2015 Housing Market Predictions: What Do You Think Will Happen Next Year?
2015 is fast approaching.
You know what that means. It’s time for our predictions!
2014 was a lackluster year for Chicago’s housing market after sales and prices exploded in both 2012 and 2013. There were high expectations going into the year, but higher mortgage rates slowed further gains.
But rates are back near record lows and inventory is higher than in 2013 making it an attractive buyers market once again.
The job market is also much stronger than a year ago, both locally and nationally.
Luxury apartments continue to be built at a record pace. Is there a luxury apartment bubble in the making downtown?
Thanks to a stock market at record highs, luxury home sales, of both condos and houses, are the highest they have been since the bubble peak.
In more good news, the rebound in home prices, and, in some neighborhoods, appreciation beyond the bubble peak, has allowed many formerly trapped home owners the chance to sell and move on.
Will the housing market heat up this spring?
Will prices appreciate, remain flat, or decline?
What about mortgage rates? All of the experts got it wrong in 2014. Will the Fed begin to raise rates in 2015? And if so, will it even influence mortgage rates?
Inventory is off the lows, which nationally was in January 2013. Will it continue to rise?
There’s a lot to watch in 2015. But conditions, economically, are some of the best seen since the bust. That would usually imply a strong housing market.
What are your predictions for 2015?
Rental increases across the board, followed by more stagnation as the middle class deteriorates further and affordability is potentially hurt if/when rates go up. Higher end properties in downtown locations will be fine, as will the rich of course; considering that they are the ones reaping the most gains from the stock market growth.
Employment in the Chicago area is recovering extremely well. We are only 100,000 jobs away from peak employment. To put that in perspective we have gained 162,000 jobs in the last year. So the underlying demand for housing will be there. I think the best guess is that prices will go up another 3 – 4% YOY and sales will be higher in 2015 than 2014 since we will be comparing to a base with fewer distressed sales in it and then we can stop debating whether or not it matters that distressed sales are driving the sales declines.
Can you link the predictions post from last year? I’d love to read it
I predict rates will remain very low (30 yr. @ 3-4.25% throughout the year)
Prices will increase around 2%
Rents will increase around 5%
Bold prediction: Inventory/listings will increase only slightly
market times will remain low
New construction condos/homes in the GZ will fly off the shelves
I hear on my drive home nearly every other day that the Feds would raise rates this year. Assuming the experts know what they’re talking about, then I predicts Feds would raise rates.
This year, prices would start going up slowly in less than prime suburbs (places like Schaumburg).
BTW, if you are interested in actually what experts say, here is an article:
http://fortune.com/2014/12/09/housing-market-2015-predictions/
Here are my predictions for 2015:
– Sabarina will continue to not understand general economics.
– Sabrina will continue to highlight resale of new construction properties that are not selling at their initial sales price.
– Sabrina will continue to use lawyer salaries and the benchmark for how the general job market is performing.
– home delete will move back to the city and finally admit the suburbs are a brutal place to live.
Best of luck in 2015!
For a while now the experts have been predicting about 3 – 5% per year home price appreciation: http://www.chicagonow.com/getting-real/2014/12/home-price-forecast-experts-remain-modestly-optimistic/
“home delete will move back to the city and finally admit the suburbs are a brutal place to live”
That’s a bold call that Long Grove housing will significantly outperform Northside, east of western, SFHs.
“home delete will move back to the city and finally admit the suburbs are a brutal place to live.”
That you are wrong about. I love living in Geneva, IL. It’s a small town with a big city feel! I love walking around the downtown; little quaint shops, major brands like starbucks. I feel like it’s lincoln park for 1/3rd of the price! All of my neighbors are the typical corporate douchebags you’d expect in Lincoln Park, right down to the DB realtors! Except like in LP where the owners are investment bankers or biglaw lawyer, everyone out here is an executive for a F 1000 company also located in the suburbs. I love it out here!
Home prices will increase from 5%-7% because of 1. FHA loosens lending standards 2. Gas prices greatly increase available spending power for American families 3. Fed does everything it can to put off rate increases because inflation is lower than expected with lower energy costs 4. Chicago area employment continues to recover 5. State income tax cut increases take home pay
The price increases take place in all home value brackets. FHA increases lower end prices. Gas prices increase suburbs. Income tax cut and huge employment gains increase the downtown area (this area sees the highest price increases).
Sales volume increases compared to 2014. More homes become positive in equity.
Homedelete,
Geneva is what is wrong with the suburbs. Traffic as bad as chicago yet with nowhere really to go except Walmart and target. As suburban corps continue to move their head quarters back into the city, your neighbors will soon follow. That does not bode well for Geneva as a going concern.
oh gosh, who could forget this!
http://cribchatter.com/?p=21646#comments
Sabrina on January 2nd, 2014 at 9:03 am
“The 10-year treasury, by the way, is solidly above 3% now. Trading at 3.036% today. The bond market is pricing in the taper, obviously, even though it hasn’t even happened yet (first smaller purchase is later this month.)
“
New inventory in the GZ is extremely low and this along with low gas prices, decreasing unemployment and low rates will drive hot demand. There are more tower cranes in Chicago than before 2008. 2015 should be very good for real estate sales, esp. new, but by year end I wouldn’t be surprised if prices begin to stabilize.
“There are more tower cranes in Chicago than before 2008.”
Yes- but these are apartments.
“oh gosh, who could forget this!”
I stand by what I said then and I stand by it now.
The ten year at its current level of 2.17% is a joke and is completely distorted by Central Bank policies around the globe (although the Bund at 0.54% is even more absurd.)
So where does this leave us for 2015? I still believe interest rates will rise but the Fed will be behind the curve in raising (as it ALWAYS raises too late.) The bond vigilantes normally would be pushing up rates in anticipation of the Fed increases next year, but it’s not happening for whatever reason.
Could we have a bond market crash in 2015? Anything is possible. We just had a crude market crash which no one predicted. The Central Bank actions will have ramifications no one has predicted.
It won’t end well.
“Yes- but these are apartments.”
yes a much needed update to our shit-tastic and expensive current stock of apartments in town
“That does not bode well for Geneva as a going concern.”
Geneva is lovely and many people take the Metra downtown (yes- it’s SUPER long, but they do it.)
It has a true historic downtown.
“For a while now the experts have been predicting about 3 – 5% per year home price appreciation:”
That would be “normal” for Chicago historically. Not hard to make that prediction!
“Can you link the predictions post from last year? I’d love to read it”
I don’t think we had one last year.
People have been prediciting the bond market to crash for decades now, I’ve been in the financial business long enough to realize that just because YOU or I may think something is overvalued, it really means nothing. Do I think its crazy that people or governments are buying german 10 year bunds at .54%? Do I think Uber’s 40 Billion valuation is insanity? uh yeah.. but there is no reason rates can not go lower. Japan had negative yield bonds remember? So they can go lower than zero % even!
“We are only 100,000 jobs away from peak employment.”
We are well past peak employment in the “mega loop” – the 11 zip codes listed in that article that Sonies and I both linked to in separate posts. The employment market is hot. But housing is not. Why?
Sellers are unrealistic about their pricing now. They saw the big gains from 2012-2013 and they think that’s still going on. But it’s over.
Sellers who price realistically will sell right away (within a week) and everyone else will sit there lagging.
For those trying to make $100,000 more than just 3 years ago without any rehab (and they didn’t buy a distressed property)- it’s going to be hard because the buyers haven’t exactly gotten pay raises to pay another $100,000. The only thing saving this housing market, as it is, is the lower mortgage rates. When those rise, it will be toast for all but the luxury properties.
We are a monthly payment nation. When that payment rises, people will be priced out (as they are ALREADY priced out.)
One of the “dead” price zones appears to be $400,000 to $600,000.
“The employment market is hot. But housing is not. Why?”
*owner occupied* housing is not hot. Rental housing is hot.
A bit of anecdata, guy I know who lives in Geneva, recently transferred to a Geneva office since he was sick of commuting downtown.
“I don’t think we had one last year.”
Here is one thread:
http://cribchatter.com/?p=21639#comment-285142
Do you think the new jumbo loan rules, capping at $417K (without the bump that other expensive markets have) are having a significant impact on the $400-600K market? If you’re looking to put no more than 10% down, you’re maxed out at $458K. You can do some creative financing, and some banks aren’t requiring the 20%, but that’s the reality for a lot of people.
Conforming loans have been capped at 417k, not jumbos, for a long time. 10% down is quite common today as well, especially on jumbos.
Gary says: “For a while now the experts have been predicting about 3 – 5% per year home price appreciation”
And Mike HG believes: “Home prices will increase from 5%-7%”.
The Chicago CSI for October 2014, announced this morning, was = 129.86. (see page 4 of the link.)
A five percent increase over the next 12 months would take it to 136.35.
Mike HG: I’ll bet you $1 the Oct. ’15 Chicago CSI is less than 136.35.
Gary: a three percent rise would take the index to 133.76. I’m hesitant but I’ll bet you $1, too, that it’ll be less than 133.76.
And if I lose I’ll pay you both at the next CC-meetup.
http://www.spice-indices.com//idpfiles/spice-assets/resources/public/documents/130552_cshomeprice-release-1230.pdf
+8 to +11%
“+8 to +11%”
You willing to give wojo $2 on that?
“+8 to +11%” ?
Of course I’d take unders on 8%, too. Eight percent translates to 140.25 on the Oct. 2015 Chicago CSI. That’d be something to behold. And it could happen! But I’ll bet it doesn’t.
“I don’t think we had one last year.”
“Here is one thread:”
We’ve always had the “first biggest story of 2012” or whatever year it was where we talked about the big themes for the next year. But I don’t think we’ve ever done a prediction thread.
“*owner occupied* housing is not hot. Rental housing is hot.”
They’re building a lot downtown but no one knows if there will be renters for those units. Already, new buildings that just opened in Streeterville are doing 2 months free on the 1-bedroom units. They usually only do the incentives when things aren’t that great. Of course, none of the rents are actually being “cut.”
But we won’t know until the data comes in. It’s always a delayed reaction. Some buildings will start saying it’s “soft” and then the vacancy rate will rise. And then the rental rates will start to drop. But this can take months.
Brand new Optima Center in Streeterville which just opened its doors is offering a “Holiday Special” with units starting at $1999 and 2-months free with select units.
All the prices I remember seeing just a few weeks ago were above $2000 so clearly there is some pricing pressure now. As I always say- you can’t get blood from a stone. There are only so many renters who can pay $2500 for a 1-bedroom in Chicago.
http://optimaweb.com/Homes/OptimaCenter/
I’ll have some new posts next week as people are starting to list again (and re-list properties that didn’t sell in 2014.)
It should be an interesting year. It could be pivotal for the housing market.
“a three percent rise would take the index to 133.76. I’m hesitant but I’ll bet you $1, too, that it’ll be less than 133.76.”
I don’t have access to the current quotes but at the end of November you could have shorted the September index at 134. Go for it!
