. “There are so many local bakeries in chicago that make fresh bread for half the cost without all the chemicals.”

    But I want the chemicals. Makes it last longer.

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  91. ” 2014 Urban Scholastic Lacrosse League (USLL) championship trophy”

    That’s like winning the Grey cup in CFL. Mark Tressman did it a bunch of times, and now he’s floundering at 5-7, soon to be 6-10, with arguably some of the best wideouts in the league (jeffrey and marshall) and a future HOF running back (Forte).

    As far as LAX, i’m not a huge fan, but a good team is a sign of wealth and affluence, and in this post-divide world of the haves and the havenots, you better know what side you’re on.

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  92. “Also, you missed talk like a pirate day, HD. That was back in September, me hardy.”

    I know, I saw the ‘me kids! Agh!”

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  93. “That’s like winning the Grey cup in CFL.”

    Yep. It’s winning the title in the league you compete in.

    Since the IL lax teams (even Stevenson) can’t claim the level of competition that exists in (eg) Maryland high school leagues, your kids will still be the one-eyed man in the nation of the blind.

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  94. The most important thing about STevenson is:

    “Free Lunch Program (% of total) 1% ”

    Of 4,000 kids, only 40 receive free lunch, and that’s probably just a handful of kids from a tiny sliver of Mundeslime.

    And for the diversity aspect, the school is only 70% white. Shurz in Chicago is 98% hispanic. It’s not nearly as diverse as lane tech at 30% white and and 50% hispanic, but it’s better than other places. and the awesomeness of large homes, at reasonable prices per sq foot that’s available in long grove is nearly impossible to beat. What’s not to love about Long Grove?

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  95. https://www.redfin.com/IL/Long-Grove/3541-Willow-Valley-Rd-60047/home/16887042

    $565,000 in the GZ gets and oversized 2/2 condo with crappy schools and no yard. This is 3.23 acres. You all talk about urban living, this is urban too – it’s minutes from Deer Park and route 12. It’s like a country estate only minutes from the rest of civilization. No bums picking through your garbage or breaking into your garage to steal your bike either.

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  96. “The most important thing about STevenson is:
    “Free Lunch Program (% of total) 1% ””

    It’s 100% at all of CPS!

    Anyway, the stats I see show it at 5% last year, and 0.1% this year.

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  97. “Crain’s is reporting that the “super loop” (which is 11 zip codes in the downtown) is at the highest employment level since 1991 at 540,000. That is up 63,000 from the 2010 recession low.”

    The PMSA has regained 300,000 jobs from the recession low. We are 155,000 away from the peak.

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  98. “I’ll tell you where people should look for SFHs, the quiet neighborhood around St. Hyacinth.”

    Why the change of heart, Helms? Only a short couple three years ago you were running this neighborhood down. Something about Spanish fliers pasted to light poles on Diversey or something.

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  99. gringozecarioca on December 3rd, 2014 at 2:27 pm

    “I wouldn’t let me kids go to Lane. I hear it’s lacrosse team is terrible.”

    Illinois has Lacrosse??? White kids in Illinois are too fat to play Lacrosse.

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  100. Ah yes. Deer Park where one finds the same midsscale major chain stores and restaurants all around the country. I will hand it to Ethel D. She cleaned up when she sold the farm.

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  101. “The PMSA has regained 300,000 jobs from the recession low. We are 155,000 away from the peak.”

    What the hell is the “PMSA”????

    I’m just telling you what Crain’s is reporting. The super loop, is 11 zip codes from the near north side to the near south side. It is the “central business district.”

    Why are you arguing with me about this???? It’s FANTASTIC news. We are past the peak because it’s the highest since 1991. That means jobs are coming back to the core- which is what it means by the “super loop”. They’re not out in Plainfield. They’re not out in Oak Park. The downtown is viable and living and breathing again.

    Yay!

    That is what we WANT.

    We are not 155,000 jobs away from the peak. We are PAST PEAK.

    The rest of the city is down from 1991 however. But that’s not surprising as manufacturing in the far out neighborhoods- especially on the south side- has all but left. It was 647,000 in 1991 and is at 565,000.

    By the way- the “super loop” is now at 541,000 up from 489,000 in 1991.

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  102. The PMSA is the primary metropolitan statistical area – the 9 county area. I’m not arguing with you. I’m just providing additional information and I think it’s pretty good news.

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  103. “I was at the zoo lights this weekend.” “in the GZ… crappy schools and no yard.”

    How nice. Free admission to all who enter – compliments of Chicago property tax payers/local fundraising and generous urban philanthropy, located in a great neighborhood that helped to insure your personal safety and enjoyment – compliments of so many committed and invested 2/2 condo owners and their families that help keep it that way, free street parking – you took a property tax payers spot, culturally enriching for your children who may otherwise only know the outside world through their local mall. All and all, your evening cost you nothing, no dollars really, and no contribution to make places like this happen for others to enjoy; you just show up and it’s there for your personal pleasure. Yet constant complaining-about-the-horrors-of-city-living suburbanites with fenced from stranger danger big back yards, still choose to play in ours. The irony writes itself, and you’re welcome.

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  104. “Deer Park where one finds the same midsscale major chain stores and restaurants all around the country.”

    This is no different than Lincoln Square or Southport or even Bucktown/Wicker Park. Why do people think the city is so sophisticated?

    Potbelly (check!)
    Chipotle (check!)
    Starbucks (check!)
    Lululemon (check!)
    Urban Outfitters (check!)
    Francesca’s (check!)

    I could go on and on. Nearly IDENTICAL restaurants and stores, actually. Sure- the city has some non-chain ones thrown in there. But why is it that the Potbelly in Bucktown is always swarming with strollers? Same as the one out in Deer Park? Oh- because parents love to go there.

    If you were at the Starbucks in Deer Park or the one in Southport- you really couldn’t tell the difference.

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  105. Goosefoot, Elizabeth, taxim, trencherman, schwa, bistro campange, Riccardo trattoria, yusho, fat rice, longman and eagle, due lire, ceres table just off the top.of my head are all great and nothing like them exist in the suburbs.

    And how about the Kyrgy, Bosnian, Serbian, Korean, Colombian, peruvian places that are dirt cheap? Naperville doesn’t have that shit.

    I can walk or be to one of these within 10-15 minutes.

    I admit that food is very important to my family though.

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  106. “Potbelly (check!)
    Chipotle (check!)
    Starbucks (check!)
    Lululemon (check!)
    Urban Outfitters (check!)
    Francesca’s (check!)”

    ummm most people in the city I know (yeah yeah we’re douchy yuppie scum, GFY) never go to ANY of those places. Ok I admit chipotle is a once a month hungover lunch binge. Do women even wear lulu anymore?

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  107. “ummm most people in the city I know (yeah yeah we’re douchy yuppie scum, GFY) never go to ANY of those places.”

    1. Someone will say “but you would if you had kids”
    2. Seems like standard rationalizing from those who move to the burbs–“we have all the same stuff here! At least all the same stuff that we could possibly squeeze in around travel baseball, travel hockey and travel soccer!!” [never questioning why one would just forgo spending 125% of one’s freetime on children’s sports that’s likely to lead to a $2000 scholarship (ie, 1/10 of what could have been had by putting the travel sport costs into a 529 plan) to Beloit]

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  108. “Why do people think the city is so sophisticated?”

    I don’t like the new Sabrina. Kids, city-hate, what’t next? Did she finally move to Flossmore?

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  109. Yeah the new sabrina is like a douchier version of homedelete. Thats it, i’m not having kids!

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  110. What is lulu lemon?

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  111. Sabrina – “This is no different than Lincoln Square or Southport or even Bucktown/Wicker Park. Why do people think the city is so sophisticated?

    Potbelly (check!)
    Chipotle (check!)
    Starbucks (check!)
    Lululemon (check!)
    Urban Outfitters (check!)
    Francesca’s (check!)

    I could go on and on. Nearly IDENTICAL restaurants and stores, actually.”

    The people who frequent these places in the city are the ones who end up in the burbs.

    “Sure- the city has some non-chain ones thrown in there.”

    SERIOUSLY??? Have you lost it? Chicago is one of the best cities in the WORLD for both high end food (Alinea / Grace) and casual but high quality food (L&E / Avec / Publican / Hopleaf / etc).

    I’m not a big shopper – pretty much everything I buy is via Amazon or Google express (or SFA / Nordstroms for clothes).

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  112. “SFA”

    Stephen F Austin bookstore?
    Sales force automation?
    Scottish Football Association?
    Somali Film Agency?
    Swedish Fortifications Agency?

    ???

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  113. Saks Ferragamo Armani?

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  114. “What is lulu lemon?”

    Its athletic apparel for affluent, skinny, white women.

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  115. Corner store. I got one a 30-second walk away. A very good one. But a corner store doesn’t need to be all that good to boost your happiness.

    Cycling to get places. Don’t want to start an argument, but I find this intensely pleasurable. I ride slowly, and I still find I can get a lot of places faster or as fast as driving. I don’t do it as much as I used to because road design in my neighborhood sucks.

    Renters. Much derided, they do the most to make bourgeois neighborhoods interesting and vital. Owners tend to become NIMBY assholes who demand down-zoning.

    Freak space. There was a lot more of this in Chicago a couple of decades ago. Cheap, disused infrastructure and space where interesting people could do interesting projects and nobody would bother them. Still some of this on the South Side.

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  116. “I ride slowly, and I still find I can get a lot of places faster or as fast as driving.”

    Trying to figure out how to say this without sounding nasty but….I’ve observed this phenomenon when driving and concluded it’s because the cyclists are running all the stop signs and red lights (I swear I have never seen a cyclist stop at either when there is no traffic) and then they get ahead of the cars, which can’t pass them because there is no room. So cars have a significant disadvantage in this universe.

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  117. “So cars have a significant disadvantage in this universe.”

    Rhetorical exaggeration or asshattery? I’ll presume the former. I get there faster because the places I’m cycling to aren’t that far away. I drive way more than I cycle, but prefer the latter for purely aesthetic reasons. If road design were different, I’d ride a lot more, but I’m not exactly beefing.

    This is why I don’t want to start a cycling-vs.-driving argument: I believe that the same assholishness, idiocy, carelessness, self-absorption and general sociopathy exhibited in drivers is also exhibited in cyclists, perhaps more so. With less lethal effect, perhaps, but what’s important in these arguments is everybody’s wounded sense that the world is out to trample their dignity.

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  118. down by me the 37 bus moves faster than the bikers, so I dont think its faster than driving unless you’re travelling very short distances

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  119. Disadvantage of cars is that they are large and there are a lot of them. Advantage of bikes is that they are small and maneuverable. Never on a bicycle have I spent two light cycles trying to move one block. Advantage of cities: there is a large number of destinations/amenities within a 10- to 15-minute cycle. However, now that I know that this selfish behavior makes Gary a second-class citizen or something, I’ll give it up.

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  120. Bus vs bike varies greatly by time of day, neighborhood/street, and distance. When I was commuting from Bucktown to the West Loop, biking between Desplaines and Damen on Milwaukee was WAAAAAY faster than the 56 bus during rush hour.

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  121. “everybody’s wounded sense that the world is out to trample their dignity”

    Not the world, just you, you self-centered hipster-douche-on-two-wheels. Go back to PDX, ya damn hippie. Or get yourself a 5000-lb car and drive everywhere, like a normal person. Who do you think you are, Eric Rojas??

    That said–absolutely there are lotsa places in my hood I can get to faster on a bike than driving–especially when I contraflow the one ways (and no, I am not ever in a car’s way).

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  122. Thanks Fred, about lulu lemon.

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  123. gringozecarioca on December 5th, 2014 at 1:28 pm

    “Do women even wear lulu anymore?”

    I think someone on cc once said to short it. They might have been a bit early, but…

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  124. “biking between Desplaines and Damen on Milwaukee was WAAAAAY faster than the 56 bus during rush hour.”

    *walking* would often be faster than the bus, barring fortuitous timing of bus arrival.

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  125. “SERIOUSLY??? Have you lost it? Chicago is one of the best cities in the WORLD for both high end food (Alinea / Grace) and casual but high quality food (L&E / Avec / Publican / Hopleaf / etc).”

    Better than Nville, to be sure, but is chicago really one of the best dining cities? Do we really think it is e.g. even in the top 10?

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  126. ETA: “one of the world’s best dining cities”

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  127. Biking is way faster than driving in the city. Plus you don’t have to deal with parking. Even commuting on a motorcycle is faster/easier which is what I started doing two years ago.

    If the city really wanted to cut down on traffic, they should allow scooters / motorcycles to legally lane split and filter like they can in the rest of the world (plus free street parking). This would make it that much more advantageous to get out of a car, but you wouldn’t necessarily have the disadvantages of bike riding.

