Market Conditions: Are There Signs of a Turnaround in the South Loop?
Money Magazine is using the quick sale of a 3-bedroom townhouse at 1712 S. Indiana in July in the Kensington Park II development in the South Loop as an example of a sign of a “turnaround” in the real estate market.
It was with some trepidation that Stephanie Kim and her husband, Brendan, 40 and 42, put their Chicago townhouse on the market in June. While the place was in great shape, prices in their city were off 8% from 2010 — and of the 30 similar homes in the area listed the previous year, only nine had sold.
And yet there was an offer on the house almost immediately; the sale closed two months later at just $15,000 under the $650,000 asking price. “We thought it would take a lot longer to sell,” says Stephanie.
Nationwide, the U.S. housing market remains deep in the doldrums and economists expect prices to fall another 5% to 10% in many places. And yet some sellers, like the Kims, are seeing signs of a turnaround.
As buyers return, they’ll naturally grab places with shorter commutes and better schools and amenities.
The Kims’ townhouse, for example, was located in Chicago’s South Loop area, near Lake Michigan and museums. “Buyers are cherry-picking,” says Sharga. You won’t buck the larger market trend entirely, but once things are cranking in your favor, your home will pop first.
The Kims not only sold fast but they sold for $49,000 over the 2005 purchase price.
3-bedroom townhouses have been hot sellers all over the city this summer.
Does this sale really reflect a turnaround in the South Loop market?
When will home prices spring back? [Money Magazine, Sarah Max, September 15, 2011]
Berg Properties had the listing (the seller was an agent, however.) You can still see the interior pictures here.
1712 S. Indiana: 3 bedrooms, 3.5 baths, 2700 square feet, 2 car parking
- Sold in February 2005 for $585,000
- Originally listed in June 2011 for $650,000
- Sold in July 2011 for $634,000
- Assessments of $185 a month
- Taxes of $9664
- Central Air
- Bedroom #1: 15×16 (fourth floor)
- Bedroom #2: 11×13 (third floor)
- Bedroom #3: 11×13 (third floor)
- Family room: 13×14 (main floor)
“When will home prices spring back?”
Are they really asking this as if bubble pricing is the norm that will spring back? The “spring back” is the correction. And the SL as an example as a place to benefit “as buyets return”?
Near South condo/th closed in August:
2005 90
2006 214
2007 103
2008 113
2009 68
2010 61
2011 35
I’ve been somewhat surprised at how well townhomes have been doing in the South Loop. It’s not a recent phenomenon. And throughout the city well priced properties sell fast. There really is no reason why a property can’t sell in 90 days unless it’s a real POS trying to find the the proper price. I routinely see multiple offers on properties even in this environment. Anecdotally, we just sold a townhome in the south loop 3 times (lost the first 2 buyers who got weird on us) – on the third try we had 3 offers.
Anyway, I just posted on the inventory situation in the city: http://www.chicagonow.com/getting-real/2011/09/fewer-condos-to-choose-from-could-support-prices/ It’s really low for 2 – 3 bedroom condos. Now, as I say in the post, I don’t think prices are going to actually “spring back” but I do see price support – unless we go into the double dip recession. Then all bets are off.
Here is the data for the South Loop. The market there for condos is still terrible but the inventory situation is much better than it was. Check out those market times! http://lucidrealty.com/near_south_side_market.htm
Minor correction: that’s the data for the near south side, which includes the south loop.
Low mls inentory + high shadow inventory = prime knife-catching opportunities
“but I do see price support”
Just like you’ve seen the bottom…a couple of times?
LOL people looking to sell and move from the south loop better plan ahead 2.5 years in advance. who does that?
The south loop is hot! So hot that few want to touch it lest they get burned!
How the hell did they sell this for $50k over 2005 price?
“Just like you’ve seen the bottom…a couple of times?”
Yeah, I’m anxiously awaiting the final verdict on your prediction that prices would not bottom in 2011. So that I don’t have to go digging it up please refresh my memory regarding when we would actually know if you were correct. Was it that we would have at least one month in 2012 that was lower than the lowest month in 2011?
Gary, considering your first bottom call was after the fact, and your second was current, shouldn’t I be allowed the same?
I am flattered that you believe I should be held to a higher standard than chronic bottom callers such as you, though.
“I am flattered that you believe I should be held to a higher standard than chronic bottom callers such as you, though.”
How is it a higher standard? I’m just trying to hold you to the same standard: make a concrete prediction, the accuracy of which can be evaluated in less than a 10 year time horizon.
I do see some ‘price support’ among some properties that actually sell, and there are few. Not many though, in the areas I watch, there have been only one or two closings in the last week, and a handful more than that over the last month, the nicer units seem to be holding their price. It seems to be more of a seller’s lottery than a real market but it is what it is.
What a dull place. I’d never pay $600K plus for it. And I hate the location, but I know some people like the South Loop, so that’s just a matter of taste.
Still, for a place like this, I wouldn’t pay that much even if it were in a neighborhood I like. Not sure what the buyer was thinking.
“How is it a higher standard?”
You want me to place a date on a future event instead of after the fact, such as you did (incorrectly.)
“What a dull place. I’d never pay $600K plus for it. And I hate the location”
The development is pretty popular and units sell pretty quickly there. I’ve been inside several units. However, this one seems to have sold a little on the rich side given the finishes. 1730 S Indiana at 3335 sq ft sold in 29 days for 770K and another large townhome there just went under contract quickly.
I would actually buy a south loop townhome in a heartbeat but we have a thing against 4 level townhomes.
“So that I don’t have to go digging it up please refresh my memory regarding when we would actually know if you were correct. Was it that we would have at least one month in 2012 that was lower than the lowest month in 2011?”
Sounds fair to me. Anyone calling the bottom should be OK with this, and anyone arguing as well.
“You want me to place a date on a future event instead of after the fact, such as you did (incorrectly.)”
Come on, you know better than that. It’s much easier to predict that we haven’t hit bottom than to predict that we have. The former prediction can never be proven wrong unless you put a time frame on it! Very clever position for you to take. All I’m asking is that you put some very broad time frame on it, which you finally did in a December 29 post when you said “it sure won’t take past 2012 to see that you are wrong and I was correct, once again.” Translated that means that there will be a month in 2012 that will be lower than the lowest month of 2011. It was like pulling teeth to get that much of concrete prediction from you.
