Chicago Market Conditions: March Sales Rise 13% YOY While Inventory Drops
As Gary already reported, sales jumped year over year in March as the spring buying season got underway.
From the Illinois Association of Realtors:
The city of Chicago saw sales of 2,118 homes in March 2015, up 13.0 percent from last year when 1,875 homes were sold. The median price of a home in Chicago was $263,079, up 11.9 percent over March 2014 when median price was $235,000.
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 2,118 $263,079
“Chicago’s spring market is showing bounce with back-to-back months of sales increases signaling strengthening demand,” said Hugh Rider, president of the Chicago Association of REALTORS® and co-president of Realty & Mortgage Co. “Even with fewer homes on the market, we’re seeing determined buyers finding their ideal home. This increased demand is moving median sales prices higher, offering homeowners an incentive.”
Speaking of inventory, Crain’s is reporting that single family home inventory in Chicago is at 8 year lows. Condos/townhouses are also low, but not quite at record lows.
The sellers of a newly listed Logan Square house must have felt like the belle of the ball yesterday, with suitors swooping in almost immediately after it hit the market two days before. At least a dozen potential buyers made appointments to tour the three-bedroom house between 9 a.m. and 6:30 p.m.
By 9:40 yesterday morning, the listing agent, Nigel Gillett of Century 21 S.G.R.’s West Loop office, already had one offer in hand and expected to receive more for the Talman Avenue home, which is listed for $685,000.
“It’s a crazy thing,” Gillett said. “Crazy.”
The swarm of potential buyers is a symptom of the city’s super-tight inventory. The supply of houses on the market is smaller than it’s been for at least eight years.
There were 3,795 city houses for sale the week of April 11, according to data from the Chicago Association of Realtors. That’s about 250 fewer than were available at the same time last year and the smallest number of houses for sale since at least January 2007, the earliest date that CAR reports. During 2007 and 2008, the inventory of houses for sale in the city came close to hitting 10,000.
What’s the reason for the low inventory even as prices have rebounded- with some being at or above peak?
“The numbers may not be working for them yet,” said Janet Joseph, a Berkshire Hathaway HomeServices KoenigRubloff Realty Group agent in the company’s Lincoln Park office.
As many as one-quarter of all Chicago-area homeowners with mortgages owe more than the home is worth, and another 17 percent are “effectively under water,” meaning the proceeds from a sale of their home won’t cover the costs of moving to a new one, according to RealtyTrac.
As a result, “they may have to wait it out another year or a few years,” Joseph said.
Is this the best market Chicago has seen since the peak of the bubble?
P.S. Don’t you just love it that Dennis Rodkin has “unretired” and is back in Chicago writing about real estate? We missed you Dennis!
Illinois home sales, median prices post double-digit gains in March [Illinois Association of Realtors, Press Release, Apr 22, 2015]
Can’t find a Chicago home to buy? Join the club [Crain’s Chicago Business, Dennis Rodkin, April 21, 2015]
Hah! I just posted that same Crain’s quote about underwater Chicagoans on your Chicago sizzle post. My point being that prices have not gone up as much as you think. But with inventory this low and sales this brisk and bidding intense you will see prices rise and that will bring out the inventory. It has to.
“What’s the reason for the low inventory even as prices have rebounded- with some being at or above peak?”
Are you just going to keep asking this question until you get the answer you want?
I just sold a 1BR LP highrise condo. I got tired of renting it after 8 years.
I’m still currently renting out a half mil 2/2 in Old Town. Closed comps are back up to near what I paid but the numbers for renting it out still work for me and I have over 20% equity in it, maybe close to 25%. However transactions costs aren’t worth a sale just yet since rent is so high.
http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/04/new%20home%20sales%20vs%20prices_0.jpg
chuk–that might be the least useful median price possible. Too many reasonable explanations for an increased median, with (still) 60% lower sales.
“chuk–that might be the least useful median price possible”
What else do you expect from ZeroHedge?
“What else do you expect from ZeroHedge?”
I was just about to say the same thing.
I know this much: the price of land has been increasing so new homes built are pricey. New construction infill spec housing are some of the priciest homes for sale, and they’re selling like Johnny Cakes. Homes that even two years ago weren’t considered teardowns are being raised for mcmansions.
https://www.redfin.com/IL/Park-Ridge/316-N-Ashland-Ave-60068/home/13649091
They’re tearing down a 3,000 sq foot house on a 16,000 sq foot lot to build a 7,200 sq foot house with a 3,500 sq basement.
That is ridiculous and stupid. That existing home looks great, why not just add onto it
“They’re tearing down a 3,000 sq foot house on a 16,000 sq foot lot to build a 7,200 sq foot house with a 3,500 sq basement.”
Is someone really going to pay $3m ($1.35 lot + 10,700 SF @ $150 psf, inclusive of profit) for a house in that location? I mean, it’s a pretty great Park Ridge location, if you’re moving to PR, but I find two $3m sales *ever* in PR.
anon, I did a little research, and I’ve come to believe that this is not infill spec housing; but rather, somebody involved in the blessed by the heavens industry of finance that is building their own home. 12,000 sq foot lots are difficult to come by in park ridge and this buyer has the kind of money to purchase whatever they want. So that’s why they were willing to pay so much for the lot.
“12,000 sq foot lots are difficult to come by in park ridge”
especially ones that are next door?
“12,000 sq foot lots are difficult to come by in park ridge”
“especially ones that are next door?”
At first I didn’t understand that comment. Then I googled street walked the street and realized that next door has what appears to be a similar size lot. Across the street also looks to have some 100ft wide lots….so it doesn’t seem that its that “rare”.
Someone has to be the 3rd person to have paid $3M for Park Ridge.
Looks like there are a bunch of big lots on that block.
And it’s basically a half mile walk to the metra.
And you have the median park.
Which is why I thought it was a pretty great location.
There’s a 95×168 across the alley that is on the market as a teardown for $799:
https://www.redfin.com/IL/Park-Ridge/319-N-Prospect-Ave-60068/home/13649777
Which is 20% less than the ’05 sale price.
Yeah 12,000 sq foot lots existsbut there aren’t many of them. $1.35 mil for just a lot is a lot of money around here in the burbs.
“especially ones that are next door?”
I didn’t gthooi or anything, but think maybe the master universe dude lives next door. Though there’s some info that’s a little confusing that I didn’t bother to sort out.
Gary – Do you have the data to correlate inventory with price increases at a neighborhood or sub-neighborhood level?
For instance if we take 4 separate tracts, two of which have median sale prices well past peak and two of which of median sale prices well under peak, and then look at what percentage of the housing stock in each has been listed for sale in each area during 2015, we will have a good picture of how much city-wide inventory is being impacted by debt overhangs (big differences in inventory between tracts) or how much it is being impacted by greater structural influences (similar levels of inventory in each tract).
Preferably you can matrix the tracts, so that one over-peak tract is a high-price neighborhood and the other over-peak tract is a low-price neighborhood.
“I didn’t gthooi or anything, but think maybe the master universe dude lives next door.”
The double lot house (ie, apparently a $2.5m *teardown*) on the corner? Nah, belongs to someone in the family of a successful family business.
Unless you mean the other next door–in which case it appears they may own *both*.
I’m confused now. what the heck are you talking about? who are these people, links please?
“I’m confused now. what the heck are you talking about?”
You’re confused? I’m confused. Or maybe I’m not. (I was talking about the house to the north.)
“who are these people, links please?”
Please, you know we are not supposed to talk about people here (and you’re not supposed to post suburban properties).
“The double lot house (ie, apparently a $2.5m *teardown*) on the corner? Nah, belongs to someone in the family of a successful family business.”
Does seem like the place to be. Is that where HD lives?
What makes it more confusing is that the redfin picture of the property is the google streetview picture of that approximate address, which is wrong.
Are we talking about the pink house with the tiled roof? What is the address # of that one?
“Are we talking about the pink house with the tiled roof? What is the address # of that one?”
I have no idea. Maybe you could walk by tonight and snap some photos and send to me/@fo. I was just going off PINs and addresses. But i really have no idea at this point.
I live in Long Grove, so Park Ridge is quite a drive for me.
The family business house is 300 N Ashland. They own the corner lot and the bonus yard to the north. So, about 3/4 of an acre.
The (possible, per HD’s reasonable conjecture) buyers of the apparent teardown (it was deeded to a land trust) live in the house to the North–320.
I am now thinking of HD living in a chocolate factory, and can’t decide if he’s more of an oompa loompa, or something else…
I wish I could go back to 2012 and show all of you guys how negative you all were – with everything in life you have to remember to stay the course. Buy smart (a decent house in a good area) and don’t look at the year to year changes in price. In 20 years you will be better than fine. All of the nervous nellies who sold out, lost out. The smart ones are sitting pretty. It’s not that hard of a concept. It also translates to jobs, spouses, etc.
“ary – Do you have the data to correlate inventory with price increases at a neighborhood or sub-neighborhood level?
For instance if we take 4 separate tracts, two of which have median sale prices well past peak and two of which of median sale prices well under peak”
Well, the data is available but as we’ve discussed before median prices are irrelevant to “prices”. For instance, if you look at Ukrainian/ East Village, median prices of SFHs are up from $550k in 2011 to $850K today. That in no way corresponds to the underlying price increase of homes here. It has to do with all the teardowns being bought and $1.2 MM homes being built on them.
By the way- did anyone else see the Buffalo House Hunters episode?
It was SO refreshing to see a young couple buying their first house and it was listed at $125,000- for a 3 bedroom, 2 bath.
The people in California must have been sick watching that episode. Yeah- they have winter but life is so much easier for them financially. They had two decent incomes. They were basically “rich.”
Strangely, the home builders have been reporting really awful first quarter earnings. I didn’t expect that. People have been ga-ga over new construction and mortgage rates are still near record lows. Seems strange to me.
Mortgage purchase applications were up last week over 2014 but were still running 5% under the same week in 2013. So they’re better, but not great.
Mortgage purchase applications usually peak in May for the year.
clio:
Good to see you in a better place. Seriously. You were pretty down for a while.
“The continued decline in new-home sales may have more to do with supply than demand. Sales have fallen simply because developers aren’t building that many homes, said Tracy Cross, principal of Tracy Cross & Associates.
“If you don’t build it, they won’t come,” Cross said.”
http://www.chicagobusiness.com/realestate/20150430/CRED0701/150429749/with-builders-holding-back-new-homes-sales-fall-again
I wonder home many of those new sales are spec infill homes. Lots and teardowns are so pricey these days that the numbers don’t work in a lot of cases. Lots of tear downs for sale all of over chicagoland but high prices for those lots too.
I’m seeing a lot of empty lot construction in my neck of the woods. Although there’s a Nortcenter-style 1.2 mill lot line home on a tear down. It’s the most expensive home in the area, which brings up the old adage of “don’t buy the most expensive home on the street.”
No shortage of new construction here in East and Ukrainian Village. It’s been non-stop for 3 years now with no sign of stopping. I’m actually planning on doing a new construction update for the city sometime soon.
“No shortage of new construction here in East and Ukrainian Village. It’s been non-stop for 3 years now with no sign of stopping. I’m actually planning on doing a new construction update for the city sometime soon.”
No offense, but it’s probably like 20 properties and everyone who lives on those blocks thinks “they’re building everywhere.” When it is very, very few new construction properties.
Overall, in the entire Chicagoland area, the real estate analysts only expect about 3700 new construction properties this year. That is NOTHING. There are millions of people living in the metro area!
I just saw an ad for the new Basecamp in Old Irving Park (on Milwaukee- near the 6 corners.) They are building 48 single family homes there. That’s probably going to be a big chunk of Chicago’s “new” construction for the year (outside of a few bigger condo buildings.)
Demand is there. I don’t get it.
From the article:
“Sales grew 4.7 percent in the suburbs, to 952 units, and fell 48 percent in the city, to 95 units. The data cover single-family homes, town homes and condominiums.
The report may undercount sales in the city because it only covers developers with more than a dozen units. Developers building single homes or clusters of a few homes or townhomes on infill lots in city neighborhoods, the norm in hot city neighborhoods like Lakeview, Logan Square and Ukrainian Village, don’t get caught in its net.”
It’s still not that much more than what they are reporting. How many houses are being built in Lakeview? 20 at any one time? And maybe 20 of those 3 flat luxury condos (where the 2/2s are $550,000 each?)
It’s not as many as you would think. The city is HUGE. Millions live here. A 100 new properties is NOTHING.
“No offense, but it’s probably like 20 properties and everyone who lives on those blocks thinks “they’re building everywhere.” When it is very, very few new construction properties.”
On an absolute basis it’s small but on a percentage basis it’s significant. Some blocks have 4 or more projects going on simultaneously. When I produce the map you’ll see that it’s all in pockets.
Wow, that basecamp old irving is a crappy development. Holy moly that’s a garbage development. I don’t even know where to start!!!