They just want the building over a certain % leased so they can sell it to a pension fund or whoever for a retarded amount of money. Holidays are always super slow for leasing, obviously. I don’t exactly see rents declining anywhere with of course the few anecdatal exceptions
Predictions:
Park Ridge will continue to be primarily inhabited by 2nd and 3rd generation goomba’s, so construction of white brick, turreted houses with water features will continue;
Humboldt and Logan lose their luster as hordes of pretend hipsters from Ohio and Naperville move in and start complaining about snow cone pushcarts;
An attempted mugging in lakeview goes awry as the intended victim pulls out a Bond Arms derringer and decapitates the perp with a .410 shell. The city rejoices.
more proof of rents increasing… chicagoans spent 1 billion dollars MORE on rent in 2014 than 2013 a 7.4% increase http://chicago.curbed.com/archives/2015/01/02/chicagoans-spent-over-14-billion-on-rent-in-2014.php
I predict that prices in 2015 end slightly flat to down, with a plus or minus of +2% either way.
Per the curbed article sonies linked, if rents increase again at a 7.4% pace in the city, I would have to imagine price gains will be somewhere near that amount as well. As China slows down, Russia fights a depression, and Europe stagnates, America looks like a great place to invest even if stock prices and real estate in places like Miami, SF, etc look bubbly.
“America looks like a great place to invest even if stock prices and real estate in places like Miami, SF, etc look bubbly.”
In real estate, the investors have been pulling out for the last 4 to 6 months. The percentage of investor buyers is well off the high nationwide now. As prices went up, it didn’t pay for investors to buy.
The percentage of investor buyers is still well above the norm, however.
The real problem is the first time home buyer. It is the lowest in 80 years.
Just read that Greece may finally demand (of Germany) that its billions in debt (unpayable) finally be written off, as was done for Germany in 1953. If this is the beginning of the concept (finally) taking hold that all the world’s debt is essentially impossible to repay, then maybe this will be the bottom for global interest rates? Who wants to own sovereign debt as an asset at the rates of interest it pays?
Highland Park will continue to be primarily inhabited by 2nd and 3rd generation JAPs, so construction of kitschy-modern, white, Mullholland-drive wannabe houses with abstract sculptures will continue. Curb side mailboxes and address house numbers will continue to get more immodest.
“As prices went up, it didn’t pay for investors to buy.”
This is a good thing.
predictions of property markets of any country will depends on the following
1 – country’s economy
2 – popularity of the country
3 – country’s job market
4 – security of the country
5 – international property investors / buyers
6 – local in-country property investors / buyers
7 – bank loan rates
8 – debt to loan ratio
9 – government’s measures and involvement in preventing a property bubble
read more property articles below which i found in the net
http://roomwithaircon.com/2014/12/asia-property-real-estate-overview-andy-xie/
http://realestatecommunities.com/5-important-factors-to-consider-in-your-home-search/comment-page-1/#comment-16989
http://www.chitownpropertygroup.com/rising-mortgage-rates-a-hit-to-the-bottom-line/
“This is a good thing.”
Why? In this market, without the investor buyer- the housing market is in the tank (as we’ve seen.) The investors have BEEN the market. They were making up more than 30% of it. Without those 25% of sales, it’s all downhill unless prices come down again which will allow the average buyer to buy.
I just saw a statistic which said that 82% of all Californians are essentially priced out the housing market by normal metrics (down payment, salary ratios.) Of course, Chicago isn’t that bad (thank goodness) but it can’t go on like this. It isn’t healthy for the nation. The housing bust was supposed to make housing more affordable again and take it back to the “norm” but it didn’t do that. Could there be another bust on the way in order to bring back the historic norm? Even California is well over its own expensive historic norm right now.
“Why?”
You don’t want a market of 100% investors. At “the bottom”, they made up the majority of the buyers. As prices go up, the mix of investors vs regular buyers should start to shift. The higher prices go, the lower the % of new buyers will be investors. This makes for a healthy market.
“The housing bust was supposed to make housing more affordable again and take it back to the “norm””
It did. But many people were too slow to act. That’s the problem with waiting for “the bottom”. If you miss it, it is very hard to chase up.
“Could there be another bust on the way in order to bring back the historic norm?”
Not any time soon.
“This makes for a healthy market.”
No it doesn’t. The market hasn’t been “healthy” in over a decade now. It’s still a really sick patient.
If there’s no second housing bust- what happens? Incomes are not rising. Prices will have to stagnate for years in order for affordability to return.
The biggest news of 2015 could be the final bond market blow-off in that bubble market. US ten year at 2.09%. The bund is basically scary now. Way too much money pouring into bonds but that’s what usually happens at the end of a bull market. We see the final euphoria before it all goes to hell.
I know 25-year olds who are buying bonds for their 401ks. The end is near.
“No it doesn’t.”
Yes, it does.
“Prices will have to stagnate for years in order for affordability to return.”
Define “stagnate”. If you mean 2% a year, then what is wrong with that?
“The biggest news of 2015 could be the final bond market blow-off…..”
I believe you said this exact same thing in 2014.
“I just saw a statistic which said that 82% of all Californians are essentially priced out the housing market by normal metrics (down payment, salary ratios.)”
How do you calculate such a metric when you have people of widely varying incomes living in a broad range of towns at dramatically different price levels? Does it matter if someone in Chico can’t afford to live in San Francisco?
The market can’t be overpriced *based upon affordability* because obviously there are enough people making enough money to drive prices to where they are in the first place.
“I know 25-year olds who are buying bonds for their 401ks”
yeah right, sorry but calling BS on that one. IF they are at more than a 25% allocation they are really stupid
“IF they are at more than a 25% allocation they are really stupid”
It’s surprising to you that there are 25-yo (millenials) who are really stoopid about $$? I usually expect more cynicism about the intelligence of the yutes from you.
well those 25 year olds smart enough to actually save money probably know that bonds are a poor investment, maybe? Then again I ride the bus to and from work and see every single idiot’s face plastered to their phone and think, hmmm maybe I am over estimating people’s intelligence
“smart enough to actually save money”
Maybe they’re at ‘opt out’ companies, or there’s a match–which they know is good, but not why.
here you go sabrina
http://online.barrons.com/articles/jeffrey-gundlachs-surprising-forecast-1420259030
“yeah right, sorry but calling BS on that one. IF they are at more than a 25% allocation they are really stupid.”
Nope. Not stupid. Get a company match so they’re putting some in. They asked older relatives (in their 30s) what they should do and they told them to put 50% bonds and 50% stocks. All of them have college educations.
It’s incredible. But it’s a HUGE bubble. And you haven’t lost money in bonds in 30 years (except 1994.) Incredible. So they think it will NEVER happen.
“The market can’t be overpriced *based upon affordability* because obviously there are enough people making enough money to drive prices to where they are in the first place.”
Of course it can. Investors were 30% of the California market. Now that they have left, sales are falling because traditional buyers can’t make up the difference because they are priced out. Additionally, there are plenty of foreign investors in some areas. Prop 13 also gives homeowners incentives to never sell. Many of the owners have been owners for 30 years or more.
The California coast is really insanely priced (go up the coast north of LA by a couple of hours. Not near any major job area and the homes are still $300,000 to $500,000. As if that’s “normal”.) But Sacramento and Riverside and other areas in the interior are also elevated again. Incomes just can’t support it. It’s crazy. I’m glad I no longer live there.
Only some parts of the Chicago area are similarly insane. And even our insanity is nowhere close to the affordability problem that is out there.
But sales wouldn’t be dropping, in Chicago and nationwide, with mortgage rates near record lows, without an affordability problem. Everyone should be buying in droves!
“I believe you said this exact same thing in 2014.”
Of course I did. And I will say it again. The bond market is in a MASSIVE bubble. If you think otherwise Chuk, you are truly a fool. But we all know you’re the only genius here- so clearly you’re not a fool.
I will say it again and again. This could finally be the year of the blow off. Or maybe not.
For those stock market analysts who said in 1997, 1998 and 1999 that the stock market was a bubble and was going to end badly- I salute them. Because they were right. With bubbles, you just don’t know when it will end because it always expands massively at the end to suck more people in (like the 25 year old buying bonds in his 401k. Good luck, dude.)
Think of all the retirees who have literally like 80% of their portfolios in bonds now. Because they haven’t had losses in 21 years. What’s there to worry about?
And maybe 2015 will be wrong again. Maybe it won’t bust until 2016. But I’m not wrong about the diagnosis. (And yeah- I don’t really want to hear about how a broken clock is right twice a day. Actually give me an argument about how I’m wrong. But people can’t so they just have to say, “you haven’t been right so far. Har. Har.”)
This is the most obvious bubble we’ve had since the dot-com bubble. But no one wants to talk about it. It’s all fun until everyone gets crushed down.
The housing bubble also expanded far larger than anyone ever predicted. I thought that would bust in 2005 and it took basically 4 more years. Even in 2008, sellers held onto their bubble like prices. It takes awhile for people to realize the bubble is bursting and the game is over.
There have been some good books written about 2000 and how much money people were funneling into stocks even though it peaked in March of that year. It took until the end of that year for people to realize the party was over. Finally.
So I will say it again: will this be the year the bond bubble finally busts? Or will it suck in even more suckers through one last gasp? Who will get caught when it ends and how bad will it be for the rest of us? I suspect, like most bubbles, it will not end well.
None of this is going to end well. People are WAY too complacent.
“Investors were 30% of the California market. Now that they have left, sales are falling because traditional buyers can’t make up the difference because they are priced out. Additionally, there are plenty of foreign investors in some areas. Prop 13 also gives homeowners incentives to never sell. Many of the owners have been owners for 30 years or more.
The California coast is really insanely priced (go up the coast north of LA by a couple of hours.”
There is no reason to believe that investors overpay for properties. If anything they keep prices from being too low and they keep parity between prices and rent.
The fact of the matter is that San Francisco, LA, and San Diego are still showing healthy YOY price increases. And if there is a disincentive to sell then that will keep prices elevated. It’s all about supply and demand.
“Of course I did. And I will say it again. The bond market is in a MASSIVE bubble.”
So you admit you are just a broken clock. Every idiot knows its a bubble. And those idiots have been run over being “right” at the wrong time.
“If you think otherwise Chuk, you are truly a fool. But we all know you’re the only genius here- so clearly you’re not a fool.”
Knowing it’s a bubble = 1% of the effort
Knowing when it will pop = 99% of the effort
^TNX 1.97
7% move in a day.
Bonds are much more difficult to call a bubble in because even if the mark to market value declines you usually get all your principal back so there is much less panic selling. The market moves soooooo slowly compared to stocks, commodities, housing, etc.
The student loan bubble will probably pop before the bond bubble as there are only a certain amount of ‘buyers’ there and who knows how long that is going to take.
Prediction: Housing mkt will outperform rental market as new buildings come on line and rent vs buy equation is too skewed. Rents will be flat and housing prices will be up 2-4% with GZ prices strongest (+4-6%). The burbs will continue to under perform as more companies move downtown or have satellite offices downtown. Rents will not rise because the new builds have already anticipated this move of workers.
