Crib Chatter on Vacation This Week

There’s time for one last summer fling so Crib Chatter will be on vacation this entire week.

Chatter amongst yourselves.

I’ll have the update on the market conditions when I come back. Meanwhile, Gary always provides links to his data ahead of time so you can check the July data there.

Fall is a good time to check in on how some of the areas outside of the GreenZone are faring. Look for some posts on our favorite non-GreenZone neighborhoods coming up.

And will we see slowing in the million dollar bracket this fall?

Everyone who has a penthouse to sell is listing right now. I’ve never seen so many penthouses on the market at the same time. Will they all be able to get out with big gains?

See you in a week-

Sabrina

57 Responses to “Crib Chatter on Vacation This Week”

  1. Hi guys,

    We have Brazilian cherry engineered wood in our condo and parts of it was damaged because of a leak. I have some questions for you:
    1) Can we just patch it or it would be too hard to match the color (even after waiting for it to settle say a year or so)?
    2) My husband likes solid better than engineered, but one cannot nail them to concrete floor of a high-rise. Do you guys think it makes sense to go for solid? Please bear in mind that installation might be tricky given the nailing issue but also we might have to adjusts doors and so on as solids are thicker than engineered pieces typically.
    3) What is trendy these days to instal? Personally, l like wider pieces with the more vintage look such as:http://www.houzz.com/photos/3320097/Duchateau-Hardwood-Floor-tropical-hardwood-flooring-san-francisco
    4) Do you think going for something lighter almost white grayish would be too crazy?

    thanks!

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  2. You want a log cabin look in a modernist high-rise box?

    great excerpt from Tom Wolfe about people in high-rise boxes who want to decorate them the opposite way, and about people who like to modernize their country houses.

    http://www.tomwolfe.com/BauhausExcerpt.html

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  3. Engineered floors are installing in high-rises for 2 reasons. The first being as you mentioned…glued down over concrete vs nailed. The second is that a glued down engineered product offers more structural stability with the slight movement of the building. Just go high quality.

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  4. I’ve always loved a subtle modern look in the old Victorian homes. It’s a great mesh of new and old. Because a lot of Victorian interior design is creepy, and as my mistress says, ‘dusty’ too, the modernism look is nice if done well, like that purple victorian in Old Town that’s been featured here.

    But otherwise I agree – the log cabin look in a high rise is ridiculous; and the french county kitchen in a edwardian is absurd; and the modern kitchen in a cape cod is atrocious. I personally have a mid-century era house with a new kitchen that has modern and midcentury elements, without too out of place. It finds in very well actually

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  5. ROCK AND ROLL VACATION DUDEZ!!!!!! WHO WANTS TO RAWK OUT?!?!

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  6. Thanks for the feedback.
    I was thinking something like this:

    http://www.houzz.com/photos/6450059/DuChateau-Floors-Marshall-White-Penthouse-modern-kitchen-melbourne

    YOu think it does not go well with a condo? or is too much of a fad?

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  7. I also like most of these flooring ideas (click and it shows a few options):
    http://www.decohomedesign.com/hardwood-1/
    Do you think it is not well suited for a Chicago high rise?

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  8. miumiu that’s just fine for a chicago high rise. they’re a little trendy but not trendy enough for someone to rip out and replace, like green avacado shag carpet.

    I mean really, what are flooring options the world? Dirt, tile, concrete, tile, vinyl and wood. am I missing something? Hardwoods are just fine. HH’s log cabin comment is a bit misplaced.

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  9. Terrazzo

    Going too rustic in a highrise is bad and screams over-leverged, fake it till you make it, I want to be unique just like all the other Chads and Trixies. So does “Brazilian Cherry” But thats just my opinion

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  10. I prefer the clean look, rustic decorations just look so ‘old people’ to me

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  11. Terrazzo is just concrete with chips of stone, so I guess I should have named teh broader category of stone rather than concrete, which includes terrazzo, concrete, marble, slate, etc.

    ANd why the 4 negative downvotes for the comment abovce? amakes no sense

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  12. Has anyone tried cork flooring in a high rise? I’ve heard good things about it.

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  13. “Terrazzo is just concrete with chips of stone, so I guess I should have named teh broader category of stone rather than concrete, which includes terrazzo, concrete, marble, slate, etc.”

    No

    Cement or Epoxy is the binder

    There more than stone that can be placed – Glass is one

    “Has anyone tried cork flooring in a high rise? I’ve heard good things about it.”

