How Low Will It Go? 3014 N. Sheffield in Lakeview Now Under $300K
When we last chattered about this newer construction 2-bedroom bank owned unit at 3014 N. Sheffield in Lakeview in November 2010 it had been reduced by $35,000.
See our November 2010 chatter here.
I asked whether it would ultimately sell for under $300,000.
Apparently, the answer is “yes” as it’s been reduced again and is now listed for $289,900.
That is $209,100 under the 2006 purchase price.
The bank has been trying to sell this unit for 4 months. It looks like the bank is reducing every 2 weeks.
If you recall, this was a new construction building in 2006. The kitchen appears to be intact with granite counter tops and stainless steel appliances.
There are wood floors throughout.
How low will this go?
Jason Shapiro at Rising Realty LLC still has the listing. See the pictures here.
Unit #2S: 2 bedrooms, 2 baths, no square footage listed, 1 car parking
- Sold in October 2006 for $499,000
- Lis pendens foreclosure in July 2009
- Bank owned by Bank of America in August 2010
- Was listed in October 2010 for $366,300
- Reduced
- Was listed in November 2010 for $330,600
- Reduced several times
- Currently listed for $289,900
- Assessments of $140 a month
- Taxes of $7110
- Central Air
- Doesn’t list washer/dryer but there would be a hook-up in the unit
- Bedroom #1: 16×15
- Bedroom #2: 12×11
Wow, this will be a rough comp, as there has to a million of these nearby.
yeah, but i mean, 2bed/2bath new construction, granite and hardwood, nice enough location, low association fees, and under 300k…not a bad deal at face value, right?
with parking, but those taxes seem outrageous, even for that area.
Eventually, most units like these will generally sell in a range between the high 100’s to low $300, depending on location, size and finishes. Great location in ELP, large size and great finishes might be high and outside the range; while small, Logan Sq (humboldt etc) Home Depot specials will sell very low and outside the range. Mark my words.
I agree with Russ when he says that the condo as a starter home has failed. So what that means is that the condo needs to become a more transitory type of housing, and what will make it transitory is cheaper lower prices and easy resale. And easy resale comes with lower prices. Much lower. This unit here I say will eventually sell in the low to mid-200’s with a range of $225-$260 probably in the spring.
Looks like one right above is on for $328k. A couple doors down, in a building up built at same time, 2S is on for $311k and 3S for $328k. Sucks to be those other owners…
jd is right. Even if it is a bank sale, what a comp killer.
One thing’s for sure: the pics on bank sales are the worst of the worst.
McCondos Suck.
Riz: that low ass. fee scares me. Even at a low, low, bargain price, I’d want to know what the association’s reserves look like and get a really thorough inspection to determine construction quality and impending liabilities. Too many of these went up too quickly around this neighborhood…
Clio if you buy this I’ll rent from you for a year.
We now have a catalysts for another downleg in home prices. Taxes going up significantly talking 5.25% income tax. That is very high for a freezing midwestern city that also has a very high sales tax. If I’m paying those rates I want to be on a coast – Cali/NYC. Chicago has to be costs competitive to work as a city and I do not believe these tax rates maintain that.
I think this isn’t completely a done deal, but if these rates pass and reckon that is worth 10-20% discount on the existing housing stock.
I like it but the taxes kill it for me. And yes the low assessment is a little suspicious.
“Sold in October 2006 for $499,000”
Musta been drunk at the Kirkwood before heading over to contract signing.
Sean: not that I want to see taxes go up, but we *are* cost competitive vs. NYC/LA/SF from a RE price standpoint, which of course factors into realized tax bills. Have you priced out taxes on a downtown condo versus a comparable Manhattan property?
“Musta been drunk at the Kirkwood before heading over to contract signing.”
I was leaning toward “R.Kelly house party”, but you may well be right.
Why did people “pay” $500k for places like these? Crazy.
“Clio if you buy this I’ll rent from you for a year.”
At what rent, Joe? Something like $2500/month?
Actual 2009 taxes: $8,019.79(!!). I’d expect a winnable appeal, probably get them whacked to ~$5k.
I was thinking $1,900
Listing is a somewhat mixed message- On one hand it leads with “Great Investment Opportunity” which implies cash only, On the other hand it does not explicitly say cash only.
I don’t see how anyone could get financing on this one. Suspect teh association is disfunctional and maybe other problems with the actaul structure ( Liens, city violations, etc)
In short, this is a distressed property and may or may not be a good deal depending on the real story.
It is not a comp to regular condos for sale in the neighborhood.
Listing is a somewhat mixed message- On one hand it leads with “Great Investment Opportunity” which implies cash only, On the other hand it does not explicitly say cash only.
I don’t see how anyone could get financing on this one. Suspect the association is dysfunctional and maybe other problems with the actual structure ( Liens, city violations, etc)
In short, this is a distressed property and may or may not be a good deal depending on the real story.
It is not a comp to regular condos for sale in the neighborhood.
Take your pick-with typos or without….
