Chicago Market Conditions: Housing Sales at a 4 Year Low for the Month of June
After all the excitement a week or so ago about the “error” in the IAR monthly sales data, the IAR finally released the June data (two days late.)
While everyone expected sales to be lower than June 2010, given that June 2010 was the deadline for closings to qualify for the first time homebuyers tax credit, sales were also under June 2009, when things were looking pretty grim in the overall economy.
From the Illinois Association of Realtors:
In the city of Chicago, June home sales (single family and condominiums) totaled 1,841, up 8.0 percent from 1,705 sales in the previous month and down 27.1 percent from 2,526 homes sold in June 2010.
The city of Chicago year-over-year median price for single family and condominiums in June 2011 was $207,000 down 11.6 percent compared to $234,250 in June 2010; it was up 8.9 percent compared to the previous month of May 2011 when it was $190,000.
Here is the prior sales data:
- June 2008: 2282 sales
- June 2009: 1981 sales
- June 2010: 2526 sales (tax credit sales)
- June 2011: 1841- down 27.1% yoy
This is the monthly median price data (which I assume last year’s data is correct since the data “error” started in November 2010):
- June 2008: $309,945
- June 2009: $242,050
- June 2010: $234,250
- June 2011: $207,000- down 11.6% yoy
The normally upbeat IAR, doesn’t sound like it in this press release. In fact, even the title of the press release (which is usually a bit of a “rah-rah”- is not like that this month.)
“In the city of Chicago, single family homes have made positive gains in pricing due to the competitive atmosphere created by compelling pricing on distressed assets short sales and foreclosures,” said Mabel Guzman, president of the Chicago Association of REALTORS® and a REALTOR® with Envision Real Estate LLC, Chicago. “We are seeing multiple offers on location-specific properties. Chicago condos continue to outpace single family by 30 percent for the second month evident not only in units, also in downward price movement. In the coming months, we will be observing the economic pressures which will likely lead to an increase in distressed assets to the market.”
For the statewide story- there appears to be slightly more optimism.
“The housing market has seemed poised for some modest rebound for a number of months—foreclosure activity is down, interest rates are very low and the variety of properties for sale is extensive—yet the economy appears unable to mount a sustained recovery and this has dampened consumers’ confidence,” said Dr. Geoffrey J.D. Hewings, director of the Regional Economics Applications Laboratory (REAL) of the University of Illinois. “Consumers are also unimpressed by the ability of the federal government to come to agreement on the deficit and raising the debt ceiling, diverting attention from the major issue of regenerating the U.S. economy.”
Adds Hewings: “The forecasts indicate that the housing market will reach its 2011 annual peak in July. Comparing the housing market in 2011 with 2010, the sales volume in the third quarter of 2011 is expected to surpass the third quarter of 2010 by 30 percent. This means the effect of the homebuyer tax credit will finally fade out in Illinois starting July 2011; some of the increase in the annual sales can be attributed to the significant decline that took place in 2010 when the effect of the withdrawal of the housing credit resulted in a sharp drop in housing sales for several months in a row.”
Illinois Home Sales Follow Seasonal Pattern through June [Illinois Association of Realtors, Press Release, July 22, 2011]
check out the interactive map:
http://www.reuters.com/subjects/housing-market
what baffles me is the huge price drop in chicago compared to places like LA which had more inflated prices.
I’m surprised no one mentioned this story from a few weeks back…
http://www.nytimes.com/2011/07/08/us/08cncforeclose.html?scp=8&sq=chicago%20real%20estate&st=cse
U.S. Moves Toward Home ‘Rentership Society,’ Morgan Stanley Says
http://www.bloomberg.com/news/2011-07-20/u-s-moves-to-rentership-society-as-owning-tumbles-morgan-stanley-says.html
“The national rate, which stood at 66.4 percent at March 31, would be 59.7 percent without an estimated 7.5 million delinquent homeowners who may be forced into renting, according to Morgan Stanley analysts led by Oliver Chang. The lowest U.S. homeownership rate on record was 62.9 percent in 1965, the first year the Census Bureau began reporting the data. ”
…
June 2007 was 3162 and you know 2006 and 2005 was pretty high so this has to be the lowest number in many years. Hopefully G can tell us how long.
Gary- I’m assuming it was among the lowest going back to 1990 (as far back as the MLS records go.) But since I don’t have the data- I couldn’t put that in the headline.
But I was surprised at how bearish this press release was- especially about Chicago. It basically says that foreclosures are going to depress the market for quite some time.
“But I was surprised at how bearish this press release was”
And what does it mean when perma-bulls turn into bears…?
I posted some historical June data last week in the May market conditions thread.
“what baffles me is the huge price drop in chicago compared to places like LA which had more inflated prices.”
I’m guessing that LA already saw a huge drop in prices previously. Chicago seems to be losing value more slowly than in other states, which lost value quickly.
“I’m guessing that LA already saw a huge drop in prices previously.”
Not really, as can be seen by miumiu’s links. California prices are still quite high compared to the baseline, which is suprising given that it seemed to be the epicenter of the housing boom.
What’s somewhat interesting is that the housing boom and bust seemed to invalidate the old maxim about real estate being local. Yet when you look at the details of the bust, various markets have all reacted quite differently: California had a large boom but to date only a moderate bust; Phoenix, Las Vegas and Florida had a huge boom and similarly spectacular busts; New York and DC had moderate booms and only a slight bust; Detroit had no boom but still had a massive bust; and places like Chicago and Atlanta had moderate booms couple with moderate to somewhat severe busts. (Obviously, everything in the last sentence is a generalization and I’m sure we can quibble over the characterizations.)
“California had a large boom but to date only a moderate bust”
LA is down 38% from peak, SD down 38.3%, EsEff down 39.5%. Nothing much “moderate” about that. (Chicago down 34.7%, for comparison)
“what baffles me is the huge price drop in chicago compared to places like LA which had more inflated prices.”
Am I reading the interactive map correctly…that we are back to 2001 pricing on average?
I do think Sad_at_Plaza440 makes a good point that real estate is no longer just local. I think its because of the individual investor-purchasers who tried to make money. There really were not individual invstors-purchaes in NYC, DC and LA because the prices were much higher (much easier to be a flipper in Miami, Vegas, and Chicago where prices are lower) and in NYC many buildings are so regulated that you have to be owner occupant or the flip tax if you sell soon eats your profits. This kept speculation down in NYC, DC and LA and prevented the huge busts you see in Vegas, Chicago and Miami.
Hmm so prices are going to continue to decline until they become affordable for the peoiple who live there? You mean all those big law and big finance guys arent going to buy all the houses up forever?
shocking
Hmm… I reading was the percentage of the map to be this year over last. Maybe I’m reading it incorrectly. If you look at LA, for instance, it looks like prices have gone up slightly since 2000.
I think the map is misleading at any rate though.
Ugh. I meant, “I was reading.”
“LA is down 38% from peak, SD down 38.3%, EsEff down 39.5%. Nothing much “moderate” about that. (Chicago down 34.7%, for comparison)”
Well, depends on what numbers you’re comparing. If you’re looking at percentage increase over the 2000 baseline, then LA is still up 68%, San Diego 55%, and SF is 32%. Chicago is only 10% higher, which is less than inflation. To put the point differently, LA and San Diego (and maybe SF) still appear to have retained some of the price increases from the boom despite the bust, while the bust may have put Chicago prices below where they would have been expected to be with no boom.
“This kept speculation down in NYC, DC and LA”
Lack of speculation in LA and DC? Really?
“Lack of speculation in LA and DC? Really?”
Yep! Had something to do with the Germans bombing Pearl Harbor.
ps: “NYC” for case-shiller purposes, includes like 40% of New Jersey, a third of Connecticut, NY half way to Albany and a county in Pennsylvania.
Sales volume is down but what about listings? The only ,meaningful data would be number of sales divided by the number of listings. Once again u guys prove that u don’t understand how to interpret/analyze data
On the brightside. When you are a 3rd world country you’ll get to see stuff like this too. The new Chicago Police Department.
http://oglobo.globo.com/fotos/2011/07/25/25_MHG_sp_bbbuuuflllos.jpg
I actaully thought the data would have been worse. I know several friends who have taken their units off the market because they know what they can sell them for is 10-15% less than their mortgage balances, and they don’t want to deal with that.
“Sales volume is down but what about listings? The only ,meaningful data would be number of sales divided by the number of listings.”
Why? The number of listings is not an independent variable, but instead is dependent on prices and other real estate conditions. If the real estate market is doing poorly, one would expect the number of listings to be lower (for reasons such as those in Dave M’s post). So a depressed real estate market would have a lower number of both listings and sales. The ratio of sales to listings may be the same in both boom times and depressed conditions, which indicates that the ratio doesn’t tell you much about the health of the real estate market.
This is the bottom. There are plenty of properties under contract, plenty, and the July and August numbers are going to pop! The question is whether enough new properties will be listed in August and September to satisfy the new found demand in the market. Demand is up, way up, and anyone who watches the area can see that Chicago has more pending contracts now than in a long time, and realtors are busier than they’ve been in years
“Lack of speculation in LA and DC? Really?”
Yes, I lived in DC and NYC during the boom. Individual buyers speculated on a place they planned to live in (i.e., bought condos off plans and in edgy but turning around neighborhoods) but they didn’t by 5 units they planned to rent out. Many good developers in DC limited the amount purchesed for investors whereas most Chicago developers did not. Speculation occured in DC but not nearly as much as here.
“Demand is up, way up, and anyone who watches the area can see that Chicago has more pending contracts now than in a long time, and realtors are busier than they’ve been in years”
HD is on to something. Our neighbors had around 10 showings for their condo. Three turned into offers. They are under contract after less than a month on the market. Apparently fInancing is an issue for the potential buyer.
Moreover, the developers in DC were much smarter than Chicago…they turned around entire neighborhoods first (got coffeehouses and shops in before they sold the units which added value and stabilized the neighborhoods). For example, Jim Abdo of abdo.com changed the entire 14 street corridor from prostitutes/drug dealers to high end retail and condos. Chicago developers build condos then get commercial in. When the neighborhood doesn’t develop, the owners are more apt to walk away.
yeah everyone is going to convert their AAPL stock to a nice piece of chicago real estate… can’t live in a stock certificate am I right people?!
“Speculation occured in DC but not nearly as much as here.”
1. What’s the condo/SFH market split in *Metro* DC (don’t care about the District on it’s own)?
2. Are those two posts a tacit admission that just maybe LA *did* have a ton of specu-vesting?
Some of these comments offering rationalization for Chicago’s RE woes are really silly.
DC and NYC have much stronger real estate because they have much stronger economies, and its harder to build. It has nothing to do with getting coffeehouses in new buildings or other nonsense.
Chicago RE has been one of the worst national performers since 2000, because the local economy has been one of the worst performers since 2000.
And, Chicago is developer-crazy. This city approves anything proposed (the bigger, the begtter), and often (through TIF-financing or other means) actually subsidizes the construction of unneeded housing. We’re like the Wild West.
Even now, there are unneeded buildings going up. Overall rental vacancies top 10% (they’re less than 1% in NYC) yet developers keep adding units. Then we’re shocked when new construction condos sell for $150k, or when you can rent in Lincoln Park for $750.
In contrast, NYC/SF/DC are NIMBY-land, and new buildings survive a gauntlet of public review. Developers have to provide mandatory subsidized housing, they have to renovate nearby subway stations, build new schools, etc. It’s a totally different mindset.
And the claims of “this is finally the bottom” have been stated on CC in practially every thread for the past three years. There appears to be no evidence (yet) of any semblance of a “bottom”.
Another issue is the local hype machine. Everyone says that families are forsaking the suburbs for the city. Really? It’s irrelevent to the overall numbers, but I find the market for newer 3-bedrooms in East Lincoln Park/East Lakeview is absolute garbage, with little interest. I’m getting very little attention on a 3-bed in a prime boutique building. Where are all these alleged breeders? Still moving to Winnetka, for the most part, IMO, especially once school age looms.
“…changed the entire 14 street corridor from prostitutes/drug dealers”
Thanks for the memories.. The 2am death defying runs for Popeyes. It was something to see.
“1. What’s the condo/SFH market split in *Metro* DC”
a teeny tiny number.
LA prices still seem high to me, like this recent sale in Hancock Park:
Sold on 07/14/2011
$1,125,000
412 South MANSFIELD Ave
Los Angeles, CA 90036
BEDS: 3
BATHS: 2
SQ. FT.: 2,001
$/SQ. FT.: $562
Dimensions: 50×135
http://www.redfin.com/CA/Los-Angeles/412-S-Mansfield-Ave-90036/home/7091681
From the NY Times article:
“Foreclosures of western properties tended to be in sought-after suburbs, he said, but in Chicago they came in older, economically weaker neighborhoods…foreclosures in the Midwest tended to be in neighborhoods where the property might have been more vulnerable to neglect or vandalism.”
This is why after 2 years of poring over the MLS on a daily basis I found few viable options at low prices in areas where I actually wanted to live. I was flexible on location looking as far north as Jefferson Park and as far west as Humboldt Park around Chicago Avenue and Portage Park around Irving Park Road.
There was a West Side condo I liked a lot. There were some low comps from a couple of foreclosures in 2008, but no one else absolutely had to sell, so nothing has closed that cheaply since. There were a couple of units which came on the market last year but the owners were not interested in low-ball offers and ended up de-listing.
Developers don’t bring in Starbucks and other shops. Retailers decide where to locate. You could build a new shopping center in Austin, it will sit mostly vacant for a long time.
I’d like to see more granular data in the greenzone. I suspect the west and south sides are really more of a factor in those numbers.
There is demand to buy from first time buyers. The biggest hurdle is the down payment requirements although 5% down is still doable. Most have the funds but I think people are just skittish about pouring all their cash into a house with employment instability. So it isn’t a matter of just saving up for a down payment, it is saving up for a down payment on top of having a lot of cash set aside for potential job loss and emergencies.
