Market Conditions: Is Chicago in Another Housing Bubble?
Multiple bids.
Waiver of appraisal contingencies.
Offers over list price.
Waiving inspections.
Record high prices which keep climbing.
Welcome to Chicago’s 2015 spring housing market.
These conditions are no longer limited to the GreenZone. The market is this hot everywhere in the Chicago and Chicagoland housing market.
Homebuyer Maria Casillas drags her two kids from one prospective home to another, surprised to learn that most everything desirable in her price range is quickly gone. Working-class neighborhoods here are seeing bidding wars between buyers.
She’s part of a broader national trend. Even while home sales are sluggish, home prices are rising in much of the nation. Competition is heating up.
“It’s like everyone is coming out to get a house,” lamented Casillas, 33, as her fiance, David Herrera, inspected the closets of homes they both feel are too small.
Pre-approved by a lender for up to $200,000, Casillas is finding that there’s nothing of good size available in that range here. Price wars are common in high-growth, high-wealth cities such as booming San Francisco. But this is blue-collar Chicago, an exclamation point for the national trend of higher home prices.
According to the article, she is looking in the suburb of Burbank which is on the Southwest side near the Chicago Ridge Mall. It is just west of Evergreen Park.
This suburb is not a GreenZone alternative suburb that routinely gets mentioned on CribChatter such as Park Ridge, Oak Park etc.
The price trend is making housing less affordable for many Americans, who saw wages grow by just 2.6 percent since April 2014. The midpoint price for a home in the United States rose by almost 8 percent between March 2014 and March 2015. In Chicago, where Casillas is house shopping, the midpoint sales price rose by 8.8 percent in the first three months of 2015, according to the National Association of Realtors.
Historically, home prices nationwide have averaged 3-4 percent growth annually with little risk for owners. In the mid-1990s, home prices began soaring to above 13 percent annual growth, before collapsing in 2008. It’s an open question as to whether housing reverts to historical growth rates.
“I think it’s overwhelmingly likely that’s what’s going to happen,” said Austan Goolsbee a University of Chicago economist and former top adviser to President Barack Obama.
Real-estate valuation firm Smithfield & Wainwright warns that at least 14 states and the District of Columbia may be experiencing inflated prices like those that preceded the U.S. financial crisis.
“You’re starting to get a disconnect,” David Macpherson, the company’s chief economist, said of rapidly rising prices in some markets.
His company compares home sales price data from the Federal Housing Finance Agency to the cost of renting a home or replacing one in areas across the country. When the sales price exceeds by 10 percent or more either the cost of renting or replacing a home, the valuation firm argues, it signals a potential price bubble that could burst.
Is a second housing bubble building in Chicago and the Chicagoland area?
With fewer houses on market, some areas see ominous trend in higher prices (McClatchy Washington Bureau, Kevin G. Hall, May 18, 2015)
April housing data is out tomorrow. We already know it is hot.
I feel sorry for the buyers who were too timid to buy at the bottom of the previous bubble a few years ago; and I feel sorry for the buyers today who are too naive to know they’re buying at the top of this bubble. I know people who bought at the top of last bubble; have sold their current home at a loss in this market; and paid top dollar bubble pricing for a new home. Some people just have bad timing.
Way too early to talk bubble, I haven’t heard of too many people wanting to be realtors or flippers or mini-trumps just yet.
The fact that some idiot was saying that “all cash buyers are today’s 0% down in this bubble” has to be one of the stupidest fucking things I have heard in a long time
I think there’s still a couple more years before we hit peak. Who knows tho right..
Certain areas are getting close to bubble pricing (West Loop comes to mind), but others aren’t close to bubble pricing.
That being said, I don’t think it’s realistic for buyers to expect to buy a large house in a safe neighborhood for $200,000.
I think you can buy a large soulless house in Oswego for $200K.
Bubble…… LOL
I spent over $200k and my house didn’t even come with a soul. Are those extra or you gotta bring your own?
Oswego is a bustling metropolis, you gotta go to Yorkville or even further to find the 200k homes of good size not in crime infested areas
“the 200k homes of good size not in crime infested areas”
Are you suggesting that Fox Chase of Oswego is on the front lines of a turf war? See:
https://www.redfin.com/IL/Oswego/205-Wolverine-Dr-60543/home/14247306
Thanks anon, I love houses where the garage is primary eye catcher.
“Are you suggesting that Fox Chase of Oswego is on the front lines of a turf war? See:”
Yep Orchard Road is the line in the turf
battlezone
I challenge anyone to find a single family home in Chicago for $200,000 or less with at least 2,000 square feet and two bathrooms in a relatively safe neighborhood. The house can’t be in a complete state of disarray. For the sake of argument, let’s say that the house must be located in the green area of this crime map: http://www.trulia.com/local/chicago-il/tiles:1%7Cpoints:1_crime
“I challenge anyone to find a single family home in Chicago for $200,000 or less with at least 2,000 square feet and two bathrooms in a relatively safe neighborhood. The house can’t be in a complete state of disarray. For the sake of argument, let’s say that the house must be located in the green area of this crime map: http://www.trulia.com/local/chicago-il/tiles:1%7Cpoints:1_crime”
How about this one?
https://www.redfin.com/IL/Chicago/5200-W-Winnemac-Ave-60630/home/13497687
It’s in Jefferson Park and actually in a pretty good school district. Somehow it was listed for $480k in 2008 and it’s now at $199k, but looks like it’s in decent condition.
On a side note, that Trulia crime map is odd. Would anybody here call the heart of Lakeview, Old Town, and Gold Coast rough parts of town? I guess there are drunken bar fights or something. I think a crime map that shows homicides would give a better sense as to which neighborhoods are truly safe or not.
Jenny -was expecting to find more than a few in Portage Shart but to no avail. Practically impossible with those standards. Some close alternatives/maybe-winners:
3117 N Lawndale (yellow zone, 1600sq ft)
5200 W Winnemac Ave (green zone, unknown sq ft)
4929 W Wellington Ave
5117 W Grace
(Please note: our standards for “complete state of disarray” may vary…)
“I challenge anyone to find a single family home in Chicago for $200,000 or less with at least 2,000 square feet and two bathrooms in a relatively safe neighborhood.”
This is in the green area of your map, is listed as 2,000 sf and having 2 baths:
https://www.redfin.com/IL/Chicago/3844-S-Honore-St-60609/home/14076502
What do I win?
ps:
I’m pretty sure that Milkster has found a couple, too. They’d probably go for over $200k right now, but that’s all about the tight market for places that are below replacement cost, nevermind the cost of land in any ‘safe’ or better hood.
The one on Winnemac looks like a large house. I would say that one qualifies. To me, complete disarray would be a property that requires over $10,000 to get the house to be livable. Just ugly doesn’t count since someone could still move it. I’m thinking of things like huge holes in the walls, broken windows, electrical wiring missing, etc.
I was thinking Mount Greenwood would be a contender for a neighborhood, but most of those houses seem very small.