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  128. “Its athletic apparel for affluent, skinny, white women.”

    Not really. it is apparel for American women. Won’t catch a European woman dead in it. Concept of wearing workout clothes outside of gym is still associated with being sloppy in other parts of the world.
    Oh and I see quite a few women who are a cheeseburger away from being obese wearing yoga pants around. One might be tempted to attribute it to self confidence but unfortunately to me it is sign of collective lack of sense and taste in a society.

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  129. DZ – “Better than Nville, to be sure, but is chicago really one of the best dining cities? Do we really think it is e.g. even in the top 10?”

    Well – its obviously subjective. But we have one of the top restaurants in the world (Alinea) that basically shares US best honors with French Laundry and Per Se. In terms of Michelin stars – they chose NYC, Chicago and San Fran cities worthy of “reviewing” (they dropped Vegas and LA) so according to them Chicago would be a top 3 dining city in the US. Subjectively I think the lower / middle area of Chicago restaurants is where it shines – L&E / Fat Rice / Kai Zan / Au Cheval / etc.

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  130. Lululemon’s founder is a Grade A Asshat.

    Examples:
    He said in 2004 that he named the company Lululemon because the letter “L” isn’t part of the Japanese vocabulary and “it’s funny to watch them try to say it”

    Also, “Frankly, some women’s bodies just don’t actually work [for Lululemon yoga pants]. It’s about the rubbing through the thighs and how much pressure is there.”

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  131. miumiu – who its designed for and who’s wearing it are two different things…

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  132. “according to them Chicago would be a top 3 dining city in the US”

    I’d agree about one of the best in the US, lot more dubious about one of the best in the world.

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  133. “one of the best in the world.”

    All turns on how long the “best” list is.

    We’re ‘one of the biggest’ cities, only if the list is ~100, and one of the biggest metros, only if the list is 35 or more.

    And is the list based on top end only, variety, ‘typical’ quality, some combo, perhaps with a value or accessibility component?

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  134. Personally, I’ve enjoyed restaurants in Portland, Seattle, SF, Milwaukee, Austin and other cities more so than Chicago. We have some good restaurants, but I don’t think Chicago is all that when it comes to good eating, particularly at the lower and mid price points.

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  135. Russ where have you eaten here that Milwaukee, Seattle and Portland are better? SF is debatable.

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  136. “Yet constant complaining-about-the-horrors-of-city-living suburbanites with fenced from stranger danger big back yards, still choose to play in ours. The irony writes itself, and you’re welcome.”

    THIS is the Jay I remember, I’d glad youre grumpy and back!

    anyhoo – I lived in the city for 17 years, and my wife and I still work in the city too, and our employers pay chicago taxes on everything we buy or rent. And we parked on the street and paid a meter. And my suburb pays for chicago water too (as a side note they are desperately trying to convince evanston to build it’s own intake crib). So I have and will continue to contribute to the tax base for the zoo. Thank you very much.

    So your

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  137. “Disadvantage of cars is that they are large and there are a lot of them. Advantage of bikes is that they are small and maneuverable. Never on a bicycle have I spent two light cycles trying to move one block. Advantage of cities: there is a large number of destinations/amenities within a 10- to 15-minute cycle. However, now that I know that this selfish behavior makes Gary a second-class citizen or something, I’ll give it up.”

    Riding a bicycle is not inherently selfish. However, my point is simply that the advantage of a bicycle in the city primarily derives from the fact that every cyclist I observe does not follow the traffic laws. If you get to run every stop sign and red light when there is no traffic and then you get to go around the cars at the stop light and prevent them from passing you you will absolutely move faster than the cars.

    Next time you have to ride your bicycle somewhere try the following experiment. Obey all the traffic laws and don’t pass the cars stopped at the light. Since you will be riding slower than them anyway and you will not be running the light there is no point in passing them. Then see how much faster you go than a car.

    Bicyclists are required to obey the same traffic laws as cars: https://www.cyberdriveillinois.com/publications/pdf_publications/dsd_a143.pdf

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  138. “That said–absolutely there are lotsa places in my hood I can get to faster on a bike than driving–especially when I contraflow the one ways (and no, I am not ever in a car’s way).”

    Not only is that against the law it is extremely dangerous. Every car entering that street is looking away from you before they pull out. You will eventually get hit doing that. I have almost hit a cyclist a couple of times for this very reason.

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  139. Vlajos, I’m talking in general. I felt I had more consistent dining in those cities especially in the lower/mid price restaurants. Good food was just everywhere from food trucks to neighborhood restaurants and you didn’t have to pay an arm and leg to get it. Don’t get me wrong, Chicago has some great spots, but I was just really impressed with my dining in those cities – everything from brunch to dinner. Good food was accessible and the variety enormous.

    In Seattle, I was blown away by Serious Pizza and Serious Biscuit which would give Coal Fire a run for the money imho. Being a born and raised Southerner, I’ve yet to find a kick ass biscuit in Chicago. I’m convinced Chef’s here have never had a good biscuit. Yeah, Bang Bang Pie biscuits aren’t bad, but I find them a bit heavy. They can’t hold a candle to Pine State biscuits in Portland or say Flying Biscuit in Atlanta, imho. Seemed like every other place I went to in Seattle & Portland had great biscuits.

    I was in Milwaukee a couple of weekends ago and had a great brunch at Comet Café. One of the best chicken fried steak breakfast’s I’ve had. Blue egg had some phenomenal pancakes.

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  140. “Russ where have you eaten here that Milwaukee, Seattle and Portland are better? SF is debatable.”

    Dinner on vacation always tastes better than a night out.

    “Au Cheval”

    Are you seriously? a ham sandwich dipped in butter with a piece of american cheese is their signature dish. It was tasty, because it was unhealthy, but I could easily make that at home.

    “Milwaukee”

    This is the highest end I’ve eaten in Milwaukee:
    sanfordrestaurant dot com

    My many wisconsin relatives would consider me insane for even thinking of spending that much on dinner (but Im sure my shorewood wealthy relatives would consider this eating out on a ‘Tuesday’);

    which these prices are expensive for the middle class used to applevbees $5 appetizers; but by Chicago standards, this is very reasonable, and this is (or maybe was?) considered one of the better high end restaurants in Milwaukee.

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  141. “Riding a bicycle is not inherently selfish. However, my point is…”

    Wrong. It is selfish. So is driving a car. Why can’t you admit it? Mention cycling on the internet, and you unleash torrents of moral preening about lawlessness. Such anger. From people comically unaware of the mote in their own eye.

    Wake me up when 0.1 percent of drivers stop to yield to pedestrians at striped crosswalks in Chicago.

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  142. BTW, the driverless car will never be thing, because it will take away the ability to break traffic laws or in any case drive like an asshole (I speak with authority, as I am one). It’s a time-honored right enshrined not in law but in custom.

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  143. http://www.thrillist.com/entertainment/chicago/why-your-chicago-suburb-sucks

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  144. gringozecarioca on December 6th, 2014 at 4:12 am

    “BTW, the driverless car will never be thing, because it will take away the ability to break traffic laws or in any case drive like an asshole”

    Ah… but think how much safer it will be to get a BJ while driving…

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  145. Russ, this is obviously where subjectivity comes into play. About the last thing I would ever seek to eat when dining out is a chicken fried steak and or biscuits.

    For good breakfast brunch check out m henry, cafe selmarie, meli cafe, marmalade, panakoken, bongo room etc.

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  146. Just to settle the dining question… Chicago is a great dining city, and arguably the 2nd best in the US but it almost certainly isn’t a top 10 global dining city.

    Off the top of my head:

    Big cities (or otherwise notable) with better dining than Chicago (in no particular order):
    Paris
    Lyon
    London
    Tokyo
    Kyoto
    Osaka
    New York
    Barcelona
    San Sebastian

    Cities which I suspect are better, but about which I am too ignorant to judge:
    Strasbourg
    Madrid
    Rome
    Turin
    Naples
    Vienna
    Hong Kong

    A few cities which are comparable / debatable (in some order of how I prefer each to Chicago)
    Copenhagen
    Mexico City
    San Francisco (probably becomes better if you include all of Napa and the entire Bay Area)
    Los Angeles

    BTW- the issue with places like Portland is that while there is certainly great food there, I think you could eat through the entire city in about a week. Anything you missed – while potentially very good – would not likely be any better than the other stuff you had in that one week.

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  147. gringozecarioca on December 6th, 2014 at 1:33 pm

    Excellent list… I’d add Lima

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  148. Never figured out how Chicago can be a top world restaurant town when we have no produce grown here, it’s freezing half the year, all the farms produce only corn or soybeans and even WI barely makes a cheese of any distinction. How can it compare to a place like Lyon or Italy?

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  149. Depends what you call a great dining experience. Sure Italy has great food at very reasonable prices even in small towns, but the diversity of the cuisine represented is no where near what one finds in NYC and London. In fact, if you enjoy global cuisine, Italy is very far from a gastronomic heaven.

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  150. Never forget grabbing lunch in a cute cafe in Rome several years ago. All the cafes had these placards in front with a photo of these 3 women on them. Went into one of these and had a pretty disappointing lunch. Kept hearing a vaguely familiar dinging noise in the middle of the restaurant, followed by hurried footsteps of the waitresses who would emerge from that room. When we were done I went into that room and discovered a bank of microwave ovens and a freezer full of frozen dinners – some three sisters brand. You would never get away with that in Chicago.

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  151. “Excellent list… I’d add Lima”

    I’ve heard great things, but I’m more ignorant of that than other places. There are other cities like that.

    “In fact, if you enjoy global cuisine, Italy is very far from a gastronomic heaven.”

    I haven’t spent much time in Italy, hence its place in my ignorant category. And I was largely underwhelmed by Tuscany, so I suspect I might agree with you.

    But, availability of global cuisine is not how I’d judge a place. To do everything well takes a very large and very global population to support. So, New York, London, Tokyo, Hong Kong (I’d guess). Maybe Paris. Chicago has restaurants with cuisine from all over the globe; the only problem is most of them are pretty mediocre compared to the original.

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  152. “Never forget grabbing lunch in a cute cafe in Rome several years ago. All the cafes had these placards in front with a photo of these 3 women on them. Went into one of these and had a pretty disappointing lunch. Kept hearing a vaguely familiar dinging noise in the middle of the restaurant, followed by hurried footsteps of the waitresses who would emerge from that room. When we were done I went into that room and discovered a bank of microwave ovens and a freezer full of frozen dinners – some three sisters brand. You would never get away with that in Chicago.”

    In almost every city I’ve been to, if you pick a place at random, the food will likely be terrible. Lyon may be the exception, but even then, I wouldn’t risk it.

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  153. My point was that many of the cafes we saw there were selling this same brand of frozen food. I mean we saw a ton of them so this must have been a common practice. But otherwise the dinners were pretty good.

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  154. “Never forget grabbing lunch in a cute cafe in Rome several years ago.”

    But that’s almost certainly the tourist trap problem, which is a problem most anywhere a resto can subsist on tourist traffic.

    “In almost every city I’ve been to, if you pick a place at random, the food will likely be terrible. Lyon may be the exception, but even then, I wouldn’t risk it.”

    Think you’d have good odds in Tokyo.

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  155. “Depends what you call a great dining experience. Sure Italy has great food at very reasonable prices even in small towns, but the diversity of the cuisine represented is no where near what one finds in NYC and London.”

    What I find interesting about Italy (where Americans simply gush about the food) is that Eataly was started there and everyone thought it would fail. But it turns out Italians like having convenient shopping too (with parking). So there are a bunch of them around the country.

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  156. “Never figured out how Chicago can be a top world restaurant town when we have no produce grown here, it’s freezing half the year, all the farms produce only corn or soybeans and even WI barely makes a cheese of any distinction. How can it compare to a place like Lyon or Italy?”

    Excuse me?

    There are several huge indoor farmhouses in and around Chicago- including this 90,000 square foot facility.

    http://www.fastcoexist.com/1681657/inside-a-nondescript-chicago-warehouse-hides-an-enormous-farm

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  157. “Just to settle the dining question… Chicago is a great dining city, and arguably the 2nd best in the US but it almost certainly isn’t a top 10 global dining city.”

    Depends on what you consider a “great dining city.”

    Paris sucks, unless you want to eat French food every day of the week. And to me, that gets boring after awhile. You’d think there would be good Vietnamese somewhere there, right? Maybe I just didn’t find it.

    What about New Orleans or Charleston in the United States?

    See? It’s all subjective (and what you’re looking for.)

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  158. “For good breakfast brunch check out m henry, cafe selmarie, meli cafe, marmalade, panakoken, bongo room etc.”

    You forgot Batter & Berries on Lincoln. If you don’t go before 9 am, you may wait up to an hour to get in on the weekends. Even at 1 pm.

