Foreclosure Alert: Church-Unit at 2000 Price: 1658 W. Superior
All you lovers of unique spaces- this one is for you.
We talked about Unit #10 at 1658 W. Superior in West Town last February.
As Kenworthey said: “That is the coolest thing I have ever seen…”
It never sold and was withdrawn from the market.
It’s back, bank-owned and listed at the 2000 price.
Here’s the new listing:
CORPORATE OWNED! SOLD AS IS-NO DISCLOSURES-ADDENDUMS REQURIED. DRAMATIC CHURCH LOFT W/OPEN FLOOR PLAN & AMAZING 19′ STAINED GLASS WINDOWS. 25′ VAULTED CEILINGS W/30′ TURRETS @ EACH END.
WRAPS AROUND SOUTH, EAST, WEST CORNERS W/SEARS VIEW. BALCONY, COVERED PARKING, CENTRAL A/C, W/D IN UNIT, HW FLRS. ROOM SIZES ESTIMATED. PREQUAL MUST ACCOMPANY OFFERS—NO EXCEPTIONS!!
Who’s interested now?
Applebrook Realty, Inc. has the listing. See the listing here (no interior pictures in the listing.)
Unit #10: 2 bedrooms, 1.5 baths, no square footage listed
- Sold in June 2000 for $319,000
- Sold in March 2003 for $430,000
- Sold in December 2006 for $474,000
- Was listed in February 2008 for $549,000
- Bank-owned
- Currently listed for $327,500 (parking included)
- Assessments of $398 a month
- Taxes of $5400
If I liked that area and wanting to have a place in Chicago, I’d take a look at it….one of the few really unique properties. But then again, 1998 prices are just around the corner too.
I think it would sell at 300K. Gorgeous place.
Anyone else catch the cross on top of the cabinets? Heh. Like they’re trying to make it extra churchy.
That kitchen color has to go, but that is a very cool place.
Two units for sale in such a small building doesn’t sound good to me.
a – It does look a bit churchy doesn’t it…..I couldn’t quite put my finger on it. Perhaps it was the stain glass, but that cross may be it. Go figure. Not sure why they would build this to look churchy, each to their own I suppose…
(P.S. Yes, I am joking.)
That is seriously gorgeous, and I love red walls so the kitchen is a-okay by me.
I love the uniqueness of that space! And the stained glass window is the most dramatic piece of art one could even imagine having in ones living room. Wonder how my orthodox Jewish mother-in-law would react to our living in a place like that, though…
Wow… and I was literally pre-approved and ready to pay $400K for this place (it was early in my home-search adventure). But that agent never did get back to me. Oh well, I’m sure the owner wouldn’t have been able to accept $400K even if he/she would have wanted to.
I wonder if I can get inside for a look *now*? It will have to wait until after Thanksgiving. Again, this place is so damn cool that I might buy it despite my resolution not to buy a new place for a few years. I’ll have to get Jason’s advice on buying an REO! (Which makes me nervous. Wonder what the Association’s finances look like?)
I would have expected to feel schadenfreude over this situation, but instead it just makes me sad.
We seriously considered this place the last time it was on the market but the layout is weird and it just needed so much work. The city views are actually pretty good out the southern “turrent” but even better from the 3rd floor (up one spiral staircase and one rickety ladder) belltower. The bathrooms were horrendously outdated when we saw the place and the second “bedroom” is in the turrent, up that spiral staircase, and tiny. The master is lofted, clearly to take advantage of that AMAZING stained glass, but has no privacy and is likely pretty bright in the am, with no way of keeping the morning sun out! But dang, what a thing to look at each morning…
Would you get to take a look at the associations finances before moving forward on a purchase of this unit?
Wow, $327k is quite a drop. After hearing the description LJ above this place may not even be worth its 2000 selling price.
You canlook at the finances, but i recommend finding the names of the people who live there now and talking directly to them. Also, you should have no problem getting to see the place, jsut cal your realtor. (My realtor rocks, I went through a bunch. She is a no BSer)
This price drop is a big confirmation. It is a signal that confirms my suspicion that so many of these severely over-priced homes (more specifically, their asking prices are overpriced) in Chicago are not due to fundamentals but due to broke/scared sellers that can’t/won’t lower their prices. Again, I say to all of those that need to sell and can take the hit to LOWER YOUR PRICES. Soon you’ll be competing with more and more bank units like this. And then, you too, will be facing foreclosure for not acting fast enough. For God’s sake, the government is trying to prop it up for as long as possible, take advantage! Because they can only hold off the flood for so long.