News breaking Ma supreme ct sided against banks and ruled 2 foreclosers void because the bank couldn’t prove ownwership. Look for more of these. Lots of mortgages were packaged into bundles and sold and broken apart and rebundled and resold over and over. Now it is virtually impossible to recreate some of the original individual mortgages. I heard one judge desribe it as hitting a piece of chalk with a hammer and then trying to put it back together.
I do love that location, but the value just isnt there. At 200 for sure, but I don’t see it dropping that much. And at 200 I would only see it as a value if you could get financing on it. Otherwise i would have other things to do with my cash than buy this place (Such as quick flip opportunities, which this would not be).
“News breaking Ma supreme ct sided against banks and ruled 2 foreclosers void because the bank couldn’t prove ownwership. Look for more of these. Lots of mortgages were packaged into bundles and sold and broken apart and rebundled and resold over and over. Now it is virtually impossible to recreate some of the original individual mortgages. I heard one judge desribe it as hitting a piece of chalk with a hammer and then trying to put it back together.”
No matter how many times and by how many people this is repeated, it is based on a fundamentally flawed understanding of what the underlying problem with the foreclosures is. The ruling is that the bank did not have standing when the auction was conducted, thus the auction is invalid–it has nothing to do with whether a future f/c and auction might be valid.
The banks need to clean up the documentation (which, yes, is *ENTIRELY* possible, and, frankly, not very complicated) and restart the f/c process. Anyone saying it’s impossible or implying that the mortgages are permanently unenforceable is whackadoo like the income tax deniers–there’s no reasonable basis for saying that they are *never* enforceable.
“I was thinking $1,900”
12*(1900 – 140) – 6000 (assuming winning appeal to 5000 and giving the lawyer his 1/3) = 15120 / 290000 = 5.2% gross return— not worth the risk, imo. At 1900 rent, I’d buy it as an investment at ~$200k.
Anon(tfo)… bingo. The root of the issue is that it is obvious the bank’s backoffice functions are completely screwed up. I think everyone gets that.
However, that doesn’t change that the debt in question was not paid as agreed regardless of how many times the debt was sliced and diced on the secondary market.
All that is going to happen because of this BS now is mortgages are going to become even more expensive and instead of a closing taking 2 hours, it will now take 3 due to the 50 additional pages of garbage legalese the bank is going to have to include to protect themselves.
The point is what the big money center banks do with the mortgages they write. Citi may take a basket of high risk mortgages and strip the interest payments from the principal and sell them to 2 different smaller banks. Then they repackage them with other loans and sell them to Goldman. Then Goldman packages them with a credit default swap and sells them to Deutsche Bank. With some of these loans this has happened dozens of times. Taking a single mortgage out of the basket and recreating it in it’s original form after it has exchanged hands and been repackaged so many times can be very difficult.
“Taking a single mortgage out of the basket and recreating it in it’s original form after it has exchanged hands and been repackaged so many times can be very difficult.”
No, it’s not.
If it’s not very difficult and “not very complicated” I wonder why Bank of America forked over 2.8 bil to fannie and freddie this week?
The fact is it is complicated and exteremely time consuming. At the very least you have people refusing to pay their mortgages and living for free in homes until the banks can prove ownership.
ltcaffey: Curious, do you have mid or back office experience?
Noop
“At the very least you have people refusing to pay their mortgages and living for free in homes until the banks can prove ownership.”
Sounds like the bank’s F up and I blame them. In their mad rush to chase profits during the boom they decided to slice up mortgages into securitization pools. No-one forced them to do this.
If they neglected fundamental housekeeping such as being able to prove ownership of an asset they made a giant loan on, I think the bank should pay the financial penalty for that. And if they are unable to do that they need to be seized and their remaining assets auctioned off in a liquidation auction (chapter 7).
Its called running your business properly and if their business wasn’t run properly it needs to fail.
Big part of the reason you won’t see higher interest rates anytime soon. Fed wants them to make money and keep their heads above water until this mess is sorted out.
“Anyone saying it’s impossible or implying that the mortgages are permanently unenforceable is whackadoo like the income tax deniers–there’s no reasonable basis for saying that they are *never* enforceable.”
You haven’t considered all possible scenarios:
http://www.doctorhousingbubble.com/mortgage-electronic-registration-systems-mers-a-system-designed-to-create-the-mortgage-back-security-bubble/
“Interestingly enough the Missouri court found that MERS was not the original holder of the promissory note and since the record never contained evidence that the original note holder never explicitly authorized MERS to transfer the note, the overall language was in essence not effective. ”
“In the case in Kansas, the court finds that MERS has very little claim on the note:
“”What stake in the outcome of an independent action for foreclosure could MERS have? It did not lend the money to Kesler or to anyone else involved in this case. Neither Kesler nor anyone else involved in the case was required by statute or contract to pay money to MERS on the mortgage. [citation omitted](”MERS is not an economic ‘beneficiary’ under the Deed of Trust. It is owed and will collect no money from Debtors under the Note, nor will it realize the value of the Property through foreclosure of the Deed of Trust in the event the Note is not paid.”). If MERS is only the mortgagee, without ownership of the mortgage instrument, it does not have an enforceable right.””
Essentially while technically the owner of the mortgage instrument could still foreclose they might not be motivated to do so because:
1) They aren’t taking the hit of the loss (MERS is).
