Market Conditions: Who’s Going to Rent All These Apartments in Downtown Chicago?

New apartment building on Clark and Chicago June 19, 2016

It seems that several times a month there are announcements for new apartment buildings all over the Green Zone, and sometimes, even outside of the Green Zone.

Last week, Lennar announced yet another new building, this time in River North.

The bulging pipeline of new apartments in River North is swelling a little bit more.

Lennar plans a 180-unit project on a site it’s buying at 675 N. Wells St., according to a marketing flier for the development’s retail space and people familiar with Lennar’s plans.

The Miami-based builder is stepping into a development hot spot, pouncing on a site with nearly 1,000 apartments under construction within a two-block radius. Just to the south, Magellan Development Group is building a 450-unit tower set to open next year.

The downtown apartment market is the strongest it has been in decades— rents hit another high in the first quarter—but surging supply could test that strength in the next few years. Developers will complete 4,000 downtown apartments this year and another 4,400 in 2017, according to Appraisal Research Counselors, a Chicago-based consulting firm.

The developers keep insisting that all is well in the apartment leasing market and that there isn’t over supply.

Here are two of the other apartment buildings going up on the same block that Lennar will be building on.

New apartment buildings on Wells June 19, 2016

Chicago developer Jim Letchinger, of JDL Development, is building luxury condos as well as apartment high rises.

He just announced a proposal for a new 94-unit condo building in the West Loop at Jefferson and Fulton where 2-bedroom units will start at $800,000.

JDL is one of the few downtown residential developers building condos these days. Developers completed just 191 condos and town homes in downtown Chicago in 2015 and are expected to complete 120 this year, according to Appraisal Research Counselors, a Chicago-based consulting firm. Before the condo market crashed, developers easily added more than 2,000 units to the downtown market every year.

The residential market has flipped over since then: After completing nearly 2,600 downtown apartments last year, developers are on pace to add 4,000 this year and 4,400 in 2017, according to Appraisal Research. Before 2008, they rarely built 1,000 units a year.

If an apartment glut is on the horizon, Letchinger isn’t seeing it yet. Leasing began in March at his South Loop project, and the building is almost 50 percent leased—such a fast pace “I can’t believe it,” he said.

We heard similar statements from condo developers in 2007, just before the market went bust.

A mid-rise at 707 N. Wells called The Hensley, has already completed construction. It’s the building in the middle in this picture below.

That’s another new apartment high rise going up just next to and behind it. It is replacing the old Howard Johnson motel.

707 n wells

It’s marketing slogan is:

“Because you’ve waited long enough”

A quick look at the prices comes up with these:

  • A 4th floor 1-bedroom with 824 square feet for $2700 a month
  • A 5th floor 2/2 with 959 square feet for $3350 a month
  • A 5th floor 2/2 with 1027 square feet for $3690 a month

While no one is moaning the loss of surface parking lots in the western portion of River North, just who is actually renting in all of these buildings?

Are developers building too late in the economic cycle?

Or is the job market hot enough that all these luxury apartments will be absorbed?

Lennar adds another 180 apartments to River North building boom [Crain’s Chicago Business, Alby Gallun, June 15, 2016]

27-story condo tower planned for West Loop [Crain’s Chicago Business, Alby Gallun, June 15, 2016]

The Hensley (website)

 

172 Responses to “Market Conditions: Who’s Going to Rent All These Apartments in Downtown Chicago?”

  1. Sold my condo in the loop that I was renting out since I knew this was coming. The issue is that there are a lot of people with money and decent jobs but low inventory in the green zone. In addition, corporations keep moving downtown Chicago (Google, United, Motorola, Con-Agra, McDonalds, etc.) creating additional demand that did not exist before.

    But the prices for these new rentals our outrageous. Paying more than $2,000 for a one bed room is ridiculous, IMHO, but the prices are well above 2,500 in some building. The good thing is these buildings are getting build – increasing Chicago’s Tax Base, banks are loaning money (while being cautious), and these damn parking lots are disappearing :)

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  2. I’ve always said there is a lot of demand from high income young professionals for more luxury oriented rentals in the greenzone. They basically want a condo without the commitment and down payment. However, these prices are getting absurd.

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  3. I’m closing on my condo in 2 weeks and was looking at many of these rental buildings as I searched for a new place. Many of these buildings only had 3-4 one bedroom units available. Often times, the cheapest unit was around 2100-2200 not including the utility package, another $110, or parking, another 200-300. Add in electric and a hd Dvr, and your looking at $2500 a month for 700 square feet. So yes, the demand is there, and they need to build thousands of more units.

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  4. “They basically want a condo without the commitment and down payment.”

    Hopefully they never want a down payment, because it will be difficult to save one paying that kind of rent and living in these areas.

    My wife and I always kicked around the idea of River North, but in addition to the high rents/prices, the general cost of living is much higher than even a few blocks away. Almost every restaurant is upscale, every mixed drink is $10+, every hamburger is $15+. It’s tough to grab a quick dinner for two for less than $50, which adds up quickly.

    It will definitely be interesting to see what happens with rents in this area and how it effects other areas. I could see this spawning more rentals buildings a little further out from Sloop, Loop, River North, and West Loop which can offer places where people from these areas can move once they’ve had their fill of those areas and want to start saving to purchase a place that will be up to the luxurious standards to which they’ve now become accustomed.

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  5. The near downtown population is rising rapidly, so there is definite demand, but at these prices? Not so sure… but somehow, someway they keep filling up so people are renting them… just nuts!

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  6. If this happens:

    http://www.realestaterama.com/2016/06/16/hud-proposes-new-rule-to-expand-choice-and-opportunity-for-section-8-voucher-holders-in-certain-housing-markets-ID034710.html

    these high rents will help turn the ‘lesser’ buildings in the same zip into public housing.

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  7. ^ only mildly infuritating…

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  8. I don’t understand the logic of thinking that high-rent housing will lead to high paying jobs for public aid recipients. That’s part of the reasoning that is pushing public housing to “opportunity” areas.

    I don’t need to live near the loop in order to work in the loop. Has HUD never heard of “commuting”?

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  9. I’ve seen multiple people go from luxury renters to luxury buyers. When you’re making $100k+/year, it’s not hard to justify $2-3k/month rent, and you can still put aside another $1-2k+/month for a down payment. That being said, there are plenty of people who won’t be here for more than a few years and want the downtown luxury Chicago lifestyle while they are here. Or they don’t want to lock themselves into a place. Plenty of reasons to choose luxury renting to buying. As long as there is demand for these types of buildings, they will keep building them.

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  10. I don’t know how sound the study is and haven’t looked closely at the results. But I think what they claim is that it matters for the next generation. The children of aid recipients moving to higher-income areas (particularly at young ages) did better in life than those who received received aid, but stayed in high-poverty areas.

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  11. Kevin – I’ve lived in the western part of River North since 2009. When I first moved here, there were plenty of places you could grab a reasonably priced meal and drink, but most of those places are now closed or have revamped their menus upscale:
    Green Door Tavern (Upscale)
    Hop Haus (Closed)
    Reza’s (Closed)
    Patron’s Hacienda (Upscale)
    Scoozi! (Closed)
    just to name a few.

    There’s a diner going in the former cabbie restaurant on the NE corner of Chicago/Orleans that we hope will be reasonably priced decent food.

    If you want to rent in River North, rent a condo. We are renting a 2/2 in the condo building we previously owned in for less than the 1/1 listed above.

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  12. “The near downtown population is rising rapidly, so there is definite demand, but at these prices? Not so sure… but somehow, someway they keep filling up so people are renting them… just nuts!”

    For now, there definitely has been demand. But based on rental absorption rates, it’s not clear that there is demand for another 4,000 to 8,000 units at these price points.

    But like always- the developers are always late to notice the game has changed.

    The thing to look for is rental incentives. In San Francisco, for instance, they are giving away 2 to 3 months worth of free rent now because they overbuilt in the luxury market.

    But we’ll have to wait to see what happens in Chicago.

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  13. Agree there really isn’t cheap dining in the west part of River north. Had hopes for Dawson’s at grand and Halsted. It’s a beautiful place but $$$.

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  14. A coworker just rented his three bedroom, two bath condo that is at Lawrence and Kimball for $3500 per month plus utilities. The renters are wealthy Millennials attending North Park University.

    Luxury apartment rentals are going up all over the place beyond the downtown area. By my neighborhood, here is a short list: 1. 2600 W. Addison. 2. About 3431 W. Montrose. 3. 3219 N. Kedzie. 4. In Ravenswod area where my folks live there are a lot of luxury apartment rentals going up. Also many condo owners find it a better option to rent out their condo than to sell it.

    People do not want to live in crappy 100 year old apartment buildings. They want character, style, grace, ambiance and luxury.

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  15. My theory about Chicago rental / housing prices in the Greenzone is that Chicago is merely catching up with other major cities in regards to pricing. Chicago is by far the cheapest major city in terms of cost of living. However, the jobs here have salaries on par with other cities whether it is BigLaw, Consulting, PE, banking, F500…

    It seems a lot of higher income professionals are flocking here to escape the higher cost of living in other major cities which is also putting pressure on prices. $3000/mo to rent a small 2/2 seems nuts to locals but if you are coming from NYC or SF where that same place would be $5000-$6000 or more, it seems like a bargain particularly if your income hasn’t changed.

    I’ve even noticed this as well in say Tier 2 cities like Atlanta, Austin, Portland, Seattle, etc where the cost of living really isn’t dramatically cheaper if you are trying to live in downtown urban areas. Often considered moving to a smaller city, but when I look at real estate in desirable areas that would offer similar amenities, commutes, none of them are really that much cheaper and in some cases more expensive.

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  16. “making $100k+/year, it’s not hard to justify $2-3k/month rent, and you can still put aside another $1-2k+/month for a down payment.”

    At $100k, monthly take home is $5,682.77, without any health insurance, 401k, anything beyond taxes. Max the 401k, and it’s $4,182.77. Then, even $3k for rent + DP savings is a burden.

    Yeah, yeah “+”. Of course if you are making $300k, with $15k take home, a $3k/month rental is minor. Are we talking about more than a few thousand households that are making $300k, and going to be first time buyers?

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  17. The booming city is of course multifacted and nuanced.

    First of all, I believe that the booming city comes pretty significantly at the expense of many suburbs, especially at the higher end of the market in the farther out suburbs. Couples that would usually move to a high end suburban home are choosing to stay in the city longer;

    which brings me to point no. 2 – the baby bust. the US in 2015 had the lowest fertility rate ever recorded, continuing a trend for 7-8 years now. So 30 somethings who would normally have 3+ kids and living in Oak Brook (near McDonalds) are now staying in the city with their one, or maybe two kids.

    Also factored into the mix is a strong job market in Chicago; and Chicago being a major hub in the city. My neighbors next door with 2 kids just moved to Chicago from elsewhere in the US. They have no connections to this area whatsoever except that it was really easy to find good jobs in their respective professions. I told them that most people are LEAVING the state, not moving in, but that doesn’t apply as much to professionals with graduate degrees, whereas labor driven jobs are leaving in droves.

    I’m not necessarily bullish on the Chicago rental market but I can certainly see how it’s hot at the moment.

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  18. I think that Nimesh made a good observation. Perhaps the reason for the demand for more new units is not a demand for *more* new housing, it’s a demand for more *newer* housing. Many people do not want to live in 100 year old buildings. Or even 50 year old buildings. Also, many of those old buildings are not cheap for either purchase or rental. With the high maintenance cost of old buildings, they are sometimes the same cost as much newer housing.

