2-Bedroom Bucktown Loft With Wraparound Terrace Sells: 1750 N. Wolcott
We last chattered about this 2-bedroom brick and timber loft in the Signature Lofts at 1750 N. Wolcott in Bucktown in July 2011.
See our prior chatter here.
Listed for $459,000, or $107,500 above its 2001 purchase price, no one had a guess on what it would sell for. One of you did predict it would sell quickly- which it did.
The loft recently sold for $82,000 above the 2001 price at $433,500.
If you recall, the loft was a corner unit with a wraparound terrace on two sides of the unit.
On one side, the terrace ran alongside the concrete wall of the Bloomingdale trail- which was formerly a 2.7 mile rail line.
You can watch a video on this unique future city park here. (I can’t wait for this to open!)
The kitchen had stainless steel appliances and granite countertops and was open to the living space.
The bedrooms were fully enclosed for added privacy.
The loft had central air, washer/dryer in the unit and heated garage parking (along with a second space available for another $10,000.)
What does this sale say about the $400,000 priced Bucktown loft?
Wesley Walker at Jameson Sotheby’s had the listing. You can still see the interior pictures here.
Unit #105: 2 bedrooms, 2 baths, 1300 square feet
- Sold in August 2001 for $351,500
- Was listed in July 2011 for $459,000 (includes parking)
- Sold in September 2011 for $433,500
- Assessments of $302 a month
- Taxes of $4613
- Central Air
- Washer/Dryer in the unit
- 2nd parking space available for $10K
- Bedroom #1: 14×13
- Bedroom #2: 11×10
This is what is happening all over (true – not a huge number of sales – but things that are selling are somewhat surprising – ie not foreclosures and not such “great deals”). Why? Because at the end of the day, people want a nice place to live in a nice neighborhood. They don’t put as much emphasis on “getting a good deal” as they do neighborhood/quality of the home. This is logical- yet few on this site seem to realize it.
I’ve said all along that there would be knife catchers all the way to the bottom.
Inventory sucks. This is not unexpected.
G – when do predict the bottom? Also, in your opinion if the bottom is not expected until 2015 or 2020 are they still knifecatchers if they put their life on hold? I bet you haven’t had any death or disease in your immediate family. If and when you do, you will realize that time doesn’t stop for anyone. The time to live it NOW – fuck the money – you can’t take it with you….
“I’ve said all along that there would be knife catchers all the way to the bottom.”
What % of buyers do you think will buy “the bottom”?
Let’s pretend this place bottoms at 400k. You call the 433k buyer on the way down a “knife catcher”. What does that make the 433k buyer on the way up?
“You call the 433k buyer on the way down a “knife catcher”. What does that make the 433k buyer on the way up?”
A knife thrower!!!
clio: “They don’t put as much emphasis on “getting a good deal” as they do neighborhood/quality of the home. This is logical- yet few on this site seem to realize it.”
Though I won’t necessarily argue the veracity of your point (sucker born every minute and all), this goes far beyond “getting a good deal.” This downturn has taught me that if you aren’t careful with your financial decision making, you can end up in a far worse situation than if you had made better situations.
What about the people that spent their entire savings on a 15% downpayment? What about the people that were maybe more secure, but bought at peak and are 100k+ under water? Heck, what about the people that just didn’t leave enough reserves, lost a high paying job and just can’t afford their place? The reality is that could be any of us if we just say “fuck it” and buy a place without understanding the risks and downside involved.
So while you might be right that people need a good place to live and might not be worried about “getting a deal”, maybe, just maybe, they should be.
jg: “If and when you do, you will realize that time doesn’t stop for anyone. The time to live it NOW – fuck the money – you can’t take it with you….”
See my above point. By all means, live well. But you might want to actually think about what you are doing, lest you bankrupt yourself in the process and make your life more difficult and harder to enjoy.
The bottom ain’t 400 chuk..
“The bottom ain’t 400 chuk..”
1) You don’t know. But I did say “lets pretend”.
