4-Bedroom “Modernist Dream” Sells for $130,000 Under the 2005 Price: 915 N. Wolcott in the East Village
We last chattered about this contemporary Studio Dwell designed 4-bedroom single family home at 915 N. Wolcott in the East Village in June 2011.
See our prior chatter here.
Most of you loved this house. But we still debated about whether this home would sell for under its 2005 price of $1.38 million (and whether a buyer would ever take the bus(!) to work).
It recently closed for $130,000 under the 2005 price at $1.25 million.
You’ll recall, at 4700 square feet, it had the modern aesthetic found in Studio Dwell properties.
The kitchen had what looked to be a wall of glass, also had modern white and stainless steel cabinetry and what looked like might be concrete counter tops.
3 out of the 4 bedrooms were on the second floor with the master bedroom on the third floor.
There was also a 18×13 home theater in the lower level.
The house hds several outdoor spaces including a stone patio off the kitchen and a rooftop deck of some kind.
Did someone get a deal?
Stephen Somogyi at North Clybourn Group had the listing. You can still see the interior pictures here.
915 N. Wolcott: 4 bedrooms, 3.5 baths, 4700 square feet, 2 car garage
- Sold in May 2005 for $1.38 million
- Originally listed in April 2011 for $1.65 million
- Reduced
- Was listed in June 2011 at $1.45 million
- Sold in September 2011 for $1.25 million
- Taxes of $12,810
- Central Air
- Bedroom #1: 27×23 (third floor)
- Bedroom #2: 12×12 (second floor)
- Bedroom #3: 12×10 (second floor)
- Bedroom #4: 15×10 (second floor)
- Theater room: 18×13 (lower level)
Yes, I think this is a good deal. Plenty of room for adult entertainment, plenty of room for kids. Its close to downtown. At a point you have children, you probably stop taking public transportation anyway b/c you have school drop off. The public school here is probably not great and the buyer will go private, but this house in Lincoln ES district would be at least 1 mill -1.5 million more…that’s a lot of private school.
Is it just me or do these rooms look a little small for a 4700 sq foot home?
The dining room is a perfect example – how much space is there behind the chairs that are closest to the wall?
How about the kitchen? It looks like a nominal amount of cupboard space and the majority of storage is only accessible by bending over or sitting on the floor.
Just seems a little odd….
r.
Love this place.
Haven’t looked at the inside, but why does “modern” architecture almost always seem to show a blank wall to the street? Just one of these on a block can ruin the entire streetscape.
Sure, the buyers paid a fair price, and perhaps even got a “deal,” if not quite a steal. And the sellers, while they sold for less than they paid, parted with it for not quite 10% less, which seems to be a pretty reasonable discount from the peak. I guess congrats are in order for both then.
anonny, the sellers lost over 200k – how the hell could that result in a “congratulations” by you? Utter nonsensical gibberish!!
“anonny, the sellers lost over 200k – how the hell could that result in a “congratulations” by you? Utter nonsensical gibberish!!”
They also lived there for 6 years. How much do you think rent would have been over that time?
I think the sellers could have gotten a higher price if they had held out. There is not much like this on the market so supply of this type of house is low. Maybe they are buying up and got a great deal on their next house, which given the spread, they sort of recoup the 200K loss. Eating 200K loss is okay when you are buying the next house at 400K less than market value.
chukdotcom, they also paid mortgage, taxes and upkeep during that time. I’m sure that they could have rented a similar place for MUCH MUCH cheaper (again, their monthly payments for PITI as well as their loss were close to 10k/month)
a local – I TOTALLY agree. Upgrading/upsizing (if you need to) is the only logical reason I can see someone above water trying to buy/sell right now.
I honestly like it! However, when I think about Chicago homes, I think about brownstones and such. This kind of have a NY feel to it. Maybe it’s just me? 🙂
JP – yeah, it’s just you, because in NY there are no brownstones……
“they also paid mortgage, taxes and upkeep during that time”
Sure. But you can’t just take the 200k number and assume it was the amount they “lost”.