Ze, I am glad to see that I called the bounce nicely. I am already up 25-35% on most of my trades the past couple days. It feels very nice buying into capitulation. On the other hand, I still feel bearish so I won’t be holding these too long…
I’d buy that place in a heartbeat at $300k, if I could only sell my two homes. Would be an easy rental for two people. I found the old VHT tour and it lays it out a bit better, but the pictures list the 2nd bed on the main floor, but the listing says it’s on the 2nd floor.
I’ll assume that you own all 3 levels of the turret and there is a room on the 2nd and 3rd levels of it?
Who has a better window in Chicago than that?
This is why the market is now correcting. Everyone who really likes real estate is now stuck and can’t buy any more until they can find a seller for their current residence. TheTurtle you’re long on two properties as it is and still have the desire to own more real estate?
“I’d buy that place in a heartbeat at $300k, if I could only sell my two homes. “
that has to be the cheesiest condo i have ever seen. like velveeta cheesy.
paulj – Not very nice….I think you need to go to the confessional down the hall…
TheTurtle
Can you post the VHT link?
Thanks
http://tours4.vht.com/Viewer/PhotoGallery.aspx?ListingID=1147023&Style=API
http://tours3.vht.com/Viewer/PhotoGallery.aspx?ListingID=1085400&Style=KSI
Two different tours of the same place.
All that exposed brick makes me cringe at the thought of what the heating bills must be.
VHT Link:
http://tours4.vht.com/Viewer/PropertyInfo.aspx?ListingID=1147023&Style=API
Yes, of course I want more real estate. Life goes on my man, and I’m an optimist.
I went to see it with my realtor on Saturday. I saw it before it went foreclosure. It has some outstanding, outstanding views of downtown. Very inspirational views at night. The entire unit is above all the adjacent buildings, so you get a stellar view from all the windows. It would be a great space for entertaining as well. Long and open.
It will definitely need some work. The person who last lived there sort of was hard on the place. There is some wall and ceiling damage near the western turret. The master bedroom carpeting needs desperately to be replaced.
My realtor did some research on the building the last time I saw the unit. They don’t allow rentals in the building. They did have some work on the roof and facade, but nothing in the works that he knew of since then. He said that the units in the church building and the two adjacent houses are the same condo association. This unit also includes one parking space. My realtor said that before condos, it was the First German Baptist Church of Chicago.
George, did you happen to ask about the cost of maintaining the stained glass window? At some point it would have to be reglazed, at least, which I imagine could cost tens of thousands. Is it a cost that would be shared with the Association, or does the owner of Unit #10 pay all? Also, did you get any sense of what the monthly heating bill looks like? Those are the two biggest issues that would concern me with with awesome (hey, I used to love Velveeta!) condo.
Someone please take TheTurtle to real estate detox….
I think the windows would be the responsibility of the condo association. That is how it is in the condo that I live now. They had to replace one of my windows and the association paid for it. The stained glass window looked in very good shape when we inspected it…
The heating bill might by another story. It has very high vaulted ceilings and alot of exposed brick, so while making the space cool & open, it doesn’t bode well for the heating bill. My agent also mentioned that if I was going to make the turret my office space, that I would need a good window air conditioner. The sun would definitely heat up the space quite a bit.
By the way, I forgot to mention that it has a balcony off the kitchen as well. The bathrooms are dated, but functional. You might be able to get away with just cleaning them…
Thanks, George. (But whether the windows are covered is very much different from association to association. We, for instance, pay for half of all replacement and repairs of windows. I could imagine that in a situation like this one, the individual owner who gets the most benefit might pay half, and the association pay the other half. Given the cost of maintenance and restoration, this can be insanely expensive, so I’d definitely want it very, very clear before I bought in.)
Kenworthey,
Don’t be afraid to lowball the bank on the price.
300K is a good offer.
Sorry for the multiple posts, but also make sure your documents are totally in order when you make your offer. Banks are looking for offers the are going to CLOSE. So even if you get outbid, if your offer looks like the one that has a better chance to close then you win. Make sure you have a certified check made out to the bank for your escrow.
Also, be prepared for the bank to mess up the closing, and roll with the punches. Let me know if you have any questions, I think you have my email.
And someone also told me on this site that there is always another deal out there….
Appears that you can rent #4 (2/2 but no stained glass window) for $2000 – seems like a pretty good deal, especially compared to the 425k sale price
I wouldn’t count on the condo assoc. paying too much to redo the stained glass. It only serves the one unit and in my experience with condos, such an extravagance that serves just one unit is the expense of that one unit. Even the extra insurance for the window might fall on the unit owner….so be sure to go over the condo docs with a fine toothed comb if you buy this because you will want to make sure it is fully insured either by the condo assoc or the unit owner as the case may be.
Neat unit…almost heavenly, almost.