I am also seeing a lot of contract failures – way more than previous years. It isn’t uncommon for someone to make three or four offers before going to contract and then a much larger percentage than I am used to don’t close for a variety of reasons. It used to be when a client told me they made an offer it turned into a deal and closed. Now I expect three or four “offers” before anything actually happens.
A TON of move up buyers are sitting still trying to avoid taking a hit on their condos.
“[Hancock Park is expensive]”
Yeah, this one seems pretty expensive, too:
http://www.redfin.com/IL/Chicago/1851-N-Bissell-St-60614/home/28630334
Beds: 3
Baths: 2.5
Total Sqft: 2,830
Lot Size: 2,975
Tax (2009) $20,688
betcha groove could dunk on that backyard hoop (on bissel)
“Sonies on July 25th, 2011 at 9:32 am
yeah everyone is going to convert their AAPL stock to a nice piece of chicago real estate… can’t live in a stock certificate am I right people?!”
Funny you say that. My friend just called me on Friday to tell me he finally sold his AAPL, and wanted to invest the proceeds in real estate (on the east coast). I kid you not.
“I’d like to see more granular data in the greenzone. I suspect the west and south sides are really more of a factor in those numbers.”
I could have sworn that within the last few months the Chicago Tribune had an analysis of home price declines by zip code, but unfortunately I am not able to find it now. As I recall, 60614 had dropped by only about 20% from the peak, but most other green zone areas had dropped by around 30%. The low income west and south side areas had dropped by 40% (though I don’t recall looking at the far southwest or northwest enclaves).
“Vlajos -Developers don’t bring in Starbucks and other shops. Retailers decide where to locate. You could build a new shopping center in Austin, it will sit mostly vacant for a long time.”
You could not be more WRONG. The developers did it by:
1. “developing clusters of buildings rather than buying a single building to stand as an island in the middle of a distressed area helps him act as a catalyst for change” He develops multiple properties at one time on the same block. Small Chicago developers don’t do this…they put up three flats next to deteriorating frame houses.
2. elists other developers to develop entire blocks together… several developers joined forces…so an entire neighborhood is transformed. This made the area more attractive businesses.
3. They did it by selling commercial first floor space for a huge discount (and built that loss into the price of condos which sell for more when the neighborhood is developed.)
4. He designs unique high end units, not the cookie cutter crap that many Chicago developers build. His units are unique and if he has enough commercial tenants nearby, he sells at a premium.
See the following articles explaining this…and one showing Abdo is doing this even in the down real estate market:
http://www.abdo.com — see the In the press section
http://www.abdo.com/retail.html
http://bozzuto.com/services/management/news-and-press/press-releases/27
It wouldn’t work in Austin but it would work in transitional neighborhoods — area around Cabrini between Chicago and Division and Ukrainain Village. For example, there are buildings trying to sell on Larabee just north of Chicago Avenue. If the developers had enticed business on the first floors of these buildings FIRST and discounted it…and made nicer units then the condos would be more attractive. The location is so close to downtown, but lacks walkable amenities (short of drycleaners, a coffee house that closes way too early, Japonais (too expansive for most) and a single sandwich shop.). The newest buidings that are suffering losses front Larabee and have vacant commercial space. The developers should have practically given away the commerical space by getting TIF money from the Alderman (this is a better use than getting another grocery store a block from an existing Jewel) or pricing the loss into the subsequent price of condos and the units would have sold better. Instead, Parkside of Old Town, the Brown clock building and the two smaller white buiding are having a hard time selling units. Its not just the former “Cabrini” legacy, its the lack of walkable middle class amenities….
I like the Hancock Park house in LA much more than the Bissell one, and it even sold for less. It also looked like the listing was very professionally done, and the property was well staged. Realtors in Chicago listing $1M properties should take note of how that one was marketed.
Lincoln Park June condo/TH closings
1988 92
1989 79
1990 97
1991 111
1992 96
1993 110
1994 140
1995 118
1996 131
1997 144
1998 156
1999 135
2000 135
2001 142
2002 138
2003 167
2004 186
2005 205
2006 164
2007 186
2008 110
2009 97
2010 117
2011 77
Lake View June condo/TH closings
1997 139
1998 176
1999 189
2000 221
2001 216
2002 204
2003 244
2004 260
2005 328
2006 320
2007 303
2008 242
2009 151
2010 214
2011 143
Near North June condo/TH closings
1997 168
1998 227
1999 192
2000 207
2001 208
2002 239
2003 254
2004 414
2005 371
2006 408
2007 321
2008 260
2009 175
2010 265
2011 203
Near South June condo/TH closings
2005 96
2006 168
2007 118
2008 143
2009 56
2010 71
2011 41
These sales numbers are abysmal given the number of additional condo/TH units built/converted during the bubble years.
Looks like Near North may be the only area that may have more condo/TH closings than last year….assuming closing continue at the same rate summer/fall.
The price adjustment pattern in Chicago will be very similar to that experienced in California.
In the more desirable areas of CA (LA, SF, SD, beach cities), there was some decline but nothng gruesome. In the the more leveraged areas of CA (Inland Empire, Central Valley, Fresno, for example) the decline in pricing was far steeper–and the recovery, if ever, is much less assured.
I think it will play out similarly in Chicagoland (and even at a more micro level within the city). Areas with fundamental advantages that drive demand (access to transit, the lake, good schools) will overall perform better.
The sobering lesson from the mid-1990s slump in CA real estate (the one before the bubble started), is that the recovery can be U-shaped, not V-shaped. We may be at or near the bottom, but that is no assurance that improvement is around the corner. More likely, it is 3-5 years away.
job growth is probably the one thing that can change all this.
G–those are great numbers. You can almost see the bubble growing and then exploding. Interesting to note that the tax incentives in 2010 seemed to actually provide the desired result.
“I like the Hancock Park house in LA much more than the Bissell one, and it even sold for less.”
Me, too.
” tax incentives in 2010 seemed to actually provide the desired result.”
the desired result was a temporary blip?
CH–LOL! Yeah, a short term tax incentive for this mess is like trying to clean up Saturday’s rainstorm with a roll of paper towel.
“the desired result was a temporary blip?”
No kidding, here’s the dropoff in volume for June to July last year for condo/TH closings:
Lincoln Park -35%
Lake View -62%
Near North -33%
Near South -48%
I dunno, that 8k really helped me furnish my new place
It likely inflated your purchase price by much more than $8k. In other words, enjoy paying interest on that furniture for the life of your low-down fha loan.
It’s amazing how small the spread is right now between conventional 80% and low down FHA rates. What happens if THAT goes away?
G (and everyone else), sales volume doesn’t mean anything by itself – you have to look at it in context with the number of listings. For those that don’t understand, 3 sales out of 10 listings (30%) is VERY different than 3 sales out of 100 listings (3%)!!
Rick (and everyone else), prices/volume are heavily tied to credit availability. Right now, the government has a tight grip/control on this credit availability for mortgages – but as soon as they loosen their grip (and they will), credit will flow again (as this is the main way banks make money) and real estate will get re-inflated. This is all going to play out in the next 5-10 years. We are entering a period of slow growth/appreciation for the next 2-3 years – but after that, things are going to go up much faster. My advice would be to buy something now (or in the next year) otherwise you may be renting for the rest of your life!!!!
“3 sales out of 10 listings (30%) is VERY different than 3 sales out of 100 listings (3%)!!”
But in brokerage commissions. Exact same thing!
I read the same article/graphic as sad_440 is talking about; I saw it in print.
“It likely inflated your purchase price by much more than $8k”
not in a declining market. there has to be some dead-weight loss and the seller will still bear some of the downward pricing pressures plus the tax credit had barely any market effect on some (8K purchases). those tended to be the market movers. the ones that came after had tighter inventory and could have borne some of the increased prices.
clio to spur the market you should offer 8k grants to home-buyers in Chi!
” but as soon as they loosen their grip (and they will), credit will flow again (as this is the main way banks make money) and real estate will get re-inflated.”
Fannie and Freddie will never get wound down? I don’t think the Tea Party is going anywhere, more people are understanding its message, so I doubt we’ll see the past RMBS ponzi scheme repeated at the same level as during the bubble.
“there has to be some dead-weight loss”
Is that the opposite of dead-cat bounce?
Marcus, ARE YOU KIDDING ME?!!! Greed does not die – greed will always be around – and greed will ALWAYS have the upper hand. This is not about morals, it is about money. There ABSOLUTELY will be another bubble – just wait about 10 years.
Sadly, clio is right about greed not dying. Anyone remember the S&L crisis? Wasn’t intemperate lending supposed to have ended in response to that debacle?
““there has to be some dead-weight loss”
Is that the opposite of dead-cat bounce?”
I thought it had something to do with zombies. No?
Rick – why is that sad? Remember – greed is good!!!
clio–I think some of the chatterati will be sad that you are right about anything.
clio–but greed is subject that many (most?) would agree you have demonstrated expertise in.
“there has to be some dead-weight loss”
“Is that the opposite of dead-cat bounce?”
“I thought it had something to do with zombies. No?”
I’m not entirely sure that zombies *necessarily* lose weight. They eat living flesh and/or brains, right? I don’t know if their digestives systems are functional. Maybe everything just sits there, with that weight gain potentially offset by the bits falling off.
I trust revassal will sort all of this out.
Actually G I don’t really care, and I purchased before the 8k giveaway was announced, and probably would have purchased regardless.
Yes, of course I wish I was buying now instead, but oh well I have got over 2 years already of fine living in my place, guess i’m doomed for a life of poverty and paycheck to paycheck living since I didn’t time my real estate purchase exactly right!
damn zombies; of course the buyer fronts the money in the transaction but to assert that buyers [sonies in particular] didn’t profit from the 8k (to what extent; assuming of housing/mortgage liabilities that’s debatable] [ and that sellers assuredly gin-up prices to take all money off the table and into their pocekts seems to be the wild baseless statements that criticizes in clio.
my of taking tax-burden analysis (and applying to tax-credit) might be simplistic but G’s stmt doesn’t back-up his usual spot-on record.
moreover his comment was said in poor taste [anti-buyer sentiment]. I rather him gloat about his data/forecasting than acerbic comments.
In hindsight I should have taken that 8k and bought 4000 shares of Ford Stock too… but oh well… At the time I really needed a new couch and coffee table and a rug and a bunch of other crap too.
That rug really ties the room together, I think you’d like it.
Well there is also enjoying life and being happy. I’d rather have less money when I am 70 and enjoy life now.
Rev, Did you forget about the 28:1 leverage for fha? I never said the seller took all, btw.
couldn’t agree more, miumiu – people put WAY too much emphasis on saving and putting things off (plans, etc) for retirement – they don’t realize that by the time they reach that age, they are not going to be able or willing to do all the things they expected. Also, they end up sleeping 10-12 hours a day – so who cares if you have millions saved by then – you can’t enjoy it!!!! …my feeling is to live today and, when you get terminally sick, just check out on your own terms.
G – please admit when you are wrong – it is a part of growing up….
“Well there is also enjoying life and being happy.”
I have to thank the CCers for helping me realize that this part of the equation can’t be found in the rent vs. buy spreadsheet.
“#
Rev, Did you forget about the 28:1 leverage for fha? I never said the seller took all, btw.
”
true, your right, my bad, but what you meant [$wise] is worst that getting taken for 8K. and still doesn’t mean ur stmt [‘likely’] is true wrt sonies [or other 8Kers].
“That rug really ties the room together, ”
Are all your plants dead, too?
“Well there is also enjoying life and being happy. I’d rather have less money when I am 70 and enjoy life now.”
Before I left school I decided my approach would be the exact opposite. So easy to make sacrifices when you are young, so easy to recover from failures. When you get older you will not have time to recover and it will be the last moment in your life you will be feeling the need that you want to be working. Also like Sabrina says COMPOUNDING!!!! If you start early it eventually takes the lifting off your shoulders and starts to do all the work for you.
More blah blah stupid, sound good, touchy-feely, self-serving at the moment, stupid advice.
“Well there is also enjoying life and being happy”
Best times I ever had in my life.. was back when my friends and I were all broke.
ze – I think you are wrong – nobody has any guarantees that they are going to live (or be healthy) to any given age. Of course you have to save, but people take it to a ridiculous extreme. Sit down, figure out how much you are going to need (realistically – you are NOT going to travel the world, take classes, etc – esp if you don’t do that now), devise a plan, save that amount per month and then stop thinking about it. Spend the rest of what you have and enjoy now.
We’re in a deflationary spiral which means every dollar saved today pays dividends tomorrow in terms of increased purchasing power.
It used to be my F U money # was like $2.5MM…these days it’s like $1.5MM…real estate in Bermuda has fallen a bit. 😀
Oh yeah & I don’t give a shit if your F U money # is higher or lower.
“We’re in a deflationary spiral which means every dollar saved today pays dividends tomorrow in terms of increased purchasing power.”
You know my opinion 🙂 …and so the battle of wits has begun. We both drink, and find out who is right… and who is dead.
Clio.. I’ll agree, except most people need to be conservative cause one hiccup along the way and back to start.
“and so the battle of wits has begun.”
Recently found a place I’d buy if I had the 20% downpayment and a bit of job security. I think the 20% downpayment is certainly doable in a couple years. It’s the job security I’m more worried about.
MLS 07862303.
anon if you start seeing crumpled up Hamm’s cans, hearing fireworks and loud people at all hours and illegal campfires..you know Bobbo has moved into the ‘hood.
Even the kitchen is perfect: I don’t want a redone kitch or anything like that as who needs a regular oven anymore? Total waste of space. Advantium, sharp supersteam and a small toaster (only for bread/bagels) do everything big expensive ovens do and then some. And an under counter kegerator can make better use of the space.
I bet it gets picked up pretty quickly though and closes at or above ask. Plus how hard can it be to build a garage? Can’t be rocked science and its not like I have clio’s lambo if I fuck up on the structural integrity of the garage roof lol.
