“Give Away Price” for a 3-Bedroom Townhouse in Bucktown: 1803 N. Leavitt
This 3-bedroom townhouse at 1803 N. Leavitt in the Churchill Row development in Bucktown has been on and off the market since May 2010.
In that time it has been reduced $54,501.
It is now also listed $60,001 under the 2007 purchase price.
At 2730 square feet, the listing says it has a chef’s kitchen and a wine refrigerator.
The master bedroom is on the top floor with the other 2 bedrooms on the second level.
The townhouse also has 2 car parking.
The listing calls it a “give away price.”
Is it?
Michael Mohn at @Properties has the listing. See the pictures here.
1803 N. Leavitt: 3 bedrooms, 3 baths, 2730 square feet
- Sold in October 2001 for $585,000
- Sold in June 2007 for $685,000
- Originally listed in May 2010 for $679,500
- Reduced
- Currently listed for $624,999
- Assessments of $140 a month
- Taxes of $9195
- Central Air
- Bedroom #1: 10×16
- Bedroom #2: 14×12
- Bedroom #3: 14×12
Nice looking place.
$585 + CPI = $722, so it’s not crazy ask, but what I want to know if if they have replaced *anything*, because it’s now 10 years old and typical new home (which this may not be) water heater/furnace/AC/refrigerator are in the danger zone for failure. If they all end of useful life, I want that reflected.
And no, it’s not a “giveaway”, even tho the sellers are having to flush their DP and possibly more.
http://www.redfin.com/IL/Chicago/2143-W-Churchill-St-60647/home/12728006
$619,000 in September
This is a long cold winter and it will destroy real estate values.
$525,000 summer next year.
$450,000 summer 2014
The real estate depression finally affects bucktown.
and another on Churchill currently for sale for $625k:
http://www.redfin.com/IL/Chicago/2147-W-Churchill-St-60647/home/12727337
That somehow is a 4/4.5 in the same SF.
shows nicely
hd – do you really believe the nonsense you write? You honestly think that we are in for a 40% decline over the next 4 years? That is completely absurd and idiotic.
Lost me at the underground bedroom.
lmao at HD
Too close to the el tracks.
“That somehow is a 4/4.5 in the same SF.”
The SF here is 2730, which is plently of space. I grew up in a couple of 4/2.5 single family homes with 1800 and 2000 sqft and never felt cramped or that the rooms were too small.
I’m not meaning to single out anon(tfo) here, but rather I have friends who simply seem to have unrealistic expectations about how much space they need. For example, one friend lives in a 2400 sqft townhome with her husband and one child. She’s expecting their second child, and now thinks that they need to move to a bigger place! Our grandparents generation probably could have raised six children in 2400 sqft; it’s certainly not necessary to have more than that to raise two kids.
(Mini-rant done)
As for the claim of a “give away price,” I tend to think of such statements literally. I’m sure there are homes in Detroit literally being given away, but requiring me to pay an amount that’s about 12 times the average per capita income in the US isn’t giving away something to me.
“I’m not meaning to single out anon(tfo) here”
I wasn’t saying 2730 sf was small for 4/4.5, just that the featured unit is the same SF and only a 3/3.
Somehow, two THs in the same complex, with the same SF, listed for the same price differ by a bedroom and 1.5 baths, which I thought odd.
Give away price = $0.00.
“hd – do you really believe the nonsense you write? You honestly think that we are in for a 40% decline over the next 4 years? That is completely absurd and idiotic.”
Not as absurd and idiotic as your math.
LOL at mentioning the wine fridge. I’m going to spend $600K on a place and I give a crap about a $300 wine fridge?
hell of a hike to the El
the milwaukee ave bus sucks as do most diagonal routes
“$585 + CPI = $722, so it’s not crazy ask”
Not crazy but the 2001 price seems a bit high. I thought regular new construction SFH were in the $600K range (maybe low $600s) at the time. The view out the windows at least from photos look nice. I hate townhomes that are directly facing each other. The back of this place must face directly onto other homes in the complex hough.
“The SF here is 2730, which is plently of space.”
Yes that’s a lot of space, but on four levels.
“hell of a hike to the El”
Really? Not that bad, comfortably under a half mile (which is kinda my default threshold).
OK G = here you go again. What is so idiotic about my math? Seriously, you are very good at reciting/displaying data but, in my opinion, are somewhat lacking in the “interpretation of data” department. Don’t worry, though – that will come with age/experience. It just takes a little time…
Take that last 9 off there and it’s a giveaway (and I’d take it at that!).
Don’t these realtors realise that the language of 3/4 years ago isn’t fooling anyone any more?
“I thought regular new construction SFH were in the $600K range (maybe low $600s) at the time.”
Wasn’t really looking in B’town, but mostly low-mid 700s, with a lot of 800s and 900s was what I saw.
“What is so idiotic about my math?”
Um, 619-450 = 169/619 = 27.3% =/= 40%, or even close.
“OK G = here you go again. What is so idiotic about my math? Seriously, you are very good at reciting/displaying data but, in my opinion, are somewhat lacking in the “interpretation of data” department. Don’t worry, though – that will come with age/experience. It just takes a little time…”
Another attempted shot at me misses its mark. Way to keep your record intact, clio.
anon, DZ: I think that $585k in 2001 was bubbly, too.
“Wasn’t really looking in B’town, but mostly low-mid 700s, with a lot of 800s and 900s was what I saw.”
I wasn’t looking at all, but Bucktown must have been a fair bit cheaper than your target locaitons. I was thinking of stuff like this:
http://www.redfin.com/IL/Chicago/2021-N-Oakley-Ave-60647/home/13356985
“I was thinking of stuff like this”
[you know it’s coming:] Short lot.
anon – I think everyone got the idea of what I was saying – so instead of criticizing my math, why don’t you criticize the idiotic prediction that prices are going to decrease 30% over the next 4 years. IS ANY RESPECTABLE/KNOWLEDGABLE PERSON OUT THERE EVEN THINKING THAT THIS IS A POSSIBILITY?!!!!!!! OF COURSE NOT!!! Stop this idiotic fear mongering – there are a lot of impressionable people out there. Don’t scare them.
“anon, DZ: I think that $585k in 2001 was bubbly, too.”
From what I saw, there was a premium being paid for brand new and a certain level of finishes, too. Which was a outgrowth of bubbliness, of course.
“[you know it’s coming:] Short lot.”
I know, I know (you’ve ruined most of btown for me, or saved me from myself), but I’m comparing to a townhome.
an additional 27% decline beyond where we are at now is VERY steep, and if you factor from where it was at peak you are talking well over 40% decline.