“is listed as 2,000 sf”
probably closer to 1300 sqft though they might be adding the basement (if finished) to the square footage is my guess
I’m guessing the one on Honore is a mess inside, but it’s getting close if the square footage is correct. I still think the Winnemac one looks like the best one of the options so far.
“The one on Winnemac looks like a large house. I would say that one qualifies. ”
There’s something off about that house. It’s too cheap, and it’s fallen out of contract at least 4 times. I think there is a major issue that turns up in an inspection.
Yes Virginia, we are in another housing bubble. It is funny that when housing prices were falling “the government had to do something”. Banks needed to be bailed out. But when prices are going sky high and are unaffordable nothing needs to be done. By all fundamental measures, this is another housing bubble. Never before in the history of finance have we had multiple bubbles- a housing bubble, a stock market bubble and a bond bubble.
As I see it, we are all government and corporate serfs. They pull the strings and we are all puppets. I wished we had a true free market but that is just an idealistic dream.
Nimish, I am older than most of you posting on this site, and I have a longer memory stream.
You are right- another housing bubble is setting up, and we are already in a stock market bubble, with every higher valuations unrelated to the ever-crummier results these companies are posting, or the intrinsic worth of their businesses. We are in another ‘high tech’ bubble, with evermore worthless companies raising billions in stock offerings; and, of course, another debt bubble.
However, we have been an economy run by creating bubbles since at least the late 70s, in direct inverse relation with this country’s ability to produce real goods and services. From 1980 forward, we ceased to be an economy based on producing goods and generating new technology in any area but information tech, and have lost our lead in every other major area. The less we produce in the way of real goods and services, the more “financialized” we become.
The dependence on debt and financialization, and the conversion of every major industry- financial, agribusiness, “health” care, education and housing- into a racket designed to skim a captive population while giving the victims next to nothing in return, all with the assistance of the government- are the true causes of the widening wealth gap, which has greatly increased since 2008.
Chicago area does not have a housing bubble. Look at Case Schiller. I do agree that there is likely a tech bubble again. Probably a great time to sell in the Bay area.
Having a service based economy isn’t the worst thing in the world, the manufacturing jobs that have been offshored really suck for the most part, the ones that remain are very good. Even still the US is the largest manufacturer in the world, maybe china recently overtook us but we are either #1 or 2 and far and away #1 in productivity.
•In the most recent data, manufacturers contributed $2.09 trillion to the economy. This figure has steadily risen since 2009 when manufacturers contributed $1.73 trillion. The sector accounts for 12.0 percent of GDP.1 For every $1.00 spent in manufacturing, another $1.37 is added to the economy, the highest multiplier effect of any economic sector.2
•Manufacturing supports an estimated 17.6 million jobs in the United States—about one in six private-sector jobs. More than 12 million Americans (or 9 percent of the workforce) are employed directly in manufacturing.3
•In 2013, the average manufacturing worker in the United States earned $77,506 annually, including pay and benefits. The average worker in all industries earned $62,546.4
•Manufacturers in the United States are the most productive in the world, far surpassing the worker productivity of any other major manufacturing economy, leading to higher wages and living standards.5
•Manufacturers in the United States perform more than three-quarters of all private-sector R&D in the nation, driving more innovation than any other sector.6
•Taken alone, manufacturing in the United States would be the ninth-largest economy in the world.7
here’s a chart even DZ can figure out
http://blogs-images.forbes.com/billconerly/files/2014/08/Manufacturing.jpg
Manufacturing is only 20% of the economy now. Services is 80%. It will never go back to being the other way. Information jobs are now taking over- where we all sit in front of a computer.
BUT- in some areas where there still IS manufacturing, it certainly helps the economy. Chicago still has quite a bit of manufacturing. We are still an amazing transportation hub with railroad and air service that is among the best in the country.
I don’t see anything approaching a bubble here. Yes, the “right” properties move fast but if you have outdated finishes (even 10 years old) or are just a bit too close to the el or you have a deck off the master bedroom or the bedrooms are split on two levels or too many issues come up in the inspection report you are going to take a haircut or sit on the market.
And I agree with Vlajos. You need to look at the CS index. None of this anecdotal stuff where you selectively pick your anecdotes.
Bubbles blow because of:
1. Excess liquidity
2. Speculation
We once again have #1. It’s not subprime or all interest mortgages. It doesn’t need to be. The Fed has $4 trillion on its balance sheet and has given the economy free money. Money is sloshing everywhere and it’s finding its way into all the asset classes now: housing, stocks, bonds, art. When was the last time ALL of the major asset classes have risen (and been at record highs) at the same time? It’s nearly unprecedented.
I’m not sure we’re at #2 yet. There’s some speculative activity (flippers, people selling just 6 months later to cash in.) Investors are at a high level. But we’re not yet at the point where people are camping out at new property developments. Although Irving Park Base Camp is soon to open its sales center (this weekend- I think)- so we’ll see what happens.
Money is not sloshing around everywhere: https://research.stlouisfed.org/fred2/series/EXCSRESNS
And that just shows excess reserves. I assume that early on banks had insufficient reserves. The liquidity has been largely neutralized.
Even in today’s market I believe buying a primary residence is the best hedge against inflation if you hold it for a reasonable amount of time. Your largest expense is housing. Rents will always rise. That’s a given. If you can buy a home and obtain a 30 year fixed-rate mortgage, you will have a fixed housing payment for 30 years, plus get all the tax deductions. There are plenty of nice, safe neighborhoods in Chicago where you can still buy a house for 200K. I see the listings every day. It’s a no-brainer especially if you’re married and have 2 incomes to work with.
Today’s buyer is superficial, has poor values and is really just kind of dumb. They fixate on all the wrong things. I could not care less about granite or stainless steel. And I’m not in debt from buying designer clothes and frequenting trendy restaurants and popping Moet up in da club.
Sabrina, Econ 101 please
MV=PT
M is Money Supply
V is Velocity of Circulation
P is Price level
T is Transactions or Output.
As monetarists assume that V and T are determined, in the long run, by real variables, such as the productive capacity of the economy, there is a direct relationship between the growth of the money supply and inflation.
IF money was sloshing around you would see more transactions or price increases, which we are not. Look at Gary’s link, excess reserves held are still going up which means banks are not lending as much and money is NOT sloshing around!
Housing agencies have reduced down payment requirements to 5% again so of course we’re headed to bubble territory again.
Milkster – of course you will have a “fixed” housing payment for 30 years. That’s assuming, of course, that you (and spouse or whoever) will actually be living in that house for 30 years! Let’s be honest people…how many home buyers actually live out the 30-year amortization? Heck, how many MARRIAGES survive for 30 years after the wedding day?
We have been living in nomadic-lifestyle society for a long time now. Get married for the first time, buy a house with your honey, and after 5 years ditch the house and the marriage for something better…In other words, the 5-year ARM is, in reality, more in touch with the “norm” of today’s society than the 30-year “fixed.”
“I’m pretty sure that Milkster has found a couple, too.”
Denise Mitchell from Gary Lucido’s agency, Lucid Realty found them for me. She understood what I was looking for.
“Milkster – of course you will have a “fixed” housing payment for 30 years. That’s assuming, of course, that you (and spouse or whoever) will actually be living in that house for 30 years!”