But it looks as though there’s another, smaller, stained glass window on the Paulina-facing side, which appears to belong to a different unit – or is that the balcony for #10?
They have 2 offers as of this morning. I am sure there will be a couple more by the end of the week. This is not FMV as some have claimed. Listing at FMV does not fetch multiple offers in just a couple of days. This is give away pricing.
It is a good unit to own but never for a rental. $315K cash with a 15 day close would get it done for any of you. Also make sure you add an addendum to the banks addendum allowing due dillegence of the association. Also remember Ill law requires the buyer to cover 6 months of assessments. A good broker will get the bank to cover this for you so it is passed paid in full.
Want to know how to get it? Write a cash offer even if you plan to finance. Then write in a 10 day 22.1 disclosure review to allow you time to get the financing in place. If you can’t get the financing then cancel under the 22.1 review. Banks like cash offers even if they are really not cash offers. Banks are not very smart so give them what they want ont he contract and then demand a bunch of stuff for yourself once the contract is accepted. They get lazy and would rather agree then put it back ont he market. They never agree to anything more than 100% tax proration so don’t even ask. Waive the inspection as well and them simply do an inspection under the 10 day 22.1 review. Again, banks like simplicity and if you waive financing and inspection the property is more likely to go in your direction.
Kentworthey – If you liked the place and $400k, you must love it at $315K 🙂 Buy it and do yourself a favor. Deals deals everywhere!
I agree that this is not FMV.
It will be clear next year that this was knife catching.
Steve,
Very constructive comments. If I was ready to jump in to the market, I would be looking for someone with this type of proactive approach rather than some of the sniping I have witnessed in the past. Way to go!
*Also remember Ill law requires the buyer to cover 6 months of assessments. A good broker will get the bank to cover this for you so it is passed paid in full.*
Yeah, but I told my condo assoiciation they could kiss my butt if they wanted the association dues for the first 6 months. I told them if it weren’t for me they would have an empty unit and nothing. (They agreed to split the 6 month thing with me, so I didn’t pay the assesments for the first three months.) I am kind of a jerk like that.
Steve H. is right.
315K in 15 days. Yop.
I probably should be put in detox. Honestly, if I sell both my units, I will be downsizing to something that is a good rental in case I move abroad next year.
Last three showings on my rehab, there were the excuses for no offer after second showings:
1. no place to hang flat screen tv (which they didn’t own yet)
2. too big
3. too big
Frustrating
Steve and Jason, Thank you VERY much for the advice. Alas, there is no way I can act on any of it before Tuesday, which is when I return to town.
Rates at 5.25% (30-year today). Think some buyers might come running?
Oh Steve H., with the real rate including deflation that 5.25% is really 15.5%…they might running…away that is. We are in a massive real price asset deflation and borrowing in nominal dollar terms will result in watching helplessly as your wealth disappears month by month. No matter what Suzanne says…
Interest rates are not really an issue at this point, as they have been at historic lows for a long time. PRICE is the issue. Regardless of interest rate, the median Chicago home price is much more than the median buyer is willing and able to pay.
Steve, where are you seeing 5.25%? Forgive me if this is naive, but I don’t see anything close to that on Bankrate…
Here is a real life example of the financial carnage. I rent in Florida…amazing brand new condo on the beach with the best possible views. The place is a million dollar condo (or was). Over the last year, prices were down 28.4% YoY (not even from peak). So, the $1M condo lost $284K over the last year, add in the cost of capital (just say 6% since jumbo), taxes, condo fees, and the place cost the owner between $350K-$400K over the last year alone….terrible. More declines to come. I rent for 1/10 of that…. Yes buyers should continue to run in an asset price deflation environment with the real rate of interest being much higher than the stated nominal rate of 5.25%. The Fed is out of bullets and we are in a liquidity trap and a deflationary spiral for at least 2009.
Chicago isn’t as bad, but this real life financial carnage illustrates what is happening in other parts of the country. Even if Chicago is 1/3 as bad, it will have wide ranging effects.
If home prices go UP 3% the real interest rate on the nominal priced 5.25% is effectively 2.25%. If prices go DOWN 3% the real rate is 8.25%. Don’t let the nominal fool you and trap you into a wealth destruction jail cell.
“Interest rates are not really an issue at this point, as they have been at historic lows for a long time. PRICE is the issue. Regardless of interest rate, the median Chicago home price is much more than the median buyer is willing and able to pay”.
Pete gets it.
John,
It doesn’t matter. Most people think in nominal terms and as of today it looks like its Paulson’s plan to throw as much taxpayer dollars at the debt problem as possible to make acquiring and servicing debt even more affordable to more people. This means lower rates and lower mortgage rates in the near future. Today is just the first noticable change lower.
