Logan Square Lush Garden Sells: 2434 N. Sawyer
We last chattered about this vintage single family home with a pretty backyard in Logan Square at 2434 N. Sawyer in May 2009.
See our prior chatter here.
At that time, the house had just been re-listed at a much lower price point.
It had 4 bedrooms, 2 baths and a garage- but no central air.
But who cares about central air when you can stay cool in the garden?
2434 N. Sawyer: 4 bedrooms, 2 baths, 2 car garage, 3000 square feet
- I couldn’t find a prior sales price- but it was in the 1980s
- Originally listed in September 2007 for $749,999
- Withdrawn
- Re-listed in May 2008 for $699,900
- Reduced
- Withdrawn
- Re-listed in May 2009 for $575,000
- Sold in August 2009 for $525,000
- Taxes of $4624
- No central air- window units
- Bedroom #1: 15×13
- Bedroom #2: 19×10
- Bedroom #3: 15×8
- Bedroom #4: 11×11
- Jeff Lowe at Prudential Preferred had the listing.
I was in this listing last year. This is a fair price.
It’s a fair price if you don’t think Logan Square is going to backslide over the next couple of years. I’m not so sure about that.
“I was in this listing last year. This is a fair price.”
Was it also fair when it was listed in 2007 for 750k?
This one goes for 425-450k is my guess. It isn’t exactly the best neighborhood, no central air and the place looks like it may need some serious work and updating from 1989.
It looks like a rental, and will sell accordingly.
Ummm…it just sold for $525. No guesses necessary.
Hah! I think I need some more coffee
$525k. All it takes is one greater fool! But hey, $750k to $525k is a steal, right?
I didn’t say it was a steal. I said it was a fair price. It is on a big lot 32×185 and its in good shape. With 20% down it makes sense on a rent/buy comparison.
525 is right for today, 425 is the right price for 2011.
If the government would stop subsidizing people with little to no financial sense this might go for 425-475. Unfortunately our government throws taxpayer dollars at people in the form of conforming loans/Fannie/Freddie making ~525k the cutoff for an “affordable” house (20% down with 417k conforming limit, OR 10% down with financing gimmicks like piggyback loans).
I am curious as to financing on this one as I doubt they brought 108k to the table. But I’ve been proven wrong before.
In my view a 20% downpayment used on the transaction would be a better indicator of a fair price as they are assuming the risk and not any yahoo can come up with 108k cash. 10% down and they’re just joe blow drinking the RE kool aid.
I see no compelling reason why anyone would think Logan Square would backslide. All the information I’ve read seems to me like it’s going the opposite direction, albeit slowly. Please explain.
when did logan square (outside the historic district) start commanding 500k and higher prices?
In my view, $525 is a lot to pay for an oversized (though nice) lot in a not great area. If they paid any significant part of that for the house, then they need to get checked.
“Matt Garrison on August 18th, 2009 at 6:44 am
I was in this listing last year. This is a fair price.”
Is the house as awful/dark/mispainted as it looks in the pictures?
“when did logan square (outside the historic district) start commanding 500k and higher prices?”
Since some buyer mentally anchored to the initial ask price of 750k and thought they were getting a “deal” at 525k. Now they can tell all their friends they just saved 225k on their house and everyone will recognize how financially shrewd they are.
This house was probably the best ‘deal’ they could find. There are only a handful of reasonably priced properties at any given time. The rest is completely overpriced.
Lately I’ve been looking at homes in terms of monthly payment (piti+hoa) after 20% down and 5% interest. For example a house at 399k equals more than 2000 a month as opposed to my current rent for 850. How much does everyone here pay for their rent/mortgage??
Which brings me to my next question…how much would you be willing to pay per month for this house??? 2200? 1700? 2800?
the extra deep lot is a pretty big selling point, IMO. otoh, I wouldn’t want to live this close to Fullerton.
but look at this:
http://www.trulia.com/property/1084905832-3137-N-Spaulding-Ave-Chicago-IL-60618
this is steps from Belmont and the expressway is right in your face here.
“How much does everyone here pay for their rent/mortgage??”
bro you wont even believe if i told you, nobody does.
“Which brings me to my next question…how much would you be willing to pay per month for this house??? 2200? 1700? 2800?”
for this house i dont think i would pay more than i pay now. my house my be smaller, alot smaller, but i have a bigger lot.
You rent for $850 a month total? LOL must be a real palace…
HD,
My rent is $795 for a (large, but old) studio in LP. Moving next month to a 2 bd in Ravenswood for $1085/mo.
What would I pay for this house? I have no interest in this location or a place this size so no comment on that.