Yes, I always learned that the problem with america is our outrageously high personal savings rate
“I bet it gets picked up pretty quickly though and closes at or above ask. Plus how hard can it be to build a garage? Can’t be rocked science and its not like I have clio’s lambo if I fuck up on the structural integrity of the garage roof lol.”
People want new. That pretty much sums it up.
We’ll have to watch this one and see what happens.
“I’d rather have less money when I am 70 and enjoy life now.”
You might change your mind when you are old and scared about simple things: like paying for your medication or not being able to buy a grandchild a birthday present (because you can’t afford it.)
Bob – I was born and lived in the house two doors east of your “dream house” until I was three. It has turned into an awesome neighborhood, extremely convenient and very family friendly. 459 is a great price (this place would have been sold for the mid-upper 700s in the mid 2000s
They also want turn-key and I have a feeling most of the people willing to overpay for real estate wouldn’t even be up for a DIY project like building a garage.
Bob,
Agree that Nelson will go very quickly.
Just save up on the Hamms and fireworks and buy now — life is uncertain, you never know when you’re gonna go!
“There ABSOLUTELY will be another bubble – just wait about 10 years.”
Yes- but not in housing.
I agree with bob this will go FAST. Someone will spend $30,000 to redo the kitchen right before moving in, especially in a neighborhood like this. This property has a long term owner, since the mid-1980’s and very small mortgage.
“459 is a great price (this place would have been sold for the mid-upper 700s in the mid 2000s”
Um…no.
clio: I have friends that live nearby and it really opened my eyes up to this gem of a hidden neighborhood.
“anon if you start seeing crumpled up Hamm’s cans, hearing fireworks and loud people at all hours and illegal campfires..you know Bobbo has moved into the ‘hood.”
Dude, I’m always killing on that non-neighborhood, because I hate the traffic so much. I’m as likely to be disturbed by you at that address as I am Milkster’s friend from the Uptown McD’s bus stop.
But, just had occasion to stop into that Foremost and had forgotten how good their prices are on some things, and their selection has gotten a lot better. That center is in serious distress now, tho. Prolly be back to Foremost pretty soon.
The garage is not DIY, not for some accountant or lawyer who wants a SFH under $500k in lakeview. Garages are only like $15,000 or $20,000, usually built with home equity loans, which are nearly non-existent nowadays.
Don’t worry, the government will take care of us when we’re older.
Don’t forget the vintage 2/2 cottage just one block away that finally sold after 2 years on the market. It was renovated AND had the garage.
Sold for $530,000.
http://cribchatter.com/?p=10672
“Someone will spend $30,000 to redo the kitchen right before moving in, especially in a neighborhood like this.”
FHA 203k? I’d build the garage first.
I’m also starting to see total wrecks in/near this area for under 200k. But they’re teardowns. Shows how much the financing has dried up for builders.
Ze, don’t get me wrong I am not advocating irresponsible spending and being broke when one is old, but I don’t want to leave multi millions to my kids and live like beggars. As for having fun while broke, it gets old after a certain age. Now I want a decent place, quality food, clothes and expensive hair cuts and cremes as in thirties one needs more help to keep up the looks : )
Oh, and $10k will get you a nice garage. Go cheap, you can prolly find someone to do it for $6k.
“Don’t worry, the government will take care of us when we’re older.”
Not in this country unfortunately.
“Garages are only like $15,000 or $20,000, usually built with home equity loans, which are nearly non-existent nowadays.”
Those are fancy garages.
Home equity loans aren’t especially rare, you just can’t have less than ~30% equity after taking the loan.
anon(tfo) : How could you fix the exterior of this bungalow? I tend to respect your architectual opinion (especially after you used the term asphalt roll siding which I’ve been wanting to know for YEARS)
http://www.redfin.com/IL/Chicago/3655-N-Avers-Ave-60618/home/13457018
there’s been a lot of talk about the villa lately.
Rip off the vinyl or aluminum siding and put cedar shakes?
What would you do with the roof of the porch?
“Garages are only like $15,000 or $20,000, usually built with home equity loans, which are nearly non-existent nowadays.”
My current political hobby horse–all of the R leadership voted FOR medicare part d, yet it is not even open for discussion to repeal it. Until one of them suggests it, I refuse to believe they are serious about the deficit.
I guess rare is the wrong word, but home equity withdraw is strongly negative these days.
http://www.calculatedriskblog.com/2011/06/q1-2011-mortgage-equity-withdrawal.html
“Home equity loans aren’t especially rare, you just can’t have less
than ~30% equity after taking the loan.”
“The garage is not DIY, not for some accountant or lawyer who wants a SFH under $500k in lakeview. Garages are only like $15,000 or $20,000, usually built with home equity loans, which are nearly non-existent nowadays.”
Okay I am capable of doing a redneck garage with gravel & 2x4s but I know the city would bust my chops on it so likely not feasible. A shanty garage might even be possible in non-GZ hoods but doubtful here.
If I can save the 20% downpayment I don’t think another 20k is a huge obstacle. 20k is easy to save up. The 92k downpayment notsomuch.
“You might change your mind when you are old and scared about simple things: like paying for your medication or not being able to buy a grandchild a birthday present (because you can’t afford it.)”
I agree with you Sabrina on securing ones old age, but I don’t want to be like some people who nickel and dime and don’t enjoy themselves. Then they turn 70 and have loads of money but by that time they are so used to being cheap that they cannot spend any more and even if they would there is not much that is fun for them besides playing bridge with their friends. Believe me I know quite a few of those people.
In fact I know shanty garages are possible in non-GZ hoods because when I first moved to the city I lived on the southside and the maintenance manager for my building built his own shanty garage.
He was also a hardworking Mexican skilled in labor so naturally proficient in such things but I doubt he spent $5k all in for it. But what flies in Woodlawn definitely wouldn’t here.
Can’t you just put up one of these?
http://www.costco.com/Browse/Product.aspx?Prodid=11538115&whse=BC&Ne=4000000&eCat=BC|50126|49275&N=4047221&Mo=18&No=1&Nr=P_CatalogName:BC&cat=49275&Ns=P_Price|1||P_SignDesc1&lang=en-US&Sp=C&hierPath=50126*49275*&topnav=
HD:
First, to not offend the architects here (except maybe spinoza), I wouldnt call my opinion ‘architectural’; not sure what to call it, but I have enough respect for the professional to not pretend to be in their sandbox.
Second, it *really* depends on what is underneath and its condition, and whether the budget allows for redoing the white vinyl/aluminum at the same time.
With that, based only on a brief look at the pix, I dont think cedar shakes would look right, but that’s personal preference–I don’t think cedar shakes are an appropriate Midwestern exterior in general. I’d lean toward wider board siding–whether wood or hardie board or whatever, and coordinate it with your garage. Brick would be clearly better tho.
The windows are a real distractin, and I’m not sure what your issue with the porch is, other than the huge expanse of white, which “just” requires replacing the soffit with a wood soffit and having it painted a coordinating, appropriate collor.
“Best times I ever had in my life.. was back when my friends and I were all broke.”
very true
Note the car is jutting out…and states:
“Lifetime’s 11’ x 21’ shed is big enough for your riding lawnmower, recreational vehicles, and all your lawn and garden equipment! ”
I don’t envision myself commuting on a riding mower. Don’t even need a gas powered push one with that lawn, oldskewl push will do (if I even feel like cutting the grass).
DO need a place to keep my wheels away from the parking n_zis and fuzz. Lets just say my wheels “aren’t exactly street legal, so keep it on the down low”.
So not only lacking space for a vehicle, if I’m dropping near a half mill I can swing an extra 20k for a garage with a rooftop “gator” deck.
Noone seems to have them though makes me curious. Seems like an excellent way to get more bang out of your small outdoor space. I suspect there must be some city laws against gator decks as I know that developer in B’po village got in trouble for them without a permit.
So I guess you gotta throw the alderman or some bureaucrat some bucks or something for that gator deck?
“Can’t you just put up one of these?”
Still want the concrete.
“So I guess you gotta throw the alderman or some bureaucrat some bucks or something for that gator deck?”
just have to overbuild the thing for the live load on the roof. It’s a lot more expensive than your basic, no load on the roof, garage.
“just have to overbuild the thing for the live load on the roof. It’s a lot more expensive than your basic, no load on the roof, garage.”
Well I’m surprised with lots trading at what they were there weren’t a lot of them built during the bubble.
“I don’t envision myself commuting on a riding mower. Don’t even need a gas powered push one with that lawn, oldskewl push will do (if I even feel like cutting the grass).”
More than big enough for the civic. Garage or not, gatordeck or not, if Bob buys a GZ-ish SFH, *with* a decent-ish CPS elem, before I do, I really might implode.
I know with taller outdoor spaces the fire code requires two points of exit so maybe that’s it but not sure if it applies to gator decks. Would seem to be fire hazard overkill at this height but this city has a lot of remnant fire laws due to the big one.
“Well I’m surprised with lots trading at what they were there weren’t a lot of them built during the bubble.”
Probably 2/3s of the one-off new-con SFHs within a reasonable walk of my house have them. Both of the brand new houses on my alley do, as well as one of the three other new garages built since we moved in.
“if Bob buys a GZ-ish SFH, *with* a decent-ish CPS elem, before I do, I really might implode.”
“Stay positive pal, most people they lose, they whine they quit. But ya gotta be there for the turns. Everybody’s got good luck, everybody’s got bad luck. Don’t run when you lose…don’t whine when it hurts…”
Don’t worry it won’t be me. Lucky would be if I had the downpayment now. But haven’t seen a deal like this in a nabe like this ever since I moved to this city. Not a turnkey livable one. Look at this place, the walkability and all and compare it to what you get for the same price even on the shithole BoWash corridor east cost.
The government does not realize that the people they are really hurting with these mortgage regulations are the middle income people. As Bob points out, the downpayment is the biggest hurdle (and would be for most middle income people) – so what is the result? – some arrogant asshole like clio swoops in, buys this place as an investment, charges 3000-3200/month rent and waits until the next boom when he sells it for the mid-upper 700s.
Yes- Clio- I’m sure you’re going to buy up all the middle class housing in Portage Park, Galewood etc. and then charge insane rents. Sounds like a plan!
I don’t understand the whining about the 20% downpayment. It was required for about 65 years. Generations of Americans somehow managed to save it and buy homes. They were all middle class and they thrived.
“I don’t understand the whining about the 20% downpayment. It was required for about 65 years.”
The difference is that other things are much more expensive now and takes up a greater percentage of one’s income:
1. education
2. child care
3. insurance
4. medical care
5. food
6. clothing
7. gas
8. lawncare
In addition, technology has given us things that our grandparents didn’t have (such as computers, cell phones, etc. ) and these things are expensive to buy, maintain, fix, etc.
The bottom line is that it IS getting harder and harder to save 20% for a downpayment. It WAS easier to do so in the past – honestly, what expenses did people in the 1970s have? They had 1-2 TVs, a wall phone and very little technology to spend money on. Education, healthcare was proportionately much cheaper and people actually had time to do their own lawncare, cooking, cleaning, and child care. That no longer is the case.
“charges 3000-3200/month rent”
You mean charges $1900-2200/month rent.
A 3/1 ranch SFH nearby rented for $1,600 ask (dunno what was negotiated). That should give you a baseline for what rents will support. Your rent quote is crazy talk for a non-new structure like the one I posted.
“In addition, technology has given us things that our grandparents didn’t have (such as computers, cell phones, etc. ) and these things are expensive to buy, maintain, fix, etc.”
The thing is when 20% was required the financial system was protected from downturns like we’re in now. Valuations were not allowed to rise rapidly as they were more in tune with incomes and savings and even if they did fall the owners were on the hook for the first 20% decline, and likely more with fully amortizing loans given that RE takes time to move.
The reason we had our financial crisis is too many owners with too few skin in the game, leaving the gaping gashes to the financial system and a financial landscape littered with failed and insolvent financial institutions.
Clio I want you now to consider the property I posted is now purchasable with an FHA loan covering the first 410k. Meaning a 10.6% downpayment for the max FHA loan.
On October 1 of this year, only the most stellar credit scores will be able to purchase a property like this with only 10% down when the FHA loan limit falls. Primest of the prime–not the occasional late payment crowd.
Clio if you have a 670 FICO score you’re going to need 20% down on the property I posted come October 1st. A lot of Americans have a FICO score between 620 and 720, a whole bunch. That property I posted is priced low vs. comps so will probably do okay. Maybe even a shrewd investor who hasn’t flamed out yet (many are likely flaming out due to purchases with a high cost basis during the bubble and getting killed by the city on taxes).
What about all the properties around it that _aren’t priced low_? That property is the canary in the coal mine, clio for unduplexed units. Just like the teardowns nearby that are 160k now are for lots. Wasn’t it less than a year ago “lot values” in this part of town were 300k+? Remember that crapshack on Paulina? I wonder how that investor is doing.
Investors that aren’t buying at extremely low costs bases that immediately cashflow are basically Aral sea fisherman these days, clio.
Yeah things could turn I suppose..they’re still working on cold fusion at fermilab I’d bet.
unduplexed units = units that were obviously and formerly a duplex converted to a SFH layout but not completely.
“It WAS easier to do so in the past – honestly, what expenses did people in the 1970s have? They had 1-2 TVs, a wall phone and very little technology to spend money on. Education, healthcare was proportionately much cheaper and people actually had time to do their own lawncare, cooking, cleaning, and child care. That no longer is the case.”
There was likely 1 salary in the 1970s.
A large portion of people’s income went to food and clothing. Both of those costs have fallen dramatically in the last 30 years.
There was less credit- which meant people didn’t lease cars (they bought them) or have credit card debt.
Actually- this discussion reminded me of Elizabeth Warren’s book from around 2004 called the Two Income Trap.