Clio, starting from the reasonable premise that selling for 10% under peak pricing (for desirable homes in desirable areas) should be expected by almost all sellers, this seller sold for $17k more than that amount. And yes, assuming the broker had them on the hook for the full 6%, there’s another $75k off the top (but that’s a cost regardless of the market).
This seller wanted to sell. It sold. At roughly the off-of-peak discount that one should expect. That is why congratulations are in order. If you would like to advance a different theory or propose a different reasonable off-of-peak discount for nice properties, let’s hear it.
chukdotcom – you are right – they actually lost a LOT more than 200k!!!!
ok – I don’t understand why someone (like HD) who is in the market and looking to buy isn’t buying right now.
WE ARE ABSOLUTELY AT OR NEAR THE BOTTOM AND MORTGAGE RATES WILL NEVER BE LOWER:
http://finance.yahoo.com/news/30year-mortgage-falls-to-412-apf-1489230507.html?x=0&sec=topStories&pos=main&asset=&ccode=
moronic idiotic scaredy cat disposition/personality is the only reason I can see…..
anonny,
is this the way you look at investments (as percentages based on the way the rest of the world is doing)? If so, you are an idiot (just like Jenny who bases sales prices on what she thinks a seller deserves). Bob and ze – look at the way most people think (anonny and jenny) and then you will realize why your economic theories and theoretical logical scenarios will never play out. We are dealing with human emotion/psychology and yes, stupidity. Those things are intangible and can never be accurately factored into these calculations.
Is this a Ranquist Development house?
“WE ARE ABSOLUTELY AT OR NEAR THE BOTTOM AND MORTGAGE RATES WILL NEVER BE LOWER”
C’mon, what have you ever been right about here?
G – look at the numbers, moron: look at the rates…..look at the prices……there are going to be no further huge broad-based price reductions in housing. the sales numbers, as we all know, were falsely depressed by investors buying only the foreclosures. In order to get an accurate understanding of the market you have to look at non-investor buyers and non-foreclosures. You then have to factor in sales volume. It is a tricky analysis (far beyond your regurgitation of data) but for the more sophisticated and experienced real estate investor, paints a completely different picture than what the general public believes. Again, I have made a lot of money in real estate and have never lost one cent – what about you? Thought so….
“Haven’t looked at the inside, but why does “modern” architecture almost always seem to show a blank wall to the street? Just one of these on a block can ruin the entire streetscape.
”
you obviously haven’t looked at the “streetscape” either, because there is a large block of modern homes right in a row here. They sure as hell look a lot better than the late 90’s mccrapboxes built across the street
“It is a tricky analysis (far beyond your regurgitation of data) but for the more sophisticated and experienced real estate investor, paints a completely different picture than what the general public believes.”
Really? Explain to me then how your sophistication and experience led you to believe that June 2011 sales volume would exceed June 2010, only to see them decline by 27.1%? Remember, you even bet me over this and then proved your word is worth no more than your real estate sophistication and experience? I mean, how sophisticated does one have to be to ignore the dough4dumps influence?
“Again, I have made a lot of money in real estate and have never lost one cent – what about you?”
The answer is obvious, hence, you have no idea.
G:
As Sam may have said, I’m almost unable to see the difference.
Clio, you are a delusional, punctuation abusing, absentee parenting, creepy suburban twit. (How did the ad hominem feel? Did it add anything to the real estate discussion?)
Now, let me repeat: Do you or do you not have an alternative rule of thumb off-of-peak discount for desirable properties that you would like to share?
G, I’m curious: at what price point do you see a bottom? (i.e. do you expect another 5,10,15% drop?) I feel like the bottom (albeit a long drawn out bottom) is happening right now. I don’t expect prices to bounce, but I don’t expect them to go much lower. (Obviously, asking prices by homeowners are still delusional and will drop further).
For example, whoever bought this unit at 1.25 will most likely not lose money if he sells in 3+years. I believe this is a good price for the buyer.
