We Love Large 1-Bedroom Authentic Lofts: 616 W. Fulton in the West Loop

This 1-bedroom loft in the China Club Lofts at 616 W. Fulton in the West Loop is one of the large authentic one bedroom lofts that were built in the 1990s.

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At 1000 square feet, it has both exposed brick, 14 foot high timber ceilings and diagonal wood floors.

The kitchen has stainless steel appliances and granite counter tops.

The listing calls the bathrooms updated.

The loft has central air, in-unit washer/dryer and an extra 10×14 “bonus” room.

Parking is also included.

This loft is the most expensive 1-bedroom currently on the market in the building.

What’s the market in 2011 for the large 1-bedroom authentic loft?

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Chris McComas at @Properties has the listing. See more pictures here.

Unit #513: 1 bedroom, 1.5 baths, 1000 square feet

  • Sold in May 1997 for $156,500
  • Originally listed in October 2010 for $285,000
  • Apparently went under contract quickly but fell out
  • Recently re-listed for $285,000 (parking included)
  • Assessments of $292 a month (includes cable, internet and doorman)
  • Taxes of $2571
  • Central Air
  • Washer/Dryer in the unit
  • Bedroom: 13×11

184 Responses to “We Love Large 1-Bedroom Authentic Lofts: 616 W. Fulton in the West Loop”

  1. Very nice. Below rental parity. This one SHOULD go fast.

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  2. Very skinny and deep. I like an abundance of natural light in the bedroom. Pass.

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  3. Why do people in Chicago decorate / stage there lofts like they are country homes?

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  4. Anyone notice that older buildings typically have larger units than the new stuff? This would be a called a two bedroom in a new building.

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  5. “This would be a called a two bedroom in a new building.”

    and my best friend Joey Z, will have some spin to legitimize the builders reason to call it a 3br plus den and then we will get to watch more videos of happy owners calling the quaintness of size Japanesque.

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  6. Do you think this is already at rental parity?

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  7. “Do you think this is already at rental parity?”

    Absolutely, assuming 275k purchase price with 55k down at 5% – your monthly cost (including mortgage interest, principal, assessment and real estate tax) comes to roughly 1400/month (after mortgage interest/real estate tax deduction).

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  8. Clio is right. This is at rental parity for the neighborhood. But I would much rather rent than live in a cave, even if I have to pay a premium for it.

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  9. Uhh, Clio.

    The type of person in the market for this place would never put 55K down to own it. The market for this wouldn’t even have 55k to put down. Even if they did, they wouldn’t tie it up in a one BR loft in a big building in this market.

    Whoever “buys” this is going to finance 95%-96.5% of it and probably walk away in two years. Just like all the other lofts everyone walks away from as soon as their 25k s.assesments come due.

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  10. Tipster, I’ve lived in a similar loft, definitely not a cave. This place looks awesome.

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  11. “But I would much rather rent than live in a cave, even if I have to pay a premium for it.”

    and you would be accuring no equity in your cave or the ability to paint your cave walls! Keep renting. That allows people like me to buy more condos and rent em to you thus making a few bucks!

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  12. “The type of person in the market for this place would never put 55K down to own it.”

    I have to disagree – there are MANY people out there who have 55k to put down:
    1. People looking for an in-town/2nd residence
    2. Young professionals (think Riz/spence)
    3. Young people with relatively well-off parents. A 55k loan is not that unheard of.
    4. Empty nesters looking to move back into the city.

    Even if you want to move in a few years, you could rent it out at a higher amount than your monthly costs. All told, this is a very good buy.

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  13. “Just like all the other lofts everyone walks away from as soon as their 25k s.assesments come due”

    Chicagobull – As usual I am here to defend the loft. Where do you get your crazy ideas? All lofts do not come with special assessments. MY wife’s new construction (2003?) condo on the south side came with one but my loft has never had a dime of SA’s. In fact we have a stronger association then the average condo tower.

    A-fed – Right on the money with the cave comment although it looks like there is a reflection in that shot of the bedroom on that glass door that makes it appear to be a window. Hard to tell. I’d give the photographer an D- for this project.

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  14. Are the use of exclamation points a way to convince yourself of what you write?

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  15. Yeah – people in chicago have no money – that’s why bears tickets are going for 1-3k/ticket AND are selling. Give me a break guys – the money is out there. People just need to make the decision to spend it on housing.

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  16. “the money is out there. People just need to make the decision to spend it on housing.”

    or spend it on goods and services, dont tie you money on a deflating asset Employ people and raise your city’s economy.

    this is not done by tying down 70% of you monthly take home on a 1br apartment, make your home/rent payment as small as possible and LIVE LIFE with all the extras you get from it.

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  17. groove – nobody is advocating spending 70% of your income on housing. However, everyone here argues that housing is a poor investment. My counterpoint is how does housing compare with cars, shoes, purses, clothes, vacations, bears tickets, etc. as an investment. True, people who bought in 2004-2008 have lost money on paper – but prices are at a low point right now so if you buy now – you are not only likely to retain your investment, but will probably gain money through appreciation. Prices are NOT going to drop (at least not that much) that is why the time to buy is NOW (or in the next 1-2 years). By the time the market recovers (in about 2 years, it will be too late.

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  18. “everyone here argues that housing is a poor investment”

    YES BECAUSE ITS A PLACE TO LIVE (CALL HOME) NOT INVEST.
    the investment idea is for the boomers how in the end most are out and royal screwed the generations behind them.

    “My counterpoint is how does housing compare with cars, shoes, purses, clothes, vacations, bears tickets, etc. as an investment.”

    explain to me how a vacation can be a “asset”? and how a one time event (tickets) be even compared to a physical home and land?
    doode i can sell you a blade of grass for 100000000x more than my cost, it can be consider an “investment”

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  19. what kind of grass groove?

    better not be shwag 🙂

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  20. I get it – the caps are intended to send a subliminal message.

    “….NOT……NOW….”

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  21. “Prices are NOT going to drop (at least not that much) that is why the time to buy is NOW (or in the next 1-2 years). By the time the market recovers (in about 2 years, it will be too late.”

    you got waaaaaaayyyy to much stake in the game for anyone to take you by those words. a grain of salt theory for your words is under-utilized.

    and even in “2 years” when the market recovers an bunch of people like my will be jumping in the game listing their places and further extending the market turn.

    yes rate are going to go up, you econ guys can guess what percent and when, but then guess what it will further delay your mini trump 5%+ appreciation the you miss dearly.

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  22. “what kind of grass groove?”

    no the kind your thinking, the kentucky kind my friend

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  23. “True, people who bought in 2004-2008 have lost money on paper”

    The bubble ain’t comin’ back. They nearly all bought at prices that will not be seen in real terms again in our lifetimes.

    One more time, folks: the bubble was the disease and the correction is the cure. It is rather morbid to wish for more disease and to deny a cure.

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  24. gringozecarioca on January 18th, 2011 at 2:43 pm

    housing is most certainly an investment too. Just at the wrong price levels it becomes a bad investment.

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  25. “Just like all the other lofts everyone walks away from as soon as their 25k s.assesments come due”
    Ha!! this building is very well managed, and they pay for “critical wall report” regularly that outlines preventative maintenance needed on the building. The costly special assessments happened over 10 years ago, including one for re-tuck-pointing. That’s in the past. The board members are active and concerned with keeping the building current, and assessments and special fees down. The Management company has called the China Club Board the best run board he’s worked with. These are all intangibles, but I will tell you this… every person that lives there LOVES living in their loft, and that is why they stay. People either love or hate lofts, some one in the market for a one bedroom in that area isn’t going to want this place… the buyer who wants a 1 bedroom LOFT will snatch this up, which is why it went under contract in 2 weeks!

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  26. the cure, G, is for people to make money… and lots of it

    good thing that’s possible for most folks these days… well at least until you’re thrown into the gulag

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  27. ” They nearly all bought at prices that will not be seen in real terms again in our lifetimes.”

    This is complete BS – give me break!! Do you think anyone out there really believes this?!! So ridiculous. I will bet you any amount of money right now that there WILL be continued appreciation of real estate over the next 10-15 years. Furthermore, real estate serves another important function: shelter, a necessity. Additionally, rents are going to be going up – seriously- don’t take my word for it. Listen to all of your esteemed colleagues in real estate. They are all predicting appreciation (albeit low levels) and rent increases in the coming years.

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  28. I lived in a 1BR in this building after college. IIRC I paid $1400 a month. Mighta been $1100, I don’t remember.

