Market Conditions: Why Are Chicago Prices Still Declining When Other Cities Are Rebounding?
Normally I don’t post on the Case Shiller home price index numbers but December’s numbers showed a third straight decline for Chicago area single family home prices and the sharpest decline, of 1.6%, of any of the 20 cities from November to December. (Seasonally adjusted, it was still down 0.6%.)
On the condo end of the spectrum, prices also continued to fall.
Prices are now down 17% from the peak, which isn’t the worst compared to other cities which have fallen over 20%. However, Chicago condo prices have shown a definite trend lower in the last few months whereas other cities have flatlined or are rising.
You can see the graph comparing NY, SF, LA and Chicago condo prices on the Case Shiller index on Socket Site here.
Chicago Public Radio interviewed Gary Lucido from Lucid Realty about the reasons behind the weak numbers.
One reason may be how many people are out of work in the Chicago metro area. In December – the number of people with jobs reached an almost 14-year low. Chicago-based realtor Gary Lucido says that’s troubling.
LUCIDO: So you have to ask yourself, how can we sustain the housing prices that we have with such low employment levels?
People aren’t in the market to buy when they’re out of work, and when people lose their homes to foreclosure, prices drop even more. But Lucido says he’s seeing some clients decide to stay put or rent their place out rather than sell and lose a lot of money. So he says he’s hopeful prices don’t have that much further to fall.
I also saw one article muse that maybe it was the “bad weather” in Chicago (and also New York) that caused the weakness in December.
Maybe I’m missing something, but I don’t remember the weather being all that bad in December in Chicago (or NY). Neither city had a major winter storm that month. The “bad” weather was only in recent weeks.
What’s the story behind Chicago’s continued falling prices?
Chicago home prices fell again in December [Chicago Public Radio, Ashley Gross, February 23, 2010]
I have seen an increasing number of sellers (including banks) accepting market conditions and reacting accordingly. This can be in the form of lower list pricing or accepting bids that are way below list price. That being said there are still plenty who can not or will do so. I believe the lower bid has been relatively consistent over the last 6 months and more sellers are accepting it. I think existing homes volume will be strong as this trend continues. As far as the difference from other markets Chicago has not experienced as much of a pricing purge as some of the others, which may be a prerequisate for recovery.
It all boils down to jobs and confidence. I am reminded of the old saying that jobs do not make you go crazy but rather prevent you from doing so.
TARP prevented an economic collapse but national health care (insurance reform?), card check and cap/trade will not help.
My hope is that Obama builds a track record of not being able to get things done which will bring back confidence among employers which will then bring back jobs which will then bring back home buying to a nomralized level.
The Case Shiller uptick is reflecting a rebound in areas of the country where you have had a wash-out (CA, NV, FL, etc.) and pricing is reflecting rental equivalence. Chicago is still stubbornly pricing in a premium and until equivalence is reached I would still expect downside.
Also, I was just in NYC over the weekend. Banks are hiring again and Manhattan real estate continues to defy gravity. We need some more banks and their tax revenue in Chicago!
Here is a random question that I hope someone can help me with. Illinois has a flat state income tax of 3% while New York’s will reach almost 9%. Why does Illinois not raise its income tax (which is deductible from the Federal income tax), lower the sales tax and use the additional money to improve public transit? If we can improve public transit and reduce congestion on the highways, this can only help job creation and ultimately housing demand.
Disregard my question. Illinois does not allow for deductibility against federal taxes.
GLS is right.
“The Case Shiller uptick is reflecting a rebound in areas of the country where you have had a wash-out (CA, NV, FL, etc.) and pricing is reflecting rental equivalence. Chicago is still stubbornly pricing in a premium and until equivalence is reached I would still expect downside.”
The Bay Area has seen rental equivalence? Really? Sure- the fringe suburbs have taken a hit and may be rising a bit now so that is maybe skewing the index. But the same can be said of the Chicago area (as CS includes the Chicago metro area as well.) I’ve heard of bidding wars on some suburban houses in the last few weeks (those priced under $300,000) in the Chicago area.
But I agree that until Chicago-proper sees some rental parity, prices will keep dropping.
Sabrina
Bidding wars on well priced properties is why the CS pricing is down. I am seeing the same thing. For the most part only well priced properties are trading. More sellers starting to realize this should mean flat to negative price pressure until inventory clears.
MGG
I don’t think green zone neighborhoods will ever have rental parity. Most places with high demand don’t. In fact, I have never seen any desirable urban neighborhood with rental parity. We may see it on “lower end/really should a be a rental property” units, but I doubt you will ever see rental parity on a decent 2/2 with all the bells and whistles in the green zone.
The Chicago market has issues with over supply and lack of financing due to the concentration of condos in desirable neighborhoods. In addition, the prices put us on the cusp of being a high cost city, but we don’t get high cost benefits (such as higher conforming financing).
We just got a memo yesterday from yet another mortgage insurance company that is going to be limiting condo financing to 85%. So yes, it is going to take 15% down to get conforming financing soon. Not only that, FHA changed how they do spot approvals on condos which has basically shut down the FHA market because now the entire development has to be approved by HUD directly and the vast majority of developments in Chicago are not FHA approved already (realtors, get off your asses and get the HOAs to get their developments FHA approved!)
Can anybody tell me the actual boundries CS uses in their determination of Chicago home prices? Does it include the burbs and beyond (Chicagoland) or just the official city limits. Maybe I’m wrong, but aren’t areas like Joliet included in their statistics?
When I think about the staggeringly expensive home prices in NY, I think about lower Manhattan, and maybe parts of Brooklyn. As a 20 year resident of the same home in LP, the real LP and not some broker’s fantasy version of it, I have to say that the actual selling prices of homes in my area are still pretty high: $2mm a couple of weeks ago for a fixer-upper on Cleveland, similar for one on Belden, almost $3mm for one on Fullerton. True every neighborhood has it’s own story, some better or worse than others, but if LP included say Bridgeport home prices in it’s statistics, the numbers wouldn’t be as high. Something about the CS report has me wondering everytime it come out… not apples to apples.
I call BS Russ. I lived in NY in the early 1990s and rental parity was not difficult to find if you had cash. There is no ‘greener’ zone than Manhattan.
“We are still in a bubble.”
That is the answer to almost every single question asked on this topic. People are begging for different answers and everyone has their own spin, but the above quote is almost always the answer.
Real estate prices are extremely sticky for many reasons, there are many more years of real price declines to come. Japan is going on 20 and counting, just an example. Over analyzing month-to-month data points is counter productive to understanding what is going on in the big picture.
Just my opinion.
John
“Illinois does not allow for deductibility against federal taxes.”
Illinois law can overrule Federal law? That’s a first. And, unlike so many other things that get called unconstitutional, actually unconstitutional.
“But Lucido says he’s seeing some clients decide to stay put or rent their place out rather than sell and lose a lot of money. So he says he’s hopeful prices don’t have that much further to fall.”
Instead, they rent it out and lose a lot of money. Or, is that imaginary “equity” and not really “money” that they fear losing?
Besides, they are helping to drive down rents by joining the record number of new apts entering the market. This is why the downward spiral continues until these units are sold, not rented.
“Chicago is still stubbornly pricing in a premium and until equivalence is reached I would still expect downside.” – GLS
“GLS is right.” – Matt
“But I agree that until Chicago-proper sees some rental parity, prices will keep dropping.” – Sabrina
I expect it to overshoot. Increased rental inventory due to irrational expectations that drive down rents while sale prices need to reach rental parity are about as good as it gets for the return of housing affordability.
“I also saw one article muse that maybe it was the “bad weather” in Chicago (and also New York) that caused the weakness in December.” – Sabrina
That writer was an easy mark for the shills. The CS Index is a 3-month rolling average so the Dec number has as much to do with Oct & Nov as it does with Dec if comparing the non-seasonally adjusted numbers. This doesn’t even take into account that the Dec sales were mostly contracted in prior months so why would the price drop be due to bad weather at closing?
“In fact, I have never seen any desirable urban neighborhood with rental parity.” – Russ
Well, you only know bubble-era real estate conditions, right? What you consider “normal” is not at all. So quit your whining about this inevitable return of normal lending standards. Besides, you can always lend them Perl’s money and become the leader in “risk-free” non-conforming loans. You say yourself there is a need, so go ahead and fill it. What’s the problem?
“Can anybody tell me the actual boundries CS uses in their determination of Chicago home prices?”
I could do a lmgtfy link, but it is:
Cook
DeKalb
Du Page
Grundy
Kane
Kendal
McHenry
Will
Note the absence of Lake County, which I have yet to see adequately explained.
I’m really struggling here. I have a month-to-month rental, and I need to get out (too small, horrible landlord, etc.). We decided that we want to rent a small single family house and have been looking for a rental for two months. We’ve found a few we’ve liked, but have been amazingly unlucky (long story) and have lost out on the three we’ve wanted. Despite thinking that folks who couldn’t sell would be renting, there just aren’t many SFHs for rent, and thus there aren’t many deals to be had for anything of decent quality. And, we’ve been looking all along the blue and brown lines from downtown north to Montrose.
So, I started doing the mortgage/taxes math on small single family homes in the city. I’ve been looking in the $300-400k range in Irving Park, Portage Park, etc. It seems you can get a decent, livable small house for that price.
Here’s the kicker – – with a nice down payment (say $150k), the monthly outlay won’t be more than renting – – and we get a nicer home. I’ve seen some really mediocre SFH rentals at $1800-2000/month.
We only think we’d stay in the house for 5-7 years. What gives me pause is that with this relatively short ownership period, and the possibility that the market will continue to decline, we’d end up losing money at the end of 5-7 years.
Anyone want to weigh in on whether we should just keep looking for a house to rent? Or, even better, have a lead on one? 🙂
Thanks!
Ahhhh, thanks anon. So basically the 12th graders are thrown into the same IQ pool as the 3rd graders. So I should expect my home’s value to be half of what it is becase some spec McMansion in Harvey is on the auction block. Thanks CS, because of your fantastic number crunching, looks like I better get packing!
Re: “Not only that, FHA changed how they do spot approvals on condos which has basically shut down the FHA market because now the entire development has to be approved by HUD directly and the vast majority of developments in Chicago are not FHA approved already (realtors, get off your asses and get the HOAs to get their developments FHA approved!)”
Can a condo board OPPOSE HUD approval? Or if a buyer or seller were willing to pay the $750 fee can it happen?
“Thanks CS, because of your fantastic number crunching, looks like I better get packing!”
The CS index was never meant to be interpolated down to the neighborhood level. Sorry but its the completely wrong tool/metric to use for this analysis and you can’t really blame the index or S&P for this.