SFHs facing milwauke street! SFH’s on top of the metra line! a single tiny street with no parking! the ‘not included’ portion of the parcel is AN VEHICLE MECHANIC that specializes in complete engine, crankshaft and valve jobs! Nice quiet neighbor! The only reason there is a park is because the architect couldn’t figure out a way to cram any more SFH’s on to the parcel! The lots look about 20′ wide, if that! Kilbourn Park and all of it’s crime and late night riff-raff is right around the corner and even better, Schurz High SChool (where your child will NEVER EVER ATTEND) is across the street!
Interestinly enough, they’ve been talking about developing this land for a while; they wanted to put senior condo housing there; but now apparently its the same old thing – cram as many SFH into the crappiest former commercial lot they can find and charge a ton of money. Epic fail!
Yeah I doubt new construction homes in that location sells quickly, but people are gaga for new SFH’s anywhere and well 500k isn’t that much anymore… will be interesting to see how it goes, the Basecamp rowhomes in Cabrini sold out before construction even started
“Interestingly enough, they’ve been talking about developing this land for a while; they wanted to put senior condo housing there; but now apparently its the same old thing – cram as many SFH into the crappiest former commercial lot they can find and charge a ton of money. Epic fail!”
The houses aren’t cheap either. Starting, basically, at $500,000.
But I wondered the same things you did HD. Why not just move to Oak Park, Park Ridge or Evanston and pay $500k to $600k and be in decent school districts? What’s the lure of living right by 6 corners?
I don’t get it. Yeah- there’s a starbucks down the street on Irving but that is true in all the inner suburbs as well. As we’ve discussed here- it’s the same chain restaurants.
“Why not just move to Oak Park, Park Ridge or Evanston and pay $500k to $600k”
Where are the new construction houses in those towns in that price range? You say *all*the*time* that people want NEW!NEW!!NEW!!!
640k-775k for a new 3/2 CONDO in oak park, doesn’t appear any SFH’s are for sale there that are new
http://www.realtor.com/newhomesconstruction/Oak-Park_IL?source=web
Evanston appears much cheaper
looks like you can get a duplex or whatever one of those side by side homes is called for 550k and up to 900k+ for a SFH
http://www.realtor.com/newhomesconstruction/Evanston_IL?source=web#newhomesconstruction/Evanston_IL/sby-1
And man taxes are brutal in both those towns!
The homes on Milwaukee Ave are right by the Metra Grayland station and a quick bus trip to the Irving Park CTA station. Developers are betting on people paying a pretty penny to live right next to transit.
Same logic is driving the construction of $1200 a month, 300 sq ft studios on Milwaukee Avenue in Logan Square.
There’s no quick bus from there to the irving blue line; and the addison blue line is a slow slow trog down addison in the morning….probably a 10 ride on the bus just to go 8 blocks…
There’s plenty of updated rehabbed homes in the burbs in the $500k range. But these homes START at $500 – who knows what they’ll really cost. on 20′ lots too. pure greed from the delveoper who sees only $$$ and substandard living for ‘rich’ people who will pay for it.
and sonies, $500k is a lot of money for 95% of the population…
Yes I know that, took a closer look at that development and wow you’re right there’s a frickin engine machine shop smack dab in the middle of the development… wow!
“There’s plenty of updated rehabbed homes in the burbs in the $500k range”
There are plenty in the City, too. They just aren’t in CC-approved hoods, and the burbs where yo find them are not Oak Park and Evanston.
“Oak Park and Evanston.”
Why doesn’t anyone here ever talk about the north shore? I’ve been on here for years and no one is like “Glencoe is mad awesome, yo.” Do CC’ers not live on the north shore at all?
New Trier holds its graduation at NU’s basketball stadium, the school is that big. 200 girls try out for the soccer team (11 on the field at one time). I suppose the best thing about going to New Trier is getting out of there, and then simply being able to brag at college “I went there” and cover up that you were actually a nobody. Another benefit, I think, is that nobody can make fun of it.
Another benefit of new trier is making connections, networking and mingling with the future who’s who.
http://en.wikipedia.org/wiki/List_of_New_Trier_High_School_alumni
The list of famous grads from my high school is nowhere near as extensive as this list.
Many New Trier grads will stay in contact their entire lives, and they will be neighbors once again when they return to the NS when it’s time to raise a family, although it’s a bit delayed lately as many of them are choosing to stay in Lakeview and LP rather than migrate back home…
Even Stevenson High School, where my son attends, which is arguably higher ranked and academically better than New Trier, doesn’t have as extensive a list of famous alumni…the most famous of which is Ron Goldman …
http://en.wikipedia.org/wiki/Stevenson_High_School_%28Lincolnshire,_Illinois
“arguably higher ranked and academically better than New Trier”
So long as you enjoy censorship and prefer heroin to coke…
“(stevenson) which is arguably higher ranked and academically better than New Trier”
What a load of crap. The same ethnic hyper-drive propagandists tried to pull this same thing with GBN, and they eventually had to give it up. Nobody is ever going to think GBN is as good as New Trier. 20 years from now it’ll be the same scenario with Stevenson. Most people in Chicagoland couldn’t even place it on a map.
http://www.usnews.com/education/best-high-schools/illinois
Exclude the Chicago magnets and it’s literally the best in the state. I don’t know if I’d called US News “ethnic hyper-drive propagandists”.
“Most people in Chicagoland couldn’t even place it on a map.”
Even if you spotted them “its in Lincolnshire”.
School rankings, who gives a fuck? God you people are so sad sometimes. Just because a school is “highly ranked” doesn’t even mean your not as intelligent as you think progeny is even going to succeed there.
“Just because a school is “highly ranked” doesn’t even mean your not as intelligent as you think progeny is even going to succeed there.”
Yeah–you went to a ‘highly ranked’ HS, and look at you!
“US News school rankings”
You look at that list, and you wonder why anyone would move to Park Ridge. Just barely better than that gang-infested Fremd.
“There are plenty in the City, too. They just aren’t in CC-approved hoods, and the burbs where yo find them are not Oak Park and Evanston.”
There are flippers doing total renovations in Oak Park – 80% new when done – and selling them for around 500K. South of 290.
“Yeah–you went to a ‘highly ranked’ HS, and look at you!”
Did I? If so, yeah exactly!
The US News high school rankings methodology makes no sense and I would put little value in how a school ranks. The “College Readiness Index” is based simply on AP or IB PARTICIPATION rate. So, if you have 80% of your students take 1 AP exam but they all score a 1 or a 2, your school gets a higher ranking than a school that has 50% of its students take at least 1 AP exam but score a 4 or 5. Does that make any sense to anybody? It basically encourages schools to allow the majority of its students to participate in AP coursework, which may even water down the curriculum. It gives no bump in rankings to schools where they have more stringent standards for AP enrollment and actually perform well on the exams.
In addition, it gives bumps to schools that have its African American and low income students perform just as well or better than its white/non-low income counterparts. Certainly, a noble idea, but no idea what they do for a school like NT that has very few African American/low income enrollees — perhaps the result of those 10 students actually impact the score, but I’d say in evaluating a school, the result of 10 students is probably not at the top of one’s list…
A better methodology for Illinois schools is simply to look at ACT averages since every student is required to take it as part of the PSAE. In other states, this would not make sense because only those applying to colleges typically take the SAT/ACT and then often only take one of them. I would prefer looking at the 75th percentile score as that gives a sense as to the quality of students in the honors courses (and does not negatively impact a school that has a large special ed population), but I cannot find that anywhere. Similarly, one could see which schools have the highest % of exceed expectations on the PSAE/ISAT.
Just for some examples, New Trier comes in at a 27.4 average score on the ACT. Stevenson 26.4, Maine South 24.2, Whitney Young 27.9, Jones College Prep 26.5. I’m actually shocked New Trier is that high considering it’s not selective enrollment and its average is definitely skewed down by those in special ed/general classes which a school like Jones Prep doesn’t have, but somehow NT’s average is still above Jones (but below Whitney Young — I think WY or IMSA are the highest in the state).
Here’s a ranking that is based on average PSAE score (better than AP participation rate, but still not great in my mind since the PSAE is a “basic” exam and doesn’t tease out the students at the top):
http://www.schooldigger.com/go/IL/schoolrank.aspx?level=3
Having said all that, I don’t think New Trier/Stevenson/Hinsdale are “so good” because of their instruction/resources. It’s just a function of the socioeconomic status/education/involvement of the parents and the students’ backgrounds and I have no doubt that a student from a similar household would perform just as well elsewhere. In my mind, there’s a minimum threshold required for a school to be able to get the most out of its students, but once it meets that, a very high achieving student with involved parents will perform well and get into a solid college no matter where they go. In fact, I’d argue that the competition at a place like NT might even HURT students when it comes to the college application process. People seem to freak out about small differences in student output at high schools, but I personally believe that the same student will have similar success no matter where they go (again, assuming the school meets some minimum threshold).
The highest three ACT averages in the state that I can find are actually IMSA at 31.9, Northside College Prep at 30.2, and Payton at 30.0.
“A better methodology for Illinois schools is simply to look at ACT averages since every student is required to take it as part of the PSAE.”
WAS required. Past tense. They’re moving to stoopid PARCC tests, so everything is going to go haywire the next few years.
“They’re moving to stoopid PARCC tests”
I saw the John Oliver story on Pearson the other day, they sound awful. I have to pay for private tutoring just to make sure my kids are infected with common core.
Maine South’s problem is the “7.4%” that gets a free lunch. There’s some apartments and small condos in Park Ridge and those transient students bring down their scores. NT and my children’s current high school, Stevenson, are all sub 5% free lunch. Do they even allow apartments in the Stevenson school district?
“In my mind, there’s a minimum threshold required for a school to be able to get the most out of its students, but once it meets that, a very high achieving student with involved parents will perform well and get into a solid college no matter where they go.”
Agree w this. I went to a v good surburban HS (maybe something like maine s but much smaller, or wherev sonies went), a mediocre city HS (maybe ~lake view, or wherev groove went) and a shitty hs in the boondocks (wherev HD went to HS). Didn’t really matter that much to me.
I don’t think the problem is Pearson, per se, but the over-specificity of the PARCC standards. It’s not ‘know how to calculate X’, it’s ‘know how to calculate X using process Y’, and a very particular (and not necessarily the best/highest/erudite-est) way of reading and interpreting texts.
The test merely attempts to assess how well our children is learning the questionable curriculum. It is possible that the test is poorly designed to do so, too, but the root problem is the curriculum.
I went to high school on the fringes of cook county, which can be a lot of different places. Hell I got a my 40th reunion coming up later this year.
an additional 1 out of 46 students getting free lunch makes that big of a difference eh? Sounds surprising.
“an additional 1 out of 46 students getting free lunch makes that big of a difference eh?”
Just confirms that there are some serious problems at Maine South.
“Hell I got a my 40th reunion coming up later this year.”
wow and still paying off your student loans huh… lol no wonder you’re so bitter
Does Illinois still require everyone to take the ACT? It should. I use this for school quality more than US News for the same reasons cited above.
“an additional 1 out of 46 students”
so waht happened here? is sonies doing math in his head? weird rounding bug in excel? fat fingering?
yeah, twas headmath, looks like I was close! Ah the small victories in life. BOOYAH
My public school friends would purposely do poorly on the state exams to prove a point that the testing was a waste of their time. Taking the college exam makes sense, but what is in it for students to take the mandated state tests in high school?
If I had gone to a public high school, I would have also purposely done poorly on the state exams. I remember my friend telling me how amusing it was to seeing the principal going ballistic over the poor test scores some kids purposely got. There was nothing he could do since there was no punishment he could mete out for getting a low score on a state mandated test.
https://www.youtube.com/watch?v=J6lyURyVz7k
Did someone say “test”?
Here comes the monkey!
I’m a product of public schools and I’m doing alright. If you went to better schools than I and you aren’t doing any better, you ain’t trying hard enough
“School rankings, who gives a fuck? God you people are so sad sometimes.”
As I’ve said so many times before- someone’s child is last in their class at New Trier. Someone’s child is in the 50% percentile in their class at Hinsdale Central. And on and on and on.
New Trier only sends like 4 people to Harvard a year- and that is considered a LOT for one high school. That means 99% of the kids at New Trier will not go to Harvard. Most will go to places like U of Illinois, Northern Illinois, Southern Illinois etc. etc. just like the kids at Highland Park, Libertyville, Barrington HS, Glenbard West etc. etc.
For most people, where your child goes to high school amongst all of these “best” high schools will really not matter. Your child can get in the honors track at a high school ranked 75th in the state and have a fine life.
I don’t understand why everyone thinks THEIR kid will be the genius. They will not.
“There’s plenty of updated rehabbed homes in the burbs in the $500k range”
The suburbs are SO MUCH more than Oak Park and Evanston. Heck, even Arlington Park and Glenview will have some nice properties for $500k.
I don’t understand the love of Oak Park for $500k. The schools aren’t that good and the crime is high there. It was one thing when a starter house was $225,000. But that was 15 years ago.
“School rankings, who gives a fuck? God you people are so sad sometimes.”