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  19. My wife and I just rented a 2 bedroom unit in 757 N. Orleans, right on the corner of orleans. It’s a mid-grade building in my opinion, with decent amenities – nothing too fancy. Our unit has fantastic south facing views, but isn’t huge by any means, about 1300 square feet. We are paying 3200 a month, and there was literally a line of 5 renters looking at the unit when we took a tour. When compared to other comparable rental units in the river north area or ‘west’ lincoln park area (SoNo, 8 0 5, new city ) , 2 bedroom units were renting in the 4 k ballpark. I’ve been on the west coast for the past year but prior to that lived in chicago for 13+ years – can not believe the prices.
    Side note: I own a 1 bedroom unit in 1211 south prairie ( south loop, not river north level neighborhood by any means ) , my renter moved out ( was renting at 1900) and i put up a post in our community forum and re-rented the unit at 2600 in 1 day. The market is nuts – I can’t figure out if it’s just chicago catching up to other comparable cities or if we are in some sort of odd bubble because the housing availability has been so limited for so long.
    We thought about buying again, especially when we’re paying 38 grand a year to rent a 2 bedroom – but decided we’d rather wait to buy our ‘dream home’ in a few years, when we’ve got a couple kids as opposed to putting money into a 500k 2 bedroom condo. Most of my friends in our age group (30ish ) have the same mentality – rather rent and pay up the nose a bit, but save a big chunk for that 1-2 million dollar home a few years down the line.

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  20. I totally agreed with you until I read “but save a big chunk for that 1-2 million dollar home a few years down the line”. I surely don’t know your household income but having to save a few years for a down payment for 1-2 million dollar home probably means you shouldn’t be buying a 1-2 million dollar home. Downpayments for higher end homes come from family money, large bonuses, trust funds, equity from a previous sell, etc. Russ may know more than me, but downpayments savers don’t have the wealth for those kind of homes. We don’t live in California and this isn’t 2006.

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  21. “Many people do not want to live in 100 year old buildings. Or even 50 year old buildings.”

    Of course not, they want to BUY 100 year old buildings, or at least all of the buyers on house hunters who claim the most important thing about their home is “Character”.

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  22. “I totally agreed with you until I read “but save a big chunk for that 1-2 million dollar home a few years down the line”. I surely don’t know your household income but having to save a few years for a down payment for 1-2 million dollar home probably means you shouldn’t be buying a 1-2 million dollar home.”

    Home delete, I’m not sure I understand – I understand some people over extend themselves on a mortgage – My fiduciary advised me to wait / save for a larger down payment as he felt it would be smarter to go beyond the standard 20% down payment on a new home. We planned on saving somewhere in the 500k ballpark if we planned on buying a 1-1.5 million dollar home. As a couple just coming into our careers the past few years, I don’t think it’s abnormal to have to save for a few years to put aside that amount of money. At our household income , the mortgage , taxes, and other fees would not surpass 20%. ( Around 15% ) – so why is it not a good idea?

    Thanks.

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  23. “I think that Nimesh made a good observation. Perhaps the reason for the demand for more new units is not a demand for *more* new housing, it’s a demand for more *newer* housing. Many people do not want to live in 100 year old buildings. Or even 50 year old buildings. Also, many of those old buildings are not cheap for either purchase or rental. With the high maintenance cost of old buildings, they are sometimes the same cost as much newer housing.”

    The problem we have when looking at higher end units ( for sale, anyways ) Is that the older buildings that are ‘worth’ living in, ( that are well kept, good amenities, great location, ‘character’ ) have really high assessments. Some include the yearly tax in the assessment, but many don’t. I would love to invest in a beautiful vintage condo in the gold coast – but paying 3k a month in assessments for an aging building seems silly when that’s what my mortgage is. I understand in NYC this kind of assessment is the norm – but this is Chicago, not new york.

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  24. 3200 for a 2 bedroom in 757 n orleans? Thats fuckin crazy…

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  25. “3200 for a 2 bedroom in 757 n orleans? Thats fuckin crazy…”

    Yes, it is – but I honest to god looked for months before pulling the trigger. I have a highly upgraded unit on the top floor , it’s a corner unit with panoramic city views – Even then it’s crazy. But similar, smaller, and crappier equipped units at nearby apartment buildings were asking 3800 without parking. At 3200 i also get two parking spots and all utilities , cable, wifi included, should have added that.

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  26. Oh thats not so bad then, even still i’m about 3 blocks from there with so much more for less price

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  27. Sonies – couple blocks in which direction?

    A few blocks west towards kingsbury is definitely cheaper, as is a few blocks north towards Walter Payton – but those areas are still “in transition” – if you’re east or south of us, kudos to you – a nice place, under 3k for a 2/2 was impossible for me to find

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  28. I’m not going to say due to you internet sleuth wierdos out there but its north of where I used to live

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  29. I’d love to be able to save up $500K in a few years. Not sure what planet you live on. Also, a $1M property doesn’t buy much these days if you want relatively new construction in the green zone as a SFH. Condo and townhouse you can get a lot. Even if you go up to $1.5M, the universe of properties that are new (built since 2012) isn’t that large.

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  30. HD, you are correct. A large portion of buyers purchasing $1 million properties (the mid 30s type buyers) have inheritances, trust funds, gifts from parents, etc helping with down payments. Granted many have really good jobs and can easily service the mortgage debt on their own, but it is still fairly common that they get some assistance as far as down payments are concerned.

    The playing field has never been level.

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  31. Hi Dave M,

    I live right here on earth :)

    Why is 500k such a crazy task? I don’t have children or student loans. We are halfway to our goal. We save about 100k a year after all is said and done.

    My wife and I are both professionals and do well financially. I’m a physician so my line of work and income is relatively secure. Our “dream home” isn’t really a SFH in Lincoln park or buck town, we know that may be out of range even for two hard working professionals. Ideally we would like to buy a sfh or townhouse in a decent north side neighborhood. Don’t really desire for a McMansion with crazy upgrades. Based on my house hunting I think we will be able to get what we want for 1-1.5 when we are ready to buy in a few years.

    I don’t think we are an anomaly by any means as far as professional couples in the city go.

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  32. “HD, you are correct. A large portion of buyers purchasing $1 million properties (the mid 30s type buyers) have inheritances, trust funds, gifts from parents, etc helping with down payments. Granted many have really good jobs and can easily service the mortgage debt on their own, but it is still fairly common that they get some assistance as far as down payments are concerned.
    The playing field has never been level.”

    That must be nice. My parents were kind enough to help pay off my medical school loans and help with my first 1 bedroom down payment, but pretty sure they’d have a stroke if I asked them to make a down payment on a million dollar house, haha.

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  33. “My parents were kind enough to help pay off my medical school loans and help with my first 1 bedroom down payment, but pretty sure they’d have a stroke if I asked them to make a down payment on a million dollar house, haha.”

    You mean *after* having given you the equivalent of a down payment on a million dollar house.

    They’d have a heart attack at the ask for *another* $250k.

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  34. Anon : keyword was *help* pay off.

    I won’t insult your intelligence by saying your math is too far off though.

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  35. “I won’t insult your intelligence by saying your math is too far off though.”

    Either way, you don’t represent the norm.
    1.) Your parents are helping you out with a significant amount of capital
    2.) Youre a physician, with a high income out of the norm. Has the number of students graduating form med school increased at the same rate as the amount of rent and home prices across the nation? I don’t know but if I were making an educated guess, I would say no.

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  36. Have to say these rental prices seem insane. I don’t know that it spells doom for all these new buildings if things cool off though. Even with a 10% decline in rental prices (maybe even 20%) they will probably still be moderately profitable. When I moved to Chicago from NYC 10+ years ago a 2/2 in RN was $2k-2.5k vs. $3.5-4k now.

    Cities are still doing well in general as the 5% moves into the city (or doesn’t move out as they used to) while the population of the other 95% continues to decline as they move to the burbs. People in the 95% have seen incomes stagnate while the 5% have gotten the lion’s share of the economic rebound since 2009.

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  37. You know what lawyers say about doctors with their money…

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  38. “Hi Dave M,
    I live right here on earth :)
    Why is 500k such a crazy task? I don’t have children or student loans. We are halfway to our goal. We save about 100k a year after all is said and done.

    I don’t think we are an anomaly by any means as far as professional couples in the city go.”

    Median income for the Gold Coast and River North is around $85-90k/year according to the latest census data. I’d say saving 100k/year is an anomaly.

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  39. “2.) Youre a physician, with a high income out of the norm. Has the number of students graduating form med school increased at the same rate as the amount of rent and home prices across the nation?”

    No – but the number of students graduating from med school that want to live in the city (where rents and home prices are increasing) has gone up – along with the number of other professionals that are staying in the city vs moving to the burbs.

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  40. For a great example of this see MCD. They are willing to p!ss off all their top executives and move to the city because they can’t find any quality hires that want to live or commute to the burbs. This is a trend that feeds on itself – if you are in the burbs while all the competitors move into the city it becomes harder and harder to compete. I mean Oak Brook is top notch in terms of suburbs and they still couldn’t lure talent there.

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  41. ” You know what lawyers say about doctors with their money…”

    HD –

    Yes. I don’t hear the end of it. My wife is an attorney. I come from a large family of physicians so I’ve seen enough cautionary tales to be too spendy. Doctors train for so long that as soon as they get a real paycheck they want to buy everything – it’s delayed gratification. Banks don’t help either – I was recently offered a “physician loan” where I could avoid PMI altogether on a loan under 500k with 0 down , or get a loan up to 1 million with 10% down – totally crazy.

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  42. There’s no way in hell I would move to Oak Brook. One of my coworkers came from McDonald’s. The commute was hell, so she found a job in the city.

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  43. “They are willing to p!ss off all their top executives”

    Are they really doing that, tho? I’m sure some of them will be annoyed (especially if there are any golfers left), but is it more than a quarter of the “top” however many?

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  44. “it’s delayed gratification”

    No, that’s not it. It’s that doctors are notorious for investing in every get rich quick scheme that has ever existed. They are disproportionately victims of the long con. And then they still have enough resources to hire a lawyer to sue.

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  45. For a great example of this see MCD. They are willing to p!ss off all their top executives and move to the city because they can’t find any quality hires that want to live or commute to the burbs. This is a trend that feeds on itself – if you are in the burbs while all the competitors move into the city it becomes harder and harder to compete. I mean Oak Brook is top notch in terms of suburbs and they still couldn’t lure talent there.

    Actually, McD is going to fire several of those “top executives”. They are culling directors and really changing things up. That includes reducing internal expenses like maintaining that Oakbrook campus. The millennial workforce is larger than the boomer force. We’ll see what happens when that cohort starts having families.

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  46. With jobs in the loop, it’s easier to network/have lunch with friends that work at other places and makes its a no brainer to switch jobs/companies when your commute/life stays the same since you now work a block away from where you used to.

    I think McD touted the move to the burbs in the 70’s as a way to reduce staff turnover. When they were in chicago, people would leave jobs for a little more money since it really didn’t impact there lives.

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  47. “Median income for the Gold Coast and River North is around $85-90k/year according to the latest census data. I’d say saving 100k/year is an anomaly.”

    I understand – but I was speaking in reference to the price ranges and rent ranges of homes we are discussing, ie 3000 /month + . If you’re earning 85k a year and spending that on rent, you’re doing it wrong. I think most young professionals paying 3-4K per month in rent and earning a dual ( married , couple etc ) income are earning way more than that. If you’re budgeting properly and paying 3k a month in rent you should be earning at least around 200k a year, in my opinion.

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  48. “No, that’s not it. It’s that doctors are notorious for investing in every get rich quick scheme that has ever existed. They are disproportionately victims of the long con. And then they still have enough resources to hire a lawyer to sue.”

    Anon,

    Maybe. Idk. Never been a problem for me. No such thing as getting rich quick or without hard work – that’s what I was raised on.