“Ahhhh, thanks anon. So basically the 12th graders are thrown into the same IQ pool as the 3rd graders. So I should expect my home’s value to be half of what it is becase some spec McMansion in Harvey is on the auction block. Thanks CS, because of your fantastic number crunching, looks like I better get packing!”
And it is only SFHs. And it excludes new, or newly reno’d, homes. And it discounts distressed sales. And, and, and.
It’s still a helluva lot more useful than medians or averages. But, as has been much discussed here, if you just take the Index for the month of last sale and say “the current index is down 15%” and try to apply that to a single property, you deserve to be laughed at.
So my sister in law’s house out in bumblefuck that lost 50% of its value is lumped in with my condo a mile from work… right that makes sense
“So my sister in law’s house out in bumblefuck that lost 50% of its value is lumped in with my condo a mile from work”
No, it’s not. The headline CS index does not include condos, just SFHs. There is a separate condo index for Chicago (and NY, Boston, LA and SF).
I have a question, and I need everyone’s help!!!
I looked at a unit a month ago, a short sale (with a tenant) and loved it. I tried to go see it again with a friend and the realtor told my agent that nobody could go see it because of a problem with the tenants. We kept contacting the listing agent and he wouldnt return our calls. He then indicated that “nothing was moving forward with the unit”. A couple of weeks later the buyer had accepted an offer. Obviously pending short sale approval.
I feel like some shady business was going on, possibly a listing agent double dipping or working with a friend. Does anybody have any recommendations on what to do? I feel cheated!
Posters on here try to use macro stats everyday to apply them to local markets and individual properties. Rent parity. Income parity. All of these are good indicators, but they often really miss the underlying causes and what drives the sale of particular properties, etc.
REB:
Habitable, updated homes in the $300’s in Irving Park get ‘snapped’ up in a matter of days, see: http://www.redfin.com/IL/Chicago/3923-N-Lowell-Ave-60641/home/13459273
Portgage park and other areas on the northwest side are pretty similar. some of the NW side neighborhoods are fairly working class, and many homeowners are long time residents, with a much lower cost basis than you. $300k-$400k is a lot of money to live in a working class neighborhood, IMHO given that the same house 10 years ago costs sub-$200k.
I tell people, you didn’t make the real estate bubble, you’re just living through it. Yes it’s tough to rent a house and yes it’s even harder to find a ‘deal’ to purchase. However will all play out, and eventually you will find something decent in your price range, however, it’s going to take a little while longer.
Tax revenues in teh state are way down, because people are earning less money, and those income levels are not coming back. If you managed to keep your job and you make a decent buck, you’ll be in a good position to buy in a few years from now. Your competition has been reduced and the people who put themselves into unsustainable mortgage payments will all eventually lose their homes and they’ll find something cheaper that they can sustainably afford, and it may even be on the same block where they currently live.
“Does anybody have any recommendations on what to do?”
Move on with your life. Nothing much you can do except avoid the listing agent’s other properties.
“macro stats … Rent parity.”
How is rent parity a macro stat when there are other units in the same building for rent?
Russ:
properties on the northside will eventually reach rental parity because otherwise there can never be any new rentals. nobody in their right mind is going to buy a rental property if it doesn’t cash flow.
Thanks, homedelete. So, the message is that even if I can comfortably afford a home in a middle class neighborhood, prices are likely to decline further, so I should suck it up, keep looking for a rental, and wait a few years to buy?
It’s hard to do with a landlord blaring Journey at 5:30 am on a Sunday morning, but I shall try!
“It’s hard to do with a landlord blaring Journey at 5:30 am on a Sunday morning, but I shall try!”
Avoiding that is worth the chance of a capital loss tho, isn’t it?
“Avoiding that is worth the chance of a capital loss tho, isn’t it?”
Steve Perry on Sunday morning?? I’ll take the capital loss.
It can sometimes suck to be a landlord, but it’s still cheap, often much cheaper, than buying:
http://www.redfin.com/IL/Chicago/5428-W-Hutchinson-St-60641/home/13478587 $369,000 listed today; sold $121,500 in 9/09.
as you can see the flippers get the best properties, spruce them up a little and then sell at an inflated value to FHA 3.5% down buyers. Bungalows for nearly $400k in Portgage Park? Come on, that’s a cruel joke. The guy down the block probably bought his similarly sized bungalow for $150k in the 90’s.
“REB on February 24th, 2010 at 11:48 am
Thanks, homedelete. So, the message is that even if I can comfortably afford a home in a middle class neighborhood, prices are likely to decline further, so I should suck it up, keep looking for a rental, and wait a few years to buy?
It’s hard to do with a landlord blaring Journey at 5:30 am on a Sunday morning, but I shall try!”
sorry meant being a TENANT!
What the CS index does do brilliantly besides providing endless entertainment to the snarky CC reading masses, is to provide fodder for the media (especially NY based networks) and people like my WS big-shot-master-of-the-universe-brother-in-law to whip up yet another story, or investment decision, about how Chicago lags behind the other major urban areas in regard to home prices (thanks Will County for spread’n the love). Not something that potential investors in THIS city (be it corporate or residential) need to see on the nightly news nor read about in Forbes. Believe it or not, decisions are partly made on such information.
It seems to me that Chicago has always had low rent for a major city.
Certainly far lower ( even factoring in lower average salaries than NYC, Boston, San Fran, etc.
How does that play out in this rental parity business?
Also, if you buy a property and hold it long term, even if you don’t make money the first few years, you most likely will toward the end (as long as you don’t use it as a piggy bank)
So I think it odd that some on this board are constantly going on about how cheap properties were 20 years ago.
#1-Those properties were bought with 1990 dollars.( worth 57 cents on a 2010 dollar.
and
#2 Rents were far lower then ( i lived in a small 2 bedroom in Bucktown in 1990. Rent was $345.)
“$369,000 listed today; sold $121,500 in 9/09.”
There are 10 sales over $350k in the last 6 months in PP (and only 14 more b/t $300 and $350–>15 sales under $100k). 2 of them east of Cicero, 2 more w/in one block w of Cicero and only 2 remotely near that place. So we shall see what they manage to get for it.
I can list my house for $4mm if I want, but no one will even look at it except to laugh.
However, sometimes you just say, screw it and buy a place that you like. Yes, I don’t want to lose money, but I am so tired of renting (and it has only been 9 months). I want my own place again (we moved here and decided to rent for the first year). So, we’re making an offer on a TH in Lakeview. It isn’t where I wanted to live (Lincoln Square/North Center) or where my hubby wanted to live (closer to his job in the Loop), but we’ve made the calculation and it makes sense for us. So, maybe it also makes sense for REB.
Thank you. We need buyers like you to set comps on the way down.
However, I don’t understand why you would put an offer in on a house where neither of you want to live – especially since you’ll probably need to stay there a while. But hey, if you’re impatient, that’s cool too. Gotta scratch that itch at whatever the cost, right?
“Question on February 24th, 2010 at 12:18 pm
However, sometimes you just say, screw it and buy a place that you like. Yes, I don’t want to lose money, but I am so tired of renting (and it has only been 9 months). I want my own place again (we moved here and decided to rent for the first year). So, we’re making an offer on a TH in Lakeview. It isn’t where I wanted to live (Lincoln Square/North Center) or where my hubby wanted to live (closer to his job in the Loop), but we’ve made the calculation and it makes sense for us. So, maybe it also makes sense for REB.”
The location is a slight compromise. And since one of us wasn’t going to get what s/he wanted, it didn’t matter that much. But, the place is very much what we’re looking for.
Oh, and you’re welcome.
” So, we’re making an offer on a TH in Lakeview. It isn’t where I wanted to live (Lincoln Square/North Center) or where my hubby wanted to live (closer to his job in the Loop), but we’ve made the calculation and it makes sense for us.”
While I’m pro-owner, this seems like a balancing act that ends up with you selling too soon and moving either to your or his preferred ‘hood. Unless you’re already renting near wher you’re buying, so you are completely comfortable with the trade-offs. I don’t think you should move to a new-to-you ‘hood that doesn’t make one of you happy, if you are buying.
jay, it is the high end which is dragging down the CS Index now. Of that 1.64% decline in the Dec index, the top tier (Under $189795) dropped 0.80%, the middle tier ($189795 – $297179) dropped 1.47% and the high tier (Over $297179) dropped 1.82%.
The first CS bottom in this correction was due to the low end. The upcoming new bottom will be due to the high end.
The condo indices have already both now hit new lows for this correction. It will continue to decline for some time since only resales are included because getting vetroed will only show up with resales.
sorry, that “top tier” should read “low tier.”
Yes, we rent very near this location. We know it very well – the stores, the bars, the restaurants, etc. We’re comfortable here.
“While I’m pro-owner, this seems like a balancing act that ends up with you selling too soon and moving either to your or his preferred ‘hood. Unless you’re already renting near wher you’re buying, so you are completely comfortable with the trade-offs. I don’t think you should move to a new-to-you ‘hood that doesn’t make one of you happy, if you are buying.”
Low rent? All of you who keep talking about Chicago having low rents are XXXXXXXX. If you consider $1500/mo + parking (possibly) low then again you are XXXXXXXXX. Especially since that place is probably 650sq ft.
The bottom line is if you can find a place cheap enough or roughly what it was worth in the late 90’s, early 2000’s, and plan on holding it for at least 3 years, you are probably in pretty good shape. When you sell it, you might not make 50k like all the greedy bastards are trying to accomplish, and very well break even….But you wont loose as much money as you would paying rent (since rent is not recoverable)
“But, the place is very much what we’re looking for. ”
Have a plan B in case that one falls through and you really want to buy. If you really want to buy this year you better have a contract signed by April 30th.
“(since rent is not recoverable)”
Neither is mortgage interest (net after tax).
“The bottom line is if you can find a place cheap enough or roughly what it was worth in the late 90’s, early 2000’s, and plan on holding it for at least 3 years, ”
Show me a place that isn’t a trashed foreclosure in the neighborhoods we mostly talk about on here with pricing in the late 90’s or early 2000’s. They largely don’t exist.
“you wont loose as much money as you would paying rent (since rent is not recoverable)”
Neither is 65-75% of the interest you pay on your mortgage.
Or are you suggesting that everyone is paying cash for their homes?
“Show me a place that isn’t a trashed foreclosure in the neighborhoods we mostly talk about on here with pricing in the late 90’s or early 2000’s. They largely don’t exist.”
Ughh…correct. They largely do not exist. Except the one that I am under contract for, in RN, which sold for 305k in 2003 and I am purchasing it for 260k (with parking), fully intact.
“Neither is 65-75% of the interest you pay on your mortgage.”