Isn’t this the exact problem that got is into this mess in the first place? Absolutely. But I guess the government figures its best to give the herion (debt) addict that is our economy more of the same drug in order to keep the patient alive.
I fully expect 30yr fixed rates of 4% will be here within a year to try to entice buyers and feed a refi boom on properties again. Its subsidizing those who are reliant on debt for their lifestyle with the taxpayer dollars of whose who aren’t. Disgusting indeed.
The Turtle, if you might be moving next year why would you purchase another place. If you are planning on being mobile don’t buy anything. In this environment even if you were to stay for 10 years you may not see any significant capital appreciation.
Don’t worry, Bob. That refi boom won’t happen when so many are underwater. Those still with equity that didn’t refi before aren’t going to suddenly become irresponsible in this environment.
Like any and all attempts to prop up house prices, it is doomed to stupendous failure. The only cure is much lower prices and they are inevitable.
G,
Yes, much lower real prices are the only solution – but we could still massively inflate the currency and ergo pump some air to keep up nominal home prices for a while. It would appear we’re in the midst of a bipartisan lovefest to ensure that neither borrowers nor lenders pay the price, and printing trillions of dollars is apparently on the table. The burden will inevitably fall somewhere, but government has the power to (re-)distribute that burden. In the end, you may be disappointed when many of those people will be bailed out by having the nominal value of their property (ergo supporting their LTV and resulting ability to re-finance) propped up via monetary policy.
They have been trying the inflation route, and it is not working. They simply can’t print money fast enough to counter the massive deleveraging going on without guaranteeing the collapse of the dollar.
Likewise, they can’t force mortgage cramdowns without killing the mortgage market forever. Not that they have anywhere near enough funds to do it, anyway.
I would still buy and let someone else pay my mortgage. RE overall is still a safe investment, just not a 2 year investment as it has been the last 5 years.
I don’t mind someone paying my mortgage on an asset that has slow growth, it’s not costing me anything. I hate the idea of renting and helping someone else out on their property, but I like the reverse.
Plus, if I wanted to come back in a year or two, I’d have a place already, with a couple of years knocked off the mortgage.
Ha! Good luck trying to find a cashflow positive property in Chicago unless you plan on collecting rent from CHAC i.e. Section 8 and that is something I’ll never do.
“I don’t mind someone paying my mortgage on an asset that has slow growth, it’s not costing me anything. I hate the idea of renting and helping someone else out on their property, but I like the reverse.”
funny that every rental property I’m involved in has positive cash flow, including the 3 new ones in the past month.
What are you talking about???
I’ll give you the benefit of the doubt, TheTurtle, but please explain.
“#TheTurtle on November 25th, 2008 at 5:41 pm
funny that every rental property I’m involved in has positive cash flow, including the 3 new ones in the past month.
What are you talking about???”
Homedelete – Are you aware that interest rates fell to 5.25% today?
Even so, housing prices fell another .04% percent today.
The turtle, there are no safe investments. With any investment you must do your analysis, and determine what the risk reward ratio is. On Friday I bought Citibank knowing that the government would bail them out- currently I am selling into strength. You need to look for opportunitities. Real estate had its day in the sun and we may never see returns like that again.
HD, maybe the turtle is paying cash for his properties.
G – Maybe the housing basket you purchased lost .04% but the stuff I buy makes lots of money. I traded $140k in gains this year on units I bought and sold.
Would you say buying something today at a 5.25% 30 year fixed with a 7.5% cap rate is good?
“HD, maybe the turtle is paying cash for his properties.”
Why would anyone pay cash for a depreciating asset?
Just wondering…
Sabrina – Again you show your complete ingnorance on investing. Will you at least admit that there are many many properties out there that are great investments and not far outway the negatives of renting. Do you have it in you?
While we’re in the midst of what is the greatest housing bust of all time? Nothing is worth investing in in this market. Eventually- it will be. But we are far, far from that.
Housing, as an asset class, will be dead for decades. It was after the Great Depression and it will be so again. For instance, the original developers of the Empire State Building took a loss when they sold it several decades later.
It DOES matter when you purchase a declining asset. And right now isn’t the time.
I also differentiate people who must LIVE somewhere versus “investing.” Everyone needs somewhere to live and if you’re going to be there for 10 to 20 years and it’s within your income/price range- then try and find a deal and go for it.
For everyone else, the true reality of this housing bust will hit them only when they try to sell in 2 or 3 years- for a mighty big loss.
Chicago prices have come down to the 2004 level. With the kind of inventory we’re seeing out there- prices will come down much further.
housing will be dead for decades? LOL
Oh yeah that’s right, housing is going to come back after the superbowl!!!
