Market Conditions: Chicago Case Shiller Hits New Lows
I normally don’t post about the Case Shiller home price index but since you were all talking about it and it’s THE big news on housing in the media, I thought you should have a place to discuss it.
In case you didn’t hear, Chicago’s housing market once again ranked among the worst in the nation in December.
I actually saw one article calling Chicago the weakest market in the nation which is pretty darn bad with Detroit, Phoenix and Las Vegas looming out there.
Either way- it’s not pretty.
- Single family homes down 30.1% from the peak
- Condos down 27.2% from the peak
You can read more data and see Gary’s excellent chart going back to 1987 for SFH and Condos on his blog here.
Gary admits he thought we had seen the bottom in the summer of 2009 but was obviously wrong.
The recent data shows that most gains over the last 10 years have been wiped out.
How low will we go?
With no talk of any further government stimulus, what will stop the price declines?
I know that many on this site think that my optimistic outlook on housing prices is based on the fact that I own many properties and can’t bear to see their values plummet – this is not true. I, probably more than anyone on this site, would LOVE to see prices plummet so that I can purchase more real estate investments. I am in it for the long haul (over 10 years) and , if I can make 5-6% net profit with realized appreciation in 10-15 years (at retirement) I would be happy. The problem is that I JUST DON’T SEE SIGNIFICANT PRICE DROPS in quality units/buildings/houses in nice areas (despite what the CSI is doing). I scour the MLS EVERY SINGLE DAY and still don’t find much in the way of bargains – and, when the rare bargain property arises, it already has multiple offers. This is why I just don’t trust these numbers and don’t put much faith in them – show me the individual quality properties in good areas at these deeply discounted prices and I will be one happy camper!!! Of course, you can’t because they don’t exist –
Case-Schiller can’t possibly catch all the different submarkets properly – so I think it’s not a useful tool.
For example 2BR condos in LP and Lakeview – disaster
3BR duplex downs in the same area – disaster
4 or 5BR new SFH’s in Lakeview – hot
Joe, I agree with you that CS is not a useful tool for real estate buyers – but I disagree with you about 2br in Lakeview being disasters. The tenants of my 2br/2ba in lakeview left and I was going to put it up for rent again and all of the agents in the area tell me that rents are SIGNIFICANTLY higher and increasing when compared with the past 3 years. They suggested I put it on for 500/month MORE than what I asked for the past 2 years (I had been getting 2000/month – which were my costs) so I did and it rented within 1 week (with multiple showings, etc.
This increase in renter interest may spur investor interest in these units…..
I’ve also been ready to buy for the last four years. Still haven’t bought, as the numbers for investment properties often don’t work. Low prices seem to be teasers, and often real estate listing agents find so many excuses to not show a property until, oops, it’s under contract. This hasn’t bothered me, since prices still seem to be going down.
It is so frickin’ hard to figure out who to believe in the media:
http://finance.yahoo.com/news/Toll-Brothers-posts-surprise-apf-2855933374.html;_ylt=AgQeM.P.TnQcJLZF5_tCIgK7YWsA;_ylu=X3oDMTE1bjM0Z3VnBHBvcwM5BHNlYwN0b3BTdG9yaWVzBHNsawN0b2xsYnJvdGhlcnM-?x=0&sec=topStories&pos=6&asset=&ccode=
I think everyone should just judge from themselves and their experience. You just cannot listen to the media or look at random sets of numbers/figures and trust them….
clio= “You just cannot listen to the media or look at random sets of numbers/figures and trust them….”
Yeah.
WSJ: Home Sales Data Doubted
Realtor Group May Have Overstated Number of Existing Houses Sold Since 2007
http://online.wsj.com/article/SB10001424052748704476604576158452087956150.html
Prices won’t stop dropping until they hit 1989. Ergh, sorry, I meant 1999. Or somewhere in between.
Prices will go up when demand goes up and that will be driven by 1) Higher rents (coming) 2) Increasing employment (already happening) and 3) People’s down payment funds increasing (I have no idea on this one)
BTW, just to clarify, our area sales numbers are not affected by this Core Logic data problem the way I read it. Almost all of the area sales are under one MLS system and we consistently report on that basis.
Not that I have any particular knowledge, but my prediction is that Chicago hits a CSI of 103 (give or take 3 or 4 points) by the end of 2011, and then stays around that number for a long time (through the recovery and next recession, so likely 6-8 years).
Price declines will be stopped by (1) slowly improving employment statistics; (2) a lot of the shadow inventory coming onto the market in 2011, as banks get tired of holding onto the properties and become more concerned about the properties deteoriating, which removes uncertainty going forward; and (3) similarly, potential sellers who have sat on their properties finally giving up hope and making significant price drops in 2011, which likewise removes uncertainty going forward.
So, in short, big crash in 2011, and then stabilization at low price. And, as Gregg Easterbrook would say, all predictions wrong or your money back.
What I think everyone underestimates is that a significant number of sellers can’t drop their price any more and they don’t have to move. They can’t drop their price because they’d have to bring money that they don’t have to closing and then they won’t have the down payment for the next place. So they choose to stay in the 2 bedroom condo with 2 kids or they rent it out. And they don’t want to screw up their credit with a short sale or foreclosure.
So the supply side of prices is supported by this immovable object.
@Gary “3) People’s down payment funds increasing (I have no idea on this one)”
Can you elaborate/clairify? Are you saying my ability to bring a bigger down payment would cause home prices to increase?
“So they choose to stay in the 2 bedroom condo with 2 kids or they rent it out. And they don’t want to screw up their credit with a short sale or foreclosure.”
well said
I think one contributor to the volatility in real estate is that it has become an investment tool whether homeowners like it or not. When mortgages are packaged as securities and traded as bonds everyone’s home within that package becomes an asset with a value judged by the market. The other issue are people driven by TV shows like “Flip this House”. When large amounts of properties are viewed as short term investments with huge potentials for profits, a bubble starts to form. This cycle will repeat itself when new generations are exposed to what they believe is a “new economy”. This sort of volatility happens with the stock market over and over, now housing has become a new tool for investors to profit from wild boom bust cycles.
“Can you elaborate/clairify? Are you saying my ability to bring a bigger down payment would cause home prices to increase?”
Maybe in your case it’s a matter of a bigger down payment. In many people’s case it’s a matter of a sufficient down payment – or any down payment. A lot of buyers are closed out of the market because of this. Once they have their down payment they become a source of demand.
gary and clio. The increase in economic activity over the past several months was nothing more than an unsustainable increase in gov’t spending. In 07 the people said they were tapped out and needed to restructure and the gov’t said like hell u will and went on a wild spending spree now leaving things worse than they were beforehand. It’s hard to look at down 30 percent and say the contraction didnt even occur yet, but that is the case. Gary your theory about supply side pricing is like the ostrich with the head in the sand hoping the lion can’t see him either. Just plain silly. For someone like me who sees the dollar got trashed vs developing nations, 30 percent is an understatement.
price always gets set on the margins gary. What u r really saying is these people have no way out and are sitting over the market capping prices if they ever get back up there. Problem is there are people ike me when i need to get out i will puke if i have to and that will set the price. U r kinda saying prices have to stay high because everyone is broke and in way over their heads. Not a fundamentally compelling bullish argument. Oh and i am long so hardly talkin up my book.