Again correct. Yet, scenario time: shelling out 20k for a year to rent vs maybe 5k of principal being paid off in the first few years to buy. The rent, non-recoverable. The interest, not recoverable. BUT, if you sell it in 3-5 years for the same price you bought it at, IT”S PRETTY MUCH A WASH, YOU DO NOT LOOSE AND BASICALLY LIVE FOR FREE (minus assesments and all that BS). Take it from someone who has been renting for the past 4 years…..
Just back from viewing a dirty, run-down 2.5 bedroom SFH rental on the 5000 block of W. Berenice. Horrible property, needing tons of cosmetic work to make it look nice (easy for motivated owner, hard for tenant) for, get this, $1850. This isn’t a particularly desirable hood and the house was a mess.
We also stopped by a house for sale at $399k. Cute house, that with my untrained eyes, looks like it’s been loved and needs minimal work. Plus, it meets all of our needs.
I’ve been renting since 2004 and really would like a place of my own again. Staying tough is tough, especially with a husband who wants to buy ASAP and stop looking at crummy rentals.
Thanks for all the input and support.
“scenario time: shelling out 20k for a year to rent vs maybe 5k of principal being paid off in the first few years to buy. The rent, non-recoverable. The interest, not recoverable. BUT, if you sell it in 3-5 years for the same price you bought it at, IT”S PRETTY MUCH A WASH, YOU DO NOT LOOSE AND BASICALLY LIVE FOR FREE (minus assesments and all that BS). Take it from someone who has been renting for the past 4 years…..”
Okay, fisking the scenario:
Assume flat rent and flat price of unit. Assume 5 year period.
Rent = $20k/yr or $1675/mo. Total cost of $100k.
Buy = (stabbing based on the $5k/yr principal–first year paydown is ~$5300) $300k mortgage, 4% interest (5/1 arm), $75k down. Monthly payment is $1432, plus assessment and assessments of ~$700, for monthly gross cost of $2150, or ~$25,000/year. $16k in tax deduction, net the forgone standard decution, ~$3.5k in tax benefit/year. x5 years = $107,500. plus op-cost on the DP (at 4%, to be conservative) = $15k = $122,500. For a (most likely) nicer place.
Then, at sale, $375,000 – 6% (total costs, conservatively) = $352,500. Mortgage of $300k – $25k in pay down = $275k leaving $77,500–or plus $2500.
Net is about 20% more for the buy than the rent, based on the scenario. Which isn’t anything close to living “for free”, altho it *may* be a reasonable premium to the cost of rent *for you*. Just don’t think that you’ll save a $100k in rent (minus assessments and all that BS) by buying.
“$1850. This isn’t a particularly desirable hood and the house was a mess.
We also stopped by a house for sale at $399k. Cute house, that with my untrained eyes, looks like it’s been loved and needs minimal work.”
If those were the *only* two choices, I’d take your husband’s side.
anon (tfo),
Unfortunately, it’s become a theme.
In January, we found a cute house in Avondale for $1500/month. We applied for it, and paid first month’s rent. It took the owner three weeks to change her mind and decide she didn’t want a dog in the property after all. Then we found a lovely house in West Welker for $1750. We agreed on all terms and set a time to sign the lease the next day. Late that night, we get a call saying they’d rented it to someone else for more money, without giving us the opportunity to counter.
Since then, we’ve seen so many crazily-priced SFH rentals. Another house in Portage Park was $1675 and had seven different floors on the first level (no exaggeration).
We were initially looking under $1800 and then bumped up our limit thinking we’d find something. Alas, no luck.
I just keep scouring Craigslist. Don’t know what else to do!
For dog owners the rental parity goes way up since only about 10% of properties in Chicago allow dogs and barely any of them allow dogs of a manly size… If you’re renting and looking for a good deal, pretty much all the rental “deals” don’t allow dogs. Typically (not always obviously) if you own the property you don’t have to worry about paying that premium which is nice. That was an added “hidden” benefit to us buying a place.
@REB-
Have you tried one (or more) of the apartment rental places? They do more in the middle of the city, but might have something interesting for you. And, they are free.
Sonies,
Actually, other than that first rental (which clearly said dogs were ok) the dog hasn’t presented much of a problem. Even with the MLS SFH rentals, very few don’t allow dogs. For SFH rentals, I’d say way more than half I’ve encountered allow dogs. Maybe these aren’t what you call “deals,” but the dog hasn’t been a problem. Our willingness to pay an extra pet deposit has even opened a few doors.
Question,
We have tried the apartment rental places. They aren’t all free, actually, as some require a $50 per person credit check before they’ll even talk to you. The apartment rental places seem to have very few SFHs, though.
It’s also just tough to search for SFHs and most search engines I’ve used don’t have a search field for type of home.
Thanks again.
Plenty of great places with two or three bedrooms for $1500 in Chicago.
I’m not really sure what YOU are talking about…….
drew on February 24th, 2010 at 12:49 pm
“Low rent? All of you who keep talking about Chicago having low rents are XXXXXXXX. If you consider $1500/mo + parking (possibly) low then again you are XXXXXXXXX. Especially since that place is probably 650sq ft.”
Sorry I missed this discussion until now.
REB,
This is the problem I was alluding to the other day. If you want to rent something on the large side or a SFH it’s not clear that there are great deals out there. And depending upon your tax bracket buying could be a pretty good option. With mortgage rates at historic lows and prices down this is the first time in 9 years that I’m willing to consider buying for myself. Yeah, prices might go down a bit more but if mortgage rates go up 100 basis points it will wipe out any savings – unless you plan on selling in 2 years or something.
I’ve looked in the northwest side before for SFHs around 400K. They are hard to find but good ones are occasionally available. Lots of crap in this price range.
G,
Here is how renting makes sense to people, right or wrong:
1) They have to move. Don’t want to mess up their credit with a short sale and don’t have the money to close. But they can lose a few hundred each month.
2) They think the market is going to get better in a year or two and they are going to make up the rental loss. There’s only so much their realtor can debate with them about this because it looks self serving.
“There’s only so much their realtor can debate with them about this because it looks self serving.”
And, even if you win them over, they’re likely to use someone else, due to “bad feelings”, so there’s only so much time you want to put into it, unless they are actual friends.
REB – Sounds like we are (or, were) in very similar situations. My wife and I were renting in Lakeview since moving to Chicago in ’03. Between the 85-lb lab, the car, 6+ years of accumulated stuff, and a little one coming in to the picture down the road, we were ready to get out of the apartment life and get a ‘real’ place to live (ie garage, basement, yard). We looked briefly into renting SFH’s, but had the same experience you describe: all the options were either VERY overpriced, in almost un-liveable condition, or located in neighborhoods that were either transit deserts, boring or shady.
So, we started looking in the same price range (300-400k). Not a lot of options east of the river, but we found several places on NW side that were reasonably priced. After losing out on a pair of mid-300’s SFHs, we closed on one late last fall. We’re out in the Horner Park neighborhood and there are definately other options nearby.
Check out this place, which just closed at 390k: http://www.redfin.com/IL/Chicago/4316-N-Whipple-St-60618/home/13486913. Nicish looking recent rehab (for better or worse), with 3 BR/3BA, CA, finished basement, yard, garage, walk to the brown lne.
A bunch of people will cry: “But that’s not affordable”. And maybe it isn’t for some folks, but if you want to have space, privacy, independance, and all the other things that a SFH offers, I think you need to get beyond the Rent=Parity mindset that dominates discussions here. It just seems to me that between the glut of new condos and crappy rentals, there just aren’t enough rentable-SFH’s in the city to drive down prices.
Sure, you can save some $$ each month by sticking with the cramped, 2 BR/1BA rental with the shared yard, no parking, shared coin-operated laundry and shared floors/walls/ceilings. But, I don’t think that is really comparable to having a place of your own. I don’t think you will find a SFH in a nice neighborhood for rent a price that makes renting worth it. Maybe I’m wrong, but that was our experience.
My two cents. I’ll let the regulars tell me what an idiot, FB I am…
PS – We also had to look through dozens of crappy houses before we found the place we liked. Some of the sub-400k houses were so disgusting, we had to just turn right around at the front door. However, there are options out there. You just need to realize that there is a lot of dirt to dig through for every nugget…
One thing’s for sure, those “irrational expectations” I referred to will not lead to a good end for them.
Btw, Gary, I note that you are now “hopeful prices don’t have that much further to fall.” This seems to be a bit of backsliding from your oft-heralded belief in your trendline analysis revealing that the CS bottom is long gone. I’m surprised you didn’t use this larger stage to continue with your previous claim, lol 😉
“I think you need to get beyond the Rent=Parity mindset that dominates discussions here”
I don’t think anyone talks much about rental parity wrt SFHs. Bob and HD are unwilling to pay the current premium for an SFH, but both are prepared to pay more for an SFH than they do to rent. G and others view real estate, generally, as to expensive for investment right now–in part based on rent value, but mainly just in general.
Probaly the biggest diff with a SFH is you are likely to have a longer ownership period, reducing your risk (or at least spreading your future loss over a longer period).
I don’t think you’re an idiot at all–$162/sf is a pretty good ppsf for your amenities. I dunno about the area though, I know the area around Kimball is shady but the area around Francisco not so much so.
It appears you’re about a mile from the el stop though. Which is likely far enough away to explain the pricing.
I have this theory that for some reason white gentrifiers place a HUUUGE premium on being a hop, skip and jump away from an el stop that isn’t in a seedy area. Even though there are these things called buses which are like magical el cars that don’t need tracks.
I bet if that house was closer to Francisco it’d at least go for 100k more.
Disclaimer: in a few years time I plan to do exactly what you did (although different neighborhood). Get a SFH about a mile away from the El at a good PPSF.
I also think you’re smart to not consider this neighborhood “boring” even though you mentioned that as one of the undesirable characteristics. Far too many people automatically write off a neighborhood as boring if it isn’t LP/LV/RN/GC/etc with a walkscore of 95+.
“It appears you’re about a mile from the el stop though”
.61. 1000 meters. *If* you walk to Francisco, which you need not. Sacramento has an entrance now, too, and that’s just under half a mile from that house.
“It appears you’re about a mile from the el stop though. Which is likely far enough away to explain the pricing.”
GoogleMaps shows it as .5 mi from Sacramento entrance of Francisco stop (yes, there is an entrance on the West side of the stop). It is a 10 minute walk. 1/4 of the value dropped for a 10 minute walk?
Also, as has been discussed here before: busses suck. They are smaller, get stuck in traffic during busy times (which is when everyone is commuting), you generally need to tranfer multiple times to get anywhere and it’s just generally not a pleasent experience. IMHO, can’t compare bus commute. Brown line picks me up 10 min walk from home and drops me off 40 min later 100 ft from my office. Can’t do that with a bus.