G won’t make any set in stone declarations here on how far he thinks prices will fall, we’ve tried to get that out of him before and he’ll just say ” you’re all knife catchers until 2015″ or something like that
clio: “the sales numbers, as we all know, were falsely depressed by investors buying only the foreclosures. In order to get an accurate understanding of the market you have to look at non-investor buyers and non-foreclosures. You then have to factor in sales volume. It is a tricky analysis (far beyond your regurgitation of data) but for the more sophisticated and experienced real estate investor, paints a completely different picture than what the general public believes. ”
I find your ideas intriguing and would like to subscribe to your newsletter.
Let me see those numbers and drink of the clio cloo-aid. Clio is good, clio is great, I surrender my will as of this date.
sonies: “G won’t make any set in stone declarations here on how far he thinks prices will fall, we’ve tried to get that out of him before and he’ll just say ” you’re all knife catchers until 2015? or something like that”
I honestly don’t have a problem with that. I generally find people willing to make hard, specific predictions to be not exactly believable. The world is uncertain and no matter what your ideas or predictions, you need to account for that uncertainty.
For instance, I’m relatively sure we’re headed into a recession (I’d give 3/1 odds) and I think the market has more downside. I’d guess we’ll see bottom in another 2 years or so. Will I bet on this? Maybe in the form on a RE purchase at some point, I guess.
But I guess the bottom line for me is that I really don’t think not making a hard, specific prediction disqualifies me from pointing out the unrealistic hard, specific predictions made by others.
“clio on September 8th, 2011 at 9:48 am
WE ARE ABSOLUTELY AT OR NEAR THE BOTTOM AND MORTGAGE RATES WILL NEVER BE LOWER”
The less one makes declarative statements the less likely to be shown a fool in retrospect.
he doesnt care if he’s shown a fool. all he wants is attention
Is Clio a he or a she. Someone told me Clio is a female broker.
“Do you or do you not have an alternative rule of thumb off-of-peak discount for desirable properties that you would like to share?:
Aninny, if this is the way you approach real estate – then you have not learned anything. Real estate is location and property specific. THERE ARE NO RULES OF THUMB!!!! Sorry, you have to use your brain to figure out whether each property is a good deal, no deal or bad deal. No cheating here.
As for being an absentee parent, that was a low blow. I pay over 85k in tuition PER YEAR on my two kids – show me how many other “caring” parents would do the same!!
clio: “As for being an absentee parent, that was a low blow. I pay over 85k in tuition PER YEAR on my two kids – show me how many other “caring” parents would do the same!!”
*sheepishly raises hand*
I’m going to go out on a limb and say that if most parents had the means to spend almost 100k on tuition for their children without bankrupting themselves, they probably would. That would, however, represent a seemingly ever shrinking percentage of parents. Lord knows I will likely never be in that group, regardless of what I might do were I able to.
“As for being an absentee parent, that was a low blow. I pay over 85k in tuition PER YEAR on my two kids – show me how many other “caring” parents would do the same!!”
Clio, it was supposed to draw your attention to the fact that you take unprovoked, pointless personal jabs others on here.
“Real estate is location and property specific.”
Wow, that’s a big surprise to me, what with my ultra relaxed, wholly unpicky viewpoints as to locations.
” I pay over 85k in tuition PER YEAR on my two kids – show me how many other “caring” parents would do the same!!”
Daughter hot? We can work something out?
“I’m going to go out on a limb and say that if most parents had the means to spend almost 100k on tuition for their children without bankrupting themselves, they probably would. ”
uhhhh wrong – have you met the people on cribchatter? They don’t care enough about their kids to move to the suburbs for free superior education – believe me, they would probably opt to buy a more expensive house in the city and then cry poor mouth and send their kids to state schools.
ze–one of ’ems going to Yale, iykwim.
” iykwim”
heh! emoticons = no silly abreviations = good
And for the record.. I understand both anonny’s point, and yours.
If you owned real estate the past few years and walked away down 10% you are one of the lucky ones (generally speaking).. and yes you are correct, it still must take in local considerations before determining how well you really did.
anon, no – iDkwym. please explain…
At Penn it’s weed, at Yale it’s pole. Both big smokin schools.
“But I guess the bottom line for me is that I really don’t think not making a hard, specific prediction disqualifies me from pointing out the unrealistic hard, specific predictions made by others.”
