Bank Owned 1-Bedroom at 546 W. Surf in Lakeview Sells For $7500 Above the List
We last chattered about this bank owned 1-bedroom at 546 W. Surf in Lakeview in April 2011 after it had just had a “drama” reduction in its price from $129,900 to $72,500.
See our prior chatter here.
In that time- some of you have updated its status in the comments section as it went under contract, fell out of contract and then came back on the market again.
Listed for $72,500 when we chattered about it in April 2011, it had since been reduced further to $69,900.
It recently sold for $77,400.
The vintage building went condo in 2006.
There were no pictures of the kitchen or the bath in the listing, so it’s unclear if those were intact.
Otherwise, all that could be obtained from the pictures was that it had hardwood floors and arches.
The unit also had a separate dining room.
There was no central air, washer/dryer in the unit or parking.
Is less than $100k the new going rate for a basic East Lakeview 1-bedroom?
Jason Shapiro at Rising Realty had the listing.
Unit #3N: 1 bedroom, 1 bath, dining room, no square footage listed
- Sold in March 2006 for $216,000 (looks like there is an error in the data as there are 2 sales recorded in 2006)
- Lis pendens foreclosure filed in September 2009
- Bank owned in January 2011
- Originally listed on Apr 12, 2011 for $129,900
- Reduced
- Was listed in April 2011 for $72,500
- Reduced
- Was listed in May 2011 for $69,900
- Sold in July 2011 for $77,400
- Assessments of $202 a month
- Taxes of $3342
- No central air
- No in-unit washer/dryer (looks like its free in the building)
- No parking
- Bedroom #1: 12×10
- Living room: 16×12
- Dining room: 9×7
- Kitchen: 12×5
“Is less than $100k the new going rate for a basic East Lakeview 1-bedroom?”
I don’t think that bank sales can set a “going rate” for any particular property class. Lots of bank sales and foreclosures within a given comp class can certainly influence general pricing, but given all the other variables in play in this sort of deal, it’s just not that illustrative of regular listings.
That said, while we don’t know if this place needs any work, I would submit that the fact that it has a sep dining room makes it a bit more than a “basic” one bed for this hood/price range. All of which is to say that this buyer got a heck of a deal, regardless of the condition of the kitchen and bath.
What’s the new going rate for a reasonably updated 1/1 in this particular hood with sep dining, but no w/d, a/c or parking?
I don’t know, but something between $125 – $150k seems about right.
I lived here when it was rentals. Sub 100k seems about right to me, but I could see people paying more. This place is a dump and new floors, appliances and paint isn’t going to make it much better. Not a straight angle in the place, I tell you…
what is the rent going for in this area? this may be worth it even if one sells in five years or just moves and rents it out?
A friend looked at this place…bath and kitchen needed gut renovation. Also, thought that a special assessment might be in the works. Might explain the price drop.
can someone explain to me how is this good business for the bank? if little money was put down, wouldn’t it mean the bank lost money? why wouldn’t they try and help the owners?
Does this building still need such a huge chimney? Maybe that was necessary in 1920 or whenever it was built. Now I’m guessing it’s a relic and the place would look better without it. Maybe that’ll be part of the special assessment.
Sold for over list? Wow things must have hit rock bottom and the rebound is on!
Paging HD, paging HD, paging HD where are you HD?
Miumiu, maybe the owner wanted out? Maybe he/she bought it for a college age kid and just wants to be done with it now.
It is odd to me that banks aren’t more willing to negotiate with people who want to stay in their homes.
Would love to turn this whole building into my own personal winchester mansion. What a great facade!
LOL at the 150k guess these days 150k gets you a lot more in Lakeview. Closing price seems a out right for this dorm.
Maybe prices will skyrocket once the Wal-Mart moves in at the end of your block?
Can someone link to a listing for an updated vintage 1/1 with a sep dining room that is east of Broadway in Lake View? That might give us a better sense of what the going rate is…
“Can someone link to a listing for an updated vintage 1/1 with a sep dining room that is east of Broadway in Lake View?”
Sold:
http://www.redfin.com/IL/Chicago/543-W-Roscoe-St-60657/unit-3S/home/12774466
for $165. a *lot* nicer, but maybe too taste specific, too.
From what I’ve read it seems that most foreclosures are now people that already had their loans modified, but they still couldn’t/didn’t want to make it work. There are still a lot of homeowners out there with places they’ll never be able to afford, no matter what the bank does to help them. And there are still people who simply don’t care about getting foreclosed on, they just want out.
I think this property was an investment for the previous owner because 3 months after this purchase the seller bought a SFH in Jeff Park to live and that doesn’t appear to be in foreclosure. The former owner made a common mistake and forgot the most important real estate manta: you make money on the buy, not on the sell. Maybe next time he’ll do better.