I’ve never lived in a house for 30 years. I have lived in different cities and countries. Whenever I’ve sold, I’ve taken the equity and put it into another house. There have been ups and downs in the market, but over time I’ve found owning to be more beneficial than renting for numerous reasons.
“Homebuyer Maria Casillas drags her two kids from one prospective home to another…It’s like everyone is coming out to get a house,” lamented Casillas, 33, as her fiance, David Herrera, inspected the closets of homes they both feel are too small.”
Being completely judgmental here, I don’t think this woman’s problem is the cost of housing. Maybe she should have gotten married before she had 2 kids and before she went house-shopping. Yes, yes…maybe, just maybe she is a widow or divorced and that’s where her 2 kids from. Based on statistics however this is not the likely reality.
Or maybe, just maybe look at smaller homes in her price range? Or is she planning on having an arm full of kids like most people
Finding a large house in Chicago on her budget in a safe neighborhood is almost impossible from what I’ve seen.
She needs to look at smaller houses or less safe neighborhoods or go to the far flung suburbs.
How do two people together only qualify for $200,000? Even if they are both making $40,000 each, they should qualify for a home in the $300,000 range.
I thought she was looking in Elmwood Park or something, that’s not Chicago anyway.
Jenny – debt – educational debt, car debt, child support debt, etc…they only qualify for 200K because half of what they earn is already spent.
jenny, even if they “qualify” for a given amount, is it really a good idea to max out your borrowing power? I would really think that after the blood bath of 2008-2012, that people would consider the downside very carefully before jumping into a monthly house obligation, that along with taxes, insurance, essential repairs, and ever-rising expense for food and other necessities, that people would want to buy as far under their means as they can and still get a place that is a decent place to live…. and forget about how they’re “supposed” to live.
If all they qualify for, based on their back-end debt and credit scores, is $200k, they should look for a condo in one of the less expensive suburbs, as a rent hedge.
Laura, I agree with you, but they are expecting to get a huge house on their budget though. I think it’s unrealistic and something has to give whether it’s location, budget, or home size. Even at the lowest point, it still would have been challenging to find a large single family home for $200,000 in safe neighborhood.
Oswego is safe, I think.
jenny, I’d say it’s just impossible to find a LARGE house in a safe nabe for anything near $200K. Sounds to me as though your friend needs to adjust her expectations and simply settle for a smaller home.
I have a condo in W Ridge, and it is a very safe neighborhood with modest prices and many nice small homes priced $200K-$300K. But they are SMALL- usually around 1400 sq ft at the most; and they are old and usually need some updating and improvement. The larger ones in this area are at least $400K.
You can get what appears to be a better deal in parts of Evanston, or in the outer suburbs, but the other costs of ownership more than offset the cheaper prices. Property taxes have gotten downright confiscatory in most Cook County suburbs, and they are not low in the collar counties.
Your friend, like many people now, has outlandish expectations. I forget exactly at what point we Americans began to believe that life is not worth living without a 2400 sq ft house with 3 baths and a spa, and 3 expensive cars. Perhaps the reason that housing has become so expensive in this country and is consuming a much larger portion of the incomes of ordinary people than is healthy, is because people in this country have very inflated senses of entitlement,
I grew up in the 50s and 60s, which some folks who could not possible remember that supposedly golden era, are “nostalgic” for, and what I remember is that almost NO one who wasn’t extremely far up in the middle class, lived in a house larger than 1500 sq ft, and most people had one bath. The typical middle class home, even among people fairly well paid, was a 3 bed 1.5 bath 1200 sq ft ranch or “Cape Cod’ knockoff. My mother’s house was a slight cut above with 4 beds and 2 full baths, AND a real dining room, but it was still a small home by today’s standards, and modestly priced. She bought it from a man who had been a Union Electric vice president, and her neighbor, who lived in a similarly modest house, was the vice president of Tums.
“Even if they are both making $40,000 each, they should qualify for a home in the $300,000 range.”
They’re not making $40,000 each. $40,000 is high for most women in the work force. If you work in the service industry, you’re lucky if you make $30,000 a year.
“Even if they are both making $40,000 each, they should qualify for a home in the $300,000 range.”
Median household income in Burbank is $54,000 (from 2012 data.)
“IF money was sloshing around you would see more transactions or price increases, which we are not. Look at Gary’s link, excess reserves held are still going up which means banks are not lending as much and money is NOT sloshing around!”
Wow. You need to read more Sonies. Please. I beg you. Just pick up the Wall Street Journal.
“And that just shows excess reserves. I assume that early on banks had insufficient reserves. The liquidity has been largely neutralized.”
Ever hear of…cash????
Jesus. Wake up.
Chinese stocks at new highs.
US stocks at new highs.
European stocks at new highs.
Japanese stocks (Japan!!!) at 20 year highs (with the Japanese Central Bank actually BUYING STOCKS!)
Lol.
Art prices at new highs.
Worldwide housing prices at new highs.
US Fed has $4 trillion (and climbing?) on its books.
Draghi will do “whatever it takes.” Now also buying bonds. Yippee!
Chinese Central Bank did nearly $4 trillion equivalent in 2008 and is now pumping it in nearly every month with a new “stimulus.”
Japanese Central Bank STILL stimulating.
If that isn’t money “sloshing” around the system- then, gosh darn, I don’t know what it is.
Wake up!
Just think how much deflation we would have if these stupid central banks WERENT doing those things! People are still extremely cautious with spending while deleveraging themselves from the last bubble it will take time again for people to go out and lever up like crazy again. This current economy is a balance sheet boom, not driven by speculation and leverage but by paying down debts and taking out smarter low interest loans to lever up.
Laura, I was talking about the people in the article posted by Sabrina who were complaining all of the houses they were seeing were too small and only had a budget of $200,000.
“$40,000 is high for most women in the work force. If you work in the service industry, you’re lucky if you make $30,000 a year.”
This makes me sad. I don’t know why in 21st century still our daughters are not encouraged to go for high earner/power positions? Every time I see another young woman studying history of art and psychology I want to cry.
Of course there is the other side to this that some very hard working people are not compensated as they deserve. The little money daycare teachers make is appalling specially given how hard they work.
“People are still extremely cautious with spending while deleveraging themselves from the last bubble it will take time again for people to go out and lever up like crazy again.”
They are?
Record number of car sales (higher than pre-recession levels) in the United States.
Furniture stores like West Elm having record years.
Cedar Fun amusement parks just said that they had record attendance at their park in Charlotte over Memorial Day weekend.
Memorial Day weekend saw the most people on the road of ANY Memorial Day weekend and travel experts expect a record number of people to drive and fly this summer. They are building hotels like crazy to meet demand.
What am I missing? They’re not deleveraging at all!
“Record number of car sales (higher than pre-recession levels) in the United States.
Furniture stores like West Elm having record years.
Cedar Fun amusement parks just said that they had record attendance at their park in Charlotte over Memorial Day weekend.
Memorial Day weekend saw the most people on the road of ANY Memorial Day weekend and travel experts expect a record number of people to drive and fly this summer. They are building hotels like crazy to meet demand.”