2) Doesn’t matter where the bottom is. Very few buyers will buy the bottom. So, 99% of buyers are either knife catchers or “knife throwers”. Seems pointless to argue about “the bottom” since almost no one will buy there.
either that park will be really cool or it will be a magnet for bums looking for a great place to take a wiz and/or siesta.
“either that park will be really cool or it will be a magnet for bums looking for a great place to take a wiz and/or siesta.”
Even if it’s nice, I don’t know that I’d want a public space right next to my place. Maybe less of an issue for this place, but a big deal I think for some of the SFHs that have windows or decks close to the trail. Especially given that the trail is elevated and there’s not much of any buffer.
“You call the 433k buyer on the way down a “knife catcher”.”
Don’t you? What else do you call someone who buys an asset that is still declining in value?
“on the way up?”
That’s a lot of pretending.
“Seems pointless to argue about “the bottom” since almost no one will buy there.”
Not if it’s L-shaped. V-shaped is just way too much pretending.
chukdotcom: I think you raise a good point. In my mind, it is about magnitude and trends. Are prices still falling? Are we obviously still off bottom? Then it’s knife catching. I will give you that it is hard to call bottom, future prices movement predictions are largely subjective and that hindsight is the only way we’ll identify it.
Still, it is hard for me to say we aren’t on another downswing right now. So I’d call it knife catching.
I think they overpaid for this property, by about $50K.
But, I also think this is a pretty cool spot!
“Don’t you? What else do you call someone who buys an asset that is still declining in value?”
A value investor. Funny, when I bought AAPL at 120 on the way down to 90, people told me I was a knife catcher.
“That’s a lot of pretending.”
So, you are saying that this place will continue to go down in price, and will never go back to 433k?
Check out what is sold on Urban Real Estate dot com, in desirable ZIP codes, [60657, 60614] many are selling for about 10% off asking. It’s “questionable” sites that are tanking.
tomm: “Check out what is sold on Urban Real Estate dot com, in desirable ZIP codes, [60657, 60614] many are selling for about 10% off asking. It’s “questionable” sites that are tanking.”
True. But it is also true that most properties (even those priced below peak) are languishing on the market and that inventory is very low. To be honest, given the inventory out there right now, I’m not surprised good properties in good locations with below-peak pricing are selling right now. There will always be people that will buy (regardless of the state of the market) and they are looking for the good stuff.
I just don’t think any of this suggests to me that 10% below peak is where the market is in GZ hoods right now. The market is so out of whack and irregular that it is folly to draw that conclusion, IMO.
DZ: I think I’d rather have a well maintained/well traveled public space next to my place than a dark, abandoned, overgrown, glass and needle-strewn train line well-traveled by the homeless, drunks and drug addicts. I think the riff-raff will go down once it’s a slick walking/bike path with lighting, fencing, policing, etc.
“I think I’d rather have a well maintained/well traveled public space next to my place than a dark, abandoned, overgrown, glass and needle-strewn train line well-traveled by the homeless, drunks and drug addicts. I think the riff-raff will go down once it’s a slick walking/bike path with lighting, fencing, policing, etc.”
That’s a pretty fair point, maybe the trail would be an upgrade. Still, having a parade of people traipsing around above my deck would be a big negative for me. I guess I’d prefer having a house next door to either option.
And since I’m not living next to it, I’m all for the trail.
“Funny, when I bought AAPL at 120 on the way down to 90, people told me I was a knife catcher.”
By definition, you were. You have a hard time with definitions, chuk. It was the word ‘parity’ that stumped you last. I suggest a dictionary.
“By definition, you were. You have a hard time with definitions, chuk. It was the word ‘parity’ that stumped you last. I suggest a dictionary.”
Ha, yet another clueless response. So, if I bought at 91 and not 90, I would be a knife catcher too? So, anyone who doesn’t buy at the EXACT bottom is a knife catcher? Please give me your real world definition of “parity” regarding rent vs own. Show your math.
Let me make it easy for you. At what price point was buying AAPL NOT knife catching in your expert opinion?
by definition you were definitely a knife catcher.