“Are they really asking this as if bubble pricing is the norm that will spring back? The “spring back” is the correction. And the SL as an example as a place to benefit “as buyets return”?”
Yes. The media doesn’t really get it that the bubble prices are NOT coming back for a long, long time (decades.)
And why would we want it to? I understand people are underwater but the best thing that can happen to housing is for it to become more affordable for buyers.
“I would actually buy a south loop townhome in a heartbeat but we have a thing against 4 level townhomes.”
What about a 3 level, quasi-SFH, like below (or 58 w 15th)?
http://www.redfin.com/IL/Chicago/1337-S-Federal-St-60605/home/14084848
“What about a 3 level, quasi-SFH, like below (or 58 w 15th)?”
Well, those are good suggestions. I especially like the one on Federal. But it’s the damn wife problem. Gotta have a family room on the same level as the kitchen. And she doesn’t like Dearborn Park (too smushed together), though I think it’s great. That’s why we’re looking at SFHs in West Town. BTW, 1848 W Erie that Joe Z posted a link to the other day is under contract already.
” The media doesn’t really get it that the bubble prices are NOT coming back for a long, long time (decades.)”
Wait. You think that the bubble prices will be back in *real* terms? Ever? Seriously?
I don’t give two shi… nickels about nominal prices except for their potential to “fix” the underwater mortgage situation (and, yes, there would almost certainly be a lot of negqative unintended consequences to go with it). But does anyone who gets both TVM and the resi-RE market *really* expect (so, excluding anyone talking their book) that we’ll see 2006 prices in *real* terms again, ever?
History will eventually repeat itself anon.
I call 2065 as the next ‘top’ in real terms. West Garfield Park is gonna be HOT!
Mark it down.
anon (tfo): “But does anyone who gets both TVM and the resi-RE market *really* expect (so, excluding anyone talking their book) that we’ll see 2006 prices in *real* terms again, ever?”
I read an article the other day about a new mortgage relief program that would give up to 25K to troubled mortgages for certain groups. 300-some million if I remember right.
My point is that I’ve been jaded enough by the power of lobbyists to think that they might pull off another perfect storm of laws, rules and subsidies to allow this to happen again. Never say never…I’m not sure most Americans have learned anything from this.
I like SL and looking to buy there. The part I like, the museum park in my opinion is and will be a prime location. That being said most units I have been tracking have done massive to moderate price reductions or been rented out as they could not sell at asking so I really don’t buy that the market is recovering.
yep.. If the time frame is ‘ever’, i’ll always take a few of those.
And tft… They have no choice but to pull out the perfect shit storm… Like the song says… ‘the show must go on’
The people will demand action!! Then bread and gladiators..
“yep.. If the time frame is ‘ever’, i’ll always take a few of those. ”
“ever”, to me, is “my lifetime”. I don’t much care what happens 100 years from now, as I’ll have long been wormfood, as will have been the counterparty on that bet.
So, want to wager on Tulip Bulbs exceeding their February 1637 peak price in real terms, ever?
Will probably take a generation. This one was a whopper, so you need people to forgot/die off.
“But does anyone who gets both TVM and the resi-RE market *really* expect (so, excluding anyone talking their book) that we’ll see 2006 prices in *real* terms again, ever?”
It is certain. Lessons learned only apply to the people who are around to experience it. The next generation or the one after will most certainly make the same mistakes, humans have been doing it for an eternity. For whatever reason greed has this hysteric appeal and there will always be those that say the history books don’t matter and this is a “new economy”.
anon: “So, want to wager on Tulip Bulbs exceeding their February 1637 peak price in real terms, ever?”
Well, come on now. Even though I shudder to say it, clio is right on one thing: people always need a place to live. Tulips…not so much. So activists and lobbyists can convince people at large and the government they *need* to own RE due to the psychological underpinnings of the word “home”.
Tulips were a fad. Home is forever. And people will exploit that fact.
I honestly hadn’t given much thought to timeframe on the next boom. You might be right that it’ll happen after I’m in the ground.
“Well, come on now. Even though I shudder to say it, clio is right on one thing: people always need a place to live.”
If that is true, why was the housing bubble of the aughts unprecedented?
I am certainly not saying that real $ prices will never reach the same heights *anywhere* for *any* property, but the breadth and depth of the bubble (remember, it was *global*) ain’t coming back
Is Museum Park the 2000’s version of the 1960’s Sandburg Village?
ya know… Sometimes i misunderstand things cause a da language down here. But we are in orchid season and yesterday they were showing special orchids that cost over 2k.
Of course i may have misunderstood.
And don’t get saucy with me, bernaisse. You are the one who offered a bet that can’t be lost. I’ll let you out.
I truly think it was a credit event and will be very hard to repeat. At some point, in the not so near future, they will have to re-institute some sort of Glass-Steagal, or the banking problem may repeat indefinitely.
“Will probably take a generation. This one was a whopper, so you need people to forgot/die off.”
Not sure. It has barely been a decade after the dot.com bust and Bay area is again blooming with start-ups that sell smoke and people are still investing all they have in stocks.
There will be another bubble. People have short memories. It will probably take 15-20 years to materialize, but it will happen. Always does.
Older people will be cautious saying “I remember when…” and younger people will say “it is different this time”. Wash, rinse, repeat.
The vast majority of people won’t know we are at the bottom until the bottom has long passed. An equal number probably won’t know we are in another bubble until the bubble is ready to pop again. Very few people will have any real tangible gains not attributable to dumb luck predicting the bottom or the bursting. Everyone else will swear they knew and predicted it, but have nothing to show for their brilliant future telling abilities.
“And don’t get saucy with me, bernaisse. You are the one who offered a bet that can’t be lost. I’ll let you out.”
Yeah, you can pry the money from my cold, dead, hand.
And, just for you, I’ll make sure I get buried with a Jim Baker hundo, that’ll easily be worth $1mm+ (in nominal terms!) by that time, so it’ll be worth paying for the exhumation.
“Everyone else will swear they knew and predicted it, but have nothing to show for their brilliant future telling abilities.”
Actually, the mantra this time around was “nobody saw it coming”.
And given how difficult it has been for the common man to short housing RMBS, I think the prize to show for their brilliant future telling abilities is not having an underwater home.