“It appears you’re about a mile from the el stop though. Which is likely far enough away to explain the pricing.”
GoogleMaps shows it as .5 mi from Sacramento entrance of Francisco stop (yes, there is an entrance on the West side of the stop). It is a 10 minute walk. 1/4 of the value dropped for a 10 minute walk?
Also, as has been discussed here before: buses suck. They are smaller, get stuck in traffic during busy times (which is when everyone is commuting), you generally need to transfer multiple times to get anywhere and it’s just generally not a pleasant experience. IMHO, can’t compare bus commute. Brown line picks me up 10 min walk from home and drops me off 40 min later 100 ft from my office. Can’t do that with a bus.
You are one of the few rational RE purchasers and got a deal. I can only hope going forward buyers are as discerning as you were when purchasing your home. Congrats on the place, BTW.
“if it isn’t LP/LV/RN/GC/etc with a walkscore of 95+.”
House has a WS of 75.
And a bus route can get cancelled or moved – the trains may run less frequently but they stay put.
“House has a WS of 75.”
My parents had a slightly bigger SFH in a lower cost of living midwestern city in suburbia with a smaller usable backyard than JCB’s place. They got rid of it for 320k. The walkscore of their house was 11. 75 for under 400k in a place that isn’t trashed and close to public transit is pretty phenomenal.
“JCB’s place”
I don’t think it’s *actually* JCB’s place, but hate to speculate.
“… but hate to speculate.”
Your right; not my place but an example of some (potentially) decent deals in the neighborhood.
“I don’t think it’s *actually* JCB’s place, but hate to speculate.”
I’m gonna laugh if we see it re-listed for 500k. 😀
Bob, look at this gem off the blue line: I posted it above.
http://www.redfin.com/IL/Chicago/3923-N-Lowell-Ave-60641/home/13459273
Walk score of 75.
The $300’s and low $400’s is the price point that higher income, professional, college graduates want to pay and can afford to pay.
The ‘deals’ available in this price range are only going to get better and better as the housing bubble bursts.
The crappy houses in these neighborhoods that are currently priced in the $300’s will eventually tumble into the $200’s if they want to sell because they need $100k in work.
But the turnkey livable properties will remain in the $300’s.
The problem is only one or two pop up every month and they sell fast. Really fast. Too bad. That’s where the multiple bidding is coming from.
Yet there are no shortage of turnkey livable properties in the $400k’s and $500k’s that just aren’t selling.
“in a few years time I plan to do exactly what you did”
Bob, Big difference is that you have yet to buy before the correction has ended.
I repeat what I have written here for over 2 years now: Spend whatever you like on whatever you want but don’t fool yourself into believing that better deals are not on the horizon, especially in areas of the NW Side with almost an hour’s commute to the loop.
http://www.redfin.com/IL/Chicago/3656-N-Tripp-Ave-60641/home/13458473
Previously featured on CC; a few blocks south of the property above
Listed at $479k, only $20k in price reductions over 8 months time.
Purchased in June 1999 for $273,000.
G,
One of the reasons I was disappointed to join this discussion so late is that I feared I had lost the opportunity to joust with you 🙂
You will note that Ashley paraphrased that I was hopeful that prices wouldn’t fall much further (If you are reading this Ashley, I think you did a fine job with the piece). You don’t hear me say that. Actually, Ashley and I had about a 10 minute discussion that she recorded but as she explained going into it she was going to use about a 10 second soundbite. However, I did in fact discuss the trendline and the fact that we are 9% below it for SFHs. I then said that looking at the trendline you wouldn’t think it could go much further (possibly interpreted as me being hopeful). That’s when I switched gears and mentioned the employment situation in the metro area, which I think is a huge factor, and could be the spoiler here.
I react to the data and the fact that it has turned down again does give me pause. But I don’t expect it to fall much further – not even the condos.
Buses are better the closer you live to work thanks to the wonderful Bustracker. No more waiting 15-30 minutes for a train or bus because I know exactly when its going to show up.
They need to make a train tracker too, no clue why they haven’t yet!
Think Small,
Your initial thoughts on the income tax were correct. We can deduct Illinois income tax from our federal income so an income tax would be preferable to a sales tax. However, they’re already discussing raising our income tax to plug their huge deficit so you may get half your wish. Of course, that will just make it even less attractive to live here.
“But I don’t expect it to fall much further – not even the condos.”
Rates are going up when the Fed stops MBS purchases on 3/31. For the tax credit to be used you need to close by 6/30. Given the current trend line for condos I see nothing on the horizon to indicate stabilization.
In fact this year will be more difficult than most when both of these things happen as typically Chicagoland has stabilized in the summer months. That might not happen this year.
“40 min later 100 ft from my office”
So much for the El. I can beat that on the Metra from the Indian Hill stop…
Lenders collaboratively need to stop giving loans to developers for new construction. There is an abundance. Simple “supply and demand”. I am glad certain project in the Sloop, Loop, LP, and West loop have been scratched. The city has been overbuilt in the last few years and it is time that we let things rebound by sitting back and not building. New construction pre-sale buyers are always going to get burned once the remaining units go in Auction and the developer wants to get out of the building.
REB
couple thoughts come to mind…
How about renting a COACHHOUSE, instead of looking for a full SFH to rent? I’m with others who suggest using resources other than just craigslist. Some of the MLS search sites do allow for searching for “rental” and “SFH”. OR, what about a renting a townhome? Or are you covering all the SFH-LIKE properties, as well?
Someone upthread mentioned the notion of a “turnkey” property, which I assume is driving your price range? I’m not completely convinced that newer, higher-priced properties are any less likely to have unexpected costs come up than with older “crappy” properties. Would a coat of paint, and refinishing all the floors be enough to make a place less undesirable?
And finally, don’t overlook Logan Square and Avondale, both on the Blue Line. There are some gems to be had in your price range, but you have to do a little more work on pinning down the good blocks from the shady ones.
“After a streak of price gains last year, Chicago home prices have been dropping again. In December, they fell for a third straight month – more than 1 and a half percent compared with November. That’s according to the S&P/Case-Shiller Home Price Index. ”
She blew this part. The CS Index says no such thing. It is a 3-month moving average that is reported. The index says that the Oct-Dec index average declined 1.6% from the Sep-Nov average index level. Her statement is simply not true and leads to other idiots trying to attribute the erroneous conclusion to “bad December weather.” Not to mention that the 3 mo trend could indicate that Nov-Dec was a much bigger decline than 1.6%.
“I react to the data and the fact that it has turned down again does give me pause. But I don’t expect it to fall much further – not even the condos.”
Really?
Nevermind the SFH index, which will rebottom in a couple of months. You actually believe this about the condo index (which rebottomed in Dec, SA-index rebottomed in Nov) in light of the fact that it is a resale index that has yet to pick up very many resales from the condo peak, and almost none who were vetroed? Even though it is only down 17% from the peak and remains 33% above the 2000 level when the SFH index is still off 25% from the peak and is only 27% above the 2000 level? LOL.
logansquarean,
Thanks for your advice. I live in Logan Square and actually would prefer to stay here. The first house we found, and then didn’t get, was just across Diversey in Avondale. I’m just half a block off the boulevard and love the neighborhood and my short commute to work.
We want a private yard, both for the dog and so that we can grow a small veggie garden. We’ve been looking at any property that would offer this. The problem with coach houses, besides the shared yard, is often the lack of parking. The problem with townhouses, at least the ones I’m seeing in the city, is the lack of yard (some only have balconies).
We have an agent searching on the MLS for us, so we’re covered on that end for rentals.
When you discuss “turnkey” do you mean buying, rather than renting? I’m not sure what you mean here, sorry!
“Can a condo board OPPOSE HUD approval? Or if a buyer or seller were willing to pay the $750 fee can it happen?”
There is little reason for a condo board to oppose HUD approval, other than the expense and the time commitment required to gather the appropriate documentation and answer the questions. If the seller pays the fee then that eliminates one objection.
You better rabbit-proof your veggie garden–there are tons of hares running around the city I always see them at night stumbling home.
Thanks, Bob. Funny.
“You actually believe this about the condo index (which rebottomed in Dec, SA-index rebottomed in Nov)…Even though it is only down 17% from the peak and remains 33% above the 2000 level when the SFH index is still off 25% from the peak and is only 27% above the 2000 level?”
Yes. Maybe another 3 – 5% max. The condo index never went as high as the SFH index and probably won’t undershoot as much as the SFH index is.
BTW, the thing that doesn’t get discussed here very often is that months of supply and days on the market have been trending way down.
Turnkey is sort of a generic term for livable, updated, move-in condition without any major upgrades or repairs necessary. For example, if the MLS listing doesn’t have any pictures and it says “need TLC” then it’s not turnkey.
For example – not turnkey: http://www.redfin.com/IL/Chicago/4329-N-Kostner-Ave-60641/home/13481854
$365k
on market for 294 days
GREAT DEAL FOR DEVELOPER OR REHABBER. DOUBLE LOT IN OLD IRVING PARK. VICTORIAN HOME STILL CONTAINS SOME ORIGINAL DETAILING. STAINED GLASS WOODWORK POCKET DOORS AND TRANSOM WINDOWS. BEING SOLD AS IS.
“I always see them at night stumbling home”
Damn drunk bunnies. They’re ruined more than a few good dive bars with their furrier-than-thou attitudes and nasty drunk behavior.
And they fight dirty.
Turnkey (ug exterior)
$525,000
http://www.redfin.com/IL/Chicago/4217-N-Kildare-Ave-60641/home/13456160
Old Irving property with a dbl lot secluded in the perfect neighborhood, and block! Must see to appreciate-Restored oak and maple floors, dream granite and updated kitchen with a huge living and dining room, plenty of room. Beautiful oak and maple wide staircase and new quartersawn oak trim throughout 1st fl. New windows, plumbing, 200amps, and one bed on the first flr and 4 on the 2nd! Convenient side drive!
“I feel like some shady business was going on, possibly a listing agent double dipping or working with a friend. Does anybody have any recommendations on what to do? I feel cheated!”
Your agent should first contact the other agent to find out WTF happened. Depending upon the answer received an ethics complaint could be filed with the Chicago Assoc Realtors.
Thank gawd they don’t know how to use a phone or the 911 system to dial in public urination or I’d have a buncha fines!
“Yes. Maybe another 3 – 5% max. The condo index never went as high as the SFH index and probably won’t undershoot as much as the SFH index is.”
I am curious why you believe the SFH market is due for a bigger correction than the condo market. I suspect the opposite as SFH owners tend to be older, more established in their careers, more settled, more equity?