    Tiles yes – wears well

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  14. “I prefer the clean look, rustic decorations just look so ‘old people’ to me”

    I am not sure what you mean by this. The wider floors with matt finishes that look like old world floors are all the rage. I was in Berlin at a design center and they told me this is thee new trend in flooring. Apparently shiny finishes and exotics (Brazilian, Bamboo, etc) are out. Don’t know how long it will take to catch up here, but it is not for old people any more :)

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  15. Anyone who lets fashion dictate their personal style preferences is a chump. Sure you may have to reconsider resale a bit but if you choose sonething “in” you don’t love you are a hopeless sheep.

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  16. I prefer wood look tile. This would not have been damaged because of a leak.

    Also, I don’t think you can glue down engineered floors over concrete in most high-rises. The condo bylaws require a sound barrier, like cork sheeting.

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  17. YOu’re right johnny utah it is cement, not concrete, my bad.

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  18. wide plank flooring has been “in” for 15+ years now it was just very expensive before

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  19. “New home sales unexpectedly jumped 12.4% in July from 582k to a 654k unit pace, a near-decade high. Far surpassing expectations for a 2% decline, according to Bloomberg, new home sales surged to the highest level in more than eight years. ”

    interesting

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  20. “New home sales unexpectedly jumped 12.4% in July from 582k to a 654k unit pace, a near-decade high. Far surpassing expectations for a 2% decline, according to Bloomberg, new home sales surged to the highest level in more than eight years.”

    So the 12% increase in this number – an increase of 72k – makes up for about half of the ~170k drop in existing home sales during July.

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  21. For those that believe that the Chicago market is super hot and in a bubble and it’s going to end badly. RealtTrac looks at individual home sales each months and then compares them to what they were bought for to calculate the gain on sale. The Chicago area turnaround has been lagging the rest of the country and home sellers have been losing money – until May: http://www.chicagonow.com/getting-real/2016/08/chicago-area-real-estate-market-home-sellers-finally-profit/

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  22. “So the 12% increase in this number – an increase of 72k – makes up for about half of the ~170k drop in existing home sales during July.”

    They’re both annualized pace numbers, so it’s hard to discern–the seasonal adjustments are probably a little different.

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  23. Gary those stats are GZ irrelevant, realistically.

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  24. Yes, but I’m not just interested in the Green Zone and most people live outside the Green Zone. And I don’t believe you can just have a bubble in the Green Zone.

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  25. “They’re both annualized pace numbers, so it’s hard to discern–the seasonal adjustments are probably a little different.”

    Sure, it’s not like it makes to count it down to the thousands or whatever, but the point is that it’s misleading to trumpet an increase in a market that is a small portion of the total real estate market.

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  26. “And I don’t believe you can just have a bubble in the Green Zone.”

    Why not?

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  27. Because the Green Zone is so small. The bubble would have to spill over into surrounding areas. People look for cheaper options.

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  28. Maybe it’s like a bubble in the fine art market. Just because the current popular artist is getting crazy prices for his works at auction, doesn’t mean that anything else is worth more.

    What drives the fine art market is when people with a lot of money all desire the same things. While other things, that seem just as nice, get overlooked.

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  29. Well, personally I don’t even think the GZ is in a bubble. It’s done pretty well but I wouldn’t call it a bubble.

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  30. folks, a friend was asking me a question and I thought to bounce it off of you:

    Basically, she has around $100K cash and she is thinking of buying a rental property in Chicago. She is ok with paying up to $300-700 a month for expenses (taxes, mortgages, etc…) as long as she earns a decent amount from the rental to cover her costs and leave her with some decent earning. She is not a handy person and cannot really maintain the property. So she would prefer a condo or a person who can help her with the rental.

    Do you think there are any good opportunities out there for her? If so, where would you recommend?

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  31. I think the GZ is in somewhat of a bubble currently. I’ve been in the market for many months and the ask on the kinds of places I’ve been targeting has typically been above peak from the 2006 or so era, often significantly above, in the absence of extenuating circumstances for some exceptions such as the owners have basically not spent a dime on the place for even basic maintenance for a decade or the property has had a hard rental life for the past few years or they clearly & badly overpaid in the past. As of very lately I would add brutal tax increases to that list and that will only grow so the bubble should be tempered.

    I think part of this perception is that (my impression anyway) is that the spread between the initial ask and the ultimate sale price has grown by a lot in the past few years and wonder if statistics support this.

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  32. Sid, you’re talking list price. What about places that have actually sold? Let’s do an experiment…Without checking the actual data identify 2 or 3 places that you FEEL closed above peak prices. Then check the underlying data to see if they really did. My guess is that your perception will be greater than the reality. Share your examples with us.

    Like I’ve said before, I see plenty of examples all over the GZ where prices are still below 10 years ago. For example, all those 2/2s in Lake View built in the early to mid-2000s.

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  33. “Do you think there are any good opportunities out there for her?”

    No. Especially not for a novice investor.

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  34. “No. Especially not for a novice investor.”