Sonies really believes I hold the answers, though. Haha, I’m not tellin.
clio–just playing with silly stereotypes, as I knew Ze would get.
“Sonies really believes I hold the answers, though. Haha, I’m not tellin.”
give it up! I must know! LOL
who has the more consistent cc track record: G being correct or clambo being incorrect?
Haven’t we all crashed a German luxury sport coupe while giving some dude a handjy to piss off our absent fathers? Haven’t we?1!!??
“who has the more consistent cc track record: G being correct or clambo being incorrect?”
who has made more money in real estate? yeah….just as I thought.
“Haven’t we all crashed a German luxury sport coupe while giving some dude a handjy to piss off our absent fathers? Haven’t we?1!!??”
ROFLMAO!!
“who has made more money in real estate? yeah….just as I thought.”
sure you did
I’m pretty sure clio is a group of random kids on a public computer somewhere in streeterville
except even a group of random kids would be right more often
well its not about him being right, its about him/her being an ad hominem spewing, conceited, arrogant, troll, jackass all wrapped up in one
“who has made more money in real estate? yeah….just as I thought.”
Not that it’s true, of course, but why is this now proof of knowledge?
Clambo said on August 17th, 2010 at 6:44 am:
“sorry to burst YOUR bubble, but everything I have posted is 100% absolutely true. If you were invovled in real estate in the 90s and 2000s you realize that a ridiculous amount of money was made by many people (who didn’t have to be smart to make a killing)- see below for explanation. I was one of those people. I DO have several investment properties (predominantly in the suburbs) and AM heavily invested in real estate. True, I am bleeding money every month, but I am not underwater and have enough reserves (and a high paying job) that I can hold on until the market improves. There are a LOT of people out there like me which also adds to the confusion of the market.”
what do you guys think of this:
http://www.redfin.com/IL/Chicago/1932-N-Sheffield-Ave-60614/home/13352014
Better location – similar size / style.
“G – look at the numbers, moron: look at the rates…..look at the prices……there are going to be no further huge broad-based price reductions in housing.”
How Big is the Pool of Eligible Home Buyers?
Here is a set of questions that will explain what is happening now.
How many people ….
Don’t have a house?
Want a house?
Can afford a house, upkeep, and property taxes?
Have a needed cash cushion in the bank?
Have a decent down payment for a house?
Have a salary that can support interest and principal payments even at these low rates?
Are not scared s*less about the loss of a job, assuming they do want a house and meet the rest of the conditions?
Someone needs to meet all of those conditions before they will buy a new house. How many is that?
Is the eligible buyers’ pool getting bigger or smaller?
The trend says smaller, in spite of falling interest rates and falling prices. Many items on my 7 point list are more important than interest rates, notably 1, 2, 3, 5, and 7.
That is the psychology of the situation.
G, CH, and Sonies, – envy/jealousy doesn’t suit any of you. why don’t we agree to ignore each others posts. I certainly have no problem skipping over your useless dribble – your posts are completely meaningless and unimportant to me.
with respect to an empirical method to estimate the floor for RE prices you can use Rent yield = (annual rent – expenses) / value of property. expenses would include RE taxes / maintenance / utilities paid by owner / insurance / etc. with long term rates around 3.5% a rent yield of 7-10% would probably be a relative floor where investors would come in. even clio shouldn’t argue w/ this method as he’s been implicitly using it to hype that rental PH on here.
“your posts are completely meaningless and unimportant to me’
Very humorous coming from you.
vlajos, go sell your house…..oh yeah, you can’t
you would think a harvard educated doctor would know the difference between the words dribble and drivel
my group of kids theory seems to be gaining some traction
of course I know the difference – it was a play on words (translation: a more subtle meaning that was meant to insult all of you)
no, uneducated internet wannabees use dribble instead of drivel, mute instead of moot, there instead of they’re, your instead of you are, the list goes on and on and you keep offending.
You are now forever known to me and many others here as the clio group, a group of pimple faced, stupid hipster wanna be kids hanging out at the Columbia college library, trolling cribchatter. You can’t spell Columbia without clio am I right?