Bob,
Well, the SFHs have already corrected more than the condos and the two have tended to peak and valley at the same time, though not necessarily at the same levels. Also, since the condos didn’t go as high they might not fall as far. And the thing about equity…I’m seeing more pricing flexibility among my high equity sellers than my low equity sellers. Not many sellers can write a check at closing.
My building board members (some of them) oppose HUD approval because they don’t want “poor people” living here.
Sorry for being unclear. I understand the term “turnkey,” I just didn’t understand what was being presented to me.
Here’s something I’m pondering. Let’s say I buy a SFH with a nice down payment and end up with a $250k mortgage. 5-7 years later I move. Let’s say I can’t sell the house at a profit OR don’t need to sell the house to buy my next one. From what I can tell about SFH rental prices from my two months of painstaking searches (and assuming those prices don’t crash and property taxes don’t go through the roof, etc.), I should be able to rent the property out without losing money.
Am I missing something?
Dollface:
“My building board members (some of them) oppose HUD approval because they don’t want “poor people” living here.”
OMG! I really feel sorry for you. That is incredibly snobbish and misinformed. First, something like 30 – 40% of all transactions are FHA now. Second, just because someone is an FHA borrower doesn’t mean they are “poor”. What it does mean is that they haven’t saved much money. But there is absolutely nothing wrong with FHA buyers. I have worked with several and they are no different than anyone else I can assure you. By not being FHA approved they are hurting the value of their own homes. I am pushing all my sellers to get their buildings approved.
Having said that, it would be impossible to get a building approved without the cooperation of someone in the building to pull all the documentation together.
Gary L: Second, just because someone is an FHA borrower doesn’t mean they are “poor”. What it does mean is that they haven’t saved much money.
Isn’t this missing an alternative: that they are not poor, HAVE saved money, but prefer to maintain liquidity and take advantage of low interest rates and (a surely misused and perhaps ill-advised, certainly soon-to-be-tapped, but in the meantime available) HUD backing?
???
Good point Roma. But FHA is a more expensive alternative if you have the down payment so I wouldn’t think it would be prudent. However, there could be reasons people would do it.
I could see someone going FHA to avoid tying up the cash for whatever reason.
Speaking of which, I recently saw a home marketed as a Fannie Mae Homepath property requiring only 3% down. Does anyone have first-hand experience on this program?
FHA can be cheaper than conventional financing depending on the buyer profile. Mortgage insurance premiums can get quite expensive on conventional loans. FHA does have a rep for being for people with bad credit, but it isn’t necessarily so; especially now.
FHA is pretty much the only game in town for condos with less than 10% down.
HOA need to get their buildings FHA approved so buyers can actually get financing to buy. Without it, the pool of buyers is limited and it hurts the value of the property.
Dollface,
You should get your naive neighbors to read this thread and then slap them upside the head.
“Here’s something I’m pondering. Let’s say I buy a SFH with a nice down payment and end up with a $250k mortgage. 5-7 years later I move. Let’s say I can’t sell the house at a profit OR don’t need to sell the house to buy my next one. From what I can tell about SFH rental prices from my two months of painstaking searches (and assuming those prices don’t crash and property taxes don’t go through the roof, etc.), I should be able to rent the property out without losing money.
Am I missing something?”
Your nice downpayment is tied up in a depreciating asset- for one.
Second- do you really think it’s easy being a landlord? The horror stories I’ve heard from friends renting out their brand new condos- including just the basic- that their tenants either never pay on time or, frankly, don’t pay and just skip out on the lease. And those aren’t the worst stories.
I love how everyone assumes being a landlord is easy (and that the property will be 100% rented 100% of the time.)
You are a renter right now and not finding nice rentals. Renters today are demanding a lot of the same amenities as owners- new kitchens and baths, refinished floors or new carpet etc. etc. All this costs the landlord money.
If you’re only going to live in a property for 5 years- it really isn’t wise to buy at this present time. But that’s just my advice. Transaction costs and the (still) declining market are not your friend. And 5 years goes by quickly.
If you’re going to buy- buy somewhere you can live at least 10 years.
As I’ve said before- there are some great deals in the suburbs. I don’t know why everyone is obsessed with neighborhoods like Portage Park when there are plenty of starter homes at good prices in Evanston, Oak Park etc. – all with the same amenities and sometimes shorter (and easier) commutes to the loop (if that’s where you work.) It is foreclosure heaven right now in some close in suburbs like Park Ridge as well (but you’ll need to put some work into those.)
Advice right from sabrina the clown and Homedelete the studio lurking creep. Rent for the long term and rent in the burbs. After 30 years you will own nothing and owe the inflation adjusted rents of 2010. Housing prices will tank while populations grows.
Tanks a lot Sabrina 🙂
Prices will decline another 10% in Chicago. This correction is still going and is primarily due to financing issues and dismal white collar employment numbers. The far out burbs will decline even more than the city, as people will refuse to commute 30+ miles to the loop or other suburbs to get to work everyday. Chicago will remain the business capital of the midwest, but property prices have yet to reach bottom until there is confidence in the market, which potential buyers will not have until the job market improves, and they are more able to get financing.
The move-up buyers are basically non-existent, unless they are willing to take a loss on their current place in order to buy a new place for less than what it would have cost before.
I’m interested in Russ’ theory that “green zone properties” will NEVER reach rental parity. Isn’t this the key issue of all of the cribchatterers in trying to call the bottom?
For sure, non-cash flowing properties are hurting, but will the green zone properties ever reach rental parity?
I remember talking about this very subject in 2002 when properties were already priced high (non-cash flow). We’re still not there and it’s 2010.
I recall after college (for those still reading) living in San Francisco, being a a recent college grad with finance degree in the early 1990’s. I worked at an international bank, etc. had a degree, I was an Excel spreedsheet guru, geeky top school “analyst” etc. Well, there were tons of investment broker packages that ended up in my inbox to “analyze”.
So, I analyzed the NOI on a rental property (wedding cake bldg.) at the corner of Sacremento St. and Jones in Nob Hill. I determined that “financially” the building was worth about $2 milliion dollars based on income.
The asking price was $5.9 million, back then, it was a 10 unit building on Nob Hill.
I called the broker, I was about 22 yrs. old, laid out the entire mathematics, the spreadsheet, etc. and the broker didn’t even listen to me. It was not about the math, and this property was within a world green zone. The broker didn’t even understand IRRs or analysis, he valued this property on a different level, and I’m quite sure that my analysis was not the “marktet” I tred to google this property but found nothing today.
Steve Heitman: “Housing prices will tank while populations grows.”
Well, Steve, the whole point of the NPR story was that the population of employed individuals in the metro area has NOT grown in 14 YEARS!
Dan-
My understanding is that prime SF multifamily properties still trade at sub 6 cap levels, approaching 5 for prime assets. Cap rates have moved up 150 basis points in past 18 months. Of course future cash flows will always be valued higher in better locations. Try finding a real 7+ cap apartment building in Lincoln Park, doesn’t exist, thus is the same phenomenon, if one hits market it will be snapped up quickly.
But with commodity condo product (i.e. standard 2/2 in high rise) I think it will have to get closer to rental parity, through price decreases, rent increases or both.
MGG
It’s not at all clear to me that you have to have parity between buying and renting at a given point in time. There are numerous factors to consider:
Deductible mortgage interest drives people to home ownership, assuming their tax rate is high enough.
People with lower tax rates can allow landlords with higher tax rates to get their tax benefits.
Landlords get depreciation.
Landlords get to increase their rents over time, which raises their return, while homeowners get to lock in a fixed payment for as long as they live there.
Americans ascribe some kind of premium to homeownership, which may or may not be rational. I’ve actually tried to convince a few people to continue renting instead of buying and they look at me like I’m from another planet.
I think there is some kind of major landlord culture in Chicago, where a ton of people think rental property is the key to riches. You can see it in the absurd asking prices for most income properties. As long as that persists…
Gary-
Thats true about Chicago having a landlord culture. Also true investors will pay a premium for location, potential rent growth etc.
And there is an ownership premium for residential real estate for all the aforementioned reasons, I just think maybe it gets smaller, particularily with commodity markets/product.
MGG
Rent is subsidized in Chicago. Subsidized by naive landlords who don’t understand the concept of cash flow or rent below the cost of ownership. But hey, that’s the ‘green zone’. Live in the green zone far cheaper than one could ever buy and your landlord will subsidize the difference.
Larger institutional landlords with older multi-unit buildings cash flow. But most landlords who’ve bought in the last 10 or 12 years are probably just subsidizing their tenants rent.
Sounds like a winning proposition to me.
Unless of course you’re steve Heitman, then it’s a losing proposition because there’s no puny commission check for him.
For whatever reason, people think it is “cool” to become a landlord and to own property, especially those in the 25-30 year old range. I’ve seen it first hand with my colleagues at work and friends. This has helped drive prices up, along with their parents’ down payment help. These people really missed the boat – if they were 15-20 years older, they would have been able to make a ton of money, but now they will not unless they can do ridiculous re-hab work themselves and take lots of risks and get lucky.
If you rent, you are considered to be somewhat of a “loser”, and people look down on you in some way. Until now, when the owners realize they are stuck in their properties and can’t get out without paying money at closing. They justify it by saying they are a long-term investor and that it’s part of their plan to get rich off of real estate.
“Rent is subsidized in Chicago. Subsidized by naive landlords who don’t understand the concept of cash flow or rent below the cost of ownership.”
Most landlords are pros and are longer term and have a much lower cost basis than anybody who bought during the past 10 years. Don’t lump all landlords together: mine owns several buildings and is a family business and does a heck of a job. There’s no doubt that not only could my landlord not predict the bubble, but that he’d be doing the same thing regardless.
He’s also not crazy enough to try to increase rents to a level to make them cashflow positive relative to current valuations as the market would not support those rents and he has no need to.
REB,
Since your already looking all the way out to Portage Park, Take a look at Oriole Park (walk to blue line on Harlem), Forest Glen (walk to metra stop), May Fair (A cheaper version of OIP and walk to montrose stop). Or for more bang for the buck Galewood (mars metra stop).
“It was not about the math, and this property was within a world green zone. The broker didn’t even understand IRRs or analysis, he valued this property on a different level, and I’m quite sure that my analysis was not the “marktet”
This I think is the huge elephant in the room with regard to lower downpayment, zero downpayment, no-doc, Alt-A and sub-prime loans.
When you open the floodgates of home ownership to everybody, the mix of the market changes more from a financially disciplined one which is more likely to tie RE valuations to some concrete methodology based on financial analysis to ones lacking financial savvy who ties RE valuations to “comps” (ie: the market). As RE prices are determined at the margin its not surprise this happened.