“TheTurtle on November 26th, 2008 at 8:54 am
housing will be dead for decades? LOL”
There are so many issues with housing right now that I can’t see us turning a corner for years. In no particular order, there are inventory issues, there has been restricted lending standards, there are elevated foreclosures, there are elevated levels of vacant housing, unemployment is the highest in 16 years, and of course my favorite, the alt-a and option arm implosion through 2013. What does all this mean??
It’s a great time to buy!
For those who can take advantage, it is a great time to buy. Never said it would turn after the superbowl, but it’s not going to take 10 years either, gimme a break.
Blood in the streets…..
The Turtle, you may be right, but based on how bubbles react after they have burst it might be a very long time for real estate to recover. I remember after the dotcom bubble burst some of my friends buying, like everything was on sale. And guess what they got burned big time. If you are looking to become wealthy please look somewhere else.
No, let TheTurtle buy as many properties as he likes. We need knifecatchers to set the comps on the way down!
I heard a quote one time that said something to the effect that you don’t need big cajones or short-quipped mantras to make money when investing, all you need is a pencil and a piece of paper. Some people repeat often heard soundbites like “When there is blood in the streets” and “real estate is a smart investment in the long term” and “if you live there for 5 years you will make money” even though they’ve never once independently thought about the veracity of the statement being made. The truthfulness of the mantra comes from being often-repeated not from its application.
The length of time it takes housing to recover depends on how much the government does to TRY to prop up prices. They cannot succeed in stopping real prices from declining, but they can slow it down quite a bit. Realtors would be much better off if housing prices took a large and quick hit now, so that prices would be at long run sustainable levels. Then, you will have people buying and selling houses for the same reasons they always have pre-bubble (but not at bubble levels of activity). Until then, realtors are sitting around doing nothing.
Oh yeah, btw, the vast majority of realtors (but not all, there will always be room for those that truly provide value added and for complex transactions) will be disintermediated in the next 10-15 years, in the same way that lots of intermediaries who are no longer technologically efficient get eliminated. Especially out in cookie cutter suburbia, with homogeneous housing stocks, what the hell is a realtor contributing? And I’m less sure of this, but I’d also bet that their hold over the MLS will be weakened by antitrust challenges with the new administration as well as by technological progress.
Sabrina – Are you HD married? You guys beat the same drum. Where are you going to have your assets when inflation runs in the next 5 years? All this stimulous will create inflation a lot higher than it is today.
Steve H – Look around, massive asset deflation is everywhere… try selling a strip mall next year….it is following housing prices.
“Housing, as an asset class, will be dead for decades.”
I’m more on the doom and gloom side, but this is a bit extreme. Especially the inaccurate comparison to the GD and Manhattan commercial real estate.
If you look at the CS historical chart, house prices dropped dramatically a decade before the GD, bounced along pretty flat up to WW2 and then took off after. So housing didn’t take “decades” to recover from the GD, and it was already in the crapper before the GD–thus the GD probably extended a bad housing market, but wasn’t the (sole) cause of the bad market.
And the Empire State Building–even if it were true that the original developers took a loss decades later (the building cost $24.7mm to build; when it sold in 1961, it was subject to a master lease, giving all office rental income to a master tenant who (until 2002–when title sold for $57.5mm–1.4%/year, disregarding the lease) was not the same entity as the title holder–so the “sale price” wouldn’t accurately reflect the value received by the sellers), single-family housing and office buildings are dramatically different markets, and more so when you’re talking about the singular market of Manhattan office space.
John,
How do you think that the fed will deal with massive deflation? The link below is a transcript of a speech from Ben Bernanke in 2002. I have been a doom and gloomer for a while but, think now is the time to buy. You need to find a deal obviously but, there are some great ones out there. After the printing press gets turned on you could be looking back wishing you would have picked something up now. Mortgage rates look to be heading below 5% in the very near future. If you have some cash you HAVE to consider what kind of opportunity this is to buy something.
http://www.federalreserve.gov/BOARDDOCS/SPEECHES/2002/20021121/default.htm
What has this got to do with monetary policy? Like gold, U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation.
Second portion form post above is an excerpt from Ben’s speech.
I wish I was as smart as you guys… are you all super-nerdy? j/k
I think it took prices until the 50s to recover; a lot of the high rises along LSD sold in the late 40s and early 50s for less than their construction costs in the 20s (I seem to recall that during the 30s, even with foreclosure, they weren’t quite a low-balled value wise, but I’d have to recheck my references). So I think, for some residential properties, decades could be right (obviously fashions and conditions of the buildings matter too, there was beginning to be competition in the late 40s from new high rise construction and older buildings were at the bottom of peoples wish lists and totally out of fashion).
