Chicago Market Conditions: March Home Sales See Biggest YOY Drop in 4 Years
Winter has held on in Chicago as March home sales took a tumble (the above picture is from spring 2012).
From the Illinois Association of Realtors:
The city of Chicago saw year-over-year home sales decline 10.1 percent with 2,290 sales in March, compared to 2,546 a year ago. The median price of a home in the city of Chicago in March 2018 was $314,000, up 6.4 percent compared to March 2017 when it was $295,000.
Historic data courtesy of G:
City of Chicago condo/TH/SFH closed totals March
year/closed/median/% REO-Short Sales
Year Closed Median %REO/SS
1997 1,226 $126,875
1998 1,540 $137,003
1999 1,766 $152,125
2000 1,793 $167,500
2001 1,800 $195,000
2002 2,112 $210,000
2003 2,261 $225,000
2004 2,772 $244,950
2005 2,822 $271,125
2006 3,000 $275,862
2007 2,399 $285,000
2008 2,098 $300,000
2009 1,219 $217,000 37%
2010 1,860 $207,750 38%
2011 1,481 $163,763 49%
2012 1,630 $170,500 44%
2013 1,894 $187,500
2014 1,875 $235,000
2015 2,173 $260,000
2016 2,149 $269,000
2017 2,546 $295,000
2018 2290 $314,000
While sales saw their largest year-over-year drop since 2014, it was the highest median price in the last 20 years.
“Limited supply and high demand took center stage for the start of the Chicago spring housing market,” said Rebecca Thomson, president of the Chicago Association of REALTORS® and principal of Thomson Real Estate Group. “While the number of closed sales slowed in tandem with the inventory crunch, the rise in median sales price and reduction of time it takes for a home to sell on average, points to competition for well-priced homes in good condition.”
“Nationally, the Fannie Mae Home Purchase Sentiment Index rose, driven primarily by a sizable increase in the net share of consumers who think it’s a good time to buy a home,” said Geoffrey J.D. Hewings, director of the Regional Economics Applications Laboratory (REAL) at the University of Illinois.
Before you blame rising mortgage rates for the sales slowdown, the mortgage rates really weren’t much higher in the month.
The average 30-year was 4.44% up from 4.33% in February and 4.2% in March 2017.
I still believe we need to see rates over 5% before they really hit the housing market.
Then what explains the lower home sales in a month that has historically signaled the start of the spring housing market?
Could the extended cold winter have put a damper on buyers?
Or is the near record low inventory really starting to hinder the housing market?
Recent housing market trends continue in March with higher home prices and slower home sales (Illinois Association of Realtors, Press Release, April 23, 2018)
If the news reported that rates would be hitting 5% this year, it would be enough to shock the market
Its not the weather. There’s a number of reasons why supply is down in “acceptable” areas. GenX and older Millennials have settled in and arent moving out enough numbers to create enough supply.
New housing in these acceptable areas is beyond what many in GenX and Older Millennials are willing to pay, especially with the specter of college for the kids looming.
The number of sales is second best in 10 years. Simple lack of supply holding back sales.
sales are still pretty high considering it was a pretty frigid and horrible March, and the supposed “lack of supply”
Exactly sonies. There were only 5 Marches since 1997 with higher sales than 3/19.
Mar/18, sorry
My wife and I were one of these March closings. Lifestyle issues aside, we’re very glad we bought as we’re already “up” $15k based on two other comps that sold near us but more inconveniently located and not as upgraded. Our offer was in late February and was met with 3 other offers so personally speaking I don’t think the cold weather really dampens buyer motivation to the degree that most assume. My parents recently listed their condo in River North and could’ve sold it before print, but ultimately decided to list and accepted a higher offer literally one day later. It doesn’t feel like a bubble or a frenzy like last time; I feel like this has been said ad-nauseam but the demand simply exceeds supply and quality properties that are priced right will get competitive.
JohnnyU on April 24th, 2018 at 7:34 am
“New housing in these acceptable areas is beyond what many in GenX and Older Millennials are willing to pay”
By “new housing” do you mean new construction or newly available properties in general? Either way I think that’s a fair assessment. It’s not just the “will” to pay but also the ability itself. There are those millennials who have found solid financial footing and those who have not, and likely will not because of crushing student loan debt and choosing the wrong career. But I digress.