850 a month for 1000 sq. 2bd, a little dated but safe, quiet, nice hood, attentive landlord and fun neighbors, street parking, walk to el/metra. My household could easily afford to pay up to 3500 or 4000 a month piti but we choose not to.
HD,
What hood? Sounds like the place for me.
Well good for you guys, hopefully you are using that savings wisely. But for me personally I couldn’t live in OIP, since most of my friends live in the green zone, and I’d have to buy a car which would suck. And since you asked my Pitihoa is $2500 (includes gas, water & internets), but then again i’m living within walking distance to work and everything that Chicago has to offer, and will never need a car (i’m renting out my parking space for $200 a month)
So HD, it sounds like you could be one of those who Bob doubts everyday? If your household *could* afford 3500-4000 a month, you must be saving a huge amount of money that you are going to use as a giant downpayment or perhaps even paying cash for a home?
I seriously did not think you could find a 2 bdrm house in a passable neighborhood in Chicago for $850. The rent I charge on two of my rehabs is double ++ that amount and I was thinking THEY were getting a great deal.
Back to this place though, I would say $525 is about right for the space they got. Other than the paint colors, it seems to be an above average home. 3000 sq ft PLUS a huge and beautiful yard? Great deal!
“Sonies on August 18th, 2009 at 9:26 am
Well good for you guys, hopefully you are using that savings wisely.”
Not sure if a ring is wise or not but that’s where most of it is going 🙂
“For example a house at 399k equals more than 2000 a month”
If certain folks are reading today, you’re going to get killed on the asset transfer piece of that. Sure, the amortizing loan amount is $1,713/month, but:
319,200 * 5% = $15,960 / 12 = $1,330/month is the interest expense.
Taxes are ~$400/month and insurance
>>>I see no compelling reason why anyone would think Logan Square would backslide. All the information I’ve read seems to me like it’s going the opposite direction, albeit slowly. Please explain.
For better or worse there are some key indicators that paint a picture of the neighborhood. I make no commentary on the merit of these un-scientific indicators, I just present them as they are:
-Developments (condos/cafes/nightlife) are creeping northwest along Milwaukee Ave.
-More strollers on the sidewalks
-Hipsters/bikeculture-types invading the area
-Gang activity still apparent
-Foreclosures all over the western edge of the neighborhood
Yes my household is sitting on cash and the rest of it is paying off student loan debt (let’s not getinto that) but paying off debt is a kin to saving money.
compared to this:
http://www.trulia.com/property/1084905832-3137-N-Spaulding-Ave-Chicago-IL-60618
I’d say this place was a great deal. I’d take the large lot and vintage house over the new construction steps from Belmont and the expressway (loud!) any day.
“Sonies on August 18th, 2009 at 9:08 am
You rent for $850 a month total? LOL must be a real palace…”
Who says that? I think some of the general financial talk on here is interesting, but when it becomes oversharing your own financial situation, or worse yet – insulting someone else’s, it becomes a little inappropriate. Just sayin.
“2 bd in Ravenswood for $1085/mo” dude thats a good deal for a 2br!
^^^ depends where. If it backs up to the Metra tracks maybe its a fair price. Otherwise seems like good deal.
HD, Bob, Sonies. I’d say I’m a bear on the housing market, but you guys are ridiculous. 525K for this place is easily a good (fair) price for the buyer. IMO, Low/Mid-level SFH (but not condos) have probably already bottomed in Chicago.
$2,239 plus about $400 a month for taxes. $417 mortgage $108k down payment at 5% interest. Is this worth $2,639 a month? Yes there are tax benefits but i’m talking a month to month cash flow here. Is this worth $2,639 a month?
Bob:
I think you will find that the quality of borrowers these days is higher than it has been in probably ten years at least. First, ten percent down is not a small amount of money. Second, lenders are evaluating things like reserves (the money you have left after dp & closing costs) and all other aspects of the mortgage much more carefully. In addition, mortgage insurance companies are trumping the lenders & fannie/freddie guidelines making it even harder to get approved for those borrowers without 20% down.
About the only borderline deals these days is FHA and even FHA is getting tougher. Dare I say that much of the funny money is largely gone. For the most part, if you are buying today you are competing against qualified borrowers.
While I am not a housing bull, I think many of you are still under estimating the demand for housing and the ability of buyers in Chicago to pay for it in certain areas of the city, particularly outside of the jumbo range.
The jumbo market is an entirely different story given the massive down payments required. If you are getting qualified for jumbo financing, believe me, you are hardly funny money. I know one major jumbo lender that wants TWO YEARS of LIQUID reserves on top of the 25% equity. Max debt ratios are 38%.