“I think it took prices until the 50s to recover; a lot of the high rises along LSD sold in the late 40s and early 50s for less than their construction costs in the 20s”
The statement wasn’t made about particular properties–it was made about “housing as an asset class”–thus the appropriate comparison is the market as a whole, not anecdotes about particular properties. Find the Case-Shiller chart showing inflation-adjusted values from 1890-2007–it shows inflation-adjusted median price dropping below $100k in about 1917 and moving above $100k in about 1947. The lowest point–slightly below $75k–was in 1921-22.
If you’re talking about when any given unit/house will be worth more in real dollars than its Fall 2005/Spring 2006 sale price, then sure it might be decades–or never. But that tells us **almost nothing** about what “housing as an asset class” will do over the same period.
http//www.nytimes.com/imagepages/2005/08/21/business/21real.graphic.html
Yes Virigina, housing prices will be sticky on the way back down and it be f’ed for quite some time.
Yeah, but median price from historic periods only includes, I assume, houses and perhaps entire buildings, not small condominium units which most urban areas have large numbers of today, so how does that change with changes in dwelling unit types over time?
You’re right, the CS data sucks, it is not useable for anything. Garbage in, Garbage out. I may as well take the historical data and throw it in the fire, it doesn’t do anything except scare potential buyers away. Housing is affordable, condos are selling like hotcakes, sorry folks, move along folks there is nothing to see here. The chart is a joke, housing is just fine and affordable and it’s a great time to buy.
Suzanne researched this and she told me that the Case-Shiller index is not representative of my particular condo purchase. She said my unit is special and the fundamentals of broader macroeconomic trends like the stock market collapse, contracting GDP, skyrocketing unemployment and a glut of condo inventory coming online in 2009 will not factor into the potential appreciation of my unit. She researched this and said “I can do this!”
“Yeah, but median price from historic periods only includes, I assume, houses and perhaps entire buildings, not small condominium units which most urban areas have large numbers of today, so how does that change with changes in dwelling unit types over time?”
You used unsupported anecdotes about LSD high rises to extrapolate to “housing as an asset class” for individuals. And you criticize the most comprehensive housing price index that presently exists?
TS – You are correct with regard to printing more money, BUT you must look at the total money supply out there which was multiplied by massive and easy credit. That credit is gone gone gone and the recent increase in printed money is simply an attempt to refill the pool, but it will never be enough to counter the current asset deflation spiral we are now in. We are now in a liquidity trap scenario. Inflation is not the immediate concern and probably not a concern as the excessive credit levels will not return. There are other dollar concerns out there but printing more money to cause inflation is not one of them. Housing will continue its slide through 2009 and there is nothing the govt can do to stop short of bulldozing or idling massive amounts of housing…..but that would destroy new construction even further and not be politically feasible since there would be a ton of empty houses…. Fed govt may attempt to do the same thing and rent them out though…crazier things are out there… But short of absolute incredible intervention the likes of which haven’t been seen before, housing prices will slide throughout 2009, it just isn’t worth it for the govt to step in for the craziness. They need to let the prices reach an equilibrium.
Yes Bob, that Suzanne is one incredible lady. Having both a successful career as a Realtor® AND a dog grooming business is just incredible. Right now she is so busy preparing dogs for the holidays….wasn’t sure what she meant by “preparing” though….I was assuming grooming, but who knows, might have meant as the main dish….the voicemail was a bit garbled.
We could use a little deflation after the last few years of rampant unchecked inflation.
You didn’t answer my question, which leads me to find my thesis correct. A few specific cases probably typifies a market, as does much of the chatter here, does it not?
“You didn’t answer my question, which leads me to find my thesis correct. ”
With irrefutable logic like that – you just can’t be wrong, right?
“A few specific cases probably typifies a market”
Are you *really* that stubborn? “Housing as an asset class”, for individuals, is typified by what (supposedly–no actual eveidence presented) happened to apartment buildings over one 30 year period? Seriously?
As to your “question”: “so how does [median price] change with changes in dwelling unit types over time?” It’s definitely an effect, as is the greatly increased average square footage of new homes and the greatly improved expected amenities in home (e.g., multiple bathrooms, appliances, a/c–none of which would have been “median” at some point b/t 1890 and now). So, yes, one would expect that there would be a change in the median real dollar price of homes because of a change in the mix, size and quality of homes. What this has to do with supporting the statement “Housing, as an asset class, will be dead for decades.”, I have no idea.
The gov is going to do everything it can to keep the US from falling into a deflationary spiral. We are on the brink right now but, after throwing a couple of trillion more into the economy over the next few months and even more throughout ‘09 and ’10, I think we will avert a 1932 type disaster. All that money will necessarily lead to inflation sometime down the road. Maybe 5 years from now but nobody knows.