JohnnyU, that certainly could be part of it. I know we have absolutely no reason to move. We love our home and neighborhood.
Congratulations, Elliot! I know you had been looking for awhile. Where did you end up moving?
I hope the strong market continues as I may be outta here by the end of the year
Thanks Jenny,
Yes I had been looking for over 8 years lol. Sucks I didn’t buy back then but I would not have met my wife otherwise.
We moved to a two flat in Jefferson Park; we intend to live in one unit and airbnb the other. I originally wanted a condo in Lincoln Park/Lakeview for an easy commute to Streeterville, but the wife wanted a yard for the eventual pup and an easy commute to Ogilvie; I think she came out a clear winner! And we all know what they say about happy wives!
“New housing in these acceptable areas is beyond what many in GenX and Older Millennials are willing to pay, especially with the specter of college for the kids looming.”
The “beyond what… willing to pay” thing speaks volumes on why Chicago’s RE market is sluggish. It’s not the only reason, but it’s an important reason that can’t be quantified by any realtor groups nor any Case-Shiller index.
In other markets, hot or just simply moving right along, GenX’rs and older Millennials *are* willing to pay to live in acceptable or even semi-acceptable areas. They may be up to their eyeballs in debt (or maybe not), but I assure you that they make no more money, have no more savings nor have any more insight into the future than any Chicagoan in their age group does. These other markets are self perpetuating at this point and they work… until they don’t. Culturally, we choose to play it safe because we are fearful of things like the above word “looming”… rhymes with doom. Maybe not a bad thing?
On the other hand, maybe all of that money that was saved by not spending it on a house like they do in Seattle, does indeed pay for all of your kid’s liberal arts degrees. Hmmmm, Chicago may actually lead the country in something?
I’m guessing that part of the low numbers are the decrease in flipping. I doubt there are many properties bought in 2017 that are listed and closed this spring for a significantly higher price. A much higher price would Indicate that the property was rehabbed over the last few months.
I doubt that anyone is tracking flipping activity, but to me it’s one of the best indicators of a good market.
“And we all know what they say about happy wives!”
doesn’t last long?
Good point jay. We already have $180K per kid saved for college and our oldest won’t be going for another 6 years.
vb, low numbers? March 2018 was the sixth highest in 22 years.
“Before you blame rising mortgage rates for the sales slowdown…”
What about all the people who bought during historic low rates 5 years ago or refinanced during those years. Would I like a bigger house? Sure, but I’m not eager to give up my 30 year fixed at 3.60%
“the highest median price”
Mar-08 $300k + CPI = $350k in Mar-18.
So, off 10% in real dollars.
Congratulations, Elliot! I know you had been looking for awhile. Where did you end up moving?
He discovered he lived too close to me and decided to get the heck out 🙂
Portage Park lost Elliot but gained Milkster, I think that was a fair trade.
“He discovered he lived too close to me and decided to get the heck out”
He’s still pretty close? Could ride share w nightingale to streeterville?
“I hope the strong market continues as I may be outta here by the end of the year”
“doesn’t last long?”
does ponies have an announcement?
@Tone – The 2018 sales are lower than 2004, 2005, 2006, and 2007. And are about the same as 2003.
“Low” is a relative term. The sales still have not reached the level where they were 15 years ago and they lost 10% from the 2017 level. You can call it what you want. I’d call that “low”.
I was extraordinarily lucky to buy at the absolute bottom of the market. Condos in my area are going for 50% more than I paid, but are still off the 2006 prices. I’m so tempted to sell and buy something with cash and just work at a doggy day care or as a dog walker. I was looking at housing costs in different parts of the country and Phoenix is appealing. The taxes are just so low compared to here.
Also, I was talking to a friend who lives in a rural area and he is paying $500 a month for an apartment! That’s $100 less than my assessment alone and it’s not as though he lives in gang territory. I could move there and be a dog walker and live a simple life.
“does ponies have an announcement?”
sorry to get your hopes up but no
“Also, I was talking to a friend who lives in a rural area and he is paying $500 a month for an apartment! That’s $100 less than my assessment alone and it’s not as though he lives in gang territory. I could move there and be a dog walker and live a simple life.”
Dog walker is not a job in rural areas. Do you want to work in fast food?
vb, March 2018 sales being higher than all but 6 of the last 22 March’s doesn’t sound low.