2) They might be so far removed from the property they might not even know about the foreclosure.
And after a sufficient period of time I would bet a clever occupant could claim deed via squatters rights or some other way.
cool link
I’d like to go back to discussing the property from the exciting world of mortgage details.
I was going to send this to the CC tip line when I saw it drop the other day but never got to it. I’ve been following this and the 2-3 others right by it on Redfin out of curiosity. Not that I would buy one, but it seems to be entering a point where it is a good deal next to what else is out there (provided the taxes can be lowered). 2/2, newer, parking, W/D hookup… you don’t find that very often under $300k.
I’m also curious about what some others have mentioned. What does this foreclosure do for the nearly identical comps? Yeah, this may warrant a discount because it is distressed. But say this sells for $275,000, how can the other units justify anything over $300,000?
This property screams mortgage fraud on CCRD. The same people bought 4 units in this building at an absurd price. All 4 are listed as lis pendens foreclosure. Add to that, they bought a $1.5M house from the same developer, which is also listed as lis pendens foreclosure.
@RE_novice the best comp for a condo is a recent sale in your building. The next best comp is a recent sale of the same McCondo up the street.
The unit below mine foreclosed at the beginning of the year and someone got a sweet deal on it. I mentioned to our condo association at our last meeting that no one’s unit was going to sell for much more the Mr Opportunity paid for his this spring and was met with wide shocked eyes of disbelief.
What so you think the price difference is for something that must be bought with cold hard cash vs something that can be conventionally financed?
Not all foreclosures are the same.
“And after a sufficient period of time I would bet a clever occupant could claim deed via squatters rights or some other way.”
You’re better than just making shi … stuff up. Squatters rights don’t give you title to a property and the record owner of a property cannot adversely possess the property against himself.
Yes, MERS is a fiction. Sovereign claiming MERS was a necessary party is rich. No, notes are NOT typically recorded, nor are assignments of notes, no matter what Dr. HB might state and/or imply.
At least the bank is making sequential price reductions. It sounds as if they want this stuff off the books. If this is worth say $260k, what is stopping someone from actually offering that, or 240, or 220? If it is bank owned I would think low ball offers are rejected without emotion, you can resubmit at will right?
anon(tfo): “The banks need to clean up the documentation (which, yes, is *ENTIRELY* possible, and, frankly, not very complicated) and restart the f/c process. Anyone saying it’s impossible or implying that the mortgages are permanently unenforceable is whackadoo like the income tax deniers–there’s no reasonable basis for saying that they are *never* enforceable.”
By “cleaning up the documentation”, this often involves creating new, fraudulent documents where none previously existed. It’s not a matter of “paperwork”. It’s the fact that the mortgage backed securities were never properly transferred in the first place.
No amount of “cleaning up the documentation” will fix the problem, short of Congress retroactively blessing all of the hinky shit.
“By “cleaning up the documentation”, this often involves creating new, fraudulent documents where none previously existed. It’s not a matter of “paperwork”. It’s the fact that the mortgage backed securities were never properly transferred in the first place.”
Believe that if you like, but it is simply incorrect. The MBS as MBS have NO effect on the mortgage itself.
It’s funny that the unit directly above is in a worse state (missing appliances and it looks like the floor may be damaged) and is asking $40K more – looks like it is also a foreclosure, listed by the same agent.
http://www.redfin.com/IL/Chicago/3014-N-Sheffield-Ave-60657/unit-3S/home/21830681
“Yeah, this may warrant a discount because it is distressed. But say this sells for $275,000, how can the other units justify anything over $300,000?”
The foreclosure IS the comp. What other buyer would bother to pay more? (especially where the kitchen/baths appear to be intact though we don’t know about the rest of the unit, i.e. the mechanicals, electric etc.)
So the other units cannot justify anything much over this selling price.
This is the problem in the market right now. We’ve seen other units that weren’t distressed in this stretch of buildings trying to sell. They will now not be able to- unless they take a tremendous loss. How many have the cash to come to the table with $200k? Not many. So they either:
1. Stay in the unit for a long, long time (a decade or more???)
2. Move and rent out the unit- but may take a monthly loss in renting it out and then risks of the renters damaging the property, not paying rent etc.
3. Short sale or go into foreclosure
These choices are happening all over the city right now and none of them are good.
4. Challenge the banks ownership of the mortgage, stop paying the mortgage, live for free for a year or more while they try and provide proper documentation.
“The foreclosure IS the comp. What other buyer would bother to pay more? So the other units cannot justify anything much over this selling price.”
HUH?!! This really doesn’t make any sense if you think about it. Let’s say you have 3 buyers who want to live in a certain building. Now let’s say that there are 3 units for sale but only one unit is a foreclosure. Buyer #1 gets it. What do you think buyers 2 and 3 are going to do – sit on the sidelines for the rest of their lives and wait for another foreclosure to come up?!!! That is insane – of course not!!!! They will feel bad about not getting the foreclosed property, but they will get over it (especially if they want to live in that particular building or area) and will pay full price or whatever for the remaining available units. The sellers of the other units would be STUPID to lower their price just to make the buyers feel better. It is a common theory called SUPPLY AND DEMAND.