Here’s an excerpt from an interview with her daughter- who was co-author:
“An average family of four actually spends less on clothing than their parents did a generation ago, adjusted for inflation. That includes all the Tommy Hilfiger sweatshirts and all the Nike sneakers. How does this work? Well we forget all the things we don’t spend money on anymore — how many kids have leather shoes for Sunday school anymore? How many people dress up in wool suits for work everyday?
The point is that families today are spending their money no more foolishly than their parents did. And yet they’re five times more likely to go bankrupt, and three times more likely to lose their homes. Families are going broke on the basics –housing, health insurance, and education. These are the kind of bills that you can’t just trim around the edges in the event of a downturn.”
http://motherjones.com/politics/2004/11/two-income-trap
I always thought that back in the day when most people could save 20%, they either lived at home with their parents until they got married or they got DP gifts from their parents. Didn’t they come up with these 0% down loans because so many people couldn’t save 20% anymore?
Here’s some more advice from the Warrens in 2004.
Many of us have seen the DINKs have kids and then not be able to make it on one salary. Back in the 1970s- the wife was there as a backup if the husband was laid off or disabled. Now- most families budget both incomes so there is no room for error.
“First, they say, families “committed” the wife’s salary. Instead of socking her paycheck away, they spent more money for bigger homes in good school districts and for better day care, preschool and schooling. In essence, the authors suggest, a “bidding war” erupted among dual-income families to get the best for their kids. This turned mom’s “extra” salary into a necessity.
Second, families lost their “safety net” — the stay-at-home mom. “By the usual logic, sending a second parent into the workforce should make a family more financially secure, not less,” they write. “But this reasoning ignores an important fact of two-income life. When mothers joined the workforce, the family gave up something of considerable (although unrecognized) economic value: an extra skilled and dedicated adult, available to pitch in to help save the family during times of emergency.””
“I always thought that back in the day when most people could save 20%, they either lived at home with their parents until they got married or they got DP gifts from their parents.”
My parents saved 20% in 1973 living in a crappy apartment near Wrigley Field with no air conditioning and no bedroom for the kids (slept in a bassinet in parents bedroom.) If you wanted a house, you did whatever was necessary.
Oh- and I distinctly remember not having any bedroom furniture other than a bed until I was nearly 9 years old. My parents couldn’t afford a dresser so I kept my clothes in plastic bins in the closet.
I couldn’t imagine a parent doing that today (going “without”- just to afford a house.)
Don’t forget- as well- that “living at home until they got married” in the 1970s meant living there until they were 22 years old (as the average marrying age was much younger than now.)
Well we definitely waste much more money these days. Just think about how many pairs of shoes we have, how much money we waste on eating out, and how most families have multiple cars as opposed to one. Then there is the crazy amount of money paid for heating and cooling.
We buy tons of cheap junk as opposed to a few real quality stuff. Even food is wasted these days. The super market model as opposed to small neighborhood stores makes us buy stuff we don’t even need and we waste a lot of grocery items. I for one feel really guilty about wasting the food, but often it happens.
“Families are going broke on the basics –housing, health insurance, and education. ”
LMAO the trifecta of government involvement in consumer goods. And Elizabeth Warren works for Obama who wants to expand government involvement in one of them.
The middle class really is too dumb to put the dots together that when the government backstops financing for a good it causes the equilibrium price of said good to rise well above what it would otherwise be with private financing. On the surface it’s hard to feel sympathetic for them. Heck Obama tonight was talking about low interest rates as if they’re an entitlement!
Elizabeth Warren is doing a lot of good according to the MSM press who wants to push the big O’s agenda, though: just today I got a letter from one of my CC companies for a card I don’t use stating that my terms are changing in September. It’s at least the tenth letter I’ve gotten from credit card companies since the laws changed and the CFPB was created.
According to the Democrats it’s not the consumers fault they got over-extended and over-leveraged: it was merely that they weren’t adequately informed of the terms! All those people with option-ARMs or living paycheck to paycheck leveraged to the hilt were victims in all of this! They were taken advantage of by evil companies. They would’ve never lived beyond their means had they _only known_ the terms of the agreements they signed on to. How can a layperson be expected to understand legal documents anyway?
Elizabeth Warren should work on powerpoint slides too and youtube videos to drive it home. Those letters I’m receiving about changes to terms are just gosh darn it too confusing! I want an iphone app and a youtube video to explain it to me. She is such a populist champion and people’s advocate and meets some diversity criteria institutions like Harvard strive for as well. It IS too bad she got passed up to head that bureau however.
And she goes on Jon Steward and Stephen Colbert so I know she must be one of the “good guys”.
“Didn’t they come up with these 0% down loans because so many people couldn’t save 20% anymore?”
It kept the house of cards afloat and the gravy train running a little longer. It bided time to allow more people to bail on the plane when they knew it was going down. If you’re remunerated in a cash bonus on wall street, as Chuck Prince said: while the music’s playing, dance.
If you know the crash is coming it gives you a few years to sell your RE to a sucker who isn’t financially savvy. The Economist ran an article in 2005 about the coming RE crash due to the bubble but the bubble was ignored by the mainstream press. People in CDO groups were bragging about the shit they were creating at recruiting events in the heyday. CDO’s squared? Cubed? There’s a lot of ways to repackage cow chips.
Not sure what Chuck’s plan was for when the music stopped for the firm or the country, oh wait what does he have to worry about–he walked away with a $37MM package and Citigroup bondholders got bailed out by the US taxpayers via TARP. Same story at every other large financial institution in the US and Europe that wanted and got a bailout (‘cept Lehman likely because Dick Fuld was such a, well, Dick). What all of them needed instead of a bailout was a wind down and liquidation auction.
It also allowed DC to go on a spending orgy which propped up DC RE values, in addition to Manhattan’s.
The comments from Elizabeth Warren make a good point. Sadly, when two people went to work and the wife’s salary was not banked, it just drove the costs of housing and education up (even public education as RE taxes just increased…look at the NorthShore for instance…public school isn’t free…it is just charged in the from of RE taxes). Thus, even for families who wanted a stay at home or to bank the second income, it becomes nearly impossible as you can’t buy the same quality of house/education on one salary that you could in the 1970s.
You don’t think a clever mortgage broker wouldn’t know how to steer a mark, er, customer to the more lucrative Option ARM loan, assuring them that, no problem, they can refinance in two years when the rate skyrockets. And then underwriting the borrower’s ability to repay the mortgage using the intial rate so the loan can be sold. No skin in the game for those guys, just move em on through. But no, its the stupid borrower who didn’t bring his accountant and lawyer along to review the deal.
And, all your snide remarks on Elizabeth Warren just show how invested you are in the corrupt two party system. Its status quo either way you go, rep or dem. The middle class gets screwed either way. Amazing how the tea partiers are standing up against raising revenue by eliminating tax loopholes being part of the debt ceiling deal. Wouldn’t seem to be in their own best interests but maybe they are all wealthy investors. I guess they can’t see beyond their stubborn platform of no new taxes. In any case, Warren had too much integrity for either party. Washington has no interest in integrity.
” They were taken advantage of by evil companies. They would’ve never lived beyond their means had they _only known_ the terms of the agreements they signed on to. How can a layperson be expected to understand legal documents anyway?”
“Washington has no interest in integrity.”
Power seeks more power. Organisms do not weaken themselves. I’ve said it hundreds of times already.
Juliana, if the gov’t didn’t involve itself and backstop this non-sense, under their ‘everyone should own a home’ policies. No way would private money have ever written those loans. But as no one wants to remember, but I very well do, god-forbid you went to a party in 2000 and tried explaining that these loans shouldn’t be written, because they are instantaneously negative on an expected value basis.
Secondly, people knew better than you think what they were getting themselves into. In detail- No… in general- Yes! And more than just a few people that shouldn’t have been able to buy 1 were buying several.
As for the 70’s. Don’t remember much, but I remember people not even having extra money to fill their gas tanks. Of course that was after a 2 hour line on odd and even days. Those were Americas worst days if I remember.
and mm.. I don’t think anyone has to worry about you.
Hey anon.. What about Bob? and I can just move in right next to you!!!
“Daddy there’s that sweet pungent citric smell again, daddy- daddy? where are you daddy? Oh there you are. Next door again?”
“customer to the more lucrative Option ARM loan, assuring them that, no problem, they can refinance in two years when the rate skyrockets.”
No juliana 86% of option-ARM holders make the minimum payment each month, precluding them from any sort of refinancing in the first five years. Option ARMs were created so someone with 30k of earnings could buy a half million dollar house. And that’s typically what happened: people could live the good life in a house previously out of their reach for half a decade and worry about the consequences later.
“Financial education” had absolutely nothing to do with it.
Couldn’t refinance a negatively amortizing loan before a couple of years ago due to the LTV where now you could up to 125% via HAMP.
They’re still pushing the option-ARM crap through the system as they were originated through 2007, which puts the end of the recasts about a year from now (they recast in 5 yrs).
Fast forward two years from that to move them through the foreclosure pipeline and you see we’ve got at least three more years of volatility.
Thanks anon, I just wanted your design opinion. And quite frankly, you’ve never told anyone what you do, there’s been speculation, any given your extension knowledge of construction materials and design, well, architect is as good a guess as any. Thanks.
well we do know for sure that he was seen on a bicycle handing out granola bars.
I think he has a science or engineering degree. More logical than your average oh-I-am-so-artsy-and-misunrtdtood-by-the-petit-bourgeois : )
Downpayments: if wanted to save 1000 a month for a 60,000 down payment on a 300,000 house, it would take five years. Or, I could get a fha 5pc down loan (15000) after one year, and then pay only 400 a month on the principal and interest on a 285,000 mortgage above the monthly payment on a 240,000 mortgage. Why save?
“Why save?”
You are exactly right HD. The savers are STILL being penalized- as long as there are cheap loans out there that require almost nothing down.
Sadly- many of these are underwater within the first 6 months. I want to know what happens when they go to sell in 3 years? FHA distress sales are only going to grow because the housing market won’t recover fast enough for most people to move again.
We’re shooting ourselves in the foot. Make people have skin in the game. They’ll survive if they have to put down 15% or 20%. The housing market would be so much more stable (as we saw for decades when this requirement was in effect.)
1 percent over actually sounds pretty cheap to cover yourself from 15 points of risk. Prices start to strengthen, then you just cover principal and take a conventional since it’s your equity now at risk anyway.
“gringozecarioca on July 26th, 2011 at 6:29 am
well we do know for sure that he was seen on a bicycle handing out granola bars.”
Lol ;)!
It’s funny how we chastise people for spending all their money instead of saving it, yet when I mentioned how ‘little’ I spend on groceries each month people thought I was nuts.
“yet when I mentioned how ‘little’ I spend on groceries each month people thought I was nuts.”
Jennifer, I don’t think people thought you were nuts, I think it was one of two things:
1. They didn’t believe you.
2. They were jealous.
“They’re still pushing the option-ARM crap through the system as they were originated through 2007, which puts the end of the recasts about a year from now (they recast in 5 yrs). ”
Mainly west coast + LV/AZ. I’d be really interested in a breakdown of where the outstanding OARMs loans are. Not a non-issue in Chicago, but a pretty small one.
“Hey anon.. What about Bob? and I can just move in right next to you!!!
“Daddy there’s that sweet pungent citric smell again, daddy- daddy? where are you daddy? Oh there you are. Next door again?””
Last neighbor who was a regular, open, “smoker” is dead. WTTW.
Option Arms were never really that huge in the midwest. They were mainly a CA, NV, AZ, FL thing. Very popular for speculators especially when layered with lower down payments and stated income/assets.
Mortgage underwriting in general just got away from using common sense in the name of efficiency – a lot of it driven by automated underwriting systems pushed by Fannie/Freddie. Also competition in the secondary market caused investors to increasing loosen guidelines to keep the market share of loans growing.
Option ARMs had been around for decades but the difference was pretty much only rich people got them and you needed like minimum 30-40% equity. Stated income used to be only for self-employed borrowers with large down payments and pristine credit. 100% with VA performs very well but the VA underwrites to disposable income including child care expenses while Fannie/Freddie only look at gross income and don’t include all other misc expenses people have. Some banks have 100% financing programs with no PMI just for medical Doctors that perform very well.
It wasn’t until the programs were bastardized to target Joe Sixpack and repackaged as affordability products that they became a problem.
Now mortgage underwriting is still mindless but in an overly conservative way.
“Mainly west coast + LV/AZ. I’d be really interested in a breakdown of where the outstanding OARMs loans are. Not a non-issue in Chicago, but a pretty small one.”
anon, I agree. I think it was something like 75% in those states alone. The best public data I know is here:
http://www.newyorkfed.org/creditconditions/
Option arms are just a part of Alt A category. They also default at much higher rates than other loans, so many are already gone. The link is not more than state specific on some data, but total Alt A appears to be under 3% of outstanding loans here. I would guess a max of ~1% option arms outstanding, so impact will be minimal going forward for Chicago.
That ~75% total includes FL, too, as Russ included.
In response to the Elizabeth Warren comments concerning one income. The 1970’s also had a much higher divorce rate, so there were lots of single parents, who both had to work as well. Understood that housing, particularly places in top school districts cost much much more adjusted for inflation, but this increase was much much more in the top US cities (SF, NYC, Chi, LA, etc). If you go to many of the middle market cities, you can easily live in a nice house in a good school district on one income, even with less income due to the COLA. It’s all a choice people make by living in Chicago. Still, this could create a major problem going forward as there are so many fewer 25-30 year olds who don’t EVER want to live in the suburbs because they think they are devoid of culture, similar to the middle market cities they also criticize. Where will these people go if their careers don’t bring them to $200K+ annual incomes?
Sorry, I meant to say “so many more 25-30 year olds who refuse to live in the suburbs EVER”.
Dave M – these spoiled brats (who don’t want to live in the suburbs) are soon going to be faced with reality – live like a bum in the city or swallow their words and move out to the suburbs – which option do you think they will choose?
