Crain’s: This Penthouse Condo Sale Would Be One of the Most Expensive Ever: 132 E. Delaware
Crain’s is reporting that a 4-bedroom penthouse in the Four Seasons Hotel building at 132 E. Delaware could become the second most expensive condo ever sold in Chicago.
Currently listed at $9,950,000 the condo went under contract after just 3 weeks on the market.
The buyer could not be determined, but people familiar with the transaction said the price is more than $9 million, slightly less than the list price of just under $10 million.
The seller, Jeffrey Levitetz, chairman of a wholesale food company, paid $4 million for the lavish unit in June 2006. The price doesn’t include the roughly $5 million he spent on renovations, sources say.
According to Crain’s this sale would put it at the second most expensive condo to ever sell in the city (after Vince Vaughn’s Palmolive penthouse- which media reports put at anywhere from $10 million to $12 million.)
The unit has north, south and east city and lake views.
It has 11 foot ceilings and a wood burning fireplace.
There is no deeded parking with the unit but there is unlimited rental parking available.
The local high-end market has struggled in recent years because of a glut of unsold inventory and buyers’ difficulty obtaining “jumbo” loans, or mortgages above the area’s $417,000 limit on loans that government-backed Freddie Mac and Fannie Mae will buy.
The transaction doesn’t signal a recovery is near, says James Kinney, vice-president of luxury sales at Chicago-based Baird & Warner Inc., who isn’t involved with the deal.
“One sale doesn’t make a trend,” he says. “But it does signify that there’s still people looking for unique, high-end spaces.”
Gold Coast unit slated to sell for more than $9 million [Crain’s Chicago Business, Andrew Schroedter, April 5, 2011]
Pamela Miles at Prudential Rubloff has the listing. Ogle the pictures here.
Unit #6602: 4 bedrooms, 3.5 baths, no square footage listed
- Sold in July 1989 for $1,597,000
- Sold in June 2006 for $4 million
- Currently listed for $9,950,000
- Under contract
- Assessments of $4524 a month (includes cable, doorman)
- Parking is rental at the range of $289-$380 a month
- Taxes of $50,679
- Bedroom #1: 28×39
- Bedroom #2: 18×18
- Bedroom #3: 18×21
- Bedroom #4: 24×22
I am not seeing $10M condo according to those pics. It looks pretty average in terms of finishes. The decor is very Naperville.
I would rather have that 7(?) million dollar place at the elysian – but why is the sale of this unit news or shocking to anyone? I hope people DO realize that a lot of people out there have a lot of money… (yeah, I know – broken record).
Thank goodness the $4,524 assessment includes cable, if it didn’t that would be a non-starter for me.
I kind of agree with Clio on this, but only on the very high end. The big money jobs still exists (Athletes/hedgies/CEO’s are still making money). I do question more the lower high end market. Think their may be way more avaiable at those prices than potential buyers. But the upper high end is probably fine.
The 2520 Lakeview building (Lucien Lagrange) that is going to be built just sold several 2-3million+ units in the past few weeks (PRE-CONSTRUCTION). HD, G – what are these sales going to do to your stats?
Clio – I don’t have stats, only observations from the trenches. I will freely admit I have little experience with ultrahigh end luxury condo sales. Then again, in this city of 2.5 mil, few do.
“I am not seeing $10M condo according to those pics. It looks pretty average in terms of finishes. The decor is very Naperville.”
Seriously? That place looks every bit of a multi-million dollar home. The decor is exactly what I would expect at this level. I’d love to see some pictures of how you’d expect this place to be finished/furnished. These kinds of comments get thrown around here all the time, but I’ve yet to see what people think it SHOULD look like.
Anyone have any news on the trader that plans to flip $7+mil condos in the Elysian?…
http://www.chicagobusiness.com/apps/pbcs.dll/article?AID=9999200038250
I also don’t know too much about high end RE but I’m guessing that the buyer was someone who had been waiting for this particular building rather than someone who was just in the market.
ChiBuilder… Susquehanna background = definitely not an idiot.
Pre-construction condos sales aren’t very relevant anymore. Some never end up closing. I don’t believe any of the stats until they actually get to the closing and write the checks.
But Dennis Rodkin at Chicago Magazine recently did an update on the building.
http://www.chicagomag.com/Chicago-Magazine/April-2011/Lucien-Lagrange-Condo-Grows-With-the-Economy/
Basically 50% has “sold” – preconstruction.
When they originally announced this building many years ago- I thought it would sell extremely quickly given that it is the first new construction in that location in probably 20 or 30 years. Many homeowners living in the older high rises nearby would certainly try and upgrade (to have better parking, higher ceilings, nicer amenities, washer/dryer in the unit, balconies etc.) That isn’t really happening. Perhaps it’s because those who would move into this building now can’t sell their old units- I don’t know.
There are simply way too many choices at this price point still available in the city- and with tighter credit it gets harder to sell.
Wait isnt the rule here, “If you cant afford this you should shut eF up, as your opinion means nothing if you dont live the lifestyle”?