Sabrina,
I am truly surprised that you are so ridiculously negative about the real estate scene out there. I don’t know who you have been talking to but things are definitely not as dire as you seem to think they are. In the scenario you outlined above, you don’t consider that there are MANY buyers out there – the reason there aren’t many sales is because these sidelined buyers are still unsure about real estate (thanks to the media). Once the economy improves you will see that the real estate problems will slowly disappear – remember: real estate is 90% psychology and also remember that Americans LOVE real estate and their homes.
Clio… take a look at the picture that goes with this listing. There are identical buildings to the left and to the right all the way down the block.
You are right. It’s all about SUPPLY AND DEMAND. And there is just too damn much supply.
Sabrina,
Also remember that the people who are hurting the most are the most vociferous/loudest. If someone has a stable job and is current on their mortgage and not at risk of default, they are not going to call you up and tell you about their situation. The same concept holds true in any service industry – if service is good, people are content but don’t usually make a big deal/noise about it but if service is bad, those people complain and complain and complain. You, unfortunately probably only hear all the horror stories because people who are not going through a hard time are not going to complain or talk to you about it.
“I am truly surprised that you are so ridiculously negative about the real estate scene out there. I don’t know who you have been talking to but things are definitely not as dire as you seem to think they are.”
I get new listings every day, Clio, and see what is happening out there. I see the total devestation every time I look up what these properties last sold for and how much money people are losing. Then there are the properties that have been on the market for a year, or two, or three, where they simply won’t lower the price because they cannot (they don’t have the money to bring to the table)- but clearly the property is never going to sell for what it is listed at.
I see all the condos out there, day after day, where all anyone is doing is taking a loss. And, in many cases, the properties STILL aren’t selling.
What’s there to be optimistic about? (at least in 2011.) The only thing to look forward to, for those who don’t own, is that they will get a better deal going forward. Meanwhile, everyone else is losing their shirt.
The one market that is doing marginally better is the upper bracket. But I chalk that up solely to the rebound in the stock market. But those sales are such a small percentage of the market they aren’t that relevant to the rest of us.
2011 will be a key year in this bust (especially as interest rates continue to rise.)
” Meanwhile, everyone else is losing their shirt.”
No – only people that are selling are losing their shirts -the majority of people CAN afford their mortgages and are not looking to move – so the majority of people out there are NOT losing their shirts.
This would have been a listing I would have looked at last year for sure. But I’ve stopped looking. I have been in my 2/1 for 8 years and want to move but frankly think I’ll end up eventually renting out my condo and renting a bigger one until rent/mortgage rates balance. I’d rather miss the best bargain on the uptick than risk getting a perceived bargain on a downward spiral.
— so am I a pessimist or just being pragmatic?
“I get new listings every day, Clio, and see what is happening out there. I see the total devestation every time I look up what these properties last sold for and how much money people are losing. ”
Sabrina, come on – think about it. The ONLY people listing in the past 2 years (and in the coming year) are people who NEED to sell. The vast majority of homeowners do NOT need to sell and know it would be stupid to sell right now. So does this mean that THEY are in trouble – of course not!!!!!! My point was that you are only seeing the desperate people, hearing their tragic stories and then making false generalizations about ALL of real estate – YOU CANNOT DO THAT!!! If I did the same thing in my profession, I would be out there blogging that everyone has cancer and is dying – remember, there is a WHOLE world out there that you are not taking into account. Just because you don’t see it everyday doesn’t mean it doesn’t exist.
Real Estate as an asset class has been an absolute disaster the past 2-4 years. Owning debt on this asset class has been considerably worse. Any argument to the contrary is simply arguing emotion over fact.
And not everyone has cancer but technically speaking everyone is dying… Now let me go look for that sign, what would that be, the virgin Mary appearing on a piece of toast next to Suzanne with the words buy now or be priced out forever?
“I see all the condos out there, day after day, where all anyone is doing is taking a loss. And, in many cases, the properties STILL aren’t selling.” & “they don’t have the money to bring to the table”
For people who responsibly took out mortgages and paid down the principal on their place, selling for a bit less than you bought for isn’t a huge problem. The problem comes when you get should-be-renters paying interest only or barely paying off any principal over time. Then, come time to sell, these folks also expect to cash in on their place and get more than they paid for it… If you’ve had your place for even a couple of years, you should have enough of the principal paid off to stomach a price drop. If you have to “bring money to the table” more than likely you overextended or treated the purchase of your home as a pure investment and – as with any investment – you can lose out.
That horse has left the barn, Jon. EZ credit distorted demand which led to the current oversupply. There is a price at which the market will stabilize. We obviously aren’t there yet. People who were “responsible” during the bubble sat out or planned for their inevitable losses.
Jon,
I completely agree and the responsible people are the ones that I talk about when I say that I see a lot of people making 50-100k looking to move up. Most of these people bought prior to 2003 and have some equity in their houses – most are going to take a small loss (but with the amount they have paid down, they still will come out with some cash – not profit, but cash that they plan to use as a downpayment for another place).
“If you’ve had your place for even a couple of years, you should have enough of the principal paid off to stomach a price drop. If you have to “bring money to the table” more than likely you overextended or treated the purchase of your home as a pure investment and – as with any investment – you can lose out.”