“Maybe next time he’ll do better”
its easy for him as now he is sitting pretty in a SFH in great hood, so piece of cake to wait out the 7 years for the credit to become good again.
but old habits die hard with a vengeance 2 electric boogaloooo
“electric boogaloooo”
Groove, serious question. As a Chicago kid, did you lean west (Breakin’) or east (Beat Streat)? Parachute pants or Puma suits (or vests/hoodies)?
beat street, as more emphasis on the graff aspect. it was puma (or adidas) suits with special checkerboard laces and soles that had puma on the bottom so duirng the windmills gave the gazers something to read.
i did rock a Lotto suit with the lotto shoes that had the velcro emblems that you could change the colors.
soon after that well all moved to I.O.U sweaters Z.Cavarichi pants (tight rolled) and playboy tasseled shoes.
then on to the cross color florecent loud overalls with one strap hanging
then to the MFG jeans worn backwards with champion sweaters and crazy large 70’s wood bead necklaces.
I find this one very interesting. It’s about $800/mo for P&I, Tax, Asses. That’s the starting point for rent on any 1 BD in the area. This place may not be that great, but neither are the rentals. If you’re going to be paying about the same, why not just a place like this instead?
But then, the other risks creep into mind. The possibility of a special assessment. The value of the property could drop further (although not much further in this case). Looming prop tax increases. As enticing as it is, staying with the low-risk rental situation may still be the way to go.
Except for the fact that the renter has the bigger risk.
“Except for the fact that the renter has the bigger risk.”
If the renter wants to stay in this crappy 1 bd unit (w/o central air, washer/dryer, parking) for 30 years, or deal with being the landlord of this crappy unit for 30 years?
How difficult is it to be a landlord? My parents are about to start looking to rent out a property that’s valued about this same as this one. They inherited it and the market is so abysmal they think it’s better to rent.
“How difficult is it to be a landlord?”
This all depends on the tenant that you attract. It can be a breeze and profitable income stream or a giant expense and pain in the ass. You only find out by doing it!
gringo, please explain yourself. I usually find your posts enlightening.
Are you inferring the renter has the bigger risk because rent prices can increase?
“Except for the fact that the renter has the bigger risk.”
The renter has no risk other than losing a security deposit, and the remote chance of being evicted. A renter has the freedom to move around the country at will, potentially accessing way more employment opportunities. The time, effort, and money involved in selling a house/condo is just way more work than notifying the landlord that you are leaving at the end of the month.
Could someone flesh this out too:
“…the most important real estate manta: you make money on the buy, not on the sell.”
I think I understand the sentiment, but can’t really see how that works in the real world.
“Are you inferring the renter has the bigger risk because rent prices can increase?”
Yes.. because they can. I am saying rent is somehow linked to price, price can increase, rent can increase. I am also saying that a renter is really short a home unless they intend on being a renter forever. If that is the case they are short price as a function of rent having a relationship to price. If one day they anticipate buying a home, then they are short price directly. The owner can walk away with a 20% loss, the renters price risk is technically infinite. Ugly graph!
I already said same for i rates and graph is same. Owner can re-fi. Renter no such luck, short i rates. Again – ugly graph!
Is what it is – not an opinion. I would have to get paid to be a renter. (rent for discount to parity)
““…the most important real estate manta: you make money on the buy, not on the sell.””
I thought.. location – location- location!
I like the notion of renting as being “short” real estate.
But really… we are all just “renting” our human bodies and our time on this planet. None of us “owns” jack shit.
“But really… we are all just “renting” our human bodies and our time on this planet. None of us “owns” jack shit.”
lol.. I just woke up from a nap, confused enough w/o this..
gringo – you lost me after “yes”
“then on to the cross color florecent loud overalls with one strap hanging”
Thanks, now I’m picturing M Doc or another of the Silk Hurley protege’s posting on here…
re… My apologies… I literally woke up when i wrote that. Please ask what didn’t click and i will be more clear. Basically i am trying to say that the renter is more short than the owner is long. As a law, and i don’t have many laws, risk needs to be compensated for, the renter must get a discount to compensate for this risk or he is paying to have a bad position on. Not every good position you win on not every bad you lose in, but do it again and again and life probably doesnt look so good when youre done.
There’s a tall building next door; the chimney was to get fumes above it.
“Basically i am trying to say that the renter is more short than the owner is long.”