    In any event, it was a “cool” place for me at the time, except for the fact that I would say bless-you when the guy next door sneezed, I could hear him open a can of soda, and I could hear the yorkie’s toenails skittering around on the floor upstairs. I’m sure I gave the adjoining units quite a soundtrack when I had female company…

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  29. clio, you do know what real prices are, right? But, what’s with that 10-15 year term now? 28 minutes ago you stated “By the time the market recovers (in about 2 years, it will be too late.”

    “Listen to all of your esteemed colleagues in real estate. They are all predicting appreciation (albeit low levels) and rent increases in the coming years.”

    You just make things up, don’t you clio?

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  30. “housing is most certainly an investment too. Just at the wrong price levels it becomes a bad investment”

    Amen gringoz – People should think of their primary housing as the ultimate retirement investment goal. Around the time of planned retirement they should be paid off or paid down as much as possible. Most people in the USA are horrible savers so they should look at that home payment as what it really is, a forced savings plan to use to their advantage in retirement.

    Once they own the home outright they have some options. Regardless of the price paid and current value that home will be paid off and they can live for the cost of upkeep, assessments, and taxes. Some may choose to downsize others to stay either way it should serve as an important tool toward financial freedom.

    The longer you wait to purchase and continue to rent the later that “paid off date” pushes into the future.

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  31. The RE market will recover in full and then some. Everything is cyclic. Housing IS an investment, if you think otherwise you are a fool.

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  32. Bradford – It’s odd but I think that you are often in the hotel room next to mine regardless of where I travel.

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  33. G – I am not saying anything contradictory – the market is at a very low point right now – in 2-3 years, we will be on the upswing. That upswing will continue for the next 10-15 years (at least) with continued appreciation. What is so hard to understand about that? Again, I personally could give a shit if the market went up or down. My properties are all very secure – if the market goes up, I will sell, if it goes down, I will buy more – so I don’t personally care one way or the other. My views are based on research and conversations with people higher up in the real estate world.

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  34. “housing is most certainly an investment too. Just at the wrong price levels it becomes a bad investment.”

    Anything you buy and hold can be considered an investment. Leaving $20 in a coat pocket is an investment, betting on deflation.

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  35. “The longer you wait to purchase and continue to rent the later that “paid off date” pushes into the future.”

    No faster “principal payoff” than waiting out the decline in values.

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  36. G- the decline in values has happened – we are near the bottom. Do you even read and listen to what is going on out there?!!! I don’t think anyone outside of this blog is predicting price declines beyond 2012. Give me a frickin break!!

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  37. “The RE market will recover in full and then some.”

    And what will be the economic basis for returning to bubble mania values that are not anywhere near supported by rents?

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  38. “And what will be the economic basis for returning to bubble mania values that are not anywhere near supported by rents?”

    uhhhh – rents are going to be increasing, einstein….

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  39. I agree with Clio, if you had any money in stocks over the last 2 yrs you’ve had significant appreciation. If you havent bought any real estate in the last two years i could definitely see someone sitting on 55k.

    Didn’t realize this place would rent that high (1400), i was thinking more like 1200, but after looking at comparable i could even see it going for 1500.

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  40. Clio, you don’t know what real prices are, do you?

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  41. “That allows people like me to buy more condos and rent em to you thus making a few bucks!”

    After all the money people like you sent to people like me, it’s the least I can do.

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  42. “uhhhh – rents are going to be increasing, einstein….”

    And what will be the economic basis for rising rents?

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  43. G- you are boring me with your childish attempts to bait me. Again, just stick to providing the stats/numbers and leave the analysis to the grown – ups.

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  44. “And what will be the economic basis for rising rents?”

    Inflation, of course. And pass thrus of higher taxes. And pass thrus of higher assessments.

    I am curious about the basis for believing that net, real dollar residential rents in Chicago will be increasing in the near term, which isn’t based on some variation of “people are being f/c’d out of their houses and need to live somewhere”. That’s an element, but it’s marginal.

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  45. Bubble prices won’t come back in a bubble, but in decent ‘hoods those prices will eventually be achieved again in 10-15 years assuming we’re at or near the bottom and appreciation tracks inflation rates.

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  46. “Bubble prices won’t come back in a bubble, but in decent ‘hoods those prices will eventually be achieved again in 10-15 years assuming we’re at or near the bottom and appreciation tracks inflation rates.”

    So, you’re assuming 10-15 years of moderate inflation and nominal prices at the same points as peak nominal prices?

    Unless I’m misunderstanding, you agree with G.

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  47. “G- you are boring me with your childish attempts to bait me. Again, just stick to providing the stats/numbers and leave the analysis to the grown – ups.”

    Waving the white flag again, I see. Well, maybe tomorrow will be your day, clio. But, I doubt it.

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  48. G- I don’t understand how my post is equivalent to “waving a white flag”. Am I frustrated with you? Of course. Is it because I think you may be right? Of course not. It is liking arguing with my teenage daughter about why she can’t have a brand new sports car for her 16th birthday. Immaturity with a dash of arrogance and a pinch of unhappiness.

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  49. “I am curious about the basis for believing that net, real dollar residential rents in Chicago will be increasing in the near term, which isn’t based on some variation of “people are being f/c’d out of their houses and need to live somewhere”. That’s an element, but it’s marginal.”

    No kidding. And that marginal element will diminish as their former residences work their way thru the foreclosure system and are shat out as more rental supply.

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  50. clio, why do you hope for more disease while denying a cure?

    I am elated that the correction is ongoing. Not a bit of unhappiness about that. It is necessary for any hope of a strong economy to emerge from the harm of the bubble mania. Why be a pessimist and wish bad things for the country? Do you not hope for the best for all of us?

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  51. G – “And what will be the economic basis for returning to bubble mania values that are not anywhere near supported by rents?”

    Everything is a bubble when a long term time line is applied. How much was a house in 1970? Look 40 years later….Bubbles can be a very good thing if you are on the right side. If you are on the wrong side when it pops, it’s your own damn fault for a) not paying attention b) you are a pig, trying to turn $1 into $1M or c)are in denial that you won’t ever loose money.

    Keep thinking the world is falling everyone and that housing will never recover and we are all screwed. I will keep stacking chips with a confident smile…

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  52. G – WTF are you talking about? Disease/cure? Huh?

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  53. “Keep thinking the world is falling everyone and that housing will never recover and we are all screwed. I will keep stacking chips with a confident smile…”

    A-fed = smart (and soon to be even richer) person

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  54. “So, you’re assuming 10-15 years of moderate inflation and nominal prices at the same points as peak nominal prices?

    Unless I’m misunderstanding, you agree with G.”

    Yep

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  55. “Keep thinking the world is falling everyone and that housing will never recover and we are all screwed. I will keep stacking chips with a confident smile…”

    The “world was falling” when the bubble was inflating, we are already recovering from it with a correction to sustainable pricing, and it will be good for the vast majority. I will keep my powder dry with a confident smile…

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  56. clio doesn’t know what real prices are. LOL. clio, I just bought a place for the same price as its 2001 price. Sure, the wire I sent in combined with the mortgage I took out matched that 2001 price, but the purchasing power of the money I paid was over 20% less than that same amount of money in 2001. That’s what G is arguing, prices won’t just have to return to their bubble prices for bubble buyers to break even, they will have to appreciate to those old prices, plus an amount to pick up the inflation that will have happened between the bubble and the time they actually go back up.

    I think it is totally fair to say that on an inflation adjusted basis, prices will likely never return to their previous levels, at least not for decades when the US has a way bigger population than it has today and the fundamentals to support such pricing is actually present. But you never know, Uncle Sugar might start a 150% LTV policy or something where anyone with a pulse can walk away with half of the purchase price on closing and the number of mini trumps skyrockets, but I wouldn’t count on that.

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  57. “Yep”

    Well, if someone is paying attention, I expect a retraction/contradiction of a compliment from another thread.

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  58. permabear, I completely understand the concept. There are just too many variables to do an accurate analysis. Bottom line, though, is that real estate WILL appreciate and keep up at least with inflation rates (and almost certainly more). Will we see another bubble like the one we had – personally, my opinion is that we definitely will (especially in certain areas). People DON’T change – and soon (10 years) everyone will have forgotten about this past bubble and the sharks will be out promoting and falsely elevating home prices. You don’t believe me? Ask yourself, how many people still talk about and complain about the 17% interest rates of the 80s, or the “real cost” of gas in the 70s? How about the greater than 65% federal tax rates over the majority of the past century? come on – you give people way too much credit.