HD, people pay $2600 to live in crappy two and three bedroom apartments in the loop. $2600 isn’t a lot to pay to have a house in a decent location in the city. Yeah, it ain’t LP/LV but it isn’t Austin either. Chicago is not a cheap city and I don’t get the whole wanting a nice house in a desirable area for $1000/month. It just ain’t gonna happen. There are plenty of 2/1 townhomes in Joilet that may work though…
I think the price on the house was reasonable.
Of course it’s not reasonable to expect a SFH in a decent neighborhood for a thousand a month. How many people do you know who pay $2,600 a month to rent crappy 2 bedrooms places in the loop?
The rental range for people I know is between $700 on the low end up to about $1,600/$1,800 a month on the high end. The only people I’ve seen who pay higher are the people who ‘own’ and bought with no money down, and are now walking in to my office with serious financial problems. They pay $2,000, $2,200, $2,600 a month for a mortgage, and even on household salaries of $80k or $90k are still having problems affording mortgage that high. I’m just saying my anecdotal experience. You put them in the loan on the front on and I’m either foreclosing on them or filing foreclosure against them on the back end.
http://chicago.craigslist.org/chc/apa/1329445708.html
Look at the bottom picture
Great view of Cabrini
$2,000 a month
Broker says: COME QUICK – WON’T LAST
HD, I see quite a few as lenders do verification of rent for first time home buyers. In fact, I am shocked more often than not what types of rents I see, most have roommates though. $2600 a month is a bit much on an $80k salary, but it can be done if you don’t have a lot of other conspicuous expenses – car note, eat out two or three times a week a nice place, burnin up the CC at Banana Republic.
But like I said, most of those folks aren’t really buying places that expensive these days as their debt ratios will disqualify them most of the time.
Russ: Would you consider $525k to be an expensive place? Isn’t the median Chicago home price in the $250’s?
$2,600 on $80k is doable I agree but the problem is that a lot of people have credit cards, student loans, car payments, etc.
“Bob on August 18th, 2009 at 10:27 am
^^^ depends where. If it backs up to the Metra tracks maybe its a fair price. Otherwise seems like good deal.”
About 200 yards from the Metra, which is a big plus for me since I take it to work every day, might be a big minus to others though. I think Metra noise is overrated though, at least compared to the el. It runs much less frequently and is quite a bit quieter.
HD, the median home price number is very misleading. It covers too wide of an area to be meaningful to anyone looking to buy a home in Chicago proper or as what some folks refer to the Green Zone.
For some people, $525k is an expensive home, particularly when you consider that it doesn’t get you much. However, it is all relative and $525k is simply the cost of entry in many places. As I have said before, Chicago is a major city and not cheap. I can admit that I am probably bias because I am in that “rich” tax bracket according to the President and most of my acquaintenances are too, so it doesn’t seem out of the ordinary to me.
However, if you compare what it cost to buy in Chicago relative to NY, Boston, SF, DC, or LA; Chicago is not all that pricey. In fact, I would say you get way more bang for the buck here. I have financed homes in all of those cities and if you think $500k is expensive, you should try looking at places in those markets. Everytime I have closed a deal in NY, we look in awe at what a dump or walk in closet you get for $1 million.
There are plenty of people with the incomes to support homes in that $400-$550k range in Chicago and if you want to own within certain areas, that is what you have to pay. If it is too much, you either have to move elsewhere or get a better job. Hoping that the RE market continues to implode is only going to help but so much…
furthering what Russ is saying, it really isn’t going to be healthy for Chicago if we lose our appeal to professionals from NYC.
I work in a place where it’s largely transplants from the rest of the country, and international ones – ask someone from NYC or London or LA about Chicago RE, and you’ll generally hear good things.
Russ: the only way we’re going to exit this real estate depression is if we get lower prices which will inevitably lead to more sales. So you better reassess your idea of what an affordable home in the green zone should be. You make money on volume not so much on prices so you should be cheering for lower prices along with everyone else.
“If it is too much, you either have to move elsewhere or get a better job. Hoping that the RE market continues to implode is only going to help but so much…”
some one explain “green zone” for me?
Green Zone. Based on the “safe” areas in Iraq that were occupied by American troops. We just stole the phrase to refer to the parts of Chicago that most professionals want to live although the borders are probably debatable. In general, the neighborhoods of LP, LV, Bucktown, The Loops, etc.
russ thank you
HD: We have gotten lower prices and people are buying. Affordable is relative. Just because you may think homes are unaffordable, does not mean that the market thinks otherwise. Like I pointed out, there are plenty of people who think Chicago is priced just fine at certain price points and they are making a decision to buy. In certain cities, if you want to be homeowner, you either need to make more money or accept that you are just going to have to be a renter or decide to move to cheaper pastures. There is nothing wrong with either of those choices.