“Seriously? That place looks every bit of a multi-million dollar home. The decor is exactly what I would expect at this level. I’d love to see some pictures of how you’d expect this place to be finished/furnished. These kinds of comments get thrown around here all the time, but I’ve yet to see what people think it SHOULD look like.”
Yeah, it’s very nice, but *how* did he spend $1000 psf on the buildout?
wesloopelo would have an answer
looks plenty nice to me, and fantastic views. although i will freely admit i have no idea how a 10 million-dollar place should look as opposed to a mere 5 million-dollar one.
gringozecarioca… I have actually met him a couple times, and no not an idiot. Just curious how this translates to his real estate success.
I would prefer a gold coast mansion for this price.
I’m surprised real estate taxes are this low here. I recall most expensive real estate tax bill is $250,000, for a house in Winnetka which is probably in this same price range.
chi.. I highly doubt his motivaions are strictly financial, any logic i could come up with for his doing this would be better done elsewhere, but regardless, he is very conscious of his risks let hom enjoy!
Personally i love the bldg and not the apt. That one in front of the zoo for 2.5 ish with the white kitchen was nicer build than this… Also i dont like looking at rooftops.
How is is possible to spend $5 million in renovations on a condo? Solid platinum fixtures? Carpets made from the hides of endangered species? Wallpapering rooms with $100 bills?
Almost 10 million and you have to rent parking! DEAL BREAKER!
Also pay more in taxes then most people make in a year!
What ever happened to the duplex penthouse that was listed in the same building for around $11 million. Did it sell or just get taken off the market? That was a pad easily worth its asking price. This one – not so much. No second floor & no outdoor space does not equal my attention.
Barf.
“If you cant afford this you should shut eF up, as your opinion means nothing if you dont live the lifestyle”?
Can we please post another home so I can start talking again 😀 shut
“How is is possible to spend $5 million in renovations on a condo? Solid platinum fixtures? Carpets made from the hides of endangered species? Wallpapering rooms with $100 bills?”
Depends on what is attributed to “roughly $5 million he spent on renovations, sources say.”
For example it could cost two people in cookie cutter condos $5K to update their kitchen. But say one of the people lives in a high rise that has expensive rent-the-elevator fees. Say for some reason you could not get all the appliances delivered on the same day and you had to rent the elevator 3 times. A few of those could bump the price up another grand.
So you can either say your reno cost you $5K in true costs or $6K if you want to account for every dollar spent.
Wow, for $10 million they made the Hancock Bldg. disappear. The finished are very nice, however there is that “naperville” feel to it, I agree, can’t put my finger on why.
Real estate prices continue to fall, weighing on the wealth of most Americans (it’s their primary asset). Increases in stock prices benefit a much narrower base (high end). There is so much money-printing/QE going on…..follow the money, it gets printed and who handles it first: Gvt./military industrial complex/Wall Street So this Fed intervention doesn’t help Main Street, it robs it via inflation, but the new money does get into the hands of some people, those with assets already. All of this money is sloshing around the world looking for somewhere to go since returns on bonds, etc. are so low. Some of it ends up in places like this.
Stunning. I’m in love.
So not in my budget and so not my taste. It looks dated and tired, but what do I know : )
“So not in my budget and so not my taste. It looks dated and tired, but what do I know : )”
But they spent $5mm redoing it!! It must just be because you don’t understand!!
Nice unit: premium for the location, views, etc but dreadful decorating- it is very mundane.
“Seriously? That place looks every bit of a multi-million dollar home. The decor is exactly what I would expect at this level. I’d love to see some pictures of how you’d expect this place to be finished/furnished. These kinds of comments get thrown around here all the time, but I’ve yet to see what people think it SHOULD look like.”
So you have the most expensive unit in a building where the only difference between you and the 1 BR in-towner on a lower floor, is the size of your apartment. Ok maybe some finish details and a nicer kitchen, but that’s about it; plus you have to share the elevator with them – ‘we’re here this weekend to see Blue Man Group, omg, they eat a whole bag of marshmallows… on…. stage!. These newer buildings lack scale and proportion, something that the old master builders (and the Europeans they copied) understood. When I look at ‘newly’ constructed buildings like this, I see low and linear.. just like the South Bend ranch house the in-towner owns.
May I suggest an Adler… at half the price?
http://www.rubloff.com/property/chicago/07715779.cfm?searchId=374f4f03-e8f6-45eb-a347-644008de2188&page=1&pageSize=20&sortType=1
By comparison, my friend’s penthouse in the Park Hyatt is “nicer” (a nebulous term, sue me) than this by a long shot. That unit has higher end finishes, better sight-lines/”nicer” views, superior design elements, better use of the space, and above all it looks like it actually costs 10 tickets.
In pictures, this unit looks like every other standard issue, high-end Chicago unit, certainly not 10 m’s special.
This probably looks much more slick in person to have sold for what it did considering the other options out there.
As someone else noted here, the pictures on the listing don’t include your up-close view of the Hancock, which I imagine would be a major block of the east/southeast view. For nearly $10 million, they should at least be upfront in their ad.
great post jay, that what rooms in a $10MM condo should look like. Awesome.
jay, that property is a dream. Absolutely stunning.
jay: love that room with the pool table, reminds me of that Illuminati-scum played by curly-haired Sidney Pollack in Eyes Wide Shut.