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  59. anon – thought about it – but decided against it.

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  60. “permabear, I completely understand the concept. There are just too many variables to do an accurate analysis. Bottom line, though, is that real estate WILL appreciate and keep up at least with inflation rates (and almost certainly more).”

    So, that “bottom line” is not based on an accurate analysis?

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  61. PermaBear, just as you bought your property for 2001 prices (and i bought mine at 1992 prices) there are many properties selling above or at there peak prices, some of them we even discuss here.

    Just because you were able to find a property at 2001 prices, doesnt mean that holds true for the entire real estate market. And not everyone looking for real estate are very price sensitive.

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  62. “And not everyone looking for real estate are very price sensitive.”

    Of course this is true. They are obviously the bulk of today’s buyers? There’s just not enough of them to sustain normal sales volume so prices continue to fall.

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  63. There are not many properties selling above peak properties. Hell, 40%ish of the market is short sales, a large number are multi-units, and there are a handful of resales. And historically the total number of sales are down, way down. So of the few properties that are selling, there are only a handful in a few select areas that are selling above their peak prices. And even those properties generally have been updated or rehabbed to justify the price.

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  64. clio – what do you see driving prices to their same real prices again? The reason that I am skeptical of the bubble real prices being hit again in the near run is that those prices took a perfect storm to get that high and while I don’t doubt there will be another bubble, I just can’t see one where prices deviate that much to the upside. Will foreign investors be dumb enough to buy RMBS from some smooth talking American investment banker again? Will banks and the government be dumb enough to lend 100 LTV again? Will poors be dumb enough to sign up for way more mortgage than they can afford again? Will millions of specuvestors rise up from the ashes eager to become mini Trumps again?

    Crap clio, now that I am thinking in terms of the stupidity necessary to build a bubble and as I think of the knucklescrapers I see walking around this town everyday, I am starting to think you might be right if your hypothesis is run out over a long enough time frame. I think it’s unlikely, but less unlikely than I thought before.

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  65. above peak prices, sorry, typo.

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  66. “Will banks and the government be dumb enough to lend 100 LTV again? Will poors be dumb enough to sign up for way more mortgage than they can afford again? Will millions of specuvestors rise up from the ashes eager to become mini Trumps again?”

    In a word – yes……

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  67. “The “world was falling” when the bubble was inflating”

    No waaay…how happy were you before the bubble popped? How much do you think your house was “fictitiously” worth? The markets (all of them) were spiking! There wasn’t a prevelant global issue until after the crash of 2008.

    No one is un-happy or distressed until well after the bubble pops and they get it through their head that they made a big mistake…

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  68. “In a word – yes……”

    Well right now the only people lending above 90 LTV are…the gubbermint (via backstopping FHA loans).

    96.5 LTV looks very close to 100 LTV to me. On a 417k property (max conforming limit for non-multi unit) that’s 14.6k down.

    I could easily swing that–easily, hands down. Many of my friends, too. Could I swing making steady payments on a 417k mortgage in this job environment? Doubtful.

    Could I easily qualify for the loan and buy a 430k place via an FHA loan? Absolutely. My credit score is good.

    I’d advise others to stay away from real estate so long as the FHA has a large part in the market–they are artificially propping up valuations at the lower end and racking up huge default losses. Currently the FHA is originating a huge percent of mortgages, a stark departure from the boom.

    Dunno about nationwide stats, but in Minneapolis alone the FHA is responsible for 40% of all mortgages:

    http://www.behindthemortgage.com/2010/01/fha-40-market-share-in-twin-cities.html

    What does that tell you when 40% of mortgage borrowers can’t meet standard lending downpayment requirements and instead have to resort to a government program to make up the difference?

    It tells me we’re in for a world of pain.

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  69. Bob- again, just because YOU cannot afford something doesn’t mean the rest of the world can’t. If that is the basis for your opinions on real estate, it explains a lot!!! Thanks for the insight into your motivation/opinions.

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  70. Clio, genius: if the rest of the world could afford the real estate they are buying they would not be resorting to FHA low downpayment loans en masse. FHA loans contain significantly more fees than regular, conventional loans, so I doubt the massive market share shift to FHA loans is due to liquidity concerns.

    The data laughs in your face, clio: the FHA is continuing the boom via offering low downpayment options to borrowers with nothing more than a couple years worth of income and a good FICO.

    I think the crash, if anything, taught us how creditworthy many of these purchasers wind up being.

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  71. Bob – even with the FHA giving away 96.5% financed loans, it’s not enough to get borrowers excited. sales are still slow, very slow. And if the first two and a half weeks of the year are the harbinger of things to come for the Chicagoland area, 2011 is going to be a dismal year.

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  72. “2011 is going to be a dismal year”

    How can you already say that 18 days into the year? There is supposed to be a flood of properities hittin the MLS and believe me when I say, there are buyers….plenty of them….just holdin out for the “right” property. The FED is keepin the interest rate low and putting stress on the banks to lend more. Large companies will start hiring again….

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  73. Honest question: are sales for the first two weeks of a year considered a technical indicator in real estate as they are in equities?

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  74. I think the issue is that people who cannot afford at least 20% down probably shouldn’t be buying. Those people have typically been (and should be) renters. However, there is a HUGE set of people out there that CAN afford 20-30% down – don’t you guys realize this? Do you honestly think that the typical buyer of a 1 million dollar house doesn’t have 200k in savings? Of course they do. The reason they have been on the sidelines is because of the uncertainty in the job and financial markets. Now, with the financial markets back and the job market improving, you will see increased confidence and these people WILL start making the move to buy.

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  75. If the banks are getting stress from the feds to lend, why are not borrowers applying for mortgages in mass? Mortgage apps are low low low and they’re mostly refi’s.

    “The FED is keepin the interest rate low and putting stress on the banks to lend more. ” A-Fed

    ________________________________________________________

    It’s not technically an indicator but sometimes people like to get an early start on the year and list or go under K so they can be one of the first to close in spring and it just doesn’t seem that way, to me at least. some areas are hotter than others and around the country the lower priced areas with teh biggest declines are finally recovering volume wise…but here? It still seems slow to me as measured by the volume of contracts that roll through the fax machine for properties all over the Northern IL, southern WI and NW IN areas.

    “Wicker on January 18th, 2011 at 4:57 pm

    Honest question: are sales for the first two weeks of a year considered a technical indicator in real estate as they are in equities?”

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  76. Correct me if I’m wrong, but if your debt to income ratio would be too high, it doesn’t matter how large your downpayment would be…banks won’t lend to you (obviously not always the case in recent history). So, people like Bob shouldn’t actually be qualifying for that $417k mortgage that they can’t afford.

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  77. 20% means nothing, nothing at all, if your competition can come to the table with 3.5% or 10% and borrow the rest. The lower the down payment, the higher the price.

    So if all properties required 20% down, guess, what prices would drop to the point where it would be possible for more people to achieve 20%.

    “I think the issue is that people who cannot afford at least 20% down probably shouldn’t be buying”

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  78. “So if all properties required 20% down, guess, what prices would drop to the point where it would be possible for more people to achieve 20%”

    That is some ridiculous BS!!!! Prices don’t fall to meet the needs of the poor – again, like I said before, there are PLENTY of people that have the requisite 20% down to buy a house and, if you don’t, you CAN’T afford the house. It really is quite simple, but if you still don’t understand HD, here is an analogy: Do you expect a really hot person to just start “giving it up”/date anyone because there are only a few good looking people that would qualify to date him/her? Of course not!!! Same goes for housing – prices are not going to drop to meet the 20% requirement. That is just ridiculous.

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  79. 3.5% down means that loans under the FHA limit are basically artificially being propped up by those with a couple of years of W2s, a good FICO, and a positive outlook for the future. That’s it.

    It doesn’t mean they need to be good at budgeting or anything else. That essentially means most properties under 425k are populated by a pool of borrowers who really shouldn’t be playing in this sandbox (FHA loan limit is 410k). In fact it likely affects sales up through 440k (backdoor for those who can’t bring even 10% down).

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  80. “3.5% down means that loans under the FHA limit are basically artificially being propped up by those with a couple of years of W2s, a good FICO, and a positive outlook for the future”

    … I smell another bubble cooking…..