While I don’t have a crystal ball and do think there are still some over priced properties on the market, I do think some of you are hoping for prices on certain properties that simply will not appear… ever.
Sip of kool-aid anyone? Just think of how ridiculous your statement would be if said made it two years ago. It is only slightly less ridiculous today.
“In certain cities, if you want to be homeowner, you either need to make more money or accept that you are just going to have to be a renter or decide to move to cheaper pastures.”
Russ man, this is a lovely house, slightly big yard, but it is *not* in the blue-chip hoods, so where does that leave us? Yes Chicago is a big expensive city but I think you lean too much on your personal circumstances.
It’s not so much a question of social justice but of what makes a healthy metro–it’s not supportable to keep a half-million as the entry-level price point in a marginally acceptable part of town. Some folks have to take out the trash, or at least be middle managers.
Russ enjoys two tiered markets and the concentration of wealth. The englewood market where homes are less than 100k and the logan sq market where homes are 500k or more. Everyone in between is a renter or moves to joylet.
I know this shocks some people, but there are plenty of people who find the gridlock of LP and LV annoying beyond belief and do, in fact, CHOOSE to live in neighborhoods like Logan Square.
I know plenty of professionals, late-twenties, early-thirties, who are quite happy in LS. I do find hilarious the general realtor perplexity on how to market Avondale, this is a riot:
http://www.chicagotribune.com/classified/realestate/communities/chi-avondale-profile_0807aug07,0,4623321.story
you’d think they were trying to describe Bridgeport in 1870. Hardscrabble? C’mon…people who live with running water and some form of air-conditioning aren’t exactly on par with the hog butchers and ditch-diggers who dropped like flies.
“Some folks have to take out the trash”
You know that city garbagemen make $80-100k a year right?
“it’s not supportable to keep a half-million as the entry-level price point in a marginally acceptable part of town”
This is nowhere close to an “entry-level” home in Logan Square:
1. An entry-level home within Chicago is as likely as not a condo, not a SFH.
2. There are a couple dozen SFHs in Logan Square currently on the market for under $300k.
3. There are over 200 condos, THs and multi-units in Logan Square currently on the market for under $300k.
This place is significantly above-average for LS, and, I think, for the city as a whole–considering all o/o housing units from studio apartments to Penny Pritzker compound.
To back up skeptic – my family is one who chose logan square / avondale over LP/LV because of the greater diversity and less crowding. We live in a 14 unit building on Diversey in which 3/2 condos go for between $375-$420K. We live next to a much larger building that probably has 50 units which is on par. Both were built in 2007-2008 and completely sold. There is a market and people have (and are) buying. Will we see the appreciation of LP/LV in the long run? Maybe not, but our values will not fall as much further as some of the marginal neighborhoods.
skeptic: I agree with you – not everyone loves the congestion and Big 10 crowd associated with LV/LP. I too live further west.
the avondale article is hilarious. I occasionally travel into avondale if i’m riding my bike down milwaukee, elston or sometimes i go to the mcdonalds and belmont and pulaski for breakfast…it’s just a regular nondescript neighborhood but those prices seem a little pricey for working class neighborhood full of unemployed tradesmen.
anon(tfo) come on, this is a little closer to entry level than you make it out to be. It’s closer to entry level than to move up status. It’s kind of a crappy house in a marginally acceptable neighborhood. the only thing it’s got going for it is a nice lot and a big backyard.
we are heading for another bubble if logan square entry homes are 500k and above.
i am hoping for the day when people moving to chicago look in other areas than “green zones”.
“CHOOSE to live in neighborhoods like Logan Square”
I know lots of people in LS, it’s just fine, but it’s not the blessed Green Zone.
“This is nowhere close to an “entry-level” home in Logan Square:”
Yeah I realize that but I took his point to be: tuff luck suckas, sorry you are such broke losers, Chicago is for rich folks don’t you know? It is truly a beautiful house, no kidding. But still, west of Kedzie; and not to relitigate the school business but….
man I thought Sabrina was going to take a week off, and I missed the conversation.
1. I wouldn’t call a brick SFH a starter home in Chicago. esp a 500K house. can’t make it fit that pigeon hole.
1a. 2K PIITA isn’t bad for the median homeowner , its quite doable, of course it has to meet your risk tolerance. 3x = 75K.
2. Logan Square, for the most of it won’t backslide, as it would not make any sense, as there is too much real capital tied to that place.
2a. The part that does would be easy pickings for the next housing boom.