By the way, I’ll never forget an article in the WSJ a number of years ago about an immigrant family that owned a dry cleaners in New York City. They decided to send their son to one of the fancy boarding schools (it was Choate or Andover or one of those). He was on scholarship but they still had to pay a lot of money to send him there- thinking it was “the best.”
It turned out he graduated ranked like 32nd out of 90 students. It was a top private school so all was not lost. But that ranking meant he was NOT going to get into Harvard, Yale, Princeton etc.
Of course, he applied to all of the Ivy League anyway- and then the secondary ivies. He ended up getting into Johns Hopkins, Williams, Amherst and other good schools- but not the SUPER prestige schools. His parents were shocked. They thought by sending him to one of the best private high schools in the nation guaranteed the best college- because of its placement rate and name and all of that.
But ALL of those kids can’t get in. They would have been better off moving to North Dakota, opening up the dry cleaners there, sending him to the local high school and THEN applying to the Ivies.
Oh- and isn’t this the problem in Silicon Valley right now? A ton of the parents who send their kids to Palo Alto High School (a great public high school, by the way) all went to Harvard, Stanford etc. They work at Apple, Google, Cisco etc. But ALL of their kids can’t get into those top schools. Even if they qualified. Palo Alto High is the top feeder school to Stanford in the nation and it sends only like 15 kids a year. Too bad for everyone else.
It’s a rude awakening for all those high achieving parents.
“Your child can get in the honors track at a high school ranked 75th in the state and have a fine life.”
Yeah, you’d think so, but HD never seems to be happy.
To me the value of a great prep school is to teach creative thinking and problem solving coupled with self confidence. I think it’s less about getting into an prestigious college than about learning to thrive in the world. I argue that a great prep school can be of more value than a great college.
People who are intelligent, creative, and confident can write their own tickets in life and don’t necessarily need to rely on a college. If I had a kid and could afford either a great prep school or a great college, I would choose the prep school.
“I’m a product of public schools and I’m doing alright. ”
No offense, I’ve never in my life heard someone say “I went to public schools and it messed me up.”
Everyone thinks they’re OK. Just like people think that vinyl siding and Maxwell House coffee is ‘just fine’. I’m sure for some people it is.
The point of the top ranked schooled isn’t about getting into an ivy, it’s actually about something more intangible. It’s about keeping the high achiever to low achiever ratio as high as possible. the less interaction my kids have with low achievers, the better.
There’s also another reason even more intangible – I want my kids to stay the heck away from degenerates as possible. I tried explaining to the baby sitter that I don’t want my daughter coming home with some POS and she was like “oh, so you’re worried that her boyfriend will have a leather jacket and ride a motorcycle?” that actually made me feel good, because her nativity shows that she never met some of the complete degenerate criminals I grew up with.
stoopid typo, naivety, not nativity….
“I want my kids to stay the heck away from degenerates as possible.”
haha if you think there aren’t degenerates at every public school in the country, at every income level… lolololol
Then again if cocaine or heroin or driving drunk are the worst thing your teenager does… I guess thats pretty status quo
KIDS WILL BE KIDS DUDE! They’re all idiots, just like we were when we were growing up!
of course you can’t eliminate kids being kids but you can limit it. high achieving kids get in less trouble, thinks nerds.
“The suburbs are SO MUCH more than Oak Park and Evanston.”
YOU specified OP, E’ton and Park Ridge. *ONLY* those three.
This is what you wrote: “Why not just move to Oak Park, Park Ridge or Evanston and pay $500k to $600k”
If you make it through a New Trier like school you will be ok in life even with the stressed out rich kids. If you make it through Eastside High w/o Joe Clark, you may be alright, but you will be so far behind academically, you may never catch up.
I’ve experienced both. I’ll take the school with entitled spoiled rich kids any day over ghetto hood rats when it comes to education.
To me a prep school should teach kids creative problem solving and critical thinking as well as instilling a sense of confidence. The purpose of a prep school shouldn’t be to get into a prestigious college. It should be for the sake of actually learning. Intelligent, creative, and confident people can write their own tickets in life.
New Trier is like a high end automated factory. They just churn out kids who can get into prestigious colleges by teaching to the tests. It’s just a waste of time for intelligent kids who would likely would have scored similarly on the tests whether they want to New Trier or a bottom rung school.
I would rather pay the money for a prep school than a college.
HD – “No offense, I’ve never in my life heard someone say “I went to public schools and it messed me up.””
Its not about being messed up – its about getting a sub optimal outcome. Same kid going to a mediocre public school with 1 GC per 100 kids vs 1:20 and connections to colleges will generally have very different outcomes. Also they will have more chances for extra curriculars and resume builders.
“The purpose of a prep school shouldn’t be to get into a prestigious college.”
So William Jones College Preparatory High School shouldn’t concentrate on preparatorying kids for college?
Maybe you should send your kids to William Jones Creative Problem Solving Critical Thinking Life Skills Academy High School instead.
Prep school kids who end up at second- and third-rate colleges still get exactly what “Harvard” used to be about: a somewhat rigorous liberal education and immersion in the folkways of the haute bourgeoisie.
Median case outcome: You’re a well-spoken, well-connected dilettante with no social inferiority complex. Perfect preparation for a life of failing upward. What’s not to like?
“So William Jones College Preparatory High School shouldn’t concentrate on preparatorying kids for college?”
No, she means “PREP School”, like Phillips Academy, or the Lab School.
Jones is a ‘public school’, whatever its full name happens to be.
” the less interaction my kids have with low achievers, the better. ”
and “I want my kids to stay the heck away from degenerates as possible.”
so you’re planning on being an absentee father then?
I Kid, of course 🙂
Obviously a lot of factors determine a person’s “success”. I’d love to see a statistical analysis. The neighborhood a kid lives in, innate ability, the school, parental involvement, family values, etc…
We sent both our daughters to the Lab School at great expense. One finished there and the other switched to Whitney Young for high school. There is something to be said about having your kids in class with the kids of Nobel Laureates. I’ve never seen a more talented bunch of kids – for whatever reason – at Lab. It sets the bar high for your kids. My kids really flourished there. One of them developed an interest in computer science thanks to a particularly inspiring teacher and now has a job to die for. I’m jealous of the opportunities my kids had.
Then there are the teachers. You have good and bad teachers everywhere but when my one daughter switched to Whitney Young she encountered a couple of real clowns. Very scary. Don’t get me wrong though WY had some very good teachers as well and Lab had some bad ones.
And of course this is all anecdata. My only point is that it’s not just the subject matter but the environment you put your kids in. And I think it’s less important what college they go to.
“One of them developed an interest in computer science thanks to a particularly inspiring teacher and now has a job to die for.”
Is the other one Jenny?
“No, she means “PREP School”, like Phillips Academy, or the Lab School.”
Would people really call lab a “prep school”? I know jenny did, but would PEOPLE do so?
For that matter, would PEOPLE really call phillips academy “phillips academy”?
I’m guessing that the faculty that sends their kids there would not think of it that way. We did not either. It’s pretty unique. Great culture. Just the opposite of snobby. Glad we ended up there.
“For that matter, would PEOPLE really call phillips academy “phillips academy”?”
Probably not. To both questions.
I didn’t know how to classify Lab. All I know is there is a huge difference between Lab and the schools I was sent to before Lab. It’s not for everyone, but I think it helped me a lot in life. I feel like I got more out of Lab than I did at Northwestern. If I ever have kids, I can’t imagine sending them anywhere else.
I just don’t think big factory schools like New Trier can match what a smaller private school can offer in terms of helping kids find their unique talents and creative problem solving. I wish I had gone starting in preschool instead of just high school.
Remember the story about how such a high percentage of New Trier students had learning disabilities and ADHD just so they could get extra time taking the ACT? Those high test scores may not be as legitimate as you would think…
All the information anyone needs to learn ANYTHING is now available for free on the internet. Standardized tests are proxy IQ tests. The colleges like them because they correlate with student performance, for the most part. Face it, if you’re in college admissions and some kid has a 27 ACT score, you can pretty much sum it all up right there. We all know what these people are like, they are perfect to fill up a normal college with. Who cares about their “essay”?
“Face it, if you’re in college admissions and some kid has a 27 ACT score, you can pretty much sum it all up right there. We all know what these people are like, they are perfect to fill up a normal college with. Who cares about their “essay”?”
The top schools can fill their entire incoming class with kids scoring above 30 and the highest score does NOT trump everything else.
considering that the average ACT score nationwide is 21, a score of 27 is well above average.
“learning disabilities and ADHD just so they could get extra time…high test scores may not be as legitimate as you would think…”
awwww, still miss bobbo.
” kid has a 27 ACT score … perfect to fill up a normal college with”
and
“top schools can fill their entire incoming class with kids scoring above
30”
are not incompatible.
My point was that when you can fill your entire class with high scores you need something other than scores to make a decision based upon. They absolutely look at the essays and the activities.
“when you can fill your entire class with high scores you need something other than scores to make a decision based upon.”
Right, but (eg–but I dunno for sure) Michigan State doesn’t. Get the 27, that’s good enough. Essay can be about your cat’s breath.
I probably couldn’t get into the top schools today writing a sentence like I did above: “make a decision based upon.”
I don’t think they teach grammar or punctuation anymore so it is probably fine.
“Right, but (eg–but I dunno for sure) Michigan State doesn’t. Get the 27, that’s good enough. Essay can be about your cat’s breath.”
Doesn’t that depend on the school, though? A school with an average ACT score of 24 will jump at the opportunity to get an applicant with a 27, but a school with an average of 27 will need to find a way to differentiate between all the 27 score applicants.
For instance, MSU has an average ACT score of 26, so having a 27 is probably enough to get you in. Indiana has an average score of 27, so it needs to find a way to differentiate between all the average applicants.
Yes, and I was looking at the Ivy Leagues: http://www.universitylanguage.com/blog/28/ivy-league-act-scores/
Some schools play a game of yield management (percent of applicants accepted that enroll). As a result, if your qualifications are too far above the typical student, you might get dinged because they know you aren’t likely to attend.
“when you can fill your entire class with high scores you need something other than scores to make a decision based upon.”
“Right, but”
Well, they could just go after the absolute highest scores, but that’s not really their goal.
All things being equal, who gets accepted to UofM?
Naperville High Grad
or
Lincoln Park HS Grad
LPHS grad, likely more liberal, will fit in better at U of M
“if your qualifications are too far above the typical student, you might get dinged because they know you aren’t likely to attend.”
I highly doubt MSU turns down an applicant with a 35 ACT score because they *might* be a safety school applicant.
“Well, they could just go after the absolute highest scores, but that’s not really their goal.”
That’s correct. There are plenty of applicants from suburban Chicago who have had the same life “experience”- going to the top 20 private/public schools with relatively wealthy (or at least upper middle class kids) that vacationed in the same places and all played soccer (or fill in the sport here.) They are ALL intelligent and can do the work.
15 years ago in an article about Georgetown admissions, the admissions office mostly dinged these applicants because they would be “fine” at a “state U” and they neither bring anything interesting to Georgetown nor will going to Georgetown somehow change their life path.
Conversely, the girl who grew up in a farm in Iowa and went to a high school with just 150 total students WOULD be changed by going to Georgetown. And she would likely bring a very different perspective to her roommate and whomever else she befriends on campus who have never been to Iowa and/or have no idea what it’s like living on a farm or in a small town.
Every year they say that Harvard and Princeton reject hundreds of valedictorians and others with nearly perfect test scores. Of course they do.
” kid has a 27 ACT score … perfect to fill up a normal college with”
What’s a 27 percentile wise now? Isn’t that top 8%-10%?
Only “selective” colleges would care about an ACT score that high. Although other colleges might give you some money if you chose them if you had that score.
“considering that the average ACT score nationwide is 21, a score of 27 is well above average.”
Thank you homedelete. That’s what I said in my other comment. This would be the top 10%, would it not?
That would get you into some, but not all, of the schools at U of Illinois. From out of state, you might need a higher score to get into Indiana or Michigan- but it depends on where you are from. If you’re from Louisiana and applying to Michigan, that’s different than applying from Chicago or the Chicago suburbs.
“For that matter, would PEOPLE really call phillips academy “phillips academy”?”
They just call it Phillips. Like Choate is Choate. And Andover is Andover. And Lawrenceville is Lawrenceville (although I did occasionally hear it referred to by its full title.)
Lab isn’t a prep school. The elite East Coast prep schools are mini-colleges with dorms. You literally send your kids away to go there (like Eton.) It’s a completely different animal. For those who aren’t rich, a lot is sacrificed on the promise that it will open doors to the elite colleges. And it does. But it doesn’t get you in if you’re 32 out of a class of 90.
“Prep school kids who end up at second- and third-rate colleges still get exactly what “Harvard” used to be about: a somewhat rigorous liberal education and immersion in the folkways of the haute bourgeoisie.”
Of course. But they could have gone to a very good public high school and ended up at the same second and third rate colleges. That’s my point. Those immigrant parents in the WSJ article worked their butts off to send their kid to that prep school thinking it was the golden ticket. When, in reality, he could have gone to one of the magnet high schools and ended up the same place.