“While sales saw their largest year-over-year drop since 2014”
I don’t understand this at all.
“Dog walker is not a job in rural areas. Do you want to work in fast food?”
I know someone who sent their dog off to obedience camp in the country. Was not cheap. That might be a thing for Jenny.
” sent their dog off to obedience camp”
That sounds like a real job, with full-time-plus obligations, not a part-time opportunity to get one’s steps in for the day.
The realtor association Prez sounds like that Iraqi PR guy. Cold, low supply. Paleeese. HIGH taxes and rampant crime = makes us one of the worst RE markets in the country. stop the lies.
With inventory so low (and I do believe that’s what’s holding sales back) I still don’t understand why prices aren’t going up faster. Case Shiller came out today and Chicago still ranks 19/20 for YOY increase.
“I don’t understand this at all.”
It’s been 4 years since year-over-year sales dropped as much as 10%.
During most of that time, the yoy statistic has been in the positive (“up” year over year). We’ve seen a few weak months where it was negative recently but not by double digits.
“I was looking at housing costs in different parts of the country and Phoenix is appealing. The taxes are just so low compared to here.”
Why do you think there’s a Lou Malnati’s there? Lol. Plenty of Chicagoans there.
A few years ago, a long time Los Angelino was so tired of the housing market there (and working like a dog to try and pay for it) that he upped and moved his family to Athens, Georgia. Got a lovely house for like $200,000.
There are plenty of other parts of the country that are cheaper than Chicago. But you’re not going to find a lot of cheaper bigger cities. Secondary cities, though, sure.
Want to know why taxes are so low in Arizona? Because they pay teachers with experience a measly $30,000 a year.
With climate change, you couldn’t pay me to live in Arizona. There is literally like 3 or 4 months now where it’s 100+ every single day. No thanks.
“Would I like a bigger house? Sure, but I’m not eager to give up my 30 year fixed at 3.60%”
Good point Marco. Maybe we will really see people living in their homes for 20 or 30 years then. Maybe only after it’s paid off and they want to retire somewhere else will they move.
This has big implications for cities (and schools) and such.
Also would imply that condos will decline in value because you wouldn’t want to live in one for 20-30 years (at least starter condos.)
If mortgage rates are only going to go up from here (if that’s the case) then what happens when they hit 5% or 6%? No one who bought with 3% rate will want to sell. Ever.
“I doubt that anyone is tracking flipping activity, but to me it’s one of the best indicators of a good market.”
I don’t know how much of it is going on in the SFH market but flipping is pretty active in condos.
“It doesn’t feel like a bubble or a frenzy like last time; I feel like this has been said ad-nauseam but the demand simply exceeds supply and quality properties that are priced right will get competitive.”
Wait a minute.
You literally talk about how you’re already “up” $15,000 on your new 2-flat in the 2 months since purchasing it AND your parents could have sold their condo before print (which means they already had a buyer) but decided to list it and got a higher offer just one day later- and you’re arguing that there isn’t a bubble?
You think this behavior is totally normal?
Lol.
Sure.
Because all of this was happening even, say, 4 years ago in Chicago, right?
The only time anyone actively tries to figure out how much their house has gone up just two months after buying is when there is speculation. Speculation = bubble.
I’m not saying we’re in a bubble yet. No. Not at all. Lending is still relatively constrained.
But many are starting to whisper the “b” word again around the country- in many markets. The whole “you can’t lose money on it” has returned. There’s no fear, for instance.
And people are keeping track of their house’s “worth” on a day by day or month by month basis again. That means prices are rising at a higher rate than inflation.
Party on.
I wonder if this blog will get to cover two housing bubbles within the span of a little over 10 years?
Wouldn’t that be something.
OMAHA AWAITS YOU JENNY
I get the sense people in Chicago are still wary to pay prices that feel like they might be bubble prices, and that’s limiting what they are willing to pay vs. the other options — mostly finding something in a slightly less desirable location. This strikes me as the reverse of what I saw in 2009-10, where people couldn’t sell at the price they wanted so just did anything not to sell rather than take a loss.