3. This might be a property some find too expensive, I do, but as others said somebody will buy it because this property has real value. Large lot, Brick, 4 bedroom, etc style character etc
3a. whether real or imaginary that value is something these and other homeowners have a real interest in preserving.
4. Some people like HDs’ landlord have PIITA, less than market rent, I do. So can you, if you don’t somebody will.
Russ: “HD: We have gotten lower prices and people are buying.”
They aren’t buying in most of the areas discussed on CC. No way the bottom is in for any market segment until sales volume returns.
Here are the attached closings in the mls for the 8/1 – 8/15 period for 2007, 2008 and 2009, plus the 1 and 2 year % changes:
2007-2008-2009***1YR ***2YR
Lincoln Square 29 – 23 – 18 ***-21.7% ***-37.9%
North Center 30 – 12 – 20 ***66.7% ***-33.3%
Lake View 116 – 96 – 55 ***-42.7% ***-52.6%
Lincoln Park 74 – 61 – 43 ***-29.5% ***-41.9%
Near North 135 -109 – 79 ***-27.5% ***-41.5%
Logan Square 35 – 24 – 15 ***-37.5% ***-57.1%
West Town 70 – 59 – 38 ***-35.6% ***-45.7%
Near West Side 58 – 41 – 38 ***-7.3% ***-34.5%
Loop 106 – 31 – 15 ***-51.6% ***-85.8%
Near South Side43 – 58 – 21 ***-63.8% ***-51.2%
You can do piti less than market rent but it became exceedingly difficult to do post-2000; and it is only slightly easier to do today. Most people with piti below rent bought homes before 1999 with money down.
“4. Some people like HDs’ landlord have PIITA, less than market rent, I do. So can you, if you don’t somebody will.”
“this is a little closer to entry level than you make it out to be. It’s closer to entry level than to move up status. ”
What percentage of o/o homes east of Pulaski are condos?
“the only thing it’s got going for it is a nice lot and a big backyard.”
Which is a lot more than over half the houses (and condos) in Chicago have going for them. You also left off that it’s 2(ish) blocks to the Blue Line.
Is that a rhetorical question?
“What percentage of o/o homes east of Pulaski are condos? “
True HD, it is hard, not only that it isn’t for everybody, but if people are willing to take the risk, it makes the possibility for ‘normal prices’ to be a bit more difficult to reach, because most peoples risk tolerance is not that same as yours.
“What percentage of o/o homes east of Pulaski are condos? “
I would say 65%. guess. would be interesting to know.
2000-2009 was a great time for anyone with a high tolerance for risk and look where that got us. I’m just saying that $2,600 a month including taxes for this place seems a big high; I think a more reasonable price, in my opinion, for this house, is around $2,000 a month. Transplant this house to Roscoe Village and I could see the monthly mortgage payment at $3,200 because it’s a better area. You can figure out what that translates to as a selling price.
“revassal on August 18th, 2009 at 2:38 pm
True HD, it is hard, not only that it isn’t for everybody, but if people are willing to take the risk, it makes the possibility for ‘normal prices’ to be a bit more difficult to reach, because most peoples risk tolerance is not that same as yours.”
“Is that a rhetorical question?”
Not really.
B/c if, as vassel hypothesizes, 65% of the o/o units are condos, then this property is easily above-average–>it’s not a condo (tho there are many, many condos nicer than this); it has a much bigger than typical lot; it’s brick; it’s close to the el; it’s not in Uptown or RP or the “lesser” parts of the Southside. So, it’s above-average, whether you like the house and its location or not HD.
East of Pulaski on the southside covers a hell of a lot of area….I’ll agree that’s its not entry level per say, but, and that it’s above average in the sense that it’s not a one bedroom or a two bedroom condo, but it’s not above average in the realm of houses or even of livable units compared here on CC. I don’t think tht Pulaski should be the diving line; I think that Western should be. There’s a lot of houses, probably more houses than condos, in the two miles between pulaski and western.
“Transplant this house to Roscoe Village and I could see the monthly mortgage payment at $3,200”
Works out to ~$625k, assuming (falsely) 5%, 20% down and cheap-ish taxes.
Are you assuming Audubon attendance area? b/c, with two kids, you’re saving $1k to $3k per month versus the Sawyer house being able (if your braaaave enough) to send them to public school. If in Audubon, I think you’re short-changing the house a bit.
There are a couple of 4/2+ houses in “Roscoe Village” (really Hamlin Park, in my view) listed for $650k (4/2.5) and $685k (4/3) (neither of whom will make money, after commission and closing costs, from tehir summer 07 purchases). But they’re frame houses, on 25×125 ish lots. They do both seem to have nicer kitchens. The rest of the (vagely) comp listings are in the $800k ballpark.