Prices are dropping faster than they are paying off any principal (which is negligble in the first few years anyway.)
Also- how many bought with less than 20% down in the last 7 years? I don’t know but it is huge based on the mortgage information I look at every day while running this site. Unfortuantely, even those buyers who put down 20% or 25% (those are the “responsible” ones) are losing all of that money when they go to sell.
As I’ve said many times before- how long did it take them to save that downpayment? How long will it take them to resave it so they can buy another property? Most buyers weren’t assuming the $50k or $100k they put down would go “poof” into the night (let alone they’d have to bring money to the closing to even move.)
For 20 or 30 somethings $100k is enormous. It is 3 to 4 years of saving again just to get that back.
This is the problem that we now have. Too many homeowners underwater. Too many with no skin in the game so they must short sale or walk away. Those with skin in the game are going to lose all or most of it. Many won’t be able to be “move-up” buyers where you used to be able to roll your downpayment (and any subsequent gains) into the next property. You are now lucky if you don’t have to bring money to the table.
“Most of these people bought prior to 2003 and have some equity in their houses – most are going to take a small loss (but with the amount they have paid down, they still will come out with some cash – not profit, but cash that they plan to use as a downpayment for another place).”
Who? Show me some actual listings of someone who bought in 1997 or 2000 or whenever prior to 2000, has plenty of equity, and now is selling and trying to move up.
“Also- how many bought with less than 20% down in the last 7 years?”
Not everyone who bought in the last 7 years is trying to sell now. Also, not everyone who is selling now bought in the last 7 years. Why do you always highlight only the properties that have been bought in the last 7 years?!!! – My guess is that because those are the people that are in trouble and selling at this moment. MY POINT IS THAT THERE ARE MILLIONS OF PEOPLE THAT BOUGHT PRIOR TO 2003 – they are just not selling now. Sabrina, there are MILLIONS of people that have enough equity in their homes right now to move – even at lower prices. Again, you don’t see that because these people can afford to hang on to their properties. When the economy comes back and these people decide to sell, you will see that many people are NOT taking a loss and WILL leave the table with cash.
“The ONLY people listing in the past 2 years (and in the coming year) are people who NEED to sell. The vast majority of homeowners do NOT need to sell and know it would be stupid to sell right now.”
The average American moves every 5 to 7 years. We are now coming up to year #6 for those who bought in 2005.
Personally, I believe we’re heading back to the days when you bought one house and you stayed there for 20 years (or more.) That is why I believe the smaller condo is doomed. No one will want to stay in a 1/1 or a 2/2 in Chicago for 20 years. Most buyers will bypass the condo and go directly to the SFH.
In the meantime, however, you have all these people “stuck” in the wrong housing and now they cannot get out. I see the same properties listed every year- year after year. Maybe they think that finally they will find a buyer to save them and they can move. Those that HAVE to move are going the foreclosure or short sale route.
“No – only people that are selling are losing their shirts -the majority of people CAN afford their mortgages and are not looking to move – so the majority of people out there are NOT losing their shirts.”
Sure- just like the people who bought Cisco stock at $70 in 2000 and still own it are not “losing their shirt.” They haven’t sold it- so they haven’t taken the loss, right?
But no gain in 10 years. Same with those just living in their house as it depreciates.
“My guess is that because those are the people that are in trouble and selling at this moment. MY POINT IS THAT THERE ARE MILLIONS OF PEOPLE THAT BOUGHT PRIOR TO 2003”
Sure- there are plenty of people. Send me the listings of those people who are trying to sell right now in Chicago. I have had posts on some of those sellers. The house on Summerdale in Andersonville was one of those.
But there are far more for sale from people who have bought from 2000 on than those who are long term owners.
“But no gain in 10 years. Same with those just living in their house as it depreciates.”
You are wrong – there WERE gains and upsides for owning a home:
1. A stable place to live.
2. Mortgage and tax deductions
3. Vehicle to express your personality/creativity
4. A place to make happy memories
yeah – I know that some of those are intangible – but they are VERY real and VERY important.
“Sure- there are plenty of people. Send me the listings of those people who are trying to sell right now in Chicago”
Sab- that is my point – people who are not in trouble are NOT selling now because they know that now is not the right time to sell. The only listings you see are people who NEED to sell – THAT IS WHY THEY ALL SEEM TO BE IN TROUBLE – because they ARE. My point is that not EVERYONE that owons a home is in trouble. In fact, the vast majority are fine – but you don’t see that because they are not selling right now. It really isn’t that hard a concept to understand – I just am not doing a very good job getting my point across.
“1. A stable place to live.
2. Mortgage and tax deductions
3. Vehicle to express your personality/creativity
4. A place to make happy memories”
Other than mortgage and tax deductions- someone can do all of those things in rental home too. You know- it’s STILL a home. Heck, in my rental, I can paint the walls any color I want, put up new curtains, buy new furniture, decorate to my heart’s content. But when the furnace, the roof or the water heater need replacing- I don’t have to spend money on it.
Gosh- I can even make “happy memories.”