Actually clio, just sold my place and got a good price. Just bought a new place and got a great price.
“why don’t we agree to ignore each others posts”
What’s the point of agreeing to anything with a proven liar such as you?
clios grandiose claims were from the get go larger than life. never believed it was an actual person. more than likely a bored/unemployed housewife or househusband whose spouse works in the RE biz. no fvcling way did the person goto the schools they claim from their writing.
but a bored housemommy with at best a 100 IQ wouldn’t be smart enough to know that people can tell.
my advice house-spouse is to not break any laws as you are timid and a terrible fvcking liar. cops love when they get defendants such as you as the cases are generally a slam dunk.
“of course I know the difference – it was a play on words”
Ha.
“You are now forever known to me and many others here as the clio group, a group of pimple faced, stupid hipster wanna be kids hanging out at the Columbia college library, trolling cribchatter. You can’t spell Columbia without clio am I right?”
Clio stands for “cross linked iron oxide” – a compound I help develop while at Harvard. Is that academic enough for you?
“Clio stands for “cross linked iron oxide” – a compound I help develop while at Harvard. Is that academic enough for you?”
Once you are a proven liar, who can believe you about anything?
homedelete are two keys that are next to each other on my computer. Every website I post on (and there are hundreds, if not thousands) has a different username. Most relate to medieval legal real estate such as:
‘fealty’
‘fief’
‘cerol/churl’
‘Livery of Siesin’
‘Surfin’ serf’
‘homage to the king’
‘law of mortmain’
‘landlord’
‘fee tail’
‘fee simple & fee simplier’
and my favorite – ‘death pledge’
G – huh? clio stands for “cross linked iron oxide” look it up along with harvard medical school and my name and you sill see who the liar is…..
“Clio stands for “cross linked iron oxide””
1st response from a google search for the word Clio OR his/her car made by Renault.
“as you are timid”
And Bob understands well the word timid. Just look at how ‘safe’ his posts have now become, between 9 to 5, while he’s down in the boiler room with his taped IPC phone and computer that’s recording keystrokes.
Sonies… been waiting so long without any reviews, I think you must go seek the perfect Black and Tan. Like a mission from God.
let’s get back to real estate….this site should not be about me, G’s obsession with me, ze’s nonsensical statements, or sonies’ nasty posts.
His name checks out with the St. Charles property, the “clio” article, and a number of local real estate purchases, including a home in, you guessed it, Oak Brook. I am shocked that he is a real person. I guess money is no salve for insecurity.
It also checks out that he is a proven liar on crib chatter.
“let’s get back to real estate”
Your contributions are meaningless and completely unimportant to those seeking knowledge.
careful – clio may be a real person but could have others posting as him/her…..
I’m with Nat, I think that he’s the real person he pretends to be. No one would come up with anyone as arrogant, clueless and narcissistic as a marketing tool.
“Sonies… been waiting so long without any reviews, I think you must go seek the perfect Black and Tan. Like a mission from God.”
I”m sorry ze, I haven’t had time and I have been trying to enjoy the nice weather out… I promise when the weather gets crappier, which it surely will soon, I will be busy drinking and writing!
I do think I have found the perfect brown ale though!
Papa?
Nicole?
“I do think I have found the perfect brown ale though!”
I like good dark beer.
and Clio.. life needs nonsense! Lots of it!! It’s short, and sadly, for many, altogether too serious. Live! Laugh! Love!
Liars don’t bother me. Its part of the numan condition. Being an idiot however is a different story.
“Liars don’t bother me. Its part of the numan condition”
Is this a seinfeld reference?
jennifer,
I don’t think anyone understands the reference. I do, however, and appreciate it!!
let’s cut Clio some slack guys. He’s been around here for a while and I
Truly doubt he is trying to hustle anyone real estate here. As I’ve said before, as far as truth goes, we could all be hamster petting 50 year old basement dwellers. 🙂
true story ‘Papa’s’ real name – Max Douchin
LOL! max douchin’ just like clio
Riz:
Perhaps a good start would be if Clambo stopped calling everyone who disagrees with him “idiot” or “moron”. Repeatedly.