Why I think prices will keep going down.
1. Wages have been stagnant for a decade.
This may be why housing prices are back to 2001 levels already.
2. There is a huge excess of homes. Shadow inventory will kill the market.
3. There are about 80 million baby boomers. There are about 65 million gen x. There simply aren’t enough younger people to buy the 500k houses boomers are trying to sell to fund their retirement.
4. Gen x and Y are saddled with massive student loans to pay off since the colleges are paying their “bed-wetting, hippie liberal, douchebag professors” (Eric Cartman) way too much to teach theory, psychology, socioogy, arts, and enligsh, only to have their students not be able to ind a job other than starbucks.
“everyone underestimates”
Gary, is that what made you wrong on your last bottom call? It seems that you should worry more about your ability to estimate.
clio & Joe, you both need to learn what the CS measures unless you enjoy coming across as idiots.
What does this mean for the Spring buyer’s season? Here is a great LP 4 BR /3 BATH example that just came on the market.
http://www.redfin.com/IL/Chicago/2734-N-Southport-Ave-60614/unit-B/home/13363256
Purchased in 2006 for $675, placed on the market yesterday for $660. A recent unit in the building sold in April for $575. So does this unit sell for less than the April 2010 price of $575? Perhaps in the mid to low $500 range? Or is it as clio has stated, that LP is insulted from the market adjustment.
One thing is for sure, it is going to be an interesting spring.
I agree, ze. Gary also seems to forget how many of those 2/2’s were not bought by occupants.
LP is often insulted around here
@ChiBuilder –
Well said! Nothing more than tulip mania… this ain’t nothing new.
“It is so frickin’ hard to figure out who to believe in the media:”
Toll Brothers had a loss if you strip out the tax advantage they claimed! Doesn’t sound so great to me. But it WAS better than the last few years- which isn’t saying much.
Gary- I agree with you about the downpayment part of it. But all these people “renting out” the 2/2s- where are they going? Are they renting in the suburbs? Have they gotten money from their parents to put down on a house somewhere so they are doubling down on real estate? Where are they all going?
I continue to see condos in LP and Lakeview that have been for sale for years coming back on the market (to try again.) Meanwhile, prices continue to plunge.
Interestingly- I am also now finally starting to see condos that we chattered about 2 or even 3 years ago coming back on as short sales or REO. Some owners are finally throwing in the towel but it’s taking a couple of years.
clio, the deals are definitely out there, if #1 you have cash #2 you are open to more than just a few select areas #3 you are willing to take on some rehab work. Some foreclosures are coming right back on the market with little or no improvements at 20-30% increases. I am seeing light rehabs of bank owned “as-is” sales come back on the market in 3-6 months sometimes at 2x the price.
Someone is making money out there. My guess is they have cash, they are flexible, and they have the capacity to rehab.
Gary- how many years before people can save money for the downpayment?
We’ve chattered about this before.
I estimate at least 4 years (minimum) for 20 and 30 somethings to save up the money (with no parental help.) And that is aggressive saving. So we’re going to have a weak market for at least 4 to 5 more years- and that’s without any big mortgage rate increases (which are nearly certain to come.)
For anyone trying to rent out their condo- have you noticed it’s hard to find renters that have the one month security deposit plus the first month’s rent? (or about $3000 to $4000) Most renters don’t have that. That’s why the big apartment buildings that only require a $300 move-in fee are so popular. So how are they all going to be buying places?
I do see some nice rehabs that look to be very good money makers (and have posted a few here).
But what is a “deal”? If something is selling at a 20-30% discount off an 03-05 price, does that make it a deal now? No, it was just over-valued (from a long-term perspective) then. Obviously there are thousands of places like that, which is what puts the index where it is.
Are any of the following deals? They’re all big haircuts for the sellers, but obviously not bargains for the buyers.
I will post separately so as to not to fall into moderation purgatory:
http://www.redfin.com/IL/Chicago/836-W-Belden-Ave-60614/home/13353936
http://www.redfin.com/IL/Chicago/6334-N-Glenwood-Ave-60660/home/13414408
http://www.redfin.com/IL/Chicago/2750-N-Seminary-Ave-60614/unit-2/home/12753754
http://www.redfin.com/IL/Chicago/1630-W-Summerdale-Ave-60640/unit-3/home/12755694
http://www.redfin.com/IL/Chicago/1148-W-Roscoe-St-60657/unit-4W/home/12622205
http://www.redfin.com/IL/Chicago/1466-W-Warner-Ave-60613/unit-3E/home/12718730
“What I think everyone underestimates is that a significant number of sellers can’t drop their price any more and they don’t have to move.”
I agree with this. Especially in the “smallish” SFHs I’ve been looking at. A lot of people bought 2-up SFHs for way, way more than they are now worth. And while they’d like to move out so the 2 kids don’t have to share one of those upstairs bedrooms, they’re not willing to price their homes at a point where they’d actually sell. Because that would mean eating their down payment, or more likely bringing money to closing. Which is frustrating the hell out of me, because I’d really like to buy one of these, but not at 2005 prices.
http://www.redfin.com/IL/Chicago/5439-S-East-View-Park-60615/unit-1/home/13947089
200,000 african americans gone from census to census. That is about 20% of the south side population, gone. Some to the metro region, most to the sunbelt. Anecdotally, this happened in the last few years, though it is hard to validate absolutely without periodic data.
20% of a population group leaves in the least few years. Of course Chicago real estate will get crushed.
Joe’s point on SFH’s is spot on. People like new houses and a lot of SFH stock in Chicago is inadequate, while condos are well overbuilt. Look at the census growth in pockets of the North side, including Lake View (double digits in many cases). Those residents are looking for quality options. Open houses have been jammed with buyers looking at even marginal SFH’s in good neighborhoods. As long as replacement cost is significantly above prices, you will have a reasonable floor for renovated / new / newer SFHs.
People who post here routinely miss the inflation that is brewing. Anyone bought food recently? Anyone see gas forecasts recently? Petroleum affects everything. Wages will adjust accordingly.
This may be true (since there isn’t a particularly robust SFH rental market, which may change) as long as demand doesn’t shift away from the city — since SFH’s are also partly competing with the suburbs.
There is a robust apartment rental market, though, and condos continue to suffer:
http://www.redfin.com/IL/Chicago/698-W-Irving-Park-Rd-60613/home/13394507
could go on forever with 2 BR condos…
“As long as replacement cost is significantly above prices, you will have a reasonable floor for renovated / new / newer SFHs.”
With unemployment and underemployment as high as it is, what will be the driver of higher waqes?