A knife catcher in economics is a term for a purchaser of a good at a point when the price of that good is declining sharply in value.
en.wikipedia.org/wiki/Knife_catcher
“when the price of that good is declining sharply in value.”
So, house prices are currently declining sharply in value? That’s news to me.
Definition of PARITY
1: the quality or state of being equal or equivalent
See ze for knife catcher.
You were talking about buying AAPL.
But hey, I was expecting “Wrong, stupid dictionary, knows nothing, how much is it up in the past 18 years? see I told you so”
” At what price point was buying AAPL NOT knife catching in your expert opinion?”
Check April 2003. I think that would satisfy “not knife catching”.
“Check April 2003. I think that would satisfy “not knife catching”.”
Oh 1990’s worked well too… if you bought 12’s and watched it go to 6 and then held on.. I guess your transgression can be forgiven… lol
“Check April 2003. I think that would satisfy “not knife catching”.”
Unless of course AAPL goes to $5 in 2020. Then it’s still knife catching. After all, the buyer in April 2003 was buying “a good that was sharply declining in value”. AAPL had gone from around $12 to 7 in a year.
“Definition of PARITY
1: the quality or state of being equal or equivalent”
Gosh, you didn’t show your math. What a shock. When people have 2 different definitions of “rental parity”, how can you tell if it is equal? Show me how YOU calculate “rental parity”. No one asked what parity meant.
“See ze for knife catcher.”
Hmm, in other words, you are saying you were wrong in using the term “knife catchers”.
” AAPL had gone from around $12 to 7 in a year.”
25 to 13. The 2 for 1 in 05 gets baked into the charts.
“Hmm, in other words, you are saying you were wrong in using the term “knife catchers”.”
I just entered this convo.. I said no such thing. Didn’t even pluralize.
I see the cute lil bouncin ball entering the room and chasing a butterfly. Chukie, open up…it’s zoloft time!
my bad chukie.. thought that was directed at me.. was puzzled..
“25 to 13. The 2 for 1 in 05 gets baked into the charts.”
Right. Either way, it was a “sharply declining market”. And I’m not really arguing the definition of “knife catcher”. I’m arguing the way he is using it as an insult towards today’s buyers. People could have said the same thing to AAPL buyers in ’03, and they would be “right” by definition. By boy would they have been “wrong” in their intended insult.
chuk… So you’re sayin…it’s like the difference between how bob and I use the word Jew???
“it’s like the difference between how bob and I use the word Jew???”
Ha, yes.
“I’m arguing the way he is using it as an insult towards today’s buyers.”
But, I’m not using it as an insult. I’m using it as an accurate description. The fact that it gets some panties in a twist is just a bonus. Funny thing is, chuk, I went into a 2008 2nd home purchase knowing I was a knife catcher. So what? I knew I could afford it. You, on the other hand, have tried desperately not to become one (so far) when you could just as easily embrace reality (since you can afford the downside to your purchase, too.)
“Show me how YOU calculate “rental parity”.”
That’s the thing, it depends on the individual buyer and property. Take everything into account for renting and buying and if they come out equal, voila, you have parity. The math is simple. But one thing’s for sure, it doesn’t include the principal payment on the buy side as a reason why owning is better “at parity” like you recently suggested.
“You, on the other hand, have tried desperately not to become one (so far)”
Actually, I have been desperately TRYING to buy for the last 6 months. Deal after deal missing out or falling through.
“But one thing’s for sure, it doesn’t include the principal payment on the buy side as a reason why owning is better “at parity” like you recently suggested.”
But it does if that is the numbers you are comparing. 90% of people here will use their total mortgage payment to compare to rental for their “parity” comparison. Including the owner of this site.
“Actually, I have been desperately TRYING to buy for the last 6 months. Deal after deal missing out or falling through.”
Must be because prices are too low. Just pick a more highly valued property. Higher prices will get the market moving for you, right?
“But it does if that is the numbers you are comparing. 90% of people here will use their total mortgage payment to compare to rental for their “parity” comparison. Including the owner of this site.”