In RV, if you could transfer the larger lot, too (but assuming that it isn’t an extra buildable lot–it’s almost a double-lot at standard 125′ depth), I think it would move in the $750-850 range, depending on the exact block. So, more like $4200/month.
again, you do gotta remember that Roscoe Village ain’t for everyone. I would far rather live at this address than deal with the congestion of Western/Lane Tech/the Cubs, and I’m very familiar with both areas.
Milwaukee has its own unique charm, perhaps best symbolized by the wonderful funkiness that is the Two Way Lounge. Where else does the price of the same beer vary all night, from dirt cheap to just cheap?
“I don’t think tht Pulaski should be the diving line; I think that Western should be”
Yeah, but this house is west of Western. Which is why I picked Pulaski.
“it’s not above average in the realm of houses or even of livable units compared here on CC”
But (I think) it’s also below the average price of houses (certainly) and livable units (probably) compared here on the CC. So one shouldn’t expect it to be “above average” if it’s a “below average” house among its comps.
“I’ll agree that’s its not entry level per say”
Which was my point–this just isn’t an entry level home in Chicago, notwithstanding that you wouldn’t consider it more than that.
“What percentage of o/o homes east of Pulaski are condos? “
“I would say 65%. guess. would be interesting to know.”
I would say that might be low for the ‘hoods listed below. The 2010 census will likely be the best source for that data.
Here are the detached closings for 8/1 to 8/15 for the same areas I listed the attached sales above:
8-1-XX to 8/15/XX Closings 2007-2008-2009***1YR ***2YR
Lincoln Square 6- 3 – 4***33.3% ***-33.3%
North Center 4- 16 – 4***-75.0%***0.0%
Lake View 13- 8 – 7***-12.5%***-46.2%
Lincoln Park 9- 9 – 3***-66.7%***-66.7%
Near North 1- 2 – 1***-50.0%***0.0%
Logan Square 9- 8 – 3***-62.5%***-66.7%
West Town 8- 9 – 7***-22.2%***-12.5%
Near West Side 1- 1 – 2***100.0%***100.0%
Loop 0- 0 – 0***0.0%***0.0%
Near South Side 0- 0 – 0***0.0%***0.0%
As far as the distribution of att/det closings in the stated timeframe, here are the attached sales as a % of the total of att & det sales:
Lincoln Square 82%
North Center 83%
Lake View 89%
Lincoln Park 93%
Near North 99%
Logan Square 83%
West Town 84%
Near West Side 95%
Loop 100%
Near South Side 100%
This doesn’t equal the % of o/o condos since I would expect the numbers to be inflated due to more rental condos than rental detached houses, as well as higher turnover in condos.
Exactly, RV is way over priced and is poised to fall soon; I predict that sales will trickle to almost nothing in the winter and then capitulation next spring.
HD:
What is so ridiculous about my comment? People make those choices everyday. You either make enough to live in certain areas or you don’t. Just because you can’t afford the market price does not mean it is over priced.
I would love to move to Manhattan or Brooklyn. However, there is no way in hell I am going pay $2 million for a condo which is probably what a similar unit in an equally desirable hood woudl cost me relative to the place I had here in Chicago when I was doing the condo thing. It doesn’t mean that NY is over priced, it just means I can’t afford to live there and have the same lifestyel afforded to me in Chicago.
No one is saying that homes aren’t over priced in many areas, however, I just think some folks are being a little too optimistic about how cheap real estate is going to get. Chicago is not a cheap place and it probably never will be.
Is $525k too much for this place? Who knows. I certainly wouldn’t expect them to be flipping it anytime soon. However, a buyer and a seller agreed upon a price. An independent appraiser valued the home. A bank underwriter and probably a second desk review appraiser all agreed that the home is worth $525k.
Given the lending environment I deal with on a daily basis, I would say there is enough evidence to suggest the price is fair. Banks are not playing games anymore and deals are falling out left and right when buyers are trying to make offers on places that aren’t remotely worth the agreed upon price. Not too mention all the funny money financing is gone and buyers are more qualified than ever.
G, not going to argue with your data. Never said sales volume was up. Everyone knows it is down. It will be awhile before the transaction volume is back to bubble years. However, people are still buying and purchase business is strong right now.
Detached sales are so low because they generally require jumbos which as Russ has pointed out are exceedingly difficult to obtain. This 2434 N. Sawyer could be purchased without the need for a jumbo and that’s probably one of the reasons why it sold so quickly once the price was reduced.