I don’t think it is just the south loop. I told you guys, I was going to list my lakeview condo for 7% less than I paid for it in 2009 and, before it went on the MLS I got a cash offer close to asking (5k) within hours of me telling the realtor to list it. There are still a LOT of buyers out there. Price your units right and they will sell.
HD.. You can make a lil album, of all your bearish comments from years past, and show ’em to everyone at dinner parties.
“There will be another bubble.”
OF COURSE there will be another bubble. Absolutely no doubt. And there WILL be another housing bubble.
BUT, the question is will it be big enough to match the size and scope of the past bubble in *REAL* terms. Not if, not when, but how big?
Using Case-Shiller and CPI (yeah, yeah, I understand the limitations), Chicago has to go up over 13% just to be *flat* with Jan-00 in real dollar terms. And up 63.8% to hit the (Sep-06) peak in real terms. Crazy resiliant DC needs to go up 53% to get back to their real dollar peak. Vegas has to go up *175%*.
HD, not buying for most people was more of dumb luck. The vast majority of non-homeowners were usually not in a position (career, financially, couldn’t afford where they wanted to live, etc) to buy prior to the bubble popping.
Not buying Pets.com because you didn’t have money to invest does not mean your good fortune of missing the bubble popping was due to talent.
There may not be a housing bubble on the same national scale, but a bubble will occur some where.
Russ.. In 2006, my dog got an application for a credit card. He probably could have gotten a 3 percent down loan, payable in biscuits, for 700k.
Clio is right that a good place at a reasonable price sells very quickly right now.
This past weekend I looked at 10 places with an agent. On Wednesday I call back about one of them. Agent calls other agent – went under contract earlier in the day. The other nine? Still on the market, nobody cares about them.
Two months ago I found another place that looked interesting and had a good price. Under contract in 5 days, before I had a chance to get over and look at it.
The vast majority of places are not worth buying anywhere near the asking price. But when something good comes along it is sold quickly.
Gringo, probably could have. I think Aurora Loan Servicing (Lehman) had that program.
“BUT, the question is will it be big enough to match the size and scope of the past bubble in *REAL* terms. Not if, not when, but how big?”
Agree with anon here that when you look at historical housing prices for the US the boom from 2000-06 was truly unprecedented. The only era that might have come close was the increase during and after WWII, which was the result of very specific policies unlikely to ever be repeated. Throughout a lot of recent increases what you see is brief increases in prices over 3 years or so, and then nominal prices stagnate (and so real prices decline slightly) for several years. I’d be very surprised if we go back to 2006 prices in real terms during our lifetimes.
Gary, why are you leaving University Village?
“Gary, why are you leaving University Village?”
Would rather not. Love it here. If a large townhome came along priced at the market I would snap it up immediately. But there are no large townhomes for sale here now (except one way overpriced) and mortgage rates are so low and prices have come down so much that I really want to buy right now. So I’m looking in that West Town area for a SFH. Optimistic I will find something.
“The vast majority of people won’t know we are at the bottom until the bottom has long passed. An equal number probably won’t know we are in another bubble until the bubble is ready to pop again. Very few people will have any real tangible gains not attributable to dumb luck predicting the bottom or the bursting. Everyone else will swear they knew and predicted it, but have nothing to show for their brilliant future telling abilities.”
100% correct.
Schools Gary, schools. That issue keeps coming up. It’s eiteher pay $6,000 in taxes and $6,000 for a mediocre private catholic school or pay $9,000 and get a great public school. WEst town is a great place, but there you’re paying $10,000 in taxes and $6,000 in schools and you better hope that real estate volume picks up over the next 10 years to support that lifestyle..
“Optimistic I will find something.”
Good luck Gary! Maybe a larger townhouse will come on the market in UV soon though.
It wasn’t dumb luck. The dummies had no luck and bought. Plenty of people were priced out. Not everyone got caught up in the mania. Few I think predicted it would cause a worldwide global crisis, but believe me, by 2006, 2007, 2008, the market was attracting the worst of subprime buyers; believe me, I know this, because I was doing their closings. I think a lot of people knew by that point that housing was a bubble, however, because no one had lived thorugh one so extensive, they failed to recognize the downfall. Hell, even the analysts were claiming it was a permanent plateau, and no declines could happen, which to me at least puts the possibility of price declines on the table.
“It’s eiteher pay $6,000 in taxes and $6,000 for a mediocre private catholic school or pay $9,000 and get a great public school. WEst town is a great place, but there you’re paying $10,000 in taxes and $6,000 in schools”
If you want the great public schools you have to pay an extra $100 – 200K for the property as well. However, in our case schools no longer matter and they don’t seem to matter that much for the other buyers we’re competing against there.
I don’t understand how the analysts actually believed the market would plateau. Did they think you could just build new construction indefinitely? It’s mind boggling. I asking back in 2003, when my parents purchased a pre-construction UV town home, how they were going to expect to find all the people to live in the new construction.
“It wasn’t dumb luck. The dummies had no luck and bought.”
Sure it was for many. If you had 20% down in 2003, I bet you would have bought.
You can say that smart people knew not to buy.
But you can’t say that people that didn’t buy were smart. Some just couldn’t afford to.
“I don’t understand how the analysts actually believed the market would plateau.”
Do you really think “analysts” believe what they write?
“Few I think predicted it would cause a worldwide global crisis”
Bob’s cited it before, too:
Economist, Jun 16th 2005:
“The whole world economy is at risk. The IMF has warned that, just as the upswing in house prices has been a global phenomenon, so any downturn is likely to be synchronised, and thus the effects of it will be shared widely. The housing boom was fun while it lasted, but the biggest increase in wealth in history was largely an illusion.”
http://www.economist.com/node/4079458
So, if by few, you mean the ~1.6 million subscribers to the Economist, yeah, just a “few”.
“Do you really think “analysts” believe what they write?”
Only what they write in internal emails:
“Merrill Lynch wanted to keep recommendations high for the following companies, among others, because of its own vested interest in their success. These records show the disparity between information being circulated among the analysts and advice being given to investors.
Internet Capital Group (ICGE)
E-mail: October 5, 2000 – “Going to 5?” (strong sell); October 6, 2000 – “No helpful news to relate, I’m afraid. This has been a disaster- there really is no floor to the stock.”
Investor advice: October 5, 2000 – 2-1 rating (buy to strong buy)
excite@home (ATHM)
E-mail: June 3, 2000 – “ATHM is such a piece of crap!”