Bri, I know your a glass empty kind of girl, but couldn’t those be signs of an improving (ever so slightly) economy
I predict that prices peak this summer/fall for Chicago. The reality of the City’s financial crisis is about to hit…taxes will go up significantly, but there will be less return (i.e., larger class sizes, education cuts). This will make some question whether staying int he city (versus suburbs or other states) worth it. I predict the higher taxes will result in many leaving and more supply on the market. If I were a seller, I’d list now, not next year.
“Bri, I know your a glass empty kind of girl, but couldn’t those be signs of an improving (ever so slightly) economy.”
And an ever increasing population.
Citing record attendance at an amusement park is just bizarre though.
“Citing record attendance at an amusement park is just bizarre though.”
Um…no it’s not. Especially when you’re spending $50 or more per ticket (and then food on top of that.) Everyone is saying the consumer if pulling in. They’re “deleveraging.” They’re NOT spending. The lower gasoline prices haven’t done anything. They’re hoarding their money.
But they’re not.
They’re going to amusement parks. They’re buying airline tickets. They’re buying new furniture.
None of this has to do with an “ever increasing population.” That’s the oldest lie out there when you are arguing against the data. So the population has suddenly boomed since last year? I don’t think so.
“Bri, I know your a glass empty kind of girl, but couldn’t those be signs of an improving (ever so slightly) economy”
The economy is BOOMING. Wake up people. It’s not “slightly” improving. My gosh. Unemployment is approaching 5%. It is under 4% in many major cities. It’s FULL employment.
Why do you think the minimum wage is rising? They can’t find enough workers.
I have to agree that for some reason the economy seems to be booming in Chicago. I don’t understand why given the city’s dire finances or Chicago’s horrific winters.
When I went to buy a car a couple of weekends ago, the dealership was packed. I had never seen such a crowded dealership and people were buying. There was a line to sign the papers with the manager. I’d never seen such a busy dealership (Infiniti in River North).
Last weekend, there were mobs of people everywhere in River North/Streeterville. My friend and I were going to go out to dinner, but after I drove to his place, I said that we were just going to order in because there were too many people out.
The City was packed Memorial Day weekend. We stayed downtown instead of leaving town. Ended up having a blast.
In regards to the City pension situation, they are already proposing re-amortizing the payments, which will go a long way in solving the problem.
Look at downtown hotel occupancy and nightly rates. Tourism is booming.
http://www.choosechicago.com/articles/view/monthly-occupancy-and-adr-statistics/72/
“The City was packed Memorial Day weekend.”
Everywhere I went (usual SWPL sorts of places) there was no one. Deaddeaddead. Which was great!
Try and find a hotel room for this weekend in Chicago… there literally are none
Anyway sabrina dont you think that the booming economy would be good for housing? I’m so confused at your back and forth I think you just troll your own blog to get people talking lol!
“…find a hotel room for this weekend in Chicago… there literally are none”
Ginormous conference of oncologists this weekend takes up every hotel room. Happens every year around this time.
“In regards to the City pension situation, they are already proposing re-amortizing the payments, which will go a long way in solving the problem.”
This will not solve the problem, it is just kicking the can down the road. What do you make of CPS’s 1 billion dollar deficit for next year? Do we think that Rahm father will continue to pull a rabbit out of the hat year after year?
“What do you make of CPS’s 1 billion dollar deficit for next year?”
I make that about half of it is the state-mandated ‘balloon payment’ on the pensions, and most of the rest is a negotiating position for the CTU contract.
Does anyone make anything else of it?
“Try and find a hotel room for this weekend in Chicago… there literally are none”
Same goes for the July 4th weekend. Might have to camp out in LP (maybe in the little forest between the Conservatory and the west entrance of the zoo).
Signs of a housing bubble(some already mentioned here):
1. Increased volumes AND prices (still below peak on both)
2. Many new condo towers (nope)
3. Mania and feeling that everyone has to own / new developments selling out quickly (somewhat)
4. People owning / buying multiple properties (nope)
5. Leverage / low $$ down (not really)
6. Rent vs buy ratio in favor of rent (hell no)
7. New realtors entering the game (don’t know)
HOWEVER – if you apply this to the rental market you get 1. Y 2. Y 3. Y 4. N/A 5. N/A 6. Y 7. Don’t know. So I would say housing bubble = NO. Rental bubble = YES.
The current required pension payments were never realistic, Edgar and Co. knew that. Payments were kept low for years with a massive ramp up that we are now experiencing. Re-amortizing the payments is logical, it should be straight lined though. Same with CPS pensions.
Will there be tax increases? Yes.
Will they be catastrophic? No.
“I make that about half of it is the state-mandated ‘balloon payment’ on the pensions, and most of the rest is a negotiating position for the CTU contract.
Does anyone make anything else of it?”
Correct anon.
“I’m so confused at your back and forth I think you just troll your own blog to get people talking lol!”
Like everyone being underwater and prices at record highs?
Vlajos, what about the 12 years of democrat controlled house and senate with a democratic governor? Right now, democrats have super majority veto proof majorities in the house and senate and can pass any pension or budget they would want. But no, instead they play ‘let’s blame Rauner’ and propose a budget with a $3 billion hole.
With regards to property buying, if you could invest anywhere along the river in the downtown area, I would do it. The new river walk downtown is stunning! And there is no real estate bubble. I predict, as of today, the first rate hike to be in December. Rates at the end of 2016 will be between 1.25 and 1.5
I dont think they rise that much in 2016 only because its an election year
not sure the politburo want a recession in an election year and I think that large of a hike would have quite the effect… i mean 1.5 is the rate on the 5 year treasury right now, and with Europe doing QE, I just don’t see the ability to raise rates that much without a dollar bubble
Mike, the Co. is in reference to Madigan and others. I wasn’t trying to blame only Republicans.
HH,
Haven’t you seen the wire? There’s nothing any individual can do to change the mess we’re in. The theater that has become the general assembly in the past few weeks with Madigan’s proposed nonsensical bills is shameful, just shameful for a legislative body to act that way. Madigan acted like an petulant four year old and it brought dishonor upon that legislative house. But that man has no shame. Yet one small district on the SW side of Chicago keeps electing that man over and over again.
“democrats have super majority veto proof majorities in the house and senate and can pass any pension or budget they would want”
So, you know little enough about the Ds in the legis to think that they would 100% back an income tax increase–with zero R votes–over a veto, with nothing in return for their constituents?
Not that Madigan and Cullerton aren’t more to blame for the current situation than Rauner is, but thinking that they can make their caucuses dance like little monkeys is silly.
Do you think this budget mess will affect real estate? I agree that there is not a bubble. However, if I had children in public school, I would be a little annoyed paying for a SFH and the high taxes to feel like my child’s education program is constantly under threat of being underfunding. Waiting for the budget save every year, with each year looking worse, might make me rethink moving to the suburbs. Class sizes are already higher in the city than the suburbs and many people do not get a great education (SES yes, and a few neighborhood schools, but most no). Are parents willing to pay 20% more in taxes without a return on that dollar? Might this affect real estate in some neighborhoods that are primarily SFHs and public schools?