Hell that additional 27% would put us back at 1997 prices practically, do you really think it’ll go that far HD.
I mean already places are at rent parity, i just can’t see it going much further cause investors from all over will come in and snatch up properties chasing after those returns.
Clio: “Don’t worry, though – that will come with age/experience. It just takes a little time…”
Gotta love clio for the over-the-top hubris and condescension. Can we get a “buy now or be priced out forever!” to go with the ego?
And I gotta say, though I don’t personally agree with all of HD’s predictions, they are no more absurd than some of the stuff you’ve been saying. I would argue they are less absurd, actually.
HD: are you calling bottom in 2014? I can’t imagine we are in for THAT much pain…
I completely agree gesco – you must also be a property owner. It seems that the fear mongerers and people who are most negative are the younger ones who are still either renting or just getting their feet wet. Seasoned professionals and people who have been in real estate for the past 30 years do NOT share these opinions. THEY say that prices are going to bounce around the bottom in 2011 but start rebounding in 2012. We will likely see 3-4% average appreciation from there on out (with possible increased appreciation in a few years).
“IS ANY RESPECTABLE/KNOWLEDGABLE PERSON OUT THERE EVEN THINKING THAT THIS IS A POSSIBILITY?!!!!!!! OF COURSE NOT!!! Stop this idiotic fear mongering – there are a lot of impressionable people out there. Don’t scare them.”
Do you consciously avoid anything that might cause dissonance, or is it just accidental? There certainly are people who are respectable, knowledgeable or both who believe we will have a ~30% further decline, generally. (and I don’t agree with them, but that’s neither here nor there) How that general idea applies to this particular TH complex, I dunno, nor does any of them, really. But to say there’s no one who isn’t a crank suggesting there’s that level of near-term downside is living with blinders on.
I could see 450K in three years, but there would need to be a paradym shift in how a majority of the population thought about housing. Cutting the mortgage tax break would have a big impact on pricing.
“Gotta love clio for the over-the-top hubris and condescension. Can we get a “buy now or be priced out forever!” to go with the ego?”
The condescension was just directed at those that attacked me in the first place. I really don’t understand why you would listen to the opinions of a 20 something year old renter who has never owned a house over a 40 something year old who has 15 years experience in real estate, has bought, renovated and sold scores of homea and who still owns 13 properties. It is like listening to a janitors opinion about cancer treatment over an oncologist.
15yrs means this is your first experience with a down market, no?
“The condescension was just directed at those that attacked me in the first place.”
Who attacked you in this thread? HD? By offering an opinion that insulted you so much? As clio, would say, cheer up!! You’re better than this!
“15yrs means this is your first experience with a down market, no?”
True – but I also listen to those older and more experienced then me. Seriously, that is the key to success in any field – you really have to know who to listen to. Then, take that information with a grain of salt, apply it to your personal situation, and make your decision. There are so many variables that you cannot afford to listen to someone inexperienced.
“I dunno, nor does any of them, really. But to say there’s no one who isn’t a crank suggesting there’s that level of near-term downside is living with blinders on.”
Give him some room. Its obvious he stepped out of the time machine from 2007. I remember hearing how steep declines were impossible then. BSC & LEH thought so, too.
“We will likely see 3-4% average appreciation from there on out”
Real $$, or nominal, clio. Gonna make a huge difference sometime in your 10 year horizon.
clio: “I really don’t understand why you would listen to the opinions of a 20 something year old renter who has never owned a house over a 40 something year old who has 15 years experience in real estate, has bought, renovated and sold scores of homea and who still owns 13 properties. It is like listening to a janitors opinion about cancer treatment over an oncologist.”
I’m one of those CRAZY people who put more weight in ideas than the person behind those ideas.
And I know people in the real world (as opposed to interwebland) that have more than 15 years experience in Chicago RE and say that this is the worst they’ve seen it and don’t take for granted that we will see recovery in 2012. I guess they win because they’ve been in the game longer, eh?
I second CH’s question about the down market.
Walk my dog past these all the time. And I always think about how screwed these people are. It really has convinced me to never, ever buy in a big complex like this. Because there are tons of them for sale at any given moment, all equally screwed for having bought at the top of the bubble. So how can you possibly ever sell yours? The only way to truly differentiate them is to slash your price and take a bath.
The complex is already ugly. It’s gonna get financially ugly in the next few years, too.
Im going to hi-jack this thread for a moment…did anyone notice what UWBK did today (nasdaq)??? Thank you very much and you are welcome to those – if anyone – shadowed by calls last year! ChaChing!
Now, back to the thread…
Still overpriced imho and the OCT 2001 sell price seems more reasonable. They sure as $hit aren’t giving this away…
I base my predictions on the following facts:
This property is listed only 8.7% off the bubble price.
A sale at $525,000 puts this property at 23% off the 2007 bubble price.
A sale at $450,000 puts this property at 34% off the bubble price.
Is it unreasonable to think that a townhome in Bucktown would eventually sell for 2/3rds of the bubble price? has it not taken longer for the bubble to pop in the Green Zone? Do you think the the real estate depression will be merely a recession for this home owner?
“15yrs means this is your first experience with a down market, no?”
i voted this the best comment for the day.
“I’m one of those CRAZY people who put more weight in ideas than the person behind those ideas.”:
That IS crazy – believe me, the problem with “ideas” is that they never factor in the “psychological impact”. This is the problem with academicians. Some of my teachers at Harvard and Stanford (and, U. of C.) were EXTREMELY bright but their theories, while they made perfect sense in a laboratory setting with no, or few predictable variables, they didn’t translate to anything meaningful in the real world. Why was that? Because the psychological factor of humans/society is so unpredictable but such a powerful force that sometimes the most solid theories are rendered useless.
gesco: “I mean already places are at rent parity, i just can’t see it going much further cause investors from all over will come in and snatch up properties chasing after those returns.”
I generally agree that rent parity is as low as we can go in a lot of hoods. But I don’t think we are anywhere near rent parity for the majority of listed properties in GZ or close-to-GZ hoods. Maybe I’m wrong on that though….haven’t really run the numbers.
This is a nice place….and while I doubt it will dip another 200k in the next few years i still think its priced a bit high…100k lower would be reasonable. 2700 sq.ft is large, the design and layout is very pleasant…is 450 a possibility? yes? a probability? no.
uh a-fed its up 20% today (7 cents LOL) after being down about 95%… am I missing something here?
yeah i told everyone to buy around $0.30!
wait, $1.00 on the horizon!