    One of my concerns besides her being a novice is that most of well functioning buildings have rental caps so unless one was grand fathered in, it might not be easy to rent the unit out.

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  35. “Like I’ve said before, I see plenty of examples all over the GZ where prices are still below 10 years ago. For example, all those 2/2s in Lake View built in the early to mid-2000s.”

    What???

    Those 2/2s are some of the hottest properties out there.

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  36. “Basically, she has around $100K cash and she is thinking of buying a rental property in Chicago. She is ok with paying up to $300-700 a month for expenses (taxes, mortgages, etc…) as long as she earns a decent amount from the rental to cover her costs and leave her with some decent earning. She is not a handy person and cannot really maintain the property. So she would prefer a condo or a person who can help her with the rental.”

    Questions like this are a sign that the bubble is growing. The speculation is increasing. Her friend sees no danger in investing $100k in real estate right now- when prices are at their all time highs and the rates are at their all time lows. And- she has NO experience being a landlord, isn’t handy and wants a person who can help her with the rental.

    Who would do this to themselves unless they thought real estate was a sure thing?

    But there will be more people sucked into housing like this before it busts again. We have a long way to go to reach the top of Bubble 2.0.

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  37. “Well, personally I don’t even think the GZ is in a bubble. It’s done pretty well but I wouldn’t call it a bubble.”

    Really?

    I guess I have to keep posting all the outrageously priced properties that are 20% over their last peak price then. Sigh.

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  38. “Because the Green Zone is so small. The bubble would have to spill over into surrounding areas. People look for cheaper options.”

    What are the prices doing in Ravenswood, Old Irving Park, Portage Park?

    Wait a minute- did Crain’s just have an article talking about how Portage Park was one of the hottest neighborhoods? I think it did. Gee. Imagine that.

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  39. “I guess I have to keep posting all the outrageously priced properties that are 20% over their last peak price then. Sigh.”

    You post list prices, not closing prices and for every one of those you post I can find another one where that didn’t happen. But that’s always an exception.

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  40. “Wait a minute- did Crain’s just have an article talking about how Portage Park was one of the hottest neighborhoods? I think it did. Gee. Imagine that.”

    Yeah, and did you see the link I provide above where the average seller in the Chicago area was losing money until May? That’s hardly what a bubble looks like.

    I’ll address the 2/2s in the morning.

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  41. “One of my concerns besides her being a novice is that most of well functioning buildings have rental caps so unless one was grand fathered in, it might not be easy to rent the unit out.”

    The time for buying as an investor has come and gone. When the market turns down again, there will be investment opportunities again. The problem is, your friend most likely won’t want to buy then.

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  42. As we’ve discussed over and over again there are numerous examples of properties selling below the previous peak and they are not hard to find. Condos in the Heritage or 401 E Ontario or high rises in the south loop. I could come up with a lot more.

    I just pulled up all the 2/2s sold in Lake View in the last month and looked around $400K. Here’s the first one I pulled up: http://lucidrealty.com/homes-for-sale/Chicago_Lake_View/condos_townhomes/3133-N-Lakewood-AVE-unit-2F/ Guess what? Sold for $3K less than it did in 2008. This happens every time I check this stuff. Of course, I’m sure you’re going to tell me that this is a problem building or whatever but guess what? This is the market – thousands of special cases. A true bubble has very few exceptions.

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  43. Part of the challenge in doing this exercise is finding examples where you have a previous sale in the right time frame. Here is the next one where I could do that: http://lucidrealty.com/homes-for-sale/Chicago_Lake_View/condos_townhomes/3200-N-LAKE-SHORE-DR-unit-604/ This one sold in 2008 for $330k. Sold again late last year for LESS: $290K. Just closed for $405K BUT they remodeled it.

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  44. We actually are renting out a 1BR and make around $1000 a month. We bought it in 2009 in SL.

    I am not sure my friend’s decision is so much indication of a bubble rather than a wish to diversify her portfolio. She already invests in the stocks and wanted to do something different.

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  45. And it’s not like I’m having to look through dozens of listings to find these examples. Here is the very next one in the sequence: http://lucidrealty.com/homes-for-sale/Chicago_Lake_View/condos_townhomes/632-W-Buckingham-PL-unit-1E/ Sold for the exact same price in 2007.

    I could do this all day if I had the time.

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  46. ” Sold for $3K less than it did in 2008. ”

    And that prior sale was on the down slope!

    C-S Condo index is still about 14% below peak in nominal dollars. Which makes it about 30% below peak in real dollars.

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  47. Re: investing in RE – what do chatterers think of Fundrise or RealtyShares?

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  48. Re: investing in RE – what do chatterers think of Fundrise or RealtyShares?