Same way it doesn’t matter for 98% of the kids if they go to New Trier v. Highland Park High. Or Hinsdale South v. Central. Or Libertyville v. Barrington. Your kid isn’t going to Harvard or the Ivies either way. They are going to MSU.
I was not making an argument about private high schools (like Lab) v the public schools like Lane Tech, Walter Payton, North Side Prep etc. Some environments (small v. large) are better for some kids versus others.
But everyone thinks if they only get their kids into New Trier- it will all be fine. But your kid will be 350 out of 600 at New Trier. So why does it matter?
“high achieving kids get in less trouble, thinks nerds.”
Wow. This is the biggest misconception ever.
Meanwhile, the kids in Silicon Valley are throwing themselves in front of trains because of the stress level that is created when you send your kid to a high school where ALL the kids are expected to succeed and achieve because the parents did. But you are asking an impossible thing from them.
Because someone will be last in their class at Palo Alto High School even if their mom and dad both went to Harvard and now work at Google.
“They just call it Phillips.”
No – there are 2 Phillips – Andover and Exeter. So each is referred to as Andover or Exeter but not Phillips.
“Lab isn’t a prep school. The elite East Coast prep schools are mini-colleges with dorms. You literally send your kids away to go there (like Eton.) It’s a completely different animal. For those who aren’t rich, a lot is sacrificed on the promise that it will open doors to the elite colleges. And it does. But it doesn’t get you in if you’re 32 out of a class of 90.”
1. I just looked at Anodover’s class #s. 338 kids in graduating class and 92 went to went to Ivies. So that is 27%. That doesn’t include the quasi Ivies like MIT/Stanford/Duke etc. So if you’re 32 out of 90 you will most likely be attending an elite school. 2. Lab school is closer to one of the boarding schools than a normal private school. They send similar amounts to the elite colleges as the boarding schools. They are pretty similar to the elite Manhattan day schools (like Collegiate which is a day school).
“would be the top 10%, would it not?”
You were on the intertubez when you posted that–it’s easy enough to check.
A composite 27 on the ACT is 87th %-ile. 28 is 90th; 33 is the start of 99th.
“350 out of 600 at New Trier”
Try ‘out of 1,000’. New Trier is HUGE.
“So each is referred to as Andover or Exeter but not Phillips.”
Weeeelll, some of the folks will say Phillips from time to time, but almost exclusive in reference to Andover. Away from the east coast, at least. A little like saying “I went to college in Boston”, at least in some cases.
“That doesn’t include the quasi Ivies like MIT/Stanford/Duke etc.”
But does include quasi-ivies like cornell.
“Away from the east coast, at least.”
well sure, who knows what goes on away from the east coast.
“A little like saying “I went to college in Boston”, at least in some cases.”
Yeah, can someone explain that to me? I’ve always wondered if Harvard makes you sign something that says you will always tell people that. Is it a rule or something? Do they cover this in orientation?
Just posted my April Chicago real estate market update: http://www.chicagonow.com/getting-real/2015/05/chicago-real-estate-market-update-home-sales-hit-another-8-year-high/
Sales up 8% YOY (IAR will report 5.8%) and inventory dropping even lower. Non-distressed sales up 18.5%
“who knows what goes on away from the east coast.”
isn’t that ‘who *cares*…”?
Gary, I think the whole I went to school in Boston comes from trying to down play the accomplishment around others who may not have the same level of schooling. Harvard is one of the few schools that EVERYONE knows even if it may not necessarily be the “best” in every field. I don’t think it comes from a place of arrogance, but to try to cut off how some people react when the find out the person went to Harvard.
I noticed when around others who likely went to similar schools, my friends/co-workers who went to HBS, HLS, etc almost never use the college in Boston line. However, when around those who may not have a graduate degrees, more middle America types, they almost always seem to use it.
“Conversely, the girl who grew up in a farm in Iowa and went to a high school with just 150 total students WOULD be changed by going to Georgetown. And she would likely bring a very different perspective to her roommate and whomever else she befriends on campus who have never been to Iowa and/or have no idea what it’s like living on a farm or in a small town.
Every year they say that Harvard and Princeton reject hundreds of valedictorians and others with nearly perfect test scores.”
Well, maybe Catholic Georgetown is altruistic enough to take in the Iowa valedictorian, but the Ivies are much more corrupt. They usually screw over the rural, Christian, fly-over valedictorians. There are 15x as many white gentile National Merit Scholars as there are Jewish ones every year, but the “white %” in the Ivies is actually 50% Jewish. You want to learn more about this bs, here is some weekend reading: http://www.theamericanconservative.com/articles/the-myth-of-american-meritocracy/
PS How come nobody talks about Denison, or Miami of Ohio, etc? That’s where some of the 27 ACT New Trier kids go. These schools have some of the best-looking, prettiest girls in the Midwest.
Hot off the press: http://www.chicagomag.com/real-estate/May-2015/Top-Real-Estate-Developers-Weigh-In-On-The-Market-And-Other-Concerns/
On housing recovery:
ALAN: On the condo side we’re probably only in the second inning of a nine-inning game. We only started building condos again in 2010, 2011, so I think we have a long way to go. Prices have recovered, by and large, to pre-2008 values, but they have yet to push higher. And the projects are small. I envision the 40-, 50-, 60-unit projects continuing for a while; 300-unit condo developments are no longer the norm. Once we get some pent-up demand we’ll start to see larger stuff.
What we’re not seeing in the market is millennials. They’re renting, and the experts on the rental market will tell you the demographics are much different than 10 or 15 years ago. Buyers are skewing a little older and have more income and bigger down payments for bigger condo units.
“However, when around those who may not have a graduate degrees, more middle America types, they almost always seem to use it.”
‘Oh, yeah? I have a good friend who went to Emerson, too. Did you know …?”
The whole purpose of a school is supposed to be that the student learn how to be creative, independent, and confident. I think it’s really misguided for parents to push their kids to go to specific schools. Frankly, if I had a kid, I would be happy if that kid was happy, intelligent, and independent. Who cares where the kid goes to college?
“Hot off the press”
“On the next hot neighborhood:
Randy: Well, the hole in the donut is the Cabrini Green area…I mean, NOCA”
I really hope that guy was saying “NOCA” sarcastically. That is insanely lame! Just call it Cabrini Green FFS Or River Town, or New Orleans or New Near North or ah who gives a shit
“ah who gives a shit”
I like that one. I propose that the new CC name for the area b/t Wells and the river, from Chicago Ave to North is:
AW-GAS.
Has at least as much of a ring to it as NOCA.
lol, AWGAS, interestingly enough, didn’t People’s Gas light & Coke company have a huge presence in the area back in the day?
Personally I think they should call it Little Hell again, not sure the yuppies will like that though.
“Personally I think they should call it Little Hell again”
So, were we to take a more relevant page from NYC, we’d pull a Hell’s Kitchen move, and try to rename it after a park in one corner of the area–I count Seward, Stanton and No. 560/Jesse White Community Center.
So: TumblerTown it is.
“What we’re not seeing in the market is millennials. They’re renting, and the experts on the rental market will tell you the demographics are much different than 10 or 15 years ago. Buyers are skewing a little older and have more income and bigger down payments for bigger condo units.”
The Millenials have NO downpayment. They are too busy making loan payments. I don’t know who is going to buy all of these $500,000 starter homes. And what happens to the generation after them? In 5 to 10 years the oldest of the millenials will be in their upper 30’s- early 40s (yes- it’s true.) So they will really be building for the next generation.
Will they be any better off? The group that just graduated was the most heavily in debt of ANY graduating class. And interest rates are only going to go up- making housing and car loans and whatever else more expensive.
Looks like developers are going to focus on the 1% for another decade or more. That product IS selling right now. From what I’ve heard 9 Walton, the latest new luxury condo tower, is already half pre-sold.
“There are 15x as many white gentile National Merit Scholars as there are Jewish ones every year, but the “white %” in the Ivies is actually 50% Jewish.”
Please Dan. We’ve argued about this before.
The Ivies actually discriminated against Jewish students for decades. They had quotas. Please learn your history. Only Penn admitted Jews in any kind of numbers and others basically excluded them. That’s why Jewish students ended up at Michigan and Wisconsin, which didn’t have quotas- to which they are still extremely loyal (in addition to remaining loyal to Penn.)
Please stop with your nonsense about Christian discrimination in higher education.
“Sales up 8% YOY (IAR will report 5.8%) and inventory dropping even lower. Non-distressed sales up 18.5%”
What about prices?
It’s not a surprise that sales are up over last year’s miserable numbers. They SHOULD be. Mortgage apps rose the last month or so over a year ago but are still well under where they should be (multi-year lows.) The last two weeks, when mortgage rates rose, applications dropped. Not dramatically- but if rates were to continue to rise you could see a slowing in the apps again.
Everyone who is looking right now knows that inventory still sucks. If you’re looking to buy- you’d better be out there the first 5 hours it has come on the market. They are doing the “best offer” garbage we saw in 2013 before the Fed said it would taper and rates went up.
I don’t think people in Chicago realize how rare it is to have bidding wars here. There is endless supply of land. It never happened- even during the bubble (because they were building so much inventory- there was no reason for it.) But this is the second time we’ve seen the bidding wars (with the first in the spring of 2013.)
“Yeah, can someone explain that to me? I’ve always wondered if Harvard makes you sign something that says you will always tell people that. Is it a rule or something? Do they cover this in orientation?”
I lived in California and knew plenty of people from the East Coast who went to school at Harvard. I never ONCE heard them refer to their schooling as saying “I went to college in Boston.” NEVER! ha! ha! That’s laughable.
They would just bust out with “I went to Harvard.” Most Americans don’t even know that Harvard is IN Boston- so why would you say “I went to college in Boston”?
There are too many schools in Boston to say that. BC and MIT aren’t chopped liver (not to mention Tufts.) If you went to Tufts for its great international affairs graduate school- do you say “I went to school in Boston”? Hell no.
Does someone say, “I went to school in Palo Alto.”
No!
ha! ha! ha!
“Try ‘out of 1,000?. New Trier is HUGE.”
New Trier has 4,000 students? Really?
I didn’t look. I assumed it wasn’t THAT big. That would make it one of the largest schools in the state. That makes the 4 students who go to Harvard every year and even smaller number. Your kid would have a much better chance if you moved to Rapids City or Des Moines.
“I just looked at Anodover’s class #s. 338 kids in graduating class and 92 went to went to Ivies. So that is 27%. That doesn’t include the quasi Ivies like MIT/Stanford/Duke etc. So if you’re 32 out of 90 you will most likely be attending an elite school.”
I don’t remember which of the prep schools he went to in the article. It was one of the “top” ones where his immigrant parents thought, “if he gets in there, he has it made.”
But the point of the article was that there is someone who finishes last in their class at EVERY high school. And this kid didn’t even finish last. He finished like 32 out of 90. He didn’t get into one of the “elite” schools. He applied to 25 colleges and got dinged by every Ivy. He DID get into Johns Hopkins, Carneige Mellon and some of the second tier exclusive schools. But they were NOT what his parents thought he’d get into.
He could have gone to the local public high school and gotten into those same schools. The parents were freaked out that they had helped pay all this money and sacrificed for the entire family to send him to “elite prep”- even though he was on scholarship for some of it- and it DIDN’T pay off in the way they thought. Nothing wrong with the schools he got into. And I’m sure he did fine there and is now working a great job (or in graduate school somewhere.)
But the point is- if you don’t finish at the top, you don’t get in. They don’t take everyone. The competition is too fierce. I don’t know why everyone is focused on the Ivies when Berkeley or Illinois will give you the same identical education for a fraction of the cost.
And no- the Lab School is NOT Andover or Lawrenceville Academy. Trust me. And thank god it’s not.
“I lived in California and knew plenty of people from the East Coast who went to school at Harvard. I never ONCE heard them refer to their schooling as saying “I went to college in Boston.” NEVER! ha! ha! That’s laughable.”
Harvard is in Cambridge not Boston.
“I lived in California and knew plenty of people from the East Coast who went to school at Harvard. I never ONCE heard them refer to their schooling as saying “I went to college in Boston.”
That is absolutely a thing. I hear it all the time. Every time I hear it I respond with “Oh, you went to Harvard?” and I’m right. Maybe Harvard grads are more insecure on the West Coast so they say Harvard.
“What about prices?”
I have no way to know about prices other than the Case Shiller index and that has been showing increasing gains over last year. And as you point out we have multiple bids now so that has to be driving prices up. You kept asking where the bidding wars are…well, now we have them.
“I don’t know why everyone is focused on the Ivies when Berkeley or Illinois will give you the same identical education for a fraction of the cost.”
For a middle class or below family (if such a thing exists any more: http://www.nytimes.com/2015/05/12/us/politics/as-middle-class-fades-so-does-use-of-term-on-campaign-trail.html?) HYP and some other will be markedly cheaper.
I’m also curious about how much taht dry cleaning family paid. I’m pretty sure andover and exeter have v generous aid packages these days for an mc- family. They aim to be little colleges after all.