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  49. “McD touted the move to the burbs in the 70’s as a way to reduce staff turnover”

    Yep; there was an excerpt from an article at the time talking about how they would leave to make an extra $5 per week (or something like that).

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  50. “On the North Shore, one agent said prices are being held back because so many homes are on the market—the opposite of what’s going on in the city, where the supply of homes for sale started the year at a new low and has continued dropping. ”

    http://www.chicagobusiness.com/realestate/20160428/CRED0701/160429836/nearly-decade-after-crash-north-shore-homes-have-yet-to-recover

    Like I said, I believe a significant amount of the relative ‘hotness’ of greenzone is coming at the expense of the suburbs. The north shore especially on the high end is slow and quite frankly, I only know a handful of people under 40 who live up there. Granted my perspective is primarily middle aged jewish attorneys but again that’s all I see, the young attorneys I know who in theory should be living on the north shore with two or three kids are instead living in teh city with no or one kid. I have two married co-workers, men, nearly 40, married but no children, living in the city. 15 years ago they would be in west Wilmette, a distance from Green Bay Rd.

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  51. http://www.chicagobusiness.com/realestate/20151006/CRED0701/150929932/this-suburb-has-too-many-1-million-plus-homes-for-sale

    This might be the story Sabrina linked to a while back

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  52. http://www.chicagobusiness.com/realestate/20160317/CRED0701/160319845/the-spring-home-selling-market-has-sprung-in-these-8-suburbs

    March 17, 2016

    “So far this year, both new listings and closed sales are running well ahead of last year in these eight Chicago suburbs (Bartlett, Evergreen Park, Frankfort, Highland Park, Park Forest, Park Ridge, Roselle, Wilmette). (In many of the other 178 suburbs, either sales or listings are down.)

    See, as I’m trying in say, outside of a handful of places, half of which are commuter suburbs (EP, PR, W and HP), the market is slower, or down, and nowhere near as hot.

    ergo, the hotness of the city is coming at the suburbs’ expense.

    (Ps why isn’t long grove on the list? THe market is on FIRE Up here!)

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  53. “I think most young professionals paying 3-4K per month in rent and earning a dual ( married , couple etc ) income are earning way more than that. If you’re budgeting properly and paying 3k a month in rent you should be earning at least around 200k a year, in my opinion.”

    Here we go again. Every few years we have the “everyone is making six figures” discussion.

    So- you’re saying that at least 10,000 people (but probably more because of couples/roommates etc.) decided to move to Chicago in the last 3 years and all of them are earning, conservatively $100,000 a piece?

    Doing what?

    It’s certainly not new college grads renting these apartments as they are lucky if they’re earning $50,000 (and some engineers, $60,000 to $70,000). There aren’t enough newbie big law lawyers to fill up those towers. Ditto with MBA students. Doctors have super high debt so it’s not them.

    Who has suddenly moved here that they’re filling up all these towers at these prices?

    And, don’t forget, they are actually also charging this in the non-downtown neighborhoods like Bucktown and Lakeview.

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  54. “The millennial workforce is larger than the boomer force.”

    Sure because the boomers are retiring (as a generation- they are still larger). But the boomers are running the company. Youngest boomers are about 52-53. They have a good ten more years to run things there.

    I never said they weren’t moving because of talent reasons. Clearly, Generation X and Millennials would prefer to be in the city. So if they’re hiring younger workers for some jobs (marketing etc.) then they are having trouble filling those positions. The 30-year old lives in Lakeview. She doesn’t want to drive out to Oak Brook every day. She’ll take a different job that is in the city instead. That’s what they’re encountering and they know it will only get worse over the next few years.

    Same with Kraft and all of the other companies that have moved. It’s probably only a matter of time before Treehouse and Allstate, among others, also move downtown.

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  55. “They are willing to p!ss off all their top executives”

    I don’t really think it’s them. They’ll buy a house in LP and be happy. Their kids are in college. They don’t care about the schools.

    It’s middle management. It’s the VP of Marketing with the 14 year old. It’s the lawyers with the 10-year old in LaGrange. It’s the accountant that has been there for 20 years, is 50, so he’s not ready to retire but he doesn’t want to move to the city either because Elmhurst has been great.

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  56. “You know what lawyers say about doctors with their money…”

    No- it’s not delayed gratification. It’s the “god syndrome.” They think they know everything and they apply that to investing.

    The worst “investors” in the Millionaire Next Door book were doctors. All of the examples in the book had the doctor making $1 million a year in salary and literally having a net worth of zero. Lawyers, actually, also didn’t fare well in that book. They don’t save. Live a high lifestyle with fancy houses and cars.

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  57. “I understand in NYC this kind of assessment is the norm – but this is Chicago, not new york.”

    Chicago’s vintage buildings were built in the same 2 decades that New York’s were. There is no difference between the two cities in maintenance and upkeep. Their exteriors, elevators, roofs, and windows have to be maintained in both places.

    I don’t understand why you think Chicago should be any cheaper. Have you seen the maintenance fees on the 1920s buildings in San Francisco? They are the same.

    The HOAs aren’t something that are pulled from the sky. They go to maintain the building. Doormen and heat aren’t that different in these cities.

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  58. “So- you’re saying that at least 10,000 people (but probably more because of couples/roommates etc.) decided to move to Chicago in the last 3 years and all of them are earning, conservatively $100,000 a piece?”

    No, but I am pretty sure that the average couple / tenant of a 3k-4k a month apartment is definitely making more than 100k. After taxes, 100k is around 70. That’s like 6 grand a month. If someone is spending half, or more, of their income on rent – that is crazy. I’d like to think people have more sense than that – but maybe i’m wrong. You said it yourself – it’s not college students or broke new graduates. I think it’s young professionals or young couples with minimal debt and a desire to live in the city.

    “Chicago’s vintage buildings were built in the same 2 decades that New York’s were. There is no difference between the two cities in maintenance and upkeep.”

    How can you possibly think that? The cost of living in SF or new york is not even comparable to chicago. I pay 4 grand a month for a tiny 1 bedroom in san francisco. Everything costs more from toilet paper to minimum wage, so in turn – what you pay your building engineer, doorman, garbage removal, is significantly more. Not even including cleaning supplies, labor on aging infrastructure – all that costs much more in SF and new york. – THAT is why the assessments are so high , and that is why the upkeep is more in those cities.

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  59. “No- it’s not delayed gratification. It’s the “god syndrome.” They think they know everything and they apply that to investing.”

    Why is it so popular to hate doctors? We work our tails off to get a degree, graduate hundreds of thousands of dollars in debt, and battle a corrupt and aging system to offer good care to patients. Suicide and depression are at a high and job satisfaction is at a low. I’m not a sensitive person but when I read things like that it really stings. I didn’t get into medicine to become rich – there are far better ways to do that. And if I had a god syndrome, I’d have been a politician or gone into corporate america to become an executive.

    PS – did you even read that book Sabrina, It talks about why Doctors, Dentists, and Lawyers are often under their predicted net worth – it wasn’t ‘0’, but stated that people in these high earning fields are typically under where they should be as they are pressured to spend more, as they earn so much more. A particular point made in the book was that physicians have delayed gratification from long years of training and a long recovery from graduate debt – it mentions the god complex absolutely NOWHERE.

    So absolutely disturbed by your comments.

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  60. ” If someone is spending half, or more, of their income on rent – that is crazy”

    http://www.chicagomag.com/city-life/April-2016/The-Rent-Is-Too-Damn-High-in-Chicago-And-Most-Places/

    “We’re at point in the U.S nationally where one in five of all renters are spending more than half of their income on housing,” Desmond told Belt. The generally accepted cutoff for whether a renter is “rent burdened” is 30 percent of income.”

    So basically all of your medicaid patients.

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  61. Riz, people hate on Doctors because many can be extremely arrogant. They often believe they are smarter than everyone else even in fields in which they have no experience or knowledge base. This leads to the “god sydnrome” and why they are often good marks.

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  62. One problem I have with doctors is that they don’t listen to their patients. They look at at them like a mechanic looks at a car. They look for the most common problems and then work your way down the list from there giving only a passing acknowledgment of the owner’s complaint. Especially orthopedics, they are the worst. Their notes are horrible, they spend 2 seconds per patient, and then move on. They tell the patient one thing (or often nothing at all) and then the actual diagnosis reflects something completely different.

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  63. “One problem I have with doctors is that they don’t listen to their patients. They look at at them like a mechanic looks at a car”

    well thats because your average american is a fucking idiot and didn’t spend decades in school learning about medicine but rather celebrity gossip or the latest in social media instead.

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  64. The younger doctors I know (33-35 yrs old) are all in massive debt and didn’t get med school paid for or subsidized by their parents. They didn’t go into the highest paying specialties either, so they can’t save $40K a year and certainly not $100K a year. Most are married too, and one of them to another doctor, and they are not exactly rolling it in when they are servicing 2 med school loans that when added up are above the $417K conforming loan limit.

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  65. These new renters will certainly translate to buyers. The Loop’s job growth is starting to take off, especially in tech. Recruiters are having trouble locating tech talent. 3000ish openings currently. Most of those jobs are being filled by transplants because Chicago is particularly weak in local talent. If all these tech workers decide they’d like to stay, it’s not hard to convince someone who works with logic all day the logic of not throwing 40k a year down the drain in rent. I would expect the market for anything under 800k to become sparse.

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  66. Two married radiologists make pretty good money; two married but salaried general practitioners probably not nearly as well. A relative of mine is a physician recruiter for a major health organization in the midwest. Gone are the days of the private practice doctors office. The younger doctors are mostly opting to sign up with existing practices within health care groups on a salaried basis. They don’t need to pay office expenses, overhead, or do billing. The medical group handles everything – they just need to recruit patients, keep the good patient ratings – and of course, make LOTS OF in network referrals.

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  67. “well thats because your average american is a fucking idiot and didn’t spend decades in school learning about medicine but rather celebrity gossip or the latest in social media instead.”

    Yeah, I won’t say idiot…but it gets really frustrating. Just from the comments in this thread – the overall attitude is your doctor is an overconfident ‘know it all’ who doesn’t listen to your REAL problems. Really – did you go to medical school or did he / she? Why don’t we leave the diagnosis up to the physician? A huge problem we face today is patients who have no medical training but believe they know how to treat their problem better than we do.

    that being said, just like any other specialty – there are good doctors and bad ones. Nice doctors and mean ones. Just like every cop , firefighter, lawyer, or accountant isn’t perfect, doctors aren’t either.

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  68. “The younger doctors I know (33-35 yrs old) are all in massive debt and didn’t get med school paid for or subsidized by their parents”

    Dave M, – Sure – but then they should have been smarter about their specialty choice. did pediatrics or family practice even cross my mind as a career choice? heck no. I liked those fields but was realistic about debt and income. I chose a competitive specialty because I was realistic about debt and income.

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  69. “Two married radiologists make pretty good money; two married but salaried general practitioners probably not nearly as well.”

    I mean, what is pretty good money? – In Chicago, two married radiologists, if working in private practice, will be earning over a million dollars together easily. Two average GP’s should be in the 400-500k range. To me, that is far better than just ‘ pretty good ‘ money. Even with a couple hundred grand of debt.

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  70. “Riz, people hate on Doctors because many can be extremely arrogant. They often believe they are smarter than everyone else even in fields in which they have no experience or knowledge base. This leads to the “god sydnrome” and why they are often good marks.”

    Russ, thanks for that insight. I like to think the younger generation of physicians such as myself have dealt with enough debt and BS in the system to not be arrogant. Physicians in their 50’s and older had no med school debt and made tons of cash without much oversight, easy money – which is why they likely fell into such situations. younger doctors are way too in debt and working too hard to make dumb investment decisions, I think.