Investor advice: June 3, 2000 – 2-1 rating (buy to strong buy)
Lifeminders (LFMN)
E-mail: December 4, 2000 – “I can’t believe what a POS that thing is.”
Investor advice: December 4, 2000 – 2-1 rating (buy to strong buy)”
http://www.lawyershop.com/practice-areas/criminal-law/white-collar-crimes/securities-fraud/lawsuits/merrill-lynch
Well, in their defense, they are telling YOU to buy, not them. After all, they need someone to sell their shares to.
Priced out was not an option by 2008. Hence the deveopment of affordability products. 100pc zero down was the norm. That excuse is not valid.
As much as I smugly look down on people who financed 100%, they are probably the smartest of the bunch seeing as they can just walk away without losing anything. It still makes me angry that any assistance would go to people who financed more than 90%.
“Priced out was not an option by 2008”
Well, there is technically priced out and there is mentally priced out. Believe it or not, not every person was willing to take on 100% financing, even if it was offered to them. Some people actually new better.
HD,
Why didn’t you buy in 2003? The bubble had barely even started then. There was no bursting to be predicted then.
“jenny -As much as I smugly look down on people who financed 100%, they are probably the smartest of the bunch seeing as they can just walk away without losing anything. It still makes me angry that any assistance would go to people who financed more than 90%.”
As someone who put 50% down, I can’t agree more. I’ve lost 30 percent of my investment though I will never qualify for any kind of bailout b/c I’m not in default or underwater. I’m responsible, which to this adminstration = rich, despite having come from a very humble upbringing. I wish I could get bailed out or walk away…Instead, my taxes will go up to support those who do. Never again will I spend my own $$$. I’ll leverage increadibly so and then get bailed out.
the guy who I applaud, is the guy who took the huge punt with nothin down… He’s my odol.
I wasn’t employed full time until the end of 2003. Bubble started in 1997-1999, arguments for any of those years are good.
“chukdotcom on September 16th, 2011 at 12:52 pm
HD,
Why didn’t you buy in 2003? The bubble had barely even started then. There was no bursting to be predicted then.”
Jenny:
“As much as I smugly look down on people who financed 100%, they are probably the smartest of the bunch seeing as they can just walk away without losing anything. It still makes me angry that any assistance would go to people who financed more than 90%.”
I am the dumbest of them all. I bought with zero down near peak, and then paid off about 25% of the mortgage over the subsequent 5 years. Based on some recent comps, I may not even by underwater.
back to the topic, I like spending time in the south loop much more these days compared to the past so its no wonder properties are actually selling down there (at still steep discounts)
“I wasn’t employed full time until the end of 2003. Bubble started in 1997-1999, arguments for any of those years are good.”
So, in other words, it’s not that you were smart enough to not buy in 2003. You just couldn’t afford to. Like I said.
I guarantee if you were in the position you are now in 2003, you would have bought.
Don’t feel bad, Nat. Everytime I make the argument that paying down principal is not advantageous, the majority seem to think, what you did was the cats meow.
“You just couldn’t afford to. Like I said.”
Could not agree more. I was in grad school and in no position to buy so lucked out. My parents bought me a small 2/2 condo and I sold it after I moved in with my boy friend of the time (current husband) after renting it out for a few years and I still make profit on it even after the realtor fees. At the time buying was not a dumb thing to do.
I could afford to buy in 2004, but i didn’t.
BAM there goes your argument.
“chukdotcom on September 16th, 2011 at 2:19 pm
“I wasn’t employed full time until the end of 2003. Bubble started in 1997-1999, arguments for any of those years are good.”
So, in other words, it’s not that you were smart enough to not buy in 2003. You just couldn’t afford to. Like I said.
I guarantee if you were in the position you are now in 2003, you would have bought.”
“
i went to the closing table, as a buyer, several times since ’03.
“I could afford to buy in 2004, but i didn’t.”
Bullshit. You just recently said that you saved up enough in the last 2 years for a down payment. You didn’t have 20% down in 2004.
BAM you’re caught in a lie.
That’s a hell of a guarantee chuk. Once again, no idea what the hell you’re talking about. How many closing have you put together chuk? How many foreclosures have you prosecuted or defended? how many loan mediations have you been to. How many brokers have you represented? None, you sit in your underwear and day trade all day and make guarantees to me. What do you know about this financial mess before you read it on cnbc?
“I guarantee if you were in the position you are now in 2003, you would have bought.”
ONCE AGAIN YOU DON”T KNOW A GOD DAMN THING. AFFORDABILITY PRODUCTS chuk, those are all the loans that went bust, the option arms, the stated income loans, the teaser rates…..nearly anyone could afford to buy except for the complete degenerates with credit scores in teh 400’s. I know degenerates with scores in teh 500’s who owned multiple properties.
Your affordability argument is fucking stupid, you have no idea what the hell you’re talking about.
I know people who make $16,000 an hour who bought $100,000 homes and got cash bck at clsoing! with the teaser rates and ARMS they could easily afford the PITI, no money down either. This particular lady still lives there today and bought in 2007. This is a waste of time, I have discovery to propound, adios folks
“chukdotcom on September 16th, 2011 at 3:08 pm
“I could afford to buy in 2004, but i didn’t.”
Bullshit. You just recently said that you saved up enough in the last 2 years for a down payment. You didn’t have 20% down in 2004.
BAM you’re caught in a lie.”
$16.00 an hour not $16,000 an hour, sorry.
“I know people who make $16[] an hour who bought $100,000 homes ”
That’s 3.125x income, before any overtime. Totally reasonable.
“Don’t feel bad, Nat. Everytime I make the argument that paying down principal is not advantageous, the majority seem to think, what you did was the cats meow.”
You say it is not advantageous, from what perspective. I am sure you are talking about from a pure $$ perspective. But there are a lot of things to consider….some people want to clear up debt, some people know they will make more now that they will in 10 years, some people have a plan where they want to retire early and have the house paid of. Of course I realize there are other things that may be more adventageous to reach that goal (e.g. other investments), but pay down principal is an easy one that doesn’t require a lot of financial saavy. Owning a home….not just owning a loan at a bank….is much more emotional, its not just about money.
it is so much funnier to leave the story as 16k/hr and getting cash back at closing.