This won’t affect downtown condo neighborhoods but what about Roscoe Village, North Center, Portage Park, etc….
Sabrina, forgive me for temporarily hijacking this post. I just wanted you and your readers to know that I have been a loyal reader (and occasional poster) for over 7 years. I cannot thank you and others enough for a very informative, albeit occasionally catty, site. Seven years ago I started looking for a river north, streeterville, gold coast, or south loop condo and attended a couple of auctions and visited a few listings. Your (and G and Homedelete) postings very much helped educate me about specific locations and buildings and the power of information in buying real estate. I soon came to admire not only your warnings about the market, but I also came to admire Gary Lucido’s objective and reasoned posts. Last year we decided to work with Gary, and we recently closed on our purchase. Coincidentally, we used Russ (also through Cribchatter) to finance the purchase. I cannot say enough about Gary’s professionalism and assistance throughout the process. We were also very pleased with Russ’ assistance in the financing. Our purchase likely means I wont be checking Cribchatter quite as often as before, but this site has been great and I wanted to share that with you.
Bluedog:
“Wow, bringing anti-Semitism to the site!”
Teh Hof has been bringing it for a long time, under all his various names.
“Do you think this budget mess will affect real estate?”
Do you really think this budget mess is going to spare suburban districts? Sure, it’s a bigger problem for CPS, but it ain’t a non-concern outside Chicago, either.
Helmethofer, aka Dan, has been banned a gazillion times from the site. I will remove his offensive comments. Don’t engage him.
There is no choice now- both for the State and the City of Chicago. In Chicago, there is a $500 million payment coming due in less than a year. There is no way to pay that kind of money unless there are tax hikes of some sort.
I’m not sure what the deadline is like on the state level. But the Supreme Court basically ruled out any other option except tax hikes as well.
“Like everyone being underwater and prices at record highs?”
Zillow says about 20% of the Chicagoland area is still underwater. Those people don’t live in the GZ.
“Helmethofer, aka Dan, has been banned a gazillion times from the site. I will remove his offensive comments. Don’t engage him.”
I wonder if that is really the most effective way to deal with such people. Perhaps it’s more effective to let them see on a daily basis what people think of their comments and for people to take them on with facts and rational responses, though it could derail the conversations here.
“Same goes for the July 4th weekend. Might have to camp out in LP (maybe in the little forest between the Conservatory and the west entrance of the zoo).”
Come on! You can’t bring up Fourth of July weekend. It’s the Grateful Dead’s last concert ever. Rooms at the Holiday Inn are going for $500 and up a night.
“Anyway sabrina dont you think that the booming economy would be good for housing? I’m so confused at your back and forth I think you just troll your own blog to get people talking lol!”
Of course a booming economy is good for the housing market- if only incomes were actually rising to counter the 5% to 10% price increases. The only reason the housing prices are rising right now are because of the low mortgage rates. Because there’s an affordability problem. When rates rise, the housing market will cool off, regardless of the economy (unless incomes really spike.)
How much will it cool off? No one knows. The Fed doesn’t want to crash it, but now that it’s reflated it past peak, can it control a “soft” landing while “normalizing” rates?
“Zillow says about 20% of the Chicagoland area is still underwater. Those people don’t live in the GZ.”
That’s simply not true. http://www.zillow.com/visuals/negative-equity/#12/41.9197/-87.6704
60610 – 32% underwater
Maybe it was Corelogic then Gary. I remember seeing a recent number where they said 20% of the entire Chicagoland area is still underwater.
I don’t trust any of that data. The prices are rising too fast. It doesn’t capture what is really going on out there. Prices are up double digits year over year right now in the GZ on top of the double digits we saw the year before that and the year before that.
When people are making $100,000 on a $400,000 property in 2 or 3 years, yeah, that’s “normal.”
But the market is what the market is.
Anecdotally, I think we all know people in the GZ who have been under their purchase prices since 2005-2007 era who are FINALLY selling and “making money” as they do so.
Heck, I even know people who bought in the most speculative neighborhoods at insane prices and now they’re able to get out. A few are just breaking even after costs- but the sales prices were insane in 2005 and they are equally as insane right now since incomes haven’t risen.
But the low rates make it all possible.
By the way- I don’t know why more people aren’t listing and cashing in. They are fools!
Or- maybe they think this is just the start. Maybe they are getting greedy thinking if they wait another year they’ll make even MORE money. And maybe they will, who knows?
But that’s the only explanation as to why more long-time owners aren’t listing (especially in the condo market.)
“I wonder if that is really the most effective way to deal with such people. Perhaps it’s more effective to let them see on a daily basis what people think of their comments and for people to take them on with facts and rational responses, though it could derail the conversations here.”
Gary- maybe you weren’t around on this blog when Dan was at his finest about 4 or 5 years ago and was posting under various names (only to be banned again.) Having a conversation with him was already tried. Unfortunately, there is no reasoning with someone with his points of view. Ask any of the long time posters here.
“But that’s the only explanation as to why more long-time owners aren’t listing (especially in the condo market.)”
Or maybe a huge percentage of people are still underwater – or barely breakeven. I talk to these people every day.
“Do you really think this budget mess is going to spare suburban districts? Sure, it’s a bigger problem for CPS, but it ain’t a non-concern outside Chicago, either.”
Yes, in terms of schools. Winnetka/Glencoe et al. receive virtually no money from the state government. Thus, there is nothing to take away. Look at these link. For example, Winnekta-Glencoe gets only 3-4% of its overall funding from the state. http://www.illinoisreportcard.com/District.aspx?source=Environment&source2=RevenuePercentages&Districtid=05016035002
http://www.illinoisreportcard.com/District.aspx?source=Environment&source2=RevenuePercentages&Districtid=05016036002
This amount can very easily be made up with local taxes. By contrast, CPS/Blaine get 15% of funding from the state:
http://www.illinoisreportcard.com/School.aspx?source=Environment&source2=RevenuePercentages&Schoolid=150162990252087
So, when Rauner cuts the state budget it will diproportionately hurt Chicago, and I’m not sure the City can make up for that loss. I’m not sure Rahm will raise taxes that much. The city had many cconstituencies and I’m not sure parents have that much power, especially when the elite are already in private school.
If I were a parent of kids, who bought a big SFH in SoPo, North Center, Roscoe villeage, Ravenswood, etc… thinking I’d do public K-8 and, if lucky an SES high school, and if not private, I’d contemplate, moving to some of the better burbs (Hinsdale, Arlington Heights, Northbrook, New Trier, etc…)area. I would not want to pay 20% tax increase on my SFH and have my child sitting in a class with 30+ kids to a class. That’s too many. The better north side neighborhood schools have good to great test scores (as good as New Trier/Hinsdale/Oak Park and River Forest), but they are already lacking when it comes to class size, real arts, music, aftershool programing etc…parents are making up these aspects of schooling through private lessons etc (Language Stars, Old Town school of music)… (We know a family from Pritzker gifted who moved to a K-8 New Trier feeder and say their child is getting a better education in the burbs – no loss in rigor and more extras like music, guitar, foreign language, art etc.. in school). Many, not all, of the suburban schools will not be hit as hard – New Trier, Hinsdale, Oak Park/River Forest (they have a huge slush fund/savings).