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  71. “A huge problem we face today is patients who have no medical training but believe they know how to treat their problem better than we do. “”

    It wasn’t long ago you people were treating conditions with leeches and mercury, and the profession was still based upon the theory of humors.

    While you probably know more than I do about salaries, my understanding is that most unestablished GPs are not earning $200k a year.

    However I do know what you mean about the older folk with no debt who fell backwards into money. I was an associate at a firm with an older NW grad who paid for law school before i was born by driving a taxi on weekends. Good luck trying to do that now! We’d all be far wealthier if Sallie Mae hadn’t found a way to monetize our future income streams. The system works so well tha the Dept of Treasury wanted in on the action and now we’re all in debt to our own government. ! AWESOME!! THANKS OBAMA!

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  72. HD posted “…The system works so well that the Dept of Treasury wanted in on the action and now we’re all in debt to our own government. ! AWESOME!! THANKS OBAMA!”
    I believe Rauner, Trump and their followers would like to address your complaint as well as congratulate you on your display of being one of the previously referenced ‘fucking idiots’.
    if they have their way they’ll do away with taxpayer subsidized student loans & taxpayer subsidized higher education, which most helps those students whose parents aren’t able to write checks or borrow to pay $120K-$250K for college per dependent. In their opinion that could level the college admissions playing field for their kids, who in their minds are the most discriminated against Americans – the middling performing, white UMC kids born on third base. No thought about how great it makes our country when every kid has a shot to fulfill their max potential by borrowing against future income, which should greatly exceed what they’d earn w/o access to excellent higher ed options.

    Imo you & HH deserve a few years of being led by dandy DonTee & Bruce, that real man of the people. The rest of us don’t. And not that it matters but was OBAMA even a senator when you borrowed?

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  73. southbound,

    why do you think college costs $120-250k and continues to increases on average 8% a year? Does it really cost all that much more money to educate a bunch of liberal arts majors?

    IT’S THE GOVERNMENT SUBSIDIZED STUDENT LOANS DUMMY!!!

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  74. “and they are not exactly rolling it in when they are servicing 2 med school loans that when added up are above the $417K conforming loan limit.”

    Conforming loan limit? Is that even a big factor nowadays?

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  75. “And not that it matters but was OBAMA even a senator when you borrowed?”

    Again GOOFY, Obama as president made all new loans DIRECT LOANS financed by the department of treasury. and they make A LOT OF MONEY doing it too.

    http://www.huffingtonpost.com/2013/05/14/obama-student-loans-policy-profit_n_3276428.html

    Liberalism is a disease

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  76. “IT’S THE GOVERNMENT SUBSIDIZED STUDENT LOANS DUMMY!!!”

    That’s a fact and that’s why tuition has risen so much over the last decade and why for profit universities have increase. University of Phoenix anyone! LOL

    BTW, I rent a 2BR for $3300 in Old Town to two millennials (~25yrs old) that make about $70k each at PWC. Initially I wasn’t going to rent to them because the salary was low and risky becuase it was a dual income but it has worked out well for the last 2 years.

    Previously, I rented the place to a big law attorney (~35yrs old) and her fiance. She pulled in around $225, her fiance worked some regular corporate job for $50k/year.

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  77. @Riz

    It is bad when I think someone is detached from reality but you, sir, are detached from reality.

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  78. @matthewlesko –

    Why?

    @HD –

    Average internist salary in Chicago is about 175k plus productivity bonus. Average radiologist salary in Chicago is about 400k +/- productivity. Unless by GP you just meant family practice doctor – in which case I have no clue what they make, no experience in that field.

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  79. @matthewlesko
    Maybe your version of reality sucks. :)

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  80. southbound doesn’t understand it. When the government “subsidizes” or throws money at something, then prices rise. Tuition would fall if it wasn’t subsidized. Housing in 2006 rose in price because Fannie and Freddie were SUBSIDIZING the purchases.

    southbound can’t possibly want to vote for the crooked Hillary and her disgusting foundation, and the country’s worst-ever misogynist Bill Clinton. SMH.

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  81. HD: I read the linked article and it says:
    “..President Barack Obama’s proposed budget … would reduce interest rates on federal student loans in an attempt to remove staggering burdens confronting graduates…

    The White House proposal would tie interest rates on student loans to the government’s costs of funding the program. …STUDENTS NOW PAY FIXED RATES SET BY CONGRESS while borrowing costs in the broader economy are at historic lows, allowing the government to profit on student borrowing.”

    To summarize for Cliff Note/Shepard’s readers Republican controlled Congress set the unconscionable rates charged & Obama admin introduced legislation to rationalize the interest rates charged. Apparently Congress balked hoping ‘fucking idiots’ would post “THANKS OBAMA”.

    Imo ignorance is the disease with the least likelihood of cure.

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  82. For student loans, there needs to be better underwriting standards. Not everyone is meant to go to college.

    Reducing the interest is great, but we also need to reduce originations.

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  83. Lookingtobuy posted “there needs to be better underwriting…Not everyone is meant to go to college..Reducing interest is great, but we also need to reduce originations”
    I agree. I favor banning loans to attend for profit educational institutions – if they believe their product is worthwhile they should fund 100% of loans their student’s require. Imo all institutions should have skin in outcomes. I suggest if 50% of a school’s graduates are underemployed & taxpayer backed loans were paid to the school, it should pay penalties to taxpayers. Let’s make schools as well as attendees accountable for outcomes.

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  84. Chicago is catching up with NYC. Look at the population growth trends in the “greenzone” – it’s the fastest growing urban area in the USA. And look at the relative per foot prices on condos in the same area – again still a healthy discount to NYC but slowly closing…

    I think also the increasing traffic in Chicago creates a desire to live closer to work and nightlife.

    Docs, lawyers, finance, consulting, developers, hospitality – all booming here.

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  85. Back to RE. As alternative to paying @ $3.35 psf rent, while recognizing inherent tradeoffs I suggest considering condo units in mid-modern larger condo buildings in GC & Sandburg Vill.
    For ex: updated 1200 sq ft 2 bed/2ba @ 1445 N State Pkwy across from 1432 NSP on mkt @ $9.5 mil & 1428 NSP on mkt @ $4.8 mil. This unit sold for $325K in ’04 (w/pkg) but’s been on market for 1.5 years, now @ $315K ask (w/pkg). Is it the $1500 mo. assessment/ taxes? The 8′ ceilings? Lack of in unit laundry? Inadequate building amenities? Perceived lack of liquidity? All of the above?

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  86. You’re forgetting the people whose kids are in college, and are now high tailing it back to the city, after being sequestered out in the burbs for 15-20 years. They’re selling their houses, and now have a good chunk of change to spend on real estate in the city. It’s not recent college grads or peeps in their 20’s driving up the costs. There seems to be great demand, I think it’s feeling a bit bubbly out there. All I know is, once the property bills hit, will give many a pause. So I’m all for more peeps moving in, more condos, and we get more taxpayers to help us out of this financial quagmire.

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  87. “Is it the $1500 mo. assessment/ taxes? The 8? ceilings? Lack of in unit laundry? Inadequate building amenities? Perceived lack of liquidity? All of the above?”

    It’s all of the above. Isn’t it obvious?

    Today’s buyers want certain features. They’re willing to overpay for those- but if you don’t have them, then forget it.

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  88. “Again GOOFY, Obama as president made all new loans DIRECT LOANS financed by the department of treasury. and they make A LOT OF MONEY doing it too.”

    I’m glad they cut out the middle man. There were loan companies making that same profit. Might as well have it go to the US Treasury which is backing them and has the risk. I’m okay with this.

    But the problem is, as everyone says here, that they continue to lend. They will actually lend you like $300,000 to go to vet school in the Caribbean when we have too many vets and the starting salary is $40,000 a year, if you can even get a job. Without those loans- that vet school wouldn’t exist. And those students, while they would never be vets, would also never incur that kind of debt.

    They’re figuring out (finally) that not everyone should go to law school either. Students are finally not applying. But more law schools need to shut down. They can’t find their students jobs and they are graduating with $200,000 in debt and working at Meijers. It’s not right.

    Here’s a synopsis of a recent NYT article on Valparaiso U Law School and what is going wrong there.

    http://abovethelaw.com/2016/06/vivisection-of-a-dying-law-school/?rf=1

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  89. “Conforming loan limit? Is that even a big factor nowadays?”

    If you don’t have the big downpayment it is.

    Buying under the conforming loan limit allows you to put less money down.

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  90. “Two average GP’s should be in the 400-500k range. To me, that is far better than just ‘ pretty good ‘ money. Even with a couple hundred grand of debt.”

    Remember back during the Recession when that U of Chicago professor wrote that blog post lamenting that he was barely making it in Hyde Park on his professor salary? His wife was a doctor but she was a family practioner, I think, and made only $80,000 a year. He made more but combined they had something like $200,000+ in student loans.

    He lamented that they could no longer pay for the maid to come clean the house and could barely afford the payments on their $600,000 graystone.

    Remember this?

    He got so many threats from the post (saying he was clueless about how the rest of America lives) that he had to take the post off line.

    They had good salaries but also a ton of debt (between the loans and the house.) I think he also commented something like firemen made more money a year than his wife. Of course, she chose a specialty that wasn’t dermatology or radiology or any of the ones that paid big sums.

    It’s not all incomes. People with a lot of education (doctors, lawyers, PhDs, MBAs) also now have a ton of debt. Remember. Ben Bernanke said his son was graduating medical school with $400,000 in debt.

    $400,000!!!!

    I don’t care if you ARE a cardiologist. It’s still going to take you 5 to 10 years just to pay that off and THEN start saving money. And what if he was in an expensive area to live like the Bay Area or NYC? Forget it!

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  91. Ben Bernake also had trouble refinancing his mortgage; my guess is that the guy was great at macroeconomics but failed household finance. I’m sure the guy couldn’t pay his gas bill on time unless the autodebited it from his account.

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  92. ” $400,000!!!!
    I don’t care if you ARE a cardiologist. It’s still going to take you 5 to 10 years just to pay that off and THEN start saving money. And what if he was in an expensive area to live like the Bay Area or NYC? Forget it! ”

    That is a good point. but remember – most cardiologists, interventional cardiologists, or in my case, interventional radiologists that are done training are around 31 years old. So, at 35, earning 400k+ a year after paying off loans ( if you had no help ) leads to a lifestyle where saving or buying a 1.5-2mil home isn’t off limits. That’s been my point from the get-go.

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  93. “But the problem is, as everyone says here, that they continue to lend. They will actually lend you like $300,000 to go to vet school in the Caribbean when we have too many vets and the starting salary is $40,000 a year, if you can even get a job. Without those loans- that vet school wouldn’t exist. And those students, while they would never be vets, would also never incur that kind of debt.”

    That is actually a really thoughtful insight into the problem with foreign medical/dental/vet education. kudos.

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  94. HD, Ben B couldn’t refinance because underwriting guidelines don’t allow for common sense due to the liability and government intervention, particularly with Dodd-Frank.

    The issue was that he tried to refinance right after he left the Fed and went from a salary to basically self-employed (making like $250k per speech). So in the mortgage world, he didn’t have a history of self-employment yet. Typically two years of self-employment is required. In some rare cases you can get away with one year of tax returns if you can make a case that it is a related field.

    Mortgage guidelines don’t allow an underwriter to be like “Gee, the guy makes $250k a speech and has already made $1.5 million this year. Even though we don’t have a full year of tax returns to go off, I think he’d be good. He is the former fed chair after all. The mortgage is only $800k and we are at a 50% LTV.” That is how things would work back in the day.

    However, with all the regulation and liability, now it is coloring between the lines. If you don’t document something exactly as required, no matter how dumb, the loan can’t be sold in secondary market or you may run afoul of ability-to-repay rules in Dodd Frank.