In all fairness to HD. Regardless of the fact he wears maxi- with wings, and thus, one can easily misconstrue HD’s position being one of fear. HD was, for as long as I can remember, fairly clear about his belief that prices were unsustainable. Very adamant about it as well.
“That’s a hell of a guarantee chuk. Once again, no idea what the hell you’re talking about. How many closing have you put together chuk? How many foreclosures have you prosecuted or defended? how many loan mediations have you been to.”
How many did you do in 2003? ZERO. Because the market was going UP. It is easy to see in hindsight. It is easy to hold off buying as the market goes down like it is now. It is MUCH harder to do when the market is going up. If you had a 1 year old and had saved up enough money, you would have bought a house. Period.
“What do you know about this financial mess before you read it on cnbc?”
I was the first owner of housingbubble.com . When do you think I got that URL?
“Your affordability argument is fucking stupid, you have no idea what the hell you’re talking about.”
What in the world are you rambling on about? I told you if you had 20% you would have bought. What affordability argument am I making?
You are full of shit. You did not have 20% down on a 300-400k place in 2003. PERIOD.
“HD was, for as long as I can remember, fairly clear about his belief that prices were unsustainable. Very adamant about it as well.”
Would he have said that in 2003?
onlookee.. Nay gave you part of the perspective. He gave away his options.
Not one argument, you make FOR paying down principal, can I not easily replicate with a simple bank account. I never go liquid to illiquid. There’s more to it, but i’d need to remember.
“I was the first owner of housingbubble.com . When do you think I got that URL?”
Um, 01-May-02? Just a guess.
see if u were a bear in 01.. This went too far in your face, before you were eventually correct, to ever say you were right.
“see if u were a bear in 01.. This went too far in your face, before you were eventually correct, to ever say you were right.”
Yes, but, if that was your call, renting thru the whole thing is at least a defensible decision. Shorting, not so much, but not going long, defensible.
i have no idea what rents were in 01. I would think in places like NYC,SF,you got hurt. Even Vegas, that’s been clobbered, where was it in 01 vs rent? But once rents were way under costs..that was bad. The quality of the loans that were written to get it there.. Just the kicker… Lucky to have gotten a chance to watch it unfold.
“I would think in places like NYC,SF,you got hurt. Even Vegas, that’s been clobbered, where was it in 01 vs rent?”
I used to follow the NYC market back then. You could get a 2/2 in Manhattan for 200k. Okay it might’ve been Inwood but today that same place up in Inwood is still probably 500k easy.
My Wife and I are considering purchasing a Chicago Condo, for the weekends, ect. We work and live an dworj in the suburbs, but enjoy the city. We like the South Loop and feel we can get more for our money. I would appreciate some opinions about buildings in the South Loop, or even perhaps sme completely different areas.
Thanks,
Steve
Bull and bear markets are all the same. I don’t care if its real estate, stocks, or beanie babies. In a bull market, it is easy to buy because prices are going up. In a bear market, it is easy to sit on the sidelines and wait because prices are going down. The smart people always do what is hard. How many people sold their places in 2006-7 and rented? Almost none.
We’ve discussed the “China bubble” here previously. Take a look at these photos of the recently constructed corporate headquarters of the Chinese state-owned company, Harbin Pharmaceuticals:
http://chovanec.wordpress.com/2011/09/09/apres-nous-le-deluge/
Thank you for that link…..
wow, the harbin building is so nuts. sell harbin
Interesting article that further adds to the confusion of pricing real estate:
http://www.nytimes.com/2011/09/17/your-money/decoding-the-wide-variations-in-house-appraisals.html?_r=1&pagewanted=2
I would have a hard time buying real estate now, unless it was priced below renting. Plus to me, the difficulty of selling if circumstances change would be the primary reason for not buying in this real estate climate.
“How many people sold their places in 2006-7 and rented? Almost none.”
Some did Chuk. One of the well known housing economists (I think he was at UCLA at the time)- said it was crazy and sold and rented in 2006. Although a year ago he bought again and everyone was saying that must mean it was the bottom. ha!
I sold in 2003 and never bought again because it was simply too insane – in both the Bay Area and also Chicago (as I lived in both cities). I used to post on the old Wall Street Journal housing forum and even the Craigslist housing forums in 2004 and 2005 that it was going to crash badly. You wouldn’t believe the attacks I got back then.
I’m still on the sidelines because it’s still cheaper for me to rent and I don’t know where I’m going to be in the next 10 years (the sale in 2003 was due to a job transfer- so I learned my lesson about mobility that time.)
But- if you want to live in the suburbs or have an in-town in a building like The Sterling in River North (where 2/2s were going for $250,000)- then there ARE deals out there. Interest rates are the lowest we will ever see. It’s a good time to buy for those with particular needs.
“My Wife and I are considering purchasing a Chicago Condo, for the weekends, ect. We work and live an dworj in the suburbs, but enjoy the city. We like the South Loop and feel we can get more for our money. I would appreciate some opinions about buildings in the South Loop, or even perhaps sme completely different areas.”
Steve #3: You should do the following:
1. Read the old posts on this site about buildings you’re interested in.
2. Get a really, really good real estate agent to walk you through the buildings and pros/cons of each.
3. Go in with your eyes open.
Also- there are plenty of deals in other parts of the city including River North and the West Loop- but the neighborhoods are very different so that’s just a buyers preference.
Also- Steve #3- your question is WAY too open ended. Do you have any idea how many high rises there are in just the South Loop alone?
You need to get yourself a good buyers agent.
“Some did Chuk.”
Yes, also known as “almost none”. Again, it was easy to buy, and most just bought and held. Market was going up, so “why sell?” was the mentality for most.
Fast forward to today, and you have the opposite. Market is going down, so “why buy?” says everyone. Well, for the same reason why they should have sold in 2007.
This is one of the reasons volume is so low. People were too greedy to sell in 2007, and they are too afraid to buy now. Markets are driven by fear and greed.
Steve,
What size are you looking for? 1/1? 2/1? I’ve done a ton of looking recently in the south loop.
“People were too greedy to sell in 2007, and they are too afraid to buy now. Markets are driven by fear and greed.”
The greed is definitely part of it. But it really comes down to:
1. The easy credit has gone away. Most can no longer get loans. They don’t have the credit scores or they don’t have the downpayment.