Dunno, doesn’t seem that big a deal. The option to stop your loss as buyer at no more than 20 percent (or whatever) is right but really only relevant for the first few years after you buy. It’s also only really valuable when homes are at significant risk of dropping more than 20 percent in price, which is a time it prob does not make sense to *start* becoming a homeowner. (All of this is separate from the interest rate risk issue.)
DZ. Yes the option would become less valuable the more you put into the home as equity, which is why I have said over and over that it is a bad idea to do so. The longer you sit there or go lower and it becomes more valuable though. Also, you do not know when anything is going to move 20% either direction. Even with that option completely removed (which it’s not) you are still looking at a lognormal distribution so that ends the argument right there. Price risk is always greater to the upside.
“you do not know when anything is going to move 20% either direction.”
Agreed (although maybe a strong hunch during bubble). My point though is that when the option to walk away is valuable is precisely in the state of the world when you should have stayed a renter. If that state of the world is v likely, then option is valuable but decision to stay renter also sensible.
“you are still looking at a lognormal distribution”
Have you tested this and found true (in real terms)? I know it’s a common finance assm and often ~true.
“Price risk is always greater to the upside.”
Just don’t know that in most locations there’s that much price risk to being a renter, especially if you can wait out a bubble.
“Just don’t know that in most locations there’s that much price risk to being a renter, especially if you can wait out a bubble.”
DZ, your bet is on price then, it still does not change the profile.
Yes I tested the theory of lognormality here in Rio. My place could have went to 0. Instead it went up 1,000% in less than 5 years. How wide open has a renters asshole been ripped open down here right now? Who saw it coming?
What are you going to win on your side? How big can you win vs lose? The graph sucks!
“(although maybe a strong hunch during bubble).”
My bet is if polls were ran more people would expect a 20% increase at the height of a bubble vs. 1 year earlier and more at 1 year earlier vs. 2, etc. Don’t underestimate herd momentum. Similarly want to find the bottom? Wait until you’re thought of as an idiot for buying at time X at the local tavern (the peak was when you were an idiot for not buying).
The key is recognizing when the trendline has changed and getting out with with some of those new-bubble grown teeth intact.
In the Chicago CSINSA index there were a few clues if looking at the right data. Year/year appreciation peaked at 10.1% in April 2005. This was not the peak however. The year/year appreciation started to decline, at first very slightly.
Between April 2005 and June 2006 it was obvious the year/year appreciation was coming down and fast, to 7%, more than seasonal fluctuations. Chicagoland peaked 3 months later in September 2006, but it was obvious we were in a trendline reversal. Flash forward to May 2007 and we’ve been negative year/year ever since.
We had a very large trendline reversal between October 2009 and June 2010, but we need to filter out the dough for dumps farce which basically goosed demand. We’re heading back down again but at a slower pace than March 2008 – October 2009.
Yeah and come down here and test “the this is a bubble theory”. Bring lots of Prep H with you.
“How big can you win vs lose? ”
With shorting you can theoretically make as much money so long as you reinvest your gains in your position on the way down.
The problem is with shorting you can get margin calls during trendline reversals. When going long you don’t have to worry about that and that’s pretty huge.
bob.. well defined.
Everyone I know is still buying. There is no fear (like you would see at a market bottom.) Heck- most of us know people who can’t sell the condo and are renting that out and taking on even more debt to buy the bigger property (SFH or townhouse)!
All people ever ask me is, “do you own?” and when I tell them “no”- they ask “why not?”
And this is 4 years into this bust.
At a market bottom, no one will care if I own or not. And when I tell them I’m buying they’ll ask, “why?”
“get margin calls during trendline reversals. When going long you don’t have to worry about that and that’s pretty huge.”
Of course you get called on the way up, hell it’s on massive up moves they call for even more margin.
And you can only short something to 0.
The only win as a renter is i rates drop, prices drop, rents drop. Graph all 3, they all suck. Price opinion removed, WHICH has more risk? A or B? shouldn’t one get paid to hold risk? 3 yrs ago renters did, now not so sure or not at all.
Ze- I lived in the Bay Area during the bubble. I know your pain. I couldn’t believe the price appreciation and none of it made any sense (because prices were doubling or tripling even in the crappy areas.) It lasted far longer than I thought it would. The bust took much longer to arrive (but it finally did.)
“At a market bottom, no one will care if I own or not. ”
Yes they will. They always will. Just like what car you drive and what you do for a living. It’s a giant game of sizing up people. I don’t miss it.
I would rather pay a higher mortgage rate and get my property for cheaper- so, to me, the renter has the better odds. I can always refinance later- but I can never get a different price on the property.
Imagine the $400k 2/2 with rates at 8%?
It’ll be a whole new world.
“Yes I tested the theory of lognormality here in Rio. My place could have went to 0. Instead it went up 1,000% in less than 5 years. How wide open has a renters asshole been ripped open down here right now? Who saw it coming?”