    Sure, there are some lenders who might do that scenario, but at a significant rate premium. Or you do like most really rich folks (as in people with 10 figure investment accounts) call your buddy up at Goldman or whereever and they just give you a personal loan at a great rate.

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  95. Russ I agree with you that the guidelines got really difficult when he refinanced and that surely had a lot to do with it; but I’d be willing to bet his credit score was a bit off. You and I both know that high income often means high credit scores but not always. I have a buddy that reviews plenty of credit reports for HNWI’s and he says the scores run the gamut especially for people that are too busy to handle their own finances, and they put a trusted family member/friend/personal assistant in charge of paying their bills, and often a lot of things slip up.

    My personal opinion is that Ben’s personality was so focused on solving the great recession and he’s so focused on the bigger picture that he let the minor details slip, and a few late payments here and there on his bills let his credit slip, and combined with the underwriting standards, it made it difficult for him to refinance. That’s just my hunch and is pure speculation but I wouldn’t be surprised if that’s the real situation.

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  96. “Remember this?”

    Todd Henderson. His wife’s salary was never mentioned; she’s a pediatric oncologist, not a gp, on the faculty at UC.

    Other folks at the time noted that their combined income (based on other statements that he made) was probably more like $350-400k.

    He was making a political point about the $250k cutoff in Obama’s tax proposals; it wasn’t actually a statement of what his HH income was.

    “their $600,000 graystone”

    $920k, in ’05. Not grey. He claimed that he paid $15k in property tax–it looks like the most they’ve paid is a little short of $14k, but it’s going to be over $15k this year.

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  97. Great to see this thread blow up (even if it’s gone off tangent).

    This is very relevant to me as you can see…

    I’m 29 and pay $2,300 for a 900sqft upgraded corner unit in River North with arguably some of the best views in the city. Sounds like a lot right? Not really when you add things up and compare to these new units that cost $2,000 for a studio. We have a 50,000 sqft amenity deck with a top gym ($100/mo otherwise?), many free events (also networking!), and an incredible pool deck right above the red line stop (time=money!).

    I make just about six figures with zero debt and lots of potential upswing in the near future (parents paid for undergrad and two masters, hate all you want, but it’s true). My room would go for $325,000 with a $700HOA. I am living here now for the FLEXIBILITY. If a great job comes up for a few years in NYC, Denver, Austin, etc., I can get up and move without losing closing costs and the hassle of renting, etc. Could I save and slum it up in Lakeview, perhaps, but if you want to enjoy life a bit more and surround yourself with executives, you have to pay to play a bit.

    Perhaps next year I will buy something if I solidify my stay in Chicago, but I am at a loss for options. Should I move to Oz Gardens in LP for $330,000 for a 1970s 2/2 with a parking spot? What about a $400,000 duplex in West Town with a garage parking spot and rooftop deck? Or do I look at cheaper lofts in River North like 225 Huron and get a 1/1 for $250,000? Options for newer condos within reason are VERY hard to come by. All of these highrise condos are pricing so many people out making the rich richer and the poor poorer.

    My friends that live in similar highrises have mentioned them offering 2 months off rent ($2,600/mo at 805 LaSalle, etc.). I hope that these new buildings flood the market and my rent doesn’t go up. Otherwise I can potentially move to a newer building and even save money, but time will tell.

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  98. So, Rob, I’m not picking on you, this is more about some general trends, probably a lot of the stuff below is not really the case for you. So, I’m not a hater, but I want to use you as an example of how things have changed from how they were for my previous generation:

    Rob is like many millenials. They’re not big on delayed gratification – they have often lived well throughout their childhoods, with cable, internet, cell phones, lots of activities, etc. They got trophies for everything and a lot of encouragement. Rob is lucky that he has no debt, but he also probably has limited or zero assets. He doesn’t want to compromise, so he’s not willing to save money by living in a place not all the way up to his standards, he would never consider “slumming” it in Lakeview and wants to surround himself with “executives.” His parents paid for undergrad and 2 masters degrees. Etc. That’s all fine – I’m not a hater and everyone makes their own decisions about how to live and how to raise their kids. When he decides to buy a place, or get married or have kids, his parents and his lady’s parents will help with the costs – that’s what they are there for, after all. How could someone save money instead of living in a really nice apartment or taking nice vacations 12 days a year? What’s the point?

    The boom in luxury apartments is being driven by these changes in lifestyle, as well as a huge influx of folks who won’t buy because they heard about bad experiences in the last downturn and value their mobility too much. Rob is willing to pay 30% of pre-tax income for a studio apartment. His parents have financed his lifestyle, paid for him to live well through college and grad school, etc. College goes to 22 or so, add a few grad degrees through 25 or 26 and he is 3 years into working. It never even crosses hid mind that paying his own way (maybe he is now, but many professionals around his age are still supported by their parents) and making some compromises would be good experiences to him or that saving money is a good thing.

    This is all anecdotal, but it feels like a big shift to me. When I came to Chicago around 2000, I made a little more than Rob at the time, and I lived in a $1300 2 bedroom rental in Bucktown with a roommate. And $100k went a lot further back in 2000. Millenials tend to be proud of their parents supporting them – unlike my generation where, unless someone had truly rich parents where it didn’t matter, if I knew that someone was getting $$ from their upper-middle class or lower means parents, I felt like they were either a pathetic mooch or someone who had to be coddled because they were incompetent. Even if it was the case, people didn’t advertise it. I feel like most of my fellow professionals were like that. Apartments on the North or Northwest sides were the places people went – River North was a rare destination, and it was pretty boring too. Everyone tried to rent for the first few years and then buy a place. Even for people who could afford more, it was totally normal to live below your means for a few years, pound out as much of the student loans as possible, stuff that 401k, etc.

    Maybe it shifts back at some point, but probably not. Compare the trajectories and lifestyles of Gen x 20somethings to their parents – vastly different again.

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  99. “My personal opinion is that Ben’s personality was so focused on solving the great recession and he’s so focused on the bigger picture that he let the minor details slip, and a few late payments here and there on his bills let his credit slip, and combined with the underwriting standards, it made it difficult for him to refinance.”

    LOL! You believe that the head of the most powerful central bank in the entire world has his son graduate in debt? or cannot pay his own mortgage correctly? You believe this BS “common man” propaganda about central bankers … who attend Bilderberg etc.?

    You have a goyishe kop

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  100. “Buying under the conforming loan limit allows you to put less money down.”

    Hmm. On our purchase a few years back, we didn’t have enough to put down to come within the conforming limit. Other loan options allowed us to put less down.

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  101. HH you’d be surprised at people’s credit scores.

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  102. “You believe this BS “common man” propaganda about central bankers … who attend Bilderberg etc.?”

    He was earning- what- $180,000 a year? $200,000 a year? Something like that? In expensive Washington DC?

    Um…yeah. According to the stats, he was barely upper middle class. Don’t know if his wife worked though.

    He was a professor at Princeton right? Not exactly the greatest way to get rich. Greenspan had done okay for himself but he invested some of his money in those 20% 20 year CDs back in the day! (which he admitted was amazing.) And he was much older. By your 80s, if you’ve been working ALL that time (which Greenspan had) then your net worth would be pretty decent even if just from real estate alone.

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  103. “Todd Henderson. His wife’s salary was never mentioned; she’s a pediatric oncologist, not a gp, on the faculty at UC.”

    This was in 2010. I don’t think she was making much in 2010 because it came up that firemen made more than her in the discussion AFTER the blog post. He refused to discuss it further later because of the firestorm.

    I’m bringing it up because doctors are notoriously poor, actually. And now it’s even worse. They’re all graduating with huge debts and while some make big incomes, not all of them do. And then add on top of that they are notorious for never saving a dime. Which is why in the Millionaire Next Door it was not the doctor (or the lawyer) who were millionaires. It was the small businessman.

    Here’s what he said. He had a ton of debt at the time he wrote the post.

    “What Henderson was trying to discuss was the impact of an Obama proposal to end tax cuts enacted by the Bush administration for households earning more than $250,000. Henderson wrote that they paid nearly $100,000 in federal and state taxes last year and about $15,000 in property taxes. And they have a big mortgage, more than $250,000 in student loans, and other expenses, he added.

    Henderson argues that he can’t afford higher taxes without cutting back on expenses, which would hurt the economy. He mentions the Mexican immigrant who cuts his lawn, the Polish immigrant who cleans his house, cell phone and cable service, and art classes for his daughter as potential budget cuts.”

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  104. “I’m bringing it up because doctors are notoriously poor, actually”

    Ehh even with the crazy debt they have and reimbursement cuts, calling physicians poor may be a bit of a stretch. Just a little. You’ll certainly see less millionaire docs but they are typically living pretty comfortably – even GP’s.

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  105. “I’m bringing it up because doctors are notoriously poor”

    huh…every doctor I know is pretty well off.

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  106. Relying to JJJ,

    Well said. As expected, much does not apply directly to me, nor do I take any offense. Delayed gratification does not appear to be as popular anymore. People have began to question if they made most fulfilling lifestyle decision when they are 35, barely traveled the world, feel too old to club or festival hop, and generally missed the ‘young and loose’ years. Marriage is also being delayed as millennials take a closer look at divorce rates and related risks. The cookie cutter, save save save, get hitched, move to the suburbs and pop out some kids approach is not as universal anymore.

    The beauty of the market is that it adapts. If these apartments do not rent initially at these prices, they will offer 2 months free, etc. Additionally, they could eventually turn sections into condos and/or temporary corporate housing. These apartments will compete, flood the market with options, and overall benefit the inhabitants of the greenest zone.

    Side note regarding parental support–There’s a big difference between paying for your kids’ collegiate yacht trips and investing in a robust education. The rich tend to get richer because they instill values of learning and career growth (along with continuously compounded interest returns, etc.). Professional athletes, lottery winnings, etc. tend to lose their temporary wealth quickly because they had not been raised in such an environment. Moreover, those that grew up by very modest means understand savings and often live a more ‘efficient’ lifestyle with less. Anyways, interesting conversation with main lenses to see it throught.

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  107. “I’m bringing it up because doctors are notoriously poor, actually. And now it’s even worse.”

    More “wisdom” from Sabrina…

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  108. ““The children now love luxury. They have bad manners, contempt for authority; they show disrespect for elders and love chatter in place of exercise.”” – Aristotle

    “Rob is like many millenials. They’re not big on delayed gratification – they have often lived well throughout their childhoods, with cable, internet, cell phones, lots of activities, etc. They got trophies for everything and a lot of encouragement” – JJJ

    The reason for the luxury boom isn’t some generation nonsense about millennials and luxury – it’s the market responding to high land prices and labor costs combined with a large, upwardly mobile and well paid work force. The cost to upgrade from base to luxurious upgrades is but a small fraction of the price of building an apartment building but commands a huge premium. And the work force is large and well paid. Someone about commented about two professionals each making $70k rented his condo. That’s $140k household income and is easily in the top 20% of all household incomes in the country. And many of them are concentrated in the greenzone etc. the people who live in these units these are literally the graduates of great colleges who work long, hard hours to make a buck in chicago. Sure, you can make an argument that with the middle class disappearing we as a society have reentered another sort of great gatsby gilded age, but to generalize that millenials are wasteful profligate spendthrifts is a bunch phooey.

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  109. “Moreover, those that grew up by very modest means understand savings and often live a more ‘efficient’ lifestyle with less. ”

    Are you kidding me? Poor people from modest backgrounds have poor habits; and investment bankers, some of the highest paid, best educated graduates out there from upper middle class backgrounds, they’re mostly know for degenerate profligate spending on, as they say, “bottles and models”. Spending habits tend to be highly individualized with the only commonality being that being poor is expensive.