Inflation can be good for debtors because it allows them to pay off their loans with cheaper money. The opposite is true with deflation. The US being a huge debtor is a major reason I believe they will do almost anything (including risking high inflation) to stop deflation. So, it may well happen that a few years from now housing prices will have increased but are lower when adjusted for inflation.
RunnerRunner,
I agree that that is obviously the gov’s plan. Not sure if it will turn out like that but that would bring the softest landing the economy possible and at the same time stabilize the financial system. The gov would love for inflation to kick in not only for the debtor reason but also if nominal housing prices stabilized everything else would, too.
As all legal contracts and consumer behavior by and large are set or react to nominal prices, having inflation would be one way to re-adjust home prices. The question comes in: with high inflation without an equal amount of wage growth it will remain ugly for consumers.
I used to be in the inflation group but now I’ve made a 75% jump into the deflation group. Somethings will go up in price but others will slowly trend downward.
RunnerRunner – What can the govt do now except weaken the dollar without creating the inflation that you suggested would help to lower the nominal dollar % of LTV? It is a catch 22….what they can do now by pumping in more dollars in an attempt to fill the current void of the credit pullback (they can’t pump enough in, this is a permanent pullback in credit…who will now make loans to people that can’t pay back the principal since you can’t pass on such silly loans in CDO’s anymore) but the result won’t be inflation, only a weaker dollar and higher interest rates on the current U.S. debt as it gets refinanced…compounding interest at ever higher rates will seriously harm the U.S. …. like a debtor having to refi at ever higher interest rates it only works for a while…all the while not only are the interest rates increase but in the case of the U.S. govt the borrowing will also balloon by trillions. The Fed can’t lower interest anymore since even if they went from a target rate of 1% to 0%, the effective rate is already near zero at 0.3% so the Fed is out of bullets in that regard to spur activity, increase demand, and cause inflation. There is a slack in every major economic sector including employment and that will lead to steeper deflation as we are already in a liquidity trap. There is to much supply, too little demand, and we have a permanent credit pullback as we had reached beyond the credit limits to the point where principal couldn’t be repaid…..subprime credit was freely given out on everything, homes, cars, student loans, credit cards, store cards, etc. and now those borrowers aren’t repaying and they never could anyway (students don’t even have an income). The supply chain and infrastructure had been ramped up for this false credit demand level and now that demand level has permanently dropped…so look for a lot more retail store closings, strip mall closings, auto dealer closings, …. you name it, everything consumer related will need to downsize to meet this lower demand. The only thing a weaker dollar will do that is positive is possibly increase our exports….. We are in for a long road of economic pain and inflation is not the concern for 2009, period.
I’m just following trends when prices were going up I was an inflationist and now that they’re going down (dramatically in some cases), I’m a deflationist. I tend to agree with John above in that inflation is not an immediate concern in 2009. However, I’m not going to even try to predict where consumer inflation will be in 2010 or beyond. The only thing I’m sure of is that housing prices will continue to fall, even more than the 10% trendline that Gary suggested. I’ve also considered that maybe the 10% might be close but it’s hard to see when so much property is at wishing prices and there are very few sales upon which to base comps. The homes I want to buy are still price about 40% too high for my tastes. It’s like they took the 2005 prices and added tens of thousands of dollars. And then use a sit and hold strategy. I see the same properties over and over again usually with little or no meaningful reduction in price.
I never said inflation was an immediate concern, just that it probably will be in a few years.
If John is correct about the US economy being stuck in a liquidity trap then 2009 = 1932 and the whole world is seriously F’d. Everybody, not just people who made stupid decisions on housing.
I don’t agree for two reasons:
1) The dollar is not going to crash because the economies in the rest of the world are worse off than the US.
2) The Fed can do more than lower interest rates, they can increase the size of their balance sheet. They have taken on > 2T in the past month or so. This will probably continue since Ben believes it is a way to increase liquidity enough to keep out of the trap.
HD,
If housing in Chicago gets 40% cheaper very few of us will be able to afford it because most will not have a job. I for one hope Gary is right.
I don’t know why people say this because I don’t think it’s true. 40% means affordable housing and more money available for consumer spending (as opposed to paying interest). In fact, the decrease in prices could be offset by increased volume of transactions. There were only 1,500 hundred homes sold in Chicago in Oct!!! The only homes selling are the affordably priced! Housing has been so out of whack for so long that 40% off peak is, paraphrasing Gary Watts in 2006, “in the bag.”
“HD,
If housing in Chicago gets 40% cheaper very few of us will be able to afford it because most will not have a job. I for one hope Gary is right.”