‘a $10MM condo should look like.’
Pure co-op here Dan, no mortgage allowed – cash only, and you can be rejected ownership on *any* grounds (said or unsaid of course). But, an entirely different world built when living well was an art form, and something not learned from watching Bravo.
has anyone else ever thought that some of these super-high condos might be too high up? It seems that when one gets up to a certain height, the view becomes almost static. I recall watching, I think a Joe Zekas video, of a Trump penthouse on floor 80 or something….. and the view from up there is almost detached from reality, nothing moves, silent, static, no connection with the city/ground.
Dan,
No.
It’s the same reason that the house at the top of the hill/mountain is usually the “nicest”.
They don’t call it being on top of the world for nothing.
“It’s the same reason that the house at the top of the hill/mountain is usually the “nicest”.”
Yeah but it’s also a place for hermits who want solitude and silence/detachment.
It’s an interesting question whether a place can be too high. I tend to disagree. From perusing many ads for John Hancock condos over the years, I’ve noticed that while the views from the 60s and 70s are quite nice, there is a stunning, top of the mountain effect that you get above the 80th floor that is truly impressive. You’re no longer part of the city – you’re floating far above it. In the Hancock, this probably has to do with the fact that the tallest nearby buildings (900 N. Michigan and the Ritz Carlton) are around 70 floors high. About 10 floors above that, your view in the Hancock is high enough to be above everything.
As an addendum to my last post, I’d say this place is not high enough for me, because its views east would be partially blocked by the Hancock. I have been high up on the west side of this building (132 E. Delaware/900 N. Michigan) and that view is fabulous, because there’s nothing in the way. So if I were to buy here, it would have to be a NW or SW view.
Maybe someone can clarify.
It seems like selling this unit for between 9 and 10 million after putting 9 million into it is a pretty bad return on investment. Add in the transaction costs and it seems like the owner would have been better off with 9 million in Munis or even Treasuries for the last 5 years.
Tipster,
This sold in 06 for 4 mil during bubble mania.
It just sold again for 9 something.
I really doubt someone as shrewd as this seller put 9 million into this. I would doubt a figure 1/5 of that.
This guy would NOT have done better buying munis. lol. In fact, this is easily the largest return I have seen for a single property that was purchased during the bub.
“has anyone else ever thought that some of these super-high condos might be too high up?”
Actually I agree with this comment. I don’t like being on very high floors when you just see mostly lake and blue skies. I like more unobstructed 30th floor type of views.
“May I suggest an Adler… at half the price?
http://www.rubloff.com/property/chicago/07715779.cfm?searchId=374f4f03-e8f6-45eb-a347-644008de2188&page=1&pageSize=20&sortType=1”
Bingo. Thanks jay.
On the other hand, you do have a Potbelly’s IN your building. Nothing screams $10M condo like living over a Potbelly’s.
chicagobull is friends with king citadel?
chicagobull, the article clearly states that the owner bought it for 4 million and then spent 5 million on renovations. That’s 9 million. The owner is getting a return that is than 10% over the course of 5 years. Over the last 5 years, pretty much everything but the stock market and real estate did better than that.
“chicagobull, the article clearly states that the owner bought it for 4 million and then spent 5 million on renovations. That’s 9 million.”
Tipster:
He was calling BS on the “$5 million” that “sources say”. I could say that the contractors *paid* for the privilege of working on such a wonderful space and that could be a “source” and would have as much credibility as that buildout costing $1000 psf. $200 psf seems more than plausible, tho, so I would bet that he as *at least* $5mm into the place.
“chicagobull is friends with king citadel?”
Yeah, me and Ken knock back brews at Pippins every Thursday.
Where do you people come up with this stuff?
@chicagobull
Because Ken owns the Penthouse at the Park Hyatt.
“Where do you people come up with this stuff?”
I dunno, maybe this:
“my friend’s penthouse in the Park Hyatt”
plus a restrictive view of what can constitute a “penthouse” and the fact that (at last report) Kenny owns the actual top floor at the PH.
“Clio – I don’t have stats, only observations from the trenches. I will freely admit I have little experience with ultrahigh end luxury condo sales. Then again, in this city of 2.5 mil, few do.”
This statement gave me an idea…
Homedelete…you ARE in the trenches…like working at a cancer treatment clinic. You see/hear sad stories all day…makes you feel like everyone has cancer or will get cancer. So you are not wrong…just more pessimistic.
CLio…you are like someone who works at a beautiful beachfront resort where everyone is on vacation…your reality is not the reality of most people. So you are more optimistic.
That being said…I think there is little GOOD inventory so purchase price and rentals for these are climbing. But HD, you are right for most everything else. Lots of mediocre to bad stuff out there that is NOT and will NOT appreciate.
I’m not bff’s w/ Mr. Griffin.
Just so everyone knows, there are multiple penthouse floors at the Park Hyatt. Are they actually “penthouses”, probably not in the brunch line at CC’s Too, where real taste is dictated by young parents seeking SFHs in Lincoln Square and So Poor.