2. They’re afraid for their jobs. Most people are a layoff away from bankruptcy. So they’re not going to buy.
Oh- #3 reason- there are no longer “move up” buyers.
The lower end of the housing market is getting hammered. So anyone who bought the “starter” house/condo and who would normally be moving up to something bigger and more expensive with their home equity- now can no longer do that because they’re underwater on the first property. They’re stuck.
So the entire housing market is paralyzed. The starter home people can’t sell and move up. The middle people can’t move up to the executive homes (no buyers for them) and the executive home people (the baby boomers) who want to sell and downsize have to take a big hit to price it right to sell it- which many are reluctant to do.
Yes, forget about the people that can’t buy. Even those that can are reluctant to. That is the fear. Take a 350k property in 2003. That was an “easy” buy mentally for people in HD’s situation now. That place then went up to say 450k. Now you take that same place back down to 350k or 300k now, and it is much harder mentally to buy.
From my experience with friends and family some people just don’t know how to negotiate. This place looks like poor negotiating, hold out this place I highly doubt had multiple offers. Buyers get emotionally attached to a place. Doesn’t look like this person knows how to negotiate. Irresponsible/ignorant buyers and one sale alone does not mean the market is turning around. I live in the South Loop and I can tell you this. The Alderman does not care about cleaning up the South Loop, he’s more concerned about the West Loop. They are getting a new park, Target, Mariano’s, etc. THe alderman when elected didn’t win the South Loop, but won convincingly in the West Loop. Go figure!!! WHy would the South Loop and West loop have the same alderman. Second of all, Richard Daley has left the area and the police care very little for the area now. The area to live in now is Ravenswood!!!! Maybe you can rent Mayor Emmanuel’s house.(LOL)
Steve, we own in museum park and love it. We use our place as in town as well.
“The area to live in now is Ravenswood!!!!”
Aww Andrew as the mare’s lil’ dog. A rat terrier likely.
Ze: This is for you (from the WSJ). It sounds crazy down there!
“Brazil is booming amid a tectonic shift in global investing toward the developing world that has lifted its stock market, strengthened its currency and provided financing for new ports and World Cup soccer stadiums. But while foreign investment is mostly a good thing, there are downsides. The abundance of cash has helped fund riskier bank loans and fueled a potential real-estate bubble. By some measures, the Brazilian real is now the world’s most overvalued currency, and many local factories aren’t competitive in global markets. Daily life has become so expensive that movies, taxis and even a can of Coke cost more in São Paulo than in New York. Rio de Janeiro apartment prices have doubled since 2008, and office space in São Paulo is suddenly more expensive than Manhattan.”
Yeah, that will end well…
Brazil is starting to look like a dead ringer for Japan. However the finance minister are doing much more in terms of imposing regulations (according to economics article I read) so they might manage to avoid the fiasco.
Hi Sabrina,
Thank you for your response and consideration. We met with a realtor today and viewed a couple units within 1717 S. Prairie, simply because the prices within that particular building are less than other buildings within that neighborhood. I researched the building (some) and I’m aware of the past structural problems, but I wanted to see the building.
The building appears okay, and the two units we reviewed have nice views. I am thinking they’re all shells, and since I worked with a finishing carpenter years ago while attending school, and still carry that experience, it would be easy engough for me to add crown molding, built in cabinets, etc to our taste. (if permtted in the building) I spoke with a couple tenants and they appear upset, rightfully so with the special assessments, more.
As well, I was told the reserves are low. That is a concern. I guess there’s a reason why units are lower priced in 1717 S. Prairie.
The Realtor wasn’t knowledgeable about the areas, she really never asked us any questions. Very nice person, but I think we need to move on.
Regards,
Steve
miumiu,
Thank, yeah we have a friend that lives off Calumet. Do you feel the units are priced competively within the area?
Regards,
Steve
“Yeah, that will end well…”
why will things end? Are you predicting a nuclear holocaust?
Miu… The biggest diff is Japan had a strong, dedicated, intelligent work force that produced a strong value added economy. Brazil is basically the opposite in all those regards, but wow can it produce renewable resources w/out even trying. How goes commodity prices.. goes Brazil..
haha yeah regulations, that always helps…
“why will things end? Are you predicting a nuclear holocaust?”
OK, you are right, no bubbles ever pop. Brazil real estate will just keep going up and up.
“why will things end?”
This sounds healthy and sustainable…
http://www.cnsnews.com/news/article/credit-card-debt-may-threaten-brazils-boom
“He defaulted three times in four years.”
“even with interest rates on credit cards often topping 200 percent.”
“The interest rate on credit cards in Brazil’s financial hub of Sao Paulo averages 238 percent, according to a study conducted earlier this year by Fecomercio, a federation of commerce. That means carrying a balance of $1,000 for a year results in a $3,380 tab.”
yep, everything is awesome until its not
greeeeeeed!
“The Realtor wasn’t knowledgeable about the areas, she really never asked us any questions. Very nice person, but I think we need to move on.”
You need a realtor who KNOWS everything about the buildings. And yes- there ARE realtors who do know everything. Someone who is just going to take you to some units isn’t going to work.
A good realtor will already know which buildings have problems, which have a lot of renters, which had special assessments and when, which may have them coming down the pike, which have had decent re-sale value etc. etc.
Don’t settle for less. There are plenty of good realtors out there.
Lol.. you are talkin financial stuff. I thought you meant they would take away the beaches, mountains, and surf.. whew!!! made me nervous for a moment.
Where I am.. ain’t over yet! When I see it, i’ll let you know..
…and one can say.. that $1,000 balance is payin about 14% a mo (I once gave a specific number on cc, prior to your posted article) or $140 in interest. Cut his rate to a more 1st world 2% a month and his pmt goes to $20, freeing up $6,000 in purchasing power at the same interest pmt.
When wages can sustain purchasing to that level (and they will), the shift will move to lower int(and it will). For now, it’s best for the banks this way.
FYI.. as far as property goes…you ain’t gettin a bank loan for what prices are doing down here.. 70-100% cash. ALL the alto-luxo is 100%.
By the way- I’ve been getting “rah-rah” e-mails from various realtors now saying that the bottom has been reached and prices are now rising in several neighborhoods.
We’ve talked about how “hot” North Center is- but one of the realtors said that prices were up 13.8% year over year as of the end of August in that neighborhood (didn’t say if that was the average selling price or the median- and, of course, it all depends on the mix of things selling, right?)