Like I give a shit about what “90% of people” think. Neither do you. That ain’t parity by definition.
“Must be because prices are too low.”
Actually, it is. All the deals get snapped up before I can get to them. Doing this remotely is not easy.
Flood the market with REOs and prices will go up, right? hahahaha
“chukdotcom on September 21st, 2011 at 3:48 pm
“Must be because prices are too low.”
Actually, it is. All the deals get snapped up before I can get to them. Doing this remotely is not easy.”
“Just pick a more highly valued property. Higher prices will get the market moving for you, right?”
Who said that? You can’t just infer the inverse. You said volume was low because prices are too high. I said volume was low because SUPPLY at these prices is too low. Higher prices could dry up demand. But if the supply was higher at TODAY’S selling prices (note: not asking), then you would have much higher volume IMO.
“Flood the market with REOs and prices will go up, right? hahahaha”
No, but volume will. Who said anything about prices going up? Try to keep up, I know it’s hard for you.
“But if the supply was higher at TODAY’S selling prices (note: not asking), then you would have much higher volume IMO.”
FINALLY, after 30 threads, it all makes sense now. That’s what we’ve been saying ALL ALONG. There are not enough homes at today’s selling prices.
But if there were more homes at today’s selling prices and demand stayed the same, then isn’t it a possibility that prices would fall some more?
One of the things I have been looking at is 1/1 foreclosures in the south loop for around 100k. The ones that come on the market go under contract relatively quickly. Right now, there is more demand for those units than there is supply. If the banks put say 25% more of them on the market, the demand is probably there to absorb it at today’s prices considering how quickly they go under contract. That would result in increasing volume, without decreasing prices. 500% more supply and you would likely have pricing pressure.
Supply and demand. It really shouldn’t be this hard for you to follow.
“There are not enough homes at today’s selling prices.”
Which I said in the very FIRST post:
http://cribchatter.com/?p=11494#comment-187872
“But if there were more homes at today’s selling prices and demand stayed the same, then isn’t it a possibility that prices would fall some more?”
Sure, it depends on just how much pent up demand there is at today’s selling prices. I gave a very clear example here:
http://cribchatter.com/?p=11494#comment-187889
The discussion was about volume, and why it was so low. You and G see it as a lack of demand. I think it is more due to lack of supply.
“There are not enough homes at today’s selling prices.”
Which I said in the very FIRST post:
http://cribchatter.com/?p=11494#comment-187872
“But if there were more homes at today’s selling prices and demand stayed the same, then isn’t it a possibility that prices would fall some more?”
Sure, it depends on just how much pent up demand there is at today’s selling prices. I gave a very clear example here:
http://cribchatter.com/?p=11494#comment-187889
The discussion was about volume, and why it was so low. You and G see it as a lack of demand. I think it is more due to lack of supply.
“The discussion was about volume, and why it was so low. You and G see it as a lack of demand. I think it is more due to lack of supply.”
It seem like the demand for $100k 1/1’s is coming from investors and we know how that ended last time…
“It really shouldn’t be this hard for you to follow.”
Less so than you think, since I believe that the number is closer to 500% than to 25%.
“The discussion was about volume, and why it was so low. You and G see it as a lack of demand. I think it is more due to lack of supply.”
There is plenty of supply at prices not in demand. Lower the price of that supply and more demand will occur. Supply and demand. It really shouldn’t be this hard for you to follow.
“It seem like the demand for $100k 1/1’s is coming from investors and we know how that ended last time…”
They are buying based on current rents that are inflated due to artificial inventory constraints caused by both overpriced listed inventory and shadow inventory.
“There is plenty of supply at prices not in demand.”
Who said there wasn’t? I clearly stated there was a lack of supply at today’s selling prices. Period. End of story. Anything else that either one of you read into that is your problem.
“There is plenty of supply at prices not in demand.”
“Who said there wasn’t? I clearly stated there was a lack of supply at today’s selling prices. Period. End of story.”
And we clearly stated that lowering prices today would increase sales volume. Period. End of story. Anything else that you read into that is your problem.