A big groth segment in Chicago has been the SFH market on the north side (North Center, Roscoe Village, Old Irving, Lakeview) – the 1 million – 1.25 million spec homes – that families with 2-3 kids inhabit in up and coming school zones. Many of these families are not private school families. They maxed out their budget for the big, new SFH banking on improvements in these north side schools. I’m not sure this segment of the market will do well if school budgets get cut. Very few people want to pay 25K or more in taxes and have their kid sitting in class sizes above 30. They can get far more value in the suburbs, and have a good high school locked down.
My place is worth a lot more than I paid for it in 2011. It’s very tempting to sell, but where would I go with housing prices everywhere having risen? I don’t want to rent or live more than 15 minutes from work, so University Village is still the most affordable option for me.
I am curious about the wages statistic. Is that on a per person level or on a job level? I don’t know of any companies that haven’t given raises in the past few year at a per employee level. The starting pay for a particular job may be stagnant though.
Incomes have been on the rise in Chicago metro area. Here is a map of the whole US.
http://www.governing.com/gov-data/economy-finance/personal-income-real-per-capita-for-metro-areas-data.html
Look at LA, I know the weather is nice, but not worth it to me.
Why should people list their places? The frenzy of listing during the bubble was precisely due to a bubble. We are not planning to list our places. We are renting one and using the other happily. Unless we move somewhere else, there is no reason for us to sell.
I’m not so sure about that zillow chart map it says 51% of 60654 is underwater with 1% delinquent…. ehhhhhh I think thats got to be wrong
zillow also says my home is worth more than I know it is but whatever I realize its not a perfect science
Anyone listed recently and have any tips?
Just curious
We listed about a week ago in the heart of the GZ. Place is already under contract. We completely renovated last year so everything is about a year old. We should end up about 15% higher than the 2012 purchase price plus renovation costs. Beyond the standard tips I’ll just say negotiate slowly of you think you’ll get multiple offers.
Sabrina – “By the way- I don’t know why more people aren’t listing and cashing in. They are fools!
Or- maybe they think this is just the start. Maybe they are getting greedy thinking if they wait another year they’ll make even MORE money. And maybe they will, who knows?
But that’s the only explanation as to why more long-time owners aren’t listing (especially in the condo market.)”
Everyone needs a place to live. Most people don’t view their home only as a financial asset to trade and there is friction (packing and unpacking, finding a new place to live, new schools, new routines, etc) and transaction costs (realtor commissions and taxes) to moving.
If someone likes their home and it works for them are they “fools” for not selling it, paying a commission, finding a new place, paying a similarly inflated price or an egregious rent, packing and unpacking their stuff, decorating their new house, and then finally settling back into their new routine? I would say the fools are the ones paying insane rents now after having missed many years of good buying opportunities.
I bought in 2012 and my house has probably appreciated 25-50% since then. So has every other house in my hood. Renting an equivalent SFH or 4 BR condo would be $10k / month. No thanks. I’ll stay where I am and enjoy walking to the zoo and grilling in the back yard instead of searching for a cheaper place (where???) and spending these sunny days cleaning my house for constant showings.
Congrats w! Are you moving from the city or are you staying?
My advice is to not underprice in this market. That can be easier said than done but you have the latitude now to price a little on the high side – within reason.
I think it’s a mistake to list on a Monday and you get an offer on Tuesday and there are a whole bunch of buyers that never even got a chance to see the place.
Or- maybe they think this is just the start. Maybe they are getting greedy thinking if they wait another year they’ll make even MORE money. And maybe they will, who knows?
That’s what I’m thinking since if I sell now, I’ll probably break even after commissions and since I’m renting out my condo, I’m making a decent return and I really don’t need the equity.
I paid a little over $500 for the place in 2007. About, 20k less than the previous owner. Currently, I owe about 350 on the place and I’m renting it out with half-hearted plans for that to pay for my kid’s college education.
Although lately, I’ve been thinking it might be more advantageous to just sell and dump the equity into my 529 accounts and let it ride tax free.
Thanks yoss. We’re moving out of state for work. Otherwise, we would have happily stayed put.
I tell you what, moving fucking sucks!
No clue how I did it every year for such a long time
“No clue how I did it every year for such a long time”
It’s a lot easier when everything but your bed fit’s into a Buick Sport Wagon.
“We listed about a week ago in the heart of the GZ. Place is already under contract. We completely renovated last year so everything is about a year old. We should end up about 15% higher than the 2012 purchase price plus renovation costs. Beyond the standard tips I’ll just say negotiate slowly of you think you’ll get multiple offers.”
Congrats w.
Everyone is getting multiple offers in the GZ. If you don’t, it’s because:
1. You listed too high
2. Your finishes are 15 years old
3. You can see/hear the El from your living room
Otherwise, you had better be getting multiple offers within hours of listing it.
“Anyone listed recently and have any tips?”
Have it painted and remove all clutter.
The “in” things right now are white kitchens and gray tiled baths. If you can, paint your cabinets. Cherry is so 2005. Remove all Hollywood lights from bathrooms. This costs under $100. Buy cheap, but newer bathroom vanities. Of course, if you don’t have stainless steel appliances, put it in.
If you can, stain your wood floors a dark walnut.
List high. Get multiple offers.
“Incomes have been on the rise in Chicago metro area. Here is a map of the whole US.”
Incomes are nowhere near the inflation in housing. When housing goes up 10% or more a year for multiple years, there’s no way for incomes to keep up. Affordability will become an issue. Who will you sell to later when the monthly payment rises?
But that’s a problem for later.
For now, party on.
The bubble is back. Housing is going MUCH higher while the Fed remains on the sidelines. Everyone is getting rich. Heck, they continue to build $3 million mansions in Southport just 2 blocks from Wrigley Field. Who would have EVER thought Southport would become one of the richest neighborhoods in the entire city?
“Otherwise, you had better be getting multiple offers within hours of listing it.”
If you are getting multiple offers within hours of listing it you listed too low and your realtor is being overpaid.
Sabrina – “they continue to build $3 million mansions in Southport just 2 blocks from Wrigley Field. Who would have EVER thought Southport would become one of the richest neighborhoods in the entire city?”
With you there. Southport seems overpriced to me – close to parity with prime locations in ELP and the Dayton / Fremont new builds. Yet the commute is close to double and its farther from the zoo / farmers market / etc and much noisier.
With you there. Southport seems overpriced to me – close to parity with prime locations in ELP and the Dayton / Fremont new builds. Yet the commute is close to double and its farther from the zoo / farmers market / etc and much noisier.
This is my point about budget cuts and schools. SoPo, North Center and a few of the farer north neighborhoods seem overpriced. These 1.5-3 million dollar mansions are selling to families in public school. We attended one of the higher priced private schools and not one of my child’s classmates lived this far north. SoPo is too high, and many are public school families. What happens when Blaine, Burley, et al., have huge budget cuts and class sizes of 35? I would think this would make these properties less attractive. Moreover, the commute from SoPo via L is as long as the commute from Wilmette.