Those penthouse floors are real nice though, they are so choice. If you have the means, I highly recommend picking one up.
Yeah, I had an epiphany that the high-end is doing OK and will do OK because these people have assets and their values are being inflated by QE2. On Main Street, people have little to no assets, and values for their property types are going down.
Since inflation only helps those who have financial assets, the wealthy are doing OK via inflation/QE2, meanwhile inflation and property value declines are hammering the middle class who have no significant “stock assets, etc.” that benefit from QE1-2 which has caused stocks to double in the last 2 years.
“Those penthouse floors are real nice though, they are so choice. If you have the means, I highly recommend picking one up.”
Nice Ode to Ferris Bueller
This is exactly what I meant about distinguishing between 5 and 10 million-dollar places. That one definitely looks just as good if not better.
“#
jay on April 6th, 2011 at 10:54 am
May I suggest an Adler… at half the price?
http://www.rubloff.com/property/chicago/07715779.cfm?searchId=374f4f03-e8f6-45eb-a347-644008de2188&page=1&pageSize=20&sortType=1
“
A 28×39 bedroom. Someone please tell me why I’d need that much space in a bedroom. It sounds like too much space even for a living room!
No offense to your epiphany but is something I thought you would have realized the TARP and the stimulus came into existence. I’ve shown over and over again on this site that many sellers and buyers of expensive homes featured on this site are in someway involved in the financial industry.
“Dan on April 6th, 2011 at 3:50 pm
Yeah, I had an epiphany that the high-end is doing OK and will do OK because these people have assets and their values are being inflated by QE2. On Main Street, people have little to no assets, and values for their property types are going down.
Since inflation only helps those who have financial assets, the wealthy are doing OK via inflation/QE2, meanwhile inflation and property value declines are hammering the middle class who have no significant “stock assets, etc.” that benefit from QE1-2 which has caused stocks to double in the last 2 years.”
“Since inflation only helps those who have financial assets”
Physical assets, no?
Hell the guy down the block from me is the managing director of a financial firm and he bought a very expensive home during the deepest depths of the recession. Who the hell else was earning that kind of dough but for the guy with near direct access to the various financial ACRONYM programs the government offered? Finance IS the chosen profession.
Just yesterday afternoon a partner and I were discussing his daughter’s friends’ parents’ occupations in his upper-tier suburb and he said the parents with the largest homes & nicest cars (including a bentley he pointed out) are involved in finance, hedge funds, banking, lending, private equity, commodities trading, stocks etc. He hinted that as a partner at a mid-sized law firm living in an upper-tiered suburb he felt a little inadequate when compared to the big finance money that floats around the bleachers of his daughter’s weekend softball games. I’m not the only one who makes these poignant observations. hell even that new construction building across from McGee’s 3 out of the 4 buyers all worked in finance and it was confirmed by some poster knows someone who lives in teh building or lives there himself. the 4th guy was somebody who designed artwork for album covers.
ER wrong again. The value of the financial contracts underlying the phyical assets is worth the money…how many commodities traders actually take delivery? even stock is a financial asset..? The end user is the party who pays the high price and suffers, so no, those owning the physical asset is not the party that benefits.
“#gringozecarioca on April 6th, 2011 at 4:19 pm
“Since inflation only helps those who have financial assets”
Physical assets, no?'”
And for the record, if I pay $9 million for a condo, I shouldn’t have to pay extra every month for my parking space.
HD.. You didn’t know this 28 years ago???
“One minute your up half a million in soybeans and the next…”
The end buyers the holder of the physical assets are quickly finding that they cannot pass the increased costs on to consumers (as much as they tout in public to the contrary) … Caribou coffee just LOWERED their price on their coffee by 20% despite record high coffee commodity prices. Used to be $12.00 a pound and now it’s $10.00. My office switched from Caribou to Starbucks (When it was on sale for $6.99 for 12oz for a while); and then Dunkin Donuts (when that went on sale too); but now the Caribou has a new lower non-temporary sale price. Even Folgers crap (I don’t drink it but follow the price) is a huge container for $5.29 the other day on sale from $9.00 or $10.00. People drink less coffee, people buy less house, people eat out less, they can’t pass on the increases no matter how much they say….even walmart said “Whiffs of inflation’ but of course they also claimed they were the best positioned to not pass on the increases to customers due to their pricing power. This next commodities crash will happen, it’s already happening, you can see it in coffee prices – record raw prices which are translating into lower consumer prices due to reduced demand….
GZ: I’m not that much older than 28 years old despite a mental age of about 83.
So the guy owning the gold, aluminum,copper mine with untapped reserves or the reserves of oil in the ground ain’t participating in the run up??
You know of not what you speak.
ze:
I suspect this thought
“I ain’t gonna have no money to buy my son the G.I. Joe with the kung-fu grip!”
is what troubles HD most about buying a house.
hd- do you drink sour grapes brand whine?
lawyers have been living high on the hog for a while contributing nothing to society… time for the finance types to do something useless and make tons of cash
I was speaking more generally, but yes, the handful of corporations or state enterprises that own the mines and oil fields are beneficiaries. and there are some farmers benefiting too (but see the story bout cotton growing in TX b/c of high prices…supply and demand).