Until we have stringent downpayment requirements and/or higher interest rates, I can’t really be sure that we ever will reach rent parity in these green zone hoods.
Dave M elaborated it well as well: there is some cachet among 20-somethings to say they “own” in one of these hip ‘hoods. And at the cocktail parties these people attend they seem unable to make the connection that one doesn’t really “own” a property with a 90% LTV mortgage against it.
I don’t know about most, but some. My landlord has owned his multi-unit for 26 years. OTOH there are 3 or 4 large buildings in my neighborhoods that are ‘reapartments’ meaning they were converted to condos, didn’t sell, and are now rentals again. The developers have turned into accidental landlords and they’re collecting $1,100 bucks a month on the handful of fully rehabbed 2/1’s they’ve managed to rent. A friend of mine just signed a lease on a reapartment on the NW side. 2 beds, 2 baths, washer, dryer, dishwasher, central heat/air, etc. $1,200 bucks a month which is probably only $100 bucks more a month than it rented for when it was a crappy apartment. The former landlord made out like a bandit when he sold the building but the developer a/k/a accidental landlord is stuck holding the bag on a bunch of apartments that probably couldn’t pay the entire construction loan even if they were all fully rented at market rates.
“Most landlords are pros and are longer term and have a much lower cost basis than anybody who bought during the past 10 years.”
“As I’ve said before- there are some great deals in the suburbs. I don’t know why everyone is obsessed with neighborhoods like Portage Park when there are plenty of starter homes at good prices in Evanston, Oak Park etc. – all with the same amenities and sometimes shorter (and easier) commutes to the loop (if that’s where you work.) It is foreclosure heaven right now in some close in suburbs like Park Ridge as well (but you’ll need to put some work into those.)”
Sabrina — I think you should consider featuring more “close in” suburban properties. I agree Evanston and Oak Park are as relevant to the discussion as Portage Park and Oriole Park, perhaps more so. So what if a home is “within city limits” — my guess is few if any of the readers are city workers.
“And at the cocktail parties these people attend they seem unable to make the connection that one doesn’t really “own” a property with a 90% LTV mortgage against it.”
This is because their job at 2nd tier private equity shops teaches them that financial engineering (read: leverage) is the way fortunes are built. They don’t know any better. That is Gen Y for you.
As long as we’re talking suburbs I think Lincolnwood is a really nice area. Cross Devon and you get a lot more for your money and it has much more of a community feel to it. But there are folks that really want that Chicago address.
A lot of them in 2nd tier shops failed to secure long term employment after the ’08 bust and today they are in biz school earning the MBA. I personally know a handful. Biz school class sizes are way up up up over last year (and so is law school which is a different story).
“This is because their job at 2nd tier private equity shops teaches them that financial engineering (read: leverage) is the way fortunes are built. They don’t know any better. That is Gen Y for you.”
I think they’re calling them (Gen Y) millennials now. But what you say is probably true for a lot of GenX-ers too.
“This is because their job at 2nd tier private equity shops teaches them that financial engineering (read: leverage) is the way fortunes are built. They don’t know any better. That is Gen Y for you.”
“This is because their job at 2nd tier private equity shops teaches them that financial engineering (read: leverage) is the way fortunes are built. They don’t know any better. That is Gen Y for you.”
Wow you give GenY far too much credit. Most aspiring land barons I know aren’t even in finance and couldn’t even do an ROI, IRR or NPV analysis. We’re not talking Steve Heitmans here we’re talking about people who watched late night infomercials or heard stories of others buying up properties and getting rich. IE: people who bought Guy Williams’ seminar (the southside “Wealth Doctor”).
Funny story about Guy he’s now a realtor. Guess people stopped attending his get rich quick through real estate seminars.
http://www.incredibleagents.com/real-estate-agents/IL/Chicago/Williams-Realty-and-Investment/1816160/Guy-Williams.html
I haven’t been down to Hyde Park lately to see if his smiling oversized pic is still all over the billboards..hmm..I hope his Viper is still being washed regularly 😀
There is only one Tom Vu.
http://www.youtube.com/watch?v=K853GykeGH0&feature=related
“I analyzed the NOI on a rental property (wedding cake bldg.) at the corner of Sacremento St. and Jones in Nob Hill.”
Chambord Apartments, 1298 Sacramento. Sold in 1993. Current tax basis is $3,688,840. bc of Prop 13, we can back out the annual max increases (1%) and see that this sold for about $3.15 mm. Property is owned (or managed) by the Topham Company.
It’s a National Register building and a noted piece of eseff architecture; there are plenty of people who will pay a premium for such a building.
Corporate rental-type apartment (furnished/maid service) across the intersection rent for 2200 to 5200 (studios to “executive” 1 BRS), so the IRR is likely substantially different than it was in ’93.
Sabrina,
Really appreciate your input.
I do eventually want to move to the northern burbs, where my family is. But, I don’t want to deal with that commute, though, until I absolutely have to. I absolutely hate commutes and being out in the cold, and I’m willing to pay to avoid both. The house I’m looking at will be about a 35 minute commute to my office (where I’m very likely to stay the rest of my working career (no one is ever fired for performance reasons)). My office is virtually on top of the blue line, but quite a hike from the Metra stations. So, even though I’d love to eventually live in Evanston or Wilmette, I can’t see doing so until the yet-to-be-conceived kids are school age. I would suffer the commute for them, but not any sooner. The commute from the northern burbs would be at least an hour. Plus, there’s the whole matter of property taxes. Even if I could find a way to buy that 1/2 million dollar house (which isn’t even a great house) within walking distance of the Metra, the taxes are twice what they are in the city. To me, the property tax savings and the time I get to spend doing what I want rather than sitting on public transportation, have real value.
I hear you about being a landlord. It wouldn’t be part of the plan. It instead is something to consider in case selling isn’t an option. Knowing that we wouldn’t bleed every month if we had to rent the place out is a good thing. Plus, from what I’m seeing, if you’re a landlord with a nice SFH rental, you can be quite picky when selecting tenants. There just isn’t much supply. Unless SFH rentals flood the market, I don’t know why that would change.
Thanks, Groove77, for the neighborhood tips. I’ll check them out.
“The commute from the northern burbs would be at least an hour. Plus, there’s the whole matter of property taxes. Even if I could find a way to buy that 1/2 million dollar house (which isn’t even a great house) within walking distance of the Metra, the taxes are twice what they are in the city. ”
1. How ’bout this one, for $350k:
http://www.redfin.com/IL/Evanston/1204-Sherman-Ave-60202/home/13579400
1 block to Purple, three to Metra
2. Taxes are higher, but (generally) not double. In Evanston, about 50% higher for the same assessed value.
Taxes in Etown aren’t 50% higher but they are higher. 6.485% vs. 4.816% (assuming no special service areas).
Low to mid 5% range for the rest of the north shore is lower because Evanston’s tax base, while good for commercial, suffers from NWU’s tax-exempt status.
anon (tfo),
Thanks for trying! This house is too small for us and is almost on top of the train. We want both a small living room and a tv/rec/pizza-eating room.
If I move up to the burbs, I want to be in a great school district. I haven’t started the research to figure out whether this house is in a good one. My understanding of Evanston is that there’s quite a qualitative difference among the elementary schools.
Googlemaps says 50 minutes to my office, which isn’t horrible, though.
I like this house, but can’t tell how much work is needed:
http://www.redfin.com/IL/Wilmette/1703-Lake-Ave-60091/home/13775624
May go check it out this weekend. The taxes hurt, it’s on a main street, and I’m sad about the no C/A. But, it’s a short walk to the Metra and the schools are great. I’d really need to be in the $450-475k range, and I of course don’t know if that’s doable.
“My understanding of Evanston is that there’s quite a qualitative difference among the elementary schools.”
As a general rule, avoid Evanston schools. Ok elementary options, but after that it falls off a cliff. ETHS significantly lags the other high schools in the area.
If you are serious about schools, consider the lower end of KW.
http://www.redfin.com/IL/Kenilworth/612-Exmoor-Rd-60043/home/13783651
I bet you could get this into your range. Metra is very close.
“I’d really need to be in the $450-475k range, and I of course don’t know if that’s doable”
If you don’t ask, the answer is already “no”, so you may as well offer, if you like it.
And if they’re insulted (as WLeo would be), too bad.
Thanks, JMM. KW house looks promising. Guess it couldn’t hurt to make an offer that’s affordable to me. No downside to making the offer.
“If you are serious about schools, consider the lower end of KW.”
Be prepared for the taxe to jump–altho the 2009 AV is lower than the listed AV, it will go up with the sale in the record. Current AV sez market value is $296k.
anon (tfo),
Yeah, those taxes sting. Thanks for making that very good point. And, that’s one thing I’m struggling with. Taxes in Wilmette or Kenilworth will be enough higher than Chicago taxes that even if I sell at a loss after 5-7 years, it may not be greater than the tax differential. Plus, I can find a house I like in the city for about $100k less than one in those northern burbs.
“Taxes in Wilmette or Kenilworth will be enough higher than Chicago taxes that even if I sell at a loss after 5-7 years, it may not be greater than the tax differential. Plus, I can find a house I like in the city for about $100k less than one in those northern burbs.”
1. Don’t forget that the taxes are deductible on Fed and you get a (small) credit on State income tax. So that reduces the gap some.
2. Consider that city taxes are prob. *more* likely to rise than suburban taxes, as there is a lot more commercial/industrial property in the city that will be paying less tax and the total tab isn’t going to go down.
3. If you buy a house now you can see being in in 10-20 years, you save transaction costs on both (over 6%) plus moving expenses plus time spent looking plus time spent trying to sell 1st house. So the $$ aren’t just purchase price + taxes.
4. I bought in the city, so I understand. But, with what we bought, our first real decision point is HS choice.
“Be prepared for the taxe to jump–altho the 2009 AV is lower than the listed AV, it will go up with the sale in the record. Current AV sez market value is $296k.”
This isn’t correct. If you check it closely, there are two separate lot PINs (some of the homes in the village have this, no one really knows why but its no big deal). Together the aggregate AV is slightly above where a sale price would be. $9k in taxes is right for this part of town and would not go up unless the composite levy increases for this part of KW.
REB,
ok metra is out of the question,
Have you looked at skokie? (by the the skokie swift?) you can get a nice small house for 300k in walking distance to the train. (yes you would tranfer from the swift to red to blue).
Or just rent a really nice place closer to work for the next 5 years before moving to the north burbs.
Or just suck it up and wait for the shadow inventory to effect prices. Something’s fundamentally wrong with real estate pricing when nearly half a million buys a shack in a decent suburb.