“People who post here routinely miss the inflation that is brewing. Anyone bought food recently? Anyone see gas forecasts recently? Petroleum affects everything. Wages will adjust accordingly.”
“I actually saw one article calling Chicago the weakest market in the nation which is pretty darn bad with Detroit, Phoenix and Las Vegas looming out there.”
It’s hard to understand what you mean when you say that a market is “weak.” It’s not a very precise term. Do you mean that additional price decreases are likely? Do you mean that such decreases are likely to be significant? Does “weakness” consider historical activity? These indices are measures of historical activity and aren’t particularly useful as predictive measures unless you also consider other factors. The numbers we’re talking about now apply to activity during November.
I’d rather be in a “weak” market like Chicago if it means we _might_ lose another 10% on top of the 27%/30% we’ve already lost than I would be in Las Vegas, where prices are off 60% from the peaks. Phoenix is off 55% or so. The fictional Robocop is all that Detroit proper can hope for now. There is no way I would consider Chicago worse off than the three cities you cited. Each of those cities has huge areas which were formerly prosperous and productive and are now mostly uninhabited wastelands. These are areas where the affluent and the employed formerly lived – now those folks either lost what they had or have something that’s more or less worthless. That’s not Chicago.
If you strip out the fraud, the absurd purchases and the places that never should be have been priced anywhere near the range that they were (like the Vincennes property from yesterday), and look at some objective measure of “market sales” (which admittedly is subjective, but I expect we could agree on some price-agnostic definition) you end up with the properties which people with a decent down payment, appropriate incomes and good credit might now consider. I’d be hard-pressed to believe that prices for such properties are down more than 20% in the Chicago area. If you consider the City proper, and affluent neighborhoods in the City, I’m not sure that you’d even get there. I have seen very few examples of closed sales in those locales more than 20% below peak prices.
In short, I think that the sky has already fallen about as much as it is going to fall. A lot is made of shadow inventory, but the liquidity makes the market and, absent the absolute need to do so, businesses and homeowners are foolish to sell at a distressed price now when they’ve already ridden out most or all of the fall. My view is we’re going to be in this range, with respect to the C-SI, of around where we are right now and not much lower. Maybe we see 115, which I’m sure will send the pessimists around here screaming for new lows in the 80s and 90s. However, my prediction is that we get nowhere near _another_ 15-20% down from where we are right now.
“Why I think prices will keep going down.
1. Wages have been stagnant for a decade.
This may be why housing prices are back to 2001 levels already.
2. There is a huge excess of homes. Shadow inventory will kill the market.
3. There are about 80 million baby boomers. There are about 65 million gen x. There simply aren’t enough younger people to buy the 500k houses boomers are trying to sell to fund their retirement.
4. Gen x and Y are saddled with massive student loans to pay off since the colleges are paying their “bed-wetting, hippie liberal, douchebag professors” (Eric Cartman) way too much to teach theory, psychology, socioogy, arts, and enligsh, only to have their students not be able to ind a job other than starbucks.”
AWESOME POST MikeHG!!!!!!!!!!!!
i agree with wages stagnating and lending standards tighter i dont see how there will be the 4-5% property appreciation a year liek we saw in the 90’s to 2008?
JMM… Let me debunk that for u. In brasil they are fighting over raising minimum wage to around 350 a month. In brasil last year 3 million jobs were created in the US 3 million were lost. Long way to mean reversion in global wages if u want my opinion. The global economy is expanding it’s just coming at the cost of already developed nations. Clear as day to me.
Doubt that a 1% drop (we’re at 116-117 now) will send anyone screaming about anything.
Personally, I like the argument that all or most of the fall is over, supported by the assertion that shadow inventory will not be a factor because…wait for it…all or most of the fall is over. Animal Spirits, indeed!
“In short, I think that the sky has already fallen about as much as it is going to fall. A lot is made of shadow inventory, but the liquidity makes the market and, absent the absolute need to do so, businesses and homeowners are foolish to sell at a distressed price now when they’ve already ridden out most or all of the fall.”
“Meanwhile, prices continue to plunge.”
Really? Where are prices plunging? We’re virtually at March 2010 levels and within a few percent of everywhere we’ve been since then. I understand that if you’re used to prices increasing year over year for a decade a few years of 5% drops per year might be “plunging” to you, but it’s not really accurate to say that prices continue to plunge. A percent or two a month seems pretty orderly to me. You’re fearmongering. Japan in the early 90s plunged. The stock market plunged. Detroit, Vegas and Phoenix plunged. Is that what you think that this has been?
A 2% “plunge” is less than the average inspection givebacks in a residential property. It’s less than the difference between a strong negotiation and a weak one. It’s rounding error. We’ve had big drops in real estate but not even in the ballpark you’re suggesting.
I think it’s easy to get confused about the Chicago data since most of the areas with HUGE losses are places no one here looks at. Far South and West sides are places I would never live, but you can get a nice little SFH for pennies…
http://www.redfin.com/IL/Chicago/913-N-Trumbull-Ave-60651/home/13284879
Factoring homes that sold for $245k at peak that are now down 1644% doesn’t help local data in good areas.
“People who post here routinely miss the inflation that is brewing. Anyone bought food recently? Anyone see gas forecasts recently? Petroleum affects everything. Wages will adjust accordingly.”
JMM,
no you actually said “wages will adjust accordingly”, i know your f’ing kidding me right. maybe you have been moved from reality or the North shore air is making you high.
“But all these people “renting out” the 2/2s- where are they going? Are they renting in the suburbs? Have they gotten money from their parents to put down on a house somewhere so they are doubling down on real estate? Where are they all going?”
Limited ability to respond today. Yes,they are doubling down on real estate. Rent out the old place and buy a new place.
“For anyone trying to rent out their condo- have you noticed it’s hard to find renters that have the one month security deposit plus the first month’s rent? (or about $3000 to $4000)”
I don’t handle rentals normally so I wouldn’t know. I’m just going off of what I read about increasing rents.
I would love to see prices come down since I’m still looking. I can’t find anything suitable. Most people who own what I want are sitting still.
JJJ,
if u put down 20 percent a 5 percent drop should be a 25 percent hit to your balance sheet on that asset. Sounds totally sucky to me.
nice robocop tie in triple J.
Ze, you may have mentioned it years ago but why’d you decide to pick up and move s of the equator?
Groove: if that’s the case with the air prices on the North Shore would go sky high.
I thought people on the north shore smelled their own farts
Most Chicago domiciled mortgagees are in denial that prices are lower than what they paid (financed), and think bear markets in real estate are a costal phenomenon.
Guess what, your cinder block crapshak ain’t worth $500k, neither is Grandma’s “charming, vintage” 1894 built 2/1 frame cottage.
CH… I didn’t like what i saw going on in the states. I didn’t like what i was a part of there either. I never in a million years thought i would go to Rio. My first choice was actually Sydney but it is so far from everything and is just horrendous timezone wise. I’m always watching trends, whoever it was above who said historical data is meaningless needs there face slapped..btw! and About 4 years ago i noticed things changing very rapidly in Brazil and always saw the absurd wealth this country has so i decided to buy in. Internet made it too easy. Since then everything happened down here 20 times faster than anyone could have seen coming. If u ever get the chance take a trip. It is truly the prettiest city on earth. And now it’s getting very safe.