Maybe I’m just carrying too much risk but I’m behaving and have behaved assuming there is no risk of this for me. And as far as I know, there hasn’t been a period in US where this has ever happened over an extended period of time and in more than a few isolated locations.
“Yes they will. They always will. Just like what car you drive and what you do for a living. It’s a giant game of sizing up people. I don’t miss it.”
I disagree. I don’t know how old you are Ze- but no one cared if a 20-something bought in the 1990s. (probably because few did.) No one was obsessed with their houses then, or spending 50% of their income on housing then.
Everyone was obsessed with what stocks they owned. That was it. Then that went bust and now people ask, “why would you buy stocks? You just lose money in them. It’s rigged.”
So I disagree 100%. When the pain becomes acute enough- people will realize that “hey, I’ll lose all my money if I buy this. That’s a dumb thing to do” and they’ll stop buying it.
As I’ve said many times, buyers will bypass the condos and go straight to the SFH. The condo market (other than very large condos where you might be able to raise a family) will be depressed in Chicago for years. We’re not Manhattan. People aren’t going to raise their kids in a 2/1 in Southport.
The SFH market will recover faster however.
“And you can only short something to 0. ”
Yeah but it’s geometric math so how many times can you double your money with decimilization from a move from 8-4? Once, or 100% per 4 points. From 4-2? Once, 100% per 2 points. 2-1? Once, 100% per point. 1-.01 (lets say pink sheets have some speculative value) 10 times, or 100% per tenth of point (roughly).
Means that you can theoretically make as much % return shorting from 1->0 and reinvesting in your position as you can shorting from 128 down to 1. Obviously there are practical constraints on this like margin calls and vulture funds buying the pink sheets but the math is the math.
(This is also why it’s much more painful going from 4% interest to 5% vs. 8% to 9%–as i approaches zero the amount of debt that can be serviced goes up geometrically).
“The only win as a renter is i rates drop, prices drop, rents drop.”
I disagree. A renter with a sizable cash position could wind up doing better if i rises, as demonstrated above.
*I am of the firm belief that a higher i will correlate with lower RE prices in the current environment. In short the Fed has to act before RE turns around significantly on it’s own.
“We’re not Manhattan. People aren’t going to raise their kids in a 2/1 in Southport.”
I dunno Sabrina I fully intend to attempt to take my toddlers to Schuba’s, SoPo, Lange’s and maybe even Big Shitty tap. I figure if I do enough binge drinking around them when they are in their pre-formative years, they will come to associate it with being “uncool” and get good grades in college.
people are not going to be able to afford sfh in the city – they have 2 choices:
– raise their kids in a condo
– move to the suburbs
guess which option 90% of the people living in chicago are going to opt for?
bob… That was the weirdest response I have ever seen.
1- it is a discreet bet, you do not get to re-write lognormal diatributions by making an assumption of adding to the bet. Hey be fair and add to the upside. You will be decimilizing to infinity. Each addition must be seen as a new bet.
2- i am comparing a position as an owner vs the synthetic position of a renter. Basically apt 1202 vs the renter in 1302. You can’t wipe away the risk by magically throwing the renter a savings account the owner does not have. Must keep apples to apples.
3- if you think you are ever going to blow past me with such awesome bullshit, as tried above, g’luck. Bwaaaaahhhhhh.
And yes sabrina people were much less focused on homes in the 90’s. I just assumed that culturally people were more constrained to discuss money. I know we all knew who had what, just did’nt talk so much about it.
“Maybe I’m just carrying too much risk but I’m behaving and have behaved assuming there is no risk of this for me.”
You are. Feels good to you when home prices drop? Should, you are short. Amazes me that so many renters think the idiot owner has all the risk, and them none.
“And as far as I know, there hasn’t been a period in US where this has ever happened over an extended period of time and in more than a few isolated locations.”
Doesn’t have to happen so fast. 2-3% a yr over 30 years will make 2 peoples retirements look very different.
“as i approaches zero the amount of debt that can be serviced goes up geometrically”
And politely I would change that to either “you think can be serviced” or “is cheaper to service” All you are doing is adding to the risk.
Seriously I can’t even get to the cynical point of believing someone could be so cunning. But when we laugh about beating the Soviets in a spending race. The Chinese didn’t have to meet us on the battlefield. Just keep financing us at low rates until the size is huge, force a default, stick a fork in the US she is now Argentina. China just loses past factory worker time.
Size of debt should be a point of National Security.