The problem with predicting a decline in bond prices is relative value. US 10yr = 2%. German 10yr = 0.5%. Spain = 2%. Italy = 2.1%. Japan 10yr = 0.3%. Which of these would you rather own? Also during market crashes bond prices rally (ie yields lower). Are all of these 10 yr yields too low? YES. Is the US the tallest midget? YES.
I predict that investing in the housing market – whether in a primary residence or investment property – will continue to be a strong and steady hedge against stocks, bonds, commodities and inflation.
“Everyone should be buying in droves!”
I agree!!
The reason why I think more people in my cohort do not buy is that they are unrealistic and entitled. I have a good friend in Queens. She has a stable, well-paying job with a reasonable amount of security. She is fixated on buying in either Howard Beach or in Long Island close to the city even though those areas are out of her reach. She has a car which she won’t consider giving up even though NYC has excellent public transportation. She goes out to expensive dinners a few times a week with her girlfriends. She only goes to trendy bars and will not set foot in a dive bar. To her those are all “needs” and not “wants”. She says what’s the point if you can’t enjoy yourself. But she can’t compromise and enjoy herself doing something more casual. She is incapable of any sort of temporary sacrifice or discomfort for a long-term goal.
She had a boyfriend who worked in construction and made significantly less than she did. This boyfriend bought a fixer-upper in Ozone Park a couple of years ago. Ozone Park is meh – not great, but not terrible either. My friend said she’d never marry him because he was fine with living in Ozone Park and they just didn’t have the same lifestyle in common. I was like “Come on! This guy’s the real deal. He has good values. He bought what he could afford. He put in some sweat equity. Now that house is worth WAY more then what he paid for it. He’s so smart! Much smarter than a guy who makes a high salary and blows it on superficial things, and he loves you like crazy.”
But she gave him up. She has rented for quite awhile. If she had bought what she could afford a few years ago she would have built up a significant amount of equity by now and she would have had a fixed cost for housing. There is SO MUCH that is affordable in Chicago in great neighborhoods if people just compromise a little. Everyone can afford to buy in Chicago. Honestly I don’t understand why my long-term tenants rent instead of buying.
Milkster – regarding your tenants – do you think its 1. complacency 2. flexibility of renting or 3. financial situation that keeps them from buying? I guess a lot of careers are more nomadic now so I can see the flexibility of renting being appealing. The housing bust may have spooked potential buyers and changed attitudes regarding housing for awhile. Also – sounds like your friend’s ex-BF dodged a bullet!
The rental boom in Chicago is very impressive and happened very quickly. I rented out my 3br in RN for $4200/mo in 2012. My realtor thought I would get $3100 for it! I had offers of paying all 12 months rent up front. With all the building going on and the relative cheapness of buying I just don’t know how the rental market can continue going up which doesn’t bode well for 2/2’s in the GZ since in my opinion the target audience for that is transitory and they should be owned by investors.
There is still a shortage of 3BR+ in the GZ relative to demand right now. I think this is because city keeps getting better and more people are choosing it over the burbs relative to the past.
“She goes out to expensive dinners a few times a week with her girlfriends. She only goes to trendy bars and will not set foot in a dive bar.”
Well, if she didn’t do that stuff, she might as well just move to Topeka, right?
“2015 Housing Market Predictions: What Do You Think Will Happen [This] Year?”
Just might be the year that I buy (possible I have said that before, though I don’t think so).
I will miss outsourcing everything to the landlord, such as a couple weeks ago when our furnace went out. Htough if I owned, also possible the furnace would not have gone out, as I wouldn’t be trying to jury rig (@fo is that right? is it jerry rig or is that only when the krauts are involved? am i confusing w jury tampering?) repairs to an ancient furnace.
“jury rig (@fo is that right? is it jerry rig or is that only when the krauts are involved? am i confusing w jury tampering?)”
after gthooi: ‘jury rig’ is the original (nautical), ‘jerry rig’ is a great war/WW2 eggcorn related to the Krauts, and ‘jerry built’ is somehow related, too, and might be the real source of the crossover to jerry.
“trying to jury rig repairs to an ancient furnace”
Watch out for the Bumpus Hounds!
“She had a boyfriend who worked in construction and made significantly less than she did. This boyfriend bought a fixer-upper in Ozone Park a couple of years ago. Ozone Park is meh – not great, but not terrible either. My friend said she’d never marry him because he was fine with living in Ozone Park and they just didn’t have the same lifestyle in common. I was like “Come on! This guy’s the real deal. He has good values. He bought what he could afford. He put in some sweat equity. Now that house is worth WAY more then what he paid for it. He’s so smart! Much smarter than a guy who makes a high salary and blows it on superficial things, and he loves you like crazy.””
“But she gave him up.”
Sounds like something from Chateau Heartiste website. Beta guy lucky to lose that bitch. She would have cheated on him anyway.
“Bonds are much more difficult to call a bubble in because even if the mark to market value declines you usually get all your principal back so there is much less panic selling.”
Um…no.
Definition of a “bubble” from investopedia:
” Bubbles form in economies, securities, stock markets and business sectors because of a change in the way players conduct business. This can be a real change, as occurred in the bubble economy of Japan in the 1980s when banks were partially deregulated, or a paradigm shift, as happened during the dotcom boom in the late ’90s and early 2000s. During the boom people bought tech stocks at high prices, believing they could sell them at a higher price until confidence was lost and a large market correction, or crash, occurs. Bubbles in equities markets and economies cause resources to be transferred to areas of rapid growth. At the end of a bubble, resources are moved again, causing prices to deflate. Thus, there is little long-term return on those assets.”
How many billions of dollars are now moving into bonds compared to even a year or two years ago? There are RECORD levels of cash moving into the bond market. Oh- and investors don’t believe they can lose money in the asset class.
Classic signs that a top is forming. When will it “burst”? Who knows. This year or next year or perhaps 5 years from now. But it WILL burst.
Bonds move in cycles just like every other asset class. Before this bull run, bonds did nothing. They WILL go into a bear market again. It’s inevitable.
But this is a GIGANTIC bull run. It’s larger than ANY bull run in stocks or real estate. And it’s going to end very, very badly.
“7% move in a day.”
It was more than this.
Yeah. Because moves like that in treasuries are SO normal. It happens all the time!
“Knowing when it will pop = 99% of the effort”
I’m sure YOU know Chuk. You’re the genius.
Wait a minute. I think you’re really Bill Gross, the Bond King. He MUST know, right? But wait! He bet against the bond market two years ago and was completely wrong. It STILL hasn’t burst.
And if everyone KNOWS it’s a bubble (just like you know Chuk) then they’d be playing for that. Instead, billions of dollars are moving INTO the trade, not out of it. Huh. Go figure.
But they’ll ALL time it right. Just like all those genius housing investors and hedge fund managers timed the housing bubble and dot-com bubble.
What a joke.
This is the longest running bull of modern times. No one has ANY fear in it. None. Zippo. Bulls like this only end one way: badly. And, unfortunately, once again, the entire global economy will get caught in it.
The Fed has added over $3 trillion to its balance sheet in just 6 years. It won’t be able to do anything when the crap hits the fan.
All of this is unprecedented. Sadly, few see it.
“It’s all about supply and demand.”
Yes. Sales dropped year over year every month last year except for one. Nationwide, sales are down in most major metropolitan cities and they were down nationally in 2014.
Inventory is off of the recent cycle low.
Dropping sales indicate that demand is down.
But why?????????????????
Mortgage rates could go back to the lowest on record if the bond market mania continues. The job market is the best in 15 years.
Where the hell are the buyers?
There are two sides to the equation – supply and demand – and volume doesn’t mean that much (I’m assuming that what we are really interested in here are prices). Prices can go up or down by a lot with or without huge volume. In this case supply is way down and the demand is actually greater than the supply. So that should mean upward pressure on prices. However, I’ll admit that the YOY price changes are looking pretty weak right now and that has me scratching my head.
I’m working on my December update right now and non-distressed sales looked decent.
“I’m sure YOU know Chuk. You’re the genius.”
Thanks.
“and that has me scratching my head.”
Don’t forget to give the balls some attention, too.
Mortgage purchase applications for the last two weeks of December were down 5% compared to the first two weeks of the month.
December is the slowest month of the year for mortgage applications. But year over year, the purchase applications were down 8% for the last 2 weeks of the month, and in 2013 there was horrible weather (snow and cold) in 2/3rds of the country.
This data indicates that January and February will be weak. This continues the trend we’ve seen in all of 2014 despite the lowest mortgage rates in 18 months.
“All of this is unprecedented. Sadly, few see it.”
I guess you’re the genius, then, with all the seeing what almost no one else sees.
“Bonds move in cycles just like every other asset class. Before this bull run, bonds did nothing. ”
yeah… except for that whole ‘paying income to people with a lower risk tolerance thing’….
“Yes. Sales dropped year over year every month last year except for one. Nationwide, sales are down in most major metropolitan cities and they were down nationally in 2014.
Inventory is off of the recent cycle low.
Dropping sales indicate that demand is down.
But why?????????????????
”
because prices have risen. This is a much more normal market with much more inventory. Didn’t you say 2012/13 was too hot? Inventory too low?
Here’s my December update: http://www.chicagonow.com/getting-real/2015/01/chicago-real-estate-market-update-2nd-best-december-in-8-years/
2nd best December in 8 years. Fast market times. Low inventory. Non-distressed home sales up 8% over last year. Doesn’t sound like a bad market to me – unless of course you are preoccupied with sales of distressed properties or who is buying or whether or not anyone can live wherever they want for whatever price they can afford.
“Sounds like something from Chateau Heartiste website. Beta guy lucky to lose that bitch. She would have cheated on him anyway.”
She is a really good person, but she is a little superficial and doesn’t see the forest for the trees. She also grew up LMC in Queens in the shadow of Manhattan and developed a skewed outlook that shiny material baubles connote success.
She makes the mistake that a lot of women make, waiting for a man to come into the picture before she buys a house and before her life can really begin.
I’m no feminist, but I’m a proponent of women buying property on their own. Why depend on someone else for your security or happiness?
“I’m no feminist, but I’m a proponent of women buying property on their own.”
From the perspective of about half the world, that makes you a feminist.
Unless you are talking about women buying other women.
“I’m no feminist, but I’m a proponent of women buying property on their own. Why depend on someone else for your security or happiness?”
Exactly Milkster. Well said.
In this era, there are plenty of women who are buying on their own. In fact, the last I looked, more single women are buying property than single men. It’s the MEN who wait until they get married to buy- more than the women.
“because prices have risen. This is a much more normal market with much more inventory. Didn’t you say 2012/13 was too hot? Inventory too low?”
But the whole point Sonies is that is should NOT be a normal market. The conditions are such that it should be hot, hot, hot. It shouldn’t be taking people 4 months (or longer) to sell a property in Lakeview or Lincoln Park. It just shouldn’t. Yet it is.
And where are the buyers? Why aren’t they out in droves? Why aren’t they out like they were in 2012 and 2013? I keep waiting for it to improve. Maybe it will in February and March. Maybe then it will turn “hot”. As long as those mortgage rates stay low, it is a favorable environment, especially with a rapidly improving job market.