The question is why is this happening in Chicago more than other places, accounting for price increases lagging, and my (totally off the cuff) theory is maybe just some degree of cultural difference (Chicago strikes me as more conservative about such things than the coasts) plus (related) not being as accustomed to paying crazy high prices for real estate. And related to those, that it’s mostly pretty easy to move out farther once prices seem unacceptable — the desirable area already is pretty large so expanding a bit further may not seem like as big a difference. So if nothing is available at a reasonable price in an area people are more likely to turn to option 2 or 3 or 4 or wait.
“The only time anyone actively tries to figure out how much their house has gone up just two months after buying is when there is speculation. Speculation = bubble.”
This comment is petty as all get out
He had UP in quotes and there were 2 sales after his. IMO its pretty normal to check what houses are selling for in your area whether it be 2 months or 20 years. If he could get out of paying PMI by using the comps to justify a higher home value, would that be speculation?
“Dog walker is not a job in rural areas. Do you want to work in fast food?”
My primary residence is in NYC where I’m a secretary. I have this conversation with my assistant friends all the time. This job does not translate to anywhere else in the country because the salaries are SO MUCH LOWER. It honestly does not even really translate to Chicago.
I feel like I’m caught in a Catch-22, working around the clock in a constant state of sleep-deprivation while not making enough money or having the time to enjoy all NY has to offer to its fullest.
I’m getting mugged through every form of taxation and the high cost of housing. Yet moving would entail drastically lower pay.
“I’m getting mugged through every form of taxation and the high cost of housing. Yet moving would entail drastically lower pay.”
I assume you’ve done the math but wouldn’t the lower cost of housing and the lower taxes completely offset that?
“It’s been 4 years since year-over-year sales dropped as much as 10%.”
I think that you are just eyeballing it wrong or are referring to a different month YOY where the data isn’t shown here. The drop from 13-14 was nothing, maybe you are looking back to 2010-2011?
“My primary residence is in NYC where I’m a secretary. I have this conversation with my assistant friends all the time. This job does not translate to anywhere else in the country because the salaries are SO MUCH LOWER. It honestly does not even really translate to Chicago.”
I am probably out of touch but in my experience in Chicago secretaries go from $35-40k with no experience and fresh out of school, high school only at lower end places to maybe $100k or just over for 25 years quality experience, good skills, higher end places like law, finance, etc. The salaries are that much higher in New York to make up for the cost of living being so much higher? That seems crazy to me. Or do you mean more like actual personal/executive assistant which is a higher level role for someone who can advance professionally in some industries (fashion, entertainment, etc.)?
Sabrina on April 24th, 2018 at 9:32 pm
“and you’re arguing that there isn’t a bubble? You think this behavior is totally normal?”
Yes.
“I’m not saying we’re in a bubble yet. No. Not at all. Lending is still relatively constrained.”
Oh ok so no bubble but there *might* be one in the future. That’s a convenient position.
“The only time anyone actively tries to figure out how much their house has gone up just two months after buying is when there is speculation. Speculation = bubble.”
That is some hilarious transitive fallacy right there. When a quality property in a low inventory market is priced right it will get competitive and generally receive multiple bids. The market undoubtedly benefits sellers right now but these sorts of incidents are not indicative of a bubble. I can think of dozens of other places that have languished on the MLS because they are priced way too high. This is nothing like the frenzy and the irresponsible lending that was occurring pre-bust.
Thank you Johnny. What homeowner doesn’t occasionally check out what other homes are selling for in their hood? It’s partially curiosity and partially self-justifying in a low-inventory market where it is difficult to figure out what a house is actually worth. Our appraiser had to use 3 properties over a mile away that sold within 3-6 months of each other.
“And people are keeping track of their house’s “worth” on a day by day or month by month basis again.” Technology has given us this ability. I could check out zestimate, redfin estimate, and comps all on my phone in less than 3 minutes. Information is power and I like to be informed about my investments.
“I could check out zestimate, redfin estimate, and comps all on my phone in less than 3 minutes. Information is power and I like to be informed about my investments.”
Except those automatic estimate tools are just terribly and completely awful. I would not look at those at all – except to narrow it down to a +/- 20% range.
Hi Gary! I’m working with Denise Mitchell on something, by the way.
Okay. So I don’t know what the difference would be as far as income taxes go. If someone knows, please tell me.
As far as property taxes they are higher in Chicago than NYC. I pay $6500 for a 2-flat in Queens vs $5000 for a SFH in Chicago. Property taxes in the suburbs of NYC are MUCH higher than they are in the 5 boroughs.