CH.. On a side note, i think Chicago is a wonderful city. Great very grounded people, great food, lots to do, clean at least compared to nyc, just awesome. Unfortunately i don’t see freezing my ass off 7 months a year as a way to live though.
I recently doubled down.
Here’s to hoping these rent rates continue to increase.
thanks Ze. visited rio and buzios 11 years ago. great place. looking at pictures online recently and it has changed a lot.
“Groove: if that’s the case with the air prices on the North Shore would go sky high.”
it is the case! they just roll it into their property tax (call it a special zone tax) so avergae folk like us dont know the truth 🙂
Most Chicago domiciled mortgagees are in denial that prices are lower than what they paid (financed), and think bear markets in real estate are a costal phenomenon.
You meant mortgagor. Mortgagee is the lender
“I thought people on the north shore smelled their own farts”
Everyone likes their own brand
“You meant mortgagor”
Didn’t he perish in Lord of the Rings?
I think that the comparison between Rio and Chicago is a great one to have over beef and liquor. That said, it’s not that relevant to most people in either place.
Personally, I haven’t been to Brazil (or anywhere in South America!) at all, and really look forward to visiting for the World Cup. None of my Brazilian friends want to indefinitely return to Brazil in the near future, though.
“I actually saw one article calling Chicago the weakest market in the nation”
Was that the one quoting Toll?
In any event, we aren’t *yet* clsoe to Vegas:
Vegas existing homes are at ***1991*** prices. 7.8% of Clark county homes (not homes w/ mortgages; total homes) received NODs in January, after 19.8% rec’d them last January.
See: http://www.lasvegassun.com/news/2011/feb/22/price-existing-homes-drops-20-year-low-las-vegas/
JJJ… I’d agree with the exception of when someone says wages have to go up because prices are going up that they need to be educated that this is no longer 1970 and the US is now just a part of a broader global market and that this inflation is global and the wage pressure is also.
From here on i’ll stick to farts… Cupping vs putting your head under your own blanket. Your preference?
“JJJ… I’d agree with the exception of when someone says wages have to go up because prices are going up that they need to be educated that this is no longer 1970 and the US is now just a part of a broader global market and that this inflation is global and the wage pressure is also. ”
ze:
Of course, no one* is defining real v. nominal wages, and for C-S home value purposes, only nominal matters.
I see a future with (more) increases is US nominal wages coupled with (more) erosion of real wages. Also, a shift back toward smaller homes (tho not necessarily to condos) b/c of the increased portion of wages needed for global-priced stuff.
*your position is well settled, so you are the exception.
“Factoring homes that sold for $245k at peak that are now down 1644% doesn’t help local data in good areas.”
It’s UNpossible for a price to be “down 1644%”. Okay, it’s kinda possible, but I doubt that the seller is looking to give someone $4,000,000 to take the house off their hands.
It’s down 94%, and yes, this sale will have *infinitely* more effect on the C-S index than any 2/2 condo sale. But, still less effect than any of the flipped/reno’d foreclosures we’ve seen, due to the structure of the index.
roma:
That Glenwood house is nice, but the single, smallish, bathroom upstairs is a bummer. Wonder if the basement is plumbed such that one could put in a shower.
I’d love to see some wage inflation. Right now all we’re seeing is hedonics as people are replacing cheap goods with even cheaper items.
I never thought I would see the day when Wal-Mart would lose market share to dollar stores but that day has arrived. It’s a race to the bottom from here. Wage inflation might be prevalent in the financial or insurance sector (I know a handful of people who’ve lateraled or received promotions) but elsewhere it is nothing but wreckage.
http://www.theweek.com/article/index/212389/what-is-behind-walmarts-record-slump
anon.. It’s rare so it’s fun to disagree with u. I think about that real vs nominal thing quite a bit. I think we can not as a nation pay back our creditors in full. I think if we dont we have problems internationally and if we tax the populace to pay we have an uprising of sorts. So i figure americans are ranked 25th in math and incredibly etnocentric, just devalue. Sorry JJJ but i have no choice but to do his again. In Brasil 3-4 years ago the exchange rate was 3 to 1 and now it’s 1.66 to 1. Basically the american worker got their wages cut in half on a global scale w/o even knowing it. Add in 6percent inflation down here and it looks even worse. I was waiting for wages to rise and wach Obama brag about it, knowing full well they didn’t. So i look back at why i was wrong and i come up with the disparity in wages is much larger than i realized. It would take another halving to even get close.
Interestingly enough, we are actually seeing some underwriting guidelines loosening up antedoctally:
1) PMI guidelines getting easier
2) Banks coming back in with 2nd mortgages
3) More jumbo options
4) Construction loans
5) Lower down payment requirements
Read it how you want, but my interpretation is that banks are realizing they shut a lot of borrowers out and with volume dropping, they are trying stimulate demand. Underwriting in some ways over corrected and now everyone is searching for a solid middle ground. This very much has an effect on the housing market.
I’ve long said that Greenzone Chicago was the No-Man’s land due to higher cost of living that isn’t recognized by the GSEs. A lot of condos in that jumbo market price point and the seller’s can’t take the hit to lower prices. Buyers can’t get financing and seller’s can sell. Thus the standoff we see.
We still have tremendous wealth in this country, with natural resources, agriculture, homes, land, knowledge, universities, and the like. Just as Egypt was a major power in the days of the Pharaohs, their power eventually waned, but, they did not lose the wealth and knowledge for thousands of years. They remained a major source of commerce, agriculture, and especially knowledge as the Greeks and then Romans subjugated them. It wasn’t until the Byzantine Empire lost control of Egypt and the Arab conquests did Egypt lose its luster. The same goes for the united states. Our natural resources are still here, we have an educated workforce (remember that our top students test the same as the top students anywhere else it the world, it’s just our averages that are lower in education), our universities are still the best in the world, our freedom and democracy are still (mostly) intact and of course, there is the weather argument. So we can say all we want about the developed world falling off the face of the earth, but it won’t, it may be a slow decline as we are seeing today, but it won’t be until 2500 or longer until America loses its luster.
Russ: how many buyers have you personally turned away because they weren’t able to get financing? I’m just wondering. My view is a bit biased because the contracts I see are for buyers that have credit scores in the 600’s thinking they’re going to snap up a foreclosure on their block and they obviously are denied credit. But up at the higher end, how many potential buyers have you seen turned away?
Very few, but as you said, it is function of my client base. I deal mostly with higher income professionals, so I rarely get calls from people who can’t be financed. Even most FHA lenders want 660 FICO scores these days even though HUD technically doesn’t have a FICO score requirement for FHA.