“And we clearly stated that lowering prices today would increase sales volume. Period.”
I’m glad you cleared that up. You’re wrong. With lower prices you will not only have lower supply (the guy who was willing to sell at 300k may not be willing to sell at 275k). But you can also have lower DEMAND. Yes, lower demand. Who do you think was buying that place at 300k? If prices are lower, that buyer may no longer be a buyer at all, because he can’t afford to sell his own house now.
Lowering today’s ASKING prices would likely result in higher volume, because there is unmet demand at today’s SELLING prices. But any moron knows that. But lowering today’s SELLING prices would most likely lead to LOWER volume.
The fact that you guys can’t grasp that is very telling.
Here’s an easy real world example for you. HP recently had their tablet called the Touchpad. They were ASKING $499 for it. Very few people were buying it. It was overpriced. They lowered the price to $99, and they sold 1m units in a day. Because they are selling at a loss, they don’t want to continue producing them. With your logic, if the market value went to $50, it would result in even higher volume. Except there is no supply to be sold at $50. Volume will be 0.
“Lowering today’s ASKING prices would likely result in higher volume, because there is unmet demand at today’s SELLING prices. But any moron knows that.”
Yet, you’ve argued about it all day…
I guess I shouldn’t expect much more from someone who insists that parity does not, in fact, mean parity.
“Yet, you’ve argued about it all day…”
Wrong yet again:
“It is because selling prices are too LOW.”
http://cribchatter.com/?p=11494#comment-187872
Not my fault you have reading comprehension problems.
“I guess I shouldn’t expect much more from someone who insists that parity does not, in fact, mean parity.”
Well, YOUR definition of parity does not mean parity. Just trying to show you the error of your ways. Apparently that is pointless.
starting to give me dain bamage. I can’t keep up with all the hypo-teticals.
is it because G believes not including principal results in parity. He is completely correct.
“is it because G believes not including principal results in parity. He is completely correct.”
Nope. It is because he IS including them. Otherwise almost every single property in Chicago is at rental parity now.
He can’t have it both ways.
The market rules!
What both ways would that be? I’ve never included principal because it’s incorrect. Every single property? You sure a few aren’t listed a bit higher?
“What both ways would that be?”
You claim that renting is cheaper than owning. Yet using your definition of rental parity (not including principle), the facts show otherwise.
“Every single property? You sure a few aren’t listed a bit higher?
Who said that? Nice editing.
Yes, that was sarcasm. By “a few” I meant a whole bunch.
“You sure a few aren’t listed a bit higher?”
And who said anything about listed? We are talking about SELLING prices. I could list a 1/1 in sloop for 5mil. That is meaningless. Just look at what the properties featured here on CC have SOLD for. You will find that most are selling for below rental parity.
I don’t care what the ask is. It’s meaningless.
The ask is not meaningless. The ask is one of the reasons volume is so low and realtors can’t put food on their table.
“The ask is not meaningless.”
It is meaningless to rental parity. Try to keep up.
“You claim that renting is cheaper than owning. ”
Show me where I made such a broad claim. You are confusing your numerous ‘hypotheticals.’
I have said there are better deals to come, though.
So, define what % “a few” is that you claim to be listed at more than rent parity?
“We are talking about SELLING prices. ”
Who? You and your hypothetical voices?
Ask them if they agree that if asking prices fall, there will be more sales?
“So, define what % “a few” is that you claim to be listed at more than rent parity?”
You said listed, not me. We are talking SELLING prices. C’mon, all those stats you spew out are all based on SOLD properties. Volume, % change, etc. Since when do you care about listings?
Because volume will not increase until they drop their prices. Why do you disagree?
“Because volume will not increase until they drop their prices. Why do you disagree?”
I didn’t. You disagreed with me. I said selling prices are too low and if they go lower, volume will decrease. Why don’t you just admit that you misunderstood my original post, rather than trying to twist what I clearly stated?
“I said selling prices are too low and if they go lower, volume will decrease. ”
Will volume go to zero chuk?
Keep talking in circles, hahahah
What % off current SELLING Prices will take for volume to dry up completely and go to zero? $1?