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  159. “Won’t catch a European woman dead in it. Concept of wearing workout clothes outside of gym is still associated with being sloppy in other parts of the world.”

    For now. But they only need to sell to women who DO want to wear it to do yoga in and they will make a fortune. They’ve already opened in London. The rest of Europe isn’t far behind. I’m not sure if they’re in Australia or China yet- but I’m sure that’s on the agenda.

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  160. “SERIOUSLY??? Have you lost it? Chicago is one of the best cities in the WORLD for both high end food (Alinea / Grace) and casual but high quality food (L&E / Avec / Publican / Hopleaf / etc).”

    By the way Yoss, on a daily basis, where do you think the family with 2 kids in Lincoln Square (versus the one living in Kildeer and going to Deer Park) eat and shop on a daily basis? They aren’t going to Alinea or Grace. Nor L&E or Avec.

    They are going to the list above. That’s why Athleta and Anthropologie opened on Southport and are going gangbusters. That’s why the Potbelly is always crowded with strollers. So before anyone says anything against the horrors of Deer Park they need to look around their own neighborhood.

    Personally, I believe, on the whole that Chicago is a world class dining town on par with the best in America. But when you have kids- you don’t really care much. Sorry to be blunt. Maybe you go to a top restaurant once a year for a special occasion.

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  161. “ummm most people in the city I know (yeah yeah we’re douchy yuppie scum, GFY) never go to ANY of those places. Ok I admit chipotle is a once a month hungover lunch binge. Do women even wear lulu anymore?”

    So those are non-real people I see all the time in every single one of those restaurants and shops all over the city? All those Potbelly’s really are making NO money- but they stay open anyway? And the Chipotles, like the one on State near Division, really doesn’t serve all those late night drunks wanting their Mexican fix?

    Who knew?

    And yes- plenty of women wear Lulu. Or you can just swap it out with Athleta (Gap’s brand.) More women wear athletic wear now than wear jeans. There’s an Athleta right down the street from the lulu in Southport. Imagine that? Oh- and there’s one in downtown Naperville too.

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  162. “And how about the Kyrgy, Bosnian, Serbian, Korean, Colombian, peruvian places that are dirt cheap? Naperville doesn’t have that shit.”

    Sure it does. Do you think all the immigrants just settle within Chicago’s borders and don’t go anywhere else? Ha! What a joke. There are probably BETTER ethnic restaurants in some of the suburbs than within Chicago now.

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  163. “Personally, I believe, on the whole that Chicago is a world class dining town on par with the best in America. But when you have kids- you don’t really care much. Sorry to be blunt. Maybe you go to a top restaurant once a year for a special occasion.”

    Now that I think about it- are there any “top” restaurants in the kid friendly neighborhoods at all?

    I’m thinking Roscoe Village or Southport. Both have plenty of restaurants- but none are very “good”. They’re fine to go and eat and whatnot, but not world class dining by any means.

    I think parts of Wicker Park/Bucktown do have better restaurants though. It’s more of a restaurant scene there. East Lakeview is also better than West Lakeview. I can’t think of a destination restaurant in Lincoln Square but I’m sure someone can enlighten me.

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  164. Good points W. I think if you define good cuisine as superb local offering, then a lot places in Middle East qualify as gastronomic heavens. They are off the beaten path of many Midwesterners hence they’re not on the radar.
    For one, I find some of the restaurants in Dubai, Beirut, Azerbaijan off the hook.

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  165. “My point was that many of the cafes we saw there were selling this same brand of frozen food. I mean we saw a ton of them so this must have been a common practice.”

    I’m sure it was. You run into this sort of thing everywhere, even in supposed food meccas- or probably especially in food meccas. That’s why I made the point about doing your homework if you care about the places you eat.

    “But it turns out Italians like having convenient shopping too (with parking).”

    Of course they do. And the French love their Carrefour judging by the numbers. There are a lot of misguided romantic notions of Western Europe.

    “I can’t think of a destination restaurant in Lincoln Square but I’m sure someone can enlighten me.”

    Elizabeth.

    “But when you have kids- you don’t really care much. Sorry to be blunt. Maybe you go to a top restaurant once a year for a special occasion.”

    That all depends on priorities and resources. I’ve seen plenty of strollers at L&E and other places; you just see them at 5pm.

    But the places being talked about aren’t everyday places for anyone unless you have a lot of cash and live around the corner. Sure, you don’t go out nearly as often with kids (though I know exceptions), but I’m pretty sure that your taste buds don’t just wither up and die either. Of course, baby sitting could just be a dying industry if parents only go out once a year now.

    “Paris sucks, unless you want to eat French food every day of the week. And to me, that gets boring after awhile.”

    I think you’re doing it wrong.

    “You’d think there would be good Vietnamese somewhere there, right? Maybe I just didn’t find it.”

    Vietnamese is doable but tough in Paris. You probably get better Vietnamese in Houston. In Paris, you do a lot better with fusion I think; you just have to be really picky. The North African places are pretty awesome. Middle Eastern can be good too. And I know of one kick ass pizza place.

    “What about New Orleans or Charleston in the United States?”

    They’re great. A lot of wonderful places to eat in each place. And each has a high hit rate- more great food than you might naively expect given the number of restaurants and population. Same is true of Portland and Seattle. What’s the point?

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  166. “For one, I find some of the restaurants in Dubai, Beirut, Azerbaijan off the hook.”

    I believe it- but I’m out of my depth here.

    FWIW- the metric I used for my off the cuff list was some rough guess as to how long I figured I could eat in each city before I feel like I’ve tried most things worth trying. It’s entirely subjective, but generally requires a lot of restaurants worth eating in with a good mix of high price and low price and everything in between. And a good mix of high quality traditional (either local cuisine or imported but done really well) and more inventive stuff. So, a gut intuition of depth, breadth, and volume. It’s nothing more serious than that- but I think gets you to the right answer.

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  167. Lincoln Square also has Goosefoot, which I’d consider a “destination restaurant.”

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  168. gringozecarioca on December 8th, 2014 at 6:19 am

    So who else remembers HD calling for $40 p/bl crude… the man is clearly omnipotent… or is that impotent… I always confuse the 2.

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  169. Lincoln Square has Goosefoot and Elizabeth.

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  170. Here is my November update. IAR will report Chicago sales down around 12.3% but when you just look at non-distressed sales they are actually up 6.7%. Market times and inventories remain in sellers favor.

    http://www.chicagonow.com/getting-real/2014/12/november-chicago-real-estate-market-update-home-sales-drop-err-not-really/

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  171. “So who else remembers HD calling for $40 p/bl crude”

    was that hd or bobbo [snif]?

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  172. “Chicago has restaurants with cuisine from all over the globe; the only problem is most of them are pretty mediocre compared to the original.”

    That’s the catch-22, without fresh & local ingredients you cannot be world class in any foreign cuisine. So, better to be in Lyon or Umbria or Kyoto/Tokyo or Guadalajara etc. than in Chicago.

    I once walked north up Broadway/Amsterdam Ave in NYC from Columbus Circle, and it dawned on me that the whole Upper West Side is basically just an Epcot Center of cuisines and Irish pubs. There’s a term for it: ersatz. Not sure that NY even has a bona fide cuisine of its own, it’s totally ersatz. It’s like an urban Epcot Center.

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  173. PS I meant to state that imho I’d rather have good ersatz with a large global variety, than only have one cuisine done correct and true.

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  174. If Sabrina is officially taking this blog pro-Naperville, anti-city, I am outta here!

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  175. helmut, local ingredients is not entirely true. You need to think regional rather than ‘grown w/50 miles of chicago”

    Illinois farms grow more than corn and soybeans, there are plenty of CSA type and organic farms that provide local restaurants with food. There are also lots of pig and chicken farms downstate, and wi has a lot of dairy. The Wi cheese market isn’t quite the brand of califoria but it does make high quality cheeses.

    Taking it one step further, a lot of american agriculture grows food in places and in ways that make food unnaturally….try reading about how tomatoes are grown in sand in FL; or how the drought in CA is taking a toll on other fruits and veges grown in the high desert, for goodness sake.

    I guess what I’m trying to say is that to make food good it’s doesn’t need to be hyperlocal, but rather regional, and just because a particular crop is grown somewhere doesn’t mean that it’s any good (florida tomatoes).

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  176. Well the debate above shows its very subjective. Apparently we’re not tops in biscuits and chicken fried steak. If we try and make it more objective by using someone else’s (Michelin) subjective ratings we get that it is a “top” city. They only do 8 city guides (an and additional guide for all “top” European cities that aren’t London / Paris). People fly here just to eat – I personally know someone in NYC that has NEXT season tickets and flies here specifically to eat there 3 times a year (and also goes to other places while in town).

    Sabrina – here is your original statement “This is no different than Lincoln Square or Southport or even Bucktown/Wicker Park. Why do people think the city is so sophisticated?”

    I was answering your question of why people think the city is more sophisticated than the burbs. I never said people in LS/SP/BTown/WP only eat at high end places. Just that they CAN when they want to. You will find chain restaurants everywhere – because there are people that eat at those places everywhere. You won’t find high end restaurants / niche places everywhere.

    “But when you have kids- you don’t really care much. Sorry to be blunt. Maybe you go to a top restaurant once a year for a special occasion.”

    Not if you live in a $1+mm house in the GZ. Sorry to be blunt – but people who live in high end homes in the city do care. They won’t be taking the kids to Momotaro or Publican but they will be going themselves. I have kids. My SO and I go out to a nice restaurant about once a week with friends (who also have kids). Additionally we generally eat out once a week with our own kids (usually with friends).

    HD – ““Au Cheval”
    Are you seriously? a ham sandwich dipped in butter with a piece of american cheese is their signature dish. It was tasty, because it was unhealthy, but I could easily make that at home.”

    If you went to Au Cheval and had a ham sandwich you’re doing it wrong.

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  177. “If you went to Au Cheval and had a ham sandwich you’re doing it wrong.”

    fried house made bologna sandwich. $10.95. It was the waiter’s most recommended dish.

    It was on half the tables around me too, and the waiter recommended it handily.

    I wasn’t too impresses with the omelet my friend ordered either. It wasn’t *bad* but it wasn’t high end food either. It’s a hipster gastro-diner type place, and it is what it is. I’d totally go again but it’s not haute cuisine.

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  178. “All those Potbelly’s really are making NO money- but they stay open anyway? ”

    I suggest you take a look at PBPB stock statistics…

    “What I find interesting about Italy (where Americans simply gush about the food) is that Eataly was started there and everyone thought it would fail. But it turns out Italians like having convenient shopping too (with parking). So there are a bunch of them around the country.”

    wow, I did not know that… but what I do know is that I went to Eataly and fucking hated that piece of shit more than pretty much any place I’ve been to in the last decade. Even more than rainforest cafe!

    And also, I have a good friend that has lived in dubai for the last few years and he doesn’t like the food at all. He says its insanely expensive, and basically all the ingredients are there, but its just made by someone who doesn’t give a shit, so its not that great.

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  179. gringozecarioca on December 8th, 2014 at 1:11 pm

    “fried house made bologna sandwich”

    Just reading that gave me the squirts…

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  180. “any place I’ve been to in the last decade. Even more than rainforest cafe!”

    You’ve been to a rainforesat cafe in the past decade? WTF?

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  181. gringozecarioca on December 8th, 2014 at 1:18 pm

    “was that hd or bobbo [snif]?

    It was HD.. take my word for it, I have a mind like a steel vaporizer.

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  182. “You’ve been to a rainforesat cafe in the past decade? WTF?”

    well, you know where he used to live. it was prob all cheesecake factory, grand lux and rainforest. seriously for all the people/money/foottraffic around there, should really be more stuff. if you take out bayless, p pig, and if you are going to turn your nose at eataly, then what are you left w exactly? prob just a lot of time at bavettes eating steak and thinking how creative the sides are.

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  183. “It was HD.. take my word for it, I have a mind like a steel vaporizer.”

    I know better than to try to predict the price of oil. Fortunes have been made and lost speculating on the price of oil.

    I do think however that oil is artificially inflated because of OPEC, and I don’t think there’s any disagreement there; but I also think there is a ‘Goldman Sachs’ or other manipulator tax built into the price of every barrel of oil….how much? I don’t know. The evidence comes out daily, especially with the hearings going on right now with Levin in congress, that the investment banks aren’t just speculating in commodities, but actively manipulating it….

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  184. “You’ve been to a rainforesat cafe in the past decade? WTF?”

    cousin-in-laws kids chose the place… BRUTAL!

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  185. “I do think however that oil is artificially inflated”

    A reasonable position.

    “because of OPEC”

    Not really. At the moment, they are largely responsible for driving the price down further.