But the airlines, trucking companies, coffee companies and retailers who ALSO then own the goods are suffering because they cannot pass their costs onto the end user.
#
gringozecarioca on April 6th, 2011 at 4:36 pm
So the guy owning the gold, aluminum,copper mine with untapped reserves or the reserves of oil in the ground ain’t participating in the run up??
You know of not what you speak.
“#gringozecarioca on April 6th, 2011 at 4:36 pm
So the guy owning the gold, aluminum,copper mine with untapped reserves or the reserves of oil in the ground ain’t participating in the run up??
You know of not what you speak.”
I said OWNER of physical assets. Caribou doesn’t own the plantation.
Put yourself in the shoes of HD the cotton farmer. Cotton just quadrupled while your costs barely budged. For every $1,000 you made last year, this year you’ll bring in $4,000. Now this increase rippled pretty far out in time so you can project and protect those gains and a year ago what you expected will be $1,000 in 2013,2014,2015… will all be much higher.. yes/no?
ya with me?
You’re right Sonies, the legal profession has changed, significantly. ask the former summer associates at my firms who took large paycuts to work here and we were the only place hiring. we’re interviewing for another associate position and the stack of resumes is 6″ high and it’s not just resumes from Cooley graduates either, plenty of UofI, ND, NW, T1 schools. The economy will recover, yes, but I have my doubts that the legal profession, as a whole, ever will. There are too many of us and not enough money to pay us all what we would like. There are fewer paying clients and they all want discounts. It has changed and not for the better.
“#Sonies on April 6th, 2011 at 4:38 pm
hd- do you drink sour grapes brand whine?
lawyers have been living high on the hog for a while contributing nothing to society… time for the finance types to do something useless and make tons of cash”
So carbiou doesn’t own coffee?
I follow you, but think, now every farmer in your town is now planting cotton….before it was just you.
read teh bloomberg story from a few days about how they’re running out of cotton seeds to plant in TX because all the corn farmers are switching to cotton many of them for the first time ever.
“The economy will recover, yes, but I have my doubts that the legal profession, as a whole, ever will.”
The top tier BigLaw jobs will recover as they do after every downturn. Top firms will pay deeply for top talent yet again once billings come back, as they don’t seem to do any cost comparison and chase only top talent.
But that’s a very small percentage of lawyers. That will not prevent the T1 schools from using those few placements as propaganda to keep the applications coming in.
For almost everyone else pursuing a law degree its a negative ROI. In a sense I think that might be a good thing for the profession as over the long run law schools will attract people who actually want to practice law and not 1) chasing money or 2) deferring adulthood by three more years for earning a JD they will never use.
The astronomical inflation in tuition will have a dampening impact on both sets. Not likely as much of an impact on those who really want to practice law.
I am so tired of meeting people out and about with JDs with jobs completely unrelated to law even by their late 20s (and I don’t mean a getting by job until they land something in law, I mean people that either never seriously pursued a law job or did it for 2 years then realized they hated it and switched fields). They seem oblivious that their choice to attend law school had a crowding out affect on those that really wanted to and it’s very selfish.
I really think law schools should do what good business schools do and require a couple of years work experience: it drastically reduces the #2 set mentioned above and application volumes would similarly plummet. Also by their mid-20s people generally have a better idea of what they want to do in life and are good at vs. at 22–lots o’ cornflakes at 22.
err really wanted to practice law as a career
don’t forget HD, law school costs more than ever too… juan marshall 37k a year? LOL yeah right like that will ever pay for itself…
something has to give eventually, or am I just crazy?
also doesn’t anyone find it odd that you see farmers staying at all the extremely nice luxury hotels downtown these days during conventions?
then again, I never met a farmer who had a “good year” either
“something has to give eventually, or am I just crazy?”
Two things should be done to solve it:
1) Debt forgiveness or allowing student loans to be dischargable in bankruptcy.
2) Government getting out of backstopping financial aid.
The higher education institutions are collectively in bed with the Democratic party, so I am thinking solution #1 is more likely. Really both should be done.
Americans need to learn that when the government gets involved in backstopping the financing of a good the equilibrium price of the good rises.
Compare car inflation (not government backstopped, no tax exemption for interest) to education or housing (government backstopped financing, tax exemption for interest) over the past twenty years for a great example.
“also doesn’t anyone find it odd that you see farmers staying at all the extremely nice luxury hotels downtown these days during conventions?
then again, I never met a farmer who had a “good year” either”
Just a little trivia about farmers and money. There’s a house on Astor, just about a block or so south of North Ave, with a stylized corn fence. The owner of the home made his money off of corn subsidies. He designed the corn fence as an homage to his use of the subsidies.
In other words, farmers do live in mansions.
“The owner of the home made his money off of corn subsidies. He designed the corn fence as an homage to his use of the subsidies.
In other words, farmers do live in mansions.”
You sure it wasn’t a commodities trader?