Can public school families donate to the schools to cut class sizes and hire more teachers?
I’d rather flush my money down the toilet than contribute another penny towards the pension of some overpaid CPS administrator.
“jenny on May 29th, 2015 at 9:18 am
Can public school families donate to the schools to cut class sizes and hire more teachers?”
“I’d rather flush my money down the toilet than contribute another penny towards the pension of some overpaid CPS administrator.”
well, I think jenny’s looking to move to charging tuition for public schools.
If you’re a parent who thinks it’s nifty to send your kids to a Chicago public school, when that school gets overcrowded, can you and other trendy parents donate money to make the school “better?”
I’m serious. I see lots of people who seem to think putting their kids in the CPS system is trendy and cool. They think the genius of their kid will bolster the school as a whole and that by sending their kid to public school, it will help the less fortunate. When the reality hits, can those parents donate money to get class size back down to a level acceptable by the upper middle class?
jenny – “If you’re a parent who thinks it’s nifty to send your kids to a Chicago public school, when that school gets overcrowded, can you and other trendy parents donate money to make the school “better?””
Yes. I think Lincoln Elem raises around $1mm per year to hire art and language teachers. I think all the parents in the $1.5-3mm homes sending their kids to public schools is fantastic and can only mean good things for those schools.
Jenny: Yes, through the ‘friends of XYZ school’ fundraising groups. There are multiple examples of headcount additions due to donations through those groups, although I can recall only music/art additions rather than actual classroom instructor.
Public schools are for plebs.
“Yes, through the ‘friends of XYZ school’ fundraising groups.”
I wonder how long it will be before they put an end to this practice because “it’s not fair”
Hi Jenny,
You are always very critical of parents who send their kids to CPS and “the genius of their kid.” I find this ironic given that you went to one the best schools in Chicago and ended up having some low paying unexciting career.
To make a not so kind analogy, I understand the super model chick calling other girls from wealthy (privileged) families thick, but I don’t get it why the chubby girl from the privilege family thinks she is entitled to make fun of the way poor kids look.
” I see lots of people who seem to think putting their kids in the CPS system is trendy and cool.”
Just how or where are you seeing this?
“They think the genius of their kid will bolster the school as a whole and that by sending their kid to public school, it will help the less fortunate. ”
so you are a mind reader and know their thoughts or someone told you this? And by someone I mean we could see them too, not Sixth Sense see them.
I chose my lifestyle and I have chosen not to have kids because I can’t afford them. I resent having to subsidize the kids of other people. The majority of poor people wouldn’t be poor if they simply didn’t have kids until they were in a position to afford those kids.
I also resent having to pay huge pensions for government employees. The majority of private sector jobs don’t offer pensions anymore. I don’t know why people of my generation have to contribute to pensions when we’re not going to get a pension.
It also strikes me as very elitist when parents think their child’s presence in the school makes the school better. “All of the poor kids will see my rich kid and they will learn from my rich kid and pull themselves out of poverty by my child’s presence alone.”
” “All of the poor kids will see my rich kid and they will learn from my rich kid and pull themselves out of poverty by my child’s presence alone.””
as opposed to “the poor urban children just bring my child down. The fathers are all absent; the urban children steal all my child’s lunch – isn’t the FREE lunch good enough for them? Few children speak English. Just the other day I caught my daughter finishing her sentences, not with a preposition, but rather, with ‘guey’. She also asked why we don’t go to Wal Mart on the first day of every month to stock up on toys and food. ”
both are elitist.
Jenny, as a whole, children from higher income homes tend to perform better in school. Individually, I agree it would be arrogant to think any one kid is going to change a school. However, as a group, the more kids you get from wealthier families in a school the better. Kids from wealthier families typically have parents who are more demanding and expect more from the schools. This absolutely benefits kids who may not be as fortunate as many will rise to their environment and higher expectations.
“I agree it would be arrogant to think any one kid is going to change a school. However, as a group, the more kids you get from wealthier families in a school the better. ”
A lot of current residents called that ‘gentrification’ and that’s a bad word.
I see the attitude of “my kid will make the school better” in my neighborhood. Parents want to start sending their kids to the neighborhood school (which is rated a 1 out of 10) and think if they can just get enough middle class people to start sending there kids there, the school will be improve. I don’t think the school itself will be “better.” Sure, the test scores will go up because the parents talk to their kids more and teach their kids more than a less fortunate family. I argue that the school itself will not get better. The teachers won’t be better teachers and the facilities won’t improve. It’s also insulting to the kids who are attending the school currently to say “Oh, if enough of us middle class people move in, the school will be great. You poor kids aren’t so great. You need middle class people to make the school great. You must change your ways and learn from us.”
Actually better pupils improve the performance of teachers and those higher test scores would attract better pupils and teachers.
As someone who has taught I can tell you, the quality of students in the classroom totally feedbacks and affects the performance of the teacher.
In fact, most of us do better teaching graduate students than undergraduates, in part because, the students are hungry to learn, love the topic as much as you, and push you to be better.
Teaching is partially a performance, ask any performer and they would tell you the audience impacts the quality of their performance.
I wonder how long it will be before they put an end to this practice because “it’s not fair”
I think Joe makes a good point. To date, the friends of XYZ have raised funds for extras and music/art, not core classes (math/reading) or to address class size. I think that, if budget cuts are huge and the wealthier schools raise funds to keep smaller class sizes, civil rights groups will file complaints in court or with the U.S. Department of Education Office for Civil Rights. I wonder if this will just lead to CPS giving these schools more money, and less to the schools that are highly subsidized by parents, thereby undercutting the fundraising. It seems sad that parents can’t donate, but in a city that is so racially segregated, you can see how it is unfair.
I suspect that the way around it is to donate to reading specialists, etc…and pull out those kids who need extra help/enrichment. But still, it can’t be fun to be a kid in a class with more than 30 kids. It would seem that it would become harder for the teacher to control the class, and more negative style of discipline.
In any event, Rahm seems to be okay with high private school enrollments. When I moved to Chicago from the east coast, I was shocked at the percentage of children who attend private school. Tons of taxpayers paying in and getting nothing in return. Could imagine if the city had to actually education most of the children in the city? I frankly think Rahm is happy if parents donate/subsidized (less out of his budget) and won’t really work to prioritize neighborhood schools until upper middle class parents leave the city.
@Jenny, teachers can only do so much. IMHO, teachers can only supplement what is going on in the home. The reality is that magical teachers who can transform a kid who comes from a broken home are few and far between unlike what is presented in the movies.
I’d actually give kudos to those parents who are willing to send their kid to the local public school even if the school isn’t one of the “B’s” instead of private as they are taking an interest in the community. Sure, many of these parents were stuck because of the market crash and probably would have moved as soon as the kid could walk, but now they are making the most of their situation.
Schools reflect the communities they serve. High performing schools are high performing because the kids are high performing. The physical school and teachers have little to do with that performance.