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  110. The middle class is shrinking because many are making more money and moving up the income ladder.

    https://www.aei.org/publication/americas-middle-class-has-been-shrinking-but-its-because-so-many-middle-income-households-have-become-better-off/

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  111. Chuk is back to talk about nothing again (and certainly not real estate.) Ho-hum.

    He’s obviously never read the Millionaire Next Door. I highly recommend it. It has apparently been updated in the last 2 years. The author died last year (unfortunately.) It’s just a great read for anyone who wants to know how to build wealth. Income isn’t wealth.

    Here’s an example he gives:

    “You may ask: How can someone be considered wealthy if, for example, he is worth only $460,000? After all, he’s not a millionaire. Charles Bobbins is a forty-one-year-old fireman. His wife is a secretary. They have a combined annual income of $55,000. According to our research findings, Mr. Bobbins should have a net worth of approximately $225,500. But he is worth much more than others in his income/age category. Mr. and Mrs. Bobbins have been able to accumulate an above-average amount of net worth. Thus, they apparently know how to live on a fireman’s and secretary’s income and still save and invest a good bit. They likely have a low-consumption lifestyle. And given this lifestyle, Mr. Bobbins could sustain himself and his family for ten years without working. Within their income and age categories, the Bobbinses are wealthy.

    The Bobbinses are quite different from John J. Ashton, M.D., age fifty-six, who has an annual income of approximately $560,000. How much is Dr. Ashton worth? Is he wealthy? According to one definition, he is, since his net worth is $1.1 million. But he is not wealthy according to our other definition. Given his age and income, he should be worth more than $3 million.

    With his high-consumption lifestyle, how long do you think Dr. Ashton could sustain himself and his family if he were no longer employed? Perhaps for two, at most three, years.”

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  112. “Marriage is also being delayed as millennials take a closer look at divorce rates and related risks.”

    This is not accurate. Marriage is not being “delayed” because of divorce risks. Divorce rates have been slowly falling since the 1980s. Most of that is due to later marriages.

    People are marrying later because women, in particular, see no need to marry in their 20s now. There are too many opportunities in careers and just life in general to get married at a younger age.

    The state with the youngest marrying age is Utah (not surprisingly, due to the Mormon faith.) Those with the highest rates are those with the major urban centers like NY and California.

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  113. “Moreover, those that grew up by very modest means understand savings and often live a more ‘efficient’ lifestyle with less.”

    Nope. Not according to the data collected by the Millionaire Next Door. They usually become under accumulators of wealth:

    “VICTOR AND HIS CHILDREN

    Take the case of Victor, a successful entrepreneur who is first-generation American. Entrepreneurs like him have typically been characterized by their thrift, low status, discipline, low consumption, risk, and very hard work. But after these genetic wonders become financial successes, then what? What do they teach their children? Do they encourage them to follow Dad’s lead? Do their children also become roofing contractors, excavation contractors, scrap metal dealers, and so on? The chances are they don’t. Fewer than one in five do.

    No, Victor wants his children to have a better life. He encourages them to spend many years in college. Victor wants his children to become physicians, lawyers, accountants, executives, and so on. But in so encouraging them, Victor essentially discourages his children from becoming entrepreneurs. He unknowingly encourages them to postpone their entry into the labor market. And, of course, he encourages them to reject his lifestyle of thrift and a self-imposed environment of scarcity.

    Victor wants his children to have a better life. But what exactly does Victor mean when he says that? He means that his children should be well educated and have a much higher occupational status than he did. Also, “better” means better artifacts: fine homes, new luxury automobiles, quality clothing, club membership. But Victor has neglected to include in this definition of better many of the elements that were the foundation stones of his success. He does not realize that being well educated has certain economic drawbacks.

    Victor’s well-educated adult children have learned that a high level of consumption is expected of people who spend many years in college and professional schools. Today his children are under accumulators of wealth. They are the opposite of their father, the blue-collar, successful business owner. His children have become Americanized. They are part of the high-consuming, employment-postponing generation.

    How many generations does it take for an ancestry group that today contains thousands of Victors to become Americanized? Only a few. Most move into the “American normal” range within one or two generations. This is why America needs a constant flow of immigrants with the courage and tenacity of Victor. These immigrants and their immediate offspring are constantly needed to replace the Victors of America.”

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  114. “huh…every doctor I know is pretty well off.”

    Nope. Under accumulators of wealth according to all the data collected by the Millionaire Next Door crew over the past 30 years. They make very high incomes and they usually spend it all.

    In the original book, there were doctors making $1 million a year and who had a net worth of basically zero. Not even anything saved for retirement. But had a big house, several expensive cars, a huge wardrobe, took nice vacations. On the outside, they appeared rich but they were just a few paychecks away from not being able to pay the bills.

    Same with lawyers. Large expenses. Usually have to live in the best neighborhoods.

    And now many in both of those professions are paying off huge student loans. So they don’t start their careers for years after their peers AND they are paying off large student loans for a decade or more afterwards.

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  115. “Chuk is back to talk about nothing again (and certainly not real estate.) Ho-hum.”

    I have given much more valuable real estate advice than you have on your own board.

    What would you like me to talk about? How right I was? How are those 4 rate hikes going? Still think a recession isn’t coming?

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  116. “What would you like me to talk about? How right I was? How are those 4 rate hikes going? Still think a recession isn’t coming?”

    You are going to call me out on the rate hikes (which we still don’t know what will happen with them- could still see two this year) when YOU are the one who predicted that real estate prices would FALL in Chicago this year?

    Lol.

    Pot meet kettle.

    Please. You don’t know anything more about what’s going on than me.

    And no- we’re not going to have a recession this year.

    You know what constitutes a recession, right? I’ll remind you in case you have conveniently forgotten: 2 consecutive quarters of negative GDP growth.

    We haven’t even seen one quarter of negative growth this year. Weekly jobless claims remain at multi-decade lows. There are “hiring” signs all over the place.

    Could the economy suddenly fall off a cliff? Sure. But even in 2008 it was slowing for months before we actually saw the negative GDP readings. We actually haven’t seen the slowing, despite about 200,000 job cuts in the energy sector. (Of course, I wouldn’t want to be a rigman or a driller in North Dakota or parts of Texas right now.)

    Will we have another recession? Of course. But nothing is indicating it will be this year.

    Wrong again Chuk.

    The housing market is booming, just like I said it would. It is hot, hot, hot. Hottest market ever in Chicago. And with rates headed lower thanks to the Brexit, apparently, it will be even hotter over the rest of this summer.

    Sizzle!

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  117. “And now many in both of those professions are paying off huge student loans. So they don’t start their careers for years after their peers AND they are paying off large student loans for a decade or more afterwards.”

    Sure. But how many of their peers are earning 200k at the age of 30? even with 300k in loans they will come out far ahead of all the engineers, teachers, consultants, etc that have been working for a few more years by the time they are 40. They start late, they spend too much ( again, delayed gratification leads to people getting carried away ) – but I’m sorry, the vast majority of my friends are physicians in their 30’s, and while many have loans – none are broke, and likely all will have a net worth of 1 million or more in the next 10 years. Please don’t hit me with the BS ‘200 k is not typical for a physician, it’s a low low estimate across the board for an internist, which is your standard hospital employed physician.

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  118. “when YOU are the one who predicted that real estate prices would FALL in Chicago this year?”

    I told you that a coming recession will bring lower prices. Did you expect prices to fall BEFORE the recession?

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  119. “People are marrying later because women, in particular, see no need to marry in their 20s now. There are too many opportunities in careers and just life in general to get married at a younger age.

    The state with the youngest marrying age is Utah (not surprisingly, due to the Mormon faith.) Those with the highest rates are those with the major urban centers like NY and California.”

    I like to know what % of single women, never married is compared to the past. It probably has never been higher. Women brainwashed by the Sex and City lifestyle, slutting it up until they’re 35, then they think they “deserve” to magically get married and find a guy….many of these women aren’t attractive physically or morally anymore and they never will find a man to walk them down the aisle. Who do you think lives in all these Chicago downtown highrises? Women who delay, take huge risks, of never attracting a man at all. Don’t get me started on the yound hipster women to tattoo themselves. Talk about the stupidest think one could do. All else being an equal, tats are a detriment to being attractive to a male.

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  120. “have a net worth of 1 million or more in the next 10 years”

    At $200k per year, with $300k in debt to start?

    How? Is there a magic doctor investment club?? Or a tax rebate program?

    $200k, net of taxes, is about $140k, so, over ten years, after paying off the student loans, that’d be almost exactly $1m in net income, before paying for *any* living expenses.

    You’ve got to be basing that assumption on much higher salaries.

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  121. “You’ve got to be basing that assumption on much higher salaries.”

    Remember who is making the assumption….. a young doctor… LOL
    A clio in training……..

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  122. HH – take a look in the mirror sometime. The way you talk about women makes me think that you’re a middle-aged male who dismisses older women based upon looks and preys on college-aged girls. Then you get tired of the lack of maturity after about six months, dump her, and go fishing in the pond for another one.

    Maybe you’re not the person as I described above, but I have seen many men like that over the years. They’re looking for a unicorn while they get older and never find someone to spend meaningful time with.

    IOW, don’t be shallow and judge by covers. Ain’t nothing wrong with having a physical preference, but dismissing an entire cohort of women because you have these preconceived notions is just sad.

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  123. He’s obviously never read the Millionaire Next Door. I highly recommend it.

    Wasn’t most of the anecdata in that book debunked back in the 90s? (Maybe not, it’s possible I’m thinking of Rich Dad, Poor Dad or some similar book).

    Which is not to say that living within your means or even frugally is a bad idea (it’s not). It’s just not a guaranteed path to “millionaire” status.

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  124. “thinking of Rich Dad, Poor Dad”

    This.

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  125. Anonemoose: totally wrong. By the way, another piece of advice, don’t advertise with a button on your purse that you’re with Hillary. That is probably the biggest single turn off to men. Any male (of the alpha sort these b!tches actually want) will immediately avoid you like the plague. I saw one of these types (early thirties, of course, and single) in the elevator at the Morningstar building at Block 37. I almost gave her unsolicited advice, but chose not to. She mostly likely wouldn’t have listened anyway. We all know these types, they blow off the entire “cohort” of decent guys in their office, dismiss them, act like the aforementioned, and expect to demand the right guy show up and make her a princess for a day at a downtown or destination wedding! When this doesn’t occur, and they know the game’s over, no guy will even marry them, they become even more embittered feminists and hillary-ish and now we have a massive subculture and demographic of these women with self-inflicted problems. The developers are catering to this demographic with yoga studios, spas, and wine bar restaurants on the ground floor retail.

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  126. Helmet… more unhinged than ever.

    I enjoy picturing your sad, weird, creepy life.

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  127. “$200k, net of taxes, is about $140k, so, over ten years, after paying off the student loans, that’d be almost exactly $1m in net income, before paying for *any* living expenses.
    You’ve got to be basing that assumption on much higher salaries.”

    Yes – I was. I’m a specialist and income in my specialty and in most specialties closely related to mine is about twice that much or more. I was using 200k as an entry point for your standard internal medicine physician, saying that even physicians on lower end of earning brackets are for from being “poor”.

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  128. “I was using 200k as an entry point for your standard internal medicine physician, saying that even physicians on lower end of earning brackets are for from being “poor”.”

    Don’t you know that with Sabrina, the exception is the rule (when it fits her narrative….)?

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  129. “even physicians on lower end of earning brackets are for from being “poor””

    Sure, but–at 30, with $300k in debt–they also are a decade away from being able to properly “afford” an UMC lifestyle.

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  130. anon (tfo) –

    Totally agree with you. Being a doctor is usually a far cry from being a high flying millionaire these days. Just saying that there are more than a few physicians in their late 30’s and early 40’s around with likely a net worth of 1 mil or more. It’s far from rare.