“And Bob understands well the word timid. Just look at how ’safe’ his posts have now become, between 9 to 5, while he’s down in the boiler room with his taped IPC phone and computer that’s recording keystrokes”
Ahhhh! Posting from my mobile actually. It’s little though so does not seem to be the proper modality to channel my rage.
I read this on Mish today. You should have put in an attribution, or are you Mish?
http://globaleconomicanalysis.blogspot.com/2011/09/mortgage-rates-at-record-lows-30-year.html
“How Big is the Pool of Eligible Home Buyers?
Here is a set of questions that will explain what is happening now.
How many people ….
Don’t have a house?
Want a house?
Can afford a house, upkeep, and property taxes?
Have a needed cash cushion in the bank?
Have a decent down payment for a house?
Have a salary that can support interest and principal payments even at these low rates?
Are not scared s*less about the loss of a job, assuming they do want a house and meet the rest of the conditions?
Someone needs to meet all of those conditions before they will buy a new house. How many is that?
Is the eligible buyers’ pool getting bigger or smaller?
The trend says smaller, in spite of falling interest rates and falling prices. Many items on my 7 point list are more important than interest rates, notably 1, 2, 3, 5, and 7.
That is the psychology of the situation.”
Mac Phail = Mac Fag = ?
(miu- you make the call)
Juliana: not many, and those that can, like me, have no interest in overpaying. My god there is an awful lot of unsold inventory out there. Kind of sucks to be a seller, but on the other hand, with all the same overpriced inventory, it sucks to be a buyer too.
Lately my practice has worked through all the debtors who defaulted. Buut in the last few months, I’ve been dealing primarily with the walkaways and strategic defaultwrs who just throw in the towel. You can buy new construction townhomes in the exurbs for dirt cheap these dqays, and single family homes in biollingbrook in the 100’s. And they can barely sell them. Crystal lake has been slammed.
See, Riz, why should anyone be civil to someone so dedicated to being an ass to everyone?
anon, don’t sink to the level of others and start making this site about me – it’s not. let’s just discuss real estate and things will be ok. I repeat – the site is about REAL ESTATE, not clio or clambo or clio’s money or clio’s education (I only mention those things to add credibility to my claims/statements). Honestly, the only times things get stupid is when you guys start attacking me – so just stop and everything will be fine.
“You can buy new construction townhomes in the exurbs for dirt cheap these dqays, and single family homes in biollingbrook in the 100’s. And they can barely sell them. Crystal lake has been slammed.”
WAY out there in suburban land- they can barely give the stuff away. Also- the same thing in the suburbs on the south side (even in the closer in suburbs like Homewood Flossmoor.) It’s just brutal.
The whole housing market is resetting right before our very eyes.
I had a neighbor that piloted the space shuttle. I think i’ll be him today. I know enough about him to easily portray him. And if you ask me anything a genius should know.. I’ll just tell you to stfu, or something, to prove my credibilty.
Hi guys! I piloted and commanded the space shuttle, first black man to ever do so, thinking of moving from my multi-million dollar home, on the river, in Annapolis. Any advice where i should look. Did i mention i flew the space shuttle?
oh and please don’t out me, or i’ll sue you! Now back to space camp.
“WAY out there in suburban land- they can barely give the stuff away. Also- the same thing in the suburbs on the south side (even in the closer in suburbs like Homewood Flossmoor.) It’s just brutal.”
The one thing people should remember is that real estate, unlike most other commodities, is a necessity. Therefore its value will never go down to below rent parity. Did prices come down? Sure. Will they go down a lot more? No. Just look at the numbers/rent and see for yourself.
“The one thing people should remember is that real estate, unlike most other commodities, is a necessity. Therefore its value will never go down to below rent parity.”
LMFAO interesting theory. Not connected to reality in any sense but interesting theory.
Bob – why are you amused by that? It is true. People need a place to live. In addition, some of the easiest places to rent out are in the blue collar suburbs – most of these folk are not and will never be in the position to buy – many rentals out there. If HD says Crystal Lake and Bolingbrook are being decimated, investors should look in those towns, pick up a few properties and rent them out. I am telling you guys that there is a lot of money to be made in real estate – and its all in front of your eyes.