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  186. “Not really. At the moment, they are largely responsible for driving the price down further.”

    Yes, still at the moment. some of dat ND fracked oil is selling at a cheaper price per barrel than the saudis are selling it for. So, even though they’re lowering the price of oil, it’s still too high.

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  187. gringozecarioca on December 8th, 2014 at 2:42 pm

    “Yes, still at the moment. some of dat ND fracked oil is selling at a cheaper price per barrel than the saudis are selling it for. So, even though they’re lowering the price of oil, it’s still too high.”

    I think that has to do with transport, but this is way over my head.
    Let’s talk about Far Cry 4 instead… where is Jenny the animal killer?

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  188. “still at the moment. some of dat ND fracked oil is selling at a cheaper price per barrel than the saudis are selling it for.”

    At which Citgo station?

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  189. ” The evidence comes out daily, especially with the hearings going on right now with Levin in congress, that the investment banks aren’t just speculating in commodities, but actively manipulating it….”

    I’ve always found this to be an untenable position. You can’t manipulate the price of oil for very long without maintaining huge inventories and I haven’t heard of any evidence for that – i.e. you can’t just use the futures market because eventually it has to settle at the spot price and the spot price is determined by real supply and demand.

    However, the politicians love to make this claim because it makes them look good with the voters.

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  190. I find it interesting that Rte. 83 just north of 90 is loaded with Japanese/Asian/Italian/Indian restaurants. But wait. That’s the suburbs! Oh noez! The food must be purely AWFUL! Nevermind the fact that these types of restaurants are the cornerstone on which Chicago cuisine is based upon. Charlie Trotter just took what was available to him and elevated it to a new level of food snobbery.

    If the immigrants hadn’t come here and brought their cuisines, if Chicago hadn’t had the stockyards, Lake Michigan or the fertile lands that surround it, food here would be boring and this conversation wouldn’t be happening.

    But nowadays it seems like everyone is about laying out on the table and measuring to see who can go to the trendiest, most expensive restaurant in Chicago. Then claiming that’s the metier for how good food is here and everywhere else sucks.

    New flash folks. Le Titi De Paris did it decades ago. Out in Palatine. His maitre d’ opened a bistro down the road in Lake Zurich in the late 80s and is still going strong.

    Perspective seems to be lost with the close-minded idea that Chicago is the pinnacle of Midwestern living and the suburbs are bland and boring with no good eateries. Bunch of gastronomic xenophobes up in this joint.

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  191. Gary – the banks may not be manipulating oil, but they’re manipulating metals.

    http://www.cnbc.com/id/102201021

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  192. Yeah. Sounds like that strategy involves storage. My sense is that oil is much harder and expensive to store.

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  193. “Perspective seems to be lost with the close-minded idea that Chicago is the pinnacle of Midwestern living and the suburbs are bland and boring”

    I always loved Blind Faith. And Va Pensiero was pretty good. Does those count?

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  194. Epcot food in Hong Kong. http://www.danryans.com/dans/location.php

    No different than the Melmans’ entire career pushing Epcot food here in the Midwest (think “ben pao”):

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  195. “Bunch of gastronomic xenophobes up in this joint.”

    That may be, but is there a good croissant anywhere in the burbs? (I’m actually hoping there is. bennisons and that hinsdale place that has a location downtown are not good.)

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  196. “Perspective seems to be lost with the close-minded idea that Chicago is the pinnacle of Midwestern living and the suburbs are bland and boring with no good eateries”

    The isn’t bad in the burbs, matter of fact lot of my top eateries are not in the city.

    That’s not the issue, its that the burbs are boring, 100% dull. And the worst part of the burbs are the people that live in the burbs.

    And there is nothing worse than a suburbanite that lived in the city and went on and on about urban living, chastised others for burb living. Then after all that end up moving to the northshore. Now those are the worst type of people.

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  197. Hi Sabrina –

    When are rates going to rise? When are we really going to be “comfortably above 3%”?

    I don’t see it until 2016 because of global deflation. You?

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  198. ““comfortably above 3%”?”

    as notorious here as

    “sqft is just a number”

    lols

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  199. “I don’t see it until 2016 because of global deflation. You?”

    Global deflation? With America’s hottest job market in 15 years and wages starting to be pressured to go higher?

    Rumor has it that the Fed will announce at next week’s meeting the timeline for when it will start raising rates- and will confirm it will be next year. But that’s just the rumor. They likely will definitely remove the “considerable time” language from the statement though.

    If the data stays this hot, the US is looking at some more quarters at 4% or maybe even 5% GDP growth. It’s silly for the Fed to be at crisis levels with the Fed fund rate.

    Oh- and for all those who think that the way things have been is always how they will be (you know- with this 30 year bond bull market)- why don’t you ask the oil traders how they’re feeling right about now? All the premises and data they and the oil companies were working off of for the last several years (and they thought they’d be working off of going into 2015) have been shot to hell. And it only took 2 months to do so.

    We know from the 1% spike that occurred in mortgage rates in 2013 that when the rates change, it could be swift.

    Are you ready Steve?

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  200. By the way- no one has yet to answer my questions about why the housing market stinks with near record low mortgage rates and the hottest job market in 15 years.

    It’s not like buying conditions will get any better. There will be more inventory for sale next year- so that will keep prices from moving higher. And rates will likely be moving higher as well.

    Why aren’t people buying right now?

    I don’t get it.

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  201. You’re asking us why we beat our children/ spouses/ significant others. You must have missed my Monday morning post above with a link to my November update. Non-distressed sales were up 6.7% in November. Market times are still great and inventories still low. What more do you want?

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  202. “Non-distressed sales were up 6.7% in November. Market times are still great and inventories still low. What more do you want?”

    Keep holding onto your “non-distressed sales” numbers Gary. Whatever gets you through the night. This entire year- home sales will be down month over month compared to last year and inventories are up over last year. They’re still not great but that may change next year if buyers suddenly freak out at the thought that mortgage rates could start rising and they’d better sell now or forever hold their peace (whether or not they will get the memo remains to be seen.)

    As I’ve been saying- the comments from strangers on this blog have turned nasty in just the past 2 months. They are attacking anyone who attacks their properties, neighborhoods or the housing market, in general. That only happens when the market is turning negative- when people can’t sell. When properties are sitting there and sitting there for months on end (which is what is happening now over large parts of the city and suburbs.)

    Sure- some very pristine properties sell right away. The distressed properties aren’t even selling because the banks are listing them too high. There have been a bunch that just got listed this week. I’ll do some posts on those. No way in hell those sell any time soon. The banks are in la-la land.

    The investor buyer has gone away. We are now left with the normal buyer. And he/she is under stress still – even with a solid job market and the lowest rates ever. They are priced out. Or don’t have down payments or something. Something is keeping them on the sidelines. What???

    And the Fed knows it can’t fix it. Because rates will never be this low again. They only have one way to go- and that is higher. And as we saw in 2013, the housing market can’t handle even 1% higher rates. They didn’t even go above 5% in 2013 and it came to a screeching halt.

    This housing market is SO precarious. Prices rose way too fast and are now too high. If we see falling home prices again next year that might help but sellers still think they’re in charge.

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  203. This is totally anecdotal, but I know a handful of middle to upper middle class families, in their 30s, who still rent. They’ve been looking on and off for at least a year, but the main problem they have, is that with over $100k a year in income, they can’t find an acceptable house in a good school district in Cook County for less than $400,000. Sure, there’s a house here and there, and they go into bidding wars, or there is a major flaw (super busy street, unincorporated area, 1 block outside good school district) and even those homes are few and far between.

    I don’t think it’s a stretch to say that a lot of first home buyers – at whatever level of the market they’re in – feel pretty much the same way. The couples with $80k year in income can’t find any for less than $300,000; and the $60k a year income can’t find anything less than $250,000. And buyer ultimately are unwilling to look outside their chosen neighborhood. Lawyers aren’t suddenly going to move into $350,000 homes in wheeling because long grove is in the $500,000’s, they’re just waiting. And the same goes for all price points all over the city and country. sure there are some people who are jumping in regardless, and that explain the non-distressed sales, but are a lot of buyers on teh side lines.

    Why aren’t realtors chirping in about clients who are on the fence? I’m sure there’s a lot out there

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  204. A really good realtor shouldn’t have a client that is looking for something that doesn’t exist – at least not for long.

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  205. “Keep holding onto your “non-distressed sales” numbers Gary. Whatever gets you through the night.”

    Only Sabrina is allowed to cherry pick data to fit her narrative. No one else.

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  206. “If the data stays this hot, the US is looking at some more quarters at 4% or maybe even 5% GDP growth. It’s silly for the Fed to be at crisis levels with the Fed fund rate.”

    what planet are you on? 4-5% gdp? Seriously, I wonder if you aren’t waking and baking sometimes … GDP is in the 2% range, and with this current oil price shock will probably stay there. Deflation in Europe is all but a certainty. They do things too slowly and too late for any monetary policy there to be effective. It is currently a race to the bottom in terms of currency and we’re the least worst if that makes sense.

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  207. “By the way- no one has yet to answer my questions about why the housing market stinks with near record low mortgage rates and the hottest job market in 15 years. ”

    um, it doesn’t stink? Its actually pretty average which is the type of market you have when banks require down payments and good credit scores… I LOVE how you always compare home sales and shit to the peak where anyone with a pulse and a 560 credit score could 103% leverage any purchase and are making comparisons to that… its sooooo dumb!

    The market now is average, it does not stink in any way shape or form. If it did, the average market time wouldn’t be so low.

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  208. If prices aren’t going up 20% a year, then Sabrina thinks it stinks. Remember, markets aren’t all booms and busts. Sometimes they are just normal healthy markets.

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  209. Sabrina – “They are attacking anyone who attacks their properties, neighborhoods or the housing market, in general. That only happens when the market is turning negative- when people can’t sell.”

    Nooooo! We are attacking uninformed opinions / logical fallacies (and the suburbs of course!). I have been reading this blog since 2008 or so. At the time I was very bearish on housing. I purchased my current home in 2012 when I was bullish. Now I am neutral on housing. When I began reading the blog I thought you made very logical and well argued points about the housing market (that it was going to get smoked) based on data. Now I think you have a narrative you believe (that the housing market stinks) and will ignore any data that doesn’t support your view. For example – you keep saying higher rates = lower housing prices when that is untrue. It COULD mean lower housing prices because it depends on why rates are higher. Rates were lowered in 2008-12 and hit their bottom in 2012 yet housing got smoked during that time and actually hit its bottom at the same time that RATES (10yr swaps) hit their bottom.

    You are acting like we are crazy for saying things aren’t as bad as you think they are. I don’t hear anyone in the comments saying the market is on fire – just that its normal. What is so controversial about that?

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  210. “Nooooo! We are attacking uninformed opinions / logical fallacies ”

    Sabrina was talking about the randos–not the dozen or two semi-regular commenters who are left.

    Like this one:

    Jana Schwartz on December 6th, 2014 at 3:03 pm

    You people that write on these norwood park homes are NUTS!!!!!!

    Anon, milkster
    especially homedelete.

    Get a life assholes

    http://cribchatter.com/?p=17524#comment-353024

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  211. “I have been reading this blog since 2008 or so. At the time I was very bearish on housing. I purchased my current home in 2012 when I was bullish. Now I am neutral on housing. ”

    Well done. This is the difference between a bear/bull market genius and someone that understands markets.

    Clio was a bull market genius
    Sabrina was a bear market genius

    Neither one understands the housing market

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  212. Sabrina,

    I think rates will rise when wages rise. You have been wrong for years but you keep pushing the same talking points. Not sure where to go from here on the discussion.

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  213. “By the way- no one has yet to answer my questions about why the housing market stinks with near record low mortgage rates and the hottest job market in 15 years.”

    http://www.vdare.com/articles/national-data-november-jobs-immigrants-are-the-only-winners

    “Native-born American employment growth is the black line, immigrant employment growth is in pink, and NVAWDI—the ratio of immigrant to native-born American job growth—is in yellow. The index starts at 100.0 for both immigrants and native-born Americans in January 2009, and tracks their employment growth since then.”

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  214. PS Keep the above in mind when you support Obama’s “amnesty”. The minimum wage in Chicago becomes the maximum wage, when you have an unlimited supply of cheap labor waltzing in.

    this was also interesting: This was also interesting: http://www.zerohedge.com/news/2014-12-06/long-slow-inexorable-demise-americas-working-white-male

    All of this affects demand in the GZ, it suppresses it.

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  215. That would make sense if white males wanted to be working in the tomato picking fields of alabama and corn fields of Illinois, however they don’t want those jobs and should be grateful they can sit on their ass on welfare and food stamps while illegal immigrants do the REAL shit jobs in this country.