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  81. “That is some ridiculous BS!!!! Prices don’t fall to meet the needs of the poor – again, like I said before, there are PLENTY of people that have the requisite 20% down to buy a house and, if you don’t, you CAN’T afford the house. ”

    The bubble and FHA has showed us that the number of people who cannot afford the requisite 20% down far outnumber those who do.

    “here is an analogy: Do you expect a really hot person to just start “giving it up”/date anyone because there are only a few good looking people that would qualify to date him/her? Of course not!!!”

    Your analogy is ridiculous–Heidi Klum is married to Seal. Humans are far too complicated for extrapolation to your analogy and many other factors play into mate selection for many.

    “Same goes for housing – prices are not going to drop to meet the 20% requirement. That is just ridiculous.”

    IF there were a 20% down payment requirement instituted overnight prices would crash precipitously–probably 40%+. This is why our government is okay with throwing bad money after good via continuing to fund the FHA–it allows a softer cushion for the bottom. Its also why renters like me on the sidelines want the FHA out of the market. Real estate transaction volume & valuations would collapse.

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  82. “… I smell another bubble cooking…..”

    Its why there are plenty better deals in the 600k+ segment than below 450k segment. I can count on one hand the number of okay or good deals I see in the below 450k segment in Chicagoland. Seems like a lot of killer deals above 600k and especially above 800k.

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  83. “Humans are far too complicated for extrapolation to your analogy and many other factors play into mate selection for many.”

    …uhhh, so is real estate

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  84. Bob – you really don’t know wtf you are talking about. As I said before, there are plenty of people out there with a lot of money who can afford 20% down and don’t need an FHA loan – MAYBE NOT WITH YOUR COLLEAGUES OR FRIENDS – but the world is a far bigger place than the little world you live in.

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  85. Clio,

    You have no idea about perspective nor economics. Chicago has almost three million people. Chicagoland has far more.

    What will determine the future course of real estate valuations has nothing to do with the number of these people: it has to do with the number today vs. during the bubble. And that number is much smaller.

    So LOL @ you. You think because there are X# of rich people they will stop this decline? I’ve got news for you they can’t and won’t.

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  86. ” it has to do with the number today vs. during the bubble. And that number is much smaller.”

    huh?? was there a recent mass exodus from chicago that I missed?

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  87. “huh?? was there a recent mass exodus from chicago that I missed?”

    Yeah it was called the tightening of lending standards. So the number of people able to bid up these properties was drastically reduced.

    This may come as a surprise to you clio but during the bubble there were plenty of middle class posers who levered up and pretended to be rich. And they were a sizeable segment of the market. And they affected valuations.

    If you had taken an econ class this would be a whole lot easier to explain.

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  88. “Yeah it was called the tightening of lending standards. So the number of people able to bid up these properties was drastically reduced”

    You were just posting earlier about how it was too easy to get an FHA loan. Are you flip flopping also?

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  89. Bob:
    “It doesn’t mean they need to be good at budgeting or anything else. That essentially means most properties under 425k are populated by a pool of borrowers who really shouldn’t be playing in this sandbox”

    Clio:
    “You were just posting earlier about how it was too easy to get an FHA loan. Are you flip flopping also?”

    Clio:
    “I will challenge you to any test that examines ones ability to reason.”

    You’ve already lost on so many occasions. And add reading comprehension to ability to reason.

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  90. “And add reading comprehension to ability to reason.”

    Thanks, Bob. You saved me from myself.

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  91. Bob: “3.5% down means that loans under the FHA limit are basically artificially being propped up by those with a couple of years of W2s, a good FICO, and a positive outlook for the future. That’s it.”

    then,

    Bob: “Yeah it was called the tightening of lending standards. So the number of people able to bid up these properties was drastically reduced.”

    prompting my comment on flip flopping regarding difficulty in getting a loan.

    followed by his comment on my reading comprehension.

    DO YOU FOLLOW NOW BOB?

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  92. anon, Bob, G and HD – let’s get together with Joe Zekas and compare how we have all fared in the real estate market over the past 15 years. If you haven’t made any money in the market and/or have not been involved in it, then you really should shut the f up. Seriously, it is like a lay person giving medical advice from stuff they read on the internet or in a medical book. Seriously, if you are not in the game, you really don’t know what is going on.

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  93. Hey einstein, tightening lending standards & fha standards being too easy are not mutually exclusive.

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  94. I hit a nerve there. Whoa, back off, just kiddin around here. Ps I’ve got an mri of my back and im looking for a second opinion….something about a herniation at L4-L5 with mild degenerative changes. Can you help me out?

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  95. I have to agree with Bob that in the condos we were looking at, better discounts are offered for over-800K-mark. Clio, there are many millionaires of course, but there are many more young professionals with combined salaries of 200-300K salaries that are now afraid of getting huge loans and are more vary of their job stability. These people will rather buy at 600K or below these days assuming they learnt something from the fiasco : )
    Of course most people see/hang out with people around their own income bracket so definitely my view point can be biassed.

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  96. No problem – HD – but seriously, I don’t know how to read MRIs. M and M orthopedics has great back specialists. I would go to them.

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  97. one of the best threads so far

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  98. gringozecarioca on January 18th, 2011 at 7:42 pm

    Clio,
    Just curious. If someone asked you what you see as your 3 biggest risks to your position, would you have a response or do you not see any?

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  99. gringo,

    my situation is very different than most people. I own several of my properties outright. In addition, I am not counting on their worth for retirement or my everyday life – so I am not worried about losing all the money I have invested (of course I would be very sad but my life wouldn’t change at all). Of course, this isn’t going to happen here in Chicago, in good areas (where I have invested). It never has and it never will. Period (and to those naysayers – 1 or 2 individual examples does not make a trend or prove me wrong – good condos in the gold coast, ELP, and the nicer suburbs will ALWAYS hold their value in the long run.

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  100. gringozecarioca on January 18th, 2011 at 8:33 pm

    I already understand that. Whether the risks are meaningful or not, to you, does not change their existence/non-existence. You make a very strong argument for price appreciation and positive return, I just never saw you recognize that there are risks. I respect taking a strong position on something, I just wonder if you see what is going on right now that can go wrong. Personally I think when you get to QE4 you will be right.

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  101. The sad thing is that Citigroup is apparently still doing substandard loans. This is STILL going on.

    From a Freddie Mac memo:

    “In Freddie Mac’s review of Citigroup’s performing loans — those on which borrowers were still paying — the portion rated as “Not Acceptable Quality” fell to 9 percent in the third quarter’s sample from 32 percent in the fourth quarter of 2009, according to the Freddie Mac memo. The average defect rate in the 12 months through Sept. 30 was 15 percent.

    ‘High 90s’

    “The percentage of acceptable quality loans should be in the high 90s,” said D. Keith Johnson, former president of Shelton, Connecticut-based Clayton Holdings LLC, which evaluates mortgage quality. “There’s a strategic process flaw. How can a report that shows exception rates this high not cause concerns?” ”

    http://www.bloomberg.com/news/2011-01-18/citigroup-46-gain-masks-flawed-mortgages-freddie-mac-calls-not-acceptable.html

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  102. “good condos in the gold coast, ELP, and the nicer suburbs will ALWAYS hold their value in the long run.”

    What’s the “long run”? 20 years? 30 years?

    If someone will live a long time in a property- they’ll probably be fine. But that’s more than 10 years. More likely to be 20 to 30 years.

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  103. gringo,

    There are risks with everything in life – of course I know what the risks are in real estate. However, a good unit in a good building in a good area still can be an excellent investment. I, along with thousands of other investors scour the mls daily for deals – we call banks if we know of foreclosures – we are not stupid and realize that, as investors, there is a HUGE amount of money to be made in real estate. For the personal buyer, real estate prices shouldn’t be of that much concern for them because the majority are buying for their own personal non-financial reasons. As long as real estate keeps up with inflation, they should feel ok. Really, there is no downside or scariness in the real estate world if you know what you are doing. All of this fear mongering is just that – and playing to the fears of the ignorant and uninformed.

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  104. “If someone will live a long time in a property- they’ll probably be fine. But that’s more than 10 years. More likely to be 20 to 30 years”

    At our current bottom ( low purchase point), I think if someone is going to stay somewhere 6-7 years, it would be better to purchase. And remember, 6-7 years goes by really really fast.

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  105. Really? We haven’t hit the bottom yet. When we do- you really think properties will appreciate enough to cover all the costs of selling?