” I am telling you guys that there is a lot of money to be made in real estate – and its all in front of your eyes.”
I agree. I call them the Long Island potato farms of Rio.
Chicago- no rush. Seriously Clio.. you need to get money out. By the time they (gov’t) are done with you, you will be able to save yourself trouble by just billing yourself, twice over, for each medicare patient that you see.
ze:
You failed to mention that your son went to Stanford.
clio: “Honestly, the only times things get stupid is when you guys start attacking me – so just stop and everything will be fine.”
Jeebus, man. For a guy that literally starts some of his posts with the words “moron” and “idiot”, you’ve got a lot of nerve. Completely divorced from reality…
Wow.. the drama on a real estate blog. interesting
“Chicago- no rush.”
Also, Ze, what’s your animosity for Arena Football?
“Wow.. the drama on a real estate blog. interesting”
Any time you put $ and differing opinions together.. what do you expect.
“animosity for Arena Football”
Ze, very happy football is back. But the new kickoff rule sucks, despite last nights return!
“Therefore its value will never go down to below rent parity.”
Why would an investor buy at zero return? Sounds just like more of the ole ‘real estate only goes up.’ Not to mention the inevitable overcorrection.
“oh and please don’t out me, or i’ll sue you! Now back to space camp”
ahahaha. I hope groove comes back, he is missing some goodness
“the new kickoff rule sucks”
Indeed. If they want to keep guys from getting smacked hard, they need to findamentally change the game to something not nearly as appealing. May as well make it flag football, with auto ejections for actually hitting someone in the open field. Boo-yah!
I really really like Studio Dwell. I think they do great work. I do agree however with the person who said why does modern mean a blank wall. That hurts the curb appeal of the neighborhood. Anyway it seems like a pretty good deal.
“Why would an investor buy at zero return?”
Rental parity does not equal zero return. Rental parity compares PITI with monthly rental. You are forgetting about the “P” part.
If you buy a 200k property with 20k down, and you rent it out for same amount as your PITI, in 30 years, that 20k is now worth 200k (assuming a flat market). That is not zero return.
I’m actually surprised nobody mentioned the ghost teepee in the back yard
sacred lands indeed
“Rental parity does not equal zero return. Rental parity compares PITI with monthly rental. You are forgetting about the “P” part.”
No, that is comparing PITI with monthly rental. Rental parity is where the costs of owning and renting are equal. Otherwise, a big enough down payment would always insure your “rental parity.”
“Rental parity is where the costs of owning and renting are equal.”
Do you roll depreciation/replacement/maintenance into your ownership costs for this purpose? And (prolly, statistically) more frequent moving expenses on the rental side?
If accuracy is what you seek, yes.
“Rental parity is where the costs of owning and renting are equal”
PITI = costs of owning.
“Otherwise, a big enough down payment would always insure your “rental parity.””
Wrong. You have to look at opportunity cost of your down payment.
If you are borrowing 100k at 3%, or using your own 100k and losing out on 3% opportunity cost, it is the same “cost”.
So, what is “rental parity” price in the below example:
200k property
20k down payment
180k 30 yr mortgage at 4%
3k in taxes
600/yr in insurance
3k/yr in HOA
For now, let’s leave out anon’s stuff.
me=855 leavin out the other stuff + other stuff
“me=855”
??
That works in interest only on a loan about half the size. You doing a life of the lona thing? But that’s unrealistic regarding taxes and assessments.
me=1504.83
I am counting opp cost on the 20k as being the same as interest cost on the 180k (4%). So, effectively a 200k mortgage. Obviously this does not take into account tax writeoffs, etc.
200k “mortgage” = 954.83
taxes = 250
insurance = 50
hoa = 250
“I am counting opp cost on the 20k as being the same as interest cost on the 180k (4%). So, effectively a 200k mortgage.”
You’re counting a principal contribution in there then and overstating it (from your calc basis) by $28.81.
“Wrong. You have to look at opportunity cost of your down payment.”
So, it isn’t just PITI now? Glad you agree.