Of course first build up 10-15 other countries to trade with.
i mean, bob… Isnt it a rediculous argument to suggest china and the us have a symbiotic relationship based on their need for our consumers. Does it matter who you sell shit to if who you are currently selling it to doesnt pay you? China is all over investing size in south america for a reason. They learned about concentration risk. Smart lil fuckers.
lol.. Didn’t know i could write so much, or knew this stuff, before my wakey bakey session…
“Amazes me that so many renters think the idiot owner has all the risk, and them none.”
I’m not sure renters hold this as a general belief. While the bubble was inflating, (I think) many bought because they feared prices would continue to escalate. And during the peak of the bubble and while it was deflating (and maybe continuing to deflate) at least some renters, maybe many, held off on buying because of price risk.
“Doesn’t have to happen so fast. 2-3% a yr over 30 years will make 2 peoples retirements look very different.”
First, I’m not convinced US home prices over the long term appreciate much in real terms. Second, even if there is small real appreciation, absent sharp movements in price, the rent/buy decision is much more complicated (e.g., you only need a 2/2 now but will want a SFH later, you might go back to school or move, etc.). With those frictions and other transactions costs, it may make sense to wait even if you believe prices will go up.
This is all separate from the issue of whether people are taking on risk by passing up a chance to get a long term fixed nominal loan at historically low rates.
“It’s a giant game of sizing up people.”
C’mon, that game goes on everywhere, it’s just a question of how fine of distinctions matter. You’re someplace where the difference b/t “rich enough to not work” and “slightly richer than that” doesn’t matter, but–honestly–that distinction matters only in certain milieus in the USA, just happened to be the ones you inhabited.
milieu.. Did you just actually use that word… I think the groucho mask and rubber chicken come out for that one.
“First, I’m not convinced US home prices over the long term appreciate much in real terms.”
I *am* convinced that they do NOT. Find the Schiller real-dollar graph. There’s no significant real-dollar appreciation in 125 years, unless your timing is perfect.
“milieu.. Did you just actually use that word… ”
Yes, and it’s something I would actually say, too. Correctly, as an English speaker, prolly “incorrectly” to a francophone, but then any native English speaker who pronounces homage with a silent h and a french g pisses me off.
in real terms no way.. But in straight up dollars.. Could easy.
“With those frictions and other transactions costs, it may make sense to wait even if you believe prices will go up.”
Also need to consider the relative trajectory of the two types of props–if you believe that the 2/2 and the SFH will move in tandem, might bring your decision forward.
oh shit… I like saying omage.. Reminds me of cheese. My dream in life now. To make my own cheese. Ordered the wrong type of rennet yesterday, so as usual, off to a fine start.
“I like saying omage.. Reminds me of cheese. ”
Yeah, if one either is saying it semi-ironically (even tho irony died years ago) and/or is a semi-fluent french speaker, I have to hold my ire. But it’s akin to Americans who say Paree rather than Paris–homage is a proper English word.
And my other problem with it is that it makes me think of cheese, too–seems it’s the aural inverse of the taste of madeleine.
“I *am* convinced that they do NOT. Find the Schiller real-dollar graph. There’s no significant real-dollar appreciation in 125 years, unless your timing is perfect.”
I haven’t looked at methodology for that. I have looked for case shiller. In a strict sense, there’s probably real depreciation. If you took the house that sold in 198X (whenever case shiller started) and and tried to sell it today in the same exact physical condition, I doubt you could get the case shiller nominal appreciate over that time period, b/c everything is out of date. I don’t think case shiller really adjusts for that. There’s depreciation beyond physical depreciation. So in that sense I think case shiller and prob the 120+ year series overstates the real returns. But then you have to consider that there’s a (tax free) return to owning, namely implicit rent. And I don’t have a firm opinion on whether there’s long run rent/own parity, which is also difficult to think about in practice with SFH.
It all gives me a headache.
i hate proust.. Find he just drags endlessly…
Wow…I am impressed anon and ze (for realizing the reference not hate of Proust).
Ze, despite your constant effort of making your schooling (including parenting you received) sound like a failure, you are refreshingly well educated.
yeah.. I almost pulled proust out one time before to prove why gays are much better interior decorators.
gringozecarioca on July 19th, 2011 at 5:31 am
“Amazes me that so many renters think the idiot owner has all the risk, and them none.”
Please enlighten one such idiot. I am a very risk averse person and feel owning is way too risky at this time, especially at the levels it takes to play ball in GZ Chicago. I toured many condos over the past couple of years that were listed at $40k-$80k (8%-20%) less than what the owners paid for them just a few years ago. I just don’t see how I have nearly that level of risk in nominal terms. Yeah, my rent may go up by a few % points, but that’s nothing compared to a similar % drop in home valuation.
gringo and all – I also wanted to say I enjoyed reading through this thread, particularly your colorful description of the rental market in Rio. But you seem to view and talk about real estate as if it were a stock position. I understand some basics, but that lingo gets lost on me.