“That is absolutely a thing. I hear it all the time. Every time I hear it I respond with “Oh, you went to Harvard?” and I’m right. Maybe Harvard grads are more insecure on the West Coast so they say Harvard.”
I thought the opening gambit was “oh, I went to school on the east coast.”
“oh, I went to school on the east coast.”
So did my friend, Joe. Do you know Joe?
DZ, that article is hilarious. I prefer the term “Joe Shmoes” to “everyday American.” “Run of the mill Americans” also beats out “everyday American” for me.
From DZ’s NYT article:
“A social stratum that once signified a secure, aspirational lifestyle, with a house in the suburbs, children set to attend college, retirement savings in the bank and, maybe, an occasional trip to Disneyland now connotes fears about falling behind”
and
“middle-class Americans — broadly defined as working-age households with annual incomes of $35,000 to $100,000”
$35,000 today is (CPI-adjusted) $12,300 in 1980. Were people with HHI of $12k in 1980 really secure and saving for retirement, and paying for their kids’ college? I know that our HHI then was not much less than that, and we lived in a very cheap house in a cheap community, and there wasn’t any real saving going on.
$100k now is $35k in ’80 dollars: That’s about what felt like the description–secure, saving, sometimes taking a slightly spendy vacation.
“Were people with HHI of $12k in 1980 really secure and saving for retirement, and paying for their kids’ college?”
Hmmm, problems w an nyt article. Surely not.
But yeah, if we are looking at it over 30 years or so, median hhi is not down (even befroe accounting of likely upward bias of cpi). The mc have other real problems, but basic lack of buying power relative to 30 years ago not so much.
“if we are looking at it over 30 years or so”
Author asserts that that is the range she was thinking of:
“After three decades of income gains favoring the highest earners and job growth being concentrated at the bottom of the pay scale, the middle has for millions of families become a precarious place to be.”
Things were good in ’85, apparently.
If you want to feel better about housing prices in Chicago lately, take a look at what 750K buys you in Queens, far from the train and sandwiched between a huge cemetery and the Long Island Expressway:
https://www.redfin.com/NY/Flushing/5134-48th-St-11377/home/20911276?utm_medium=email&utm_content=view_details&utm_campaign=instant_listings_update&utm_source=myredfin
ewww that place is disgusting
Wow, that’s terrible Milkster.
…another property that makes me feel bad about life. Seeing people live like that is enough to break the human spirit.
Completely off topic, but I wanted to ask this question to a judgmental group of people – Acura TSX or Infinit G (AWD)…which should I buy?
the tsx is a fancy accord and the Infiniti is a fancy Altima. you get no street cred from either. you may as well be buying a Camry and living in Buffalo Grove. if I were you I’d throw in a few extra bucks and get a 3 series but everybody has their own opinion.
I’d pony up for the Lexus IS. Not much more than the other two. I’d be afraid of the maintenance on the bimmer.
I love NYC, but much rather visit than live there. I don’t get why educated adults with decent job mobility are willing to live like broke college students in NYC when they can move to practically any city in the country and have a decent life.
I get the city is vibrant, full of culture, etc but at some point it has to get tiresome living in a shoebox with roommates and paying astronomical rents.
You’re absolutely right. And really the same can be said about Chicago vs. much more affordable cities. What does $200k get you here vs. normal cities?
“The mc have other real problems, but basic lack of buying power relative to 30 years ago not so much.”
Medical costs and higher education costs have soared beyond what the middle class can afford – especially relative to the 1980s. How much are college costs up since then? 500%? I haven’t looked lately but it is HUGE. The Middle Class could get by on one salary in the 1980s in most American cities. You also weren’t paying 50% or more of your income towards housing- even in California.
A LOT has changed.
“Were people with HHI of $12k in 1980 really secure and saving for retirement, and paying for their kids’ college?”
You didn’t save for retirement in 1980. You had a pension. The 401k was only first “invented” in 1980 and it took years to “catch on” at other companies. Even in 1990, 42% of private sector employees still had pensions.
Kids’ college was pretty cheap. In 1980, tuition/fees for the year at U of I was $682. By 2010-2011 it was $10,386. In 2014- it was over $13,000.
There’s no way incomes kept anywhere close to pace with that.
“I don’t know why everyone is focused on the Ivies when Berkeley or Illinois will give you the same identical education for a fraction of the cost.”
We’re not talking about middle class families here. We’re talking about people who are sending their kids to New Trier. They are upper middle class (for the most part.) If you make under $75,000, Illinois will give you a generous scholarship package too. It’s higher for Harvard/Stanford etc. because they KNOW you can’t pay the $60,000 or whatever it costs even making $125,000. And heaven forbid you have more than one child.
It’s nearly $30,000 a year now just to go to Illinois. Let that sink in a minute. Even making $150,000 a year- most aren’t paying that out of pocket. That is buying a new car every single year.
“That is absolutely a thing. I hear it all the time. Every time I hear it I respond with “Oh, you went to Harvard?” and I’m right. Maybe Harvard grads are more insecure on the West Coast so they say Harvard.”
No one talks about schooling on the west coast. Not a single person I met ever cared. It’s SUCH a relief from the way they think, and obsess, about it on the East Coast.
Unfortunately, at least in Silicon Valley, so many easterners have now moved there and overachievers that they seem obsessed about it again. Thank goodness I left out of that place. But you could probably be in Marin or the wine country and no one would care.
Credentials and who your parents are really don’t play a part of the California dream.
“You kept asking where the bidding wars are…well, now we have them.”
Yes- we have them now. On almost every property- even 1-bedroom condos.
I have heard of San Francisco type things going on in Chicago. Bidding hundreds of thousands over the list price just to “get” a property. Waiving inspections. Waiving appraisal contingencies.
Desperation hangs in the air.
Yet the developers just told Crain’s that it’s too early to build new condos because there is no demand.
Huh.
I’ve heard through the grapevine that the new luxury high rise at 9 Walton in the Gold Coast is already 50% sold. I don’t think that has been confirmed by the developer yet though. I’m waiting for Dennis Rodkin at Crain’s to do a story on it. Prices started above $1 million in there- I believe.
I’ll be interested to see how quickly Basecamp at Irving Park sells out. It didn’t take them long to sell out Basecamp at River North- and there’s a flashing blue light on the telephone pole just 3/4ths of a block away from those.
“…another property that makes me feel bad about life. Seeing people live like that is enough to break the human spirit.”
I see this in these cheap 2 – 4 unit buildings. I was in a 4 unit fully occupied building in Humboldt Park the other day. Rent was around $500 per unit. Needs to be torn down. I started gagging on the cat piss odor in the hallway.
I’ve seen people living in unfinished basements with mattresses on the floor and sheets hanging on clothes lines for privacy.
If it was me I’d get the hell out of here to where the job opportunities were better, the weather was warmer, the crime was lower, and the cost of living lower.
“Yes- we have them now. On almost every property- even 1-bedroom condos.”
Of course it depends on the price. But I see really weird stuff. Have a listing. Priced at 300K with plenty of showings but no offers for 2 weeks. Feedback is that we’re high so we drop it to 280K. Then we get 4 offers that we could have gotten when we were at 300K. I don’t understand.
“Priced at 300K with plenty of showings but no offers for 2 weeks. Feedback is that we’re high so we drop it to 280K.”
Everyone is being told that sellers won’t take anything but full price offers because it’s so hot. So why make an offer if it’s listed at $300k and you think it’s only worth $280k?
I know one person who was told not even to MAKE an offer if it wasn’t full price. So she didn’t. The property sits there on the market 32 days later. No price reductions.
But they’ll get their price- eventually- right?
Virtually everything in the GZ of decent quality is going under contract within 48 hours of listing. If you’re not under contract within even 5 days, you need to lower your price. You are priced too high.
“If it was me I’d get the hell out of here to where the job opportunities were better, the weather was warmer, the crime was lower, and the cost of living lower.”
Why were people living in dumps without windows within the 8 Mile in Detroit when they could just sell everything and get on the Grayhound out to Californa?
Why were all those people living in poverty with no hope for the future in the 9th Ward of New Orleans for like 30 or 40 years? It was only Katrina flooding that FORCED them to re-locate to Houston. 95% of them never came back (and some in New Orleans actually complain about this! Saying things like, “why didn’t they come back?” Why WOULD you???)
I’ve never understood it. Our ancestors left their squalor on other shores to come here for a better chance. That’s much harder than getting on a train/bus or plane and moving to another state- even without a job in hand.
But many have absolutely NO training in how to do anything. And in a lot of places, working at the Subway still can’t pay the bills even if it’s lower cost of living.
“Medical costs and higher education costs have soared beyond what the middle class can afford – especially relative to the 1980s.”
they are included in teh cpi. granted you gotta save up for college but it is part of the real dollars adjument. how do median wages compare now versus 30 yeara ago?
“We’re not talking about middle class families here. We’re talking about people who are sending their kids to New Trier. They are upper middle class (for the most part.) ”
was the immigrant dry cleaner family umc? bc that’s who you were talking about.
“Completely off topic, but I wanted to ask this question to a judgmental group of people – Acura TSX or Infinit G (AWD)…which should I buy?”
tsx. no question.
I don’t have statistics or anything, but seems like a lot of new listings this week.
“was the immigrant dry cleaner family umc? bc that’s who you were talking about.”
In my example- his economic status was irrelevant. We were simply discussing his admission into these schools. He was on scholarship at his private prep school but his parents were still working their butt off to make sure he got everything he needed to go there (versus sending him to the public high school where, actually, he would have most likely gotten into the same exact colleges.)
That is all I was talking about. I wasn’t talking about whether he got scholarships to anywhere he got in or whether his family could afford it. He was applying to Harvard whether or not he went to public or private high school.
So I don’t understand these upper middle class families obsessing about Berkeley versus Stanford. Both are equally good. Berkeley is way cheaper. Your child isn’t going to have a better life because they went to Stanford. They’re not going to turn into Steve Jobs- who didn’t go to Stanford either.
“they are included in teh cpi. granted you gotta save up for college but it is part of the real dollars adjument. how do median wages compare now versus 30 yeara ago?”
Housing in the cpi is rent- not home ownership.
I can’t find the chart right now with the tuition/fees, but I think it said that minimum wage in 1980 was $3.10 and in 2011 it was $7.50. But look at what tuition and fees did. It’s not even close. It’s up like 1000%.
“In my example- his economic status was irrelevant.”
You were talking about him and noting his family having essentially wasted money on him for prep school. Then you asked why the Ivies even matter. My limited point is that for a mc family, the Ivies would be cheaper.
“Housing in the cpi is rent- not home ownership.”
What’s that got to do w the discussion? Who was talking about housing in the cpi and why does it matter? I assume they also look at imputed rent but quite possible they estimate that based on actual rents.
“My limited point is that for a mc family, the Ivies would be cheaper.”
The WSJ article was from like 7 or 8 years ago before they started offering free tuition to anyone under $100,000. So it was irrelevant at the time. The family was busting their butt to send him to the prep school because they thought THAT was the golden ticket.
My whole point of bringing it up is because someone’s kid is 500 out of 1000 at New Trier. Someone’s kid is last at North Side Prep. Someone’s kid is in the middle at Walter Payton Prep. I’m not saying you can’t go to a good school by being in the 50% at a great high school. But you won’t go to Harvard. So why bust your butt to send your kid there? Just send them to the regular, but good, high school where they will end up going to the same college either way.
People put WAY too much emphasis on where their kid goes to high school. All the upper middle class high schools give you basically the same education. Which will be better for you kid? Stressing them out at New Trier or not? You THINK you’re giving them an edge- but you’re probably not.
“If you want to feel better about housing prices in Chicago lately, take a look at what 750K buys you in Queens, far from the train and sandwiched between a huge cemetery and the Long Island Expressway.”
But check out those low property taxes! ($2,800 for a 750k property). Chicago prices would certainly be higher (particularly in the suburbs) if taxes were at comparable rates to most other locations in the country (I realize still not even close to NYC levels, though).
And, I agree with DZ — seems like a lot of new listings this week! Homeowners finally seeing that there’s low inventory? Will be interesting to see if that continues and what happens to prices in the GZ in the upcoming months. I’m thinking it’ll be relatively flat…
“Just send them to the regular, but good, high school where they will end up going to the same college either way.”
A school should be for learning not just getting into a specific college. Parents should spend more time worrying about whether their kid is going to be happy as an adult instead of obsessing over college. It would also be nice for the rest of the people in the world if parents taught their kids a sense of empathy.
“But check out those low property taxes! ($2,800 for a 750k property). Chicago prices would certainly be higher (particularly in the suburbs) if taxes were at comparable rates to most other locations in the country (I realize still not even close to NYC levels, though).”
The taxes will stay low for a year and then unfortunately reassess at approximately $7500 if the house sells for 750K.
RE: high schools and college admissions. I’ve spoken to the Director of Admissions at a top 10 university in addition to attending sessions that mimic the admissions decision process. These guys are smart and understand the intricacies and offerings of particular high schools — that’s why they have regional heads that really learn an area and request detailed high school profiles. When they judge an applicant, they don’t look at a New Trier grad and a Senn High School grad through the same lens — they judge the applicant in the context of the opportunities extended to them by their high school.