“He hinted that as a partner at a mid-sized law firm living in an upper-tiered suburb he felt a little inadequate when compared to the big finance money that floats around the bleachers of his daughter’s weekend softball game”
That is more a reflection on his weak personality and insecurities….. it has NOTHING to do with money and what is important. Seriously, if you need money to feel “adequate” then you are pathetic and need professional help. Everyone should feel adequate and proud of what they have (no matter how much or how little). It shouldn’t even come into play in your feelings of security, etc. If it does, you need to re-examine your life.
HD.. Honestly i don’t know shit about caribou. Some companies that act as supplier to the end user want to focus on extracting the margin solely from retail, some might liike the idea of having control over levels of production and price but that door can swing both ways severely. Depends on the company i guess.
And it is not just big guys. Think of 1000 teak wood farmers with just a few acres each in nicaragua. Run up in lumber prices is an enormous benefit too them all for reason i laid out above.
It’d going to take the utter destruction of the profession before the law school tuition fiasco comes to an end. apps are up again.
“It’d going to take the utter destruction of the profession before the law school tuition fiasco comes to an end.”
Let us all pray for this…..
Insecurity coming from a guy who brags on the internet about a lambo…
Gz ill give you that a handful of teakwood farmers benefit. But the buyers at the middle of the supply chain can’t pas s off the costs on consumers. Even kraft mac and cheese has lowered its price to less than 70 cents…
“That is more a reflection on his weak personality and insecurities….. it has NOTHING to do with money and what is important. Seriously, if you need money to feel “adequate” then you are pathetic and need professional help. Everyone should feel adequate and proud of what they have (no matter how much or how little). It shouldn’t even come into play in your feelings of security, etc. If it does, you need to re-examine your life.”
Clio… didn’t you literally describe your childhood as such?
HD.. I get the article… no need to read it. That is how it is supposed to work. when the price gets too high people either stop buying or new production is brought in increasing supply over demand crashing prices.
Of course there is another possibility, prices keep rising, people in other countries buy everything and your store shelves get bare… that’s the model much of the world lives with btw…
HD, it sounds like you are starting to acknowledge that finance types actually are part of the real estate market. Im pretty sure you got on my case for saying that they were a significant portion of the buyers in the more expensive parts of the city.
“Caribou coffee just LOWERED their price on their coffee by 20% despite record high coffee commodity prices. Used to be $12.00 a pound and now it’s $10.00.”
Stick to law =)
But the buyers at the middle of the supply chain can’t pas s off the costs on consumers.
HD.. this was never the argument. And btw futures and stocks (as you describe them) are in and of themselves a zero sum game…
“Since inflation only helps those who have financial assets”
Physical assets, no?
“HD, it sounds like you are starting to acknowledge that finance types actually are part of the real estate market. Im pretty sure you got on my case for saying that they were a significant portion of the buyers in the more expensive parts of the city. ”
Of the finance types I know they all tend to congregate in only a few neighborhoods:
Gold Coast: a lot
River North: a fair amount
Lincoln Park: a smattering here & there
Lake View, South Loop, etc: not so much
They do tend to party all over the GZ though–cabs aren’t a big deal for them.
“HD.. this was never the argument. And btw futures and stocks (as you describe them) are in and of themselves a zero sum game… ”
I’m shocked!! Shocked!!! to find that gambling is going on in here!
…
Your winnings, Ze.
“Caribou coffee just LOWERED their price on their coffee by 20% despite record high coffee commodity prices. Used to be $12.00 a pound and now it’s $10.00.”
For my basket of goods & services I have seen significant deflation year/year in almost everything but energy (gas, elec). However our state has taken it upon them to increase taxes so that blunts a large part of the savings.
Bob is no longer confined to the one dollar beer bar on Fridays like in good times. There’s now at least 5 of them and there’s another 10 bars with groupon type discounts.
I better make sure my inventory turnover on these discounts remains healthy though as I’m sure a lot of these places aren’t going to make it.
“they do tend to party all over the GZ though–cabs aren’t a big deal for them.”
Thats because they understand the cost of a lawyer in order to get them bailed out for a DUI and figured out its much cheaper to pony up for the cab fair.
Gz- if it really zero sum then where does the money come from? Credit and the fed maybe?
Flo I never jumped on u for saying that fianace was part of the high end market. Not enough to keep it proped up buut definitely enough to prevent the collapse. I’ve acknowledged that quite often especially since the 42 yo old the block probably makes 50x what I do and he’s not that much older than me.
Ppl attribute quotes to me all the time on here, its understandable, its tough to get all the anonyous posters right and remeber what they said.
“Finance IS the chosen profession.”
Agreed, indeed it is. But anyone who falls into the class that owns assets is benefiting from QE and the run up in stocks. Someone like a lawyer, doctor, business owner, hell…..even a RE person who built up a tidy portfolio is benefitting and that can translate into more buying power for the upper ends of the housing market, at the margin.
Basically, 80% of Americans don’t own any stocks outside their puny 401Ks. These people are not participating in the QE asset-inflation, since they have no assets. Therefore, at the margin, they have nothing to contribute to an increase in housing prices at their level, which is still declining.