To further explain where I’m coming from, I have two more points concerning timing and costs. I understand that over 30 years you’re most likely to come out ahead by owning, provided you purchase a place you can live in for 30 years. But just because I don’t buy today doesn’t mean I can’t tomorrow. I can jump in pretty easily at any time for now, why not wait until things seem a little more stable? Prices are still falling dramatically in Chicago YOY. Conversely, once you’re in, you’re in.
Secondly, there are so many other costs associated with owning. As a renter, there is rent and that is all. Owning comes with a number of expenses beyond P&I: taxes, assessments, special assessments, insurance, maintenance… all of which is very frightening to a renter. For many of the places I looked at, the taxes+assess alone was higher than what I pay in rent. Granted, they are not of the same quality, but I can live in either nonetheless.
To sum up my personal position and view, it seems much less risky to be a renter and bide my time, stashing away extra cash. Please tell me where I am wrong.
“To sum up my personal position and view, it seems much less risky to be a renter and bide my time, stashing away extra cash. Please tell me where I am wrong.”
Missed opportunity – you only have to live through that once to know that you never want to be in that position again. Right now is a great time to buy. Seriously, pick a neighborhood you like and are going to stay in, and try to buy something. I tell you (and ask others as well), when you are priced out of buying, NOTHING feels worse.
As a renter you should still have insurance. My homeowners insurance is actually less than the renters insurance was, for the same exact unit. You also risk the expense of having to move if your landlord decides he doesn’t want you as a tenant anymore or worse, stops paying the bills and gets foreclosed on, at which point you may also lose your deposit if they decide to file for bankruptcy too.
“My homeowners insurance is actually less than the renters insurance was, for the same exact unit.”
Seriously? My renters insurance is low enough I don’t really know how much it is, but pretty sure under $200. I don’t see how homeowners can generally be less as it should cover more stuff.
“Seriously? My renters insurance is low enough I don’t really know how much it is, but pretty sure under $200. I don’t see how homeowners can generally be less as it should cover more stuff.”
Second the question. If nothing else, renter’s insurance doesn’t cover the structure, while H.O. (except condo) does.
Sorry – I meant condo owners insurance rather than homeowners. But yes my renters was $256 pa and my condo owners is $202 pa. No clue why.
“Sorry – I meant condo owners insurance rather than homeowners. But yes my renters was $256 pa and my condo owners is $202 pa. No clue why.”
Partial coverage thru the association’s insurance, I would bet.
“Sorry – I meant condo owners insurance rather than homeowners. But yes my renters was $256 pa and my condo owners is $202 pa. No clue why.”
“Partial coverage thru the association’s insurance, I would bet.”
As an aside, the $256 for renters seems high. I think mine is closer to $100 than $200 (I got whatever the minimum was needed for umbrella).
Ever made a claim under your renter’s insurance?
“Ever made a claim under your renter’s insurance?”
The coverage is very narrow.
Clio – I hear what you’re saying about regret, but it’s not like the market will take off overnight. Things have been spiraling down for years now, with no end in sight. Once it levels off, or god forbid, things start looking up, then yeah, maybe it’s time to jump in. But without a family and the need for home stability, I think only an idiot would willingly give up renting for ownership right now.
Besides, I see a drastic change in my housing needs coming in the next couple of years, so I’m definitely out for timeline reasons alone now.
“Ever made a claim under your renter’s insurance?”
“The coverage is very narrow.”
I only really care about liability and b/c (I think) to be able to get umbrella policy.
It is my understanding that one should only make a claim under a renter’s policy for very expensive items, because allegedly making such a claim lands one a “the list.”
“It is my understanding that one should only make a claim under a renter’s policy for very expensive items, because allegedly making such a claim lands one a “the list.””
Pretty much the same for HO–which is why going from, say a $250 deductible to a $1000 deductible saves a huge %age.
Where did you buy the renter’s policy from? Would love a policy that can have umbrella on top of it–but State Farm (for instance) only sells umbrella on top of car policies or homeowner’s. Don’t have a car, but do drive rentals/relatives’ vehicles from time to time.
Yes to high deductibles–you would only want to make a claim on a renter’s policy if the building burns down with all your stuff inside.
“Pretty much the same for HO–which is why going from, say a $250 deductible to a $1000 deductible saves a huge %age.”
Correct. However, I have heard that by landing on the renter’s insurance claim “list,” it can become extremely expensive, if not impossible, to take out an HO policy – which is required by lenders.