Well, we are in a liquidity trap already, that I have no doubt at this point. The fed govt can ONLY use unconventional means at this point to prevent a mild depression. Although the talk has been housing, that was just the first part of the credit bubble to burst and it did so spectacularly. The real issue is a general credit bubble…not a housing bubble which was a merely one symptom of the credit bubble. IT WAS THE CREDIT BUBBLE THAT BURST, not just housing. Once that is understood….that this credit bubble had been building slowly for over a decade or decades. This credit bubble was permitted to dramatically inflate thanks to the CDO and similar financial instruments. Creative financing permitted the principal repayment risk to be passed on to others at a much higher rating than warranted. The credit bubble was self-reinforcing as easy credit allowed people and businesses to simply refinance their debts instead of making substantial principal payments back..it was a refi madness of debts. Although the fed govt has used unconventional means already…even $2T isn’t enough…would need more like $10T to fill the demand pullback.
We may look back and call these next few years The Great Recession caused by a massive credit bubble. During the credit bubble, demand had artificially increased beyond what incomes permitted. In fact, the savings rate had even reached a negative rate during the credit bubble. So the demand for goods and services was artificially high….I call it the “Credit Bubble Demand Rate” for goods and services and supply infrastructure and investments were made based on this CBDR. Now we realize that the CBDR exceeded our allowable demand based on our GDP as evidenced by the credit bubble burst and our demand has returned, is returning, and in some areas dipped below the balanced demand rate commensurate with our GDP. So, we must understand that demand had been artificially high and will not be returning to that level, period, no matter what the fed govt does. This applies to the entire economy, not just housing which housing credit burst first. In the short term, there has been a sudden pullback in credit in numerous areas with some overshooting on the downside as people tried to get an understanding of the risks…there was a lot of uncertainty and you can’t extend credit with high levels of uncertainty. Other credit areas did not drop so quickly and are continuing to be pull back (credit cards, in store credit promotions and financing, etc.).
Since the CBDR was an elevated demand rate and touched all areas of the economy, the entire economy must pull back to meet the balanced demand rate which is lower than the CBDR. That will mean a very nasty deep and long recession, plain and simple since the pullback in supply takes time. Not only in the U.S. but also the countries that supply the U.S. with goods and services will be hurt. ANYTHING that supplies the U.S. with goods and services will be made to cut back since those supply levels now exceed this new more accurate and sustainable demand. Just like the airlines that cut back on the number of plans and flights, many many parts of our economy will have to do the same. The fed govt will attempt to increase demand through massive federal spending but it really is a lost cause and is futile to a large extent. The CBDR was caused by too much credit and the fed govt is simply trying to keep this CBDR alive though more credit spending through federal deficits instead of private credit….MASSIVE federal deficits. While I agree that now is the time for deficit spending (not tax substantial increases) such fed spending MUST be understood as a way to soften the economy’s supply adjustment and to prevent as much as possible overshooting on the down side below what the demand rates is. We don’t want the fed govt to simply create a new bubble, in this case by crediting a federal government credit bubble, since that would end in a complete systemic financial collapse. As such, we need to hunker down, get through this recession and not try to reflate the bubble which was caused by private credit with new public credit. Otherwise it truly will be game over.
This would be a great unit to combine with another one to increase the size.
I would hire a stained glass restoration specialist to do some archival work on the existing glass “just in case.”
And yes, the heating bill would be high. But I would gladly endure the bill for this level of double height drama. Just walking through your condo would be a religious experience. Maybe get a bed with heavy drapes [ala Ebeneezer Scrooge] and set the heat to 60 at night. Or install heavy drapes that can be pulled along the part of the bedroom that overlooks the downstairs.
anyone have any updates on this?
This listing still appears to be active in the MLS. When I checked it out in late november, there was a bit of drywall damage. Nothing too bad though. It is a very interesting space, I have to say.
For anyone really into church conversions I found another from MLS surfing. St. Philippus Lofts is a new 10-unit conversion in McKinley Park with two units on the MLS for 280k and 300k.
Whats odd about that is the 280k unit seems to be one of the two units with the special custom church windows like this unit.
Thanks Bob, I’ll check those out. I actually went to see this property a few weeks ago, but the lockbox was empty so we never got in. Our realtor was pretty embarrassed since we spent about 30 minutes on ashland coming from the north side. Bad traffic.
There are also 2 other units in this building for sale for 420k+
743 North PAULINA #6 for 420k (different address same building)
and
1658 West SUPERIOR #4 for 425k or 2k a month rent (lol)
If we can pick this unit up for 250k with parking, we’d move in immediately.
Bob: We chattered about these church units in McKinley Park earlier in 2008. There are now interior pictures available on realtor websites.
The thing with this conversion is that they appear to have stripped out the natural features so it’s not really obvious you’re even living in a church. What’s the point then?