Most people with significant credit issues don’t even bother trying these days from what I can tell. The biggest mistake banks made during the bubble was subprime lending. Looking back on it, it is is almost comical the loans that banks were making. 580 FICO, Stated Income/Stated Asset for w-2’d borrower, 6 mos out of Bankruptcy, 100% financing. No joke…
I’ve seen a few well off self-employed borrowers who are having problems due to “creative accounting” when it comes to their tax returns though. Banks don’t care about down payment and assets if they can’t verify income on tax returns so it screws a lot of business owners.
I think you’re right, those with significant credit issues don’t even bother to try. I understand that credit is ‘tight’ but who exactly is being turned away for credit other than those with poor credit?
The next time Crain’s hosts a RE vulture-investing forum they can use the slogan: “Party like it’s 1999”.
“Prices won’t stop dropping until they hit 1989. Ergh, sorry, I meant 1999. Or somewhere in between.”
and as follow up to #4, Number 5: The demographics of the Gen X and Y generations aren’t going to be the same as the Baby Boomers. Too many X,Y and beyond proficient at non-productive endeavors like knowing social justice history and mastering the debating techniques and not enough of them know basic math or science to increase American productivity/manufacturing levels.
Why I think prices will keep going down.
1. Wages have been stagnant for a decade.
This may be why housing prices are back to 2001 levels already.
2. There is a huge excess of homes. Shadow inventory will kill the market.
3. There are about 80 million baby boomers. There are about 65 million gen x. There simply aren’t enough younger people to buy the 500k houses boomers are trying to sell to fund their retirement.
4. Gen x and Y are saddled with massive student loans to pay off since the colleges are paying their “bed-wetting, hippie liberal, douchebag professors” (Eric Cartman) way too much to teach theory, psychology, socioogy, arts, and enligsh, only to have their students not be able to ind a job other than starbucks.
HD, not too many good borrowers are being turned away now. At one point though, it was getting nearly impossible to finance condos and mainly it was driven by down payments and mortgage insurance guidelines. Not too mention lenders actually starting to care about the health of the condo association/developments.
Down payment availability combined with relatively high home prices for condos in the Greenzone is what is hurting the market. Borrowers have incomes to buy these places but they don’t necessarily have the liquidity. Given that condo ownership is just a short term step for most of these borrowers, I think the buyers are just reassessing if it makes sense for them to buy a condo at all and instead are just going for the town homes and single family homes.
When you could sell and make money or at least not take a financial hit, buyers wouldn’t think twice about buying a 2/2 and in five years sell and move out to the burbs when Junior comes along – this is why 90% of the properties on CC have cribs. This dynamic is now being questioned by the typical buyer and I think most are risk averse and rather just rent and buy when they can make a long term decision.
In some ways I agree with Clio that the market is suffering from a lack of confidence on the buy side.
Dan, Gen X and Gen Y watched their manufacturing jobs in the rust belt and elsewhere disappear in the 70’s and 80’s, and they watched many engineering, computer science and other back office jobs disappear during the 90’s. The only realistic chance they had of finding a good job was in the FIRE (finance insurance real estate) economy. So you got a lot of mbas, lawyers, and liberal arts types who filled the gaps in between in the real estate and insurance industry. I find it difficult to blame them one bit for this. I know plenty of people who jumped out of any computer programming related industry during the 90’s as they watched jobs go overseas time and time again. It’s not like there would be all these job available had the students gotten degrees in other areas, there would still be the same number of jobs, just more competition for them.
Believe me, there is intergenerational karma and the boomers will pay. They’re paying now for their misery and it will only get worse. I don’t care if they are a voting block – they are not the first estate and they’re block is not powerful enough to overcome the liberal spendthrift nature of the boomers. Nobody will cry a single tear for an older boomer who has their pension cut, their home sold for less, or the value of teir 401(k) shocked. They can all live in studio apartments subsisting solely off cat food for all I care.
“4. Gen x and Y are saddled with massive student loans to pay off since the colleges are paying their “bed-wetting, hippie liberal, douchebag professors” (Eric Cartman) way too much to teach theory, psychology, socioogy, arts, and enligsh, only to have their students not be able to ind a job other than starbucks.”
“anon.. It’s rare so it’s fun to disagree with u. I think about that real vs nominal thing quite a bit. I think we can not as a nation pay back our creditors in full. I think if we dont we have problems internationally and if we tax the populace to pay we have an uprising of sorts. So i figure americans are ranked 25th in math and incredibly etnocentric, just devalue.”
I don’t know that we’re disagreeing, except in degree. Real wages will fall, but paying back the $14T debt (yes, I count the SS piece until *ANY*one in Congress has the courage to stand up to AARP-folks) with even flat GDP requires so much revaluation, that it’s difficult for nominal wages to not (continue to) rise.
And I *know* you only consider real $$ and v. global basket, not CPI or any other domestic-oriented type of “real”.
QUESTION… Do any realtors or appraisers realize housing prices have gone down?
I’m looking to sell my (West) Lincoln Park single-family home. I have two refinance appraisals and two realtor evaluations/proposals in the past year.
All indicate that my home has increased in value about 9% since I purchased in late 2004. During that time the house has significant wear and tear and deferred maintenance (documented by appraisers and commented on by realtors).
Yet, the index, which does appear to apply to Lincoln Park, has gone down about 20% in that same period. And I’ve been reading you guys for a long time and been persuaded by all you skeptics out there (I was definitely in denial – oh that’s a coastal thing, or that doesn’t apply to MY house).
I suspect the realtors just know most people won’t list a house unless they can get out what they paid after paying the realtor’s commission, so they just suggest that price. The appraisals are harder to dismiss, but the comps and adjustments don’t look right to me. I suspect hanky-panky with the bank, since the appraisals always seem to come in at whatever I say we need for a refinance.
=> Should I follow the advice and list for quite a bit higher than I paid, or does anybody know an appraiser (or how to find one) who can give me a realistic view of what the home is worth? Somebody who thinks homes may have gone down in value? I’d rather work with somebody who helps me get real than somebody who tells me what they think I want to hear and I still own my house in 2 years – with 700 days of market time.
HD if the history story was for me, thank you. Please remember though i am extremely bullish overall. I think the biggest up cycle ever is still to come. My grandfathers market was brooklyn, my fathers was ny metro and later most of the US. Mine is the entire globe. The best and brightest have unlimited opportunity, those that dont excel though are now just 1 of 6 billion. Basically more and more class stratification.
but anon thats the point i’m making. I agreed with u before but i revisit it and see they couldn’t move nominal and i know they tried. Again my theory but i think china blew out it’s money supply for that reason. It’s what old evil Ze would have done if someone tried to pay me back pennies on the dollar. When i revisit it i just see that wages in developing nations need to meet developed nations in a sort of global wage parity. That mean reversion is working hard against nominal too. Think in 1973 prices soared,unions demanded increases and got them. Now prices at the input level are soaring and no one has the balls to walk into their bosses office and ask for a raise. By no one i am talking about the average american and not you latte drinking priviledged lincoln park d-bags.