Any type of contracting – electrical, plumbing, heating, etc. is MUCH higher in NYC than Chicago and they will do a terrible job. Good luck in trying to get them to show up in the first place.
YES, you can buy a house in Chicago for about 20 – 25% of what it would cost in Queens. This would be in a comparable or better neighborhood in Chicago. The difference is shocking.
I feel like everything else – food, clothes, entertainment, transportation costs about the same.
” I’m working with Denise Mitchell on something, by the way.”
Yeah, I heard. Glad to hear you’re back!
Income taxes are currently 5% in Illinois, though who knows where that is heading. I think 5% is pretty average around the country. I suspect with NYC and the state it’s much higher than that.
Our sales tax is above 10% so that’s a factor. Chicago property taxes work out to about 2% of what they think the market value is. That’s probably heading higher.
I think you are correct about the cost of everything else.
But there are other places – in particular 7 states with no income taxes and housing in those places is even cheaper than Chicago. The tough thing to figure out – and I’ve done a bit of this myself – is what are comparable locations? e.g. Is Portage Park to Chicago the same as Queens to NYC?
But for me a big issue is the PITA factor. Lived and worked in NYC for 9 months once and then worked there for another few months many years ago. Even the simplest things were a hassle. And Chicago has more hassles than a city like Atlanta or Dallas or Raleigh/ Durham. Those are a different type of urban than a Boston or Chicago.
Milkster, Illinois income tax is half of NYCs. What is the Queens property worth vs. the Chicago home?
This house is in East New York, Brooklyn which is one of the worst neighborhoods in the city. Look at the price and the optimistic listing notes:
https://www.redfin.com/NY/Unknown/67A-Somers-St-11233/unit-Ocean-Hill/home/145336193
“I don’t know what the difference would be as far as income taxes”
So, using some round numbers, and making it all stupid simple (no allowance, no other deductions, etc), here’s what PaycheckCity sez:
$100k salary in NYC = $65,530.12 net (that’s deductions for FIT, FICA, NYIT, FLI, SDI, NYCIT)
$100k salary in Chicago = $69,998.50 net (deductions for FIT, FICA, ILIT)
$90k in Chicago nets $63,658.50, so even a 10% cut in that salary band means less take home.
“This house is in East New York, Brooklyn which is one of the worst neighborhoods in the city. Look at the price and the optimistic listing notes:”
Off topic, but it’s interesting that this place is listed for $699,000 and doesn’t meet Redfin’s minimum price limit to show it.
I think Marco nailed it – – we bought in 2013. We got an unbelievable deal and our mortgage rate is super low. Even though we could definitely sell our home for 50% more than what we paid plus the improvements, we couldn’t buy anything of similar quality in our current neighborhood that would count as an upgrade to our living situation. What we are looking at now is the only way we sell is if we relocate to an entirely different city and that isn’t going to happen until we hit retirement unless something crazy happens with one of our careers.
Anecdotally, based on Costar data, when you total current apartments under construction with the past 24 months of deliveries, Chicago is number one by A LOT – – and that is raw numbers. We are like 30% ahead of the next closest major city……think of that: recent completions + near term deliveries and we have more going on than NYC!!!
Sure, I am talking about rental apartments but smart renters, who are renters by choice paying crazy rents in new construction downtown locations, see this supply coming on line and know that they can play the concessions game and have a brand new place every year for comparable to less cash outlay than owning based on current prices. If their landlord tries jacking up the rent at lease renewal, they have the cash to hire a mover to move them one block to the latest brand new building with two months free rent. I know some young professionals who do this and invariably they expect a market correction – – at some point the supply of rental has to impact the ownership market and I think that it already is.
“This house is in East New York, Brooklyn which is one of the worst neighborhoods in the city. Look at the price and the optimistic listing notes:”
Are you posting this as an example of the bubble Milkster?
Will this sell at this price do you think? Because if it sells, then that could indicate that buyers are willing to pay whatever it takes.
“What homeowner doesn’t occasionally check out what other homes are selling for in their hood?”
Two months after you move in?
In a normal housing market that house would be up exactly ZERO. Heck, a year later, that house would be up 2%. Whoop-dee-doo. There’s other things to do in life than look to see if you’ve made any money.