In all fairness, I think we understand your point about underwater sellers being unable to sell, and lower home prices result in more underwater home sellers unable to sell. That’s the practical situation due to liens
However, the millions of foreclosures and DQ’s in the pipeline should eventually solve this problem, and more foreclosure beget more foreclosures; and eventually, the market will work through all the inventory..years down the road. HAMP tries to push the problem 40 years …
This is the great decline, and someone of your purported financial sophistication should expect nothing less than a massive, major decline.
Japan has been going for 20 years now?
“This is the great decline, and someone of your purported financial sophistication should expect nothing less than a massive, major decline.”
Yes, we already had one. I’d be surprised if we went down more than 15% from here. And I believe that last 15% will be recovered quickly after the bottom. Therefore, I feel it is “safe” to buy now if your timeframe is 5+ years. While prices are likely to still go lower from here, I believe they will be at this level or higher in 5 years. Only the very lucky will buy at the bottom.
as per the merits of rent vs. buy, I don’t recall G claiming that renting is cheaper than owning, but others have:
http://blogs.reuters.com/felix-salmon/2011/07/20/rent-vs-buy-datapoint-of-the-day/
I liked this line: “Unless someone possesses the cash necessary to buy a residence, he or she will be renting one way or another. The choice is between renting the property directly or instead renting the capital necessary to buy the property…”
Suffice it to say- people are stuck. Over 25% of the population won’t be able to move for a very, very long time (because they are underwater and prices won’t rebound fast enough for them.) Some won’t care because they’re going to live there until they die. But it definitely has an impact on mobility and the overall housing market.
Also- investors are a big part of this market right now. Nationally, 28% of home sales last month were to investors. I don’t know the Chicago number- but I’m sure it’s similar. Who do you think is buying the $11,000 house in Morgan Park? Or the $70,000 in Avondale?
That means there are even fewer “normal” transactions as the investors tend to buy the short sales/foreclosures.
It’s a mess. And it will not be solved quickly. Many buyers may not be able to time “the bottom”- but we’ll likely be at the bottom for a long, long time. So what’s the hurry? Does anyone seriously think we’re going to see a V shaped recovery in housing?
“The principal component of each mortgage payment – i.e. the portion of the mortgage payment that goes towards reducing the principal mortgage balance instead of interest – is an added expense renters don’t have.”
Looks like the “rent vs buy” equation isn’t as clear to everyone as G thinks it is.
“So what’s the hurry?”
Why wait? With so many properties selling below rental parity, the sooner you buy, the sooner you start to save.
“Does anyone seriously think we’re going to see a V shaped recovery in housing?”
You don’t have to to make buying better than renting.
But you claim that the place you rent for $1500 a month costs the owner $2500 a month. I’d love to see that math.
“But you claim that the place you rent for $1500 a month costs the owner $2500 a month. I’d love to see that math.”
I never said this. My landlord bought 50 years ago. It’s not an issue for him.
I said- it costs me much more to buy the same unit I rent. I can either rent it for $1500 a month or I can go and buy it for $2500 a month somewhere in my neighborhood.
I prefer the footloose and fancy free lifestyle. If I don’t like my neighborhoods- I can move. If I hate the noise that inevitably becomes an issue with condo living- I can move. If I decide the commute it too long- I can move. If I decide I really want to try out another neighborhood (one of those “hot” areas)- I can move.
There are simply too many benefits for me to rent versus buying at this time.
Other people are in different situations. They want the single family home and know they’re going to live there 10 to 20 years. There are tremendous deals all over the suburbs and some in the city. Why not go for it? But that isn’t my situation. I have a great roof over my head and a home I love. AND it’s tremendously affordable in a great city. What more could I want?
I don’t know why you insist everyone must buy chuk. Many of us aren’t obsessed with home ownership the way you seem to be.
“I can either rent it for $1500 a month or I can go and buy it for $2500 a month somewhere in my neighborhood”
I call B.S. There is NO WAY there is that big of a gap in the rent v own equation at today’s prices. Are you including the principal payment in that $2500?