“By no one i am talking about the average american and not you latte drinking priviledged lincoln park d-bags.”
Watch yourself–I don’t drink lattes and don’t live in LP.
But yeah, I hear you. How long do you think China can maintain it? Aren’t they the proverbial bank with a problem, just 6 and a quarter orders larger than the bank attributed to Keynes?
Interesting that prices have fallen in chicago for condos, I havent seen this on the low end. To be honest i’ve actually seen an increase… probably mostly the result that more people are sitting on cash and putting out offers. Of the 5 properties i put a bid in this week already, 2 of them had over 8 offers, the others all went into multi-bid.
how i see china is the new kid to capitalism that was so focused on beating the US they forgot to look out for what they might win. Yep..thanks for all the stuff now good luck getting paid. As confucious say fool me once ahame on you, fool me twice shame on me. I find nothing more rediculous than those that say that china needs the us as much as the us needs china. Absurd!! Yes they need us to buy their stuff, how will they possibly find others to lend to tha wont pay them back.lol. What do you learn from this if you are them. Diversify risk and promote multiple countries development. I think they come out fine down the road but it is hard to make predictions about a country u can’t trust the information from. Again this year china surpassed the us as brasils biggest trade partner. They are buying everything they can throughought all of south america. But 10 percent growth is mathematically unsustainable.
“It’s down 94%, and yes, this sale will have *infinitely* more effect on the C-S index than any 2/2 condo sale. But, still less effect than any of the flipped/reno’d foreclosures we’ve seen, due to the structure of the index.”
I think it is a very safe assumption that people buying properties like these for less than $30k are not buy and hold types. Moreover most of them require rehab attracting… rehabbers. Moot point with my response, but what is the “structure of the index”?
“Moot point with my response, but what is the “structure of the index”?”
The index weights short-hold transaction pairs heavier than long-hold transactions–a house sold in Mar-10 and again in Sept-10 will have a greater weight than a house sold in Mar-99 and not again until Sept-10, but 2 or more sales in 6 months gets the property excluded entirely.
From the methodolgy description:
“For large metro area markets, the interval weights for sale pairs with ten-year intervals will be 20% to 45% smaller than for sale pairs with a six-month interval.”
Prices are set to plummet from here.
To the person who made the argument that families with new kids are staying in their 2/2’s thereby driving up the price by constricting the supply, my answer to that is those same families are also reducing the demand for the SFH they would have bought. Everytime a non-investor/civilian doesn’t sell – takes themselves out of the supply, they also take themselves out of the demand.
To the people citing tight credit standards. You also have to look at the historically low interest rates. If anything is being artificially affected it is these ridiculously low interest rates, whereas lending standards are simply returning to where they should have been all along, and they are not even there yet. Who in the heck would lend someone money at 4-5% for 15-30 years? Well guess what we all are lending that money now through our tax dollars. Ask yourself, where would the housing market be right now, if it were a pure free-enterprise market?
Shadow inventory is so incredibly high, people have no idea. Yeah, if you are in a gated community on the northshore or oak brook, you don’t see it as much as I do, I am right here living in it! I’m in a 3/2, 8 flat, circa 2005. It’s nice and modern, stone counters, hardwood, high ceilings, w/d, elevator, parking – all of the essentials I care about. The developer managed to get $20k per packing space, even though street parking is easy around here in west rogers park. I’d estimate those spaces are worth about $3-4k tops. Not a single condo unit has sold since the developer cashed out. That’s about 5-6 years with no sale. There’s one offered short sale at 35% off, been on the market for 6 months, but I doubt it will move to quickly if at all. When the first sale is finally closed, I’m guessing it will be -50% from 2005. Another unit is rented at severely cash flow negative. And best of all is my unit, I’ve been here two years, for the first year my landlord just took all of the money and didn’t make a single mortgage or dues payment. So not a single mortgage payment has been made on this place for at least 2 years, probably 3. Landlord is laying low. I paid off her back dues for her just to keep the association from taking over. Now I’m living here paying dues only, and plan to do so for as long as I can. I’d guestimate about 2 more years. Bank has foreclosed but is obviously not in a hurry to move forward and sell this thing. If the banks foreclosed and sold everything they would be broke by like negative $1 trillion. They (BAC/Countrywide) sent a former carnival worker-type here to check on the place, but he just mumbled something more or less in coherent. I was willing to pay them my rent money, but shockingly they said they didn’t want it. That was 7 months ago and I’m still here, and haven’t heard anything substantive from them. So anyway out of 9 units here, we have 1 offered short sale, 1 rented several cash negative – likely future foreclosure, 1 that’s leaking water ownership status unknown, and my unit which the bank hasn’t received a payment on for at least 2 years. So 30-40% of the units have suspect futures, all of them are severely underwater, and none of them are officially on the market save 1.
The demographic arguments about the babyboomers is also set to drive prices even lower. The price of oil is up, which means people have to spend more on gas and less on housing.
I believe there are some areas around Chicago that are down about 0% but there are other areas that are down 60%, which is why the average is down 30%.
Don’t forget city government finances, that can affect housing too.
Since i’m willing to shop outside the greenzone, I can look at units that are down 75% and find them. For you high falutin types in gated communities, eventually those will go down to, but to a lesser extend. Don’t think you area is immune, every better than average area thought that in 2008, the adjustments just take longer.
Thanks for the story Brad. I’ve heard of other similar tales where some renters have been in units for 2 years or more and still the bank hasn’t done anything.
I hope you’re saving a really big downpayment with all the money you’re saving!
I just don’t understand why condos were built in areas like West Ridge. Why buy a condo when a bungalow SFH, the predominant housing stock out in that area, was probably the same price of cheaper?
“I hope you’re saving a really big downpayment with all the money you’re saving!”
Sabrina – this is a shockingly irresponsible statement. This is incredible immoral and unethical. Brad is essentially a squatter and just because he has not been evicted, doesn’t mean what he is doing is right – it is like “stealing” gas or electricity from the utility company by having a broken meter or not returning money/jewelry/property you found on the sidewalk. Sure, it’s not illegal – but, as a society, we have to condemn this type of behavior if we want to survive. If you think this behavior is OK – please do society a favor and DON’T have any kids. This is an incredibly sensitive subject – and your blatant disregard for honest mortgage/tax paying individuals is absolutely appalling!!!
Clio- you obviously didn’t read his post closely. He is a RENTER!
His landlord stopped paying the mortgage years ago. He’s now stopped paying the landlord (why would you?) but paid the back assessments so the condo association didn’t take over the unit. He’s now only just paying the assessment and continues to live there- virtually rent free. Eventually the bank will kick him out- but since they’re not inclined to- what’s his hurry? Pocket the money living in the nice condo.
“Sabrina – this is a shockingly irresponsible statement. This is incredible immoral and unethical.”
Hahahaha too bad for you. You don’t have a ruler to smack the “kiddos” as this isn’t parochial school. Brad should save all his money and live for free as long as he can.