“live like a bum in the city or swallow their words and move out to the suburbs – which option do you think they will choose?”
Depends if they are trying to be friends with jenny or not.
Some of these kids will probably choose to look elsewhere around the country to live (Austin, Houston, Dallas, Denver), or maybe choose to live abroad for a few years. The good suburbs are still living in a dream world with inflated home prices that will continue to fall. Elementary school enrollments for kindergarten are falling in the north and northwest suburbs. Why is that? Most young families simply cannot afford the home prices in a decent school district unless they move 40+ miles out.
“Some of these kids will probably choose to look elsewhere around the country to live (Austin, Houston, Dallas, Denver), or maybe choose to live abroad for a few years.”
ARE YOU F’ING KIDDING ME?!!! What planet do you live on? Do you really think that it is that easy to just pick up and move to another city or, even more ridiculous, to another country? Even if it was (and it is not), people are NOT that mobile (en masse). Remember, in the 80s everyone thought that when the baby boomers retired, they would all move to warmer climates – that was proven to be SO wrong – the vast vast majority don’t move more than 10 miles from where they lived. Seriously, dude, that statement was so ridiculous .
Why wouldn’t I want to leave and pick up Marathi?
Sheesh. Gotta agree with Clio here. Elementary school enrollments may be falling, but your analysis looks wrong. Without researching it, I would guess that the echo boom generation has peaked and enrollment is finally showing that. I also do not see kids moving away en masse. If prices are high, they will have roommates, delay starting families, live at home, etc. Having the safety net of your local connections is more important in a bad economy.
“Some of these kids will probably choose to look elsewhere around the country to live (Austin, Houston, Dallas, Denver), or maybe choose to live abroad for a few years.”
As an American you can not just pick up and move to another country anymore.
And Texas sucks, jam packed full of freshly river crossed illegals and god the heat, my god the heat is insanity there, and its also a huge HQ for government jobs, when that well dries up (NASA already got the axe) Texas will revert to a 3rd world status like california is in the process of doing all in the name of diversity
In my group of 25 or so close friends from Chicago, in the past 2 year, 7 of them have relocated, to Dallas, Madison WI, Austin, Denver, Los Angeles, Bermuda, and Houston, all but one for significant increases in pay over Chicago, with the only one who didn’t get a raise pursuing a PDH. They were all 27-30 years old and despite family ties to the midwest, decided that for their careers it would be better to move along. I’m sure there were personal reasons as well, but this is not uncommon at all as several coworkers of mine have seen the same thing. Of those 6, 5 of them were looking at buying real estate, but due to the prices/down payment requirements/income requirements, elected to move instead. This is not a random occurrence, and these people never wanted to live in the suburbs. It’s a generational change, and people don’t want to live in the suburbs.
Oh, and one more, another friend of mine is moving next month to London for the next 2 years. He put in for a transfer because he recently got married and wanted more excitement and didn’t want to even consider the suburbs. His wife had wanted a house, but they couldn’t find one in the GZ that they could afford, so relocating became their option. Obviously they won’t be purchasing real estate in London, but it’s more exciting than staying here for the time being.
I’m not a fan of London either, hopefully your friend has a better experience
You think the weather here in Chicago sucks… your friend is in for a big surprise! LOL, Also I hope he doesn’t like food or large apartments because he will miss Chicago greatly
“It’s a generational change, and people don’t want to live in the suburbs.”
No it’s not – moron. Every generation has been the same. Why do you young people think you are so unique and special?!! None of my friends (while we were in our twenties) would ever consider moving to the suburbs – but guess what – life happens and, in reality, you have to make choices and most people will choose a safer, more pleasant lifestyle in the suburbs over the city. Also, once you have a couple of kids, the appeal of the city is almost COMPLETELY lost. Unless you have kids, you wouldn’t understand.
In terms of moving around the country, your friends maybe lost or trying to find themselves but they are certainly not saving any money by moving to another city. Moving costs are high (not just the actual movers but everything involved). Also, if you can’t find work in this city, then you are unlikely to have luck in another one. Your friends will soon realize this and my bet is that they will be back in a couple of years (poorer than they would have been had they just stayed put).
The guy going to London is getting his housing paid for for the first year – living in a 700 square foot one bedroom close to the train line that goes to where he’s working at Canary Wharf.
People would rather relocate than live in the suburbs and are doing so. Why are the suburban elementary schools laying off teachers, especially those for kindergarten and 1st grade? It’s because enrollment is down. Fewer people are moving to the suburbs with young families. It’s a profound generational change – urbanization is here to stay. But no, I am totally wrong, right Clio?
“my bet” is just an expression in this case, right?
“But no, I am totally wrong, right Clio?”
Uhh – you ARE wrong and most people here would agree with me. Your view is so idiotic and myopic, based on a few obviously spoiled brat echo boomers who have NO FUCKING clue about the real world – but don’t worry, they will soon find out….
They already had employment in the new city when they left. It’s not like they flat out moved and then decided to look for a job.
Also Dave, the British dont’ really like us “Yanks” and he will be greatly discriminated against pretty much everywhere he goes, but that is still better than living in the burbs!
And clio – higher energy prices (due to increased demand around the world) going forward will mean most people want to live closer to work, in smaller more energy efficient spaces.
Already over 50% of the population lives in urban centers, and that has been growing, like people moving to the south and west parts of the country (stupid IMO due to the water situation, but thats another topic) So the north, and midwest suburbs have been getting crushed in terms of population growth
“You think the weather here in Chicago sucks… your friend is in for a big surprise! LOL, Also I hope he doesn’t like food or large apartments because he will miss Chicago greatly”
Weather is nice (yes I know what it’s like), as long as you are tolerant of some wetness; not too hot or cold. Plenty of v good food; even more mediocre food.
“the British dont’ really like us “Yanks” and he will be greatly discriminated against pretty much everywhere he goes”
The english don’t like anyone foreign much (or of different classes etc), but “greatly discriminated”? Really?
Your friend is going to be in for a shock living in London. I hope the job came with a massive pay rise, because you don’t get too much excitement there on a Chicago salary. We turned down several UK offers because of the cost of living (and the quality of life).
Amongst my fellow young parent friends, almost all of us would rather have stayed in the city than moved out to the suburbs but the school situation made it impossible for most of us. Obviously with all the parent groups out there trying to fix the city schools, that will become less of a problem over time. It used to be that a stay at home mom drove a minivan and hung out in the mall all day. The new generation of stay at home parent wants to still have a life!
“The english don’t like anyone foreign much (or of different classes etc), but “greatly discriminated”? Really?”
Sonies got one too many cut directs from the snooty english birds.
I lived in London for a summer – the Brits weren’t as mean as New Yorkers, and certainly not as mean as the French.
“The new generation of stay at home parent wants to still have a life!”
The arrogance of the “new generation” is un-fucking-believable!!! Are you kidding me Jennifer – do you really think that your generation of “women” are so much more progressive than women in the past? Are you that stupid and blind? The “new generation” moms-to-be are actually MUCH WEAKER and less adept at handling anything without help. You must be very young, unmarried and definitely child-less. Anyone with any maturity, experience or kids understands that you cannot have the life you envision/describe and raise kids. All the new parents that are trying to change the CPS will soon be looking for homes in the burbs – absolutely no question. It happens every generation – I’m just surprised at the ignorance of people like you, though…
While the British, as a rule, don’t like Americans, London is full of Americans, and people from all over the world, and doesn’t represent all of Britain anymore than NYC represents all of the US. That said, you will be hard pressed to find a British person who will be rude to your face simply because you are American. When they say they don’t like Americans, they “don’t mean you”. Just like people who don’t like immigrants don’t mean the one they’re talking to.
It was however, a joyous day when I got to tell my British mother that she had an American grandchild. I wish I could have seen her face.
The only people getting jobs these days are those who already have jobs. So these friends of yours leave for greener pastures, somebody else takes their job. No net change. Or all your anecdotal evidence predates the unemployment crisis.
“They already had employment in the new city when they left. It’s not like they flat out moved and then decided to look for a job.”
Thats one theory. I could see more multigenerational families living under the same roof close to public transportation, be that CTA or Metra. Energy efficiency is relative. If you have eight people living in a big house with new mechanicals, it is probably more energy efficient that two people living in a 2/2 condo.
“And clio – higher energy prices (due to increased demand around the world) going forward will mean most people want to live closer to work, in smaller more energy efficient spaces.”
Clio why don’t you try reading what people write before firing off at them?
Thanks for the compliment though, that’s the second time in a week that someone has said I can’t be old enough to have been married for almost 10 years and have two kids.
” I could see more multigenerational families living under the same roof close to public transportation, be that CTA or Metra. Energy efficiency is relative. If you have eight people living in a big house with new mechanicals, it is probably more energy efficient that two people living in a 2/2 condo. ”
You are more optomistic than I that society will turn around from being anti-social and become more family oriented. I am quite cynical, that things will get far, far worse in that regard, with more people choosing to live independently.
Especially because of the assimilation of the immigrant latino community into the general “American lifestyle” (SFH, yard, etc.) What I mean by that is that multiple family under one roof lifestyle is more typical in the latino community as they haven’t climed the economic ladder yet like most of the 2nd generation Indians have.
pardon my terrible spelling
My apologies, Jennifer – you are right – there ARE a handful of younger people who CAN have kids and live in the city to preserve their lifestyle – those are the people we call “gold-diggers”…..
“Hmm so prices are going to continue to decline until they become affordable for the peoiple who live there? You mean all those big law and big finance guys arent going to buy all the houses up forever?”
Inane comment. Sorry, but the stock of homes that are attractive to this cohort is such a specialized piece of the market and is not at all relevant to any city wide or even zipcode wide data.
I worked with some Claritas data 4 years ago that showed there are fewer than 5000 households in Chicago city limits proper with earned income over $500,000. Households, not people. And that was in a far better economy.
JMM – there is NO POSSIBLE WAY to get accurate data on that topic/subject for many reasons:
1. W2s are a joke – most rich people do not earn their money in the traditional way 2. Overall reported income is also a joke – do you really think that all of the officials who publish their incomes/income taxes only make what they are reporting?!!! There are so many ways to legally reduce your reported income and rich people know how to do it.
3. Income is not reported on unrealized gains – which account for the majority of wealth in this country – (ie it is not income which makes the richest people rich).
4. Inherited money/family money etc. is not counted in your “data”
Basically, Claritas or Clarissa or whatever the fuck you want to call it is absolute BS.
We are still in a bubble – see how all the people on here trashed my comment about the people leaving Chicago for better opportunities? This is exactly the problem with this city. There are better opportunities outside of Chicago, but also consider this. Often to get promoted to one of the “bosses” in Chicago, you need some special experience outside of Chicago, so the 2 year assignment in London, or some experience in another area of the country can be invaluable and often move you above and beyond the potential career trajectory of those who stayed put. Clio obviously knows nothing about the corporate world.
My guess on households with income within Chicago city limits > $500K is probably 10,000 at most. 5 seems a little light, but maybe that is taxable income or earned income. So in Kenilworth, that number would be 500 of the 950 households?
there is more concentration of income in the city; i’d agree its closer to 10K households, clio he’s talking about income not wealth.
“So in Kenilworth, that number would be 500 of the 950 households?”
No, the median is “only” something in the $200s. So prolly 450 of the 950 households.
revassal, I know what he is talking about – but income is only one small piece of the picture – you really can’t get a good sense of the wealth out there with this piece of useless information.
“No, the median is “only” something in the $200s.”
Again, more moronic data….. Do you really think the average Kenilworth resident/household only makes in the 200s? How the f would the average price of a house be over 1 million? Basically, income is either under-reported and/or is only a small part of the whole economic picture.
If your W-2 income was $250K, you could qualify for a mortgage of $800K, and with a $300K downpayment, would be a $1.1M house. Also, many of the people bought their places 10-20 years ago, so they didn’t need anywhere near that income back then, even when adjusted for inflation.
Your theory implies that the employment situation will get better, since being able to live independently requires sufficient income. I see lots of kids still living in their parents’ home after college here in the suburbs and I see a trend. Structural unemployment and continuing downward pressure on wages will make independent living more difficult.
“You are more optomistic than I that society will turn around from being anti-social and become more family oriented. I am quite cynical, that things will get far, far worse in that regard, with more people choosing to live independently.”
“Basically, income is either under-reported and/or is only a small part of the whole economic picture.”
I’m seriously going to call the office and bitch out whatever half-wit assistant is using clio’s computer to post here while he’s on vacation. As many questionable things as have been posted in his name over time, the dreck of the last couple of weeks has just gotten out of control.
So I’m clear mr/ms assistant: OF COURSE “income” doesn’t cover the whole “economic picture”, it is JUST INCOME. Everyone here except you innately understands the distinction.
No doubt, Dave M, some of that is explained by the fact that many long time residents could not afford to buy their house today.
“Everyone here except you innately understands the distinction.”
Isn’t this always the case?
If income is such a small piece of the real estate world, why do we even work? It’s not like people making $480K are only reporting $250K.
I live on a street on the north side where 2 of my neighbors bought homes in the 1970’s on fairly low salaries – one as a teacher and the other as a secretary. If they tried to do that here today, they would have to save up for 30 years to do so.
“No doubt, Dave M, some of that is explained by the fact that many long time residents could not afford to buy their house today.”
EXACTLY, G – and this is the reason to stay put (even if you are underwater right now). In ten-twenty years, the prices of your house/condo is going to be very high – you might not be able to afford it in ten-twenty years. This is not that complicated of a topic – it is cyclical and history repeats itself over and over and over again (despite each generation thinking that they are different). Again, staying power trumps all – that will always be the case.
It really was a game of musical chairs. Urbanization explained part of the trend, but a lot of people make between $100K and $250K. Not that many make $500K. The lack of wage inflation going forward will hurt the housing market big-time and the long time owners in 15 years will not have much of a return on their investments unless we are talking the abosolute best locations.