There will be at least another 10% price correction downwards, maybe more. At a minimum you should be offering 10% under ask, and probably 15%-20% under for these types of properties at this point.
What would that $300k place in Skokie have sold for 10 years ago?
“half a million buys a shack in a decent suburb”
First of all, it’s not a shack and second of all, it happens to be the most expensive suburb on the north shore (debatable if that is good or not, but it is).
True, its not Palatine or Arlington Heights. There are cheaper suburbs but the combination of schools and reasonable location are hard to beat.
My comment above was on Skokie real estate, not Kenilworth, which will probably hold it’s value well, and only decline another 5% at most.
Skokie, Kenilworth… All the same right?
Pay half a mil to live in one of the smallest houses in the richest villages in the country?
“Daddy, why don’t we have a butler?”
“Daddy, why can’t I take skiing lessons in Breckenridge on spring break? All my friends are”
“Daddy, why can’t I have a brand new car when I turn 16? ALl my friends have new cars”
“Daddy, are we poor because our house is the smallest in the neighborhood? My friends at school say i’m poor”
No way.
I went to high school in a middle class NW suburban school district in the 1990’s with students that ranged from just above poverty to solidly upper-middle class. Even during the 1990’s the wealthier kids at my school had interstate sports competitions at 12, $1,000 BMX bikes at 13, new cars at 16, spring break trips to mexico at 17, trips to europe at 18 and private colleges after that, and that wasn’t even HELOC money either. It’s difficult enough to explain to kids why mommy and daddy won’t let them travel for a spring break ski trip to breckenridge when they’re 16; I couldn’t imagine doing that when virtually everyone else is doing that.
“Junior, Mommy and Daddy both work and we make only in the low six figures. Little billy’s parent’s parents made their money in plastics in the 1940’s, and little johnny’s daddy’s is the CEO of a Fortune 500 company.”
Boo fucking hoo
“interstate sports competitions at 12”
Just play some alley Bball get a wipe board for brackets and your good
“$1,000 BMX bikes at 13”
What happened to the $50 huffy from montgomery wards?
“new cars at 16”
Buy the kid a Tata from india, new car real cheap problem solved
“spring break trips to mexico at 17”
they dont have to go that far, buy the time the kid is 17 most of chicago will be mexican just send the to a park pool.
“trips to europe at 18 and private colleges after that”
drop the kid off on belmont and central, it will be like he is in poland
“Boo fucking hoo”
LOL.
I didn’t realize how broke I was growing up until I got bused to the rich white high school in the hoity toity suburbs across town growing up in Atlanta. Complete culture shock for me…
hard to believe i’ve been reading comments here for nearly 2 years and this is the first time ,iirc, anybody has mentioned tom vu. kudos to the kid from kenilworth.
alley hoops… so much fun.. but what is a wipe board?
You’ll do just fine in Kenilworth.
“#Groove77 on February 25th, 2010 at 11:59 am
“interstate sports competitions at 12?
Just play some alley Bball get a wipe board for brackets and your good
“$1,000 BMX bikes at 13?
What happened to the $50 huffy from montgomery wards?
“new cars at 16?
Buy the kid a Tata from india, new car real cheap problem solved
“spring break trips to mexico at 17?
they dont have to go that far, buy the time the kid is 17 most of chicago will be mexican just send the to a park pool.
“trips to europe at 18 and private colleges after that”
drop the kid off on belmont and central, it will be like he is in poland”
“You’ll do just fine in Kenilworth”
its an era thing i guess. kids at 8 years old rocking iPhones. I remember when i bugged my mom to get us a bigger tv, she smacked me in the head and said “if you want a bigger tv sit closer”.
We only had one tv and it was the 19 inch monster tv, you know the one with 250lbs of wood built around it. took 4 people to move it.
“a wipe board”
White board. Dry erase markers.
If Groove were 20 (or maybe 30) years older, he’d suggest chalk on the blacktop (or someone’s garage door).
“You’ll do just fine in Kenilworth. ”
I don’t understand all the animus towards the wealthy set. My outlook would probably be different if it were the rich on the coasts I suppose but here in the midwest people are generally modest. And rich people’s kids I would venture to say are generally more pleasant to be around than say, working class kids.
I have a coworker with a son in low who was caught with prescription drugs and he goes to a north shore HS. Its a huge deal–will give him time to straighten up. Know what happens when this happens in CPS? Nobody really cares much and maybe your kid gets a little more street cred.
I don’t think kids are generally as economically conscious as you think, either. When I was growing up it was never “so and so is poor so we won’t hang with them”, and I seriously doubt NS kids think like that either. Also by telling your kid they can’t have all the things their friends may have they’ll learn a valuable lesson about life early on: its not fair! The sooner they learn this the better off they’ll be. Heh.
“he’d suggest chalk on the blacktop”
better yet borrow a flippy chalk board from a school 🙂
I miss the Wipe board (white board) we used it for Nintendo double dribble tournaments, and mario high scores and again for sega dreamcast madden brackets 🙂
“borrow”
You mean, sneak in when the janitors go out for a smoke, take it and then leave it next to the same door 4 weeks later when someone feels a little guilty b/c you heard the janitors were getting hassled about it?
“When I was growing up it was never “so and so is poor so we won’t hang with them””
Your circle was apparently more enlightened than some–it definitely happens, if not necessarily so explicitly (more the “we’re all going to (place x that costs y to get in)” and those who don’t come along bc of “cost y” are de facto excluded. Not that I know how the current crop of NT kids think/act. And also, not that some of that isn’t the “poor” kid semi-self-selecting to avoid feeling bad. But it happens, and teenagers are (generally) not-rational about such things.
“You mean, sneak in when the janitors go out for a smoke, take it and then leave it next to the same door 4 weeks later when someone feels a little guilty b/c you heard the janitors were getting hassled about it?”
LOL classic 🙂
how many guys were crammed into the alley that you needed brackets to keep things organized?
“how many guys were crammed into the alley that you needed brackets to keep things organized?”
about 20 kids, 3 on 3, good times until the ball goes in a yard with a dog or kid goes head first into a gate 🙂
I grew up 20 minutes straight west of the north shore and through various means I had enough interaction in high school and in college i had even more contact with children of the NS and trust me when I tell you the rich of the rich is a completely different world than where you or I live. Here’s a story: One time I went to the house of a some kid to hang out; this house wasn’t on the lake – but – it was enormous, with a pond in the back yard, 5 car garage, etc; I asked my friend “What does this kid’s parents do?” and he replied “nothing. His parents do nothing. his grandfather started the company XXXXXXXXXXX and the grandfather lives a few blocks to the west ON the lake with steps down the bluff to the beach.” That pretty much summed up a lot of the little clique that I was part of for that summer and school year.” Of course there’s the power lawyer, power surgeon, investment banker type parents who actually work but even they are taking home well in excess of hundreds of thousands a year. Well beyond most of our pay grade. those are the people that live a stone’s throw from your house in the poor neighborhood. Socializing with these sorts of people is a little than you think. you can’t just crack open a PBR and put a pork butt on the smoker for 10 hours with your neighbor all day. It’s a lot more difficult to socialize than you think, and it’s difficult for your children too. This is the old money, the wealthy grandparents kind of money, grandkid goes to harvard type of money. THis isn’t the biglaw attorney who buys in the mcmansion in barrington kind of money, or the middle manager earning a $120k or $150k with a supersized house in palatine. It’s old school money, millions and millions, paying a mortgage with the trust fund income money. more money than probably 99.9% of the posters (including SH) have.
wow HD, channeling the ghost of some westloopelo are we?
“paying a mortgage with the trust fund income money”
If they have so much money, they wouldn’t have a mortgage. They’re *obviously* just poseurs.
“channeling the ghost of some westloopelo ”
The *bizarro* westloopelo. WL would be talking about how poor those folks all seem compared to average NYers, like his grandparents with the 42-room triplex with CP views from three sides.
It’s one of my many different styles of posting depending the topic to discuss and my various moods:
short and witty
ranting
rambling
succinct and concise
sarcastic
ironic
cynical
arrogant
comical
bullet points
sometimes I combine different styles
you’re not doing a good job of communicating the downside of these peeps. ok, his parents didnt have to work and neither did he, but how did that make them hard to hang out with? the kids with uber rich parents i knew growing up were just dullards. but not hard to hang with.
I also went to hs with a ton of ns kids and never really encountered anyone like hd described. the super rich i knew, their parents built companies, or took them over and pushed guys out..haha. I’m sure there were some like hds pals but probably more exception than the rule.
Great story HD. But your story is not the norm and quite frankly there are people like that everywhere.
Back then, my recollection was that most households were headed by a male professional who worked full-time, often quite a bit. He might have been a doctor, a lawyer, a financial professional or an executive. Occasionally you had generational wealth, but that was the exception and not the norm, and when it was the case the men still worked doing something (maybe running the family business, etc). Kids were far more likely not to see their father because he was away on a business trip than for him to be sitting on his ass playing backgammon all day or sipping scotch at Indian Hill.
That was some 30 years ago and today, I think your observation is even less the case. In fact, there are lots of people hurting up on the NS because in fact they do need to work and have lost HH jobs.
Case in point:
http://online.wsj.com/article/SB124924069909799645.html
Chicago does have a lot of old money. But I disagree with how you portray it and that it should be a barrier for someone looking to buy in a well-regarded older community such as the NS villages.
Take this how you would like…
when i waited tables the observation i came out with is…
those who can tip big, tip like shyt
those who can barely afford to tip at all, over tip.
“Case in point:”
Non-WSJ subscriber link:
http://finance.yahoo.com/real-estate/article/107458/high-end-homes-frozen-out-of-budding-housing-rebound.html?mod=realestate-buy
Almost always can get a freebie if the article is over a few weeks old.
That’s just from my experiences as an outsider to the north shore. The area is beautiful, absolutely idyllic and gorgeous, but you and I both know it’s pretty uppity up in there. I don’t think that’s really even debatable. That’s why people move to the north shore.
And no you don’t get the old old money everywhere and certainly not in the areas where I grew up.
If you just show up as a regular middle class folk and buy the cheapest house in the richest community, like I said, don’t think you’re going to be able to pop open a PBR with your neighbor and smoke a pork shoulder for 10 hours.
“But I disagree with how you portray it and that it should be a barrier for someone looking to buy in a well-regarded older community such as the NS villages.”
As someone who lived on the 600 block of Exmoor (see above address) in Kenilworth for 5 years, I can guarantee you that it and its residents don’t match your notions of North Shore rich.