“Doesn’t sound like a bad market to me – unless of course you are preoccupied with sales of distressed properties or who is buying or whether or not anyone can live wherever they want for whatever price they can afford.”
So sales were down again. That means they were down 11 out of 12 months last year at a time when mortgage rates were a whole percentage point lower than the year before and the job market was stronger.
That makes no sense.
First time homebuyers continue to be the lowest percentage in 85 years.
Without them, there really isn’t much of a market. Maybe that’s the problem.
It’s not taking people quite 4 months to sell a property. Single family homes on average across the entire city sell in 109 days. In Lincoln Park it’s been running around 100 days but that’s for properties with an average price of $2 MM. What do you expect? Condos in LP sell in about 75 days.
Does this mean that you can put any property in any condition on the market at any price and expect it to sell quickly? Hell no!
There are buyers out there…just waiting for the right property to come along.
Sales of non-distressed properties were up again. That’s healthy and makes total sense in light of lower mortgage rates and a good job market. And I really don’t care if first time homebuyers are buying or not. I just care about the total market.
All the reluctant landlords are watching their principal balances decline and just waiting for the day when they don’t have to bring money to closing so they can get out of landlord purgatory. My phone is ringing. They want to sell. There should be more inventory this year because principal balances are lower than last year.
“Does this mean that you can put any property in any condition on the market at any price and expect it to sell quickly? Hell no!”
But in 2012 and 2013 anything and everything was selling almost immediately. There were bidding wars even on properties that weren’t that great. People were paying over list prices. But that has all gone away even though market conditions are actually better now.
It makes no sense.
Also, if inventory was truly “low” it wouldn’t take condos in the prime neighborhood of LP to sell in 75 days. It’s supply and demand.
Where’s the demand?
By the way- the $2 million buyer is pretty much irrelevant. We KNOW that market is doing well because the stock market keeps hitting record highs. Until that changes, that market will be fine.
It’s the other 99% of the population that isn’t buying.
“But in 2012 and 2013 anything and everything was selling almost immediately. There were bidding wars even on properties that weren’t that great. People were paying over list prices.”
2012 was the bottom of the market and a lot of buyers felt it. 2013 sale prices were actually closer to list than in 2012 and 2014 is about the same, although there has been a slight decline in the last 6 months. But there are two parts to that equation – list price and sale price. If list price is higher then it’s going to be harder to approach it and/ or beat it.
“at a time when mortgage rates were a whole percentage point lower than the year before and the job market was stronger.
That makes no sense.”
It makes no sense to you. Maybe you need to rethink what you “know” about how the housing market works?
“But in 2012 and 2013 anything and everything was selling almost immediately. There were bidding wars even on properties that weren’t that great.”
Ummm. That’s because the properties were $99k. Now they are $199k. It’s not that difficult to see why there aren’t the same bidding wars now.
“Ummm. That’s because the properties were $99k. Now they are $199k. It’s not that difficult to see why there aren’t the same bidding wars now.”
No. These properties were $750,000, $900,000, $1 million+.
I covered several of the upper bracket properties on this blog that had “best and finale offer within 24 hours” requirements. All were in the GZ and all were expensive. They weren’t foreclosures or short sales either.
Where have those all gone? Why aren’t buyers of $900,000 4-bedroom houses in Bucktown overbidding anymore? Are there just less buyers than 2 years ago? If so- why? Or did supply in that price range rise so there was no need for the multiple bids? From the listings, it doesn’t appear that we are now flooded with million dollar houses in the GZ.
So why aren’t there buyers when the market conditions are actually BETTER?
Here’s an example of one of the properties we chattered on that had multiple bids almost immediately upon coming on the market. It’s in Lakeview and it’s not priced at $99,000.
Where are these properties? Why aren’t we seeing this? Mortgage rates are back to where they were when this property sold and buyers were swarming it. The job market is 10 times better. The stock market is literally up another 45% since this post.
http://cribchatter.com/?p=16597
Properties like these are selling in record quantities but because list prices are higher there is no need for multiple bids.
Here’s another post discussing multiple bids and how properties were under contract within 24 hours of being listed.
http://cribchatter.com/?p=16520
There are a lot of anecdotal stories in the comments but it definitely was happening. Is anyone seeing this now? Maybe we have to wait until February to see it (as this post is February 2013 which is normally the start of the spring buying season.)
But as I’ve said before, I had a friend trying to buy a million dollar house or townhouse in the GZ in the spring of 2013 and they were outbid several times and ultimately just gave up (and stayed in their high rise condo.) They were having a baby and thought they “had” to move to something bigger. They discovered the condo was fine with just one child and still live there.
But they would leave work in the middle of the day and rush out to see properties the first day they were listed because they had an “offers within 24 hours clause.” But I’m not hearing ANY of these stories right now.
Here’s another post from February 2013. A 3-bedroom condo in Southport listed at $449,000 that “sold before print.”
http://cribchatter.com/?p=16639
Here’s a post from January 2013 where a loft went under contract in Lincoln Park within days.
Obviously, some properties right now are also going under contract almost immediately. But this was happening all over the place in January/February of 2013.
http://cribchatter.com/?p=16475
Here’s a January 2013 post about an multi-unit building in Lakeview that had an “offers by 5 pm on Friday” clause.
http://cribchatter.com/?p=16438
“Properties like these are selling in record quantities but because list prices are higher there is no need for multiple bids.”
So the difference between 2013 and 2015 is that in 2015 the sellers are overpricing?
So the number of buyers are the same for that $750,000 property but because they are listing it at $850,000 instead of $750,000 it is sitting on the market for days, weeks, months. Or ditto for the $450,000 properties that were selling “before print” in 2013 but, again, are just sitting on the market.
This is the problem with focusing on anecdotal data. In total homes in Lake View and Lincoln Park are selling as fast today as they were in the early part of 2013. It’s just that they are no longer being priced stupid low.
“So the difference between 2013 and 2015 is that in 2015 the sellers are overpricing?
So the number of buyers are the same for that $750,000 property but because they are listing it at $850,000 instead of $750,000 it is sitting on the market for days, weeks, months. Or ditto for the $450,000 properties that were selling “before print” in 2013 but, again, are just sitting on the market.”
Not exactly. There are more higher priced properties on the market. Some are overpriced and being withdrawn quickly. Others are priced higher than they would have been in 2013 and are selling quickly but not with multiple bids in 3 days. The market is fine.
“So why aren’t there buyers when the market conditions are actually BETTER?”
Define “better”. Are prices 200k higher “better” for buyers?
How is this unclear to you?
I don’t care what price point you are talking about.
Take a property was priced at $800k in 2012 and went under contract with multiple bids and sold for $850k.
If that SAME property comes on the market now at $1mil, are you surprised that there isn’t the same bidding war? In almost every case, that property is NOT coming back on the market at the 2012 price. If it did, there would be a bidding war.
“So the difference between 2013 and 2015 is that in 2015 the sellers are overpricing?”
No.
Sabrina,
You do know there are MULTIPLE inputs into the housing equation formula, right? Interest rate is only one of them. Let’s look at a typical property that was going under contract with multiple offers in 2012.
2012:
400k at 3.5% = $1796
2013:
475k at 4.5% = $2406
2014:
550k at 3.5% = $2469
Now, are you surprised that the property does not have the same bidding wars as it did in 2012? Are you surprised that sales/prices are relatively flat YoY?
“Let’s look at a typical property that was going under contract with multiple offers in 2012.”
The *typical* property increased in price by nearly 40 percent from 2012 to 2014?
“The *typical* property increased in price by nearly 40 percent from 2012 to 2014?”
Not the typical property.
The typical property that had bidding wars and sold within days. Which was the type of property we were discussing. Foreclosures, short sales, etc.
And your answer is yes.
“And your answer is yes.”
I don’t know that you are wrong, but I think it is show me time. Just a couple of examples of pre/post prices will suffice.
“Are you surprised that sales/prices are relatively flat YoY?”
Also, how does your example support this? Either your example is relevant to whatever price level you are talking about, in which case rices are going up in your example. Or it is not relevant, in which case it is not relevant.
“I don’t know that you are wrong, but I think it is show me time. Just a couple of examples of pre/post prices will suffice.”
No incentive for me to do the legwork. I have nothing to gain. I’m sure Gary has some stats on price increases.
Speaking from my own experience, the one property I sold already has doubled in price from where I bought it in 2012. I sold it in spring of 2014 for about 85% higher. Similar units have since gone for more. The one I still own has doubled as well. Both were foreclosures bought in cash.
What do YOU think the average property (not even the bidding wars ones) has increased since 2012?
“Also, how does your example support this?”
That decrease in mortgage rates are offset by increases in price, resulting in a similar monthly nut. Which results in similar sales. And comparing 2014 to 2012 is just plain stupid.
“but I think it is show me time”
http://blog.lucidrealty.com/wp-content/uploads/2014/04/Case-Shiller-Chicago-Year-Over-Year.jpg
“But the whole point Sonies is that is should NOT be a normal market. The conditions are such that it should be hot, hot, hot. It shouldn’t be taking people 4 months (or longer) to sell a property in Lakeview or Lincoln Park. It just shouldn’t. Yet it is.”
Just because you think the market should be hot doesn’t mean anything, as evidenced by your lack of understanding simple things such as supply and demand.
“Where have those all gone? Why aren’t buyers of $900,000 4-bedroom houses in Bucktown overbidding anymore? ”
Inventory sucks. A quick search on Redfin shows 4 homes under 1 million for sale with 4 bedrooms. And yes, i know it’s January.
“No incentive for me to do the legwork. I have nothing to gain.”
It’s a common understanding here that if you want to make such claims you have to have some support (unless you run the joint).
“http://blog.lucidrealty.com/wp-content/uploads/2014/04/Case-Shiller-Chicago-Year-Over-Year.jpg”
Is this in support of your point in some way?
“Both were foreclosures bought in cash.”
I didn’t realize we were comparing cash foreclosure sales from before to current non distressed sales.
“What do YOU think the average property (not even the bidding wars ones) has increased since 2012?”
I only really have a sense of certain areas, generally the more “desirable” ones. Land in some areas has gone up a lot, maybe by 30-40 percent trough to current, more in really “hot” areas. A regular house? I dunno, maybe 15-20 percent (but depends on what sales you pick as representative of trough). I do think pricing increases mostly tapered off middle of last year. maybe going up low single digits (not enough precision to tell), but nothing like prior couple years. More like a normal market. It is in this sense that the claim that the market has “cooled” (perfectly reasonable to dispute whether this makes sense as “cooling”) has some merit, IMO.
“That decrease in mortgage rates are offset by increases in price, resulting in a similar monthly nut. Which results in similar sales.”
Your statement included claim that prices were flat YOY.
“I didn’t realize we were comparing cash foreclosure sales from before to current non distressed sales.”
Of course we were. And that is the whole point. What was selling in 2012? What was going under contract within days? Foreclosures and short sales. And most of those were cash deals. You didn’t have bidding wars and sold before print on “conventional” listings in 2012.