Dave M – once again your arrogance is unbelievable. You think that we are in some awful unique time where this type of downturn has never been seen. Sorry – if you want to be smart – you have to realize that this will pass and things will stabilize – if you don’t realize this, then you are going to be sorry in about 10 -15 years when you realize that you lost your opportunity to buy a place at a steep discount.
“EXACTLY, G”
No kidding. Which is why this was nonsense:
“Do you really think the average Kenilworth resident/household only makes in the 200s? How the f would the average price of a house be over 1 million? Basically, income is either under-reported and/or is only a small part of the whole economic picture.”
Clio would be wise to just make “EXACTLY, G” an auto-response.
G – you aren’t smart enough to argue with me- so just drop it… seriously, you are data cruncher – just provide us the data and leave your incorrect opinions out of it.
Napolean brain complex rears it’s tiny head again.
I owned an investment property in the past (2003 to 2006) and sold it for a profit. I really didn’t see the long-term growth potential and reinvested the proceeds in equities and another venture outside of real estate. I also have experience in development, but don’t see the financing in that area right now. You pretty much need to do it all cash right now if you are a little guy without a big track record or borrowing base.
“Your theory implies that the employment situation will get better, since being able to live independently requires sufficient income. I see lots of kids still living in their parents’ home after college here in the suburbs and I see a trend. Structural unemployment and continuing downward pressure on wages will make independent living more difficult.”
which again with lower wages, would create more demand for smaller, cheaper housing closer to work that doesn’t cost as much energy
Trust me, most people do NOT want to live with their parents, eventually the job market will turn around, whether its 5, 10, 15 years from now who knows but having living at home after college is about the last thing most big ten graduates want to do
I don’t see how the employment situation is getting any better in Chicago, so what’s going to give?
The demand for lower cost housing is immense in Chicago – there just isn’t the income for the $700K suburban home purchase anymore. It just doesn’t exist and there will be chaos as this all continues to unravel going into 2012.
Snooze. There are rich and poor. You can get an older ranch in dunning for $1,200 PITI a month and rehabbed bungalow all new in portgage park for $300,000. Do you realy believe things are going to get cheap than this? Especially with the tight inventory right now? the only sellers listing are those that have to. Some sellers dip their toes in teh cold water with little or no interest and recoil and take their homes off the market. They’ll have to sit for 20 years if they have to until they build enough equity to sell at a break even price. That will keep prices higher for years to come with teh reduced inventory. Even today in one particular neighborhood there’s been one sfh listed in the MLS in the last week. Adn even that house is just a relist of a previously expired sale! Crazy talk here, I know. but the lack of inventory will keep prices high, that is simple supply and demand. Even I crowed about the shadow inventory, which is still in the shadows. I have an extended family member who has been living in a house for nearly three yeras, october of 2008, without a mortgage payment. crazy stuff in the world today. Just yesterday I heard of a bank charging off a mortgage and seling the debt to a debt collector ! The property wasn’t worth much and the balance was even less. They will give away these homes to the borrowers before they foreclosure. There are no deals, and those that think they can wait are out of their minds. We’ll all be dead before then.
Welcome to the other side HD – I’m glad you were finally able to get your head out of your ass.
The problem is, not everyone can wait it out for 10-20 years. Life situations change quickly with death, divorce, job transfers. This will spur the inventory back up again, as not everyone wants to rent their house in one of those situations.
Despite what you say, how many people do you know died, got divorced or got transferred in the past 10 years? Now compare that to the number of people you know that didn’t have one of those things happen to them – yeah, I thought so…..
Over 10 to 20 years, this number is surprisingly higher.
It’s kind of like saying that you don’t think you will die in the next 20 years because you don’t know anyone your age who did recently.
We could probably get the real # from an actuary and a judge, but over 20 years, this is probably 25% in total, assuming everyone was staying in their house for all but those reasons I noted (death, divorce, job transfer).
People waited 20 years before – hence all the crapshacks. The house I just looked over the weekend in the villa was occupied for 42 years by the same owner. Hows that different?
US will face a debt crisis by 2015. Perhaps sooner than later. No more govt spending. Deflationary spiral here we come. Asset prices can’t be manipulated/held up in perpetuity with the beast running out of food.
“My guess on households with income within Chicago city limits > $500K is probably 10,000 at most. 5 seems a little light, but maybe that is taxable income or earned income. So in Kenilworth, that number would be 500 of the 950 households?”
Remember the wealthy areas of Chicago proper aren’t as populous as you would think.
The KW number is high — my guess is 500k income homes are 25% or so. 500k is a lot of current income. Remember that for many, wealth creation events (such as the sale of a business) drive the big homes, ski houses etc. Sub 40% marginal federal tax rates are a recent phenomenon.
It in highly inefficient to try to build wealth through current income. All you want is enough to pay the bills.
“US will face a debt crisis by 2015. Perhaps sooner than later. No more govt spending. Deflationary spiral here we come.”
Yes because it is customary for debt-crisis addled countries to experience deflation and not inflation.
“Yes because it is customary for debt-crisis addled countries to experience deflation and not inflation.”
He’s talking about a complex analysis of real dollar asset values, not worthless nominal Weimar-Dollars.
Course, the best thing is to have a large nominal dollar obligation with a fixed interest rate.
I should’ve used better wording : a deflationary spiral caused by removal of unsustainable govt spending. Hows that Osaka RE these days?
“It in highly inefficient to try to build wealth through current income.”
Yes, exactly, you want to build it through deferred compensation, including pensions, healthcare, stock options and the like.
“He’s talking about a complex analysis of real dollar asset values, not worthless nominal Weimar-Dollars.”
Don’t forget about the other side of the balance sheet. Nominal inflation destroys the real value of fixed liabilities. Meanwhile all the smart renters get rolled by inflation. Should be a hoot. I will be sure to pop some popcorn and wait for 8.2.
“Don’t forget about the other side of the balance sheet. ”
Did you get bored before reading the other 17 words in the post?
JMM – I totally agree. Many people here (including Sabrina) think that renters are relatively immune to the costs of home ownership. They are living in fool’s paradise. Landlords/apartment building owners are in it for a profit – those costs PLUS A PREMIUM will get handed to renters. Sure you may find a private owner who is willing to give you a break for a year or two – but not much longer than that. Do you guys really want to be moving every couple of years AND keep paying increasingly higher and higher rents?!!!
Yes actually.
Never mind the fact that renting doesn’t work well for upper middle class and above families with school age children.
Rentals of SFH are generally overpriced, of poor quality or in less desireable locations, and usually some combination of the three.
“Hows that Osaka RE these days”
Comparison to Japan are lame. You need to understand how the Japanese economy is different than ours. First and foremost, their population is not growing. In fact, I believe it has shrunk each year since since 2003 — plus there is zero immigration. Second, you need to understand saving vs. spending dynamics. Third, you need to understand the dearth of natural resources Japan has. All of these condemn the Japanese economy to very, very slow growth (or zero growth).
You see, new bodies need places to live. So in a shrinking population, it is no wonder what happens to real estate. Wait a second, that is what is happening to Chicago — good thing it is only poor minorities moving out right?
“Yes actually.”
Adderall can help that.
Right says the person who is supposedly earning a living sitting at a desk yet has both the time and inclination to read the drivel posted here and actually respond with something he/she believes is actually thoughtful.
I like the fact that my mortgage gets cheaper every single month, guaranteed
“Rentals of SFH are generally overpriced, of poor quality or in less desireable locations, and usually some combination of the three.”
If home ownership is still a status symbol among some sets, and I believe you’ve articulated one quite well, then so be it. There are families that rent in great school districts and have a cheaper overall housing cost than those who don’t. Whether they’re comfortable living in a less updated dwelling and perhaps looked down upon by those who have it all is another matter entirely. I know I’d be fine with it.
You can’t have it all and get a great deal on price. But I’ve found the higher cost area around here the more of a discount in percentage terms you can get if you’re willing to make some sacrifices.
Manhattan OTOH a luxury 1bdrm might cost you 3k/month and an average one 2600 and a POS one 2300.
Also I will say it is quite possible this past winter and summer will be a localized bottom for much of the country. As in bottom for the years 2011-2012. This is because the declines had slowed and the year/year comparisons to this summer which will be terrible due to the tax credit expiring. Next summer it is possible the year/year figures will look better, possibly even be up in Chicagoland for the first time in 4 years.
But I won’t be fooled: this tax credit is going to take years to shake out of the data. If 2012 is better than 2011 (likely) and 2013 is at least as good as 2012 then I’ll be much more optimistic.
I don’t envision this happening, but it is a distinct possible so I’m getting ready for the cheerleaders to trumpet the bear market is over. They’ll likely be mistaken.
You are 10x more likely to find a deal on a rental than you are on a sale. While it’s true the SFH rental market is comparatively small, does anyone doubt it’s still much easier to find a deal on a rental sfh than on a sale?
It isn’t hard to figure out. The rental market has extremely imperfect information. There’s no MLS equivalent for rentals. There’s no public recording of rental prices (for the most part). There are no appraisals. There are far fewer transactions mediated by agents/brokers.
There are, as should be obvious, far more overpriced rentals as well.
Way to include a floor plan!
http://www.redfin.com/IL/Chicago/5522-S-Kimbark-Ave-60637/unit-3/home/13945253
What. Is. This?
http://www.redfin.com/IL/Evanston/9032-Lincolnwood-Dr-60203/home/13626010
roma, in a different country, this would be considered a most luxurious house!!!
“Way to include a floor plan!”
Hah! That’s a first.
UR LAME
The one and most important thing japan has in common with the US is huge credit bubble, POP, years of low interest rates, seamlessly infinite deficit spending culminating with a lost decade or two.
And how is this pattern different from the US?
Haahahahah
Thank god we are at the bottom. at least we can stagnate from here.
“JMM on July 26th, 2011 at 3:35 pm
“Hows that Osaka RE these days”
Comparison to Japan are lame.”
That skokie home would sell for $499,999 if it were in west town.
That Skokie house could be amazing if you really put enough work and money into it. But it would still be in Skokie.
^^^ um… no, that place is beyond help, straight FUGLY
“Next summer it is possible the year/year figures will look better, possibly even be up in Chicagoland for the first time in 4 years.”
It depends on too many factors:
1. Interest rates. What if they’re much higher?
2. Unemployment. What if it moves up again as government jobs are cut?
3. Inventory- how many distress sales will still be coming on the market?
“Do you guys really want to be moving every couple of years AND keep paying increasingly higher and higher rents?!!!”
If you have a 10 year time horizon or more- you should buy a property and enjoy life.
If you believe you will move before that 10 year time period is up- you should rent and enjoy life.
Hasn’t anyone learned anything by seeing the $50k, $100k, $150k losses the homeowners (and taxpayers) on this site are taking every single day? Those are REAL losses. They aren’t riding it out (for whatever reason.)
Be smart. The real estate market won’t come “back” for decades. We’re going to see normal appreciation rates (when we finally DO see appreciation) of 1% to 3% a year. You don’t get rich off of that.
It pretty much rules out the “I’ll buy the condo when I’m 25, get married, and sell the condo when I’m 28” plan of action.
“I worked with some Claritas data 4 years ago that showed there are fewer than 5000 households in Chicago city limits proper with earned income over $500,000. Households, not people. And that was in a far better economy.”
Chicago is a very large city. Most people don’t see most of it because they only go to their little block in Lincoln Park or whatnot. It can take you 45 minutes (in good traffic) to drive to the western side of the city from downtown.
All you see in many neighborhoods are rows and rows of bungalows. Having 5000 households making over $500k a year sounds correct to me. Don’t forget, there are plenty of people living in the GZ who live there only due to the bank of mommy and daddy. They don’t actually have the “income” to support the lifestyle either (but the parents give them that.) There is also inheritance etc.
Income is different from wealth.
“Be smart. The real estate market won’t come “back” for decades. We’re going to see normal appreciation rates (when we finally DO see appreciation) of 1% to 3% a year. You don’t get rich off of that.”
Of course not- but you absolutely get “poor” by renting. Sabrina, come on – think about the FINANCIAL benefits of buying
1. – the payment you make when you buy a house stays relatively the same for the period of the loan –
2. – even though the payment stays the same, your principal gets bought down (ie more of your stable monthly payment goes toward the principal) –
3. – tax write off – a big deal to many people.
4. 1-3% appreciation on the TOTAL cost of the house (20% of which you actually invested) – so you are actually benefitting on the 1-3% appreciation on 80% of the house that you did not even pay for!! (this translates into a 5-15% return on your 20% down – that is a pretty good return!!!
You can see how you still can make money in real estate – you just have to have staying power – at least 10 years (and please none of this nonsense about prices being lower than 2001 – we are talking about 2011 and forward here)
“You can see how you still can make money in real estate – you just have to have staying power.”
I never said anything about “making money” in real estate in 10 years. I just said you have to be willing to stay there at least 10 years.
With maintenance, interest paid on the loan you took out and selling fees of 7% to 9%- it’s going to take a lot to “make” money on real estate (other than the rehabbers/flippers, who are doing so right now.) For “regular” buyers- it’s simply a place to live. That is it. Same as a rental.
Even if you decide to move, you can rent out your unit. The fact that most people don’t is either because:
1. they don’t want to deal with landlord issues – in which case, money is not as important to them as their lifestyle
2. they don’t care about the loss (for whatever reason)
3. they were too greedy and showed poor judgement when they bought the place
4. they are stupid scaredy-cat spoiled wimps who freaked out when they heard housing bust and cannot stomach a few years of uncertainty – these are the ones who whine the most.
Everyone else is either staying put or renting out their place. Seriously, real estate is not that scary or complicated – pick the right place and you WILL make money – but staying power is the key.
“tax write off – a big deal to many people.”
If you are married- something like 70% of homeowners don’t get the mortgage tax deduction. Believe it or not- their itemizations don’t exceed the $12,000 standard deduction. That is the REAL America!