They’ve also been talking about the hotness of Lakeview, Lincoln Park and River North/Streeterville.
Is anyone else seeing this? There have been a few more mega-mansions selling than in years past (over $4 million) which can easily skew the pricing data. But actual sales still seem near multi-decade lows.
“Is anyone else seeing this? There have been a few more mega-mansions selling than in years past (over $4 million) which can easily skew the pricing data. But actual sales still seem near multi-decade lows.”
Listed my blah 2/2/2 in lakeview and it sold within hours (didn’t even make it to the MLS). Bought it in 2009 (yeah, I know, a knifecatcher) for 390k and sold it for 360k (was asking 365k. I think that is amazing and a testament to what is going on in the market.
Why is that “amazing”?
2009 wasn’t the peak of the market and yet you’re STILL getting less than just 2 years ago. You still lost $40,000 to $50,000 (depending on your fees.) Now THAT is amazing- and should be scary to anyone with a short term time horizon even thinking of buying right now.
By the way- I don’t consider ANY property “sold” until it actually closes- and NOT just under contract because I’ve seen plenty of things fall apart at appraisal and at the mortgage stage.
Going under contract quickly right now doesn’t tell us much about the market. I saw a 2/2 in Logan Square that they tried to sell in 2009 but re-listed it recently and it went under contract in a week. Different price and literally NO competition in the market for what this was (which was unique.) There is low inventory. So I have seen some “decent” properties go under contract quickly- especially townhouses.
But sales continue to be at 15 to 20 year lows- the last I saw. That would indicate no change in the market whatsoever.
What most concerns me is another leg down on the stock market. That could really hurt this already fragile market even more.
Steve, what units did you view at 1717? Are you looking for a 1br or a 2br?
“2009 wasn’t the peak of the market and yet you’re STILL getting less than just 2 years ago. You still lost $40,000 to $50,000 (depending on your fees.) Now THAT is amazing”
Why is that amazing? His investment lost 10-13% in 2 years.
If you invested 390K in the stock market 2 months ago, you lost $40,000 to $50,000.
Housing is NOT the stock market chuk. So stop comparing the two. Can you liquidate your housing position in 1 second? I don’t think so.
So- yeah- the fact that we’re down another 13% (or more) in just the last 2 years- well past peak prices- when everyone thought that 2009 was “low” and some people bought thinking they were getting a deal (at least Clio acknowledges that he WAS a knifecatcher) – IS amazing.
Let this be a lesson to all buyers. You had better intend on living there for a long, long time to ride out this downward trend. When you add in transaction costs on top of it (7% or more for a “normal” buyer who isn’t a realtor)- you begin to see how long it will take to even break even.
Buy something to live in for a decade.
“Housing is NOT the stock market chuk. So stop comparing the two.”
Huh? I’m not allowed to compare two different investments? Meanwhile, that is all you do. You keep saying how renting is better than buying, because you have been able to invest your money elsewhere. Do you even realize that you are comparing the stock market to real estate market every time you say that?
“when everyone thought that 2009 was “low” and some people bought thinking they were getting a deal (at least Clio acknowledges that he WAS a knifecatcher) – IS amazing.”
Everyone? And the 2009 price may be a deal in 10 years. Just like your stocks that you bought 2 months ago and are down 10-13% now. In 10 years you may be happy you bought. If you had to sell them today, you’d be screwed just like clio.
“Buy something to live in for a decade.”
Well, you said you are willing to hold onto your stocks for a decade, so yet another way the two investments are similar.
When I bought the unit in 2009 everyone (and I mean everyone) said I got such a great deal (most of these units were going for the mid 400s – so buying it at 390 was a steal). Of course, the market went down a little since then BUT (and this is a big BUT), there has to be a bottom and I truly think we are at it. This is for many reasons:
1. the economy is not free-falling anymore and actually is SLOWLY improving
2. there are a LOT of sidelined buyers who REALLY want or need to buy and there is no good inventory out there (either stuff is overpriced, short sales or crap). Competition is non-existent – so if you have a good unit in a good location at a good price – it WILL sell.
3. Rents are going up – people are getting a little nervous about it. They sense the music stopping and need to find a chair before they are left out.
All of that being said, I truly believe we will be bouncing around the bottom for the next couple of years (so there is no huge need to go rush out and buy something – BUT if you find something you like, I highly doubt that prices are going to continue to drop).
“You keep saying how renting is better than buying, because you have been able to invest your money elsewhere. Do you even realize that you are comparing the stock market to real estate market every time you say that?”
No- I’m not. I’m not “comparing” the two. I simply rent for much cheaper than buying and I choose to put my money somewhere else. That is all there is to it. It’s my choice. If someone else wants to put all their money into their house- go for it. I choose not to.
They are not the same thing. As I’ve said again and again and again-housing is NOT an investment (unless you are a professional.)
Pulease.
Steve, some units are priced pretty well especially the short sales that pop up here and there. In general thought the units are more expensive than the average SL high rise, but I think it is fair given the buildings are very well managed. I think in this market you have a pretty good bargaining power as a buyer so you might want to low ball if you fins something you like. I think as long as it is within reason, there is no reason not to try it. Of course I don’t mean going 30% under the ask as that will be a waste of time : )
“Sonies:
haha yeah regulations, that always helps…”
No let’s completely deregulate because that worked wonders, didn’t it?
“No- I’m not. I’m not “comparing” the two. I simply rent for much cheaper than buying and I choose to put my money somewhere else. ”
Ha. In other words, you compared the two and decided the stock market would give you a better return. Of course you are comparing.
“Everyone? And the 2009 price may be a deal in 10 years. Just like your stocks that you bought 2 months ago and are down 10-13% now. In 10 years you may be happy you bought. If you had to sell them today, you’d be screwed just like clio.”
Yep- pretty much everyone thought 2009 prices were deals. They think 2011 prices are deals too. Maybe they will be.
The difference between stocks and real estate, chuk, is that real estate goes up only 1% to 3% on average in Chicago (for basically all of history.) And that is in a good market. So- sure- maybe someone who buys in 2009 will escape with a slight gain in 2019. Who knows. And who cares. You’re buying it to live in. You gotta live somewhere. Buy and enjoy life.
But don’t think you’re getting an “investment.”