The only reason people are looking and trying to figure out what their house is worth is because home prices are rising well above their normal rate- yes, even in Chicago.
That’s a sign of speculation. We’ve seen it all before. You can say “but it’s nothing like the frenzy of before” but every bubble is different. They don’t all look the same. But the first rule is speculation. And we’re clearly seeing it now.
Heck, if I lived in Seattle and literally was making $1,000 a day then hell yeah- I’d be checking. I’d be giddy. It’s NO different than the stock market. That’s why people look at their portfolios multiple times a day when a rally is on and don’t when it’s selling off. You feel confident. You feel alive. You feel like you can do anything.
You made the right decision, see? You’re MAKING money. It’s soooo great. It will keep going up and up and up. You’re counting the money…
Yeah- that’s totally normal.
No bubble happening in Chicago.
Carry on everyone.
Also, I’ve been running this blog long enough to see the signs.
All you have to do is go and look at the comments here in 2007 and 2008. Hell, even 2009. People were still arguing with me that there was no bubble.
Ha!
What a joke.
We’re back to that again. We’re back to the denial.
What are the stages of a bubble?
1. Speculation
2. Denial of said speculation
3. Denial of any bubble
4. Fraud
5. Bubble busts
“I think that you are just eyeballing it wrong or are referring to a different month YOY where the data isn’t shown here. The drop from 13-14 was nothing, maybe you are looking back to 2010-2011?”
No. It was November 2014 where the year over year drop was last more than 10%.
It’s been 4 years since the Chicago market has seen a yoy drop of 10% or more in sales.
“If he could get out of paying PMI by using the comps to justify a higher home value, would that be speculation?”
If you can get out of paying PMI two months after you buy due to nearby sales, then something is drastically wrong with those sales.
That wouldn’t be possible unless there were fraud involved.
Everyone checks prices right after they buy. Because they are terrified that they overpaid.
You have to consider two very likely scenarios: 1) Elliot got a deal on his place and it really hasn’t appreciated. I do see stuff at significantly different prices all the time. In my own neighborhood I saw a couple of fairly comparable homes sell about 15% apart. 2) Elliot’s comps aren’t really good comps. No offense to Elliot but buyers and sellers cherry pick their comps all the time. This is especially true of 2 – 4 unit buildings. You might think they are comps but when you look at the condition or the income generation potential they are not comps. I comp those buildings based on income/ cap rate, not structure. So maybe his place hasn’t really appreciated at all.
“No bubble happening in Chicago.”
I fuckin wish there was a bubble happening… prices have gone nowhere the last year or so
“Are you posting this as an example of the bubble Milkster?”
Apologies, Sabrina. I should have clarified. I posted the Brooklyn house as an example of how overpriced NYC real estate is and how much more your money buys in Chicago. I still think Chicago is a bargain. Yes, prices have gone up, but you can still buy a decent 3 bed / 2 bath house in many nice parts of the city in the 300K range. 300K does not even buy you a studio in Brooklyn or Queens. Even in the sketchy parts.
Gary Lucido on April 25th, 2018 at 11:03 pm
“Everyone checks prices right after they buy. Because they are terrified that they overpaid.”
YES. That is what I was saying in my last post. And it’s the same regardless if housing is bullish or bearish. Glad I’m not the only human here.
“No offense to Elliot but buyers and sellers cherry pick their comps all the time. ”
None taken. This is why I put “up” in quotes; for one it’s only 2 comps (I’d argue that it’s difficult not to cherry pick because sales volume in comparable area is so low – literally nothing else to pick!) and because if there is a gain it’s unrealized/on paper. It is difficult to comp 2-4 units because the income-approach needs to be considered in addition to sales approach and with a lot of renters grandfathered in to paying under-market rents, that puts a drag on caps.
What kind of cap rates are you noticing on the northwest side? The only “deals” we were finding (+5-6% cap) were very expensive 4-units that were way too far from public transportation. Though I’m sure there were many that sold off the MLS.
NYC is cool, but why pay 10% income tax and RE prices 100% higher than Chicago? It’s not that great of a place. I get it for the rich, where money is not much of a concern, but for everyday people it’s weird.
NY median household income is $71K
Chicago median household income is $66K.
“What kind of cap rates are you noticing on the northwest side? The only “deals” we were finding (+5-6% cap) were very expensive 4-units that were way too far from public transportation. Though I’m sure there were many that sold off the MLS.”