Sabrina,
I didn’t mean to make it sound like you have to own a home to have those intangibles – but there definitely is a different, special feeling you get when you actually own a home. It is the same as leasing vs owning a car. I have done both but definitely experience “pride of ownership”, babied my car, and learned more about every aspect of it when I have owned and simply didn’t really care about the car at all when I had leased. Maybe it is me – but I don’t think so.
“The average American moves every 5 to 7 years. We are now coming up to year #6 for those who bought in 2005”
Ridiculous statistic – for so many reasons:
1. No way to accurately calculate this number. This average is based on self reporting and reporting to rental/mortgage companies – most people who live in a place for over 30 years are not going to be included.
2. It includes renters who skew the data as many move EVERY year.
3. It doesn’t break down the total number – demographics are incredibly important – for example, in the city of Chicago many people DO move frequently but in the suburbs (where the MAJORITY of people live) people usually stay put for a lot longer. Most of my neighbors have been here for well over 20 years.
Clio where do I fall? I am making my mortage but I want to move. I want to move into a SFH before I’m too old to deal with all that and want to move back into a low maintenance condo.
Icarus – will you be too old in 2013? Why don’t you list your place now and just wait until it sells. Remember, if it isn’t listed, it is definitely not going to sell!!! By 2013, things will be much better. People are not going to be able to wait that long to buy/move and, with the economy doing better, they will soon forget about the real estate mess of 2009-2011.
Oh, and about the economy, how come nobody ever looks at the demographics of this country when assessing future employment. Remember that a HUGE number of boomers (who are 51-66) will be leaving the workforce in the next 10 years, leaving HUGE vacancies in the workforce. Also, they are not selfsufficient and will require a lot of help (more jobs). I actually worry that there are not enough workers to fill the void they will create when they leave/die.
Clio, I tried. I priced it fair based on comps but no one wanted it. I could only afford to go so low with my price drops. It didn’t make sense to drain my savings/down payment for the next place by bringing money to the table. And now the market has corrected so much, i’m not sure I wouldn’t have to bring more.
I have to say I have two separate friends who have sold condos they bought in 04/05 and moved on to significantly larger homes in the last year. Both early 30s couples with kids. Neither ‘needed’ to sell but took the lower profit on the condo sale (good downpayments, diligent principal paydown) in order to get the home they wanted down the line now, rather than waiting it out.
“I actually worry that there are not enough workers to fill the void they will create when they leave/die.”
200 million here in Brasil, 1 billion in India, 1.3 Billion in China… Oh they are filling the void at a fraction of the price and happy as heck to be doing it.
At least tell Icarus best way to reconcile it is to think what you saved not buying the house in 2006. You were short the spread and it came in big time.
I don’t know how they calculate the stat Clio- but every single article you read about how often people sell their homes in America it is every 5 to 7 years.
This does NOT include renters. These are home sales.
Of course, this is the “average”- some stay longer and some try to sell in a shorter amount of time.
Every year, according to the U.S. Census Bureau- about 14% of the population actually moves (but that is renters AND owners.)
“By 2013, things will be much better. People are not going to be able to wait that long to buy/move and, with the economy doing better, they will soon forget about the real estate mess of 2009-2011.”
Yeah- they will now be focusing on the doubling of property taxes expected to begin in 2015.
“Yeah- they will now be focusing on the doubling of property taxes expected to begin in 2015.”
Maybe – but this affects EVERYONE – even renters. Do you honestly think landlords/companies are going to leave rents the same if their expenses start skyrocketing? Of course not. If fact, the increase in taxes might be a reason to buy – at least you can deduct property taxes from your income. As a renter, the buck gets passed to you and you have no deductions….
“Do you honestly think landlords/companies are going to leave rents the same if their expenses start skyrocketing?”
If you have taxes that are $6000 a year right now and they go to $12,000- that is $1,000 a month. Do you really believe poeple’s rents are going to go up by that amount? Do I think my rent is going to go up $500 a month (or the equivalent for a homeowner?)
Not a chance.
Good luck passing the increase along to renters. A few bucks here or there- certainly. Anything more? Laughable.
Sabrina-
What source estimates property taxes will double by 2015? I haven’t seen this data. Seems extreme. Thanks,
MGG
Clio: “Remember that a HUGE number of boomers (who are 51-66) will be leaving the workforce in the next 10 years, leaving HUGE vacancies in the workforce. Also, they are not selfsufficient and will require a lot of help (more jobs). I actually worry that there are not enough workers to fill the void they will create when they leave/die”
I was on a guided tour in Central Europe in 2009. On this tour was a dialysis nurse from NYC, who was in her 60s. She said that when the baby boomer nurses retire in the U.S., that we will be good and effed unless there is a massive influx of nurses from the Philippines, Caribbean, etc.
“Good luck passing the increase along to renters. A few bucks here or there- certainly. Anything more? Laughable”
you think landlords are going to eat the cost and deal with the problems of renter?!! Even more laughable!!!!
” She said that when the baby boomer nurses retire in the U.S., that we will be good and effed unless there is a massive influx of nurses from the Philippines, Caribbean, etc”
Absolutely true – nursing is one of the highest paying stable jobs out there. It is SO easy for a nurse to get a job – and it is just going to get better. So, to all of you out there who are looking for a good career path and don’t want to do the whole graduate school thing – look into nursing programs. Most nurses I know make 60-100k. It is a very rewarding career.