    The absolute worst case scenario for a doc is making 150-200k and being 300k in debt. I know a couple people like that, but very few. That means 0 family help, 0 spousal help, no investments, and being a GP in a low earning practice. Even with all that – these people are typically far from poor when they are in their 40’s and older. That’s the point I wanted to make – to negateSabrina’s super bizarre claim that physicians are “notoriously poor”.

    I find it really funny that so many people on CC line up to knock down the possibility that there are professionals in their 30’s and 40’s making a lot of money in this city. They aren’t unicorns people, and they aren’t exceptions. A poor doctor would be a unicorn, if anything.

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  131. “Remember who is making the assumption….. a young doctor… LOL
    A clio in training……..”
    Is this clio?
    Haha you don’t know the half of it. I used to spar with Clio on these forums years ago when I was just a kid in residency training.

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  132. No this is not Clio the clown…..
    Riz, I believe that you are missing Bri’s point as you are mixing salary and wealth which are two distinct and separate measures. Having a high salary does not make one wealthy, while having a high net worth in relation to ones salary does.

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  133. Oilc,

    I also think that Riz being a nice and green doctor is being overly optimistic about this ability to pay down debt, save and generate wealth. He has no children, he hasn’t made any large principal payments to his student loans yet, he hasn’t even had his $75,000+ dual doctor wedding with catered food from Nomi; his car is only a new MDX and he thinks he’s ‘saving’ because isn’t not a range rover. his $3,200 a month rent IIRC is only 1/2 to 1/3rd of the monthly nut of a mortgage on his million dollar house (which hardly buys anything for a respectable enough for dual physician household these days anyways); and there’s no nanny to pay for, no charitable donations to make to the private school (religious or otherwise), and all the other trappings of the physician lifestyle. Doctors are a spendy group of people, unlike the ‘cheap lawyer’ trope of which is very familiar to most people; and while he may be one of the few ‘frugal’ doctors out there, he has spent too much time doing 24 hour shifts in residency to truly understand the day to day expenses of living the million dollar home lifestyle that comes with it.

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  134. “Just saying that there are more than a few physicians in their late 30’s and early 40’s around with likely a net worth of 1 mil or more. It’s far from rare.”

    The whole point of the millionaire next door, as oilc so graciously pointed out, is that high income is meaningless if you spend it all. You can be Mike Tyson and still be broke (whoops- he was as he declared bankruptcy.) Income ISN’T wealth.

    Plenty of doctors have high incomes. But they aren’t frugal. They don’t save their money. They live paycheck to paycheck. So having a “net worth” of a million dollars isn’t impressive at all if you are earnings $400,000 a year. That doctor should have a net worth of $3 million- $5 million if they’ve been working 20 years.

    Highly paid professionals, as a group (doctors, lawyers, consultants) tend to spend a lot on their lifestyles. They are high income but high consumption people. So they end up with hardly anything in their 401ks or their kids have to take out loans to go to college because there’s hardly anything left over in the paycheck after paying the mortgage on the $2 million house.

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  135. “When this doesn’t occur, and they know the game’s over, no guy will even marry them, they become even more embittered feminists and hillary-ish and now we have a massive subculture and demographic of these women with self-inflicted problems.”

    We don’t need you helmethofer. Get it? We can earn our own money, get our great jobs, get some sperm at the sperm bank, save for our retirement, buy our own cars and houses. The doorman will protect us from criminals and they’ll even replace the lightbulbs in the building.

    So sorry that in 2016 you are only now realizing this.

    The last I checked, Angela Merkel has done just fine as the leader of Germany.

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  136. “The developers are catering to this demographic with yoga studios, spas, and wine bar restaurants on the ground floor retail.”

    There is no “catering to.” Women ARE the demographic. They buy more condos than single men. They are earning great money. In many cases, there are more women then men in many professional schools (law and veterinary medicine.)

    This is why the marrying age has been rising steadily over the last few decades. Why would you necessarily marry before 30? The men certainly aren’t. No need for the women to either.

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  137. Wasn’t most of the anecdata in that book debunked back in the 90s? (Maybe not, it’s possible I’m thinking of Rich Dad, Poor Dad or some similar book).

    Nope. Not debunked at all. They have updated the original book which was from the 1990s. The overwhelming number of millionaires are entrepreneurs- i.e. small business owners like dry cleaners, pet stores, car washes, liquor stores etc. They also don’t drive expensive cars or wear expensive watches. They also tend to live in cheaper houses that aren’t in the Green Zone type of neighborhoods (because that’s how they save money.)

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  138. “Women who delay, take huge risks, of never attracting a man at all.”

    It is not a “risk” to be single. She has a job that, according to Riz, pays her over $200,000 a year (if she’s a doctor.) She doesn’t need a man. There is tinder for everything else, if she needs that.

    Is it not a “risk” for a man to be single at 35?

    The number of women who have never married has varied according to US history. There have been times, after the civil war, for instance, when the rate of American women who never married was as high as 20%. But even today, with marriage happening later, most straight people (men and women) end up married at some point in their lifetimes. It’s only like 5% who remain single for life. And now, with gay marriage changes, the numbers will shift for the gay community as well.

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  139. “I told you that a coming recession will bring lower prices. Did you expect prices to fall BEFORE the recession?”

    What coming recession? I don’t see one. Do you? All doom and gloom. Poor Chuk. Being left behind by one of the hottest housing markets EVER in Chicago.

    Here’s what you said on Dec 20, 2015. That’s 6 months ago, for anyone keeping track.

    “What are you confused about? Your answer is contained in your question. I said that I think we will have a recession, and as a result, housing prices will go down. What more would you like? Would you like me to tell you what a recession is?”

    By the way- if housing prices fall in a recession, it will be the first time in all of Chicago history they have done so outside of the Great Recession. Because Chicago housing prices have NEVER fallen in a recession. Why would they? Has the housing market slowed down in a recession? Sure. But housing isn’t a stock. It doesn’t go up and down daily. For home prices to actually fall, you have to have some kind of event like:

    1. massive housing inventory (you know- supply v demand.) We don’t have that. We have such little supply, buyers can’t even find places to live.
    2. mortgage rates have to spike higher quickly making affordability an issue which then, of course, leads to demand. But buyers will just trade down if they want to buy. And why would mortgage rates be moving higher if we’re in a recession?

    Chuk, you just don’t make any sense.

    Will you be on here another 6 months from now talking about the recession? It had better hurry up because if it doesn’t start in another week or two, there won’t be time for a recession in 2016.

    Meanwhile, the housing market continues to sizzle. 5% unemployment and hundreds of people like Riz making six figures means prices can keep rising for years. And rates may go even lower still. Imagine a 15 year mortgage at like 1%!

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  140. “But how many of their peers are earning 200k at the age of 30?”

    Someone has to do the analysis of it. Because that doctor lost out on 8 years of work AND has huge student loans. They do this analysis for business school students (how long it will take you to “earn” out at various schools i.e. whether or not its worth it to get the MBA if you have to take out big loans to get it.)

    What if the 22 year old had only $10,000 in student loans, graduates with an engineering degree, and makes $65,000 a year every year for the next 8 years. Saving into 401k and other general savings. It will take a LONG time for that doctor to catch up who only starts earning at 30 and has big student loans to pay off. They may never catch up even though their starting salary is higher.

    Much like those who save for retirement starting at 25 versus those who start saving at 35.

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  141. “he hasn’t made any large principal payments to his student loans yet, he hasn’t even had his $75,000+ dual doctor wedding with catered food from Nomi; his car is only a new MDX and he thinks he’s ‘saving’ because isn’t not a range rover. his $3,200 a month rent IIRC is only 1/2 to 1”

    That’s a sweet caricature, but ;
    I only have around 25k of loans to pay off, and they are my wife’s, not mine.
    I actually got married in the city last year and the wedding cost was more than 75k. No way in hell you’re catering food from nomi on a 75k budget , unless it’s a small ass wedding.
    Most importantly:

    an MDX? That’s an insult. My wife drives a Range Rover sport. I sold my car this past summer, , and typically I use public transportation – not for money reasons but bc of convenience. If it’s too cold or the train is out I usually just uber. I don’t miss driving.

    24 hour shifts don’t exist in my specialty. I’m not interested in working like a dog. I scored well on my boards and was able to match a low stress high income specialty. I know that’s not the norm.

    I pretty much agree with everything else you say about doctors spending too much money and the costs of day to day living – maybe it will be more than I expect if I end up with a million dollar mortgage and 3 kids in private school. But then, I’ll probably just be forced to move to Naperville or some other crap suburb. :-/

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  142. I noticed my comment above about the range rover sport thing may come across as douchey without context:

    To clarify, As a car buff:

    In response to comparing an MDX to a range rover, I was stating that a range rover , to me, is very much a fancy soccer mom car. My wife and I are planning on a kid in the next year so she bought that. It isn’t something you’d catch me behind the wheel of. And as far as an MDX goes, i’d rather be on a 10 speed huffy. Hate Japanese ‘luxury’ cars.

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  143. “he hasn’t made any large principal payments to his student loans yet”

    Yes- we’ve established that your parents paid for your medical education. But most aren’t that lucky (even your wife wasn’t.) Many graduate with hundreds of thousands of dollars in debt.

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  144. “Being left behind by one of the hottest housing markets EVER in Chicago.”

    Ummm. I bought 2 properties in 2012. I flipped one in 2014 for about 85% gain. I still have another that is up well over 100%. What did you buy?

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  145. “get some sperm at the sperm bank”

    Wow, the shiv hits deep with you and you “out” yourself. Every child deserves to know who his father is. How depraved. Every child raised by homosexual men deserves to know who his mother is. Only a man and a woman can produce a child.

    All these Sex in the City sluts, yoga morons, and Chardonnay drinking feminists will figure it out eventually, when they have no grandchildren and die alone. It’s abnormal. Period.

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  146. The LR4 is the city AYSO soccer mom car. The RR Sport is actually acceptable to men, whereas the LR4 is purely for women. If anyone wants to see the LR4 set in real life, go to the Target on Division Street at about 8:45 a.m. after school drop off, there are plenty of MILFs there, bored out of their minds… of course their “banker” husbands would never dream that their wives have roaming eyes.

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  147. I think it is true that many doctors live large and spend, but if one can afford to give the kids a good education, have a nice house, travel and have a guaranteed job until retirement (as doctors do), then it is ok.
    Not everyone is a saver. Riz is correct that doctors have a pretty good standard of living and they are certainly not poor.

    BTW, nice to see you are back Riz and good luck with everything especially having your baby :)

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  148. Riz,
    It appears you are headed down the doctor trap…. A Range Rover sport???? Terrible vechicle from a reliability stand point. While we don’t care for Japanese luxury you would be far better off with the Acura.

    In full disclosure my husband in an MD, so I understand the high salary. When dating, his finances where a mess… No savings, high debt, etc. He had no idea what a budget was or where his money was going. At the time I made less than half what he did but had a net worth 100x what he had.

    We have many friends that are in the medical profession and are illiterate when it come to financial independence. You see many doctors working in there 60s, 70s and beyond, they tell you they do it because they love it- in reality they have to continue working to support their lifestyle.

    I am not picking on doctors, many highly paid professionals are committing financial suicide. When you tell them that you will need $1,000,000 of net worth for every $40k of income in retirement they give you this look of horror. You know the 4% rule right?????? Some financial planners now say it needs to become the 3% rule due to low returns on the income side of investing. So if your lifestyle dictates $300k in spending what should your net worth be at 65??????? $8,9 or 10 million?????

    When I go home to HK to visit my parents I always wonder about the their tenants. They pay +/- $25k in rent per month, the garage is full of uber luxury vehicles. The building is paid off, they don’t own a car and either take the bus or cabs around town……… who do you think is wealthy???????