I would hope that you could get at least 6% cap rates there but I always have to check a neighborhood right before we list a place or submit an offer on a place.
Yeah, I think the biggest limitation for many buyers is that their budget is lower than the prices out there.
I do not get that whole off the MLS thing. I almost never see that make sense for either the buyer or the seller. It only works for sellers when they have a really, really good idea of what the property is worth (rarely true) and they have a buyer for whom the personal value is greater than the market value. And it works for a buyer when the seller is really dumb.
Tone, a lot of people in NYC delude themselves into thinking NYC is special and that other cities don’t have as much “culture.” The funny thing is most never actually get into any real “culture” beyond having avocado toast at their favorite brunch spot.
I love NYC and usually do a week long vacation there 2x’s a year, but could never live there. It is funny because I swear wife and I seem to know more about sh*t to do in NYC and have participated in more cultural, museums, and other off the beaten path things in NYC than pretty much all our friends that actually live in NYC.
NYers seem stunted in maturity. People in their 30s and 40s living like I did when I was 23.
I also think a lot don’t want to move because in a way, it is admitting failure that they didn’t make it to the class who can afford the “classic six apartment”, private school, etc.
Have some friends where husband is a VP at a bulge bracket in M&A and they finally said screw it and moved to Jersey cause they couldn’t afford Manhattan and raising 2 kids in a 750 sqft apartment for $8,000/mo. WTF?
Seems like a lot of people that live there with normal jobs actually have family money. I know where was a dust up a few weeks ago when a couple was featured in NY Times Real Estate section… $4 or $5 million townhouse in Brooklyn. Article mentioned husband was elementary school teacher and wife was a stay home mom. Of course, they got doxxed and turned out wife’s dad was CFO of some real estate company.
Russ, I mean NYC clearly has more of everything, but for the price it makes no sense. My wife and I do quite well, we would literally need to triple our income for a move to NYC to make sense. That would never happen in our industries.
“Everyone checks prices right after they buy. Because they are terrified that they overpaid.”
Absolutely. Or you’re afraid you missed out on a better place or a better deal. And you were conditioned to shopping for homes, so it takes a while to give that up.
“Absolutely. Or you’re afraid you missed out on a better place or a better deal. And you were conditioned to shopping for homes, so it takes a while to give that up.”
Same goes when one is close to buying. There had been hardly any new listings in our desired area/price range for the past several weeks (and what few houses were listed were overpriced IMO but still went under contract immediately). After seeing a (rare) FSBO house, we offered the guy quite a bit less than he had in mind a week ago, followed by radio silence. Yesterday he says he’ll accept our offer, so today I draft and send him a contract. Within a span of maybe 3 hours today, there have been at least 5 houses listed in our desired area (a couple too far out of price range, but a few that could be remotely possible), which gives us pause. Seeing as our FSBO seller isn’t using a broker, and doesn’t strike me as someone who checks Redfin everyday, I feel we’re at a disadvantage in that he’s not aware of all of the competition his house suddenly has.
Where you looking anonny?
“Where you looking anonny?”
West of Broadway.
“Absolutely. Or you’re afraid you missed out on a better place or a better deal. And you were conditioned to shopping for homes, so it takes a while to give that up.”
Maybe that’s men’s behavior but not women’s?
“Seems like a lot of people that live there with normal jobs actually have family money. I know where was a dust up a few weeks ago when a couple was featured in NY Times Real Estate section… $4 or $5 million townhouse in Brooklyn. Article mentioned husband was elementary school teacher and wife was a stay home mom. Of course, they got doxxed and turned out wife’s dad was CFO of some real estate company.”
I saw this and I was like, “what???” about their jobs. Something didn’t add up.
The sad thing is this scenario is in the Millionaire Next Door (where the parent buys the home.) Because they still have to decorate it. And they still have to heat/cool it. And they still have to pay the taxes on it. And they still have to maintain it (roof, windows etc.). None of which they can afford on their current salaries.
Basically, you are dooming your child to a life of dependence. They will never be able to live without the parent. And, according to the book, they will never achieve. There is no motivation for the wife to get a job or the school teacher to get another degree and get more money. The parents are paying for their life.
Also, others in the neighborhood WILL have money. So you now have to compete with your family vacations, clothing, type of car (if they have one) etc. Can’t do any of that on a school teacher salary.