“at least you can deduct property taxes from your income” at the moment you can…that may go away along with mortgage interest deductions
“at least you can deduct property taxes from your income” at the moment you can…that may go away along with mortgage interest deductions
Or for almost 20% of Americans… just no longer having enough income to make it worth itemizing deductions…. 🙂
People seem to have a wide disparity of beliefs regarding price projections this next year, but I think it would be interesting to discuss the dichotomy between single family homes and condos. Based on what I’ve seen, reaonably priced GZ SFHs seem to be selling relatively quickly / the supply isn’t horrible. However, the condo scene seems to be an ongoing disaster.
I think that a lot of factors have driven this dichotomy, including the fact that, for the most part, super-jumbo financing never got as crazy as the conventional / jumbo (
Sorry folks, this time anyway, Clio is right. Speaking as someone who grew up around the corner from this, most people I know are just getting on with life. Prices going down equals out if you are staying in the City – you sell lower than hoped/at a loss, you break even when you buy at distressed prices. And many folks (self included) are refinancing to ensure we ain’t going nowhere when all the speculator-sissies decide to come back in the water.
“No – only people that are selling are losing their shirts -the majority of people CAN afford their mortgages and are not looking to move – so the majority of people out there are NOT losing their shirts.”
That said, this is completely true as well. People planning on staying put would be wise to assume property tax increases double the rate of inflation – so you better have an income stream diverse enough to handle that when you retire.
But the truth is that taxes really go up when a property is sold as the property gets on the radar of the County Assessor at that time. Or perhaps more accurately stated, when multiple properties are being sold and showing gains which can be pinpointed to a census tract.
“If you have taxes that are $6000 a year right now and they go to $12,000- that is $1,000 a month. Do you really believe poeple’s rents are going to go up by that amount? Do I think my rent is going to go up $500 a month (or the equivalent for a homeowner?)
Not a chance.
Good luck passing the increase along to renters. A few bucks here or there- certainly. Anything more? Laughable.”
interesting no one has mentioned the great view of the el right over the parking lot…. shweet
“But the truth is that taxes really go up when a property is sold as the property gets on the radar of the County Assessor at that time. Or perhaps more accurately stated, when multiple properties are being sold and showing gains which can be pinpointed to a census tract. census tract.”
The latter is more accurate since the assessor doesn’t “chase” a specific sale. However, neither is why taxes “really go up.” That would be due to levy increases due to increasing budgets of the taxing units. This threat is very real because of underfunded pension obligations.
3014, 3018 and 3020 are all on the market. We walked through 3020 this weekend. Realtor said 3020 was being marked down to 299 soon, probably to match the other foreclasures. In 3020, All units are investment owned and most in foreclosure. The bank is requiring owner occupancy with cash or a portfolio lender. As a previous post indicated, the unit could be beautiful with some tlc as it has granite, dark hardwood with stainless steel appliances (although they were missing for the open house) and parking.
300k would be a solid price for the unit unfortunately the condo association has lawsuits against it and there is no owner occupancy.
Right now, this building seems to have a lot of risk, but it could be the right deal at 300 or 270.
“What source estimates property taxes will double by 2015? I haven’t seen this data. Seems extreme. Thanks,”
It’s vapor, Matt. The City’s piece of the levy is expected to approximately double, which is a 12-17% increase.
“This threat is very real because of underfunded pension obligations.”
Absolutely taxes are going to go up, at least for a while, to fund the ridiculously underfunded–and overly generous–pensions. But, do you see doubling b/c of pension issues, G?
does anyone on here really think taxes are going to double or even increase by a SIGNIFICANT percent year over year? Of course not – there would be such an uprising/uproar that the gov. will find other ways of funding the pension (think increased parking fees, fines, sales tax and decreased services).
“does anyone on here really think taxes are going to double or even increase by a SIGNIFICANT percent year over year?”
ha! ha!
The governor already signed the bill. Cities have to come up with millions/billions to cover the pension liabilities that aren’t there. No other way to do it other than raise taxes significantly.
We’re already going to see the state income tax rise from 3% to who knows what- all within the next year. And that’s just the beginning. All the discussion at the federal level about the extension of the bush tax cuts was a joke because Illinois will take all of that- and more.
Also- Clio- how high do you think Cook County can raise the sales tax? It is already amongst the highest in the nation.
Besides, I believe the new law specifically requires that the payments come out of property taxes which is why Daley blew a gasket. All of this, as I understand it, will be negotiable going forward as the state legislature may tinker with the law. But you can’t make the pension money appear out of nowhere.
“does anyone on here really think taxes are going to double or even increase by a SIGNIFICANT percent year over year?”
Clio–In Chicago, when the pension catch-up requirement kicks in, the City’s levy needs to approximately double. That, alone, will require a 15%+/- increase in a single year. After that, there isn’t a *necessity* for an additional increase, but that extra 15% will be with us for (likely) 15-20 years.