“If you think this behavior is OK – please do society a favor and DON’T have any kids.”
I, like Brad, will do whatever I want. And with all the money Brad is saving he can better provide for his kids.
“- but, as a society, we have to condemn this type of behavior if we want to survive.”
Go back to watching Glenn Beck.
@Clio
You can stop preaching right now. Most people try to game a system one way or another. Be it the suburb mom that returns an old TV to Costco for a full refund, the trixie that gets free cable in an old LP apartment, the wealthy that set up trust to pass along the maximum asset amount to the next generation or Brad who is not paying rent (but is paying association dues).
Also Clio – the landlord is not paying the mortgage, Brad could be evicted by the bank at any time. Second if you actually read his post, he tried to pay the bank
So back off and go use up “our” fossil fuels in your Lambo. Your blatant disregard for “our” environment is absolutely appalling!!!
Good thing you are not breading.
“Good thing you are not breading.”
What is “breading”?
You caught me, it should have been “breeding”. Now go to bed feeling superior for yourself.
CLIO WINS SPELLING WARS!!!
Sabrina, I DID read Brad’s post – I know he is a renter – but I stand by my statements. What he is doing is wrong. Anyone who says anything different is absolutely 100% supporting unethical behavior. That reflects a totally low-class, low-brow type of attitude/persona. Believe me, no high-class upstanding, worthy and respectable person would ever do or encourage this type of behavior. This reminds me of a discussion I had with some of my friends because someone actually offered me 1000 to sleep with them – they couldn’t understand why I turned the person down. They had the same attitude as you guys…. I just you cannot teach “class” – but just remember this – no matter how much money you guys that encourage this type of behavior have, you will NEVER EVER be “high class”. Ridiculous discussion…… really.
“You caught me, it should have been “breeding””
uhhh – I have two kids…
“What he is doing is wrong.”
I know several other people doing the same thing (renting condos that the landlord has stopped paying on.) They are all paying the condo associations for the assessments and just waiting for the bank to take over and saving the money.
What was the landlord doing with the rent money all those months before? Pocketing it. Not paying the mortgage (that much we know.) The renter is always the last to know.
I think it’s great for Brad. As long as he realizes the bank could tell him to get out at any time. But hopefully by then he has a ton of money saved.
But Brad’s actual point of his post is that there is a ton of shadow inventory out there that most people aren’t even aware of. The banks are taking their own sweet time in doing anything on a lot of properties. In some cases 2 to 3 years.
I feel sorry for those entitled “high class” kids. Perhaps you can call up Northern Trust and create a legacy plan for the next generation.
Better yet, why not reach out to Brad and be his mentor. Passing along all the real estate knowledge and ethics that you keep bottled up in your head.
As Stephen Covey would write, Win/Win.
Clio he is helping out the bank by keeping it occupied. If he moved out the electric company woould shut off the heat and the pipes would freeze and damage the unit or worse, thieves could break in and gut the unit making it next to worthless. You need to reevaluate the situation. Look at cases in a different perspective, sort of like your fictional mentor, House.
Re: countrywide – whose loans were basically toxic waste issued by the most unscrupulous brokers, against the most questionable collateral and to the most uncreditworthy borrowers. Bofa may just abandon the entire countrywide debacle someday given how terrible the investments were.
Countrywide is by far the slowest to foreclose of any of the major banks. Primarily on their BAC toxic waste. They were giving$ 300k loans against homes in Bellwood for gods sake. Those homes sell as foreclosures for 60k and investors do some simple work and try to flip them for 175.
Thoer loan mods are just as bad. I saw them drop a 2400 a month property in bellwood down to 1900 a month for 40 years with a balloon payment in the end of 40 years. Today the propery is worth maybe 33% of the 2006 valuation. AAnd now they want to foreclose. What’s the point?
While whether Brad’s conduct is ethical or not is debatable. Statements like “Most people try to game a system one way or another” to justify doing wrong is quite unethical. So not paying taxes is fine too if you can get away with it?
In the long run societies in which people choose patty personal gains over the greater good of all end up in a mess.
Times are so confusing to potential home buyers right now. Shadow inventory is huge, price discrepancies between foreclosures and non-forclosures are getting wider and wider every day- what is a homebuyer to do? Well, my advice is to forget about trying to predict the market – figure out how much money you can afford, what neighborhood you want to live in and start looking. If you find something you like and can afford, then buy it. Move in, enjoy and then STOP looking at real estate sites because they really shouldn’t affect you (if you are a long term owner). Believe me, you will be in a much better state of mind. If you need an analogy, just think about your partner/wife/husband. Do you stop and think, “oh boy, if I just waited another year, I could have met someone better looking/richer/funnier, etc.?” No, you can’t go down that road. Just accept, be happy and move forward.
I agree with miumiu completely – now there is someone with true class!!
clio your advice whether the market goes up or down – it makes no difference. But there are disastrous consequences to your advice.
This reminds me of a joke someone once sent me, see:
http://www.clickhere.gr/content/jokesdtlen.asp?JOKESEN_ID=326
“oh boy, if I just waited another year, I could have met someone better looking/richer/funnier, etc.?”
“But there are disastrous consequences to your advice.”
No there aren’t. Again, if you are looking for a long term residence (over 7-8 years), can afford the house/condo and taxes/upkeep and have a stable job, there are NO disastrous consequences. Name one…
miumiu – very funny and very true…..
You know once I read this joke, I got afraid and tied the knot…hehe…kidding of course : )
“but just remember this – no matter how much money you guys that encourage this type of behavior have, you will NEVER EVER be “high class”.”
You’re a 40s divorcee who hangs out at Rush street bars and drives a lambo to overcompensate for his lack of game and social skills with the ladies. I don’t think too many on here are worried about being perceived as “high class” in your eyes, clio.
Bob – I don’t hang out at Rush street bars – I never have and never will. I don’t even know where that came from. Also, it is not about what you have or where you hang out that determines your “class” – it is your attitude, behavior, self-respect, self-discipline that contribute to classiness. In addition, if you have to be told this, then there is no hope…..
“his lack of game and social skills with the ladies.”
students – this is called projection. Soon, I expect we will see the manifestations of oppositional defiant behavior
I think renters who pay the assessments are glorified squatters.
It may make financial sense but it is morally wrong.
The landlord was wrong too for not paying the bank, especially if they were able.
I know many of you disagree and believe that we should all stick it to the banks, but I believe when you sign a contract you honor your debt. I continue to pay on 2006 purchase that is underwater. Even if it did not cashflow, I would dig from other resources to make the payments (which I have sometimes due to costly city inspection 2 years ago). It was a bad decision to buy the building but I am honoring my word to pay back the loan. And it sucks but it is the right thing to do.
Humboldt1 – I hear you loud and clear and want to encourage and support you. What you are doing IS the right thing. Once you start going down that other road, it is a slippery slope. I hope you sleep well at night knowing that you are doing the right thing. Don’t look back or second guess yourself – you are a better person in the end – and pride/self-respect CANNOT be bought at ANY price!!!