If it’s short term you might be able to ignore anon’s stuff, but then ya gotta at least figure in transaction costs. Holding periods, tax and hedge benefits vary, so use em if ya got em. The rest is basic math. Figuring it out, along with the effects of price/rent/rate changes, is up to you.
did it while cooking.. wanted to get the ball rolling…
$895 on excel… I am embarrassed! Damn wine!!
$43 op cost on 20k
$400 a mo int aft tax (although need to account for months til payback, unless you personally send in expected)
$162 a mo taxes (aft tax – with same as above to apply)
50 insurance
250 hoa
G.. you are more thorough today, than normal… very talkative for you. nice.
$390 on i per month.. typo with the 400.. was going to charge a higher rate for my I/O
“So, it isn’t just PITI now? Glad you agree.”
I deliberately used a low down payment to minimize the effect. And the first “I” is for interest. Both interest you pay, and interest you aren’t getting on your down payment can be represented there. I was trying to keep it simple. Not get into the nuances of what makes up rental parity equation. That wasn’t the point. The point was, just because you are at rental parity, doesn’t mean a zero return.
“If it’s short term you might be able to ignore anon’s stuff, but then ya gotta at least figure in transaction costs.”
I don’t plan on ignoring it. But first I wanted to get the basics settled.
“Figuring it out, along with the effects of price/rent/rate changes, is up to you.”
Irrelevant. The argument already assumes rental parity has been calculated. Simply put, you were wrong when you said that rental parity implied no return for an investor.
The argument assumes that principal reduction doesn’t belong in the equation and that the definition of rental parity is no return to an investor.
I don’t think you’ll find too many people with that definition of rental parity. If so, just about every property in Chicago is well below rental parity.
“I don’t think you’ll find too many people with that definition of rental parity.”
Probably not. Logical definition though.
“Logical definition though.”
Not really. Look at it this way. If the investor bought the 200k property in cash, his monthly “expenses” are only $550. Does that mean that rental parity on a 200k unit is $550? Of course not. That investor would want a return of at least 4% on his money, which is another $666 per month. That would put rental parity around $1200 (probably still low). But clearly, even at “parity”, the investor is getting a return on his money.
I like yoss’s comment above at 1:39… especially since he used the words “estimate” and “probably”.
My simplest definition, my friend . If I buy or if I rent, at the end of the year. My balance sheet was unaffected by my choice. Assuming no price change in the asset.
With your investor desired 4% we get into a strange issue. Hasn’t it been said here repeatedly (i personally have never confirmed) that the avg holding time is 7-10 yrs? So why give 30yr rate. let our investor get 10yr yield of 2%. Which oddly brings your numbers to my earlier $890. Or maybe look at his equity like cash and go to 0%. Just creates confusion. Which rate is wrong? Which rate is right? Do we make an entire new rate based on the risk of the underlying asset? Easiest to stick with cost of borrowing and pretend you are borrowing 100% I/O (not that anyone here, but me, personally likes that loan, but you are just backing out op cost on equity anyway…so…. this will also take away your gain, you think you see, in your 1:47 post… really, an easy error to make).
If one side is coming out ahead… by definition of the word parity, it ain’t parity.
“Easiest to stick with cost of borrowing and pretend you are borrowing 100% ”
If it’s basic parity you want, that’s the best way to go for the reasons you state.
“If one side is coming out ahead… by definition of the word parity, it ain’t parity.”
I thought that was obvious…
“I don’t think you’ll find too many people with that definition of rental parity.”
Not the first time I find myself confident while in disagreement with the masses.
yes, but G… The last time you felt that way you were drunk, naked, and waiting on a ski lift line at 4am.
Well, it felt right to me at the time, and no less so in retrospect.
Funny you mention that, as tailgating has begun and I’m already starting to doubt my pledge to drink every time I hear Rocky Top with kickoff still 5 hours away and they don’t appear to know any other songs. I’ve only been here a few hours and punctuation is already gone
“That is the psychology of the situation.”
True, and that’s part of the big reason why the prices are not going to be affected to a large extend from these elements. If someone is not buying for fear of job loss, then they are not buying and more discount is not going to change that.