    In the end you can work for money or money can work for you………

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  149. Riz, it’s not because you’re a DR but because you’re a bit of a DB. as a physician you’re going to see people of all types, and given your profession in an urban area, you’re going to see a lot of poor people. In fact, 1/4 of the state is on medicaid and upwards of 50% of all kids in the state are on some government health care program. Your rich kid privileged comments are disappointing given your profession’s reputation for compassion and charity. Hilarious I nailed the large, wasteful, expensive wedding AND the range rover. I hope it all makes you happy.

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  150. “All these Sex in the City sluts, yoga morons, and Chardonnay drinking feminists will figure it out eventually, when they have no grandchildren and die alone. It’s abnormal. Period.”

    As I said: We.Don’t.Need.You.

    This is the new world order. In this century, women in America (sadly- not in every country yet) are self-sufficient. We can be president of the United States, lead Yahoo, be CFO of Facebook and worth billions of dollars. Yes, we can also get married and have children. For the first time in all of history, American women have choices.

    What a great time to be alive!

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  151. “Ummm. I bought 2 properties in 2012. I flipped one in 2014 for about 85% gain. I still have another that is up well over 100%. What did you buy?”

    Good for you! Fantastic.

    So you’re now admitting that this market is on fire. Why aren’t you buying more?

    Prices are only going to go up. Buy now or be priced out forever.

    And, chuk, honestly, you have NO IDEA anything about me (other than I am a woman who runs this blog.) You have no idea what I bought or didn’t buy. I could have been living in a brick bungalow in Berwyn for the last 10 years for all you know.

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  152. By the way helmethofer, you never answered my question about telling men about the “risks” of being single either.

    I see on the news that John Cusack turned 50 today. He is single. Never been married. No children.

    Where is the outrage? Why isn’t everyone telling him the “risks”? Doesn’t he know he’s going to die alone?

    Lol.

    Give me a break.

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  153. “In this century, women in America (sadly- not in every country yet) are self-sufficient.”

    you think you are, the sad truth is that you are most definitely not yet, come on who are you crappin

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  154. Indeed, statistically speaking, men get a much better deal out of marriage than their wives—married men tend to live many years longer than single men, whereas married women live only a little bit longer than single women.

    http://www.scientificamerican.com/article/why-women-live-longer/

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  155. “Riz, it’s not because you’re a DR but because you’re a bit of a DB.”

    Zing. Good one. Did that take you a few hours?

    “Your rich kid privileged comments are disappointing given your profession’s reputation for compassion and charity. Hilarious I nailed the large, wasteful, expensive wedding AND the range rover. I hope it all makes you happy.”

    Lol. It’s really funny being called a DB coming from such a hater. Just a few posts ago you were likening my profession to using leaches and calling doctors idiots, basically. Now we’re compassionate and charitable. Funny how your opinions change to suit your post. You didn’t nail anything – My point was simple, big weddings cost a crap load of money in this city. You’re out of touch with what is considered wasteful if you think celebrating our love with 500 of our family and friends is wasteful.

    As far as the range goes, I thought I clarified my point to make myself not sound like a DB, but if i did, apologies. Was simply stating that i don’t think of it as some ‘baller car’, more of a mom – mobile. They are a dime a dozen in the city.

    HD – Can i be a hater for a second? Is this a male lawyer thing? Always finding faults in others and making excuses for why their success isn’t valid and they are bad people? My wife’s male colleagues lose their mind about my profession and salary all the time also.

    Why the stats about poor people and poor kids? I trained at a non for profit hospital for my entire residency , with the highest level of gun trauma in the country. I volunteer every week and do doctors without borders. Wtf do you do my dear JD?

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  156. “BTW, nice to see you are back Riz and good luck with everything especially having your baby :)”

    Thanks miumiu. It’s nice to be back on here – lots of opinions and tension once in a while but that’s what makes it fun.

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  157. “I am not picking on doctors, many highly paid professionals are committing financial suicide. When you tell them that you will need $1,000,000 of net worth for every $40k of income in retirement they give you this look of horror.”

    You’re spot on with this one oilc. I was surprised when our fiduciary told me we needed to have around 10-15 million in our retirement in 35 years. Blew me away, and explained why so many 70 year old physicians are still working in my field. They didn’t plan on having the long life expectancy many people have these dies and seriously rising costs of living.

    I do think medicine breeds a certain ‘lifestyle’ mentality, and the fact that physicians have to live up to a certain ‘standard’ probably explains why so many are below their projected net worth, as sabrina was pointing out with the millionaire book example. I’m doing my best to plan accordingly, but I doubt i’ll be at or above where I ‘should be’ with net worth – while I also doubt i’ll be broke or struggling.

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  158. “You have no idea what I bought or didn’t buy. I could have been living in a brick bungalow in Berwyn for the last 10 years for all you know.”

    You’ve previously made all sorts of statements about renting and this and that. And you had that overseas time. So, it seems really improbable that you’ve been in Berwyn for a decade.

    Basically, you’ve written quite a few ‘details’, so, unless it was all HD-style BS, then Chuk has *some* idea–maybe inaccurate, but some.

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  159. everything I’ve disclosed on this site is true. •everything•

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  160. Doctors are well compensated on average. However, I don’t find they are really making much more than many successful folks in other professions common in Chicago who get a much better ROI and a number of years of making six figure incomes while docs are still slaving away in residency.

    Nice thing about medicine though is the stability.

    Hardest thing about making good money is living below the lifestyle that good money affords. It takes more effort to live below your means as you have to not care what others think about you and forgo the status symbols that project income / wealth. People tend to spend to their income so to speak.

    The wealthiest folks I have come across rarely own luxury cars or big homes. Always amazed when I see people who make like $750k or $1 million and they buy $2-$3 million places. I’d be more apt to just buy a much smaller place and be mortgage free. Buy a place in Oak Park or Evanston for like $750-$800k and be done and on the way to early retirement so you don’t have to stay on the hamster wheel keeping up with the Jones’s.

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  161. If I said that the next thing I will say was true, but the last thing I said was a lie, would anyone believe me?

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  162. “If I said that the next thing I will say was true, but the last thing I said was a lie, would anyone believe me?”

    Definitely maybe.

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  163. ^^^ Good.

    While speaking at a conference, Bernanke told moderator Mark Zandi (“just between the two of us”) that “I recently tried to refinance my mortgage and I was unsuccessful in doing so.” When the audience laughed, Bernanke said, “I’m not making that up. … I think it’s entirely possible [that lenders] may have gone a little bit too far on mortgage credit conditions.”

    I’ll grant your hunch that Ben was probably as ignorant of conforming-loan requirements as he is, say, about the economy. But in this instance, recently retired as chairman & knowing his words would be publicized, Ben’s faux-intimate secret revelation was less a description of his sufferance than it was an attempt to convey empathy for/solidarity with his fellow loan-denied Americans. In that sense Ben’s words were as true as when Bill Clinton once told an audience “I feel your pain.”

    http://www.bloomberg.com/news/articles/2014-10-02/you-know-it-s-a-tough-market-when-ben-bernanke-can-t-refinance

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  164. “As I said: We.Don’t.Need.You.
    This is the new world order. In this century, women in America (sadly- not in every country yet) are self-sufficient. We can be president of the United States, lead Yahoo, be CFO of Facebook and worth billions of dollars.”

    Hillary would be nowhere without her uber-misogynist male husband. Yahoo was invented by men, and women haven’t helped the stock price. Sheryl Sandberg is where she is because of jewish ethnic networking and her relationship to a man: Larry Summers. Don’t get me started on Mugface Whitman or Carly Fiornia. Failures. Women haven’t invented anything of consequence, all the top IT companies were created by men. Men are also the best chefs. Where exactly does all this false go-grrrrl propaganda come from?? We can ask that DePaul student on the Blue Line who was attacked and beaten, she cried on TV: “nobody helped her” and “why?” Yeah, when the going gets tough, you’ll be calling on a man or a cop. Why should we even lift a finger for you, huh? You don’t need us and sneer. Lol. PS Merkel is a nutjob. She helped push Brexit over the top with her traitorous lunacy with 1+ million unassimilable migrants. She has caused divison, divisiveness and inflicted economic harm on her own voters. She’s toast.

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  165. PS Google Fallon Fox. Oh well, you wanted “equality”, don’t complain: “Jun 10, 2015 – Fallon Fox, a transgender MMA fighter, took down her female opponent and busted her eye socket within the first round.”

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  166. “So you’re now admitting that this market is on fire. Why aren’t you buying more?”

    Because that’s when idiots buy. Smart people buy when the market is down. Is “buy low, sell high” really that hard to understand? “Buy high and sell higher” is for suckers and gamblers.

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  167. Ah, another lover’s spat between Chuk and Sabrina. GO GET A ROOM!

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  168. HH – are you serious? I understand you like to push buttons with your persona, but this stuff is getting a bit ridiculous. Your mother was a woman for goodness sake, show some respect.

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  169. “You’re spot on with this one oilc. I was surprised when our fiduciary told me we needed to have around 10-15 million in our retirement in 35 years.”

    Is this just saved? Because there’s virtually no way to have more than $10 million in an IRA unless you have a partnership arrangement like Mitt Romney had where you can funnel enormous amounts into an IRA. I thought he managed to get like $100 million in there.

    As of 2014, according to the IRS, just 314 people had IRAs over $25 million (Mitt being one of those.) Even getting to $5 million is quite the feat (certainly without the partnership set-up again.)

    Only 7,952 taxpayers had $5 to $10 million. That’s because you would have had to start at like age 22, maxed out every year, probably had a spouse who maxed out every year, and owned during the mega-bulls like the 1982-2000 bull market that had 18% average yearly returns.

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  170. “you think you are, the sad truth is that you are most definitely not yet, come on who are you crappin”

    44% of all women in Boston are single. It is 40% in NYC and Washington DC. I don’t know the percentage in Chicago.

    Many of them are doing quite okay in their Green Zone condos. Women buy more real estate than men. And they are better stock market investors then men.

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  171. “Prices are only going to go up. Buy now or be priced out forever.
    And, chuk, honestly, you have NO IDEA anything about me (other than I am a woman who runs this blog.) You have no idea what I bought or didn’t buy. I could have been living in a brick bungalow in Berwyn for the last 10 years for all you know.”

    Hey Sabrina, do you remember this gem from Oct 2014?

    http://cribchatter.com/?p=21838#comment-349801

    “Here’s another prediction: Housing prices will be falling over the next 2 years as rates rise but salaries don’t keep up with the difference.”

    Now wait just a cotton pickin’ minute. You SWORE to me that you were bullish the last 4 years and told everyone to buy? What gives?

    I think all of your devoted readers would love to hear your reply on why are such a liar.

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  172. “Now wait just a cotton pickin’ minute. You SWORE to me that you were bullish the last 4 years and told everyone to buy? What gives?”

    Nope. Wasn’t bullish in October 2014. So I stand by what I said then. As I’ve said multiple times now, I became a bull only last summer- at least in terms of this being Bubble 2.0.

    I’ve always said on this blog (almost 10 years now) that if you have a long term time period, then you should buy. But don’t expect to buy and only live there 2 or 3 years and make money.

    Of course, that is not true right now because we’re in another bubble. So you can buy and re-sell just a year later and probably make 10%. It’s only going to get hotter!

    But the Fed is not going to raise rates substantially enough to push up borrowing costs. That much has been made clear.

    If the Fed can get 30-year fixed mortgages down to 2.5%, then it won’t matter that incomes aren’t rising (because they aren’t.) We’re a monthly payment nation. The property can go up 30% but as long as the borrowing costs are falling, then all is well.

    Of course, eventually, that will change. But who cares about that? Right now, it is WAY cheaper to buy than to rent the same property in Chicago.

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