I’m starting to think, if the asset-holders-class gets more paranoid of a dollar-collapse, you could see people cashing in millions of cash and putting it in RE, bidding up the higher ends, just putting it somewhere into something real. Is this maybe what the Elysian buyers are doing? Parking money somewhere? laundering money is more like it, ha ha
“Flo I never jumped on u for saying that fianace was part of the high end market. Not enough to keep it proped up buut definitely enough to prevent the collapse. I’ve acknowledged that quite often especially since the 42 yo old the block probably makes 50x what I do and he’s not that much older than me.
Ppl attribute quotes to me all the time on here, its understandable, its tough to get all the anonyous posters right and remeber what they said.’
After rereading the old post you were just trying to prevent people from coming out and saying that finance types were a reflection of market as a whole. Obviously they are not, and are not the end all be all. I was making the point that they are a significant portion of the buyer in higher end properties. It was a discussion on the 3 out 0f 4 finance guys that bought in that condo conversion on webster ave. It is kinda surprising that new highs are continuously being made on the highest end of Chicago real estate, like this example. You hardly see any 10M+ properties on the market here in Chicago compared to the likes of NY, LA and the rest of west coast. Is there a larger demand for these types of properties here in Chicago than people are thinking? maybe that trader who bought that penthouse at the elysian hotel is onto something.
Gz- if it really zero sum then where does the money come from? Credit and the fed maybe?
Tough question. You need real cash to play OR to get credit. Most of the money in the game now is aggregated together by wealthier investors and institutions, pension funds are huge players, university endowments, it comes from every direction (so much for 80% of America having no skin in the game, they do!)
Problem is when the banks are in and have non exchange settled and cleared transactions, this is where a huge problem occurs, no risk controls, and just think how can me and you bet on the price of something and both be right at end of the quarter. makes no sense but I sell you widgets for $5 and at quarter end say it’s worth $4.80 making 20 cents and you report it as worth $5.20 also making 20 cents and without a settlement price we both pay McKinsey to sign off on it. Oh and we bet a trillion and instead of one defaulting we somehow get the gov’t to pay out on it. total scum!
Bob – I was told subsidies. Not directly by the person himself, but by someone who knows who the owner is and how he made his money.
‘Sides, if it was from commodities, I would think that soybeans would have been worked into the design as well. 😉
“think how can me and you bet on the price of something and both be right at end of the quarter. makes no sense but I sell you widgets for $5 and at quarter end say it’s worth $4.80 making 20 cents and you report it as worth $5.20 also making 20 cents and without a settlement price we both pay McKinsey to sign off on it.”
Not accessible enough, smart guy.
“Not accessible enough, smart guy.”
Nope… you keep throwing these movie quotes at me and all I can think of is “go to the hotel and get Busy Bee”
btw.. you have correios
WHere is the QE money coming from? Thin air. 0 and 1’s on a computer screen… where does that money add up? Now I know that QE is really just buying government bonds not dropping money from helicopters but still….I’d hardly call it a zero sum game..
It might ze zero sum between you and me but all the extra cash created via credit and the fed sure seems like everybody wins.
Flo: I think, IIRC, that I was trying to argue that finance will not SAVE the market or keep it propped up to such great heights – but – obviously, in a city like Chicago, finance will buy in the higher end, albeit 15 to 30% cheaper than 2006/2007.
Dan: I don’t think they’re scared or looking for a place to park assets; I think they believe this is a good time to buy, in a sense, they are bulls like Clio except that they have more cash. Oddly enough, there are people everywhere who believe we are at the bottom, or in some cases already passed it.
“I think they believe this is a good time to buy, in a sense, they are bulls like Clio except that they have more cash.”
….oh really?
HD you got apples with oranges and are throwing in avocados also.
None of this is simple and none of this goes without hundreds of tangents so no reply can be completely accurate or inclusive but yes QE is pretty much just dropping $$’s out of a helicopter hoping the price of shit goes up. Every dollar that goes out there is done with the intent to pressure the demand side you keep talking about by having the same supply of goods available as before but now with more $$’s available to buy those products. Problem is when there is no demand for the ultimate product you are trying to push up, which in this case is housing. Money just goes elsewhere.
Now here’s an ugly thought. EVERYTHING is wonderful for banks and Fed if housing prices can just get above the damn price they wrote the loans for. So if new build is now $150 psf why not just push up lumber, steel, etc until you get to $300 or $400psf.. At some point you push up housing prices even if it’s just to buy and strip the copper wiring. This cleans the fed and bank and the banks are now existing in an environment with 5 to 6 times the cash floating around as before and hey their revenue is in some way tied to amt $ and credit outstanding so increasing money supply gives them a built in revenue increase which makes them happy.
Plus cutting the dollar in half one more time finally closes the gap on the global wage arbitrage I obsess frequently about. It has to get closed!
The average guy gets slaughtered but I don’t see anyway to stop it. America is 300 million out of 6 Billion it can not walk away from the game.
“Even kraft mac and cheese has lowered its price to less than 70 cents…”
Homedelete- you are way off on what is going on with food price increases. They are ALL raising (and raising dramatically.)