“Here are the detached closings for 8/1 to 8/15 for the same areas I listed the attached sales above:”
🙂
Russ, it’s ridiculous because it sounds so arrogant. Make more money or get a better job, because you’re too poor to afford real estate. That’s what people were saying in 2004 on the way up. If you ever questioned the value of real estate then you were the foolish one, not the moron buying his sfh with an IO jumbo balloon using 45% of his gross income to pay the mortgage. That moron’s house is now worth less than his purchase price and now that his bonus has been reduced financially he’s stretched really thin.
There are a whole bunch of reasons why real estate is expensive right now and me not making enough money isn’t part of it. The lack of lending standards from 2000-2009 is a huge part of it, exotic financing helped drive sfh’s into Jumbo territory across the board had a lot to do with it.
Volume will not return until prices fall. And they will. The stats G posted are frightening and horrifying. The RE business has been decimated. It’s too bad that they don’t recognize that by driving prices to high they did it to themselves.
I get the general sense that many on this board underestimte the number of high earners in the city. I know the topic has been discussed here before, but the comments that a $525K house isn’t affordable is comical. I fully understand that there is a subset of people driving leased Land Rovers, upside down in mortgages and just barely hanging on to the appearance of wealth. On the other hand, I’m always amazed when I learn how much people earn. Just think of all the attorneys, investment bankers, private equity firms, asset managers/hedge funds, CPG firms. Not to mention entreprnuers, sales people, trust fund babies, old money etc. My guess is that are thoudsands upon thousands of people in the Chicago area who could afford a $525K house IN ADDITION to their current housing costs. I transitioned from an industry of limited upside potential to one where it is virtually unlimited. I used to be like many people on this board and couldn’t fathom how someone could justify or afford a $1,000/month car payment or a $1MM house. Now, it doesn’t faze me one bit. This is a big city with a diverse economy with a lot of high earners and wealthy families. The value of something is what one person is willing to pay for it and as long as there are deep pockets in the city, there will be transactions that make us scratch our head. There may be unreasonable expectations of price among many sellers, but if they aren’t in a distressed situation, who are they hurting by trying to find that one perfect buyer willing to pay top dollar? I don’t begrudge them one bit. If I disagree with their price, my best course of action is to not transact with them.
Marko this is my favorite quote to address your theory of wealth:
“And exactly as the developers of the tropical wonderlands of Florida had learned that there were more land- speculators able and willing to gamble in houses intended for the polo- playing class than there were members of this class, so also those who carved out playgrounds for the rich in North Carolina or elsewhere learned to their ultimate sorrow that the rich could not play everywhere at once. And once more the downfall of their bright hopes had financial repercussions, as bankrupt developments led to the closing of bank after bank.” – Only Yesterday: An Informal History of the 1920’s by Frederick Lewis Allen
What this means is that there aren’t enough wealthy to buy everywhere at once yet so much seems like it’s priced at the $150k+ a year crowd, and we know that’s less than 1 in 5 households in the entire Chicagoland area. Of course we know there are wealthy out there and that spending $1,000 a month on a car happens routinely, but apparently it doesn’t happen often enough, because if it did, the worldwide car and housing depression wouldn’t be happening like it is right now.
A $1,000,000 house was often nothing more than a $200,000 down payment and an $800,000 IO jumbo ARM balloon mortgage from WaMu or National City.
HD: I just call it like I see it. People either make more money or move to an area they can afford. Nothing arrogant about it. No more arrogant than when the renter mafia laments about how smart they were to not buy (more like luck in most cases) because they are all knowing and make light of folks trying to sell their places.
Marko: Everyone is broke. You didn’t get the memo? Those firms you speak of really don’t pay that much money. It is all pretend. The only people allowed to make that much money are a handful of surgeons. Wives don’t work either.
Oh yeah, i’m sorry guys, I’m all wrong. There is no real estate depression, G’s stats above are made up; YOY volume is down 62% in Logan and that has nothing to do with prices…you’re right, it must be consumer sentiment or something. $525k for a older house in a marginal neighborhood is a steal. Better buy now or be priced out forever! Just like Robert Toll said, children will live with their parents until they’re 40 to save for a down payment for a home because it’s going to be so expensive.
“G, not going to argue with your data. Never said sales volume was up. Everyone knows it is down. It will be awhile before the transaction volume is back to bubble years. However, people are still buying and purchase business is strong right now.”
Russ, you sure aren’t calling that like you have seen the data.
Purchase business is strong? Return to the bubble levels?
“No way the bottom is in for any market segment until sales volume returns.”
Serious question: returns to what?
I read an article in the WSJ today that appraisers are really taking it on the chin with the new appraiser code of ethics or whatever its called. Appraisers really expanding their range of coverage to include areas outside their familiarity.