What is selling 2014? The foreclosures are mostly all gone. And the ones that are around are being OVERPRICED by the banks.
I’ll make it easy. Case Shiller is up 30% from the bottom.
Add in 10% for “under contract in 1 day” properties = 40%
“Your statement included claim that prices were flat YOY.”
I was just being sloppy. Most of the big gains ended in spring 2014. So since spring 2014, it has been mostly flat. But there were large gains from spring 2013 to spring 2014.
“Is this in support of your point in some way?”
Yes.
“It is in this sense that the claim that the market has “cooled” (perfectly reasonable to dispute whether this makes sense as “cooling”) has some merit, IMO.”
What exactly do you think I am arguing? Of course the market has “cooled”. I am explaining WHY it has cooled. I am simply explaining why there aren’t bidding wars now like there were in 2012, despite Sabrina claiming that buying conditions are “better” now.
“Why aren’t buyers of $900,000 4-bedroom houses in Bucktown overbidding anymore?”
You are basically asking why this place isn’t selling:
https://www.redfin.com/IL/Chicago/2049-W-Mclean-Ave-60647/home/13356483
“You are basically asking why this place isn’t selling:”
Feb 22, 2013 Sold (MLS) (Closed Sale)
$551,250
“Check the pictures out to see how beautiful it is.”
I wish I had not… eww
“Of course we were.”
I’ll admit I basically tune out when there is an extended sabrina-cdc discussion, so I don’t really have any idea what you two were up to. I’ve heard the multiple offers as sign of hotness applied to regular sales as well as cash foreclosure sales. I don’t think regular prices have gone up 40 percent. (Also thought wo checking the case shiller increase were more like 10 percnet a year rather than 15.)
“Land in some areas has gone up a lot, maybe by 30-40 percent trough to current, more in really “hot” areas.”
Near-to-me examples of teardowns: Trough (Q1-10) = ~$450k; recent = ~$750k. So, +50-60%, easily.
“I don’t think regular prices have gone up 40 percent.”
No one was talking about regular prices. Those have gone up 30%. We were talking about “bidding war” properties. Those have gone up 40-100%.
“Feb 22, 2013 Sold (MLS) (Closed Sale) $551,250”
Feb 15, 2007 Sold (Public Records) $1,200,000
AND
Feb 22, 2005 Sold (Public Records) $745,000
Probably would have ‘sold before list’ at $825.
“(Also thought wo checking the case shiller increase were more like 10 percnet a year rather than 15.)”
As of Feb 2014:
Single family home prices have recovered 21.9% from the lows of March 2012, while condominiums have bounced back 30.1%.
I don’t understand how someone who chooses to rent instead of buy is having trouble understanding why people are choosing to rent instead of buy.
“Single family home prices have recovered 21.9% from the lows of March 2012, while condominiums have bounced back 30.1%.”
I don’t care about condos.
“I don’t care about condos.”
I don’t care about SFH.
““I don’t care about condos.”
I don’t care about SFH.”
I only care about double lots.
“I only care about double lots.”
I only care about the Near North side
I only care about Des Plaines.
Also sabrina, it appears as though the gubment is going to try and juice up the first time homebuyer demand by reducing the cost of PMI
http://finance.yahoo.com/news/fha-just-cut-major-expense-130035296.html
“I only care about Des Plaines.”
Are you following the style of HD, where “Des Plaines” actually means Hinsdale or Highland Park or Andersonville or something?
Or are you speaking french?
Or are you honoring Herve?
Because its not believable that anyone cares about Des Plaines, IL.
All of the above?
So much of this discussion is based upon anecdotes and might be specific to individual neighborhoods. That’s why I only really pay attention to the Case Shiller index or aggregate sales stats unless I’m trying to price a specific property. However, you can draw minor conclusions from properties that are fairly similar – e.g. teardowns or new construction from the same builder.
Look at East Village. When I moved here 2 1/2 years ago teardowns were going to around $180 – 190K. Recently they have gone as high as $400K. 4300 Sq Ft. Noah Properties new construction was going for around $900K. Now it’s going for $1.2 MM. Oh…and those new construction homes are selling pretty fast – but not in days with multiple bids.
I think the question is better asked is if this the new normal for homes in certain areas of Chicago? Or is this a dead cat bounce that’s taking advantage of the cheap money that’s being floated by the government? And are that many people able to pay the monthly nut without being leveraged to the gills? Maybe the buyers are so used to paying high rents that they don’t blink at paying it for a mortgage.
Or is this another case of lenders encouraging buyers to take out as “much as they can possibly afford, screw savings because the equity in the home will take care of that problem?”
I’m too lazy to search, but are any of these $1.4m homes built in Nort’ Center a few years ago seeing much in the way of appreciation?
“Noah Properties new construction was going for around $900K. Now it’s going for $1.2 MM. Oh…and those new construction homes are selling pretty fast – but not in days with multiple bids.”
This is only the result of the stock market being at record highs. For once, I would like someone to point to a “hot” market that isn’t for the rich.
If the stock market has a major pullback (20% or more) then the sales in the upper bracket will fall as well. It is exactly what happened in 1999 and 2008.
“Also sabrina, it appears as though the gubment is going to try and juice up the first time homebuyer demand by reducing the cost of PMI”
Yes- they’re cutting the cost of FHA mortgages (will save a family $900 a year, apparently.) But FHA has been dropping for several years anyway. It’s no longer a big driver. Maybe that’s because the first time buyer has gone away.
They are desperate to boost the first buyer pool. Without first time buyers, the market is dead. It’s what drives everything. You can’t have anyone move up unless someone first buys their starter house.
“Of course we were. And that is the whole point. What was selling in 2012? What was going under contract within days? Foreclosures and short sales.”
Nope. Wrong.
“Nope. Wrong.”
Says the person who didn’t buy anything in 2012…
Bri and chuk should just go on a date already,
“Says the person who didn’t buy anything in 2012…”
What does that have to do with ANYTHING? It doesn’t.
I run this blog. I look at thousands of properties in every neighborhood (yes- even Austin and the areas outside of the GZ.) Sure- foreclosures were selling in 2012. They’re selling now. And yes, investors were bidding them up in 2012 and 2013.
But that’s NOT what we’re talking about. We’re talking about GZ properties that were getting multiple bids in 2012 and 2013. “Normal” properties. 4-bedroom million dollar houses in Lincoln Park. $500,000 3-bedroom townhouses in North Center or Roscoe Village. 4-bedroom houses in Wicker Park.
Where are the bidding wars now? The buyers should be the same. Same low mortgage rates. Same prices (houses still $1 million.) Why isn’t anyone going crazy now???
Stock market is now 45% higher. Everyone at that price point is richer. These are the same “normal” buyers as last time.
I don’t get it. And prices aren’t up that much since 2013 in Bucktown or LP or Lakeview. Whatever you were paying then, you’re basically paying it now because those 2013 buyers were already paying the appreciation because of the multiple bids.
It’s just a really weird market. The Fed can’t figure it out either. They will try and keep mortgage rates low for as long as possible with the hope that maybe housing will have a real recovery- but once those rates rise the affordability problem will get much, much worse. The housing market is really going to go into the crapper then.
Buy now or be priced out forever.
” I would like someone to point to a “hot” market that isn’t for the rich.”
Make the exchange post a forward SNAPS contract. We could have a bubble in SNAP swaps just for the po’
“Same prices”
Wrong
“Make the exchange post a forward SNAPS contract. We could have a bubble in SNAP swaps just for the po’”
Really? This is all you’ve got?
I get so sick of this. There are millions in the middle class. Many more millions than are on SNAPS.
Are they benefitting from this recovery? Where do they buy a home? Plainfield? Because they’re completely priced out of any interior suburbs (possibly even Berwyn, but I haven’t checked those listings lately.)
Are there bidding wars on the $150,000 house in Joliet or Lockport or Orland Park?
“$500,000 3-bedroom townhouses in North Center”
Huh?? Show me one that sold for over list.
“Are they benefitting from this recovery? Where do they buy a home? Plainfield? Because they’re completely priced out of any interior suburbs (possibly even Berwyn, but I haven’t checked those listings lately.)”
They will benefit as soon as wages go up, which they inevitably will. As for where they will buy a home…where they can afford it…which is the way it’s always been. I’m priced out of Lincoln Park. It’s not a problem.
So because there aren’t bidding wars, its a great time to buy? Am I following this correctly?
“So because there aren’t bidding wars, its a great time to buy? Am I following this correctly?”
No.
If you are a buyer, prices are too high.
If you are a seller, prices are too low.
Do I have that right Sabrina?
I’m so confused. I think i’m going to stick to my own “crazy” predictions
“Really? This is all you’ve got?”
Yes, poor people smell funny and we should pretend they are not there.
Interesting article on teardowns and mega-mansions:
http://www.dnainfo.com/chicago/20150112/lincoln-park/lincoln-park-megamansions-on-rise-including-one-on-seven-lots
This is good for the GZ no doubt. The fact that the ultra wealthy are staying in the city is a big deal – and they aren’t choosing penthouses on Michigan but SFHs. In the past these would be going up on the lakefront in Highland park rather than Lincoln Park.
Also – anyone driven by the new Google building on Fulton? It is very impressive. That area is only going to get better in my opinion.
Lastly – Sabrina – are you saying the housing market is bad because it should be amazing given stock market / rates? And therefore if the economy gets worse it will all go to sh!t because even in a great environment its not hot?
Yoss, some poster here for years has said to find solid properties with good land value in Lincoln Park. This same poster predicted a trend of the rich moving and staying in areas like Lincoln Park. Some lady who runs a blog told this poster he was wrong and crazy and that “lawyers wages are hurting and that nothing will go up in price”. Lucky this poster followed his own advice and purchased a bunch of LP land in 2008 – 2011.
I recommend all of you get your real estate advice from someone other than Sabrina. She knows nothing about supply and demand, and nothing about trends within seconds of markets. Lots in Lincoln Park sold for $800k back in 2008. Some are now selling for $1.5 million. Would you rather have owned that tear down, or have been the renter who was asked to leave when the developer stepped in?
Sabrina?
From the Article Above:
“A DNAinfo Chicago analysis of the teardown data found that in the mid-to-late 2000s builders were constructing a mix of multiunit and single-family homes through teardowns. That is no longer the case over the last three years, with all but two of 83 teardowns being given permits to build single-family homes.”
It’s just a matter of time before a 12′ high razor wire electrified fence is constructed around the perimeter of some of these neighorhoods. The poors will be given an ID for admittance to do things like cook, clean and landscape, but that’s about it.
HD – “It’s just a matter of time before a 12? high razor wire electrified fence is constructed around the perimeter of some of these neighorhoods. The poors will be given an ID for admittance to do things like cook, clean and landscape, but that’s about it.”