    That would mean you need at least 8% in order to breakeven on that purchase (at the minimum.)

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  106. unless chicago gets “gary’d” where a corporation (US Steel) has been paying an unfair amount of on taxes for generations and then the city decides to push that burden on the residents all at once, I really don’t see chicago as a long term negative.

    Yes Chicago is totally segregated but what part of the country isn’t that way? People like living with people hat are like them whether its socioeconomic, racial, or religious or whatever.

    As long as the idiot mayor whoever it is doesn’t privatize our water supply or lets BP dump more crap in it we have one of the best and unique (and best tasting water) resources in the entire US

    do you guys know how close NYC or LA is to total chaos? they really need to update their aquaduct system… a disaster is nearly certain

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  107. “Honest question: are sales for the first two weeks of a year considered a technical indicator in real estate as they are in equities?””

    No. The real selling season doesn’t start in Chicago until after the SuperBowl.

    This year, some people might be listing a little earlier since some agents are telling clients that with prices still declining- you have to try and sell as quickly as possible to save 5% or 10% (in further declines). But just because you list it- doesn’t mean you’ll sell it.

    So- no. Actual sales in the first two weeks aren’t really relevant. Anything closing in the first two weeks was under contract weeks ago (and sometimes months- given what I’m hearing from people about the difficulty in getting financing.)

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  108. “Really? We haven’t hit the bottom yet.”

    Oh – did I miss the press release from God? This is your opinion. In my opinion, we hit the bottom in several areas already. True, I think prices will fall in some areas, but in the better buildings in better areas, I don’t think you are going to see price appreciable price declines…. oh, and just wait until there is a little uptick in sales/prices that will get blown out of proportion by the media and you will have a rush of lemmings (sidelined buyers) rushing out and looking to purchase.

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  109. ” you really think properties will appreciate enough to cover all the costs of selling?”

    Properties will likely appreciate at least 3%/year which all the experts are predicting – so in 2- 3 years after purchasing, prices will likely appreciate enough to break even and in a few more years, prices will appreciate enough to make a small profit. In addition, 3% is a conservative estimate. Don’t take my word for it – ask any expert (and no, nobody on this site – including me- counts as an “expert”).

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  110. “Properties will likely appreciate at least 3%/year which all the experts are predicting – so in 2- 3 years after purchasing, prices will likely appreciate enough to break even and in a few more years, prices will appreciate enough to make a small profit. In addition, 3% is a conservative estimate. Don’t take my word for it – ask any expert”

    That would be on the high end of Chicago’s historic average appreciation- which is 1% to 3%.

    Are you predicting similar wage increases and/or inflation as the reason? Because without wages going up- I don’t see how real estate will be going up.

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  111. “Oh – did I miss the press release from God? This is your opinion. In my opinion, we hit the bottom in several areas already. True, I think prices will fall in some areas, but in the better buildings in better areas, I don’t think you are going to see price appreciable price declines.”

    No- but you clearly have missed all the statistics that indicate there is no stabilization. Without stabilization- there is no bottom.

    I don’t see how prices are going to stop falling while sales continue to fall and foreclosures are waiting in the wings in nearly all buildings and towns in the Chicagoland area.

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  112. gesco,

    I’d respectfully disagree with your general claim: “if you had any money in stocks over the last 2 yrs you’ve had significant appreciation.”

    As Marc Faber reminds us (in this week’s Barron’s): “If you measure the stock market not in dollars but gold, it is down 80% since 1999.”

    So, attention need be paid to the unit of account when measuring ROI. Analogically, I’d guess that investments made over the last two years in, say, bushels of wheat, barrels of oil, ounces of gold, or acres of prime farmland, have also produced “significant appreciation.” But this (Faber’s) point may muddy/occlude the one you’re trying to make.

    http://online.barrons.com/article/SB50001424052970204555504576075983972474462.html

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  113. to be fair sabrina there could be a V shaped recovery in housing so there isn’t really a need for things to stabilize for a while in order for there to be a recovery

    note that I don’t find that to be likely at all (less than 5% chance of happening) unless the gubbermint does something crazy

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  114. “anon, Bob, G and HD – let’s get together with Joe Zekas and compare how we have all fared in the real estate market over the past 15 years. If you haven’t made any money in the market and/or have not been involved in it, then you really should shut the f up. ”

    Lets get together in five years clio and talk about the last 20. Methinks the next five are going to do a bit of mean reversion for you with regard to your outsized appreciation the last 15.

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  115. Wojo…… really? I dont even know how to respond to what you said. I cleary specified the last 2yrs. The DOW 2yrs ago was at 6600, it is now at almost 12000. For folks like myself who bought aggressively then, we have seen a REALLY significant appreciation.

    Yeah i just dont know what else to say to your comment.

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  116. gringozecarioca
    Clio,
    Just curious. If someone asked you what you see as your 3 biggest risks to your position, would you have a response or do you not see any?

    clio
    Really, there is no downside or scariness in the real estate world if you know what you are doing.

    good stuff!

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  117. “good stuff!”

    Well, if you are (1) judging returns in nominal USD, and (2) have a 10+ year horizon, and (3) are sub .25 LTV in your portfolio, I agree that there isn’t much risk in the *real estate* side of things. There’s a risk of everything going to hell, but worrying about that shi … stuff really negatively affects one’s QOL.

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  118. I agree with gesco. I kept dumping money in the stock market over the past two years (bought heavily in 2008 after the crash) and have seen a ridiculous rate of return on my investments. As Gesco points out, the market has nearly doubled since march 2009. While it is true that my investments from 2000 are almost back to where they were, the money I put in 2008 has resulted in a 50% appreciation (I didn’t pick all winners).

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  119. anon is completely correct. Real estate investing is best done with money that you can afford to lose and wouldn’t miss if it were lost. If you have this type of money, real estate investing is NOT scary at all (and can be exciting, entertaining, and rewarding). I got into it because I love to renovate, rehab houses – it allows a creative outlet for me. If I make money, fine, if not, that is ok also. Of course, I am an anomaly

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  120. Clio, I agree with you on that it should only be done with money you can lose, but compared to stocks its alot safer. Sure I bet alot of your 13 properties fell in value but did any of them from 14000 to 6600 like the dow… i doubt. A significant amount of the properties that are down 50%+ since the peak are the result of a lot of sketchy stuff going on in the building. Plus with real estate you have the rent coming, whereas for stocks dividends are often times very tiny and all but disappeared when the economy went more sour. Im trying to move all my assets from stock over to RE cause i consider it much safer than stock in this economy and hell just a better investment.

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  121. “Plus with real estate you have the rent coming, whereas for stocks dividends are often times very tiny and all but disappeared when the economy went more sour.”

    That said, you don’t have to pay taxes, assessments, upkeep, etc on your stock portfolio (ok, maybe an account fee, but small in comparison to RE taxes).

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  122. nothing is safer than well chosen stocks right now except for CD’s and checking accts….

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  123. “nothing is safer than well chosen stocks right now except for CD’s and checking accts….”

    I’m just curious, what are some of these well chosen safe stocks?

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  124. big business manufacturing, household names, *certain* banks…and anyone that the government bailed out.

    Off the top of my head I would say: Ford, GM, Johnson n Johnson, GE, Sony, Microsoft, Nestle, Yhoo, Citibank, Goldman Sachs (even though I think they just posted a 50% profit loss), AIG.

    Big money in small banks that passed the stress test and already/planning on repaying the tarp $.

    I also like gold (not etf’s though), and oil (future), as well as precious metals like silver.

    Lastly for global diversification, pick up some chinese securities, like TaoBao (ebay for china), Alibaba (paypal for china), and additional precious metal refining firms given that china accounts for – I think – 60% of all precious metal refineries…

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  125. I’d go with well known things like Worldcom, Enron, and Blockbuster Video. Can’t go wrong with them!

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  126. A-Fed:

    and you think the south loop or miami has some empty condo buildings? China has empty cities! Lots of them!

    http://www.dailymail.co.uk/news/article-1339536/Ghost-towns-China-Satellite-images-cities-lying-completely-deserted.html

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  127. a-fed

    you’re a moron, those are hardly “safe stocks”

    safe stocks would be something like a dividend aristocrat (raises dividend for 25+ years in a row) or utility where your loss of principal is limited in case of emergency

    here’s a list for example

    http://www.dividendgrowthinvestor.com/2010/12/dividend-aristocrats-list-for-2011.html

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  128. “safe stocks would be something like a dividend aristocrat (raises dividend for 25+ years in a row) or utility where your loss of principal is limited in case of emergency”

    What’s “limited” in your view?