“it can become extremely expensive, if not impossible, to take out an HO policy”
It’s never *impossible* to insure. Never.
RE.. You keep moving things.
This is someone owning 1202 vs renting 1302. Comprable positions. Current rent is at parity to owner expenses and that includes op coat of down payment. You win as a renter if your rent goes up less than his expenses or Prices and/or i rates drop.
I agree you dont just buy to buy, or buy if it leaves you penniless. Or if you know you are moving. But you stand so little to gain and you are so much worse off than 1202 if prices rise. The risk is non-symetrical. You just keep taking an eraser to the side of the graph you don’t like. Fine that’s a bet, good luck. But it doesnt change the fact that your risk is non symetrical and against you. If you made the graph and pretended it was something else, you would pretty much never want your position. No real upside-endless downside. Not the way of the Ze.
“Where did you buy the renter’s policy from? Would love a policy that can have umbrella on top of it–but State Farm (for instance) only sells umbrella on top of car policies or homeowner’s.”
Currently from Amica. Had something similar from Safeco at one point.
“Pretty much the same for HO–which is why going from, say a $250 deductible to a $1000 deductible saves a huge %age.”
I was surprised at how little difference there was in going to a $2000 deductible for auto. Can’t remember delta exactly, this was a while ago, I dropped collision and comprehensive pretty quickly.
Made one claim (for about $500) on the renters insurance, didn’t affect our premium the next year. But I wouldn’t make a habit of it.
lol.. Always choose a high deductible. Man what an insight i got into pricing private healthcare in a non-refusal insurance environ. Basically bracket when you hit 60 is everyone til they die and takes a wild jump from previous bracket, forcing 60yr old to pay for 84yr old. I have no idea how it is in states but wonder if it goes this way – if not already.
“it doesnt change the fact that your risk is non symetrical and against you”
The non symmetry hasn’t been a big deal for the bulk of US locations and time periods. If it is a big deal, then it’s also the wrong time to buy a lot of the time.
It’s one thing if you were a speculator during the bubble, this could really work for you and when the bubble ended, your loss was capped (although I’m guessing it didn’t really work out that well for a lot of speculators, yes I’m sure great for some). But for a regular homebuyer during regular times, I don’t see importance of the asymmetry.
“I was surprised at how little difference there was in going to a $2000 deductible for auto.”
The big claims for total loss and medical are the same, and someone that wants a $2k deductible is someone who wasn’t like to submit a claim for damage $150 over the lower deductible amount anyway.
the importance of the non symetry is to show which side should be compensated because risk should always be compensated for. If you are not being compensated you have the wrong position. This goes for anything.
You don’t need to think the non-symetry is important. One day you’ll just have an ah-ha moment. You just won’t win your way, but go ahead. The other guy can win huge with so little risk. He has to pay to live somewhere anyway. He has all the upside. When expenses were 5500 for a 3500 rental, diff ballgame. 3500 vs 3500 diff game again.
“the importance of the non symetry is to show which side should be compensated because risk should always be compensated for. If you are not being compensated you have the wrong position. This goes for anything.”
Your non symmetry comes from homeowner loss being capped. How often has this been relevant in US? If not often, then it’s not very important and there’s not a lot of risk that needs to be compensated for. (And when it was applicable during bubble, that was very much not time to buy.)
“You don’t need to think the non-symetry is important. One day you’ll just have an ah-ha moment. You just won’t win your way, but go ahead. The other guy can win huge with so little risk.”
The risk of having home prices move vastly against the renter is also very low going by past US experience. (I’m much more sympathetic to you interest risk point, although I also think overstated.) Also, fwiw, I am looking to buy relatively soon, so this is mostly quasi-academic.
ok.. A home out in Greenwich in the 70’s vs today. Manhattan, Cali, paris, rome, monaco, london, rio… That is the importance of the non-symetry. The stop out just lets you sleep at night. Find me this bet 200 times and i guarantee you just 10 wins leaves you giggling. Where is your home run your way.. show it to me. So you have ever so slightly more risk at your best argument, and no home run. Sounds like a dream.
“ok.. A home out in Greenwich in the 70’s vs today. Manhattan, Cali, paris, rome, monaco, london, rio… ”
Okay, but one example, at any point, in Chicago? Do you *really* see Chicago having the 10/20/30 year future of any of those examples? Don’t we here just have too much convertible land?
you know my fear… Developing world placing enormous long term price pressure on product and a simultaneous weak dollar.