I don’t understand this mentality. Having ultra wealthy people move into / stay in the city is a win / win for others. Fewer people using city services (no way a billionaire’s kids go to public school) yet paying the same in taxes (although probably more because the assessed value of one of these mega mansions is higher than the individual buildings its replacing). You think its better for the city if they are in the burbs? Also – if they wanted an “electrified fence” barrier they’d have moved to a penthouse in the GZ with a doorman. The fact they chose a SFH show’s that is not the case.
yoss, it’s easy to hate the rich. Remember, they’re not like you or I.
Sure they pay property tax and use less services – but that is NOT the #1 factor nor is is the most imporant factor in deciding whether or not the entire character of a neighborhood should change to fulfill the sick mcmansion fantasies of the ultra-wealthy.
This is really no different than the lord building himself the largest manor in town. At least in teh days of Downton Abbey they had the reasonableness to build their monstrosities out in the rural areas outside of town. These days the rich wants to live in town.
….and drive the ‘poor’ out to the suburbs
So the entire character of a neighborhood should never change? It constantly does and on average over the long run it’s usually for the better.
“probably more because the assessed value of one of these mega mansions is higher than the individual buildings its replacing”
In general, that may be right, but my suspicion is that (a) mega mansions are typically under ass’d and (b) in specific cases, they may not even pay much more than what would otherwise be there.
Can the taxes on this place as listed on redfin really be right?
https://www.redfin.com/IL/Chicago/1955-N-Burling-St-60614/home/13348188
[1955 Burling]
That is, as usual for RF with these big props, only one of the PINs. There are actually *5*, with the AVs being 283,542; 275,836 (twice); 20,756 and 56,140, for a total of 912,110, and a total tax bill of about $170k.
Still means it’s assessed as if it’s worth half of the asking price.
ps: for comparison, 1963 (the building just north) just sold for $1.3m
https://www.redfin.com/IL/Chicago/1963-N-Burling-St-60614/home/13347991
and has an AV of 103,805 (until it’s torn down and something new and big put up).
“Still means it’s assessed as if it’s worth half of the asking price.”
Based on the way G would describe the general ass process, it never sounded as if there was much of a means whereby houses that were worth a lot more than would be indicated solely by sq foot, location, and whatev other explicit factors go into the comparisons. Can maybe appeal down but won’t be appealed up. Are ultra luxe properties ass’d by the same process as everything else or is there something individualized? G?
“as usual for RF with these big props, only one of the PINs”
Now that you mention it, I think this has come up before.
Like many here I had a suspicion that high end properties were not taxed at the same level as lower end properties. So I analyzed it and, while I did find a bias, it wasn’t anywhere near as bad as I thought it was: http://www.chicagonow.com/getting-real/2014/08/chicago-property-taxes-hit-poorest-disproportionately/
…except at the very low end it’s out of whack.
Lincoln Park is on its way to becoming the Chelsea or Kensington of Chicago. These stories about the teardowns and multiple properties being bought up and combined into one SFH is going to accelerate. I think it is a good thing for LP and the GZ in general, as the quality of housing stock goes up. As far as the tax assessments go, I am not sure if they are underassessed.
Whatever happened with the old Childrens Memorial hospital property? Did the condo building get approved?
HD – “yoss, it’s easy to hate the rich. Remember, they’re not like you or I.”
Maybe not like you…
“but that is NOT the #1 factor nor is is the most imporant factor in deciding whether or not the entire character of a neighborhood should change to fulfill the sick mcmansion fantasies of the ultra-wealthy.”
If you want landmarked areas then there is OTT. This anti gentrification vitriol is idiotic. Were you against the redevelopment of Cabrini Green? That has led to more shopping at Halsted and North (apple / WF mega store) which has led to more condo’s (SoNo 1&2 / 1225 n wells / etc) which has led to more restaurants / shopping (Mariano’s / Arcligh cinema) which will lead to more development and so on and so on. Its not like the mega mansions are taking the place of high rises – instead of 3 $2-3mm homes there is 1 $10-15mm mansion. Besides – you don’t even live in the city (let alone that hood) so why do you care? Ask the people who own on those blocks if they want that mansion built. As long as there isn’t a butt ugly blue statue out front the answer will be a resounding YES. Also – ask those sellers of rowhouses that are getting torn down if they are unhappy. They will be too busy counting their $$$.
“At least in teh days of Downton Abbey they had the reasonableness to build their monstrosities out in the rural areas outside of town. These days the rich wants to live in town.”
Because in those days downtown (London) was a cesspool of disease and garbage. Literally there was toxic smog from the Thames. The rich want to live downtown now. How is that a bad thing? Oh right – its only a bad thing if you live in the burbs and are watching them bleed out in real time.
“…except at the very low end it’s out of whack.”
And condos at the high end. Seems that high end SFH are pretty ‘fairly’ assessed.
And some of the issue on the sub-100k properties is that (a) the assessment for land value never goes to zero, and (b) the comparison property values are drawn from ‘market’ sales, which excludes basically all of the actual transactions in some areas.
“‘[]they’re not like you or I.’
Maybe not like you…”
Wondering who this “I” person is.
“it wasn’t anywhere near as bad as I thought it was”
Certainly less of a difference than I thought [it’s me, I’m the “I” person] but 1.3 for sub $1 mill versus 1.1 for $1.5ish plus is not nothing, still 15 percent lower. Also, do you have the percentage for e.g. $3.0 mill plus? It’s the really premium stuff I’m most suspicious enough. A lot of the $1-2 mill properties are in sufficiently homogeneous neighborhoods that comps would get a decent number. Less sure about the ultra luxe.
“They will be too busy counting their $$$.”
Again, the issue Yoss is that not everything need be about money. Not everyone believes that the almighty $ is the final arbiter of what is right and good; and since the elites have more of the $ than everyone else, everything they do by definition must be good and right.
Again, please avoid the strawman arguments: “If you want landmarked areas then there is OTT. This anti gentrification vitriol is idiotic” and focus on the specific issues talked about in the article that I was referencing i.e. seven lot gilded homes of the ultra rich in Lincoln Park. Nobody has once disputed that gentrification is bad.
There’s a case to be made that this is not even gentrifying, because LP was gentrified 30 years ago. This is crapification by the ultra-rich with lots of $ but unfortunately zero taste or humility.
“Nobody has once disputed that gentrification is bad.”
Huh? Lawyer doublespeak.
HD – “Again, please avoid the strawman arguments: “If you want landmarked areas then there is OTT. This anti gentrification vitriol is idiotic” and focus on the specific issues talked about in the article that I was referencing i.e. seven lot gilded homes of the ultra rich in Lincoln Park. Nobody has once disputed that gentrification is bad.”
I assume you mean gentrification is good?
“There’s a case to be made that this is not even gentrifying, because LP was gentrified 30 years ago. This is crapification by the ultra-rich with lots of $ but unfortunately zero taste or humility.”
“the entire character of a neighborhood should change to fulfill the sick mcmansion fantasies of the ultra-wealthy.”
Agree this is not gentrification. Disagree its crapification. For the most part the new buildings are more attractive than the old ones they replace. Of course that is all subjective. I live in the affected hood and I think its a good thing. It is interesting that this is happening in Chicago after having happened in NYC and London. I think its a good sign for the city.
And I think Downton Abbey is a beautiful building but I guess you would categorize it as a sick fantasy of the ultra wealthy.
“Also, do you have the percentage for e.g. $3.0 mill plus?”
I was interested in that as well but the data is so sparse as to be meaningless. That’s why I lumped it all together finally.
“the data is so sparse as to be meaningless”
That’s what Berrios and his ‘supporters’ hope you would think.
The anecdata supports that the true top end of single-unit residential real estate (esp condos) is undervalued by the assessor. Which may or may not be by design.
“The anecdata supports that the true top end of single-unit residential real estate (esp condos) is undervalued by the assessor. Which may or may not be by design.”
I did not find that, though I’ve seen it on occasion. I wanted to find it because it would have been a much more interesting blog post.
“the data is so sparse as to be meaningless”
Do you have them handy? Are there any that exceed 1.1 percent? What’s the min, max, median, mean?
I just made the raw data available to DZ 🙂
“And I think Downton Abbey is a beautiful building but I guess you would categorize it as a sick fantasy of the ultra wealthy.”
Ha! This is the midwest’s version of Downton Abbey
http://www.chicagonow.com/getting-real/2011/06/the-biggest-homes-of-lincoln-park/#image/1
I think everyone would be clamoring for a neighborhood with beautiful downton abbey style homes. Instead we get these hideous “french” homes
http://splash.suntimes.com/2013/12/06/holiday-decorating-michaela-parrillo/
God help us:
http://www.chicagomag.com/Chicago-Magazine/December-2014/Record-Breakers/
“Are there any that exceed 1.1 percent?”
Yes. Here is one example with a pair of sales:
https://www.redfin.com/IL/Chicago/401-N-Wabash-Ave-60611/unit-77D/home/13109864
There are a few buildings that seem to be meaningfully under-assessed top to bottom, but they seem to be a bit better than my recollection of last time I looked at a number of them.
“Yes. Here is one example with a pair of sales:”
My other sense of things anecdatally is that, on a relative basis, new construction is ass’d more than non-new.
HD – You prefer this?
http://www.chicagomag.com/Radar/Deal-Estate/March-2012/Another-New-Mansion-Coming-to-Burling-Street/
That holiday decorating is fugly though.
“HD – You prefer this?”
Yes, a resounding yes. 3 flats are what gave the neighborhood some character, some density.
HD:
Did you see the recent DNA Info article about the McMansion being built on 7 city lots in Lincoln Park? What do you think that will do to the neighborhood?
It’s the gilded age Part II. It’s the 1920s all over again only these properties aren’t as cool as the McMansions they built back then. The craftsmanship just isn’t the same anymore.
http://www.dnainfo.com/chicago/20150112/lincoln-park/lincoln-park-megamansions-on-rise-including-one-on-seven-lots
HD:
Did you see this vintage 2-flat that just came on the market in LP for $1.75 million?
They’re advertising it as a tear down. It’s on an extra wide 30 foot lot.
But it was built in 1886, has crown molding, ceiling medallions and stained glass. They can’t (and won’t) make them like this anymore. It makes me sick to think someone is going to tear this down to build those ugly buildings they’re building all over LP and Lakeview. Ugh. I truly hope a vintage lover buys this and saves it. Once it’s gone, it cannot be brought back. And then what is Lincoln Park?
https://www.redfin.com/IL/Chicago/2221-N-Fremont-St-60614/home/13354167
“There’s a case to be made that this is not even gentrifying, because LP was gentrified 30 years ago. This is crapification by the ultra-rich with lots of $ but unfortunately zero taste or humility.”
I can’t even believe someone is saying this is gentrification. What is happening in LP (and to a lesser extent, in Lakeview) is NOT gentrification. That ship sailed 20 years ago. If anything, this is the next stage up. Where even the regular rich people can’t live there. Only the SUPER rich.
I don’t really understand the super rich living in big houses like that. Condos, yes. Houses, no. There just isn’t enough security and whatnot. Will they hire private security to drive around those blocks then? I’ve seen private security with those $4 million homes just south of Chicago Avenue in River North (which are surrounded by high rises) because that area isn’t great. But it would be something new to see it in Lincoln Park.