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  216. sonies, the data says that the only jobs that are increasing the gvt. stats are the menial jobs given to minimum wage immigrants and illegals. The data is telling us that there hasn’t been a big pick up in the economy/jobs otherwise. When you see the workforce decline numbers in the second graph, that suppresses demand, does it not? The middle class is being gutted by the anti-white liberals who support open borders, and also the Chamber of Commerce type republicans who love the endless supply of cheap labor. Chicago isn’t that plugged into the money spigot from the NY Fed or the WashDC spending, so we’re basically in a no growth mode, except for the minimum wage jobs. Our state probs also cast a pall on the alleged economic recovery.

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  217. “That would make sense if white males wanted to be working in the tomato picking fields of alabama and corn fields of Illinois”

    Nevermind the fact that while furriner employment went up 4.8%, and ‘Murican employment only went up 1.4%, furriner workforce population went up 3.7% compared to 0.2% for ‘Muricans–so, really, the ‘Muricans outperformed the furriners better than 5:1.

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  218. gringozecarioca on December 10th, 2014 at 3:54 pm

    Working is way too overrated anyway.

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  219. “Sabrina was talking about the randos–not the dozen or two semi-regular commenters who are left.”

    Exactly anon(tfo). Suddenly newbies (NOT the regulars on this site) are showing up and posting nasty things against the regulars. That hasn’t happened for years. It wasn’t happening at the bottom of the market- because everyone KNEW it was bad. It wasn’t happening in 2012 and 2013 (i.e. the new “top”) because the market was hot and properties were selling within days (hours) in some cases.

    But in the last few months, people have been showing up on this blog and writing nasty things. Or trying to pump their properties or their buildings. Just random comments trying to make it seem like everything is roses.

    People only do that when the market isn’t very good.

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  220. When was the last time a newbie came on here and called us all assholes or told us to get a life (which someone did on a Lakeview property just a few weeks ago)?

    I can’t even remember. But it was years and years ago. Heck- it might have been 2008 even when there were people posting that prices could NEVER go down in the GZ (because it was soooooo special.)

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  221. “The market now is average, it does not stink in any way shape or form. If it did, the average market time wouldn’t be so low.”

    Ask most sellers how the housing market is. They’ll tell you. It sucks to have a property on the market for months.

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  222. “what planet are you on? 4-5% gdp?”

    Gosh, I don’t know Sonies. Where have YOU been???

    Second quarter U.S. GDP = 4.6%
    Third quarter U.S. GDP = 3.9%
    Fourth quarter??? (we don’t know yet- but ISMs and unemployment are indicating it is very hot.)

    The only reason the yearly average will be lower is because of the polar vortex first quarter which fell 2.1%.

    Many people are saying that we could see 5% in Q1 of next year if these conditions continue- especially if employment is as strong as it is. But I’m fine with another 4%- especially given weakness in China, Japan and Europe.

    Look around you Sonies. The economy is BOOMING. And now oil is coming down- which means margins will improve for almost all manufacturers.

    Yes- the economy has been growing at 4% for the last 6 months.

    What will the Fed do????

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  223. helmet- newsflash but you don’t have to pay illegals federal minimum wage…

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  224. gringozecarioca on December 11th, 2014 at 4:43 am

    “What will the Fed do????”

    They clearly want to tighten and let rates rise a bit, but they won’t be able to because now they loosen and lower as a reflex to every move down in equities.
    They most certainly need to shrink their balance sheet, it has to scare them.

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  225. The November retail data which was hotter than anticipated at 0.7%, combined with that great employment report, is on target for Q4 GDP over 3%. The American consumer IS spending.

    So why aren’t they taking out mortgages? Weekly data is still at 19 year lows.

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  226. People are spending more on retail beacuse gas prices are temporarily down. People aren’t taking out mortgages because they have a few extra bucks a week from cheaper gas… Come on this is common sense!

    Also the fed deals with SHORT TERM RATES. Just because they raise them doesn’t mean the 10 year is all of a sudden going to go up, in fact its possible they go down due to the tightening putting the brakes on future growth rates.

    The thing you don’t seem to grasp is that the rest of the developed world is putting their money into treasuries because their idiot central bankers are destroying their currency. I’ll say it again why the fuck would you buy a spanish 10yr bond that yields 1.88% with a weakening currency when you could buy a US bond with an appreciating currency that yields 2.2% Spain is a DISASTER! Other countries in better shape are yielding below 1%! To guarantee rates will go up is stupid. Of course some day they will, but the hard part is knowing when. My guess is not for a loooooooooooooooooong time. Decades even possibly

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  227. ” I’ll say it again why the fuck would you buy a spanish 10yr bond that yields 1.88% with a weakening currency”

    The peseta is back? :-)

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  228. When the bubble blew up, it used to be everyone vs Clio. Now that things are stable, it is everyone vs Sabrina : )
    Sorry but the market has recovered and wonderful deals are not to be found.
    I am not saying it is a bubble and all types of junk sell at high prices but rather that it is a normal market. I think Sabrina knows this subconsciously too and hence she has become pro suburbs as that is where she might be able to buy.
    “Most men would rather deny a hard truth than face it.”

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  229. “Exactly anon(tfo). Suddenly newbies (NOT the regulars on this site) are showing up and posting nasty things against the regulars. That hasn’t happened for years. It wasn’t happening at the bottom of the market- because everyone KNEW it was bad. It wasn’t happening in 2012 and 2013 (i.e. the new “top”) because the market was hot and properties were selling within days (hours) in some cases.
    But in the last few months, people have been showing up on this blog and writing nasty things. Or trying to pump their properties or their buildings. Just random comments trying to make it seem like everything is roses.
    People only do that when the market isn’t very good.”

    Let’s rate the market on a 1-5 scale:
    5-Top
    4-Good
    3-Average
    2-Not Very Good
    1-Bottom

    So really Sabrina isn’t as far from everyone else as she seems. She’d call the market a 2 and most everyone else would call it a 3.

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  230. My husband and I are under contract on a townhome. We have a 7 month old and a dog, in a dated, carpeted, high rise rental, and something had to give. I worry we overpaid (needs an updated kitchen . . .), but it is the neighborhood we wanted. We did purchase two investment properties at the bottom of the market and both are doing well (as we were not sure at the time we would stay in Chicago); let’s hope it all evens out somewhere.

    I’m not looking forward to watching the market in the spring :)

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  231. Lots of harebrained talk on unknowable macro-topics. No one here is going to have a particularly erudite opinion on macro movements, so I suggest you all (and us mostly silent observers) get back to where legitimate expertise might exist: in the peculiarities of the Chicago market.

    Anyone seen this fun tool yet? http://www.zillow.com/research/neighborhood-home-value-change-8496/

    Methodology aside, it’s data is not intuitive, and doesn’t reflect anecdotal consensus. Worth a look.

    Who is shopping East Chatham right now?

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  232. The market is a 4 for the average seller and a 2 for the average buyer.

    As for Zillow’s fun tool…in general I find Zillow’s black boxes to spit out a bunch of random numbers. I also find it hard to believe that some blind formula is going to produce any kind of meaningful analysis.

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  233. “I think Sabrina knows this subconsciously too and hence she has become pro suburbs as that is where she might be able to buy.”

    I’m not pro-suburbs. But the price is cheaper and the schools are much better. Most people in Chicago with young children are in denial about CPS and the high school situation. As I’ve said many times before- your precious little one probably isn’t going to be a genius and beat out thousands of others to get into one of the top 4 magnet schools. You can avoid all of this stress simply by moving to a place where your child is guaranteed a spot, with their friends, with your tax payer dollars.

    There are pros and cons to both city and suburban living. No place is perfect.

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  234. “Also the fed deals with SHORT TERM RATES. Just because they raise them doesn’t mean the 10 year is all of a sudden going to go up, in fact its possible they go down due to the tightening putting the brakes on future growth rates.”

    This would go against everything that has happened in US economic history up until this point. But that being said- we have never had a 30-year bond bull that has turned into a bubble. And we have never had the Fed have over $4 trillion sitting on its books. Both are unprecedented. There is no knowing what the end result will be- but I’m assuming it won’t be fun.

    Bailouts are never free.

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  235. “My guess is not for a loooooooooooooooooong time. Decades even possibly”

    If rates don’t go up for decades, we are all screwed. We are Japan. And in Japan, real estate did not go up for 14 years.

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  236. Also remember, along with mortgage applications being the lowest in 19 years, first time home buyers as a percentage of all buyers is also at its lowest level in a century. And that’s with 4% mortgage rates.

    If they’re not buying now, when WILL they buy?

    This isn’t a “normal” housing market. It is far from it. And now Fannie and Freddie just announced a loosening of the credit standards because they are desperate to try and give loans to first time buyers who don’t have downpayments. But this is what is happening out there. No one has the 10% downpayment. They’re lucky if they have 3%.

    The housing market is not functioning as it normally should.

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  237. Does everyone think the global economy is functioning normally right now with both oil and the ruble crashing? Also multi-year lows for several other currencies- including Mexico.

    Something is going to blow up somewhere. Lots of people are on the wrong side of these trades.

    U.S. 10 year at 2.12%. Gold at 6 month highs.

    Just when you think you know what will happen in the global economy next, there are curve balls.

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  238. “If they’re not buying now, when WILL they buy?”

    When they turn 35. Millenials don’t want to own. Independent of being able to, they just plain do not want to, that is why they are not buying. They value flexibility over money. Even with 0% down, they don’t want to be locked into living somewhere for more than a year. They do not want mortgages. If you want millenials to buy, the fundamental homebuying process will need to change radically. Expect historically low first time homebuying for the next 10-15 years.

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  239. not to be a dick, but told ya so…

    Things also don’t “have” to blow up… remember the rule about people can stay irrational longer than you can stay solvent? Wise words.

    Gold is still in a bear market and nowhere near 6 month highs…

    There are no curve balls right now, it is a world wide currency war, or race to the bottom. We did just totally pwn the Russians though.

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  240. “Millenials don’t want to own. ”

    Because they’re broke. A lot are stuck in crap and unsecure jobs, and have student loans or other debt. It’s very expensive out there. And when the rich are hoarding all the money, it’s no surprise that the millenials cant buy.

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  241. ” And when the rich are hoarding all the money, it’s no surprise that the millenials cant buy.”

    Can’t tell if you’re being facetious or not. The notion that money can be hoarded is one of the great misunderstandings of our time. Money can only be hoarded if it’s stuck as cash under a mattress. Otherwise it is always reinvested in the economy.

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  242. “Money can only be hoarded if it’s stuck as cash under a mattress.”

    Gary, HD keeps his money in a coffee can under a mulberry bush (or maybe a dogwood, now), so his view is skewed.

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  243. “If rates don’t go up for decades, we are all screwed. We are Japan. And in Japan, real estate did not go up for 14 years.”
    I’m just back from Tokyo and imo we won’t ever become Japan. Land values were insanely high 14 years ago and remain irrationally high there apparently as result of more gov’t & bank intervention than we here could ever imagine. They have bigger issues than RE values – as a culture they crush independent thinking which imo is necessary to nurture entrepreneurial activity. Nothing like Google will be created by the Japanese (but I met people from US/Australia/NZ/GB doing tech business formation there). And like some narrow minded CC’rs the Japanese are extremely xenophobic.
    Re real estate – Tokyo provides great examples of wisdom of concentrating res density via transit oriented dev’ts in apparently flexibly zoned, very mixed use neighborhoods. Also I saw an enormous #/ variety of restaurants – Tokyo has more than 160,000 restaurants!
    Finally as a nation the Japanese really can’t stand us (or S. Americans/ Koreans/ Chinese…) but voraciously consume our fashion/ music/ food (ok they love Italian & French cooking but they’re economically driven to McD’s where coffee & breakfast cost less than 1/3 of what competition charges) … & they really really really want to become us – go figure.

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  244. “Money can only be hoarded if it’s stuck as cash under a mattress. Otherwise it is always reinvested in the economy.”

    Not true for two reasons. First, Money reinvested is the biggest myth. The money is generally used to buy up assets that already exists as a safe way to store money. Second, in the event that money is reinvested In the economy, it’s generally not reinvested in the united states, but rather abroad. This is one of the reasons why the wealthy own a disproportionate amount of the wealth in the country the highest since the gilded age.

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  245. “Tokyo provides great examples of wisdom of concentrating res density via transit oriented dev’ts in apparently flexibly zoned, very mixed use neighborhoods.”

    I wonder how old their infrastructure is and what happens when it needs to be replaced – e.g. water lines, gas lines, electric power, phone cables. What is the cost of doing that in a high density area? Heck, look at Chicago. You can’t drive 100 feet without hitting some kind of hole in the street and it’s only going to get worse.