Put it this way, no matter how great the coach is, nothing they do will ever get me to the point where I can play professional sports. However, Lebron James is Lebron James regardless of how good or bad the coach may be.
I don’t know Russ. The type of school environment where kids just sit in desks all day listening to a teacher drone on and on, then yeah, what goes on at home matters much more than what goes on in school. If a school creates an environment that fosters curiosity and creativity, then I think kids from poor families can do well.
If I were a parent, I would want to send my kid to a place that practiced the “Children’s School” philosophy where kids determine what they want to study and how they want to learn. I think that model would help poor kids feel like they have some agency in their lives that they don’t get from their parents or school.
“The type of school environment where kids just sit in desks all day listening to a teacher drone on and on, then yeah, what goes on at home matters much more than what goes on in school.”
Where have you seen a school like this?
These schools are based on an alternative model like Montessori and are called “Chldren’s Schools.” There’s one in the suburbs: http://www.thechildrensschool.info/index.php?option=com_content&view=category&layout=blog&id=2&Itemid=4
“I wonder how long it will be before they put an end to this practice because “it’s not fair””
They did this in Oak Park a few years ago.
“Could imagine if the city had to actually education most of the children in the city?”
You think that there are over 800,000 school-aged kids in Chicago? Get real!
About 1 in 6 Chicago kids (so, 80,000) go to private school–about the same percentage as that eden NYC, and less than Philly. It’s a bit more that Boston. So I suspect your surprise was simply because you weren’t paying attention when you lived in EnWhyCee.
“The economy is BOOMING. Wake up people. It’s not “slightly” improving.”
“Economy in U.S. Shrinks for Third Time Since Expansion Began”. It was down 70 bp in Q1. One of the worst quarters for years. Wake up.
I guess what surprised me was the number of truly middle class families that choose private school in Chicago. Yes, more do in NYC and Boston but if you look at the demographics, these are families with higher incomes. Chicago still has more middle class families than NYC/Boston.
My point about education all the students is how would the city handle this many kids when it is underfunded. The per pupil spending would fall even futher.
“Economy in U.S. Shrinks for Third Time Since Expansion Began”. It was down 70 bp in Q1. One of the worst quarters for years. Wake up.”
Wake up JJJ. Or do you just look at the newspaper once a year?
Because last year’s first quarter also contracted. And it was even WORSE. And what happened? Oh my god- the economy still grew the rest of the year. Imagine it? And it grew over 4% in at least one of the quarters. And we added over 200,000 jobs every month for the best year of job gains in a decade.
How did THAT happen?
Because the economy is the best it’s been in 10 years. All the asset classes are at record highs. People are rich, rich, rich and they’re spending all over the place. If your stock portfolio has tripled, you feel pretty good about yourself. You’re going to take your kids to Disney World for a week’s vacation for $10,000 (and, oh yeah, Disney knows you feel good so they’ve jacked up the ticket prices to record highs too.)
But see- you only look at the newspapers once a year. Too bad for you.
Oh- and those pay increases by Walmart? First time they’ve EVER done that. So why do it if the economy is so horrible? Because they were losing tons of employees to better paying jobs- and the turnover costs were in the millions.
“I think that, if budget cuts are huge and the wealthier schools raise funds to keep smaller class sizes, civil rights groups will file complaints in court or with the U.S. Department of Education Office for Civil Rights.”
No they won’t or they would have been filing those cases since the 1970s in California and I’ve never heard of them doing so (or if they did they filed in the 1970s and lost them all.)
The wonderful Prop 13 meant that every school district got the same amount in California. It was supposed to equalize education, but, of course, it didn’t. With budget cuts and higher expenses, the rich school districts now didn’t get enough money for fancy libraries, computer classes, foreign languages, the arts, music courses etc.
So what do the parents do in California? They raise money for individual schools. It’s quite extensive and well managed now because they’ve been doing it for 40 years. The “public” schools in the rich towns miraculously have librarians and music classes because the parents are “urged” to donate and they hold extensive fundraisers. In the really rich towns, these parental organizations raise millions so their children can have certain benefits at their public school that the kid in, say, West Oakland, will never have.
But those are the distortions from trying to make everyone be “equal” statewide.
“I frankly think Rahm is happy if parents donate/subsidized (less out of his budget) and won’t really work to prioritize neighborhood schools until upper middle class parents leave the city.”
Upper middle class parents aren’t fleeing the city. They’re staying in droves as long as they can get their kids into one of the “Bs” – Bell, Blaine, Burley.
“I also resent having to pay huge pensions for government employees. The majority of private sector jobs don’t offer pensions anymore. I don’t know why people of my generation have to contribute to pensions when we’re not going to get a pension.”
They have changed the rules for those entering the system now. I know someone who became a federal employee over 10 years ago and he gets no pension. He had to pay into a 401k like everyone else – albeit with a government match.
They have also changed the way the pension system works for new hires in the state of Illinois, so employees are paying more of their own money in.
But the pension problem we face isn’t from the new employees. That can be changed going forward. It’s from the agreement we made on people who started work in 1970. The Supreme Court just said that contract cannot be changed.
Upper middle class parents aren’t fleeing the city. They’re staying in droves as long as they can get their kids into one of the “Bs” – Bell, Blaine, Burley.”
Yes, and after getting into one of the B’s many people have left due to large class size. If the budget deficit touches classrooms and increases class size, will these parents still be happly with the “Bs” or leave for private school and suburbs?
The parents are leaving and moving to the suburbs; only to be replaced by new parents who first moved here from some podunk town somewhere in the midwest.
“Wake up JJJ. Or do you just look at the newspaper once a year?
Because last year’s first quarter also contracted. And it was even WORSE. And what happened? Oh my god- the economy still grew the rest of the year. Imagine it? And it grew over 4% in at least one of the quarters. And we added over 200,000 jobs every month for the best year of job gains in a decade.”
So it’s a lagging indicator is your argument? The cyclical Q1 argument is a looser. Last quarter is 9th out of the last 12 in job adds. To me it’s more about what does all this QE mean forever if essentially all M2 expansion is coming from eprinting money forever what does that mean? Until? Housing bubble is meaningless in that calculus, right? Just another asset class for the rich to wash government money through?
I saw a Youtube video of Bill Nye TSG debating some creationist and the creationist said (I’m paraphrasing here) “I’m right because I have God on my side and no evidence or data will ever change my belief.” and Bill Nye TSG said “I’m showing that I’m right by showing you the evidence and data and if there were contrary evidence or data I would evaluate that data and it would change my mind if it so warranted.”
According to this chart, I certainly see the possibility of some bubbles brewing, housing not being one of them
http://static4.businessinsider.com/image/5542958aeab8ea910c30cec4-480/student-loan-debt.jpg
“So it’s a lagging indicator is your argument? The cyclical Q1 argument is a looser. Last quarter is 9th out of the last 12 in job adds.”
We just had the best construction numbers in 6 years. Is that wrong too? And millions of new jobs over the past 18 months? Those are wrong? Wait a minute, Walmart is now raising salaries of its MANAGERS. Wow. Aren’t they an altruistic company to do so when the economy sucks. Imagine what they’ll do when it’s good?