    The share holders are the last ones in and first one to get F’ed. The biggest winner is the intermediary and principal.

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  49. “I could do this all day if I had the time.”

    I could too Gary. Why are you only looking in Lakeview? My god. The 2/2s are exploding in price in Wicker Park, Bucktown, River North, Gold Coast, even the South Loop (gulp, dare I say it?)- yes. Even THERE.

    All of those areas are in the GZ. Heck, 2/2s are selling for $750,000 now in some parts of the GZ. It’s absurd what is happening.

    If you aren’t making any money right now in the GZ, then you are a MORON.

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  50. “I am not sure my friend’s decision is so much indication of a bubble rather than a wish to diversify her portfolio. She already invests in the stocks and wanted to do something different.”

    Why?

    Why would you invest in something you don’t understand or want to do?

    In the 1970s my dad bought into a stupid restaurant chain in Southern Illinois in order to “diversify.” He knew nothing about restaurants. It all went to hell a few years later. Oh, and he also bought some cattle around that time. Born and raised in Chicago yet he was buying cattle.

    Again…why???

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  51. “A true bubble has very few exceptions.”

    It’s not a bubble yet. There’s speculation and it’s building. That is all.

    When miumiu has 5 to 10 more friends who decide to become a landlord because they have too many stocks and want to “diversify” then we’ll know.

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  52. “Yeah, and did you see the link I provide above where the average seller in the Chicago area was losing money until May? That’s hardly what a bubble looks like.”

    Gary- you keep talking about the “average seller.” None of us has ever said that someone in Englewood or Norwood is getting rich off housing (not yet, anyway.)

    We talk only about the GZ and a select few other neighborhoods outside of it- which are, actually, starting to also get rather bubbly.

    $400,000 bungalows in Portage Park? $350,000 in Jefferson Park?

    Without a big increase in incomes, this is not normal price appreciation for the Chicagoland area. So one of three things has to happen:

    1. Incomes rise in a BIG way to catch up to housing prices
    2. Mortgage rates drop even further to keep the monthly payment “affordable”
    3. Or prices will eventually drop to bring them in line with the top two

    But it takes time for everything to play out- just like last time. Hell, we had millions of people losing their jobs and STILL people in this very website were saying real estate prices couldn’t drop in the GZ.

    It’s quaint now.

    The market is completely distorted in all the major metropolitan cities. Massive bidding wars in nearly every one of them on “affordable” properties. The upper end is cooling though, which is interesting, because that doesn’t usually cool until the stock market drops. I’ve never seen the luxury end cool when the stock market is hitting new highs day after day.

    But then, the developers haven’t built this much “luxury” property in a long time.

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  53. “We talk only about the GZ and a select few other neighborhoods outside of it- which are, actually, starting to also get rather bubbly.”

    But my point is that I don’t believe you can have a bubble in the GZ without it spilling over into other areas.

    But you don’t like me looking at all the GZ areas. Looks like Lake View is now excluded and you want me to look at the South Loop. OK. Fine. First one I picked: http://lucidrealty.com/homes-for-sale/Chicago_Loop/condos_townhomes/170-W-Polk-ST-unit-1601/ Sold for $6500 less than it did in 2008.

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  54. You want River North? Is The Sterling excluded? I just saw one close for about $60K below the 2003 price. Will you also exclude 440 N Wabash? What about the Millennium Centre? Just saw one close there below it’s 2004 price. Is there a long list of exclusions for River North?

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  55. “In the 1970s my dad bought into a stupid restaurant chain in Southern Illinois in order to “diversify.” He knew nothing about restaurants. It all went to hell a few years later. Oh, and he also bought some cattle around that time. Born and raised in Chicago yet he was buying cattle.”

    I think this is not a fair comparison. Many people diversify their portfolio by renting out houses. Quite a few of my friends have one or two rentals. My parents and in laws also have always had rentals.

    During the bubble people were making money by flipping houses not by renting them out. Renting out houses predates and post dates the bubble as a side income practice for many who are not business investors.

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  56. “$400,000 bungalows in Portage Park?”

    Yes, it is crazy what people are paying for RENO’d bungalows.

    That is NOT what Gary is talking about.

    But it’s also true that it’s hard to find a paired sale of a maintained but not improved home in PP to show one way or the other.

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  57. Also, remember in the early 2000’s interest rates were almost double what they were now. ~6%

    Asset prices are high right now. I’m looking to sell (I should change my user name). I sold one rental property last year. I have another where my ARM just adjusted up 25 points, my assessed value almost doubled (it was way low before, but now it’s above market and we did fight it). With recent sales at all time highs, I need to run the numbers and might sell although I just renewed the lease…hmm

    I also don’t think prices will increase further but I’m optimistic they will stabilize even with interest rates increasing over the next several years.

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