    Yeah, I get the economy of scale but there’s also a diseconomy of scale as well when it comes time to make repairs. And the cost is never fully captured because they only look at the direct dollars spent. They don’t look at the cost of people stuck in traffic or being rerouted on buses while they redo a transit stop.

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  246. ” First, Money reinvested is the biggest myth. The money is generally used to buy up assets that already exists as a safe way to store money. Second, in the event that money is reinvested In the economy, it’s generally not reinvested in the united states, but rather abroad. This is one of the reasons why the wealthy own a disproportionate amount of the wealth in the country the highest since the gilded age.”

    When someone buys a financial asset in this country it has no impact on the money being hoarded. An equal amount of money is freed up and put to use somewhere else so it’s a wash. But eventually the money finds it’s way into IPOs or venture capital – same thing basically.

    And money invested abroad would be equivalent to hoarding except that there are also foreigners investing here, which cancels that out. I suspect we are on the winning side of that equation.

    The main reason the wealthy own a disproportionate amount of the wealth in the country right now is because a) the fed has pumped up asset values and the wealthy have always had more assets than the non-wealthy. So the fed made it worse. and b) wealth is going to those with knowledge, creativity, and skills in demand. That is a shrinking percentage of our population.

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  247. “wealth is going to those with knowledge, creativity, and skills in demand. ”

    No, the wealth is almost entirely going to those who already have wealth. Absent a few new billionaires here and there, most of the ‘new’ wealth being created is all ending up in the money hoards of those who already have enough to last 100,000,000 lifetimes anyways. knowledge, creativity and skills have nothing to do with it at all. Read Piketty that says return on investments exceeds growth, which is why the rich get richer, and the poor get poorer, and it’s only made worse by ridiculous policies in place by the government.

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  248. The new wealth is being created by the hoardes of programmers that are being hired by Google and Facebook and Uber and by the people who are creating Uber and all the other startups. The richest people in this country are people who started companies – or their direct descendants in a few cases like the Waltons. Case in point: look at who bought the most expensive condos in Chicago: Ken Griffin, Sanjay Shah.

    And as I’ve already discussed there are no money “hoards”.

    It’s also impossible for the return on investment to exceed growth in the long run. Investment values can not grow faster than the overall economy for an extended period of time. To do so would result in absurd P/E ratios eventually.

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  249. HD should move to Belgium. And take Helmut with him.

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  250. gringozecarioca on December 13th, 2014 at 2:06 pm

    It’s also impossible for the return on investment to exceed growth in the long run. Investment values can not grow faster than the overall economy for an extended period of time.

    I need to smoke a bit more and think about this, but I think it can.

    If A (private sector) and B (gubmint) are both Part of C (GDP). and B has negative growth but C grows it would have to be because A is outgrowing C. Thank god for A!!!

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  251. gringozecarioca on December 13th, 2014 at 2:08 pm

    I need to find someone at CATO to send that to.

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  252. “If A (private sector) and B (gubmint) are both Part of C (GDP). and B has negative growth but C grows it would have to be because A is outgrowing C.”

    You’re absolutely correct. I actually thought about that but figured that in the long run that would be too good to be true.

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  253. Japan doesn’t necessarily need more people anyway. It’s densely populated already with very high housing costs. The worst thing they could do is open the borders to hordes of Africans, Mexicans, Central Americans, Mongolians, etc. It would change their unique culture for a short term “fix” of the demographics?? That’s short term thinking. Japan should follow the lead of our ally the Israelis and deport anyone who is not like them. Japan is a First World country from top to bottom. Southbound, can you say that about Chicago outside the GZ? Why should they, or anyone, want to emulate you, our city and state? Do you read the news in this city and country? We have race riots. Why would Japan want that? you’re insane.

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  254. Sanjay Shah. That guy’s purchase of the Trump penthouse ought to dispel all the southbound-type moronic whining about white privilege which his precious ND has now started to teach as part of its curriculum. Shah’s Hoffman Estates based boiler room programming shop has poor reviews on Glassdoor and it’s also built on the owner’s racist use of H1-B visas to use Indian programmers as cheap labor. Screw that guy’s company. southbound’s kids should go work for him, that would be social justice.

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  255. gringozecarioca on December 14th, 2014 at 4:33 am

    “but figured that in the long run that would be too good to be true.”

    Yep, that’s because you are prejudiced by the idiots that espouse ‘zero sum’ for the economy as a whole. So you are incorrectly prejudiced to see the right side of the equation as fixed and therefore acts as a constraint.
    Reality:So long as the parasite accepts a variable growth rate, never for any long period of time exceeding that of the host, mathematically speaking – the system can go on for t-infinite.

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  256. I’m not sure I understand where you’re coming from. I’m not assuming a zero sum game but I do believe that the parasite can not grow faster than the host for an extended period of time. I also believe there is inherently a lot of waste in government – friction, misallocation of resources – so we are better off if the government is a smaller share of the GDP.

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  257. gringozecarioca on December 15th, 2014 at 4:54 am

    “I’m not sure I understand where you’re coming from. I’m not assuming a zero sum game”

    Many do (i.e, HD)… it fits their narrative..

    Most interesting, I have never (that I remember) commented about ratings, but how the hell does someone give a (-) to a simple and correct mathematical concept. You have to be an absolute fucking moron. I pity anyone that has to work with someone like that.

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  258. “how the hell does someone give a (-) to a simple and correct mathematical concept”

    Maybe just having trouble with the math problem at the bottom??

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  259. Lots of hard core liberals here it seems

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  260. CC’s self deluding loser should move to Japan. There’s no fixing Japan’s demographic problem which is too few young people (via birth or immigration) to support the future of their rapidly aging populace.

    The Japanese economy is based on workers exchanging a promise of lifetime employment for underpaid employment at jobs performing rote tasks albeit inefficiently, because that’s how it’s always been done. Employers reward worker longevity over performance or production of profits. Thinking creatively is punished. Women are viewed as second class citizens. Change is seen as bad. Everyone shares a belief their system and purity of race makes them best in the world. Hating everyone who is different is a simple concept to unite behind. Japan and HH remind me of the US’s backward mindset of 60+ years ago which any of us with the ability to think have discarded.

    In my opinion the inherent failings of Japanese beliefs & behavior are why the US will continue to dominate Japan on every measure of a society. And losers like HH will continue to pine for US’s old ways instead of accepting that today what you produce versus what you cost is what matters most.

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  261. “You have to be an absolute fucking moron.”

    Or somebody who disapproves of straw-man arguments. Which is why I downvoted you, you absolute fucking genius.

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  262. “Many do (i.e, HD)… it fits their narrative..”

    Not even a straw man, but a flat out fallacy. I never said it was a zero sum game. It’s not. But the new wealth almost entirely goes to the ultra wealthy. This is not hyperbole, or exaggeration, but fact. You can google yourself the study upon study that proves this. Anyone who denies this fact is more concerned with dogma than reality.

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  263. http://blogs.wsj.com/economics/2013/09/10/some-95-of-2009-2012-income-gains-went-to-wealthiest-1/

    –All told, average inflation-adjusted income per family climbed 6% between 2009 and 2012, the first years of the economic recovery. During that period, the top 1% saw their incomes climb 31.4% — or, 95% of the total gain — while the bottom 99% saw growth of 0.4%.

    –Last year, the richest 10% received more than half of all income — 50.5%, or the largest share since such record-keeping began in 1917. Here is how the top earners break down: Top 1%: incomes above $394,000 in 2012; Top 5%: incomes between $161,000 and $394,000; Top 10%: incomes between $114,000 and $161,000.

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  264. And read the rest of the post: “The housing and stock markets give and they also take away. The one-percenters saw their incomes slide 36.3% during the 2007-2009 recession; incomes of the 99-percenters fell 11.6% during the downturn. “The fall in top decile income share from 2007 to 2009 is actually less than during the 2001 recession from 2000 to 2002, in part because the Great Recession has hit bottom 99% incomes much harder than the 2001 recession”

    Of course. They pick a period of time when the stock market is coming off a low and in my opinion it has gone too high now. These are short term phenomenon, partly driven by the Fed’s action. Not to mention that the economy has had to significantly restructure during this time period – reallocate labor from housing and related fields.

    This is a very popular theme these days and it works well for selling books, generating clicks, and getting elected but I’m not sure there is anything we are really supposed to do about it other than make sure our labor is employed as productively as possible.

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  265. “There’s no fixing Japan’s demographic problem which is too few young people (via birth or immigration) to support the future of their rapidly aging populace.”

    Why is that a “problem”? Japan already has 120 million people already on its small island land mass. The “problem” only affects the current generations, and only with regards to budget math. Letting in Mexicans, Nigerians, Somalis, Indians, Russian Jews, etc. isn’t going to solve the budgets any better than here, where was have $17 trillion in debt ($100 trillion total unfunded liabilities).! southbound is so blinded by ethno-maschoism he cannot see that open borders of uneducated Third World immigrants has not helped our debt or budgets or nation, but has given us more racism, quotas, welfare, race riots, division, and misery. Osaka is overall better shape than Chicago and is clearly more First World, because their city isn’t 2/3 African and mestizo. 100 years from now, the current financial debacle Japan finds itself in will be history, but letting in non-Japanese would be forever a curse against their unique and historic culture. Let’s hope they dismiss the insanity of the southbounds.

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  266. “These are short term phenomenon, partly driven by the Fed’s action.”

    Labor share of income is in long-term secular decline. Nobody who does macro denies this. The wage-productivity gap has yawned open since at least 1980.

    As for the Saez article upon which the WSJ post is based, here’s what it found about real income growth by groups in the period 1993-2012:

    Average Income: 17.9%
    Top 1% Incomes: 86.1%
    Bottom 99% Incomes: 6.6%
    Fraction of total growth (or loss)captured by top 1%: 68%

    You’re better off arguing that it’s fitting and deserved than that it’s not happening.

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  267. gringozecarioca on December 16th, 2014 at 5:00 am

    “disapproves of straw-man arguments”

    Ze doesn’t do straw-men, or believe in ideologies, the sociopathic-aspergers component of my personality consigned me to a life where only a, b, and c’s exist, and only non-sequitir comments seem warranted.

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  268. Finally looked at the original Saez paper, which has a much longer time horizon than the blog post. So there is a lot going on here. First, note that it does not suggest that returns are shifting to investment owners. On the contrary, the allocation of income looks pretty much the same if you include capital gains or not. So the shift is occurring from one set of skill holders to another. That should not be a surprise – what with increasing globalization and a major shift from manufacturing to knowledge based efforts. The moral of that story is the same that it has always been – workers need to make sure they possess the skills in demand.

    The other thing that is interesting is that he did not include transfer payments or employer provided health care benefits in income. I have no idea what impact that would have but it would be interesting to include that for the benefit of those that believe we need to increase transfer payments to “solve” the problem.

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  269. as a side note, redfin added some interesting interactive charts that can break things down by neighborhood or community area, check them out

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  270. Gotta hand it to you, Gar. Debating you is like wrestling a tag-team match against Dr. Pangloss and Mr. Pettifog.

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  271. http://www.chicagobusiness.com/article/20141213/ISSUE01/312139988/why-suburban-companies-like-mcdonalds-follow-the-siren-call-of-downtown

    whats that, high tech IT jobs moving downtown, you don’t say?

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  272. To the discussion of money being hoarded. I believe this is where the hoard is: http://research.stlouisfed.org/fred2/series/EXCSRESNS

    Looks like about $2.4 Trillion worth.

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  273. These are PERFECT conditions for home buying. The lowest mortgage rates ever. The strongest job market in 15 years. Gasoline prices plunging. Fannie and Freddie loosening down payment requirements.

    This spring’s housing market should be HOT. If you want to sell in 2015, you should get your property on the market before the Fed raises rates in the late spring/summer.

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  274. 1) I thought you said prices were too high, so how is that the perfect time to be buying

    2) you don’t think that the bond markets are forward looking at all?

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  275. “This spring’s housing market should be HOT.”

    Wait. What? You said if you didn’t sell in 2013 that you missed the boat and it was too late to sell. Are you re-writing history only weeks later now?

    “If you want to sell in 2015, you should get your property on the market before the Fed raises rates in the late spring/summer.”

    When is the last time you gave good advice on anything?

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  276. “Wait. What? You said if you didn’t sell in 2013 that you missed the boat and it was too late to sell. Are you re-writing history only weeks later now?”

    Peak selling prices were in 2013. Just ask anyone who has seen their property sitting there for months since the fall. (September appears to be the WORST month in 2013 to have listed. Lots of properties listed in September are just sitting there.) The Chicago market has really slowed.

    It will be hot in the spring relative to what we’re seeing right now as sellers rush to list ahead of the Fed raising interest rates and mortgage rates rising once again. Mortgage rates are still low and inventory has risen. So buyers will have more to chose from and still have a low monthly payment. Those are great conditions for buyers.