“At least in teh days of Downton Abbey they had the reasonableness to build their monstrosities out in the rural areas outside of town. These days the rich wants to live in town.”
Yeah- but in the early part of last century, in the United States, a bunch of huge mansion homes were built in New York City and Chicago. Some survived the Great Depression but a lot did not. Many of them were torn down! These were huge monstrosities similar to Downton Abbey in size built by various rich families. Some were converted into multiple condos.
There is a whole book devoted to the great houses of Chicago- many of which are no longer standing because they went into disrepair when the neighborhood changed. They all wanted to live “downtown” before the Great Depression but the crime was so bad in the 1930s that they all fled to their suburban estates where they stayed for over 50 years.
10 year at 1.79%.
Yet no one is rushing out to buy a house or a condo.
Mortgage applications for purchases jumped 24% last week yoy. We have the lowest rates in 19 months. Could it finally indicate that buyers will be out in February and March?
“Yet no one is rushing out to buy a house or a condo.”
2 minutes later…
“Mortgage applications for purchases jumped 24% last week yoy.”
^TYX 2.40 record low. Whatever happened to the dreaded “taper”….
“There are a few buildings that seem to be meaningfully under-assessed top to bottom, but they seem to be a bit better than my recollection of last time I looked at a number of them.”
Prior to the last re-assessment 340 On The Park was woefully under-assessed. People mistakenly bought units there assuming this would go on forever. When the re-assessment came out the taxes doubled overnight.
I always tell my clients to ignore the current property taxes and assume that in the long run they will be appropriate. Even if they are too high you can appeal them, though there is no guarantee that you will succeed.
“Mortgage applications for purchases jumped 24% last week yoy. We have the lowest rates in 19 months. Could it finally indicate that buyers will be out in February and March?”
or maybe it was really warm last week compared to this week last year? *shrug*
A place in my building went under contract in 8 days though at a price that I thought was a bit crazy *shrug again*
$500M? Only if they throw in the fake palm tree
Wrong thread
The questionable usage of the term “McMansion” has me recalling the days (maybe his first day?) of Dan (“how dare you denigrate the Irish!”). Or was that somebody else? Anyways, what ever happended to “good Dan” (Highland Park)?
As for building a massive house on seven lots in LP, as long as the tax revenue isn’t much different, it seems it wouldn’t be a big deal. And there would also likely be fewer people/cars/dogs added to the neighborhood as a result…that is, at least if or until the massive home is converted into condos.
“how dare you denigrate the Irish!”
Surprisingly, not theHof:
Mike HG on September 24th, 2010 at 5:01 am
My bad. But I made my point, or at least I got to vent on this board on my dislike for the bland McCondo invasion.”
Guys, lets give it a rest calling things “Mc” condo or “Mc” mansion. Whether you like it or not, “Mc” is a derogatory term towards the Irish. This term was started back in the 1800’s when anything Irish was added to a community that first started attracting Irish immigrants. It would not be acceptable to add something in front of a name that offended other nationalities, racial backgrounds, religions, genders, or sexual orientations. What if I started calling poorly built, look alike condos something offensive towards women, blacks, jews, italians, homosexuals, or whatever group you come from. If this term is continued to be used, I will start calling them that.
Sabrina please take care of this issue. Thank You
http://cribchatter.com/?p=9324
Doesn’t Mc = McDonalds?? (and I’m of Irish descent…):
The neologism “McMansion” seems to have been coined sometime in the early 1980s.[2] It appeared in the Los Angeles Times in 1990[3][4] and the New York Times in 1998.[5] Related terms include “Persian palace”,[6] “garage Mahal”, “starter castle”, and “Hummer house.”[7] Marketing parlance often uses the term tract “mansions” or executive homes. An example of a McWord, “McMansion” associates the generic quality of these luxury homes with that of mass-produced fast food by evoking the McDonald’s restaurant chain.[8]
Can’t tell if you are serious or not. I just thought it was a reference to McDonald’s style uniformity.
That’s was a classic. Right up there with tales of Lambos and thousands of lightbulbs and showing up to fight in (the wrong) Midas lots.
lol I remember that
“(the wrong) Midas lots.”
Autozone, dude. There’s only one Midas on Grand (just off LaSalle).
“Anyways, what ever happended to “good Dan” (Highland Park)?”
You mean Helmethofer? (aka Dan?) He came back on here not too long ago.
“A place in my building went under contract in 8 days though at a price that I thought was a bit crazy *shrug again*”
There are some things going under contract fairly quickly (depends on the building/location/amenities and price.) Others are sitting for months.
In 2013 I couldn’t even really run this blog because the properties would go under contract before I could write about them. That is NOT my problem this year.
Although, Phoenix and Southern California reported rising home sales in December. That could be a sign that things are going to be hot this spring.
Chicago’s were lower though. It’s possible we have one of the few markets that isn’t responding to the lower mortgage rates for whatever reason.
“Mortgage applications for purchases jumped 24% last week yoy.”
You can’t really look at just one week though. That’s the thing. It really DOES vary dramatically. You have to look at the 4-week moving average which is still well under the year ago numbers.
BUT- if this kind of increase keeps occurring over the next several weeks it could be a sign that the spring market is going to be better than what we saw last year. Maybe we’ll get a lot of people listing- thinking that this is their time to dump their properties they’ve been stuck in. I’m already seeing some listings from people who have been in the property since 2008-2009 so that’s a good sign.
Inventory is off the lows which was in 2013 but it’s still lower than we should have.
“BUT- if this kind of increase keeps occurring over the next several weeks it could be a sign that the spring market is going to be better than what we saw last year. ”
Wait. Are you saying last spring was NOT a good market?
“Are you saying last spring was NOT a good market?”
That’s right. All of 2014 basically sucked. We backtracked from the gains in 2013 and the entire market lost momentum. Some of that is simply because there was more inventory. But it wasn’t such excessive inventory as to cause the slowdown we saw (which accelerated into the fall.)
We’ll see what happens this year. I really do think that those people who bought either during or just after the bust will be itching to move because it’s been 5 or 6 years. The average amount of time Americans stay in their homes is 7 years. They know with the low rates this is their chance to sell and move on.
One problem I’ve been seeing though is sellers pricing just WAY too high. And buyers are just not biting. I hate to tell sellers but prices haven’t gone up 8% to 10% since 2013. You’ll be lucky to break even.
“hat’s right. All of 2014 basically sucked. We backtracked from the gains in 2013 and the entire market lost momentum.”
We have to agree to disagree on this. I don’t think it sucked at all. Just because we sold fewer crap shacks doesn’t mean the market sucked. We sold more nice houses.
“One problem I’ve been seeing though is sellers pricing just WAY too high. And buyers are just not biting.”
And when that happens it doesn’t mean the market sucks. It means the sellers suck – not mine of course.
“And when that happens it doesn’t mean the market sucks. It means the sellers suck – not mine of course.”
It means the hot market is completely gone. The buyers don’t feel any desperation or urge to overpay. They will wait. You only wait when you have the advantage (NO ONE was waiting in 2012 and the spring of 2013.)
The urgency has completely been removed from the Chicago market. Even the new construction has slowed. I expect things to pick up in the seasonality of the spring market. In about 4 weeks, many more properties should be coming on the market.
I’ve talked to a couple of buyers looking in Evanston for starter homes. I asked them if it seemed competitive and they shrug and say “no.” They’re not rushing out in the first 24 hours the property is listed to look at it because they won’t get it. That WAS happening in 2012 and 2013.
If this is a “normal” market- then the sellers don’t really get it. They are pricing WAY too high.
Sabrina – when are you going to stop being part of the problem and start being part of the solution? Buy already! By your own huffing and puffings you should be clamoring to do so, so do it already!
Sabrina probably already bought a house last year in Naperville, like when bizzaro HD showed up after he bought his place in Pork Ridge she’s all over the place wondering why the market isn’t hotter because its in her own self interest?
“It means the hot market is completely gone…The urgency has completely been removed from the Chicago market.”
Let’s see. December had the second highest sales volume in 8 years. Sales of non-distressed properties hit a record. Condo average market times hit a new low for December. SFH market times were up only slightly. Doesn’t sound like a slow market to me.
“I’ve talked to a couple of buyers looking in Evanston for starter homes. I asked them if it seemed competitive and they shrug and say “no.””
I would conclude from that that 2 buyers looking in Evanston for starter homes feel like the market is not competitive.
“How Real Estate is a Unique Good”
by: _______
Econ 202 – Spring Semester
Someone’s got a lot of work to do!
All real estate is unique is really just Contracts 101.
“I’ve talked to a couple of buyers looking in Evanston for starter homes. I asked them if it seemed competitive and they shrug and say “no.” ”
Well, that settles it then.
“If this is a “normal” market- then the sellers don’t really get it. They are pricing WAY too high.”
There are two houses I had really liked here in Southern CA, but they’re overpriced by at least 30%. Both went under contract last month, and I started to think that the market was just too hot for my realistic budget – I’m not expecting fire sale prices. Then last week both of the houses relisted again as according to my broker, the buyers couldn’t get financing due to neighboring comps. The sellers might not get that their houses are overpriced, but the banks sure do.
Just an FYI Sabrina, buyers are out in full force already which is much earlier than expected. Are we shaping up for a huge 2015? We just might be. Don’t worry Sabrina, your rent will only go up 5 percent this year????
I just can’t understand why Sabrina can’t understand pricing and supply and demand. 2013 was not normal. Prices were too low so people came out in droves and bid everything up. Prices in 2014 were higher so the bidding wars needed and we returned to a “normal type of market”; although with low inventories.
Do you think the market for AAPL stock would go up or down if Fidelity priced it at $90 per share for the month of January when the stock was trading at $110 on the open market? Would there be bidding wars for the $90 stock? What about when the special price expired and the stock was available again at $110? Would there still be bidding wars at $110? Which would you call the “normal market”? It’s quite obvious to me but to Sabrina????
“2013 was not normal. Prices were too low so people came out in droves and bid everything up.”
I know someone who tried to sell in at this time in 2013. When he listed, he had 3 offers for over the asking price within 24 hours. He was so freaked out (as he wanted to buy and move up) that he actually decided NOT to sell because he feared he wouldn’t have anything to buy with the market that hot.
Flash forward 2 years later. He listed again. Same time of the year as last time. (Actually- the same week of the year- just 2 years later.) Listed at the same price. It’s been 2 weeks so far. No offers.
Yet- SAME PRICE. Same interior (kitchen/baths and everything else identical to two years ago.) Apples to apples sale. Neighborhood the same great neighborhood.
Inventory is higher, but not extremely high. Mortgage rates aren’t that much different- certainly not to scare off buyers.
So…what’s happened?
The market has slowed dramatically since late 2012 and early 2013. Anyone who has been watching it since September of 2014 knows this (including you Steve.) You can’t deny it. For some reason, last fall, it REALLY slowed dramatically (meanwhile, GDP was one of the strongest in a decade.) The data all shows it has slowed. Sales are down even while mortgage rates are falling. When have we EVER seen that?