That is, if a school only offers 2 AP courses and the student takes both, that will NOT be looked upon unfavorably. They took the toughest curriculum offered. However, if a school offers 15+ APs and the student only takes 2 APs, that WILL be looked upon unfavorably. They want to see a student: 1.) Took the toughest curriculum available to him or her, 2.) Performed well in those courses. Those two things, however, are not even close to standardized across all areas and high schools throughout the country. So, they look at other criteria and it’s a nuanced approach to decision-making.
A student definitely gets major “bonus points” if he or she is able to demonstrate success despite not being given all the opportunities afforded to those at the top high schools. They’ll be more impressed with a 33 ACT score coming from a city kid at an average high school than a top flight suburban school because it’s more unusual and shows initiative/promise.
On the other hand, they understand a school like Andover is extremely competitive to get into in the first place, so a selection process has already occurred, and will not completely dismiss a student because they’re in the middle of their class. In fact, those schools almost universally do NOT rank their students anymore because they don’t want it to be a factor, but the colleges still can get a sense of it based on historical information and the school’s profile — but without official ranks the colleges don’t get “dinged” on selectivity by the rankings services because there’s no official rank.
I personally think a hyper-competitive high school is typically a negative when it comes to “getting into the best college” since the vast majority students will not rise to the top, get perfect grades, and their shortcomings will come to light whereas they may show more universal success at a less competitive school. Not being “the best,” though, is something good to realize in life and will happen eventually; I’m just talking about it through the context of getting into elite colleges. However, if somebody is truly exceptional at something, then a high school that really pushes the student will certainly serve them best and get the most out of them (but these types of students are very rare and every parent thinks their child is in this boat….but likely isn’t). On the other end of the spectrum, poor high schools do not prepare their students at all and a student would be very hard pressed to get a decent standardized test score and demonstrate the readiness to take on a rigorous college curriculum. Again, there’s a “minimum threshold” that the admissions staff ask — would this student be able to handle our curriculum? (That minimum threshold can admittedly be fairly high.) After that point, they look for if the student overcame obstacles, what they’d contribute to the community, special talents and skills, diversity, etc.
” the colleges still can get a sense of [class rank] based on historical information and the school’s profile”
Well, and of course all the other applicants from the same school. Easy enough for (say) Harvard to take all the applications from (say) Andover and rank them by GPA. Not that any school necessarily doed it that explicitly.
Bluedog’s post above is exactly why I laugh at all the suburban lemmings. My kids will have a better shot at a better college than most suburban kids.
“The WSJ article was from like 7 or 8 years ago before they started offering free tuition to anyone under $100,000. So it was irrelevant at the time.”
For ivies in the boston area, those initiatives date back to at least 2004, with enhancements over time.
http://www.collegiatetimes.com/news/harvard-offers-free-tuition-for-low-income-students/article_5263051b-4ba2-547f-8138-4fb3530a8a9c.html
“They’ll be more impressed with a 33 ACT score coming from a city kid at an average high school than a top flight suburban school because it’s more unusual and shows initiative/promise.”
Generally agreed, but in e.g. Chicago, for the v top schools, that kid prob also needs a reason for why s/he didn’t go to a selective enrollment school.
“that kid prob also needs a reason for why s/he didn’t go to a selective enrollment school”
Could make for a good essay, if it is at all compelling.
Infiniti’s are for posers but Acuras are usually driven by the upper middle class folks who like cars but don’t want to be a douche in a BMW
How about Audi’s?
I find Acuras and Infinities signs of lack of taste. It is one thing if you don’t have money and buy a fugly Toyota, but a whole other thing if you can buy a lovely Audi and get an Infinity.
“How about Audi’s?”
for the most part, they are for older people 45+ y.o.
typically not as douchy a drivers as BMW drivers
I was at Home Depot the other day loading up on topsoil, mulch, weed and feed and flowers. This nice worker was like “Here, let me help you with that. We can also load it into your car, you know.” I pointed at the cart and I was like “This IS my car.” 🙂
Lexus is my car of choice. I had one for 15 years without any major issues. (anecdata)
^ They are sooooo boring though
Like could not possibly be any more boring, boring
I like boring cars with luxury features that will last 10 or more years. My old Infiniti just died (bad transmission). I don’t like BMWs. They feel stiff to me. I like Lexus but the IS 250 didn’t review well.
I am used to Infinitis, but wonder if the Acura will last longer.
Getting into an Ivy is really a crap shoot. The year before I graduated, the Harvard admissions officer for Lab went on sabbatical and almost no one got in… the year I graduated, she was back and about 15 kids got into Harvard.
Jenny, my wife bought a Lexus IS250 last year. It has been pretty flawless. My only criticism so far as a car guy is that it lacks power, but the 350 model has plenty of punch. After my experience with German cars, I’d be hard pressed to buy another without a very long warranty. Maintenance cost are out of control.
I think my next car will probably be a Jeep. I want something good in the winter but without too many bells and whistles. Need a friggin computer science degree now to fix a car.
Don’t most cars these days come with like 10 year warranties even american cars?
But yeah, lexus or toyota or honda sounds right up your alley
I’ve met more than a handful of Harvard undergrads / Law Grad in my life; and I can say that, for at least concerning the ones in Chicago, they are mostly complete weirdos. I’m impressed with Harvard in the sense that it’s “Harvard” but make no mistake the actual grads themselves, at least the ones I’ve met in Chicago, are complete DB’s. Maybe it’s different elsewhere, I don’t know. Look at Zuckerberg, he’s a sociopath freak. OTOH, I’ve known a few Yale grads, and they’re all generally way cooler, at least the ones I’ve met in Chicago. There’s some saying that I’m sure I’ll botch, but it’s like everyone who didn’t go to yale wishes they did. There’s probably some truth to that.
“Look at Zuckerberg”
Dropout. Don’t sully him with the grad label, nor the grads with Z-berg.
“I’ve known a few Yale grads, and they’re all generally way cooler”
WTH?
Ze–what’s the actual saying about the Yalies??
Kudo’s to Bluedog for the only post that reflects what my offspring ( graduating from Stevenson HS) experienced in college process some 10 years ago. And I strongly disagree with Sabrina’s response:
“I don’t know why everyone is focused on the Ivies when Berkeley or Illinois will give you the same identical education for a fraction of the cost.”
We’re not talking about middle class families here. …. If you make under $75,000, Illinois will give you a generous scholarship package too…. And heaven forbid you have more than one child. It’s nearly $30,000 a year now just to go to Illinois. Let that sink in a minute. Even making $150,000 a year- most aren’t paying that out of pocket. That is buying a new car every single year.”
One of ours attended U of I C/U for 1st year but their Fin. Aid rep laughed me (sole breadwinner w/ disabled spouse) out of their office. They said they reserved their aid for the truly needy (which I could understand). Im my experience U of I only offers middle class students loans, work/study jobs, basic fed grants and some one off scholarships with very little direct school financial aid. On the other hand Wash U./ St Louis & Notre Dame charged
a net cost much lower than U of I (admittedly we had 3 in college so we could plead special circumstance). My takeaway – to schools with large endowments it’s apparently irrelevant how much they collect from specific attendees.
My final fwiw – imo having degrees from top schools assisted our grads get selected from pools of qualified applicants for competitive positions (ex. Foreign Service, grad school & others) over others.
“Getting into an Ivy is really a crap shoot. The year before I graduated, the Harvard admissions officer for Lab went on sabbatical and almost no one got in… the year I graduated, she was back and about 15 kids got into Harvard.”
Doesn’t sound like a crap shoot at all. The boston-area college officer seems to have been a big causal factor.
I can’t speak to the financial aid process now but I know in the 90’s when I went to school I was accepted at U of I and they offered zero free financial aid. There were merit scholarships for those with ACTs in the middle 30’s (!!!) but no need based scholarships that I was aware of, because that particular year, I know my family would have qualified for food stamps if my parents weren’t so darn proud and republican. Loyola though gave me a ton of need based cash, so much so, that it was the same price to attend Loyola for four years as it would have been to attend U of I. I don’t ever regret not attending U of I; I may have regretted Loyola (my college counselor kept pushing U of C, very hard actually, but even then I thought it was too much of a reach, but maybe he was right) – but if I had to do it all over again…I’d go to Arizona or somewhere warm all year round.
I have found Northwestern grads to be really socially awkward as well. Don’t know too many people that went to harvard, they typically shy away from “flyover country” here in Chicago
Sabrina: check this out esp. the last two boxes at bottom
http://www.zerohedge.com/news/2015-05-13/mark-hanson-full-blown-black-swan-lookout-mode-housing-bubble-20
That zerohedge is pollyanna nonsense. Things are getting frothy yes, but this ‘bubble’ differs significantly from the previous bubble, the primary significance being the lack of subprime. I was seeing people buy $500,000 two flats in Rogers Park with no money down in 2005/2006. I swear nearly 50% of all buildings on the southside flipped using subprime loans during that time period. Prices are a bit frothy, there’s a lot of competition for good properties; but the buyers are qualifying for *Real* mortgages, and have the ability to pay. Not every area is reaching 2005 prices. I’m seeing some homes struggling to reach their 2011 price! It might be crazy in a few local markets like CA or NY or the GZ; but look at the ask vs sell prices on a SQ foot basis and you’ll see that it’s the sellers that are a lot more optimistic on prices than the buyers are on paying it; and that’s why the good properties sell in 5 days and the rest take price cuts. I’m always of the belief that home prices will fall, even years after the ‘bottom’ but this bubble is nowhere near as serious as the previous bubble.
” I swear nearly 50% of all buildings on the southside flipped using subprime loans during that time period.”
And 99% of those were ninjas, or outright fraud.
Also, re the last 2 boxes:
Hanson is totally cherry picking on both sides to attempt to make his point. It’s soooo egregious, that anyone actually looking at it should dismiss the whole thing–if he had a real point to make, he would have compared apples to apples, using the cheapest readily available loan, instead of the allegedly ‘popular’ loan. Garbage in, garbage out.
“Garbage in, garbage out.”
zerohedge is all garbage, mostly pandering to its overly paranoid, and the ‘think they are smarter and more important than they actually are’ reader base who LOVES nothing more than to blame conspiracies for their lack of wealth
I guess it doesn’t apply to the Green Zone, but I rather liked his comments about the Blackstone-type investors. If they are no longer buying, and then actually become sellers, then Econ 101 says that more supply and less demand means prices fall.
The record supply of non-owner occupied single and multi-fam “investment” props – and fraudulent loans for “vacation houses” that are really flips or rentals — owned by a small slice of the population will hit the supply chain much quicker than millions of foreclosures did from a wide base of the population in Bubble 1.0.
The Gov’t won’t be able to stop the private house for-sale supply flood like they did last time around vis a’ vi bank and servicer mortgage mods and foreclosure moratoria.
New, large-scale, well-capitalized demand cohorts rising from the ashes — like institutional and private foreclosure buy-to-renters & flippers and foreigners with cheap relative dollars did post Bubble 1.0 explosion — will be tough to find.
helmet,
But there is end user demand. And demand for the most part that has a down payment and can meet at a minimum 45% DTI ratios including tax escrows.
I think if anything the systemic problem will be the loan mods that redefault around the time of the next recession. That will be the leading indicator for the next economic downturn. The redefaults will eventually flood the market as foreclosures or short sales, and more institutional investors, or more fortunate buyer, will sweep in to buy up the lower priced homes on the cheap.
“…foreigners with cheap relative dollars did post Bubble 1.0 explosion — will be tough to find.”
I agree with what Sonies has said all along that the US is the safest bet for foreigners looking for a place to park their cash, and I don’t really know about Chicago, but there are buyers of this type a-plenty in Queens, primarily Chinese and after that Koreans.
My anecdata is Corona, Queens where there are “briefcase full of cash” deals going down for rickety frame teardown dumps. These are the piss-stinking / mattress on the floor / bed-sheet places Gary described with multiple families or restaurant shift workers hot-sheeting it in each unit, and even bedding down in the kitchens.
There is NO WAY these rentals cash-flow enough to cover the monthly carrying costs for those who actually have to obtain financing to buy and have the idea of purchasing a 2-Flat to get a little extra income to cover the mortgage. These places sell for over a million dollars and keep going up. These are houses which to people in the rest of the country would be unlivable. There is a lot of foreign cash flowing, at least in NYC.
I stopped talking to a friend who bought in Queens recently. He’s a US citizen and a business owner who bought a multi-family house for cash. He said he was going to convert the 5 car garage into a bunk house because he could rent out beds in that area for big money. I was like “Look, you can’t do that” and he was like “Why not?”
So, what happens when the foreign buyer cash spigot stops? Also, the Blackstone type buyer is less prevalent than before, that’s what the data says that Hanson is interpreting. If these 2 buyer classes reduce marginal demand, then prices will fall. Who will be there to take up the slack?