    But we have good conditions right now and no one is buying. So who knows?

    We’ll see by the middle of January though. I think a lot of sellers are going to want to get a jump on spring and will be listing as soon as the holidays are over.

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  277. “If you want to sell in 2015, you should get your property on the market before the Fed raises rates in the late spring/summer.”

    “When is the last time you gave good advice on anything?”

    Remember Chuk. You’re the only genius here. The rest of us are just morons.

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  278. “But we have good conditions right now and no one is buying.”

    No one except the 1617 people who closed in Chicago during November.

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  279. I thought after the super bowl in February was ‘listing TIME’

    I dunno, I think like with the stock market, seasonality is a bit overrated when dealing with condos and other such properties

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  280. “Peak selling prices were in 2013.”

    Huh?

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  281. “Remember Chuk. You’re the only genius here. The rest of us are just morons.”

    Actually, I find most of the OTHER regulars to be quite knowledgeable.

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  282. “I thought after the super bowl in February was ‘listing TIME’”

    It used to be after the Super Bowl was the prime spring selling season but in years when it’s a hot market, it starts much earlier. In 2013 people were listing right after New Years. So we’ll see if that happens again this year.

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  283. “No one except the 1617 people who closed in Chicago during November.”

    Wow Gary. So if 100 people closed, you’d say “see”?

    It’s dead as a doornail out there. That November number is the lowest in 4 years.

    Remember 2009? There were 1905 sales that year but that was the first time home buyers tax credit that goosed the sales numbers. We have the government goosing things right now too. We have the lowest mortgage rates EVER. And what are sales doing? They’re in the tank. Rates are lower than last year. So why are sales down? Oh- right. All of those distressed properties are no longer selling.

    But you see- in a “normal” market- the regular buyers should be stepping in to buy with these conditions. But they’re not. That’s why inventories are starting to rise. They’re not high enough to impact prices (yet) but they’re high enough that you can wait weeks and many properties will still be on the market. Market times are rising.

    This spring will be interesting. Mortgage applications are still at 19 year lows which indicates a weak December, January and possibly February.

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  284. “That November number is the lowest in 4 years.”

    It’s the lowest in 3 years. Slightly lower than 2013 and 2012 but higher than 2011. But it’s the highest of those years in sales of non-distressed properties. Sure doesn’t sound like dead as a doornail to me.

    I’m actually going to analyze the listings in the first 2 weeks of September and compare them to last year to see how they fared. You claim it was a disaster. I will let you know. I already know it’s not a disaster.

    And, BTW, the individual investor is still pretty active in distressed properties. You wouldn’t believe what some people are doing. But we reactivated a short sale the other day and had 10 showings in one day and it’s not like we had it priced stupid low.

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  285. “It’s the lowest in 3 years. Slightly lower than 2013 and 2012 but higher than 2011. But it’s the highest of those years in sales of non-distressed properties. Sure doesn’t sound like dead as a doornail to me.”

    It’s dead. Dead as a doornail. Nationwide in fact. Lowest number of sales in November in most of the metro areas since the “fake” November boost in 2009. Chicago is faring only slightly better.

    Here’s the data. Unfortunately, sales are going backwards. Sales don’t decline unless something else is going on. Again, rates are the lowest EVER. The job market is the best in 15 years. What is going on????

    What will sales be when rates go UP? (which they will.)

    But, again, the mortgage applications tell the story. They are still near 20 year lows. If regular buyers are now buying, they need a mortgage. Only no one is applying for one.

    •November 2007: 1859 sales and median price of $290,000
    •November 2008: 1093 sales and median price of $222,500 (16% short/REO sales)
    •November 2009: 1905 sales and median price of $215,000 (29% short/REO sales)
    •November 2010: 1144 sales and median price of $182,500 (39% short/REO sales)
    •November 2011: 1429 sales and median price of $157,000 (43% short/REO sales)
    •November 2012: 1750 sales and median price of $180,000
    •November 2013: 1800 sales and median price of $220,500

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  286. Also- once again, another post to this site attacking the other commenters (see Caprice Capone’s comment.)

    I haven’t seen these kind of posts in 6 or 7 years. Suddenly they started appearing in about August.

    The “attack” posts don’t appear when things are good. They show up when things are bad.

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  287. The IAR is supposed to release the November data today. It’s not out yet so I’ll have the post tomorrow (if anyone decides to show up in their office and press the button to put out the press release.)

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  288. Maybe we should admit that mortgage rates have nothing to do with buying anymore? It used to be, if mortgage rates plunged to a new low, you’d have a bunch of people rushing out to lock in the rate. But that’s not happening anymore. Mortgage applications last week were down 5% from a year ago- when rates were higher.

    So what is keeping people on the sidelines?

    1. They don’t have a down payment? But Fannie and Freddie are now taking 3% down.
    2. They are simply priced out? Many neighborhoods are back to peak pricing now.

    I don’t get it. It doesn’t make any sense.

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  289. Nationwide, existing home sales were down 6.6% in November. That’s the weakest in 6 months. Those would have been people looking in September and October.

    Why was it so weak this fall?

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  290. well record low mortgage rates could also keep people from selling their homes. If your cost basis is low why not just refinance and upgrade your existing residence rather than move? I’m talking about SFH’s here, although I suppose for larger condos that can happen as well. Lots easier than moving thats for sure. NOT moving is the financially prudent move if you think about it a little deeper

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  291. “The IAR is supposed to release the November data today. It’s not out yet so I’ll have the post tomorrow (if anyone decides to show up in their office and press the button to put out the press release.)”

    But I already told you what they are going to say two weeks ago :) Yeah, I know…it’s not official.

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  292. “Here’s the data. Unfortunately, sales are going backwards. Sales don’t decline unless something else is going on. Again, rates are the lowest EVER. The job market is the best in 15 years. What is going on????”

    The market was red hot for last 2 years (too hot IMO). Lots of people bought. Now they don’t need to buy again for a few more years. People that didn’t buy feel like they “missed the boat” and are waiting.

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  293. “I don’t get it. It doesn’t make any sense.”

    Let’s take you and I as a very simplistic example. In 2012 when prices were at the low, you chose not to buy. So, you CERTAINLY aren’t going to buy now. That represents one group of people that are “on the sidelines” now. I felt prices were low in 2012, so I decided to buy. And they were so low, I decided to buy 2 places when I was only in the market for 1. That pulled a sale forward that I might have done now instead. So, the 2012/2013 years numbers likely “stole” some sales from the 2014/2015 years.

    So, you and I both aren’t buying now. Just for different reasons.

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  294. Chuk – you can’t be “on the sidelines” if you aren’t even playing the game. She has historically been a perma-renter with no intention to ever buy.

    So Sabrina, if conditions are perfect for buying right now, why aren’t YOU buying? Or did you buy a place while you were off having kids and loving Naperville?

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  295. “So Sabrina, if conditions are perfect for buying right now, why aren’t YOU buying?”

    Anyone who has read this blog since inception knows that I have owned real estate before. But I move around a lot and like that. I don’t want to be stuck in a property. I’ve had to deal with selling while living in another part of the country and I don’t ever want a piece of real estate to hold me back.

    Also- anyone who has read this blog even in just the last few years knows that I’ve said I would buy when it was cheaper for me to buy instead of rent the same amount of space/amenities in my same neighborhood. It hasn’t been cheaper to buy- although with rates this low it’s probably about the same monthly nut right now.

    I’ve never been against buying. I’ve said over and over and over again- that it’s the right thing for many people IF they plan on being there to ride out the dark times which means at least 10 years. People who think they can buy and sell and make money just 2 or 3 years later are nuts. Some may get lucky and manage a small gain or to break even but most don’t. And as rates rise, it’s going to get damn hard to sell for any kind of “profit.”

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  296. “That pulled a sale forward that I might have done now instead.”

    This is ludicrous. You’re just an investor if you’re buying 2 properties Chuk. I’m talking about the regular person. The person who can barely afford ONE property and is going to live in it. Why aren’t they buying?

    You all have been arguing for at least a year that it’s cheaper to buy than to rent. And rents keep going up. But mortgage rates keep going down. And the job market is humming with all those tech jobs. So why aren’t all those groupon/Motorola/grubhub people buying?

    Maybe attitudes really HAVE changed and we’re going back to when renting is king. They’re building 6,000 rental apartments downtown for somebody, right? That’s 6,000 sales that are never going to happen.

    Where does that leave condo owners, in particular? Single family homes seem more in demand, in certain neighborhoods. But why buy a condo when you can just rent one. Seems like condo owners are going to have a hard time of it- again.

    We’ll have to see what this spring looks like.

    Nationally, inventory is up about 9% from the lowest point which was January 2013. It’s still low though but it’s not as severe as it was last year.

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  297. “People that didn’t buy feel like they “missed the boat” and are waiting.”

    Waiting for…what?

    Prices to go higher? Usually when prices rise, buyers jump in because they think “if I don’t buy now, I’ll be priced out forever.” But that’s not happening in Chicago. Buyers aren’t panicking about rising prices.

    Waiting for…mortgage rates to go lower? That could be a possibility. They think- why buy when rates are at record lows? They keep going lower, so if I wait, they may go lower again.

    Waiting for…mortgage rates to higher? That makes no sense, obviously. But perhaps they read this blog and believe Sonies logic that rates will be this low for the next 10 to 15 years so they see no reason to rush out and buy anything. There is no fear of rates rising.

    Or perhaps they’re going to skip buying condos altogether and go straight for the single family home. And since most (all?) are priced out of their preferred North Side neighborhoods, they simply rent and then will buy a SFH in the next 3 or 4 years in the inner suburbs like Park Ridge, Oak Park or Berwyn.

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  298. “NOT moving is the financially prudent move if you think about it a little deeper”

    Not moving only happens when rates rise. So if you bought in 2013 with a 4% mortgage and in 2017 the mortgage rates are 7%, why would you move? You wouldn’t.

    But that hasn’t happened yet. Rates are just as low as that 4% mortgage, if not lower. There is no incentive to stay in your current property and simply refinance.

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  299. “Waiting for…what?”

    For prices to come back down.

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  300. “This is ludicrous. You’re just an investor if you’re buying 2 properties Chuk.”

    So? All investors have to buy all their properties at the same time? I bought one property for myself, and one as an investment. If prices weren’t so low, I would have just bought the one for myself, and would have looked into an investment property down the road. Shelling out all that cash at once was not easy, and I wouldn’t have done it if they weren’t such good deals.

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  301. “For prices to come back down.”

    Why would it EVER do that? Historically, prices hadn’t fallen in Chicago in 75 years (until the Bust of 2008-2012.) And that was after a massive housing bubble. What would cause prices to fall right now versus, say, 1995?

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  302. “What would cause prices to fall right now versus, say, 1995?”

    Couple of reasons.

    1) Wishful thinking. Just because some people may be waiting for them to come down, doesn’t mean they actually will. But think of the people that didn’t buy for 200k in 2012. How hard it is for them to pay 300k in 2014? Personally, I couldn’t do it, and would “wait for prices to come down” (which may not actually happen)

    2) Prices went up too much too fast. They may actually decline as a result. It doesn’t mean the market will crash, but markets over-correct both to the downside AND the upside. I think we over-corrected both in 2012 and 2014. 2014 not so much in actual $$, but in the speed in which it happened.

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  303. “What would cause prices to fall right now versus, say, 1995?”

    Also, consider the large amount of investors that came into the market vs 1995. Both little guys like me and big guys. The big guys may be in it for the long haul, but I have already sold my 2nd property. So, you have a large investor overhang in the market that could cause prices to go down if they all look for the exit at the same time. These aren’t homeowners that actually have to move and buy another place.

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  304. “Also, consider the large amount of investors that came into the market vs 1995. Both little guys like me and big guys.”

    I agree with you Chuk. The investors have left the building. It’s obvious by the number of all cash sales (which has been trending lower the last 6 months.)

    But that’s why the “recovery” was fake. It was spurred by investors. Strip that out and you’re left with the housing market we have now. A go-no-where market. The “normal” market with regular buyers is still awful.

    People aren’t making enough money to afford these prices- even with the lowest mortgage rates on record. And those are only going to go higher. They’ll choose to rent instead, apparently.

    I’ll be interested to see how quickly the 6,000 new apartments in downtown Chicago get absorbed over the next 2 years.

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  305. By the way- I’ve been seeing the banks listing quite a few foreclosures in just the last few weeks. In fact, that’s nearly the only new properties being listed. They still have quite a big backlog of inventory- even in the GreenZone. They’re still being smart about selling it slowly though. Some of the foreclosures were taken back by the bank over a year ago.

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  306. “They may actually decline as a result. It doesn’t mean the market will crash, but markets over-correct both to the downside AND the upside.”