Just 2 weeks ago Kraft announced a 22% price increase on Maxwell coffee. This is after Folgers announced its 10% raise. Hershey’s just raised last week by 10% on all products across the board. Kiimberly Clark is raising prices on diapers (because of cotton costs.)
Here’s more on Kraft from just a week ago:
“The company already raised prices on most of its products in Europe and more than half in North America. But it said its input costs rose nearly $500 million during the fourth quarter and its profit margins suffered accordingly.
Company leaders expect costs will remain high for the year, but they said profit margins should recover in the second half of the year as price hikes begin to offset those costs.
Kraft is one of many food makers talking about price hikes to cope with increased costs. In the past two weeks, Kellogg Co., Sara Lee Corp. and J.M. Smucker Co. also announced them.”
Oh- and by the way- the farmers are rich! American farmers are expected to make about $94 billion this year- a record high. They are buying everything from new tractors, to more fertilizer, to mercedes and big flat screen tvs. It’s the one area that America actually has the advantage. No one does it better than our farmers (except maybe the Brazilians.)
“It might ze zero sum between you and me but all the extra cash created via credit and the fed sure seems like everybody wins.”
EXACTLY!! This is why I convert things to global dollars all the time. You are getting your ass kicked and not seeing it. They’ll raise minimum wage and tell people to be happy but 5 years ago that $7 bought a nice lunch in Rio, the new $8 won’t buy a chocolate bar. You are going to start feeling it more and more. At first companies cut margins to protect market share, then they’ll stop producing and normally (textbook) prices should drop.. But they wont because all the grains will go elsewhere because the US does not have the control over demand it once did. Then you will either pay what I am willing to pay here or have no mac and cheese.
Bri.. one of the biggest buyers of land here are farmers from the mid west who learned they can grow 2 corn crops a year down here.
One day when a good one is on I’ll post a link to online auctions for elite cows. Oh hundreds of thousands a piece. Average cow in US went for $5k+ last year. 3,000 to 4,000 of those on a ranch is a nice piece of very liquid asset. Think of them being born at an exponential rate and not paying taxes on the growth of the herd because it’s asset appreciation and not income. Yep, Farmers are laughing. Spend time on delaval website and see shit you would never believe. Robotic milking parlors that use lasers to guide to the utters, microchip tagging that identifies calf’s and controls what they eat and how much and reports out all the info so you can see any issues with animals not feeding correctly.
Interesting about the cows Ze. The money is flowing everywhere for the farmers and good for them. The technologies are making them better at their jobs. But they’d better be because demand is skyrocketing so there are pressures on the acreage etc.
“Oh- and by the way- the farmers are rich! American farmers are expected to make about $94 billion this year- a record high. They are buying everything from new tractors, to more fertilizer, to mercedes and big flat screen tvs. It’s the one area that America actually has the advantage. No one does it better than our farmers.”
Ha ha…. good to hear! Now all the know-it-all idle/unemployed hipsters who look down on “rednecks” and “hicks” might just have to readjust their conceited attitudes at the upcoming farmers’ markets.
“Now all the know-it-all idle/unemployed hipsters who look down on “rednecks” and “hicks” might just have to readjust their conceited attitudes at the upcoming farmers’ markets.”
There are tons of jobs in food/farming but not many people with the proper training. I’ve spent some time at the Ag school at U of I. They have a really innovative Masters Degree in both business and agriculture where you can end up working for Monsanto, Deere or Bunge OR companies like Chipotle which buys all of its food locally. There is a ton of opportunitiy in sustainable farming and organic farming. All the top employers recruit down there. You can create your own job. There are too many english majors and not enough Ag majors.
I can’t see an urban hipster, even who buys organic, wanting to attend a school like Purdue or one that ends in “A & M”.
On this whole margin pressure and suddenly rising price issues; its only happening in some products mostly linked to food. Corporate margins in aggregate are at all time highs so while food companies may be hiking prices an equal or even greater amount of products will have pricing pressure because their profits are currently way too high.
Im neeing price increases and then a sale the following week. A huge vat of folgers coffee is on sale this week at walgreens or least the walgreens downtown I visited. My personal opinion is that there is a lot of talk and myths out there and you have to pay attentiion. They can’t pass the prices on to the consumer as much as they claim they can.
HD – it’s called loss leaders and lowering package volume.
Walgreen’s lowers the prices on the coffee to get you to walk into the door and buy something else while you’re there. The only way around this is to stick to your guns and don’t buy anything else.
Package volume is coming down in commonly purchased foods. As an example, a box of spaghetti may have been 12 oz a year ago. Now it’s down to 10.5 oz. Stuff like this gets noticed by people who cook regularly. They find out the hard way that the amount of ingredients they bought isn’t enough for their recipe.
One of the boards I read is populated with women who are having to raise families on tight budgets. They’re the ones who notice these things. Lots of talk about growing gardens this year, then canning the produce.
But yes, people will find ways to get around food inflation, even if it means buying less, using more coupons and growing gardens.
Thank goodness that we subsidize the family farmers! I have a close relative that is tied into a family farm in Iowa. They are long overdue for changes to the government financial handout programs. It is insane and fundamentally wrong.
Sold for $7.2MM according to Redfin…