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  129. “safe stocks would be something like a dividend aristocrat (raises dividend for 25+ years in a row”

    You mean like General Electric?….yeaaaaah.

    Utilities? Better watch that green movement in that case. They are waiting in the wings to pass a form of cap & tax so they can enact a wealth transfer from utility owners to the likes of Goldman Sachs & Franklin Raines (who purchased an emissions patent on behalf of..Fannie Mae).

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  130. any opinions about real estate values returning to their historical mean? We may have another 20% to go on the downside.
    http://online.wsj.com/article/SB10001424052702304173704575578190261574342.html#articleTabs%3Darticle

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  131. “What’s “limited” in your view?”

    who cares what my view or definition of ‘limited’ is… everyone’s risk tolerance is different, but i’m in the camp that if mcDonalds, exxon, p&g, 3m, walgreens, walmart, etc. go to 0, we’re all pretty fucked and the likelyhood of that happening is near zero

    chinese internet stocks or insolvent banks and unprofitable car manufacturers on the other hand have a very good chance of going to zero

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  132. also bob you’d be sitting on a cost basis of about $2.50 a share if you bought GE stock exactly 25 years ago today so yeah… real terrible investment right there… only a 7 bagger!

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  133. “also bob you’d be sitting on a cost basis of about $2.50 a share if you bought GE stock exactly 25 years ago today so yeah… real terrible investment right there… only a 7 bagger!”

    You can selectively pick timeframes to make a lot of investments look good. Being a former meatballer I can say when I started there the stock was in the 50s. Even had some stock options around 27 (which cashed out the 20% vested when I left). This was a decade ago.

    Noone I know around my age made $$$ on GE. I think the premise is by the time the business press is writing books about how great a company is you’ve already missed the boat.

    But GE is telling about how a CEO will claim their supposed sacrosanct dividend is safe right up until the cut announcement.

    Utilities, formerly considered a “safe” industry, are now under attack from the green movement. People don’t understand punishing utilities will just drive up consumer electricity prices. But the left has never been well versed in economics.

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  134. “insolvent banks and unprofitable car manufacturers on the other hand have a very good chance of going to zero”

    The banks already came close and we saw the outcome with that. Car manufacturers are likely to again–so long as the unions can continue to milk guillable shareholders. This means you would need a president from the Democrat party. Bankers are much better at hedging their bets so are in bed with both parties.

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  135. so are people going to start using less electricity? yeah right… or all of a sudden decide not to charge up their latest and greatest hip new electronic device, or air condition their mcmansion in the burbs? hah! the utilities are an old and deep lobby man, not to mention that if the green movement does gain any momentum, the utility companies will just build “green” powerplants and make money off of them.

    Also, yes Immelt is a moron and a terrible CEO, but he is starting to figure out what investors are looking for out of GE (consistency & dividend growth & not overleveraging). I mean its probably tough to run such a competitive diversified industrial services company that was disguising itself as a hedge fund in a cheap labor world market like we are in today, but he is starting to figure it out (aka outsource shitty labor jobs where there are no unions, and keep the white collar jobs here in the US).

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  136. and I like how you take one aristocrat that hasn’t done well in a relatively short time-frame and say that all aristocrats are bad investments… do your due diligence and don’t invest in high debt companies, or companies that use a large portion of their net proceeds to pay the dividend, a rate of less than 50% is ideal because it gives the company room to continue to pay the dividend if a bad recession occurs.

    I tell you waht I wasn’t buying GE at 60, but i was buying it at 30, then doubling down again at 11, and today i’m still way ahead if you include dividends that since after the initial cut, they have increased twice already…

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  137. “who cares what my view or definition of ‘limited’ is… everyone’s risk tolerance is different, but i’m in the camp that if mcDonalds, exxon, p&g, 3m, walgreens, walmart, etc. go to 0, we’re all pretty fucked and the likelyhood of that happening is near zero”

    Well, yes risk tolerance differs. But if anyone is going to understand your comment (or if you want to understand what A-Fed means by safe), s/he needs some idea of your risk tolerance, which apparently says that limited means less than 100 percent loss.

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  138. China has the largest growing economy in the world. Its worth the *risk* and could pay off huge.

    HD – look at the US. The rich is getting richer and the poor poorer. Of course as China grows there is going to be a divided class. The goal is to stay with rich side 🙂

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  139. “don’t invest in high debt companies”

    typically I would agree with you but not with companies that are too big to fail.

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  140. fair enough, and I do agree and I personally own a few china energy plays, but I certainly wouldn’t call any of the companies or stocks you mentioned “safe” as you did and i’m a pretty risk tolerant person

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  141. It is precisely because everyone is pointing out how hot china is and yet ignoring the largest building spree the world has ever seen. The government says lend and thhey lend. Remember freddie saying lend and the banks lending? China has been doing the same thing on a massive scale. And inflation is through the roof.

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  142. danny (lower case D) on January 20th, 2011 at 9:47 pm

    Stricter emission regulations are good for utilities, businesses, fuel suppliers, customers, and pretty much everyone else who breathes. They ultimately will result in higher stock prices for power companies.

    We have 3 coal-fired power plants in City of Chicago limits that are basically running on 1970’s emission control technology. None have baghouses, selective catalytic reducers, or flue-gas desulfurization controls. They are basically dinosaurs waiting to either be revamped (with pollution retrofits) or put out of their misery.

    Stricter pollution regulations will result in new construction, new heavy equipment purchasing, and new labor requirements. Everyone ultimately benefits from the increased economic activity and the decreased pollution.

    The “free market” will not result in Midwest Generation installing pollution controls on their power plants. They will keep running the old clunkers until one of them collapses. Only regulatory enforcement (or settlement with the Illinois EPA) will result in cleaner air from these plants. Carrot and Stick.

    That said, very large utilities like Exelon, Ameren, AEP, etc. will likely continue to be reliable, dividend paying stock. These are solid companies that own significant hard assets (power plants) of varying age and lifespan.

    Any future carbon regulation (i.e. CO2 cap n’ trade) will be an ENORMOUS boom for power companies. They have the “baseline” CO2 emissions with which to trade for $. This is evidenced by a majority of the major energy companies (electric and petroleum) parting ways with the U.S. Chamber of Commerce and actually SUPPORTING CO2 cap and trade.

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  143. danny (lower case D) on January 20th, 2011 at 10:05 pm

    Here is a Businessweek article which describes (better than me) how power companies actually benefit from carbon limits and cap n’ trade:

    http://www.businessweek.com/magazine/content/09_11/b4123022554346.htm

    Key quotes:

    “The Obama Administration “is very close to right on the climate plan,” says John W. Rowe, chief executive of Exelon (EXC), a Chicago-based utility.”

    “Nuclear power plants, such as Exelon’s, would become more valuable. “I have great hope for the ‘green’ stimulus, but it won’t fulfill its potential unless there is a price on carbon,” says James E. Rogers, chief executive of Duke Energy (DUK).”

    There’s also some negative commentary from AEP and others. In all a pretty balanced article.

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  144. Sonies – those blue chip stocks are going to be around for a long time. Most are too big to fail. My point was to create a globally diversed portfolio with emphasis on blue chippers. The highest degree of risk is in the small cap banks which also have the largest potential. China is just because – as an investor – you should take that chance. I disagree with you regarding Chinese energy though as their best upside – as I see it – is in their internal services. If anything, the US has the highest potential for energy given the push for green energy and the reliance on oil (thus my call on oil).

    Danny – Stricter emissions choke much of the manufacturing industry. Its a great idea in time, by the immediate push means more money directed to R&D instead of increasing jobs (and dont argue that they will hire for R&D, it is not part of the lean manufacturing model). The best bet is to provide gov incentives to those who are pursuing green energy in the form of tax breaks (which in turn hurts the defecit).

    HD – You pointed out a great risk regarding China, that they are blowing a bubble. But, just like the crash of 2008, if you get in and out at the right time, you are golden. Or, short the shit outta em and make a fortune. But just like the great recovery of the S&P and DJIA as of late, its all cyclic my friend.

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  145. danny (lower case D) on January 20th, 2011 at 10:28 pm

    Hypothetically, let’s say that the EPA/Congress enact tougher emissions requirements for conventional pollutants and begin a CO2 cap and trade program.