(if you know anything about stocks, monetary amounts mean nothing, % gains are everything!)
clio: “That IS crazy – believe me, the problem with “ideas” is that they never factor in the “psychological impact”. This is the problem with academicians. Some of my teachers at Harvard and Stanford (and, U. of C.) were EXTREMELY bright but their theories, while they made perfect sense in a laboratory setting with no, or few predictable variables, they didn’t translate to anything meaningful in the real world. Why was that? Because the psychological factor of humans/society is so unpredictable but such a powerful force that sometimes the most solid theories are rendered useless.”
I get that. And respect experience.
But at the same time, don’t you think it a bit foolish to blindly take advice just because someone has a reasonable historical track record? I mean, Warren Buffet is an investing genius and all, but if he told you to go all in on biotech stocks because the easter bunny would be delivering some new amazing tech in the next year, you’d be skeptical. In fact, I think outside of his track record, one of the reasons he is so well respected is because of the quality of his reasoning and arguments.
No matter how successful the person giving you advice is, it is always a good idea to use your critical thinking skills. Not all successful people are successful because of their skill and intelligence…
“But at the same time, don’t you think it a bit foolish to blindly take advice just because someone has a reasonable historical track record?”
Of course – that is why I wrote: “Then, take that information with a grain of salt, apply it to your personal situation, and make your decision.”
They sure as hell ain’t giving it away. They had a $100k down payment. At the bare minimum they’ll lose that.
“Still overpriced imho and the OCT 2001 sell price seems more reasonable. They sure as $hit aren’t giving this away…”
clio:
missed it, or ignoring?
is your forecast of 3-4% gains in nominal dollars or inflation-adjusted?
Be wary of running afoul of securities laws a-fed with your blatent ‘pump & dump’.
“#A-Fed on January 13th, 2011 at 3:54 pm
yeah i told everyone to buy around $0.30!
wait, $1.00 on the horizon!
(if you know anything about stocks, monetary amounts mean nothing, % gains are everything!)”
“Be wary of running afoul of securities laws a-fed with your blatent ‘pump & dump’. ”
If 50 Cent doesn’t get the SEC all over him, no one’s worrying about a company with a $13.1mm cap (after todays run-up!!) unless a fed is an insider.
HD: If 50 cent can get away with his shenanigans, I think A-Fed is safe.
Google it…it’s funny.
“is your forecast of 3-4% gains in nominal dollars or inflation-adjusted?”
Nominal
Clio,
I know you keep talking the psychological factor and all. But the only psychological factor I see at work is that you currently own 13 properties so basically you are talking your own book……… just like HD is talking his……….
A-fed glad to see someone else is making money in the stock market!
HD – I have been tracking for a long time and witnessed the PnD’s. Thank you for the warning but I have performed my due diligence. This stock is going to buy me a new bathroom and a Hublot (with some left over in invest in GM)! hehehe
Valasko – Thanks buddy!…there are soo many opportunities out there once you open your eyes and cover your risks.
Hope you are doing well too! 🙂
isn’t going to get delisted by feb 11th if it doesn’t reach the 1.00 threshold
”
yeah i told everyone to buy around $0.30!
wait, $1.00 on the horizon!
(if you know anything about stocks, monetary amounts mean nothing, % gains are everything!)
“
The MLS right now is certainly flooded with places that are well over rental parity, you even have those ppl who just dont get it and are trying to sell at over peak prices having done nothing on their property.
But those places aren’t selling! the places that are moving right now are the ones that are. Especially when you get to multi-units where the buyers tend to be more investor savy in their methodology.
Even the federal goverment kinda forces rental parity now, for example now for 3-4 units with FHA the building must be self sufficient. Meaning that the rents of all the units must be equivalent to PITI (this also includes the unit the owner plans on occupying).
Its a tough criteria to meet, I barely met the requirement on the 3 flat i bought in uptown with 3.5% down and in anycase i ended up doing a northern trust loan. But i would say in the last 12 months i have probably put in over 70 different offers on all sorts of condos trying to get a 15%+ net return and no luck, they are moving at rental parity or a 5%+ return with few exceptions.
I don’t know if anyone here has an econ background or is familiar with currency markets but if the market is ever out of whack, speculators will take notice arbitrage will take place to align the rent/buy ratio, which is exactly whats going on right now.
““is your forecast of 3-4% gains in nominal dollars or inflation-adjusted?”
Nominal”
Well, then, depending on your inflation expectations (which, given your rent expectations are not especially low), that’s nothing.
Revassal – yes but it aint going to happen (delisting). They just reached a deal with JPM today, have backing from G-S and outside investors, and have raised the capital to meet the OTS requirement for an undercapitalized bank…Not to mention all the insider buying last year and lawsuit with BoA regarding mortgage backed securities…
valasko,
no – my opinons are not based on the properties I own. If the prices go up – great. If not, whatever. I am lucky enough to have diversified my investments and will be OK either way.
When I talk about psychology, I am talking about the psychology of the average person out there. So much of real estate is based in psychology that, to ignore it, is absolutely going to lead to the wrong conclusions.
But of course, trade at your own risk everyone!
DJIA: F, is still treatin me well though….
Clio,
psychology will only get you so far, this country NEEDS jobs……. once I see the US creating +275k jobs per month average for a year plus stabilization in residential real estate then I will be onboard. Right now we are not even CLOSE……. plus the shadow inventory………. too many headwinds for me!
valasko – remember when you saw me in my lambo on state street? Didn’t that leave you with a good feeling? Where did that come from? People have the same type of psychological/emotional reactions to particular condos/houses. That psychological/emotional factor drives much of the market and cannot be denied.
“psychology will only get you so far, this country NEEDS jobs”
We HAVE jobs. Sure, many don’t pay well, but people are going to have to get used to paying a larger percentage for housing. This is common in many countries where housing eats up a majority of people’s incomes.
thank a-fed, just wanted learn more.
50 cent and his pump and dump. Hilarious.
Woah. 50’s spent.
They put Martha Stewart away for much less.
So let me get this straight. Clio is Harvard and Stanford educated, lives in the Palmolive, drives a Ferarri, and currently owns 13 properties??!! Nobody else finds this hard to believe?
Speaking of taking CC comments with a grain of salt.
Ned: clio has a medical degree. ’nuff said.
N/M, 50 hasn’t sold any of his shares, but his shell co’s prob have.