Only the upper middle class get the deduction and it is going away. In fact, right now, they are debating lowering it to properties under $500k (right now it’s a million) and only on a primary residence. It will become even less relevant going forward.
Besides- why does it make any sense to spend $1 to save 30 cents? It never does.
You are too funny Clio. Always rah-rahing real estate ownership when owners are getting decimated in the market- even those who bought just a year ago.
It’s funny- because if you talk to someone of the Greatest Generation (80s and 90-year olds)- most NEVER refer to real estate as a great investment (some of them remember the depression, though- or the stories their parents related about it.) Their houses are all paid off and they have a nice asset- but it’s not something they much care about. They don’t obsess over it. The younger generations could learn a thing or two from them.
Sabrina, please stop confusing the young ones:
1. – nobody is saying to spend $1 to save 30 cents but if you are going to spend the 1 dollar anyway, why NOT save 30cents?
2. Also, your numbers are skewed (regarding 70% of homeowners not getting the interest deduction). Please re-do for your audience (people who live or want to live in the green zone in chicago ) – we are not talking about trailer parks in west virginia.
3. Renting is always going to be a losing battle – and it absolutely will at this time (when prices are so low to buy). Only a fool would continue to rent at this point – you are absolutely 100% paying (and going to pay) a HUGE premium for the ability to be mobile. It is so clear to most people – I don’t know why this concept is lost on people on this site!!
“It’s funny- because if you talk to someone of the Greatest Generation (80s and 90-year olds)- most NEVER refer to real estate as a great investment”
of course not – they can barely remember their names!!! No, seriously, though – they don’t talk about their investments either – at that age, money/investments are not that important. What is for dinner is of much more concern!!
What about some costs?
What about the cost of homeowner’s insurance?
What about the cost of property tax (minus tax savings)
What about the cost of the mortgage? ~ 80% of your payment goes towards interest for the first 5 years.
What about maintenance costs?
“You are too funny Clio. Always rah-rahing real estate ownership when owners are getting decimated in the market- even those who bought just a year ago.”
The only owners who are being decimated are the stupid and weak ones – again, the majority of these people made the choice to sell – they could have made the choice to stay put, rent out their place, etc.
Also, who are you kidding – there are plenty of people that made money in real estate (even now) – again, you choose to highlight the disasters = but there are properties out there selling for a profit.
Again – the people being decimated are the stupid and weak ones….
chichow, do you think real estate investors (developers/landlords) don’t factor those costs into the rent? Do you think they are eating those costs? OF COURSE NOT – not only are they passing those costs down to you, but they are also adding a premium (for their profit). God damn – it really isn’t that hard to understand this stuff.
Over the long term historically housing moves just above inflation whereas the stock market is about an 8% return adjusted for inflation.
I mention long term because one of the assumptions for this line of thinking is that the minimum stay period is 10 years
“you just have to have staying power – at least 10 years”
“1. – nobody is saying to spend $1 to save 30 cents but if you are going to spend the 1 dollar anyway, why NOT save 30cents?”
You don’t have to spend money to save money. Its the same fallacy as the original price of the Oak Street t-shirt was $400, but since you bought it for $150 you saved $250. But you didn’t. You still spend $150.
Buying a home isn’t a savings plane. Saving money every month is a savings plan (ala HD / Bob).
and yes you do have to live somewhere – but you could live at just a nice place by renting instead of buying
“chichow, do you think real estate investors (developers/landlords) don’t factor those costs into the rent? Do you think they are eating those costs? OF COURSE NOT – not only are they passing those costs down to you, but they are also adding a premium (for their profit). God damn – it really isn’t that hard to understand this stuff.”
their cost basis is relatively fixed – But I hardly think the developers or landlords have market pricing power. If the market rate for a rental is less than their fixed costs, then yes they are eating those costs.
“but there are properties out there selling for a profit.”
Yes- the rehabbers/flipper properties are selling for a profit (usually.)
Most other people are not. Please show me all the people making a profit who bought in the last 10 years. Occasionally we see it – but those taking a loss outnumber those making any money by 10 to 1.
It’s just been an awful asset to own.
“No, seriously, though – they don’t talk about their investments either – at that age, money/investments are not that important.”
Of course they do. I just spent the weekend with someone who is 91 years old. Never once did she mention her house (that she’s lived in for 35 years- other than to mention all the money she’s had to spend on buying new appliances and new air conditioning since everything is breaking down at once.) Oh- yeah- and all the money she has spent on new landscaping in the yard (which looks very nice.)
Otherwise- we talked about her stocks and how the debt ceiling debacle could impact her stock portfolio.
She otherwise could care less about the house. That is NORMAL behavior. She has bought and sold several houses in her lifetime. She’s paid off 2 mortgages. The only thing that matters to her is that she lived there- not the money involved in it.
Sabrina, come on – she didn’t talk about it because she doesn’t have a clue as to how much it is worth – if she got a “statement” each month telling her the value of her home, she would probably be overjoyed!!! Houses bought for 50k in the early 70s are worth in the 400s right now.
“and yes you do have to live somewhere”
uhh that was my whole point (that somewhere is going to cost something)- so your bad example about the tee shirt was just that , a bad example
If I was 91 I wouldn’t worry about the debt ceiling impasse I’d be happy to make it to August 2.
“Houses bought for 50k in the early 70s are worth in the 400s right now.”
Where? You really don’t live in reality do you. Ever been to Tinley Park, Olympia Fields, Oak Forest, to name a few. A house bought for $50k in the 1970s might be lucky to be worth $200k today in some of those towns (lucky.) Actually- in the 1970s, those houses would have cost probably $7000 or so. And now they’re selling for around $100k (if they’re a foreclosure) and $130k if they’re not. Total devestation in those cities.
The 91-year old, however, retired to her house over 35 years ago and it’s not in Illinois.
She actually DOES know how much it is worth. She owns the property next door to it and gets calls from buyers on that land every once in awhile as people are still building new homes around her (one just went up down the block, actually.) She knows exactly what everyone is selling for and how much her property is worth. She could care less. She lives there. It’s of no use to her to obsess over it (as many of you seem to do.) And, by the way, she has no intention on selling the property next door even though people continually inquire about it.
Take a clue from the Greatest Generation- just LIVE THERE. In the end, we’re all dead anyway.
“If I was 91 I wouldn’t worry about the debt ceiling impasse I’d be happy to make it to August 2.”
She had just played a round of golf and wanted to know if her stocks were going to get hammered. That’s how it came up in the conversation. So, making it to Aug 2 is the least of her worries. Outliving her money over the next 10 years is of greater worry if the stock market is crushed again.
Sabrina, wtf? I mention a house bought for 50k in the 1970s being worth in the 400s now and you try to refute my statement by stating that houses bought for 7k in the 1970s are worth 100k now – that actually more than supports my argument? What gives?
She is absolutely going to sell that house when she has to go pay her medical bills!!!
“She is absolutely going to sell that house when she has to go pay her medical bills!!!”
No. Medicare will pay for that. Her stock portfolio will pay for everything else. She pays very little in any kind of medical bills. When you’re 91, you rarely have the slow decline. You just get something and you’re dead a few months later. There’s not enough time to exhaust a bunch of money.
By the way- on her first home purchase in 1951, she made about 1% a year (this was in a Chicago suburb) when she finally sold in 2009. It far underperformed the returns of her stock portfolio (which she has owned since the early 1970s.) She called it the “money pit.” But she did raise her children there- so there was that.
way to go in terms on not addressing anything on the cost side – again.
Sabrina, good God – when she calculated her “return” on her house, did she factor in the rent she saved per year? I bet if she would do so, she would realize her return was FAR FAR greater (especially in later years when the house was paid off). In fact, I wouldn’t be surprised at all if her house investment actually was her BEST investment ever (from a financial standpoint). Remember ignorance is not an excuse for providing false conclusions.
“Sabrina, good God – when she calculated her “return” on her house, did she factor in the rent she saved per year? I bet if she would do so, she would realize her return was FAR FAR greater (especially in later years when the house was paid off). In fact, I wouldn’t be surprised at all if her house investment actually was her BEST investment ever (from a financial standpoint).”
It was an awful investment. She’s gotten over 13% a year on her stock portfolio in the last 35 years. She’s living off the dividends with no cares.
She actually rented out the house for 25 years when she moved into the place she bought for retirement. It rented for only like $200 a month in the 1970s and some of the 1980s. It wasn’t enough to maintain the home. She had to update appliances, put in new floors. Oh- then one tenant had a fire in the kitchen (thank goodness it didn’t burn the whole house down) but she had to pay for repairs with that. There was a flood once in bad rain- but insurance paid to replace the carpet at least. What a pain for her! She was glad when it finally sold- but it took 3 years in this crappy market to do so. She had to keep paying the property taxes and for a gardener to maintain the outside of the property while she tried to sell it. That’s why she called it the money pit, Clio. Because it was.
Well I ain’t gonna make it to 91 more than likely, but if my ma and/or pa do make it that far and run out of money me and my sibling will chip in to help fill the gaps and take care of them where the govt won’t pick up the tab. Which these days might be the whole cost.
Theres a reason they’re calling boomers the sandwich generation: unemployed kiddos to support and aging parents.
(altho not a boomer myself my scenario is a hypothetical future one)
Who’s going to support the baby boomers? Certainly not Generation X or Y. They’re stuck in their underwater condos. People are in for a rude awakening in retirement. At least the Greatest Generation prepared (and had the benefit of pensions, veterans benefits etc.) My 91 year old friend’s husband served in WWII so she gets a widows benefit from that. It’s not a lot but every little bit helps.
i know someone in a very nice northwest suburb who just sold their place for about 10% more than they paid for it in the 1998-1999, and they put way more money into it than that over those years of ownership. Factor in the real estate commission and they lost money overall. Not sure how I’d feel about that. This is not an isolated or distressed sale either.
My parents were prudent. They drove Honda civics and Toyota Camrys while the neighbors were out buying luxury SUVs and Mercedes. They worked hard, lived below their means, saved diligently and amassed a small fortune. That will go a long way towards supporting them. If they do run out (quite unlikely as at least one of them still smokes maybe both) me and my sibling will be able to help support them. I don’t care about other people’s parents the catfood is in aisle 3.
Wow, Dave M – and I know someone who just sold for a 500k profit on a 400k place they bought in 1998 and they didn’t put any money into the place (sold for land value)….. again, to make decisions and opinions on the overall market based on a few anecdotal stories (which may or may not be true) is absolutely ridiculous.
Bob – why don’t you ask your parents for the downpayment on that nelson place?
My pa still drives a 13 year old camry with over 150k miles on it. He is interested in buying my 4 year old vehicle off of me but he’s smart: he knows the car has been taken care of, has low miles and that I’ve already taken the depreciation hit. No dice for me.
I need to drive mine for ~13 years to amortize the depreciation hit out. (cars tend to start breaking down more around 9yrs/120k miles and really start to be a money pit around 13 years/160k miles).
People that didn’t plan ahead for the future are in for a rude awakening in the new America where credit doesn’t grow on trees. The 50 year debt fueled consumption supercycle is over. This ant isn’t too sympathetic and isn’t paying for the grasshoppers.
http://finance.yahoo.com/blogs/daily-ticker/debt-binge-ending-middle-class-clobbered-20110405-094510-405.html
“Who’s going to support the baby boomers?”
Two words: “death squads”…. they ARE coming and they are coming sooner than you think – the cuts that medicare and medicaid have instituted and also the ones that they have outlined for 2012 and beyond are going to force doctors to stop seeing medicare and medicaid patients. If you want to see a doc (and don’t want to go to cook county), you better start shelling out for additional supplemental insurance. Even so, medicare (and all insurance) are starting to limit what tests doctors can order – so people are absolutely 100% going to die – but nobody seems to understand or really care about this…. unbelievable!!
clio: they wouldn’t give it to me. They’re both retired and on a fixed income. They need their assets to live on and that Nelson place isn’t something I need. They might help me with a down payment once they go on SS but not 92k. They need their money more than I do.
Also my job situation is anything but steady. In my current profession there is quite a bit of variation in earnings. Maybe I’m the option-ARM target demographic? 😀
I’m gonna work on that downpayment now though. I’m already mostly there but don’t want to raid my roth IRA. That’s a rainy day fund not to be raided for anything but a true emergency (not even unforeseen medical bills I know how to get around paying for those). I raid the retirement fund and then I’m paycheck to paycheck and could wash that 92k downpayment down the drain if an extended famine.
I don’t think places like that will go much lower but I think there will be other opportunities like it in the years ahead.
I agree Bob – I hope you find something – but you have a good head on your shoulders -you’ll now when the time/place is right.
do you really think these death squads will do that much? Isn’t it usually someone who has a terminal illness who would live another 3 months? I guess there’s a chance they could live another year.
Also, most people are passive investors and prefer to get dividend checks. they don’t want to be landlords and deal with people not paying, or having to deal with maintenance issues at 3am on a Saturday night.
Finally some good news in Chicago RE:
New Life for Stalled Project
http://online.wsj.com/article/SB10001424053111904772304576470552102253090.html?mod=WSJ_hpp_MIDDLE_Video_Top
Watertower Place is finally being completed–IF they can get financing.
Thanks for the link Bob.
Waterview Tower was going to be luxury condos and an upscale hotel. And now they want to turn it into…rentals!
“Even so, medicare (and all insurance) are starting to limit what tests doctors can order – so people are absolutely 100% going to die – but nobody seems to understand or really care about this…. unbelievable!!’
You would not believe all the tests they constantly order for my 91 year old friend. It’s like every 6 months they do $1000 blood work. It is ludicrious. But medicare pays for it all – so why not? There is so much waste and abuse. Oh- and what about the “rehab” that is ordered for months at a time? I could go on and on.