Argument more theoretical, i don’t guess where and when. Just like when it happens being on the smiley unlimited upside side. Particularly if my risk was limited and defined. Learned a long time ago you never know when those helicopters are going to fly over kuwait, one day i’ll explain the hurricanes hockey jersey with the name katrina embroidered on the back. I keep that one hidden.
seriosuly.. Golds quadrupled + *what if*same happens to lumber, aluminium,copper, oil… Not saying it will, but it can…. Why have the bet on the other way. Just not going to gain from it.
Also, i’m starting to believe that as we move below parity, if investment goes even better, and it will, large capital will move in for the return. There is sooooo much money out there available for those with no need for it.
“one day i’ll explain the hurricanes hockey jersey with the name katrina embroidered on the back.”
Ah. Yeah, that would have been a *very* good quarter for certain positions. Very, very good. Did you get it from an NHL shop directly, or have the work done aftermarket (b/c, altho I can imagine the NHL being that dumb, it’s hard)?
“you know my fear”
Yeah, but I guess I’m less sanguine about how that plays out for the working stiff buying a commodity housing property. Certainly for someone with mobility and capital, I’m on your side of the argument.
Of course, if your fall-of-the-USD happens, no one will be worried about their credit score being f’d by defaulting on their loan.
Someone sent it to me. Think cosbys made it. I won’t wear it, i won’t throw it out.
Anon.. I just believe you always make the better bet and as many as possible in as many places as possible, in as many things as possible, to the size possible and in the end your wins accumulate and you giggle, but everyone starts somewhere and usually small, so doing the right thing early compounds itself the most dramatically.
The “less risk as renter” view for like properties really only took hold with the perception of bubble. And I believe was correct to view that as greater risk than missing out on next London in Chicago etc. People I know who bought during bubble aren’t thrilled no matter how much their loss is capped (cap also isn’t that central to your London argument).
Other than that, the conventional wisdom has always been to buy when you have some life stability and know what you want to live in.
“Anon.. I just believe you always make the better bet and as many as possible in as many places as possible, in as many things as possible, to the size possible and in the end your wins accumulate and you giggle, but everyone starts somewhere and usually small, so doing the right thing early compounds itself the most dramatically.”
Sure, but for many, it’s one bet, or one bet in lieu of others.
“the conventional wisdom has always been to buy when you have some life stability”
Did anyone predict the magnitude or duration of this downturn? The only people predicting this were called the tinfoil hat crowd back then..even by me.
dz.. We werent close to parity then.
Starts at 1 bet, make it a good one and maybe you play again then again. Who knows. It’s hard as hell to win when you do everything right, make bad bets and they almost always haunt you. This just extends so far beyond R/E. And yes the single most necessary ingredient is still luck. But you have to be set up right when/if she decides to shine.
gringo – you lost me again. You say I keep taking an eraser to the side of the graph I don’t like, but I don’t even know what graph you are talking about.
As you stated, let’s keep this theoretical in that RE prices are at rent parity and that buying makes perfect sense for your situation in life. I get your point that only a couple things can go in favor of the renter: rent increases less than owner’s expenses, or prices/interest rates drop. On the other side, the value of RE can increase. Is your point that this possible increase far outweighs in both possibility and magnitude the factors in the renter’s favor? And, as such, the renter should be compensated for this possibility with lower costs?
Teach me “the way of the Ze.”
“On the other side, the value of RE can increase. Is your point that this possible increase far outweighs in both possibility and magnitude the factors in the renter’s favor?”
Another thing he ignores is that the trendline favors not owning RE vs. owning. Note I didn’t say renting as I don’t care about your life situation for housing.
When trendlines shoot up like they did during the bubble they frequently go under. His opinion that RE valuations will hit rent parity then stabilize and/or rise is laughable.
Who is buying RE these days? Only guys suckered into it by their wife or those with enough money not to worry about it. Oh and the former category has way more than the latter.
Guess what Ze the trend isn’t their friend. I hope that’s enough advice to not confuse you too much. Some stocks go from a P/E to 16 to a P/E of 4, to break it down further for ya.
This purchaser will probably do okay if they aren’t an idiot. But how many 1BDRMs within a mile of here are or near the cost basis of this new owner? Very few.
This is one of the comps on the way down.
Bob… I know your track record trading. Your opinion is as equally valuable to me as your performance. I also remember your cute bond trendline which would have gotten you, at best, sent to back office data entry on the spot.
I will agree that we have not yet hit bottom, and that i would not call an upturn until the trendline breaks. You will find reasons the break is a blip and still stay bearish. Seen it before so many times.
And i’m gettin a feel where the money is going to come from. If this is beginning to shine a light for me, i know it has to for certain others. Mom and pop buying all these condos aint gunna be the buyers.
And RE, you hit the nail on the head. Life offers you few bets that don’t have linear risk. When i see them i take them.