The book argues you’re hurting your child by buying them a house they can’t afford on their own.
“I still think Chicago is a bargain. Yes, prices have gone up, but you can still buy a decent 3 bed / 2 bath house in many nice parts of the city in the 300K range.”
Yes- we’re definitely a deal. People don’t realize how cheap it is here. Even in the prime GZ neighborhoods you get so much more for your money than you would in NYC, SF, LA or DC.
I posted this this morning. It shows how home prices in the Chicago area have lagged the rest of the country for the last couple of decades http://www.chicagonow.com/getting-real/2018/04/the-sad-story-of-chicago-area-home-prices-in-one-graph/ The cumulative effect is dramatic.
“Absolutely. Or you’re afraid you missed out on a better place or a better deal. And you were conditioned to shopping for homes, so it takes a while to give that up.”
All this rings true to me, as does the checking to confirm the price paid was a decent value, and also seeing what happened to places that you looked at/considered. It may be personality driven but I think it’s common (and looking at houses is fun so it’s hard to stop).
A friend of mine has been doing it since he bought a couple of years ago (a house in the close-in burbs he plans to raise his young children in until they are grown, so no flipping considered). I think for him it’s partially that he got burned by buying at the top of the market before, so is reassuring himself that it was a good deal, that this time it’s going up.
“Yes- we’re definitely a deal. People don’t realize how cheap it is here. Even in the prime GZ neighborhoods you get so much more for your money than you would in NYC, SF, LA or DC.”
Because were not those 4 cities.
I’m sure folks in Milwaukee, KC, StL say the exact same thing about Chicago.
“you now have to compete with your family vacations, clothing, type of car”
Why do you “have to”? Why not just live your life, and let the Joneses keep up with the Kardashians?
“folks in Milwaukee, KC, StL”
There are prime GZ neighborhoods there?
And yes, of course they do.
Interesting perspective on people’s plans to move/ sell their home. They do talk about one thing I’ve been suspecting…it feeds on itself. Lack of supply discourages selling, which reduces supply.
I also wonder if people have an irrational fear of making a mistake – i.e. they saw what could happen and don’t want to buy “at the top”. Of course, owning is equivalent to buying.
http://dsnews.com/daily-dose/04-26-2018/how-many-homeowners-plan-on-remaining-in-their-homes
We aren’t moving up because we just can’t stomach the cost necessary to do so to get something that would actually feel like a true move up.
We’ve decided we rather have more financial freedom than being locked into a bigger mortgage/house.
Everything we look at seems to be exponentially more expensive, but only marginally better than current house.
We are going to renovate. For the 20% down payment on the new house, we could renovate basement, kitchen, baths, paint, and change out all fixtures to current trends… and still have money left over to buy new furniture for practically every room. Best of all, we’d still be mortgage free in 10 years or less.
“For the 20% down payment on the new house, we could renovate basement, kitchen, baths (etc)”
Send your contractors’ info to my real email, please, Russ. If they will honestly do all that (well) for well under $300k, I need that info.
Thanks!
@ Gary
Correct me if I’m wrong, but doesn’t CS use Cook, De Kalb, Kane, Grundy, Kane, Kendall, McHenry and Will counties (Lake is excluded, go figure) to come up with their numbers? So you’ve got a new high rise on Michigan Ave thrown into the same statistical pot as a condo development 75 light/cultural/economic miles away in De Kalb? Does CS cast such a massively large demographic net for all of the cities they chart?
CS tells me about as much as what has happened to prices in Logan Square over the past two decades, as an official Chicago spring 70s and sunny forecast… out at O’hare. Both are meaningless if you’re actually downtown.
jay, my understanding is that CS also excludes older homes that have not sold in a number of years. Which is most homes in the city of Chicago.
You are correct that the Case Shiller index looks at the entire metro area. That’s why I always try to say “Chicago area” when referencing it. The other 19 indices are also for an entire metro area so it’s fair to compare them. The Chicago area is severely lagging the rest of the country.
The Depaul Institute of Housing Studies has the same data a bit more granular and it does show areas like West Town/ Near West Side and Logan Square/ Avondale having done quite well – of course due to the gentrification there.
As for the older homes that haven’t sold in a while. Sure. They are underrepresented but there is no better measure of home prices.