    The Chicago housing market has NEVER done this however. Doesn’t mean it won’t happen. After all, it never had the price increases of early last decade or the housing bust of the last few years either. So anything is possible. And with the amount of Fed interference and distortion, we’re likely to see things that have never happened before.

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  307. “But that’s why the “recovery” was fake. It was spurred by investors.”

    So when Carl Icahn takes a position in a company and the stock price goes up that’s a fake price increase and we should all sell. Right?

    Investors step in when the prices are perceived to be wrong.

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  308. “The Chicago housing market has NEVER done this however. Doesn’t mean it won’t happen. After all, it never had the price increases of early last decade or the housing bust of the last few years either.”

    Am I not understanding what was just written here? The Chicago housing market most certainly went into a bubble and then over-corrected and is now recovering. Just look at the Case Shiller chart.

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  309. Sabrina will never understand. It’s like arguing with a plant. I guess the stock market was fake as well – those darn investors pushed the market higher!

    Question for you Sabrina. If prices go back down to 2013 levels will the investors jump back In to support it? did you see GDP has now increased faster than anytime in the past ten years? Do you think the economy taking off will: (1) keep wages flat, or (2) finally give the working some leverage in negotiating a higher wage. Here’s my take…

    The slack in employment is finally turning the corner. The strong economy will continue, wages and interest rates will rise, and the equity markets will finally cool off as margins will drop. Housing will be just fine as inflation trickles back into the economy.

    Take it from someone who bought equites and housing when you were telling everyone to run for the hills. I am 1 up on you Sabina so lay out your predictions for 2015 & 2016 and let’s see if you can catch up.

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  310. “But that’s why the “recovery” was fake. It was spurred by investors.”

    So, if hedge funds piled into the S&P at 666, does that mean the stock market recovery was fake? It’s the same in ANY market. The professionals step in first and the market stabilizes. Then Joe Blow waits for signs of recovery and buys in much higher.

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  311. “So, if hedge funds piled into the S&P at 666, does that mean the stock market recovery was fake? It’s the same in ANY market.”

    But Chuk- the only time investors have bought the housing market like this was in the bubble. Prior to that- investors weren’t buying in droves. In some markets in 2012-2013, investors were 30% of the market. Historically it’s only been about 5%.

    It’s been skewed and distorted. But not just by investors. The Fed has kept rates too low for too long and that has distorted the housing market as well. So now we’re going to be left with a housing market that is at peak prices just as the Fed starts raising rates and mortgage rates rise- making it even MORE expensive to buy than ever before.

    Yet income, at least so far, has not been keeping up.

    It’s a mess. And it’s only going to end one way- unfortunately. Badly.

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  312. “Sabrina will never understand. It’s like arguing with a plant. I guess the stock market was fake as well – those darn investors pushed the market higher!”

    Again, real estate investors have NEVER been 30% of the sales in any given market as they were over the last 2 years. It was a feeding frenzy of cash buyers. And yes- they took a ton of the distressed units off the market. And good for them. Those needed to be cleared. But now that they have cleared those and the prices are back at peak- it doesn’t make any sense to buy as an investment anymore. So those investors are leaving the market (by the way- I’ve never heard of hedge funds or big mutual funds selling everything and going into all cash- have you? Or just stop buying stocks altogether. So to compare the housing market to the stock market- in terms of large investors getting into the game- is comparing apples to oranges. And- by the way- the Fed’s interest rate policy has distorted ALL asset classes. That’s the whole point of what they did. They wanted to reflate the asset classes.)

    So- what we now have is that 15% to 25% of the “market” has now gone into retreat (hence, why sales have fallen.) But a big percentage of the “normal” market can’t buy because prices are now too high and mortgage rates are only going to go higher.

    The only logical conclusion is that prices will fall as sales retreat.

    We’ve never seen this in Chicago except in the housing bust years. To have it happen again just 4 or 5 years after the first time would be highly unusual, but the Fed keeping rates at 0% with unemployment under 6% and GDP at 5% has never happened before either.

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  313. “Am I not understanding what was just written here? The Chicago housing market most certainly went into a bubble and then over-corrected and is now recovering. Just look at the Case Shiller chart.”

    The Chicago housing market has NEVER had a price decline in the last 80 years except in the bubble years. So to suddenly have one now- with GDP at 5% and full employment for those over 25 with a college degree (unemployment for that group is under 4%)- would be highly unusual.

    But, again, with the Fed distorting everything with its stimulus and free money- we are in uncharted territory. None of us (and certainly not the Fed) has ever lived through conditions like this.

    I hazard a guess that it won’t end well. When the Fed kept rates low for too long after the tech bust, we got the housing bubble.

    Fed watchers believe that once the Fed starts raising rates, it will do so rather quickly. After the tech bust, they were too cautious and did only 25 basis point raises and allowed the housing market to overheat. If the stock market reaches bubble territory in 2015, the Fed may be forced to raise in 50 basis point increments.

    What happens to housing then?

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  314. Not many of us were adults the last time mortgage rates actually rose substantially. (And I’m not talking about 2013’s 1% raise- which, by the way, basically halted the housing recovery in its tracks.)

    Who here remembers the rise to 20% in the late 1970s- early 1980s? Who remembers trying to sell their property for 2 to 3 to 4 years because buyers were non-existent? And back then, people stayed in their properties longer than 7 years (which is now the average.) Lots of home owners are in for a rude awakening when rates rise. They have a cheap monthly nut. The next buyer won’t. So unless incomes rise sharply- who’s going to buy your home?

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  315. “So now we’re going to be left with a housing market that is at peak prices”

    Well, we know we’re not at peak prices because tons of people are underwater on their mortgages still.

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  316. We’ve been through the discussion of mortgage rates before. Shiller’s charts, contrary to common sense, indicate that prices did not fall when rates rose to astronomical levels in the past. Perhaps buyers figured it was temporary and they could refinance when rates fall.

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  317. “We’ve been through the discussion of mortgage rates before. Shiller’s charts, contrary to common sense, indicate that prices did not fall when rates rose to astronomical levels in the past. Perhaps buyers figured it was temporary and they could refinance when rates fall.”

    Yes- we’ve had this discussion in the past. But no one actually knows. You know why? Because the last time rates rose substantially in the 1970s, home prices weren’t at record highs AND mortgage rates weren’t at record lows. Yet- those are the conditions that are now apparent in the GZ and many wealthier suburbs.

    And did you think you’d just “refinance”? ha! How old are you? No one “refinanced” in 1978. That wasn’t even on someone’s mind. Do you know what it took to even get a mortgage back then? To have a bank give you one?

    Oh- and when rates came down off of 20% highs they didn’t go below 10% for 13 years. So yeah- no one was really thinking, “I think I’ll just refinance.”

    They made the monthly payment work and that was it. They didn’t expect their homes to make them rich or to appreciate at 10% a year (as, once again, most homeowners right now are thinking it’s going to do again.)

    That could also be why home prices stagnated in the Chicago area for much of the mid-1980s. Prices didn’t go down, but they didn’t go up for 6 years either.

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  318. “Well, we know we’re not at peak prices because tons of people are underwater on their mortgages still.”

    Not in most of the GZ (of course, as I said before, this varies from building to building and block to block.) In buildings where investors could buy and distort the market (i.e. high rises without a rental cap)- prices are WAY above peak. Like 15% above in some cases. A few other popular buildings have simply seen appreciation as well. Other buildings (whether it’s because of special assessments or high assessments or not as popular location) they haven’t been as lucky.

    In single family homes in the GZ, prices are past peak in the best locations. Southport, Roscoe Village, Bucktown, Wicker Park- all remain on fire. Lincoln Square- not so much though. But it was hot in the bubble – and maybe got too hot back then.

    Prices are past peak in many prime inner loop suburbs as well.

    If you’re in Orland Park or Rockford or Joliet or Plainfield, yeah, you may still be underwater.

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  319. Above Sabrina made the claim that the market is dead and September was a terrible month to list in. So I decided to analyze this. Here are the results: http://www.chicagonow.com/getting-real/2014/12/how-the-2014-chicago-real-estate-market-really-compares-to-last-year/

    What it really boils down to is more people listed their properties than last year – probably at optimistic prices – and then quickly got discouraged and pulled the listing. That doesn’t sound like a dead market to me. I don’t think September was that bad a time to list.

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  320. “Shiller’s charts, contrary to common sense, indicate that prices did not fall when rates rose to astronomical levels in the past.”

    **NOMINAL** prices didn’t fall. In real dollar terms, prices were dropping like a rock.

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  321. Sabrina,

    The last market bust was caused by amature investors buying multiple properties with zero equity. The lastest investor push was from professional investors buying with cash. Do you see the difference? The 30 percent of sales purchased by cash investors will not come back on the market – they are cash flowing machines. During the bust there were over leveraged properties that investors walked away from – causing the distressed market.

    I’m not saying we can’t or won’t see a flattening or slight decline in prices, but a bust is out of the cards. Home owners today are well positied with low interest and low monthly payments. Housing is very stable for the most part.

    You can keep hoping for another crash but the housing market is so much different than it was in 2008. I’m sorry you can’t see this as the “expert” you claim to be.

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  322. “**NOMINAL** prices didn’t fall. In real dollar terms, prices were dropping like a rock.”

    Of course my mortgage and income are denominated in nominal dollars. But perhaps you are saying that with inflation so low this time we will see nominal declines?

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  323. “In real dollar terms, prices were dropping like a rock.”

    So was the M-T-M value of your fixed rate loan… So on 1Mil at 20% down you’re starting + 1 mil Asset – 800k Debt, and the debt side is getting absolutely crushed while the asset is appreciating, seems good to me!

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  324. “And did you think you’d just “refinance”? ha! How old are you? No one “refinanced” in 1978. That wasn’t even on someone’s mind. Do you know what it took to even get a mortgage back then? To have a bank give you one?”

    Yes, in ’79 Talman offered me 75% financing (@ 8% iirc) on 5 unit north side apt building – I had down payment $ but zero credit or job history as a recent graduate. When rates skyrocketed a short time later creative real estate minds reacted – do you remember Sundance Homes offering buyers 0%, 5 year fully amortizing loans in 1984?

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  325. “But perhaps you are saying that with inflation so low this time we will see nominal declines?”

    I’m saying that if asset value is increasing by 1% (nominal) annually (that is, ‘not falling’) while inflation is 10-15%, then ‘not falling’ is not telling a true story.

    I do think that if we see a significant rate spike (ie, to 6%+), *without* meaningful inflation (and/or wage growth), that we could see a dip in home price values. Not that I expect that set of circumstances to occur, but if it does, I would be unsurprised by dropping (nominal) home prices.

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  326. “You can keep hoping for another crash but the housing market is so much different than it was in 2008. I’m sorry you can’t see this as the “expert” you claim to be.”

    I don’t hope for a crash. Why would I? Come on Steve- you can do better than that.

    Lame!

    I hope for affordable home prices for the middle class so they don’t spend 40% or 50% of their income to send their kids to good quality schools. So they have money left over to save for retirement and for the crushing costs of college education (which is a whole other problem.)

    Prices are unaffordable in many (but not all) areas once again. Something has to give. Either incomes have to rise dramatically, or home prices will have to come down because mortgage rates are going to go higher.

    And still- no one on this blog has answered the basic question I’ve had for the last several months:

    With the best job market in 15 years and near record low mortgage rates, why aren’t Chicagoans buying houses in droves? I can’t believe all those tech workers don’t qualify for a mortgage. They’re all making $150,000 a year (and their spouse is too.) I’d think you’d be able to qualify with $300k in income, right?

    Housing has always been psychological. When the economy is booming, so is housing. It’s shocking that it’s not. In fact, most economists have said that it basically provided NO boost to GDP in the last 2 quarters- which is shocking. Imagine what GDP would have been if housing had been participating? 6%? Wow.

    Why is the housing market so sick?

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  327. “What it really boils down to is more people listed their properties than last year – probably at optimistic prices – and then quickly got discouraged and pulled the listing. That doesn’t sound like a dead market to me. I don’t think September was that bad a time to list.”

    Thanks for checking into this Gary because it confirms what I have been seeing in the listings. September has historically been a pretty good time to list as there are people looking in the fall and the weather is lovely. Why would you list and then pull it that quickly?

    Oh- you would if you listed too high (as you said) and if the market was dead.

    Yeah- MANY people figured out that the market slowed in September. Properties weren’t selling in a day or even a week. There are still plenty of properties on the market today which listed in September. It’s odd- but September was a dramatic slowdown for whatever reason. It’s like the buyers just went on vacation.

    We’ll see in the next few weeks if the buyers return. This is the start of the busy period of the year- obviously. I think there are a lot of people who want to list and move.

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