Clio, not only in other countries when i was in boston and NYC, everyone there paid SIGNIFICANTLY more of their income towards housing. I imagine you can attest to this from your experience in boston and san fran area. I think in chicago we have been pretty spoiled on cost of housing relative to what we make.
“I think in chicago we have been pretty spoiled on cost of housing relative to what we make.”
Context is everything–coming from a smaller midwestern city I take the opposite view. Why are you comparing Chicago to NYC & SF?
I think it would be a strange and unusual comparison to compare chicago to a small midwestern city, I think you need to compare it other major cities, and i dont just mean population wise, but amenities wise.
http://www.foreignpolicy.com/node/373401
cause thats how awesome we are. the best of both worlds
“Why are you comparing Chicago to NYC & SF?”
“So let me get this straight. Clio is Harvard and Stanford educated, lives in the Palmolive, drives a Ferarri, and currently owns 13 properties??!! Nobody else finds this hard to believe?”
It’s a lamborghini, not a ferrari.
I have told you guys – I made most of my money in real estate in Boston in the late 90s early 2000s. It was like taking candy from babies. I am also in my 40s (a little older than what I perceive most people on this site to be).
” I imagine you can attest to this from your experience in boston and san fran area.”
ABSOLUTELY – people in Chicago would be SHOCKED to see the prices in other, similar sized metropolitan areas (well, namely LA, SF, and NY). We are completely spoiled and need to realize that we are going to spend a larger percentage of our income on housing.
valasko – remember when you saw me in my lambo on state street? Didn’t that leave you with a good feeling? Where did that come from? People have the same type of psychological/emotional reactions to particular condos/houses. That psychological/emotional factor drives much of the market and cannot be denied.
Clio,
You fail to understand that seeing you and your lambo doesn’t require me to have a job or a downpayment. But you do have me on the good feeling!
“people in Chicago would be SHOCKED to see the prices in other, similar sized metropolitan areas”
Only the dumb, provincial ones.
“Only the dumb, provincial ones.”
So, in other words, everyone
“So, in other words, everyone”
Maybe that’s why it’s so cheap here.
clio – I got a good feeling when I saw a lambo drive down Oak and I thought it may have been you. I can’t imagine the shiver down the spine valasko got when he actually saw you in your lambo.
“Maybe that’s why it’s so cheap here.”
Because of the presence of mindless belligerence like that? Yeah, probably.
clio – I got a good feeling when I saw a lambo drive down Oak and I thought it may have been you. I can’t imagine the shiver down the spine valasko got when he actually saw you in your lambo.
Perma, not sure I should be saying this but “I think it moved”……..
ABSOLUTELY – people in Chicago would be SHOCKED to see the prices in other, similar sized metropolitan areas (well, namely LA, SF, and NY). We are completely spoiled and need to realize that we are going to spend a larger percentage of our income on housing.
What do prices in LA, SF and NY have to do with Chicago, anyone with even a hint of knowledge about Real Estate will tell you that it’s local.
Clio I know that you are the expert here in Real Estate, but its funny that all the development market anaylsis/proforma reports that I have reviewed, none have used people’s psychological/emotional as factor for the project to proceed. Maybe KPMG should hire you as a consultant…….
“We are completely spoiled and need to realize that we are going to spend a larger percentage of our income on housing.”
LOL you’re an idiot.
“So let me get this straight. Clio is Harvard and Stanford educated, lives in the Palmolive, drives a Ferarri, and currently owns 13 properties??!! Nobody else finds this hard to believe?”
Not necessarily..there are a lot of rich people in this city. It’s not hard to believe that they’d be into realestate and want to post on CC.
p.s, the ferrari is me, not clio. actually it’s my old timer’s but i like to pretend on the weekends.
“We are completely spoiled and need to realize that we are going to spend a larger percentage of our income on housing.”
“LOL you’re an idiot.”
Come on Bob, you know he’s got a point. People that live in NYC and Manhattan need to spend a significant amount more on their income towards realestate, and compared to previous generations, we will be doing the same – yes, not as much as in 04-06, but certainly more than in the 90’s and late 90’s…it’s a national trend. compared to 95, property in ny, chicago, and LA is significantly more expensive..
“Come on Bob, you know he’s got a point. People that live in NYC and Manhattan need to spend a significant amount more on their income towards realestate, and compared to previous generations, we will be doing the same – yes, not as much as in 04-06, but certainly more than in the 90’s and late 90’s…it’s a national trend. compared to 95, property in ny, chicago, and LA is significantly more expensive.”
Riz, be careful you know its only Wednesday and Bob can be pretty fiesty, he might call you an idiot next….
“Come on Bob, you know he’s got a point.”
When he follows it with everyone in Chicago is dumb and provincial? No, I don’t think he has a point, just a rant.
While I’m not sold that I absolutely have to spend a greater percentage of my income on housing as I’m in an overpriced condo, I could easily take the wash on the sale and move to a burb or city-lite neighborhood (Portage/Edison/Jefferson) and pay the same or less.
What I do know for certain is that I’m going to be paying more taxes.
Oh and on the property: I have a friend that moved into the complex with a wife & child and have been happy for about a year there now. Walks to the blue line every day and now has learned to love to shop at Aldi for canned goods. Near two parks to push the kid around in.
“Come on Bob, you know he’s got a point. People that live in NYC and Manhattan need to spend a significant amount more on their income towards realestate, and compared to previous generations, we will be doing the same – yes,”
Chicago case-shiller in January 1995 was 81.38. What does that translate to with inflation?
January ’95 CPI: 150.3
November ’10 CPI: 218.8 (latest available data)
Growth in CPI: (218.8/150.3) = 45.6%.
81.38 * 1.456 = 118.47.
Today’s Chicagoland CSI: 122.28
Methinks you look pretty stupid, too. As the trend line fits. Oh yeah and there’s nothing saying the trend line won’t over-correct.
There is no data that people will spend a larger share of their income on housing. Only hopeful belief from the likes of you, clio and Bob Toll.
I am so tired of people talking about CSI, CPI, etc. – misinterpreting and mis-analyzing the data. It has NO true bearing on any individual property/area in Chicago. These are averages that include areas like Englewood and Western Avenue,etc. Homes in these poorer areas are doing terribly (and there are enough to bring the averages down significantly) – however, they do NOT affect the majority of the areas/properties we discuss on this site. The fact that the same people keep bringing up these idiotic numbers and try to analyze them makes me realize that these people really don’t know wtf they are talking about.
“Methinks you look pretty stupid, too. As the trend line fits. Oh yeah and there’s nothing saying the trend line won’t over-correct.”