Hd, you’re saying that end users will, but they are already in the marketplace, they can’t increase magically to fill up the hole left by the departure of the Blackstone-type buyers and the foreigners with cash suitcases.
“and more institutional investors, or more fortunate buyer, will sweep in to buy up the lower priced homes on the cheap.”
That’s a big assumption. Who says the institutional owners won’t become net sellers?
he says:
1) Hard-core speculation is back – some 40% of all transactions according to my calcs — complete with occupancy and appraisal fraud, process incompetence, willful blindness, and relationship-driven dissonance in lending, just like 2003 to 2007.
2)All cash transactions in this era have replaced exotic loans of Bubble 1.0 in bypassing the “mortgage-loan house-price governor”.
3)Demand has been extremely weak relative to Bubble 1.0 – end-user, owner-occupied demand more/less flat since 2008 — yet price gains have been far more powerful; a divergence that cannot persist for any great length of time.
4)Demand for primarily owner-occupied builder houses has remained far more depressed than resales, which attract a substantial percentage of speculators.
5) “Stale listings”, another term for “houses priced too high to sell”, at record highs and a serious house price headwind.
6) This end-user, owner-occupied “demandless” house price bubble proves something other than traditional, end-user, owner-occupant fundamentals are driving prices.
“Who will be there to take up the slack?”
There are lots of buyers out there but haven’t bought. I know of a short sale for a fixer upper in dupage county that had 26 showings the first weekend it went in the MLS and multiple offers after that. The other 25 people are still looking for homes but just haven’t found the right one. i have a buddy who is looking for a house, and everything decent is gone too quickly for too much money, and everything is ridiculous, like $500k for a 1300 sq foot split level in northbrook. My point being there is plenty of demand but buyers are far more cautious this time around. My other buddy just bought a place a few weeks ago and waited, and waited until his favorite flipper special house was stale enough and had enough price reducions. There’s demand out there, and lower prices and higher inventory will meet that demand. I’m generally known as one of the more pessimistic posters on cribchatter for years now, and I’m saying from what I’ve seen on the ground, it’s not as bad as everyone is saying it is.
“Things are getting frothy yes, but this ‘bubble’ differs significantly from the previous bubble, the primary significance being the lack of subprime.”
Not every bubble is the same. But I wouldn’t call this a bubble. A bubble means that EVERYONE has to get in. I don’t see that happening right now. But there’s PLENTY of greed. Greed everywhere. Could the greed turn into a bubble? Possibly. But it will have to go on for awhile and the distortions get even bigger.
Are we removed from fundamentals? No. Buyers ARE putting down the down payments. They have the proper credit. But the investor buyer has been much larger than is the historic norm. Normally the investor is just 5% and the investor has been 20% to as high as 40% in some areas. No one knows what the market will be like when that investor buyer goes back to the historic norm.
Additionally, no one has any idea what happens when rates go up since its been 30 years since such an event has happened and we weren’t at historic low rates with the highest home prices on record when it happened previously. Maybe nothing will happen because incomes will rise. Who knows?
Anyone who says they know what’s going to happen is lying.
I didn’t think the Fed could reflate housing prices after the biggest bust in 75 years in just 8 years and yet- here we are. We are PAST peak in most of the GZ and prices continue to rise.
The only thing that will reverse pricing is a rise in mortgage rates. That’s what we saw happen in 2013 and the housing market ground to a halt. So- we’ll see.
You can’t get blood from a stone. Prices can only rise so high. But as I’ve seen in California, somehow first time buyers are still buying $500,000 to $600,000 homes 2 hours from major urban centers and incomes aren’t that different than the Chicagoland area.
“My final fwiw – imo having degrees from top schools assisted our grads get selected from pools of qualified applicants for competitive positions (ex. Foreign Service, grad school & others) over others.”
Illinois and Berkeley ARE top schools. In fact, I’d rate them higher than Notre Dame or Washington U in St. Louis- but two are public and two are private so they exist in different worlds. Go to London and they will know Berkeley probably before any of the others.
I wasn’t telling someone to go to a lower ranked state school like Eastern Illinois. Berkeley is probably harder to get into for an out of state student than 99% of all private colleges except the Ivies. Ditto for some other top state schools like UVA, UNC, Michigan etc.
But we could argue this for forever. If you have talent and ambition it doesn’t matter where you go- or if you even go and/or graduate.
“Illinois and Berkeley ARE top schools. In fact, I’d rate them higher than Notre Dame or Washington U in St. Louis- but two are public and two are private so they exist in different worlds. Go to London and they will know Berkeley probably before any of the others.”
Illinois above wash u (as a general statement)? Really? I base this only on comparison of grads I personally know (wash u is higher on max, median, min). Is anyone here a wash u grad?
Also, none of these are top 10 schools, right? Top 10 seems like a reasonable defn of top school.
“Illinois above wash u (as a general statement)? Really?”
Completely agree with DZ–It ain’t 1989 anymore.
There are *all sorts* of reasons to discredit USNews rankings, but they’re readily available, and generally in line with current “general statement” perception. The 4 schools being discussed are ranked among “national universities”:
Cal: 20
Illinois: 42 (tied with 2 schools in Boston, RPI and UC-Irvine)
Notre Dame: 16 (tied with Brown (last Ivy) and Vandy)
WashU: 14
Now, were we talking about engineering specifically, that’s different.
Sabrina – “Anyone who says they know what’s going to happen is lying.”
Please please please remember this every time you are about to say higher rates means lower housing prices (as you have said so many times in the past)!
In my opinion NYC RE will get smoked in the near future. The euro is 1.14 vs 1.37 from a year ago. So that $5mm apartment is now $4.4mm euro vs $3.65mm a year ago (a 21% increase!). There is a new building going up south of central park with 60 apartments over $20mm each. In 2008 there were 20 total SALES above $20mm in all of NYC.
“60 apartments over $20mm each”
118 total, *starting* at $12m:
http://therealdeal.com/blog/2015/05/05/220-cps-one-third-of-the-condos-sold-after-six-weeks/
“There is a new building going up south of central park with 60 apartments over $20mm each.”
was just reading this about 20 min ago:
http://www.marketwatch.com/story/amid-boom-fears-of-too-many-20-million-manhattan-condos-2015-05-14?dist=lcountdown
Notre Dame climbs in the “rankings” by selling out Christ and appealing instead to East Coast Jews, secularized WASPs, feminists, liberals, and even Muslims and the gay lobby. Notre Dame didn’t even come out to support Indiana’s recent religious freedom bill. It’s pathetic to witness any group blatantly sell-out its own founding principles, whatever they may be.
“Brown (last Ivy)”
that doesn’t seem possible. or did you exercise editorial discretion and toss cornell from teh ivies?
I read the other day that the top 25 hedge fund managers earn more money than all of the kindergarten teachers in the country combined. Priorities! We need more $20,000,000 condos to house the financial industry, not less!
Ben Bernanke gets $200,000 to speak, the Clintons get the same, Obama is lining up to start doing the same thing. NFL and NBA owners and players make too much. Warren Buffet avoids income taxes. Gates is giving away all his money taken from the American people and US companies and giving it to Africa. Sheldon Adelson only cares about Israel. Neocons spent $1 trillion+ on their wars and want to invade Russia to install a puppet.
Nobody cares about Kindergarten teachers is the truth. Not the aforementioned cast of so-called do-gooders. It’s going to fall on the backs of the hd’s of the world to fund everything, as RE taxes are going up on the backs of the hd’s on the world.
“Buyers ARE putting down the down payments. They have the proper credit.”
The state of Illinois will help first time buyers buy homes with 1% down, giving them up to $5K in cash. They must be awash in cash.
Gary, in IL’s defense, I think the source of that money is from a settelment with the big banks for the mortgage crisis and the money had to be used in a certain way.
Everybody focuses on NYC’s market, and what the foreign cash is doing. But it’s most dramatic in Miami (currently the most expensive market in the country).
“Warren Buffet avoids income taxes.”
No he doesn’t. He has very little income. He doesn’t get paid much to run Berkshire Hathaway. His wealth is in stocks and other investments (like Mitt Romney’s) so he pays the capital gains rate, which is less than the income tax rate. That’s why his tax rate is lower than his secretary’s (which he has pointed out and said is why the system is screwed up.)
Most rich people aren’t rich from “income.” They are rich from investments, which are taxed at a lower rate. This is why Mitt’s taxable rate was only 14% in 2011.
The Clintons, by comparison, actually had a high tax rate last year, relative to other rich people, because all of those speeches were considered “income” and they aren’t generating much capital gains. They paid at a 30% tax rate.
“Please please please remember this every time you are about to say higher rates means lower housing prices (as you have said so many times in the past)!”
Sure. Maybe incomes will soar 10% to 20%? That would counter any rate hike.
We’re a monthly payment nation. All that matters is how much it is per month. The Fed has been able to engineer lower monthly payments through the rates. When they rise, the monthly payment will rise.
But who knows what will be the result? Maybe home prices will continue to keep going up. They’ll go higher and higher and higher until Chicago is San Francisco and San Jose.
Somehow they are able to buy $1 million 1300 square foot homes all over the Bay Area on relatively little income.
So who knows what will happen?
In 2013 when rates jumped 1%, the Chicago market came to an abrupt halt. Sales fell. Prices didn’t really do much though. Maybe rates need to go even higher to actually impact prices. And now, in 2015, prices are at all time record highs.
“There are *all sorts* of reasons to discredit USNews rankings, but they’re readily available, and generally in line with current “general statement” perception. The 4 schools being discussed are ranked among “national universities”:”
I’ve never compared public and private. It’s just not possible. The size- for one thing. And different agendas, admissions requirements etc.
The US News and World Report “ranks” based on yield and average test scores etc. Well- Cal is going to be a lot different than ND or Wash U in both of those regards. Cal has certain requirements for admissions (certain percentages from students with certain GPAs etc.) Same with Illinois.
You can’t compare the privates with the publics in those rankings. I know US News tries- but that’s also why they have the public and the privates in separate rankings as well. Cal, Michigan, UVA etc. will NEVER be in the top of the rankings because of their size and missions. But many of the state flagships are better schools for much less money.
And you can look at different subsets within these schools and say, “the business school shouldn’t be considered.” Because Indiana and Illinois both have top undergraduate business schools (better than most, if not all, private schools.) Michigan and Wisconsin both have superior political science and history departments- tops in the nation according to US News and World Report.
Blah, blah, blah.
Anyone who thinks their child won’t have a fine life going to Illinois (versus ND) is nuts. Isn’t that the goal? To “educate”?
Oh wait. It’s really NOT!
There won’t be a new post today because I had family obligations all weekend long (it’s graduation season!). But I’ll post something the rest of this week.
There’s a lot going on. Some properties continue to sell fast but some sellers are getting greedy and listing WAY too high. So they’re sitting there.
“Brown (last Ivy)”
“Rating: -2 (from 2 votes)”
Okay, who are the two big red grads?
Warren Buffet is full of shit though, in order for that to be true his secretary would have to be making 200k+
Now I’m not sure that is the case as I don’t really give a fuck but I find that to be highly unlikely
“Warren Buffet is full of shit though, in order for that to be true his secretary would have to be making 200k+”
Um…no it’s not. He has said he pays a lower effective tax rate than his secretary (he’s never said that he’s paid LESS than her.) So he’s paying like 17% or whatever it is and she’s paying 30% on her $75,000 a year or whatever it is.
We don’t know her age or what her deductions are. She may have, frankly, few (especially if her home is lower priced and/or she owns it outright.) The vast majority of middle class people don’t have a high enough house payment to actually deduct their home expenses on their taxes.
So why wouldn’t she be paying 30% or higher?
“Now I’m not sure that is the case as I don’t really give a fuck but I find that to be highly unlikely”
I’m not sure Buffett even knew what her tax rate was when he made that comment. He paid 17.4% a couple of years ago when Romney’s taxes were in the news. He said the “average” of his office staff (which is like 5 to 10 people, I believe) was 34%.
Of course it was. They only have income. Probably very little other investments. They are taking the normal deductions (if anything- as they may not even get a housing deduction in Omaha.) The middle class pays more. Always. Heck, they don’t even cap out the SS tax like the upper middle class.
Some articles say she only makes $60,000 a year. No one has any idea what her deductions, her husband’s income (if there is one) etc. are.
“The middle class pays more.”
That is simply not true. There is all kinds of data out there that shows that the rich pay a higher percentage in total income taxes than the middle class. I’d rather not dig the data up but if I have to I can.
The fact of the matter is that 47% of the country pays NO income tax.
And don’t bring social security and medicare into this because those are totally different animals. Those are separate programs that SHOULD be funded separately and with social security you – in theory – should get back what you put in.
Um if your effective tax rate making 75k is 30%, you really need someone to help you with your taxes… LOL! Then again that is close to accurate including Mediare, SS, and State income taxes.
With just the standard deduction your federal effective rate should really be around 10%? Not sure
“I’ve never compared public and private”
You did. In this thread. Here:
“Illinois and Berkeley ARE top schools. In fact, I’d rate them higher than Notre Dame or Washington U in St. Louis”
“social security and medicare … are separate programs that SHOULD be funded separately”
But they aren’t. They are general obligations of the Federal Government and NO ONE has the fortitude to suggest cutting them. The ‘lockbox’ is a total farce.