West of Green Bay in Kenilworth most of the houses are modest, and many are occupied by solidly middle- and upper-middle income folks who bought when the homes were selling in the $300s and below. A number of the residents can barely afford to live there, and kids will find plenty of other kids both in Kenilworth and Wilmette in similar circumstances to pal with. Here’s a video I shot recently with a homeowner right around the corner from Exmoor on Roger:
http://www.youtube.com/watch?v=-6E3CbEtxIE
Sears School in Kenilworth is fabulous and the community is very circumspect about displays of the wealth that’s obviously there.
yes, but does that dude drink pbr? otherwise hd will not feel comfortable.
hd, are you becoming a hipster?
“If you just show up as a regular middle class folk and buy the cheapest house in the richest community, like I said, don’t think you’re going to be able to pop open a PBR with your neighbor and smoke a pork shoulder for 10 hours.”
Your not going to be able to do that with me, either, at least not until we’re *actually* friends, because my taste in beer is different from Frank Booth’s.
Not that I won’t drink a PBR once in a while, esp. during happy houe in MKE.
Kenilworth, with 2,494 residents, a median home value of $976,400, and a median per capita income of $200,001, doesn’t “match (my) notions of North Shore rich”?
Come on Joe, seriously.
homedelete,
Some day you should visit Kenilworth for the first time and check out the area west of Green Bay.
I lived there for 5 years, so don’t try to tell me what it’s like. I also practiced law back in the day if you’d like me to tell you what that’s like.
“West of Green Bay in Kenilworth most of the houses are modest, and many are occupied by solidly middle- and upper-middle income folks who bought when the homes were selling in the $300s and below. A number of the residents can barely afford to live there, and kids will find plenty of other kids both in Kenilworth and Wilmette in similar circumstances to pal with.”
Joe, nws prior disagreements on the subject, I’m 100% in agreement on those two sentences.
Whether the rest of the environment is definitionally desireable is the nugget of disagreement.
drinking pbr with hd could be a lot of fun. after 6 or 7 you could just feed him lines and watch him erupt. a less violent version of the tube bar prank calls.
“As someone who lived on the 600 block of Exmoor (see above address) in Kenilworth for 5 years”
Nice block. Bomb threats and everything…
http://abclocal.go.com/wls/story?section=news/local&id=5400061
Seriously i dont get the PBR fad, for me it just doenst hit my tasted buds right, but then what beer really does?
“a less violent version of drinking with Bob”
Fixed that for you.
I’m sure west of green bay road isn’t nearly as rich but how does that factor into the $900k median home price?
I’m sure there are a few nice blocks west of Green Bay road but that’s not the Kenilworth that is conjured up in most people’s minds when they hear the name “Kenilworth” – and then you point out the exception, a few blocks of lower priced homes on the west side.
Joe, you have repeatedly shown to me that you have an extremely warped sense of reality – so – I don’t really listen to or respect anything you have to say.
homedelete,
I can’t account for what is conjured up in most people’s minds about Kenilworth, but I do know a great deal about Kenilworth, and about people who have money, having spent most of my life among them.
Kenilworth is a very different place. The warped sense of reality is entirely yours.
Here’s a small taste of how Kenilworth doesn’t match the general perceptions of it:
http://www.youtube.com/watch?v=8ogkQ2wfMKA
“I’m sure there are a few nice blocks west of Green Bay road but that’s not the Kenilworth that is conjured up in most people’s minds when they hear the name “Kenilworth” – and then you point out the exception, a few blocks of lower priced homes on the west side”
its all nice street (narrow streets) west of green bay, there are million dollar homes in the mix on those streets too. and a few dumps on the that shocked me when the wife and i took a look.
strange fact; (if true)
a older gentleman i struck a convo up with said that the the reason ridge st is higher than the adjacent streets is because of a glacier.
“bob is violent?”
He semi-frequently mentions a desire to smash things when angry, mainly about people taking advantage of taxpayer largesse, esp. bankers. But mostly Bankers.
Things to not say around Bob:
“I just refi’d thru FHA and got cash back at closing”
“If we hadn’t bailed out AIG, the world economy would have collapsed”
“My bonus from Citibank last year paid for my yacht. The CDO-workout business has been very good for me”
“those who can tip big, tip like shyt
those who can barely afford to tip at all, over tip.”
Thats because most people who can tip big have never waited tables in their life…
“groove, i have no strong opinion of pbr but Hamms is very drinkable”
beer serves it purpose, get drunk cheap in a socially acceptable way. I dont beleive anyone truly or honestly likes the taste of Beer.
“strange fact; (if true)
a older gentleman i struck a convo up with said that the the reason ridge st is higher than the adjacent streets is because of a glacier.”
True. It was once the edge of glacial advance. It’s technically an esker, I think.
“I dont beleive anyone truly or honestly likes the taste of Beer.”
Why do you hate America, groove?
HD,
The idle rich are a much smaller subset than you seem to believe. I remember reading Andrew Hacker’s book “Money” recently and recall reading that the “idle” rich are really less than 13% of the rich (the book was published 13 years ago but I doubt much has changed). They represent a much smaller subset than either the idle poor (for certain) or idle middle class (I suspect). Yet people seem to villanize them as they are jealous of their money.
And granted it might be easier to villanize them as the end of 2008 laid bare that our government will do any and everything to maintain the status quo and funnel bailouts to institutions many rich work for. But I prefer to channel my anger at those supporting the currently oligarch system (politicians), where something can be changed.
Also I don’t drink PBR not only because hipsters drink it but also because the taste sucks and you can get far better beers for cheaper. Why get a 24pk of PBR when you can get a 30pk of some ice beer which has more alcohol for the same price or cheaper?
I don’t drink my economical beer to try to make some statement that I have something in common with the working class man and can related to him. I drink my economical beer because its cheaper. That distinguishes me from being a hipster. And PBR is shyte.
“Things to not say around Bob:“I just refi’d thru FHA and got cash back at closing”“If we hadn’t bailed out AIG, the world economy would have collapsed”“My bonus from Citibank last year paid for my yacht. The CDO-workout business has been very good for me”
It is official Anon drank some funny man juice he has been a roll this week 🙂
“True. It was once the edge of glacial advance. It’s technically an esker, I think.”
not as funny but good to know.
“Thats because most people who can tip big have never waited tables in their life…”
Sonies,
very true statment, i think everyone should wait tables in their early 20’s its a great sociology skill and fricken fun!
“Things to not say around Bob:
“I just refi’d thru FHA and got cash back at closing”
“If we hadn’t bailed out AIG, the world economy would have collapsed”
“My bonus from Citibank last year paid for my yacht. The CDO-workout business has been very good for me””
You certainly know my buttons for starting barfights, anon. I’ll give you that. 😀
“those who can tip big, tip like shyt
those who can barely afford to tip at all, over tip.”
A server friend of mine in college ran outside after a guy who stiffed her on the tip. As she yelled at him, he climbed into his BMW and said, “I didn’t get rich by leaving tips.”
Wow, I give one story of handful or more of the idle rich in the NS, and what do you know, I’m chided and lambasted.
Here’s some more news: my landlord lives in the north shore and virtually every boss & partner I’ve ever worked for lives or lived on the north shore. No they’re not the idle rich but they have beautiful homes, beautiful and spoiled children, very nice, newer model cars, usually have some degree of family money which helped pay for college or the down payment or what not. those friends of mine with the $400k or whatever down payment are from the north shore. a friend I went to law school with grew up ‘across the ravine’ in her back yard from the dean of my law school. say what you want, but it’s a different world. It’s a different lifestyle. And unless you can afford (or at least act like you can afford it) then you’re going to be severely disappointed and you will always be an outsider.
Unless of course your neighbor in Kenilworth or Winnetka is Joe. He’s just as welcoming and friendly in real life as he is online.
“Why do you hate America, groove?”
Still on a roll!!!!!!!!!!!!!!!! 🙂
Don’t worry NS doesn’t appeal to me for the same reason any other random burb doesn’t: the driving lifestyle.
I can go move to the NS equivalent in a lower tier midwest town and have the same lifestyle for far cheaper. Still eating at Chili’s and driving to work and everywhere else. No thanks.
The driving lifestyle is a pain in the butt, but on the other hand, where else are you going to live within commuting distance and have a ravine in your backyard?
“beer serves it purpose, get drunk cheap in a socially acceptable way. I dont beleive anyone truly or honestly likes the taste of Beer.”
Sorry groovster its just not socially acceptable for us crackers to walk around with kool-aid stained lips when hitting on chicks, so we have to drink beer instead. It is an acquired taste
HD —
You just need to bill more hours bro. You will get there.
hahaha. This profession sucks. Looking back on things it would have been nice to be a famous DJ or something.
“JMM on February 25th, 2010 at 4:24 pm
HD –
You just need to bill more hours bro. You will get there.”
“Unless of course your neighbor in Kenilworth or Winnetka is Joe. He’s just as welcoming and friendly in real life as he is online.”
the jokes are rolling out today 🙂
HD,
the same uppity and “rich ignorance” can be seen worse in places you wouldnt expect like Northbrook, Oak Brook and even Schaumbugererererer.
Yes idle rich are a different breed but the one i have come across is a pretty down to earth guy.
its the “fake” rich that are the pricks and uppity i have found in my life
I’m a bit pessimistic but I really believe we will be in a recessionary environment with a high unemployment rate for a long time. I see the rich getting richer, the poor getting poorer, and the middle class getting slammed everyday. The only people making any money these days are the folks in some way, shape or form involved in the finance or banking industry because of government bailouts. The rest of us are just struggling to get by. For example, in my ‘hood, some guy lost his house to foreclosure 2 years ago, it gets torn down and a million and a half dollar house gets built in its place and some guy in the finance/consulting industry buys it up. That’s the karma in the world right now. The bankers are going to come and take your $hit. You can try to improve your lot in life but at the end of the day, a lot of it is luck, like being in the right industry at the right time, which just so happens to be finance, and so many others are struggling, even my landlord tells me that he’s got a handful of people in the building behind on rent, which is something he says happens rarely in his 26 years of being a landlord. It’s tough to have a positive outlook,which probably in part explains why getting any work done today is so difficult.
“Sorry groovster its just not socially acceptable for us crackers to walk around with kool-aid stained lips when hitting on chicks, so we have to drink beer instead. It is an acquired taste”
alcohol is just either a mask or a medicine, i.e. a mask to cover a sadness in your life or a medicine help with a pain. (or help average guys get laid more than the should)
and i still have not acquired the taste yet, but i will still pound a few down tonight to mask and medicine the pain in my ankle. (didnt let it heal and played a pick up game monday and aggravated it again)
Bob said: “I remember reading Andrew Hacker’s book “Money” recently…”
WHOAAAAA!!!! Bob, you read Andrew Hacker? Did you read Two Nations?