Perhaps, the continuing drop in rates will bring the buyers (and more sellers) back into the market in the next few weeks. Spring is historically the stronger season. Sales are starting to perk up in other markets across the country.
But even the homebuilders don’t sound optimistic. KB Homes said it was having to offer more incentives to move product. Lennar is worried about margins and what will happen in Houston, one of its larger markets. The new home market is really the top 10% market now. The homebuilders don’t build for the middle class. They build for the upper middle class and rich. Yet, it is those buyers who should be KILLING it with the stock market near record highs.
“Don’t worry Sabrina, your rent will only go up 5 percent this year????”
My rent hasn’t gone up in three years, actually. I have a local landlord (not a big corporate landlord.) The locals value good tenants. That’s why it’s still cheaper for me to rent than to buy. Ditto for many people I know living all over Chicago.
“Well, that settles it then.”
Yep. It sure does. It’s what analysts do when they go check out the retailers or restaurants. They do channel checks. It’s not perfect. You have to combine it with data (which we can easily do in this market.)
Have sales gone down 11 of the past 12 months even as mortgage rates have fallen?
Yes.
How is the market then?
Not good.
Thanks for playing.
“Sabrina probably already bought a house last year in Naperville, like when bizzaro HD showed up after he bought his place in Pork Ridge she’s all over the place wondering why the market isn’t hotter because its in her own self interest?”
Yes! I live in Naperville now. You’ve found me out Sonies. It DOES have the exact same restaurants as many of the “hot” city GreenZone neighborhoods.
Remember, Southport has:
Noodles & Company
Gap
Athleta
Anthropologie
Dairy Queen
Potbelly
Einstein Bagel
lululemon
What else? Am I missing anything?
And Naperville, gasp, has ALL of those exact same stores (although I’m not sure there’s an Einstein Bagel.) In fact, it had a Noodles and Company years before Southport.
But I can’t walk to Wrigley Field from Naperville. There’s that.
Nothing’s perfect.
“By your own huffing and puffings you should be clamoring to do so, so do it already!”
It’s still cheaper for me to rent my space/amenities and neighborhood than to buy in this same neighborhood. Not everyone is living in an absurdly overpriced new luxury apartment downtown.
“Flash forward 2 years later. He listed again. Same time of the year as last time. (Actually- the same week of the year- just 2 years later.) Listed at the same price. ”
Yeah, this isn’t true…
“The market has slowed dramatically since late 2012 and early 2013. Anyone who has been watching it since September of 2014 knows this (including you Steve.) You can’t deny it. For some reason, last fall, it REALLY slowed dramatically (meanwhile, GDP was one of the strongest in a decade.) The data all shows it has slowed. Sales are down even while mortgage rates are falling. When have we EVER seen that?”
You can keep saying that it’s a slow market but that doesn’t make it slow. I repeat: “December had the second highest sales volume in 8 years. Sales of non-distressed properties hit a record. Condo average market times hit a new low for December. SFH market times were up only slightly. Doesn’t sound like a slow market to me.”
But Gary, she knows TWO people looking for starter homes in Evanston!!! It’s hard to argue with those kind of statistics. Her “shrug” indicator has to be more accurate than your actual sales data.
“It’s still cheaper for me to rent my space/amenities and neighborhood than to buy in this same neighborhood.”
So your landlord has been losing money on you for the last 5 years, even while rents have skyrocketed? Sounds plausible…
“So your landlord has been losing money on you for the last 5 years, even while rents have skyrocketed? Sounds plausible…”
You don’t live on the North Side chuk where there are long term landlords who have owned for 30 years. They don’t WANT to raise the rent because they know, having been in the game for that long, that having a tenant who doesn’t trash the place and pays on time is very, very valuable. In fact, my landlord recently offered to renovate my kitchen (which is 15 to 20 years old) but I don’t want to deal with it because it would entail moving out for a month or more.
“You don’t live on the North Side chuk where there are long term landlords who have owned for 30 years.”
What does that have to do with anything? If it is cheaper to rent than to buy, then he is “losing” money renting to you. Doesn’t matter if it is paid off or not.
“Flash forward 2 years later. He listed again. Same time of the year as last time. (Actually- the same week of the year- just 2 years later.) Listed at the same price. ”
Whoops. Sorry Chuk, but it is. I wish I could post the listing but I can’t since it’s still on the market.
Actually, another house just came on the market in his neighborhood for WAY less than he is listed with similar amenities (new kitchen etc.) It’s pretty obvious he’s way overpriced. He told me that if he doesn’t get an offer by the end of this week, he’s going to lower the price. At least he’s realistic and he’s not going to sit there being stubborn for months, as I’ve seen with other listings.
If you don’t get an offer within 2 or 3 weeks then you’re overpriced. Sorry. That’s the reality.
Super Bowl is in two weeks and then things are really going to heat up with much more inventory. You’d better be priced realistically to others.
Too bad for my friend though. He could have sold for much more 2 years ago. But the market has changed dramatically. It’s good for buyers. You no longer have to rush out to see a property and you have some leverage now.
He’ll still make money though. But he did a renovation. People love those new kitchen and baths!
“Whoops. Sorry Chuk, but it is. I wish I could post the listing but I can’t since it’s still on the market.”
Why does that matter?
“He could have sold for much more 2 years ago. But the market has changed dramatically. It’s good for buyers.”
Also not true.
“It’s still cheaper for me to rent my space/amenities and neighborhood than to buy in this same neighborhood.”
The problem with renting forever is that you never own your own shelter. If you pay down your mortgage, either via amortization or throwing a few bonus checks at it, eventually you can own your place free and clear. Then you don’t have to “pay” for shelter (other than RE taxes etc. yeah yeah).
The American dream goal of everyone should be to own their shelter debt-free, and then you aren’t subject to rent inflation either.
“The American dream goal of everyone should be to own their shelter debt-free, and then you aren’t subject to rent inflation either.”
And when you get old enough you can apply for the senior freeze exemption every year!
“The American dream goal of everyone should be to own their shelter debt-free, and then you aren’t subject to rent inflation either.”
We’ve been sold this by the government. “Ownership” isn’t the “dream” in the rest of the world. Far from it.
In the last 10 years all it has been is a nightmare for many in America.
This was from the New York Times over the weekend. No “dream” here until they ditched the condo.
How do YOU want to live?
http://opinionator.blogs.nytimes.com/2015/01/14/what-would-you-grab-in-a-fire/
We rent the second floor of a three-flat apartment building in Chicago. The layout is typical: living room and bedroom in the front; dining room and bathroom in the middle; kitchen and a second bedroom in the back. We moved in a year ago, after bailing on the condo we’d bought just before the market crashed. Everything happened so fast: One day we had a home and then — snap your fingers — it was worthless.
“Underwater,” they call it, which is a poetic way of saying that you’re drowning. We couldn’t sell. We’d just had a baby. I’d just gotten sick. My husband took a second job. I got better and took a third, then a fourth, 60-hour weeks of hustling, passing our son between us. It was a wild whiplash between gratitude — we had the jobs, the home, each other — and exhaustion. One day I woke up and five years had passed.
At some point, you have ask yourself how you want to live.
One morning, I typed “beach” into Craigslist and an apartment came up along the lakefront. It had a working fireplace. The rent was half our monthly mortgage.
My husband and I talked about what would happen to our credit, to our future. And a week later, I was on our new front porch, listening to Lake Michigan wave against the sand. My 5-year-old son sat on my lap. I felt him breathing: Slow. Easy. Calm. “It’s nice to be home,” he said.
If you want to love Chicago even more, check out this article about what you can buy in New York City for $750,000 (and the comments are especially interesting.)
http://www.nytimes.com/2015/01/18/realestate/what-750000-buys-you-in-new-york-city
““Underwater,” they call it, which is a poetic way of saying that you’re drowning. We couldn’t sell. We’d just had a baby. I’d just gotten sick. My husband took a second job. I got better and took a third, then a fourth, 60-hour weeks of hustling, passing our son between us. It was a wild whiplash between gratitude — we had the jobs, the home, each other — and exhaustion. One day I woke up and five years had passed.”
I’m confused. What does being “underwater” have to do with affording the house payments? Their payment was the exact same even if the value of their house went up. Sounds like they are morons.
“I’m confused. What does being “underwater” have to do with affording the house payments? Their payment was the exact same even if the value of their house went up. Sounds like they are morons.”
Being underwater prevented them from selling their home to relieve them of burdensome home payments. They were “drowning” due to the lifestyle in order to “afford” their “underwater” home. I was in the 99% in high school reading comprehension according to the Prairie State exams or whatever they’re called now. The author was probably a creative type and used an abstract analogy to describe her situation, rather than usage of the strictest sense of the term “underwater” as understood by us financial/legal/RE types.
Then again, I couldn’t find the exact quote and it wasn’t in the article itself and the link was bad, so maybe I’m missing something else the author was talking about. who cares! The market is HOT HOT HOT!!
“Being underwater prevented them from selling their home to relieve them of burdensome home payments.”
Yes, but they still would have been “burdensome” even if the market didn’t crash. They seem to be blaming their problems on the market crash, not on themselves for buying a house they couldn’t afford.
“Yes, but they still would have been “burdensome” even if the market didn’t crash.”
She said “We’d just had a baby. I’d just gotten sick.” They had a reduction in income and an increase in expenses which made the mortgage burdensome. Poor planing on the baby but illness can strike anyone.
In a normal market, they could sell and relieve themselves of the mortgage. But since the market crashed and the value of their mortgage exceeded the price of the home, they became stuck “underwater” as she says.
They should have just gone into foreclosure and lived in their place for free for two years like everyone else.
She said “We’d just had a baby. I’d just gotten sick.”
But it sounds like there was no real loss of income. Sounds like she needed 4 jobs just to make the mortgage. Again, nothing to do with the value of the house. What if the house doubled in price during all of this? Wouldn’t she have still needed all those jobs to pay the mortgage?
“We’d just had a baby. I’d just gotten sick. My husband took a second job. I got better and took a third, then a fourth, 60-hour weeks of hustling, passing our son between us.”
Anyway, no sense debating it further. I just hate when people can’t take responsibility for their own actions.
wojo:
“Mike HG: I’ll bet you $1 the Oct. ’15 Chicago CSI is less than 136.35.
Gary: a three percent rise would take the index to 133.76. I’m hesitant but I’ll bet you $1, too, that it’ll be less than 133.76.”
Ze: “+8 to +11%”
Actual Oct-15 Chicago C-S index: 131.40
Oct-14 Chicago C-S index: 129.86
change = +1.19%
wojo gets about $2.68 (given the collapse of the real)
Too funny to read all of Sabrina’s nonsense in this thread. But didn’t she tell us she was bullish in 2015? I encourage everyone to read Sabrina’s posts in this thread and compare it to her current lies.
Ha!
Please credit that $2.68 to my account. I want to let it ride.
What can we bet on next?
“What can we bet on next?”
Maybe how many times bri uses the phase “you can’t get blood from a stone”