Riz, I told you so………
Also methinks that clio and riz are the same person, only riz is about 20 years younger.
ok… im not following this, so because clio went to harvard and stanford, you are saying he doesnt know what he’s talking about because he isnt a smart guy… im just not following the logic here.
And Valasko really? on real estate not being emotional and psychological. the vast majority of sales are purchases by owner occupants who in addition to finding something they can afford are looking for a property they feel a special connection to, something they can see themselves living. Thats seems pretty emotionally driven to me
“Not necessarily..there are a lot of rich people in this city”
I definitely do not even qualify as “rich” in this city. To be called rich, I truly believe you need to have a net worth of over 15-20 million. There are thousands of people in the chicagoland area that are worth between 2 and 15 million and, believe me, they don’t consider themselves rich at all.
Clio, especially if you look at Case-Shiller SFH, that thing is so distorted. You essentially have large blocks of some parts of the south and west side of chicago that are essentially abandoned. I wouldnt say we are as bad as detroit in terms of the city potentially shutting off services to entire neighborhoods, but its pretty bad.
I tend to find the CS index for condos more useful, but it is a very small part of the analysis i use. Basically if im buying a condo that last sold in 1999 and another that sold in 2002 i try to user it as in indicator to understand the differences between those two time periods. While yes its imperfect, its the best i can do.
“I definitely do not even qualify as “rich” in this city. To be called rich, I truly believe you need to have a net worth of over 15-20 million. There are thousands of people in the chicagoland area that are worth between 2 and 15 million and, believe me, they don’t consider themselves rich at all.”
Isn’t this where you plug your senior thesis? Or do we have to wait until JMM posts something in this thread?
“Clio, especially if you look at Case-Shiller SFH, that thing is so distorted. You essentially have large blocks of some parts of the south and west side of chicago that are essentially abandoned.”
And they were in ’95, too. They certainly helped distort the peak, but comparing 95 to now-ish, they don’t distort much.
Clio, “Why So Many Rich People Don’t Feel Very Rich” it was a NYT article this week in the Economix section
http://economix.blogs.nytimes.com/2011/01/11/why-so-many-rich-people-dont-feel-very-rich/
I think that low to middle 500’s is the right price for this property – it was way overpriced in 2001.
“And they were in ‘95, too. They certainly helped distort the peak, but comparing 95 to now-ish, they don’t distort much.”
Clio’s classic deflection mechanism is the data available either isn’t accurate or isn’t relevant to assessing today’s RE climate. I say that it is.
gesco,
I fully understand the emotional factor. But before you even get to the emotional factor in a home purchase the person needs to have a job, and down payment. So if you think emotions play such an important role don’t you think finanical security plays a role in this emotional decision to purchase. Additionally people now understand that their house is not a path to great wealth, another psychological effect. See psychological and emotional factors to play a role and place on top of that increased taxation and economic stagnation.
Anon, not at ALL there has been a MAJOR exodus of african americans from 2000-2010 havent you seen the census numbers at all, the only thing that made up for it for was like 30%+ growth in the hispanic population but they are going to different neighborhoods, that the exodus of the african americans.
I think Gesco said it best when referring to CSI: “It’s the best we have”.
While this is true, my point is that there is so many other factors involved when discussing real estate that CSI is only a very very very very small part – yet certain data people on this site stand by these numbers as if they are the major determining factor on the future of real estate – laughable, really.
Many people underestimate the psychological effect of housing. Think about it – if someone is making 75-300k, they pretty much know that they are never going to be rich so most of them ARE willing to spend money to make their lives as comfortable as possible. The alternative is to live like a pauper for 30 years in order to save a little extra money (which is likely going to be too little to make a big difference in their life) – and most of which is likely going to go to taxes and healthcare expenses when you are 80 and demented.
“yet certain data people on this site stand by these numbers as if they are the major determining factor on the future of real estate – laughable, really”
I consider it a much more predictive and relevant variable than your hopeful beliefs & hot air.
I’ve been saying for years that the foreclosure crisis was gutting southside and african americans neighborhoods. I believe I posted this theory on cribchatter.
I think Chicago of any city has the potential for an urban renaissance in that someday cheap land will be available in the city. Imagine living west of washington park, with a house on one lot and a side yard of three lots, bought for a pittance. close to downtown, near the el, what if it was actually safe there…Of course the amenities would follow after the people did (sort of like teh exurbs) but it would be nice to see a day where this would be possible.
“#gesco on January 13th, 2011 at 7:25 pm
Anon, not at ALL there has been a MAJOR exodus of african americans from 2000-2010 havent you seen the census numbers at all, the only thing that made up for it for was like 30%+ growth in the hispanic population but they are going to different neighborhoods, that the exodus of the african americans.”
“there has been a MAJOR exodus of african americans from 2000-2010”
How many of them owned homes in ’95 and sold them before ’10? I’m saying that, population or not, those houses were mainly worth X in ’95 and are again mainly worth X +/- 10% now. It’s immaterial whether they sold for 2X, 4X or 10X in 2006 (most of them did not, in any event). And, remember, that CS is only affected by paired sales, so the house has to change hands, it excludes ALL multi-unit buildings (meaning 2-flats), excludes transactions less than 6 months apart and *should*, per its methodology explanation, exclude the most probably fraudulent high price sales of crap.
“when discussing real estate that CSI is only a very very very very small part”
That’s a bad show. I don’t think it plays even as large a part as you’re saying.
I mean its kinda going on with the MAJOR redevelopment that will be going on the southeast side with the old steel plant. Its like a 30yr project, but it would potentially be a huge economic hub and new anchor for the southside, combine the with Jesse Jackson JR’s 3rd airport, and i could see some growth for the southside. But all these things are 20-30 yrs out.
Although if anyone else has other ideas on timeline I would be very curious to hear their thoughts.
“Think about it – if someone is making 75-300k, they pretty much know that they are never going to be rich”
Um, this is the sort of thinking that leads to revolutions.
“the MAJOR redevelopment that will be going on the southeast side with the old steel plant”
Where will these folks work? The new southside walmarts? *that* is the real challenge.
Where will these folks work? The new southside walmarts? *that* is the real challenge.
Come on anon haven’t you seen the light yet……… jobs are meaningless its all about psychological, emotional and attitude.
I added attitude to the mix……..