    The short-sighted Steel Company CEO thinks “this is horrible… it will increase costs and decrease profitability”. Same thing for the short-sighted Power Company CEO.

    The visionary Steel Company CEO realizes that the tougher emission requirements will result in the purchase of significant amounts of steel for the new scrubbers and baghouses. The older power plants that are too far gone to upgrade, will in turn will spur the purchase of steel for building new power plants.

    The visionary Power Company CEO realizes that a cap n’ trade program will allow the owners of coal-fired power plants to be the BIGGEST players (or “market makers”) in the program. They will establish baseline CO2 emissions at the beginning of the program based on existing pollution levels; with only modest improvements in boiler efficiency, they will be able to quantify and sell CO2 “emission reductions” on the open market at significant profit.

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  146. danny (lower case D) on January 20th, 2011 at 10:35 pm

    a-fed: “Stricter emissions choke much of the manufacturing industry. Its a great idea in time, by the immediate push means more money directed to R&D instead of increasing jobs (and dont argue that they will hire for R&D, it is not part of the lean manufacturing model).”

    The R&D for most pollution control technologies were done back in the 70s and 80s. Scrubbers, baghouses, and selective catalytic reducers are off-the-shelf technologies with many existing vendors. They have been 3 decades of proven, installed performance.

    Stricter emission laws will result in immediate purchase orders for heavy equipment and steel. The R&D has already been done.

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  147. danny – but thats just the supplier. Sure they will crank out more steel, but the next manufacuter in line has to figure out how to meet those requirements set forth by the EPA/Congress. Therefore they have to increase R&D to develop a robust design to not put the customer at risk.

    So the increased revenue generated by the steel company is offset by the increased costs to the big business manufacturer. The effect is drastic because the methods of producing steel wont change, they just have to meet demand. BUT, that big business manufacturer has to re-plan, re-structure, re-market, re-promise the investors based on the new business model…

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  148. “Scrubbers, baghouses, and selective catalytic reducers are off-the-shelf technologies with many existing vendors. They have been 3 decades of proven, installed performance. ”

    danny – I completely agree with you. But take the auto mpg requirements as an example. Sure 35 mpg avg across fleet is ok, but CARB pushing ~50 by 2015? Drastic. Sure the OEM’s can do it, but the customers will not want to buy a vehicle with a lawn mower engine in it that can’t go faster than 30 mph. Or rather, lessen vehicle weight which may negatively affect crash test ratings.

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  149. danny (lower case D) on January 20th, 2011 at 10:49 pm

    The offsetting of costs from one manufacturer to another, both up and down the supply chain is the TRUE definition of economic activity. It is a very good thing.

    All of the “re-planning, restructuring, re-marketing”, will give a much needed jolt to our moribund economy. It’s worth the higher fuel and electric prices to get many people back to work — not just in manufacturing and construction, but in finance and marketing.

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  150. “The offsetting of costs from one manufacturer to another, both up and down the supply chain is the TRUE definition of economic activity. It is a very good thing.”

    But it’s a negative offset if performed too quickly!…that’s all I am saying. Placing a short timeline for re-regulation on companies that typically have a business plan 7 years in advance is like throwing a curve ball to a mentally challenged kid after telling him you are gonna throw a fast ball.

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  151. “It’s worth the higher fuel and electric prices to get many people back to work”

    But this does not concur with the lean manuf model. Companies will not re-hire based on this. They will only fire people to reduce costs and assign more work to those who are still employed. And how can you say its worth higher fuel and electric prices? This country is going broke and you are asking people to pay more? Some people have to travel 150 miles to work everyday. Some people do not have good insulation in their house.

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  152. “We have 3 coal-fired power plants in City of Chicago limits that are basically running on 1970’s emission control technology. ”

    No Danny, we don’t. Why you attempt to lie on this website is beyond me. Although I don’t think you’re a liar I think you’re just prone to propaganda and not one to check facts.

    “Any future carbon regulation (i.e. CO2 cap n’ trade) will be an ENORMOUS boom for power companies. They have the “baseline” CO2 emissions with which to trade for $. This is evidenced by a majority of the major energy companies (electric and petroleum) parting ways with the U.S. Chamber of Commerce and actually SUPPORTING CO2 cap and trade.”

    Tough to take this point seriously when you spout off incorrect facts such as above. IF the large utility companies support cap & tax it is likely because they are awarded emissions permits based on historical use–it allows them to capitalize on a new asset that used to be free.

    You don’t need cap & tax to shut down Fisk & Crawford, and the Indiana coal plant as well. You would just need sensible regulation.

    The Obama administration isn’t interested in this–they are interested in doling out goodies to politically connected individuals such as Franklin Raines and Goldman Sachs so they can get rich off of this new “commodity”. This is why Obama will be a one-term president. He could’ve achieved a lot had he wanted to but at the end of the day he is an ultra partisan not interested in bettering society but rather interested in helping those who helped him get there over the general welfare of Americans.

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  153. “The offsetting of costs from one manufacturer to another, both up and down the supply chain is the TRUE definition of economic activity. It is a very good thing.”

    More bullcrap from Danny. Methinks you stand to personally benefit from implementing this new “system”?

    Punishing manufacturers or other businesses for emissions or even sanctioning those who have historically emitted lots of carbon vs. not allowing others to do it unless they pay for it puts the smaller guys at a significant competitive disadvantage. It also enriches the big guys via allowing them to monetize their historical behavior.

    I don’t expect someone who doesn’t even know that there aren’t three legacy coal power plants in Chicago to know this, however.

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  154. “But, just like the crash of 2008, if you get in and out at the right time, you are golden. Or, short the shit outta em and make a fortune. But just like the great recovery of the S&P and DJIA as of late, its all cyclic my friend.”

    A-fed you make me laugh. You act like it’s all so easy. When stocks are up 90% in 18 months anything is possible. Yeah- this is when the “investor geniuses” come out of the woodwork. Oh- but wait- you’ll get out at the very top (just like you got in at the very bottom.)

    You DO know what’s happening in China, right? 70% of their GDP is from construction. That’s why the big construction machine HAS to grind on and why they’re building skyscrapers with no tenants in their secondary cities. It can’t last forever. I’m scared to know what will happen when it busts.

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  155. danny (lower case D) on January 21st, 2011 at 1:12 am

    Bob: “No Danny, we don’t. Why you attempt to lie on this website is beyond me. Although I don’t think you’re a liar I think you’re just prone to propaganda and not one to check facts.”

    Please point out any factual errors. Just calling me a liar does not make it so.

    The Fisk and Crawford plants were originally constructed in the 1920s, and the current operating units were built in 1958-1961. Since then, the only major pollution control upgrades were electrostatic precipitators (ESP) at both plants, and low NOx burners Fisk. These are “1970s” technologies!

    Sometime in the 1980s, both plants switched to low sulfur coal from Wyoming. While this resulted in lower sulfur dioxide emissions, the change in the “resistivity” of the coal greatly reduced the effectiveness of the ESPs and caused increased particulate emissions.

    Most recently in 2008, Crawford and Fisk installed activated carbon injection (for mercury control). While a minor step in the right direction, they still need to install baghouses (for particulate bound mercury) and scrubbers (for gaseous mercury) to be truly effective.

    I was traveling in the Czech republic in 2009. While driving through the coal producing region, I noticed that most of their coal-fired power plants were of a much newer vintage and had modern pollution control equipment. Meanwhile, we in Chicago suffer with these dinosaurs.

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  156. danny (lower case D) on January 21st, 2011 at 1:18 am

    Bob: “More bullcrap from Danny. Methinks you stand to personally benefit from implementing this new “system”?”

    I am an Engineer in the power industry who has worked on numerous nuclear, coal-fired, and gas-fired power plants — both new construction and older retrogrades. I’ve even worked on the power plants discussed above, so my knowledge comes from a direct source and not from being prone to propaganda.

    I certainly stand to benefit from any new environmental regulations, both professionally and as a breather of air.

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  157. danny (lower case D) on January 21st, 2011 at 1:24 am

    Bob: “I don’t expect someone who doesn’t even know that there aren’t three legacy coal power plants in Chicago to know this, however.”

    The third plant is the State Line Generating Station, which is just beyond city limits in Hammond. The only entrance to the facility is through Chicago city streets. However, their location puts them beyond the jurisdiction of Chicago and Illinois regulations.

    Emissions from State Line Generating Station (just as dirty as Fisk and Crawford) impact us every bit as much as those “within” city limits.