“that is close to accurate including Mediare, SS, and State income taxes”
Buffett usually discusses it in the context of FIT + FICA, since it is all $$ that is deducted from your check and sent to the US Treasury.
I always assumed that Buffet, the scumbag that he is, treats his secretary like an independent contractor and 1099’s her at the end of the year. So yeah, she’s paying her income tax, plus all of the self-employment tax, making her effective tax rate darn near 30% or higher. Self-employed people get hosed on taxes as part of the government’s assault on small business. The government’s lip service to small business is just that: lip service. If it were up to the federal government, and especially the IRS, everyone in the country, except for the financial industry, would be a W-2 employee of big business. Small businesses have disproportionately high audit rates, they pay higher marginal tax rates due to the self-employment taxes, and they get far fewer deductions that large corporations get (such as stock options, pensions, health insurance deductions, etc). Don’t even get me started on the fraudulent tax positions that the multinationals take like the infamous ‘double irish’. That tax loophole along with others like carried interest are simply not available to small businesses.
” They are general obligations of the Federal Government and NO ONE has the fortitude to suggest cutting them. The ‘lockbox’ is a total farce.”
There is some kind of separate accounting though. They track the money going into and out of those programs. I just think those programs are fundamentally different than the rest of the government programs because I get money back from them someday so it’s really not an expense like the rest of my income taxes that go all over the planet. And in the case of social security what I get back is loosely tied to what I put in.
“There won’t be a new post today because I had family obligations all weekend long (it’s graduation season!)”
From newborns to tweens to graduates all in one year!
http://news.investors.com/ibd-editorials/051515-752974-obama-pushes-banks-into-riskiest-borrower-pool-yet.htm
Oh no! “credit inequality”:
Obama Pushing Banks Into Riskiest Borrower Pool Yet: 45 Million ‘Unscorables’
As part of its amnesty program, the Obama regime seeks to expand credit to a whopping 45 million potential deadbeats — including illegal immigrants — whose credit files are too spotty even to score for risk.
In a just-released federal report, the administration portrays these “credit invisibles” as victims of a traditional credit-scoring system. And since most are minorities, it claims that excluding them from the financial mainstream is discriminatory.
PS isn’t this subprime redux? I guess the stocks of the for-profit colleges rallied on this news.
And yet, when things fail, the evil wall street or big banks or whatever catchphrase of the day will be blamed and not the idiotic socialist market oriented policy
Ugh. Can’t these people do what most other people did when they were young? Get a credit card in college with a low credit limit and build up from there. Pay your bills every month in full and on time. It’s not rocket science. I feel sad for people whose credit was damaged by medical bills or the death of a partner, but the vast majority are irresponsible jerks and I don’t want to support them.
Y’all are missing the point here. Just as the ACT/SAT have inherent and systemic cultural and classist biases that work against lower income test takers, the FICO scoring model too has inherent and systemic cultural and classist biases against low income consumers.
For example, middle and upper class consumers either have mortgages, or live in large rental communities that report on time payments to credit bureaus. Lower income consumers pay their rent on time too, its just that their landlord shows up at their door on the first of the month for a cash payment; or, they live with another family or two in a shared rental unit and the mortgage is under some other family member’s name.
Another example is medical bills. middle and upper class consumers have medical insurance that requires copays or deductibles. These unpaid bill may end up on a credit report but later can be reported as paid when they are satisfied by the consumer. But lower income consumers are usually on medicaid, and they don’t have any copays or deductibles, so they don’t have any medical bills reported to their credit.
Lower income consumers also have cultural biases which negatively affect their credit; for example, if you give a lower class person a First Premier credit card with a $300.00 limit, by golly, they’re going to charge up to the $300.00 within day of receiving the card, because to them, that’s being responsible as long as they pay the bill. However, the systemic biases in the FICO system is that charging a measly $299 out of a $300 limit is considered over utilization of credit, and it hurts their score. Whereas a middle class consumer with a $1,500 limit could charge the same $300 and not have their score negatively affected.
Something else most of the middle and upper class never deals with: HFS child support arrearages on their credit reports. Middle and upper class people get married and divorced, and they enter child support judgment orders with no balance. But lower class people are less likely to get married, are more likely to have children out of wedlock. What happens is that their baby momma/daddy ‘turns them in’ to the HFS office in exchange for SNAP/WIC (aka welfare) benefits. HFS is required by federal law (The social security act title IV) to track down that baby daddy/mommy and enter a child support order. What happens is that support begins accruing to the baby momma as of they day the noncustodial parent is served; and it could be months before the first court appearance and the paternity test is returned. When the child support judgment is finally entered, it gets entered as a money judgment for thousands of dollars and messes up their credit reports. Of course someone who makes $40k a year can’t just write a check for $5,000 in child support arrearages so it messses up their credit for years until it’s paid back at $30 a month or whatever the hearing officer decides it to be.
Another reason for a ‘thin’ file is that while middle and upper class consumers are likely to go to college and take out student loans, lower income consumers are more likely to receive need based scholarships and grants, or just not attend college at all.
You can naively call them deadbeats, but they’re tax paying Americans or undocumented tax paying american just like the rest of us. It’s the system that is designed to keep them from accessing the american dream; the systemic, inherent and probably classist and racist system that requires consumers to ‘play the game’ according to FICO’s rules, that prevents them from access to the credit system. Most of the people with thin files come from places where a vouch from a family member or neighbor, along with a handshake, is good enough to borrow money. Heck the hawala system in the middle east relies on a network of trust among shopkeepers who’ve never met to reconcile their books to transfer money. That’s my two cents.
Good points HD. At the same time though, aren’t they choosing to live a low income lifestyle? If a FICO score is supposed to determine credit worthiness, should someone who receives government assistance really be allowed to get a mortgage or auto loan?
I was able to be build up an excellent credit score while living at home with my parents. The lower income people can get a credit card by reporting the total household income of everyone in the house.
I’m also not sure if it’s like this now, but I remember my parents saying that when they were young they were told to get a store credit card to start building up their credit. They didn’t have much money then and it worked for them.
“It would also be nice for the rest of the people in the world if parents taught their kids a sense of empathy.”
“Ugh. Can’t these people … irresponsible jerks and I don’t want to support them.”
Same thread. Love it!
Choosing to live a low income lifestyle? Wat?
Jenny,
Sometimes ‘living at home’ isn’t an option, or if your parents are divorced, low income, or living in a rural area in northern michoacan. Not every lower class person can externalize their cost of living onto some other family member with higher income. Some cultures push work at age 16 (or younger with fake papers) and schooling isn’t important. They say get out of the house, earn some money to support the family and send remittances home. Timely Remittances don’t show up on credit reports due to FICO score cultural biases.
I agree with jenny, want a bunch of losers all these poor people are!
Why don’t they just live with their parents, or just access their trust funds earlier? I know of a guy who even had to sell some of his stock portfolio to pay for college – sad that he had to miss out on that appreciation but that’s the kind of hard choices that poor people really need to make if they don’t get a good job out of college after Lab School, am I right?
“I know of a guy who even had to sell some of his stock portfolio to pay for college”
Do you know Mitt Romney?
http://www.samefacts.com/2012/01/everything-else/mitt-romney-and-ann-the-students-struggling-so-much-that-they-had-to-sell-stock/
“They were not easy years. You have to understand, I was raised in a lovely neighborhood, as was Mitt, and at BYU, we moved into a $62-a-month basement apartment with a cement floor and lived there two years as students with no income.
“It was tiny. And I didn’t have money to carpet the floor. But you can get remnants, samples, so I glued them together, all different colors. It looked awful, but it was carpeting.
“We were happy, studying hard. Neither one of us had a job, because Mitt had enough of an investment from stock that we could sell off a little at a time.”
REMEMBER THE NEEDIEST!
The sarcasm seems to be flying over some people’s heads in here.
“From newborns to tweens to graduates all in one year!”
You know family is not just one’s kids. If I attend my cousin’s son’s graduation, does that mean I lied that I have a toddler?
“But lower class people are less likely to get married, are more likely to have children out of wedlock.”
Yeah, because many of them are immoral and/or stupid. They make stupid and immoral decisions and that is main reason they are stuck in poverty. It’s tough to get out of poverty when you make stupid decisions.
Agreed, not everyone gets to grow up with Highland Park privilege, or racist Standard Club nepotism, etc. but many people get ahead nonetheless. Even Obama had to admit that Asians are having no problems as immigrants and building up credit the NORMAL and decent way.
Forcing banks to make loans to high risk borrowers is Marxism and quite stupid as the last subprime debacle showed. Fannie and Freddie becoming a tool of racists like Obama is terrible too, they take responsibility for all these loans with predictable losses. Don’t say “it was the investment banks’ greed” because they were merely dumping the minority loans on Fannie and Freddie or pension funds.
“From newborns to tweens to graduates all in one year!”
Many people graduate in a family including siblings and spouses.
Duh!
Anyone else see this article discussing further gentrification in Pilsen?
They want to build 500 apartments. I doubt these will be at the lower price point given what’s going on in the apartment market right now.
What happens when 500 apartments that people are paying $2000 and up go in the neighborhood?
Isn’t Wicker Parkification of Pilsen inevitable?
http://chicagoist.com/2015/05/18/500-unit_pilsen_residential_project.php
Homedelete,
If I am understanding you correctly you are saying that there are numerous credit worthy people out there for whom the current credit scoring system does not accurately reflect their borrowing risk. They would be good risks but no one is lending to them. So this is an enormous business opportunity that no one has recognized as of yet. Lots of smart financial operators out there but no one has figured out how to make money lending to this group. Correct?
Sabrina, I really hope the Pilsen gentrification starts happening. I feel like it’s holding University Village back that Pilsen is still so gang ridden. I think Solis continues to stand in the way of making Pilsen a more livable area. They were supposed to build on the parcel you mentioned years ago, but Solis stopped it because they weren’t going to give units to low income people. It’s very frustrating and I’m happy that Solis is no longer the UV alderman.
If Solis wasn’t the alderman in Pilsen, I would be very tempted to buy a single family home in Pilsen. Without him, that area could be so much better.
I drove through Pilsen on Saturday, taking Racine from Taylor to 18th to the expressway. It’s already getting gentrified, there were indeed hipsters present enjoying the fine day. It’s already baked into the cake imho. I suspect the Pilsen that exists west of Ashland where the gangbanger shooting occur will remain in the “credit unscorable” category.
There is nothing that Hispanic racists can do to prevent it, even though there are some irascible marxist idiots that think they can. Lost on them is that Pilsen was built by white immigrants, and white people have every right to return there and fix the buildings back up to their original European condition, that the hispanics let into disrepair.
Unscored borrowers are an issue, but it isn’t a huge one. Every now and then I get a borrower with no FICO score. In some cases, the borrowers simply don’t have a score because they are relatively new immigrants, but they make really good money and there probably should be some sort of exceptions for these borrowers – i.e., recent Chicago Booth grad at McKinsey making six figures. I recently had one guy who didn’t have a score because he paid off all his debts and pretty much was using cash for the past three or four years. I had him reopen a GAP card and now he has a score.
Credit scoring is really just a way for lenders to deflect liability. Government, lawyers, and the various grievance industry prognosticators make it really hard for mortgage lenders to make exceptions lest they get accused of discrimination, predatory lending, or making bad loans.
FHA used to allow underwriters to build a credit history using non-traditional liabilities that don’t show up on credit reports – cell phones, rent payments, etc. However, you’d be hard pressed to find any bank that will do that now given the liability when the loans go bad. Invariably, these loans have higher rates of default and no lender wants to be exposed to the liability.
For every action there is an equal and opposite unintended consequence.
“If Solis wasn’t the alderman in Pilsen, I would be very tempted to buy a single family home in Pilsen.”
I do hope that no Lab English teachers read this site.
In the mortgage world, it is actually better to have bad credit than no debt. I guess with bad credit, we can properly price the mortgage. We know you don’t pay things on time, so the loan is priced accordingly. However, with no credit/debt the bank doesn’t know so there is uncertainty.
A person with multiple late payments, collections, and a low 600 FICO score and two nickels for a down payment can get a mortgage. A person with no FICO score, no debt, six figure income, and large down payment is SOL.
I love this business. 🙂
“Forcing banks to make loans to high risk borrowers”
Nowhere does the linked screed say how lenders would be forced to lend to anybody. More harem scarem from the people who want you to believe that the CRA caused the mortgage crisis.
How is more information about prospective borrowers — even less desirable ones — bad?
“How is more information about prospective borrowers — even less desirable ones — bad?”
has the chance of increasing the prices of loans to regular borrowers?
“has the chance of increasing the prices of loans to regular borrowers?”
Dude, the market is never wrong.
k so explain how that wouldn’t increase the cost?
Explain why I should care. I have perfect credit and regard at least a little bit of credit rationing as a good thing.