There’s some places on the south side and west sides where there are just as many vacant lots as there are homes. and many of those homes are vacant. Basically you have to gentrify which means displacing the current residents and replace them with wealthier urban pioneers. WIth housing in the dumps it’s going to be years and years before this change happens organically, if ever. They tried it the washington park area and the olympics. But we know how that turned out. it would have to be a government or industry led push, with the CPS creating good schools in bad areas, housing developers and rehabbers getting tax breaks, and a willingness of cribchatters to move to washington park for the opportunity to own a SFH and an extra lot or two for the same price as a condo in lakeview. It’s a pipedream but sometimes it’s better to let this stuff happen organincally like logan, wicker, bucktown etc.
Anon, where have you been. I mean thats all part of the grand plan for the redevelopment of the 470 acre area. The redevelopment will include commercial place for work.
http://www.nytimes.com/2010/12/29/realestate/commercial/29chicago.html?_r=1&scp=1&sq=chicago%20steel&st=cse
I think it will happen and in my lifetime, but the southside changing… im guessing at least 20 yrs out. It may even be a slow spill down from downtown like what happened during the peak of close by areas developing, bronzeville, SLOOP, Pilsen, near west side
HD, think more an entire block for the price of a LP condo. you got properties selling at under 5k.
But really on the gentrifying displacing ppl, if wealthy ppl are buying the current owners are likely getting paid handsomely, no one is forcing them to sell. I wouldn’t call that displacement.
There’s some places on the south side and west sides where there are just as many vacant lots as there are homes. and many of those homes are vacant. Basically you have to gentrify which means displacing the current residents and replace them with wealthier urban pioneer.
HD, I want you to present you ideas to community groups down there……… and see what the reaction is…….. I doubt you will make it out of the room alive.
Oh I agree. But it’s an idea and it’s a pipe dream. But it’s completely reasonable idea; in fact, that’s how these neighborhoods were first developed over 100 years ago. Close to downtown, near trains, the opporutnity to own a house or two flat in a dense area without high rises, etc. IT just seems like such a waste of land to have an entire block with only a handful of houses, 1/4 of which are vacant, so close to downtown….when other more desirable areas around the city are so expensive for a SFH. Even in europe teh englewoods and roselands are on the outskirts of the city not in the middle of it.
“HD, I want you to present you ideas to community groups down there……… and see what the reaction is…….. I doubt you will make it out of the room alive.”
“someday cheap land will be available in the city. Imagine living west of washington park, with a house on one lot and a side yard of three lots, bought for a pittance. close to downtown, near the el”
oh yeah, with lollipop lanterns, gingerbread houses, streets paved with chocolate and cotton candy for clouds……come on – snap out of it and grow up!!!
oh yeah, with lollipop lanterns, gingerbread houses, streets paved with chocolate and cotton candy for clouds……come on – snap out of it and grow up!!!
Clio, now that a response, nice………..
HD, if you want your 4 lots west of Washington Park you’ve got it. I think you would just need about 100k and the alot of time on your hands to track down the banks that own the vacant (or are there squatters) homes, but don’t bother to list them cause its not worth there time, and get them to sell the properties
The banks aren’t listing them because they are abandoning them. The tax scavengers will get them and offer them for sale just like the old days.
Gesco, I’m wondering if your South Works redevelopment timeline includes the 15 years since the last one was announced. Only blatant theft from taxpayers will make that “feasible” in anyone’s cuurrent lifetime.
It has to be a major redevelopment project. It works well in teh suburbs and exurbs where small communities can pave roads, build infrastructure and set up schools. It won’t work so well in West wash park because CPS controls the schools, and the infrastructure won’t be rebuilt with city funds for years if ever. It would work so well if you could carve a small suburb out of neighborhoods, give them a taxing authority and funds just like a suburbs or village. It’s a major untaking and it won’t happen organically. They tried to do it with the olympics with a major governmental effort and had we got the olypimcs it may have worked.
“I think Gesco said it best when referring to CSI: “It’s t best we have”. While this is true, my point is that there is so many other factors involved when discussing real estate th CSI is only a very very very very small part – yet certain data people on this site stand by these numbers as if they are the major determining factor on the future of real estate – laughable, really.”
Not as laughable as your straw man, clio.
Bob,
somehow I’m not really offended by you calling me stupid, I don’t know. I think your numbers are stupid. My point is a pretty simple one:
Real estate was way way cheaper in the 80’s and 90’s than it is now. I know salaries are different, but millionaires and people earning 200k+ were still around. 200k bought a heck of a lot more in the 80’s and 90’s than it does now – hence, we are spending more of our money on real-estate than we have before. Is that too complicated for you? If it is, you know where you can put your case-shiller index / xyz b.s.
“Riz, I told you so………
Also methinks that clio and riz are the same person, only riz is about 20 years younger.”
Yeah, it’s not the first or last time Bob will talk down to me, or clio, or anyone else that makes a point that doesn’t sit well with him. As i’ve sad before, tough skin on the internet folks…sticks and stones.
As far as being the same as clio, I’d say probably not – I wouldn’t mind having a lambo in 20 years though. 10 would be better.
Looking back at bob’s case schiller stats – I get what he is saying, but I feel we were saying 2 different things, I wasn’t speaking in terms of inflation, just saying that on a strictly raw numerical basis real estate is obviously significantly more expensive in Chicago now than 10 or 20 years ago, and will still probably be significantly more pricey 20 years from now than it is today. I don’t have a time Machine so sue me if i’m wrong.
Example:
If i bought a 1 million dollar SFH in 95′ in bucktown, lincoln park, lakeview , would that property still be worth 1 mil now? or in 20 years for now? i’d gamble to say it’s worth a lot more now ,and will be worth even more in 2031. I think it’s fairly tough to disagree with that.
” I think it’s fairly tough to disagree with that.”
… and yet somebody soon will…. wait for it… wait for it….
“on a strictly raw numerical basis” there are far more six figure jobs now than in the 90s & 80s. Even though the proportion of these jobs as a percentage of the labor market has probably shrunk.
“but millionaires and people earning 200k+ were still around.”
There were far, far less of them back then. When people in the 80s talked in a reaganesque way about the “six figure life” at cocktail parties that really was the life where you could have a stay at home wife, a inground pool, two luxury cars (typically bimmers) in the garage and a really nice house. As if that is affordable in or near major metros like Chicago today on 100k even with the lower taxes LOL. Lots more millionaires and 200k+ people these days, too. Including some Crook county employees.
“and will still probably be significantly more pricey 20 years from now than it is today.”
20-years out is a long guessing horizon. Its probable given inflation of the past we will be at or above where we are today but the lingering question is how much will we dip in the interim?