I was just at my parents in the suburbs. They were busy cutting down massive amounts of branches from some trees in their yard when I arrived that have mold on them. Anyone else hear of this? The nursery told them that everyone in the area is coming in with the same affliction on this type of tree. There was simply too much rain earlier this summer and it is rotting the root systems, apparently. They cut off the infected branches- but they won’t know until next spring if the trees have been “saved.”
I bring this up because my father was like, “the joys of home ownership.”
Indeed. Lots of extra expenses people don’t even consider. You buy a house to LIVE in and that is all.
Chuk- not at all. I decided it was stupid and foolish to pay $2500 a month for my shelter when I could pay $1500 a month and use the $1000 a month for something else (vacations, investments, savings etc.)
That is all. I am not comparing them in the least because they are not the same thing.
By the way- the talk of eliminating the mortgage interest deduction is heating up again. It’s the second largest loop hole in the tax system. 75% of those who claim it live in just 3 metropolitan areas (LA, SF, NY).
“But don’t think you’re getting an “investment.””
If you’re living in it, no. Otherwise it absolutely is an investment (like clio’s place, which started this discussion). See, you are confused. You talk about price appreciation as being the only component of “investing” in real estate. Some people invest in real estate and make lots of money, even if prices don’t go up. Tell them it is not an “investment”.
“I am not comparing them in the least”
You just did again in the sentence before, and you don’t even realize it.
“Some people invest in real estate and make lots of money, even if prices don’t go up.”
95% of the people reading this site do so because they are trying to buy their primary residence. Some people are like Steve #3 who want an in-town- but it is a much smaller percentage. Then you have people like Clio and a few others who buy for investment- but they aren’t on the site to learn anything really.
The flippers/rehabbers buying in Avondale for $70,000 and reselling for $400,000 don’t read CribChatter. Believe me.
So- sure- they are making money. There have always been rehabbers/flippers. For decades. And there always will be.
This site isn’t designed for those people. I’m glad if they are here and check in- but it’s really about the person like Homedelete or the Groove or myself: people who simply want a place to live that they love that doesn’t break the bank.
3. Rents are going up – people are getting a little nervous about it. They sense the music stopping and need to find a chair before they are left out.
Clio- I would agree with you if there weren’t thousands of foreclosures in Chicago still coming down the pike. In fact, I just saw a property that I covered 2 years ago in the GZ (that was a short sale THEN) get re-listed again as a short sale recently. So- 2 years later and this property is STILL in distress and still hasn’t re-sold. When is the bank just going to take it?
Also- I know someone renting a condo where the landlord stopped paying over 2 years ago. The bank only filed the lis pendens foreclosure about 6 months ago. They’ll probably live there another 6 months to a year before the bank takes possession. So that is over 3 years and that doesn’t even include the time it will take for the bank to re-list it.
It’ll take years to work its way through all of these distress properties (yes- even in the GZ.) Those will keep pressure on prices for the considerable future.
I’m just here to do my part.
“Then you have people like Clio and a few others who buy for investment- but they aren’t on the site to learn anything really.”
That is not true – I actually learn a lot on this site. Real estate is very psychologically driven and because I don’t have easy access to regular everyday people/opinions, I find this site useful to use as a gauge of what people are thinking.
In terms of the rent vs buy argument, I think that buying your primary residence is a “must” (esp as a long term investment). The only time it doesn’t make sense is if you are going to move, start a family, or, if you are single and aren’t TOO particular on your living space – then renting is much better. In terms of an in-town (miumiu, chukdotcom, steve, etc.) I ABSOLUTELY 100% am convinced that renting is SO much better than buying. I don’t know why anyone would still be considering buying an in-town – it just doesn’t make sense.
“75% of those who claim it live in just 3 metropolitan areas (LA, SF, NY).”
That is very interesting. All 3 places have no shortage of both D’s and über-money (for whom it will make no diff).
Hi Clio,
We are looking for a Chicago Condo mainly because we plan to retire in 10 – 15 years and sell our home in the suburbs. Maybe now is a good time to negotiate a good price since home prices are down. I like the downtown area, probably a bit more than my wife.
We agreed to have a place here near family, and a small place somewhere warmer.
If/when we purchase we will rent the unit for a few years, until we are ready to spend more time downtown, or sell our current home.
We like many areas in Chicago. We need to find a knowledgeable realtor, but I understand too that Realtors want immediate buyers. We need a little time to become knowledgeable of the areas and buildings. So wee need a knowldedgeable/patient realtor.
This is an investment for us. I have many friends that are underwater after putting down a 100 – 200K on a home to see that equity vanish.
I am open minded, but I think there is more risk for downside than upside prices.
Met a lady that owned 5 Chicago Condo’s, (….. Long Story) but she just recently walked away from them. These stories are becoming more common in Illinois, with 10% unemployment and wages decreasing. The market will see many more short sales, foreclosures, ect.
Thank You,
Steve
Hi Chuk,
We looked a (2) 1 bedroom units. Of course the unit that is @ $107K and another 1 bedroom unit. I thought they’re just shells inside, but as mentioned, I can turn them into ‘litle gems’. It’s amazing how adding trimwork, built in cabinets, lighting can do. The views are nice looking North East, East over the lake.
The building is quiet, but the residents I spoke to don’t seem happy with the building (of course the special assessment wore them down). We recognize the units prices are lower, but so are the assessments.
Maybe we will look at 2 bedrooms next.
Mi Miumiu,
“Steve, some units are priced pretty well especially the short sales that pop up here and there. In general thought the units are more expensive than the average SL high rise, but I think it is fair given the buildings are very well managed. I think in this market you have a pretty good bargaining power as a buyer so you might want to low ball if you fins something you like. I think as long as it is within reason, there is no reason not to try it. Of course I don’t mean going 30% under the ask as that will be a waste of time : )”
I’ll have a look.
Thank you,
Steve
Steve:
Make sure you sign in as Steve #3 – when you post something. We already have another “Steve” on the site who has an in-town in River North. It gets too confusing with too many Steves. So just be Steve #3- and your posts will go through immediately.
Steve,
Email me at chicago.buyer@yahoo.com . I may have something you’d be interested in.
Chuk
Hi Sabrina,
I’ll do that..
Thanks,
Steve
Hi Chuk,
I’ll send an email.
Thx, Steve