That being said an appraiser, a buyer and a seller did agree to transact at this price. For this point in time it is a valid comp.
Not that I would ever buy in this hood but if this house was in another hood to my liking (also non-green zone) I think it would be fair (the yard is pretty awesome). So different strokes for different folks. No way would I live in Logan Square so perhaps am biased. And yea it is a marginal neighborhood.
MADFLY: returns from the abyss…
Volume figures from what year would represent out of the “abyss”?
Comparing 2009 to 2007-8 and ooohing/ahhhing doesn’t make sense, does it?
It makes perfect sense. Unless the current sales volume (or lack thereof) is the new normal; then ooohhh/ahhhh – the RE industrial complex is so screwed.
“Comparing 2009 to 2007-8 and ooohing/ahhhing doesn’t make sense, does it?”
“It makes perfect sense. Unless the current sales volume (or lack thereof) is the new normal; then ooohhh/ahhhh – the RE industrial complex is so screwed.”
Um, how ’bout none of the last 5 years is “normal”? Certainly possible, no?
I have posted the numbers many times that show sales volumes in some CC ‘hoods have hit 20-year lows. There is no doubt that market supply has increased in that time in every one of those same ‘hoods, meaning that sales as a % of supply might likely be at their lowest levels ever.
If you believe the bubble began in 2000, then we should be looking at 1999 volume figures as the norm. And when volume hits those figures, that would be an indication of the bottom.
I doubt that would take 5-7 years as some have suggested.
Did anyone listen to Robert Shiller this morning on CNBC. I know how HD and the gang thinks of him as a God.
That ignores the increase in market supply (new condos & conversions.) “Normal” sales volume has to be higher than pre-bubble levels due to the sharp rise in market supply.
My new normal question was rhetorical. If sellers win the standoff then yes, this will be the new normal. Few sales, low volume, stable pricing. If buyers win the expect lower pricing and higher sales. An awful lot of people drank the koolaid to their own detriment bw 2000-2006 thinking that was the new normal.
““Normal” sales volume has to be higher than pre-bubble levels due to the sharp rise in market supply.”
You are forgetting the factor of carrying costs and when most of these volume developer’s construction loans come due. If their loans aren’t due for another 5 years, theorhetically they can slowly sell their inventory before that time is up without a price drop.
Sellers cannot win the current standoff because some will always have to sell. The 3 D’s aren’t on hold: death, divorce and debt. Toss job mobility and babies into the mix, too.
Sonies, I am talking about market supply. That would be the total number of condos in the area. Not inventory, or what is for sale (listed or shadow.)
It is obvious to me that current sales volumes are in no way “normal.” They will only return to “normal” through price reductions (real or nominal.)
Marko to be exact there are 172,000 people in the Chicago area that have a networth in excess of $1,000,000.00 My guess is they can afford taht 525k house.
Marko on August 18th, 2009 at 4:11 pm
My guess is that are thoudsands upon thousands of people in the Chicago area who could afford a $525K house
But in 2008 there were close to 200,000……. do you see a trend?
“the RE industrial complex is so screwed.”
Maybe but they’re trying to hold on by retooling to apartment rentals. Thats what JoeyZ and many RE agents are up to these days: making the move to apartment rentals because they’re “hot”.
My guess is the apartment finding/advertising business pays a lot less than being a new or used home salesperson during the boom and the shakeout will continue.
I wouldn’t mind renting in a luxury building but the problem is they are pricing these things at or higher than Chicago luxury rentals pre-economic bust. LOL at that.
$1300 for a ‘luxury’ studio..unless its got everything (parking, indoor pool, doorman, cable+inet) no thanks. I like $700 better and I’ll keep getting my amenities a la carte for far less.
Renter mafia, are you guys serious calling Russ arrogant? You guys are the most arrogant people around. You’re constantly reveling in other peoples’ financial misery and calling everyone a moron. Additionally, regardless of relevance, HD is always telling us all about the fancy lawyering going on in the household.
Russ is just speaking from his perspective and experience and providing useful insight IMO. Much better than the sensational, unsubstantiated garbage you so often throw around. You’re obviously entitled to an opinion, but its lame to accuse arrogance and wage class war on people who disagree with you.
Russ, thanks for the quality input
“You guys are the most arrogant people around.”
“its lame to accuse arrogance … on people who disagree with you.”
Fail.
Looking through some old Logan Square posts and saw this comment from 2009: “It’s a fair price if you don’t think Logan Square is going to backslide over the next couple of years. I’m not so sure about that.”
Find it amusing considering Logan Square has arguably improved more than any other neighborhood in the city over the past few years.
It’s baaaa-aaack!
Good time to revisit that “Logan Square backslide” from 2009?