Maybe ou’re in an occupation, like clio, with a steady and predictable cash-flow stream. It’s an enviable position. But it’s an increasingly less common one for those not in government or health care. And they’re a large segment of the market, too.
….and there it is!!!
“If i bought a 1 million dollar SFH in 95? in bucktown, lincoln park, lakeview , would that property still be worth 1 mil now? or in 20 years for now? i’d gamble to say it’s worth a lot more now ,and will be worth even more in 2031. I think it’s fairly tough to disagree with that.”
History would show you are wrong. Just ask those who bought mansions on Prairie Avenue at the turn of the century. They were not worth more decades later. They were worth less.
In a bubble, many neighborhoods (even prime ones) take decades to “recover.” I really wish I could still find the link but it was from years ago warning about the bubble- but the Suntimes ran a story about a property on lake shore drive in the Gold Coast purchased in 1928 for $1 million. Of course, we know what happened next. By 1970, the property was sold for $200,000. It sold in the mid-1980s for $560,000. It finally sold again for $1 million in 2001.
There are simply no guarantees about neighborhood, price appreciation or anything. What you “knew” from the last 15 years could be totally different in the next 20.
“Real estate was way way cheaper in the 80’s and 90’s than it is now.’
Yes- it was. That’s why prices are going to go way, way, lower.
……and there it is again! bam
“anon – I think everyone got the idea of what I was saying – so instead of criticizing my math, why don’t you criticize the idiotic prediction that prices are going to decrease 30% over the next 4 years. IS ANY RESPECTABLE/KNOWLEDGABLE PERSON OUT THERE EVEN THINKING THAT THIS IS A POSSIBILITY?!!!!!!! OF COURSE NOT!!! Stop this idiotic fear mongering – there are a lot of impressionable people out there. Don’t scare them.”
No one knows anything. Let’s admit it. There are too many variables right now. If we had anything like a “normal” market- then it would probably be absurd to say that there COULD be a further 30% drop. But we don’t have that.
Let’s recap current conditions:
1. Lowest sales in 20 years
2. Near record or record foreclosures
3. Near record or record foreclosure notices filed in 2010- which means the properties will come on the market in 2011/2012
4. Unemployment rate “officially” at 9%- unofficially much higher
5. Very tight credit
The tight credit could get even tighter by this spring. From the WSJ:
“Wells Fargo & Co., the nation’s largest mortgage lender, has asked U.S. regulators to set a down-payment standard of 30% on mortgages that wouldn’t have to meet a new requirement that banks retain 5% of a loan if it is securitized. The so-called risk-retention requirement is aimed at preventing future housing meltdowns because lenders could face steeper losses if their loans go bad.
If regulators go along with the San Francisco bank’s proposal, mortgage lenders still could make loans with down payments lower than 30%. But those loans would be more costly for the banks because of the risk-retention requirement. Lenders likely would pass those costs along to borrowers in the form of higher interest rates.’
JPMorgan is apparently telling regulators that mortgage rates could rise by 3% as they pass along the costs.
8% mortgage rates? What will that do to the market?
http://online.wsj.com/article/SB10001424052748703889204576078371120293698.html?mod=googlenews_wsj
I’m tired of all this squabble. This isn’t fun or interesting anymore..
.
When Gold Coast and lincoln park property returns to 1980’s value, which is kinda the point Sabrina is implying as a possibility with the gold coast and prairie district example; I will chew my thumbs off. I stand by what I say..it’s highly unlikely a person who purchased in the 80’s or 90’s is losing a dime on real estate today, or is likely to in the future. Obviously I can’t speak for today , or even the next 5-10 years, but i’m pretty confident in saying that if an individual buys a townhouse or SFH property in a stable or ‘luxury’ neighborhood today , it’s highly unlikely they won’t profit if they sell 20 years down the line.
Sometimes i feel like people argue just to argue..The doomsday mentality of some of you guys really brings me down at times. And i’m surrounded by dead bodies all day!!!!!!
goodnight all
Perfect strategy Riz, bury your head in the ground, and pretend the real estate depression doesn’t exist. Things are OK and stable in a lot of areas and im sure all is fine and dandy in your life. But they’re most assuredly not ok in real estate.
HD,
At the end of the day, I don’t have to bury my head in the ground..I’m not invested in real estate heavily – actually, at all. zip. zero. I have nothing to gain and nothing to lose, unlike a lot of other passionate posters here. I always try to be objective, and that’s pretty tough to do with the mentality some have on here. To be honest, if your prophecy of real estate disaster is true, i have everything to gain – I’d love to graduate residency and start working in a realestate market where property is dirt cheap, and 90’s prices or cheaper..Nothing would make me happier to buy a 3 bedroom townhouse in bucktown for 300 grand or a big SFH in lincoln park for sub 1-mil . I just find it unlikely. So sayeth the non-believer.
” I’d love to graduate residency and start working in a realestate market where property is dirt cheap, and 90’s prices or cheaper.”
I totally agree. I ALSO would love it if house prices crashed and real estate was extremely cheap. Sure, I would lose a lot of money on my 13 properties, but I would definitely buy more and hold on to them until retirement. I just know that this is not going to happen. It just isn’t.
“8% mortgage rates? What will that do to the market”
8 % mortgage rates?!!! OH MY GOD – I have never heard of such a thing!!!! – Of course I am being sarcastic. Does anyone remember the 15% mortgage rates of the 80s? What kind of long term effect did that have on the market? – NONE.
If the “negative nellies”on this site think that it will soon be next to impossible to buy a home in the coming years, what do you think that will do to the rental market? Obviously rents will skyrocket (supply and demand). You can’t have both. Furthermore, if and when rents skyrocket, we will get to a point where:
1. investors start buying property to rent out
2. people accept that they will be paying more for housing, bite the bullet and start buying houses (as opposed to renting).
Oh, and another thing about the rental market – most renters on this site seem to think they always have the upper hand. That might have been true in the past 1-2 years, but not in the long term. I know a boatload of landlords that won’t tolerate much (me included). Many have enough money/equity in our places that it isn’t worth it to have a complaining tenant. Seriously, if my tenants have problems, they can move. The vast majority of landlords feel the same way. We own the units and have the “upper hand”. Sorry, I don’t think this is necessarily right – it is just the way it is.