So, yes, anyone who is paying attention and understands even a little how it works expects a SIGNIFICANT increase y-o-y in the near future.
“the new law specifically requires that the payments come out of property taxes which is why Daley blew a gasket.”
Not “required”, but that’s the only place for the city to go to raise that sort of coin. *only* place.
There are a lot of ways government will get the money. Of course some of it will come from increased taxes – but we are NOT going to see doubling of real estate taxes – that is just plain silly. Ways that governement might raise this money:
1. decrease/eliminate future pension benefits
2. tack on requirements to existing pensions that will be unrealistic and lead to people getting decreased benefits
3. increased fines
4. increased taxes on certain items (hotel tax, sales tax, vehicle tax)
5. decreased spending.
Come on people – the politicians know that increasing property taxes is going to lead to their political demise. and again, this affects renters as well because the buck is going to be passed on to them.
hahaha
when has any government buerocrat EVER DECREASED SPENDING!
serious question… because i’m as Ron Paul as they come but I have yet to see any politician with the qualities of a vertebrate and actually cut spending when they say they will
“we are NOT going to see doubling of real estate taxes”
So, you are agreeing that we will see a SIGNIFICANT [your word] increase?
“So, you are agreeing that we will see a SIGNIFICANT [your word] increase?”
No – I don’t believe property taxes will significantly increase – again, this would be political suicide. Small, consistent increases will be made – but that is life and to be expected.
Also, nobody is immune to this – renters will see the cost of increased real estate tax in increased rents. No investor/landlord is going to eat the costs and leave rents the same.
“No – I don’t believe property taxes will significantly increase – again, this would be political suicide. Small, consistent increases will be made”
So, Chicago (and, by that, I mean *only* the city itself) is going to start increases taxes *earlier* than necessary to make things easier on whoever is in office 5 years from now? Do you really believe that? Seriously?
“No – I don’t believe property taxes will significantly increase – again, this would be political suicide. Small, consistent increases will be made – but that is life and to be expected.”
yes they already avoided this, i.e. prop taxes bills sent after election.
next year you will see a nice increase and before the next election the papers will be printing about how so and so will be fighting to lower it and the prop tax before the next election will stagnant if not a small increase.
its all about timing and spin my friend.
but prop taxes will be getting huge just wait your wonderful Oak Brook is not immune and schlumburger dropping is prop tax will be getting it again no matter the retail taxes collected.
“schlumburger dropping is prop tax will be getting it again no matter the retail taxes collected”
Is there really an upside to a drilling services company having a Chicago-area ‘burb named after it? Houston, I could see, but here? … seems like a vanity project and ultimately a waste of advertising dollars.
“Is there really an upside to a drilling services company having a Chicago-area ‘burb named after it?”
Is that how they got the name Schuamburg? cool never new that, it will now be a fun drunk groove fun fact 🙂
“Is that how they got the name Schuamburg? cool never new that, it will now be a fun drunk groove fun fact ”
to be clear–I was riffing on your joke. No relation I know of.
“to be clear–I was riffing on your joke. No relation I know of.”
oops i read you wrong, its monday and brain not firing all 8 pistons*.
*for all you tree huggers my hybrid is not fully charged and im using the gas engine
*for all you hipsters, my tight (girly) jeans ripped and i didnt oil my 10speed
“Absolutely taxes are going to go up, at least for a while, to fund the ridiculously underfunded–and overly generous–pensions. But, do you see doubling b/c of pension issues, G?”
No, I agree with your calculation. I also see an increase coming in green and greenish zones due to the rapid collapse in values in more marginal areas. The number of tax delinquent props are exploding and many are not worth the outstanding taxes. Everyone will have to make up for the increasing shortfalls. There will also be more declines in commercial assessments due to rising vacancies and falling rents. Govt attempts to prop up housing have only slowed down the price correction in desirable areas, but the consequence will be a greater share of the tax burden due to the inability to suspend reality in the low end and commercial segments. I love unintended consequences, but maybe this wasn’t?
” I love unintended consequences, but maybe this wasn’t?”
You obviously also love scaring people and creating panic.
You answered this one yourself, clio:
“do you honestly think that I believe what I say here will affect Chicago real estate prices?!! I am not that disillusioned about my power.”
Besides, grow up and don’t be a wuss in the face of adversity.
G – I have no idea what you are trying to say in that last post – obviously something negative, but it didn’t make sense.
I am one of the most positive and optimistic commenters on this blog. The real estate bubble and its perpetrators did serious damage to our economy. The correction has always been the only solution. It was also inevitable so there was never a reason for pessimism or negativity. This was a reason for optimism during the bubble. Lower housing costs mean more money for consumerism (which I’m told our economy requires,) and maybe even more money for actual productive uses.
Now quit being so negative and pessimistic, clio. High housing costs are a bane to our economy.
Clio: “So, to all of you out there who are looking for a good career path and don’t want to do the whole graduate school thing – look into nursing programs. Most nurses I know make 60-100k. It is a very rewarding career.”
Plus, I believe that certain hospitals associated with Universities (i.e. Loyola) offer partially subsidized tuitions for spouses and kids.
I like condos!
I see the auction closed and sale is pending. Does anybody know what it went for?