“Wow, Dave M – and I know someone who just sold for a 500k profit on a 400k place they bought in 1998 and they didn’t put any money into the place (sold for land value)….. again, to make decisions and opinions on the overall market based on a few anecdotal stories (which may or may not be true) is absolutely ridiculous.”
So we’re at 1998 homebuyers as “examples” of homeowners who have come out of it okay, huh? It used to be 2001 or 2002. Now we’re into the 1990s.
Yep- it will soon be that we’ll have to go back 15 years to find people who aren’t underwater (with the way things are going in the price declines.)
Clio,
1-you just have to stop with this hold onto losing assets until they turn around gospel. It is the kiss of death. Bleeding to death while waiting for Jesus to come save you hasn’t worked well the last 2000 years. It’s simply an immature viewpoint from the standpoint of any real investor. Lucido has gone on about this a few times. He is correct.
2- you are correct. Return – for purposes of rent vs own- must include unrealized rental savings. Personally this is why i place it into the rental parity part, keeps things cleaner. Saying someone else only made 3 percent and not dinging yourself for rent is bad analysis.
Also, speaking in general, comparing returns asset to asset without looking at the risk of said asset to asset is misleading and dangerous.
“We’re going to see normal appreciation rates (when we finally DO see appreciation) of 1% to 3% a year. You don’t get rich off of that.”
What you fail to factor in is that is a LEVERAGED return. You put 100k down on a 500k house. If your house goes up 3%, the value has increased $15k. That is a 15% return on your 100k. Yes you paid interest on that 400k, but that has already been factored into the rent vs own equation.
“If home ownership is still a status symbol among some sets, and I believe you’ve articulated one quite well, then so be it.”
Me personally? My house is over 100 years old and I’ve owned it for 15 years, outright for about half of that.
Remember that for every renter there is a landlord — someone who owns. I just prefer to rent from myself. The BLS has a word for it I believe — imputed rent.
“2. their credit took a massive hit – with that hit, their credit card interest went up, their car insurance went up….”
I call bs on the CC part. Only poor people keep a balance on their credit card. I couldn’t care less if my rate was 99%. I pay in full every month.
oops wrong thread on the above post.
“I’m not a fan of London either, hopefully your friend has a better experience
You think the weather here in Chicago sucks… your friend is in for a big surprise! LOL, Also I hope he doesn’t like food or large apartments because he will miss Chicago greatly”
London might have even passed paris in gourmet food and excellent restaurants, are you kidding me?
“I lived in London for a summer – the Brits weren’t as mean as New Yorkers, and certainly not as mean as the French.”
Do you speak french as fluently as you do English? have you thought that maybe people don’t feel talking in English in their own country to someone else? It is amazing how American’s won’t learn Spanish even though they are so many Spanish speaking people in US, but they expect the French to deal with their terrible and often non existing language skills.
Fuck the French! Useless jerkoffs IMO!
And British food sucks… I shouldn’t have to pay a hundred pounds a head to eat a decent meal, are YOU kidding me?
Sonies when were you there? Also were you trying to eat in a pub?
There are so many moderately or low prices great Indian, Mediterranean, and Asian restaurants in London.
For instance:
http://www.strada.co.uk/
and if you like meat a lot:
http://kazan-restaurant.com/
http://www.efesrestaurant.co.uk/
I posted some links to restaurants for you Sonies. But it is waiting moderation. Google
strada italian london, and kazan restaurant london or efes london restaurants.
“And British food sucks”
FYI that’s why they all eat indian food.
“I call bs on the CC part.”
Me, too.
And I never even owned a credit card until maybe 3 years ago when I found out about cash rewards. Before that it was debit cards all the way.
I pay off my balance every month, in fact I even pay it before it even shows up in a statement most of the time.
I’m not going to try to carry some sort of float for a few extra bps: a waste of time in my opinion especially with rates near 0% these days. I did play the CC shuffle in terms of putting everyday purchase on an 0% interest APR card when I did have interest bearing debt to minimize that. Looking back it was a lot of paperwork though to save maybe $100.
And now they send me lines of credit checks all the Fing time which I have to promptly shred–I get at least one a week despite that I’ve never used them in my entire life, they just love wasting postage. Damn I’m going to worry when I move whether any of those show up at my old place and who moves in.
“Do you speak french as fluently as you do English? have you thought that maybe people don’t feel talking in English in their own country to someone else?”
Some of it I’m sure is a city thing. People in Paris seem if not rude much more short with you than elsewhere in France. (Not that different from NYC etc.) But, still, would you dispute that people generally in e.g. Spain are much nicer than in France? Also, as discussed above, the English don’t like foreigners much but they are generally polite.
“There are so many moderately or low prices great Indian, Mediterranean, and Asian restaurants in London.”
As I said above plenty of v good food but also v easy to pay a lot for truly mediocre food, more so I think than most other major cities.
“And I never even owned a credit card until maybe 3 years ago when I found out about cash rewards. Before that it was debit cards all the way.”
Hard to believe you didn’t get in on those credit card rewards schemes (buy coins for miles etc.).
“Hard to believe you didn’t get in on those credit card rewards schemes (buy coins for miles etc.).”
If I lived in a building with secure and reliable deliveries I would’ve. Once FedEx lost an LCD TV some years ago (it’s box clearly advertised it was an LCD TV) I decided against it.
Its a great scheme while it works but those who did it serially most have horror stories of eventually missing a shipment or two. Poof–there goes much of your profits.
If I lived in the burbs I probably would do it in between periods of employment.
Oh yeah I got refunded for that TV too…after many phone calls and weeks of hassle. Fedex has to do an internal “investigation”.
DZ, you are absolutely right. People are nicer in small towns almost every where.
““And British food sucks”
FYI that’s why they all eat indian food.”
lol…true.
That house on Nelson is already under contract.
If you price it right, it will sell. Way too many overpriced listings in Chicago city proper.
And, as all of us who follow the market know and understand, inventory is down, way down; this has been confirmed by various measures; and even the available inventory is the same, tired, boring, over priced wishing “if I just list it for one more day I might get my listing price” – did I mention that it’s tired, and a lot of properties need work? there’s an old victorian I follow, converted to a three flat, listed for half a million: convert to a SFH it says! Yeah, the $700,000 converted home on a block of homes in teh $400’s! keep that listing price high for a year now, refuse to lower the price (despite such a small mortgage on the property) and pray to god that one special buyer, because it only takes one, will magically appear, fall in love with your decrepit shanty, and pay full price in cash.
But if you have a new listing, and you price it right, it will sell.
Here’s one that popped onto my radar; it’s avondale, a bit outside the GZ but in a decent area, near the highway and el, gentrification will work it’s way up here soon enough: priced right as a short sale for $167,000
http://www.redfin.com/IL/Chicago/3421-N-Ridgeway-Ave-60618/home/13455130
“If you price it right, it will sell. Way too many overpriced listings in Chicago city proper.”
Was it priced “right”?
That house on cuyler was a much better deal even if it ends up closing for a bit higher than the Nelson house because it was gutted and everything was new.
The Nelson house hasn’t been updated at all.
I’m surprised it’s under contract already, actually.
There are plenty of 2-flats in the $400,000s all over the north side that aren’t moving at all. You could live in one and rent out the other or convert into a SFH for the same or cheaper than that Nelson house.
Bob- remember 2030 W. fletcher? We chattered about it a few months ago. It was at $475,000, I believe. I can’t find it now so maybe they withdrew it from the market.
Lots of houses on Fletcher that will probably sell for $450k or so. Here’s one under $400k that is just sitting there.
http://www.redfin.com/IL/Chicago/2233-W-Fletcher-St-60618/home/13360227
But the nelson house is in the green zone so to speak. two flats sell in the mid to high 200’s in my area, they sell all day long at that price, but the demand to live in a sfh in the lakeview area exceeds supply by a lot. Even today I read something that inventory is down 11% YOY, and we can all attest from regular reviews of the MLS, of that remaining 89% of properties listed today, most of it is junk, or far overpriced for it’s relative desirability.
So when a semi-decent property comes along, and you have to get your kids into school by the end of august, you just suck it up and buy what’s out there. LIke clio says, you just buy when you’re ready and move on with life. and that means when supply is low and demand is high, people will pay $500k or more for a tiny little awkward sfh in lakeview or north center because at that price range there is next to nothing available.
The problem with the fletcher house is that it is too small for the price. in 2007 this would have been a tear down for $400,000.
The amount of work necessary to bring the home into the 21st century is prohibitively expensive at $400,000, even if you put $100,000 into it and made it really nice, it’s still a 1,200 sq ft $500,000+ home and the ppsf is far far above the roughly $250 psf homes in the area sell for.
Take off $125,000 or $150,000 grand, put the same amount of work into it and its a $400,000 house that will sell in a new york minute.
“The amount of work necessary to bring the home into the 21st century is prohibitively expensive at $400,000, even if you put $100,000 into it and made it really nice, it’s still a 1,200 sq ft $500,000+ home and the ppsf is far far above the roughly $250 psf homes in the area sell for.”
The same can be said of the Nelson house HD. It’s not move in ready either.
Yeah, but Nelson is in Burley.
And sure, you could do a 2-flat. There are indeed plenty multifamilies around there on the market under 500. And they’re pretty much all under contract.
”
The Nelson house hasn’t been updated at all.
I’m surprised it’s under contract already, actually.
There are plenty of 2-flats in the $400,000s all over the north side that aren’t moving at all. You could live in one and rent out the other or convert into a SFH for the same or cheaper than that Nelson house.
“
”
Was it priced “right”?
That house on cuyler was a much better deal even if it ends up closing for a bit higher than the Nelson house because it was gutted and everything was new.
”
Are you talking about 1824 Cuyler, Sabrina?
It’s:
a) right next to the tracks, and
b) listed for $100k more, not a trivial difference
”
Bob- remember 2030 W. fletcher? We chattered about it a few months ago. It was at $475,000, I believe. I can’t find it now so maybe they withdrew it from the market.
Lots of houses on Fletcher that will probably sell for $450k or so. Here’s one under $400k that is just sitting there.
”
Those places are west of the tracks and in Jahn, not Burley. Big difference to school-obsessed families.
“And sure, you could do a 2-flat. There are indeed plenty multifamilies around there on the market under 500. And they’re pretty much all under contract.”
I think I am def. leaning that way if I ever want to go the SFH route. Do a 2-flat then convert it when I get tired of renting the other out and need the extra space. Makes financial sense and is the only sort of landlording I’d be interested in (something conks out at 2am it probably did in my unit too so I want that fixed ASAP and I already live there).
Think greystone SFHs are out of the question for under 500k? Well they are in good neighborhoods, but not 2-flats:
MLS 07743552 for 450k.
MLS 07867317 for 365k.
And the cribchatterers will howl that these need some work (esp. the second one) to bring it up to their standards and it’s not up to their expectation of quality. But by the same token very few of them live in an updated greystone.
West Lakeview 2-flat in decent shape listed for 422k–MLS 07839333.
All the other manure on the MLS simply cannot compete with what’s coming onto the market now. These places are by owners who can afford to undercut the competition and they go under contract and sell quickly.
The manure just remains and collects flies.
Oh boy, Chicago July mls sales could only keep pace with last year’s post-D4D collapse.
Chicago sfh/condo/th closings for July each year:
1997 1,694
1998 2,139
1999 2,186
2000 2,013
2001 2,410
2002 2,661
2003 3,105
2004 3,429
2005 3,487
2006 3,088
2007 2,819
2008 2,200
2009 2,040
2010 1,631
2011 1,666
Lake View condo/th for July:
1988 74
1989 64
1990 69
1991 87
1992 83
1993 109
1994 98
1995 126
1996 151
1997 125
1998 192
1999 204
2000 144
2001 160
2002 209
2003 244
2004 245
2005 275
2006 245
2007 276
2008 220
2009 154
2010 82
2011 112
Lincoln Park condo/th for July:
1988 73
1989 76
1990 87
1991 84
1992 98
1993 126
1994 112
1995 95
1996 105
1997 117
1998 133
1999 138
2000 110
2001 130
2002 129
2003 176
2004 168
2005 219
2006 143
2007 167
2008 120
2009 73
2010 76
2011 86
Near North condo/th for July:
1997 126
1998 196
1999 173
2000 143
2001 198
2002 264
2003 312
2004 387
2005 359
2006 308
2007 277
2008 251
2009 208
2010 178
2011 179
Loop condo/th for July:
1997 36
1998 41
1999 26
2000 75
2001 42
2002 49
2003 118
2004 64
2005 93
2006 67
2007 113
2008 69
2009 70
2010 110
2011 55
Near South condo/th for July:
1998 26
1999 31
2000 34
2001 31
2002 53
2003 76
2004 90
2005 88
2006 167
2007 93
2008 107
2009 71
2010 37
2011 39
I know things are going to be much better in august.
keep hope alive
Anecdotally seems that things have been picking up and properties I thought would never sell aregoing fast, must faster than I ever imagined. Just wait util next month, roar!
Roar roar!
remember what happens to big kitties who stray into the GZ, HD
10yr note at 210bps. bond market signalling a lost decade. we’re in a deflationary depression.
I think it’s easy to see a few properties in some neighborhoods selling and think, “wow- things aren’t too bad out there. Look at all the homes going under contract and selling.” When- in reality- it’s just a very small subset of the entire city market.
When you think about just 1600 or so properties selling in July, one of the “prime” months to buy, in a city the size of Chicago- it’s kind of scary. Drive around for a bit – past rows and rows of bungalows. Walk around the density that is East Lakeview and think- gosh- only like 100 properties in this area sold last month. There are plenty of for sale signs everywhere. They’re NOT moving.
I AM seeing some things that are in short supply selling somewhat fast. That would be 3-bedroom townhouses in LP and Lakeview priced under $500k. SFHs priced under $700k in the “good” north side school districts (you know which ones I’m talking about.) I’m seeing some larger neat lofts sell. Many “unique” properties are selling. And then, finally, the distress sales of all kinds are selling- especially the foreclosures.