“1. . investors start buying property to rent out
2. people accept that they will be paying more for housing, bite the bullet and start buying houses (as opposed to renting)”
1. Investors are still buying.
2. Bobby Knight’s theory apparently has a believer.
I think the CSI is a useful tool, assuming the neighborhood is on par with what is was in the period you’re comparing with. I’m looking at places in Bucktown now. One in particular was last sold in 1998. Am I off base in using CSI as one factor in establishing a fair price? In terms of relative desirability, how does Bucktown compare with other ‘hoods now vs. in ’98?
EJ, Bucktown certainly had a much steeper appreciation realtive to the city since 98. If you can buy a property in bucktown at 98 prices I would consider that at face value to be a great deal.
Assuming the property hasnt become a dump in those 13 years and has been kept in the same condition (or improved, as alot of rehab was done to bucktown in that period)
“I think the CSI is a useful tool, assuming the neighborhood is on par with what is was in the period you’re comparing with. I’m looking at places in Bucktown now. One in particular was last sold in 1998. Am I off base in using CSI as one factor in establishing a fair price? In terms of relative desirability, how does Bucktown compare with other ‘hoods now vs. in ‘98?”
Are you trying to figure out the “market” price in the sense of the price that people would generally pay for it now? Or the price that you would be comfortable with? In terms of market price, my sense is that case shiller growth from 1998 to present would probably understate what things were selling for, which isn’t to say that you should necessarily pay that. But that’s a long time and I dunno the condition of the property then and now. Recent comps would of course be very relevant.
As gesco says, btown relative to other locations is more desirable now than in 1998.
Sabrina:
I thought we already put the Prairie Ave comparison to bed. You can’t possibly compare that small enclave at the birth of this city to any neighborhood today… it defies any understanding of urban history.
“Anon, where have you been. I mean thats all part of the grand plan for the redevelopment of the 470 acre area. The redevelopment will include commercial place for work.”
So, if we build it, they will come?
I don’t subscribe to the Field of Dreams method of job creation. I’d expect a bunch of vacant office space, if they even actually build any. Maybe city/county/state offices, like the first 15 years of WTC in NYC.
How about roseland, austin, marquette park? What were those neighborhoods like 50 years ago?
How about right outside the city in Elmwood Park? Just yesterday my office was discussing the sweeping demographic changes and property value declines that have taken place in teh last 10 to 15 years.
What about lincoln park? 30 years ago it was completely differnt than it is today.
Neighborhoods change.
“#jack on January 14th, 2011 at 9:29 am
Sabrina:
I thought we already put the Prairie Ave comparison to bed. You can’t possibly compare that small enclave at the birth of this city to any neighborhood today… it defies any understanding of urban history.”
“What about lincoln park? 30 years ago it was completely differnt than it is today. ”
At this point, you really mean 40. You’re getting old, HD.
“If you can buy a property in bucktown at 98 prices I would consider that at face value to be a great deal.”
I can’t get it AT ’98 prices, but I certainly think I can get it at CSI-adjusted (i.e., roughly 25-30% above ’98 price). So granted, it was new at that time, but if you trade off new in ’98, for more desirable in ’11, reasonable deal?
“So granted, it was new at that time, but if you trade off new in ‘98, for more desirable in ‘11, reasonable deal?”
1. Do you mean case-shiller or consumer price? They’re about the same at the moment, but not really.
2. Have they replaced *anything*? If not, you need to budget for repair/replacement of stuff.
Case-Shiller primarily, but interestingly, on a ’98-’11 comparison you get to almost the same place with either.
Very well-maintained, but I don’t think they’ve replaced anything. So, I get your point, I could be looking at a lot of repairs/replacements over the next 3-8 years.
“I can’t get it AT ‘98 prices, but I certainly think I can get it at CSI-adjusted (i.e., roughly 25-30% above ‘98 price). So granted, it was new at that time, but if you trade off new in ‘98, for more desirable in ‘11, reasonable deal?”
So, basically at 2002 nominal prices? Sounds kinda ballpark bucktown market price to me, maybe a bit lower than market although you have to consider depreciation as noted (although that’s true of a lot of btown sales, which are often of places that were new or reno’d in early 2000s). Would definitely look at recent comps. Adjusting using any index or any growth rate over 12-13 years is a long time.
First time poster here, with a few thoughts. To begin with, I estimate that a buyer of this property should have at least 226k/yr in pre-tax income and 120k for 20% down. As of 2008, that puts them in the top 5% of Illinois earners. Is this a property worthy of a top 5% earner? I don’t know, just asking.
(i’m assuming 4.5% mortgage rate, 4.5% opportunity cost on downpayment of 20%, 35% all-in tax rate, mortgage int deduction in effect and housing costs no more than 1/3rd of after-tax income)
Also, Clio, you write some stuff that boggles my mind (but I realize you could end up being right, as housing could continue to make no sense).
Clio writes: “If the “negative nellies”on this site think that it will soon be next to impossible to buy a home in the coming years, what do you think that will do to the rental market? Obviously rents will skyrocket (supply and demand).”
The nellies see headwinds to home buying coming in the form of the disappearance of the 5% down FHA mortgage, tighter FNMA/FHLMC/GNMA underwriting standards, expiration of higher conforming limit and 20%/30%/40% down requirements for non-conforming mortgages. Not only will this make it very difficult to buy a home, it will make it very difficult to SELL a home. For most, not all, owners, a home not sold must be rented to cover the monthly cash outflow. In the rental market, supply (homes you can’t sell) should increase along with demand (people finding it impossible to buy). No net effect on rents.
People read Peter Schiff’s 12/30/10 WSJ article in which he noted that from 1900 to 2000, home prices went up 3.35% annually on average. However, in the first 6.5 years of this millenium, home prices went up 14% annually. As supply and demand ebb and flow, we expect home prices to rise in-line with wages. The 6.5 years at 14% came from speculation and mortgage products which helped under-capitalized speculators. Pay-Option ARMs, Interest-Only, HELOCs and 5% down mortgages allowed people without any real savings or income to get involved in the housing market because they shared one common trait, low upfront costs and early year payments. These new buyers created a significant increase in demand… significant but temporary. Alas, home prices and rents cannot grow faster than after-tax wages over the long term. Clio, even if people spend a greater percentage of their incomes on housing, they’ll have a smaller percentage to commit to savings and other investments. Savings some day become down payments, which supports housing prices. Investments fuel economic growth and wage growth. Wage growth supports housing prices. People spending a greater percentage of their incomes on housing doesn’t help the housing market over the long term.
Coogan
Since the bears are winning and I am in a good mood I will keep this lite friendly and simple:
You are wrong abouT a lo
T of what you said – wait I can’t fricking type on this goddamn iPhone. I’ll explain Tomorrow why