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  158. Hah!

    danny +2, Bob 0!

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  159. The TRADE part of cap and trade is where the gaming will come in. Here is a video that explains why that solution will result in another payday to friends/special interests and questionable outcomes for consumers. Why not just cap carbon pollution and quit fossil fuel subsidies?

    http://www.storyofstuff.com/capandtrade/

    “I certainly stand to benefit from any new environmental regulations, both professionally and as a breather of air.”

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  160. Thank you for the interesting conversation danny & Bob.

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  161. From a health perspective, Danny is right.
    Those old coal power plants aren’t the best from an air pollution perspective.

    From what I have read, its likely not cost-effective for the plant operators in question to upgrade. My guess is that they will be run until enforcement of existing and new regulations shut them down.

    Exelon is a decently safe Chicago stock. They’re down from their peak and probably at a buy/hold rating (I haven’t looked in a while).

    Not going to be a booming stock since demand for electricity and subsequently utilities is not there as the economy is still recovering, but as a utility with a 3-4%??? not sure dividend yield not bad for income – since we were talking about safer stocks.

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  162. “I am an Engineer in the power industry who has worked on numerous nuclear, coal-fired, and gas-fired power plants — both new construction and older retrogrades. I’ve even worked on the power plants discussed above, so my knowledge comes from a direct source and not from being prone to propaganda.”

    Pffft. You’re just spouting Sierra Club crap, danny. Have you forgotten that Bob has an MBA as so *must* know more than you?

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  163. “We have 3 coal-fired power plants in City of Chicago limits that are basically running on 1970’s emission control technology. ”

    “The third plant is the State Line Generating Station, which is just beyond city limits in Hammond.”

    So Danny Hammond is within the City of Chicago limits? Is that what you’re saying?

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  164. Danny just admit you were caught in a bold faced lie. My above post clearly indicates so.

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  165. “Danny just admit you were caught in a bold faced lie. My above post clearly indicates so.”

    ummm i thought he stated the only access to the plant is from chicago streets? an average laywer could make that a gray area.

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  166. “ummm i thought he stated the only access to the plant is from chicago streets? an average laywer could make that a gray area.”

    No Groove.

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  167. “The third plant is the State Line Generating Station, which is just beyond city limits in Hammond. The only entrance to the facility is through Chicago city streets. However, their location puts them beyond the jurisdiction of Chicago and Illinois regulations”

    a below average lawyer could argue that.

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  168. chichow if you bought EXC today, it would yield you 4.85% annually and they are due for another dividend increase IMO

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  169. chichow if you bought EXC today, it would yield you 4.85% annually and they are due for another dividend increase IMO

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  170. 4.85% would yield me more than Clio’s numbers right now…hmmm….

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  171. Regarding air quality: this is from wiki

    “The State Line Power Plant’s age meant that it has not been fitted with many of the pollution control equipment that is mandated on more modern generating plants. Instead, State Line’s operations are grandfathered, giving the plant the right to vent nitrogen oxides, airborne mercury, and sulphur dioxide into the air. According to a September 2010 article in the Chicago Tribune, the State Line Power Plant is described as one of the greatest single point-source contributors to the Chicago area’s ongoing noncompliant status under the Clean Air Act.[6]”

    Regarding location and history:

    I do know that State Line used to be owned by ComEd and given its location in the Chicago area might be why Danny thought of it as Illinois.

    And for Off-topic:

    I really wish Chicago would have something like the Tri-State authority (JFK,LGA, EWR) for the area so Chicago could have O’hare/Midway/Gary and just expand the under-utilized Gary instead of this build another airport crap, but because Gary is outside Chicago borders and hence outside his control – Daley always squashed it.

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  172. Instead of cap & tax Obama could just instead revoke the grandfather status of these polluting plants. However his goal is not to increase overall health or general welfare of Americans his goal is to enrich his cronies. So instead it’s either cap & tax or nothing.

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  173. chichow, there is an O’Hare/Midway/Gary agreement put in place by Daley that gives Gary a piece of Chicago’s boarding fees. The Chicago Gary Airport Compact has been around since 1995 and is meant to squash a suburban 3rd airport in IL after Daley’s Lake Calumet Airport plans fizzled.

    Gary recently cleared a major hurdle to runway expansion by working out a deal to move some EJ&E (now CN) railroad tracks. The FHA already funded the expansion. There are currently no comm’l flights there as several attempts over the years have failed. Its biggest use now is as a base for Boeing’s corporate fleet. It’s also a great place to get up close and personal with both the Chicago and Gary air shows’ participants.

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  174. danny (lower case D) on January 21st, 2011 at 3:16 pm

    Okay Bob. You caught me in a “bald-faced lie”. I claimed that there were 3 coal-fired stations in Chicago, when in truth there are only two within city limits and one just skirting the border.

    Ouch! I’ve been pwned.

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  175. Hooters airline flew out of gary for a bit

    http://www.garychicagoairport.com/PressRelease_detail.asp?ID=28

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  176. I just tire of the pace sometimes…

    It took forever for the 355 extension down to I-80.

    It crosses state lines and cities, but coordinating Milwaukee Chicago and Gary would go a long way to improving the infrastructure of the area.

    Midway is at the bottom in terms of on-time stats. If the airlines don’t want another runway or additional upgrades at O’hare, then start flying out of Gary.

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  177. danny (lower case D) on January 21st, 2011 at 5:04 pm

    chichow: “It crosses state lines and cities, but coordinating Milwaukee Chicago and Gary would go a long way to improving the infrastructure of the area.”

    Milwaukee airport is a major hub for Frontier airlines, where you can fly non-stop to Cancun, Puerto Vallarta, and many other cities (eventually I bet they add Costa Rica).

    The Amtrak Hiawatha has a stop at the Milwaukee airport. You can pick up the train at Union Station or Glenview. Plus the Hiawatha is getting brand new rail cars that are suitable for high speed rail. I think the line currently peaks at 80 mph, but I bet it will eventually exceed 100 mph once the tracks and crossings are brought up to standard.

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  178. “I bet it will eventually exceed 100 mph once the tracks and crossings are brought up to standard”

    eta: 2045.

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  179. danny (lower case D) on January 21st, 2011 at 5:36 pm

    anon(tfo): “eta: 2045.”

    Yeah… I know. From what I understand, the new Governor of Wisconsin intends to only kill funding for the Milwaukee to Madison rail project, while the funding for the Hiawatha line remains intact.

    The old Chicago North Shore & Milwaukee railroad used to run an “Electroliner” train that routinely ran at 90 mph, and peaked at 110 mph (it has since been abandoned and is now a bike trail) and this was back before World War 2. The Pioneer Zephyr (now at the Museum of Science and Industry) also peaked out at 110 mph.

    Things like high speed rail and electric cars were developed at the beginning of the 20th century. For various reasons, neither were commercially successful, but the technology is not something new.

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  180. the el used to go a lot faster. in the 80s or 90s i watched the speedometer once and it was over 60mph iirc, usually on the long straight stretch btwn loyola and lawrence where the purple runs express howard to belmont

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  181. The Blue line now goes pretty fast (since they fixed the slow zones), the red line is fairly fast south of belmont all the way to 95th, its just red line north of belmont that is really slow. Some parts of that track are over 100 yrs old.

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  182. danny (lower case D) on January 23rd, 2011 at 12:53 pm

    I’d love to go to China, Taiwan, or Japan for the sole purpose of riding the high speed rail. The Maglev train in Shanghai reaches speed of 268 mph.

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  183. I was in Wisconsin a handful of times over the holidays (family) and the topic of the railway came up and the firm consensus was that the high speed rail between milwaukee and madison was a complete waste of money. It only saved an hour or so, if that, people didn’t want to rely on public trans in either cites after getting off the train, and everyone is madison was a little ticked that teh train station would be at monona terrace requiring a large amount of eminent domain to lay the track to get there. The alternative was to put the train station on the outskirt of the city where is would be a necessity to have a car. Furthermore, the train was supposed to make a number of local stops at peuwakuee and a few other places thereby negating a lot of the time savings. Finally, there is literally ZERO need for a high speed rail between those two cities. Everyone I spoke with was pretty happy the rail was terminated. they all kept saying that WI wasn’t densely populated enough to support it.

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  184. Oh and people were really ticked off that the federal government would build the railway but then WI would be responsible for paying for it for years to come, of which the yearly losses would vary widely, and even wisconsin public radio based in Madison was skeptical of the idea.

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