“I don’t know why you insist everyone must buy.”
I don’t. If you are in it for less than 5 years, you should not buy. At any price. YOU are the one saying “what’s the hurry?”. I was merely answering why someone would “hurry” to buy now. Not why everyone should.
“I prefer the footloose and fancy free lifestyle. If I don’t like my neighborhoods- I can move. If I hate the noise that inevitably becomes an issue with condo living- I can move. If I decide the commute it too long- I can move. If I decide I really want to try out another neighborhood (one of those “hot” areas)- I can move.”
Renting is perfectly fine for all of those reasons. They have almost nothing to do with price. I take issue with the people that claim they rent because it is “cheaper” than buying and they can “invest the difference”. It simply isn’t true over the long term.
But for someone like HD who is starting a family and looking to buy a place for the long term, buying now will be better than renting. Even if it isn’t “the bottom”.
“I call B.S. There is NO WAY there is that big of a gap in the rent v own equation at today’s prices. Are you including the principal payment in that $2500?”
If I buy essentially my exact place- I can write checks totalling $2500 to the bank, the condo association and the city of Chicago for my taxes every month. Or I simply write a check to my landlord for $1500.
The tax deduction isn’t that big of a deal because as a renter I already get a $450 a month standard deduction. (And that’s assuming they don’t get rid of the mortgage deduction soon.) But that’s not before I put down a nice juicy downpayment (that is now out of my hands when I prefer to do other things with it.)
It really doesn’t make any sense to buy what I rent unless I thought I was going to live in it long enough to build equity (like 10 years or something.) I prefer to take the $1000 a month and do nice things with it like take vacations, put it in savings or other investments. Those give me greater joy.
Real estate is a crappy thing to put all your money in. When it is way cheaper to buy my place- then maybe I’ll consider it. But right now- Chicago prices really haven’t come down enough to make it worthwhile for me in my targeted neighborhoods.
Also- you assume that real estate will always be going up everywhere someone buys. Neighborhoods change. I’ve said it before and I’ll say it again. My family bought in the 1950s in the south suburbs. It was a wonderful area for decades but now it’s not. My grandfather bought for $5,000. My uncle just sold the family home for $105,000 last year. 60 years of home ownership- and for what?
You buy it to live in it- and that is it.
Chuck- there simply is NO hurry to buy anything right now. There won’t be for a decade or more.
As I saw on one of the bubble blogs today- when you have massive overbuilding for 5 years- how long do you think it will take to correct itself? Well- we’re in year 4 of the “correction” with no end in sight (yet). Throw on top of the overbuilding a massive credit expansion- that is now a massive credit contraction- and there is no reason prices are going to go up for a long, long time.
Even in the “good” neighborhoods- there are simply too many million dollar homes available for the number of buyers.
“Looks like the “rent vs buy” equation isn’t as clear to everyone as G thinks it is.”
I highly doubt he thinks it’s clear to the majority, that it matters what the majority thinks, or that it changes whether he is right or wrong.
Doesn’t for me. Just simply re-affirms what I have said several times before. No need to spend more than 10% of your energy on work. 6-8% sounds like the sweet spot.
“Chuck- there simply is NO hurry to buy anything right now. There won’t be for a decade or more.”
More nonsense. Ever think about “life”? Do you think every person that has bought a house in the last 100 years bought because they thought it was “the bottom”? I bought my house in 2002. Of course it was a higher price than it last sold for in 1998. I was well aware of that. Now, in 2011, it is back down to the 2002 price. So sure, I didn’t need to “hurry” and buy it. I could have waited 9 years, lived in a rental, moved my kids from school to school. What a great idea! At the time, I had a 1 yr old, and I was living in a condo that doubled as my home office. I needed more space, and I was at a time in my life where I wanted to start to put down roots. So, there is your answer why someone might want to “hurry” and buy now. Life.
“I highly doubt he thinks it’s clear to the majority, that it matters what the majority thinks, or that it changes whether he is right or wrong.”
Well, the debate started because he accused me of not knowing the definition of “rental parity” when I told him that not everyone uses it in the same way.
“My grandfather bought for $5,000. My uncle just sold the family home for $105,000 last year. 60 years of home ownership- and for what?”
For what? For 100k profit (5+% compounded for 60 years) and no rent for 60 years. Sounds like a pretty good deal to me.
“If I buy essentially my exact place- I can write checks totalling $2500 to the bank, the condo association and the city of Chicago for my taxes every month. Or I simply write a check to my landlord for $1500.”
Sabrina, it sounds like you’ve got one hell of a deal on your rent (that, or the unit owner purchased at the top of the peak AND it’s a unit of which there is a glut, e.g., 2/1’s in Lakeview, etc.). I think I paid $2,400 (plus $200 to rent parking) in rent from 08 to the end of 10, and I felt like we were getting a great deal. To “own” that unit would have entailed a loan payment of around $2,000, a fee of $700, and taxes of around $400 (so, roughly $3,100). Factoring in the $200 rented parking, we “saved” at least $800/mo by renting.
But it was a great place – one which we were extremely lucky to find in early 08 and which would be a score even today. Try and find a huge 2/2 just steps from the park for under $2,600/mo rent, let alone $3,300. They’re not that common. So why would we leave such a situation, especially when we were “saving” $800/mo? Because we wanted some things that unit lacked, especially a w/d, for no more than $3,000/mo (and while they were nice enough for most of our 2 years of renting, the unit owners were becoming increasingly unaccommodating, and were hinting of a possible sale). Once we found a unit that had pretty much everything that unit had (still steps from the park, but no longer an elevator) – plus a w/d, central air, a deck, garage and powder room, at a monthly “own” cost of $3,000, we pulled the trigger.
A year later, I’m still interested in hearing about properties – for sale or for rent – that meet all of the Unicorn Criteria, at a monthly cost of no more than $3k. I haven’t seeing that many.
“But for someone like HD who is starting a family and looking to buy a place for the long term, buying now will be better than renting. Even if it isn’t “the bottom”.”
I’m not looking for the bottom, I’m just looking for something that makes sense for my family. Every which way I do the math, over and over again, the numbers just don’t work. It’s always a combination of not enough cash flow, too small a down payment, to high of a listing price, too high taxes and too many other expenses getting in the way. Daycare (for one maybe two children), student loans, gas, taxes, etc. The numbers just don’t work for a livable 3 bedroom house on the NW side or the inner suburbs and now way is it working in the green zone (especially after the necessity of private schools). And if one of us loses our job or gets laid off or take a paycut at a different job, it’s all over. My household does OK, we make far more than most of the people who walk through my door, but I see how they do the juggle and it’s extremely scary. Even the people at my daycare, they all own, drive nice cars, have 2 kids in daycare; and I’m sure they all make pretty similar to what we make, they all have very similar type jobs. I know they’ve got to be living a lot closer to paycheck to paycheck.
So, I wait until things make sense for me. Because if we can’t make it work to live the traditional middle class lifestyle on our salaries, then nobody else can, and housing prices must come down to reflect that.
http://hosted.ap.org/dynamic/stories/U/US_CENSUS_RECESSIONS_IMPACT?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2011-09-22-00-17-27
Read this story and tell me what you think this means for housing prices for the next 20 years as this generation is mired in recession and reduced future earnings. one in five 20 something men still live at home!
Because if
“I highly doubt he thinks it’s clear to the majority, that it matters what the majority thinks, or that it changes whether he is right or wrong.”
Exactly, ze.
“Well, the debate started because he accused me of not knowing the definition of “rental parity” when I told him that not everyone uses it in the same way.”
Yes, and you and “not everyone” are clearly incorrect.
“Read this story and tell me what you think this means for housing prices for the next 20 years as this generation is mired in recession and reduced future earnings.”
When i think back, at how much has happened over the past 20 years, I choose to reply with . I have no idea!
“one in five 20 something men still live at home!”
On a positive twist, gotta make pickin-up 20 somethin girls a lot easier.