“The landlord was wrong too for not paying the bank, especially if they were able.”
Maybe a nuance here but it seems your indicating the landlord was/would be wrong for not paying back the bank even if they are unable to?
funny clio i have very much the same feelings about ethics and avoiding the slippery slope. With that said u r wrong. 1- you are not acting ethically fulfilling your contract on that building, you are simply honoring your terms of contract.
2- you offer no suggestion to Brad, obviously paying rent to a landlord who will pocket it doesn’t seem just either. Should he move regardless of costs of doing such?
3- to you and miumiu… Riddle me this. Obama changed the laws for depreciation this year allowing me to take a 179 deduction of depreciation on first year purchased assets in order to stimulate the economy. I went on one hell of a shopping spree purchasing up to the limit the least depreciating assets i can find, in order to minimize my tax burden. Worse is i bought them in brasil although the law was created with the intent to stimulate things in the US. I fully acted within my rights by law. So how unethical am I?
4-the only entity acting unethically here and in my belief ILLEGALLY are the banks who are fully aware the value of this property is way less than they are recording it for. They are presenting it on their balance sheets at a level they know is innacurate and providing earnings without taking a loss. Then paying bonuses on profits that dont really exist. That to me is fraud. Oh but they had the law changed to allow them to do that. Like i said to CH in reasons for leaving the US
… I didnt like what i was seeing.
and to irk u a bit more. With number 3. I have no intention of keeping those assets. I will revert them back to cash and take any gain or loss on next years 1040. Totally kosher! All documented, all above the bar.
“This is incredible immoral and unethical. Brad is essentially a squatter…”
@Clio (the pontiff in a lambo)
So I’m immoral, unethical, and my behavior should be condemned, huh?
So as I mentioned I paid off all of the back and current association dues, and I offered the bank rental money seven months ago, which they declined. I moved into the unit with a lease and a very significant security deposit, and I remained current on my rent until the foreclosure. I choose renting even though I could have easily bought for cash, while some owners snickered at my choice including one who is now over $125k underwater on a $260k purchase. I had no intention to game the system when I moved in, I was just happy to rent a modern unit at a reasonable rate, however I have no qualms about accepting this unplanned monthly windfall. I’m living rent free, but paying dues and maintaining the place, including painting the whole thing. Banks otherwise have to pay people to maintain and check on units because they are not selling them. No one has yet asked me to leave. So what should I have done differently your highness?
I suppose you might say that it would be better if I moved out since no one is here to collect the rent money. In which case the unit would be vacant and the dues would be unpaid. That would seem wasteful to me.
Speaking of wasteful, I would never have brought this up except to respond to your criticism, but you Clio judging by your posts seem to live a very wasteful existence and worse yet you seem somewhat proud of it. We are all entitled to our own consumer choices. I certainly enjoy my luxuries. However in a society of limited global resources, where a few have so much while many have very little, respected ethics commentators have stated that wastefulness is immoral. You might want to think about that next time you are inclined to cast judgement.
i commend Brad for doing what he’s doing right now. He’s paying assessments, and the bank won’t even take his rent. What else is he supposed to do?
” We are all entitled to our own consumer choices”
True – but I work and pay for mine — big difference, you parasite.
“i commend Brad for doing what he’s doing right now. He’s paying assessments, and the bank won’t even take his rent. What else is he supposed to do?”
Move. It’s like a prostitute who gives you free sex even if you agree to pay – sure it’s free but it is wrong.
“True – but I work and pay for mine — big difference, you parasite.”
“Move. It’s like a prostitute who gives you free sex even if you agree to pay – sure it’s free but it is wrong”
– So , where’s the ‘class’ now clio. I love how you act high class but when it comes down to a difference of opinion you act like a dirty hoodrat.
I love how Brad responded to your insult of calling him a squatter with some facts and intellect, and you called him a paraside and compared him to a prostitute. If that doesn’t exude class, I don’t know what does. Clio for the win.
parasite*
Riz – again, so many things to say:
1. Why are you getting in the middle of this now?
2. I never said I was “high class”. I never said I was “low class”. My status was never in question. The topic was about a squatter and a delinquent landlord – not me.
3. Do you honestly think that anyone (even people with “class”) will just sit their and let anyone say anything about them and not do anything about it? Believe me – they are the first ones to attack anyone who threatens their reputation or insults them.
Riz – I didn’t compare him to a prostitute – I compared him to a john that goes to a prostitute. Geez – where did you go to college/medical school?
Clio, i’d love to share those facts; but that info combined with my name would make it way too easy to find out who I am, something I don’t really want to do. Let’s just say they were both highly competitive institutions in the Midwest.
You attacked Brad, not vice versa. but alas, not my fight to fight.
Essentially, it sounds like Brad has the tacit permission of the bank to live there. He has had a direct conversation with an agent of the Bank who is aware of the situation. He offered payment which was refused. From the sound of it he has tried to honor the terms of the contract which he entered into. He is maintaining the property which is a service to the owner (bank) and is paying assn dues which is a service to his community. Not an ideal situation but it sounds like he isn’t getting a completely free pass as he is not the one who renigged on a promise of payment.
Hey Brad – come over to the Hinsdale food pantry – you can also get FREE FOOD (most of which is donated from Whole Foods). Why don’t you do that? – think of all of the money you can save!!!
‘Hey Brad – come over to the Hinsdale food pantry – you can also get FREE FOOD (most of which is donated from Whole Foods). Why don’t you do that? – think of all of the money you can save!!’
Seriously clio. i think you’ve hit a few below the belt already. totally uncalled for.
“Essentially, it sounds like Brad has the tacit permission of the bank to live there. He has had a direct conversation with an agent of the Bank who is aware of the situation. He offered payment which was refused. From the sound of it he has tried to honor the terms of the contract which he entered into. He is maintaining the property which is a service to the owner (bank) and is paying assn dues which is a service to his community. Not an ideal situation but it sounds like he isn’t getting a completely free pass as he is not the one who renigged on a promise of payment.”
Right. it’s his home. If they don’t want his rent, that’s on the bank. he’s paying the dues and maintaining the place. When they ask him to leave or figure out what to do with the property , he will. i don’t see this as squatting at all.
what if brad sells the appliances and fixtures on ebay a week before he moves out? WOuld that be OK too?
I find it interesting how Brad’s situation seems to offend Clio on a deep and personal level, even though it has no intrinsic affect on Clio’s life.
If the bank wanted Brad out, they would have asked him to leave. They don’t, ergo he stays. Tough noogies.
I’m not totally buying the theory that a large wave of REOs will hit the market soon. Several short sales I was following went into contract and stayed in contract for a few months and then all of a sudden they were re-listed, but they were not marked as “reactivated” in MLS, they just appeared as completely new listings at higher prices, and they are not REOs, they are auctions.
For one of them, the listing agent said they had nothing to do with it anymore and referred me to an online auction website which went nowhere.
For another, I didn’t even realize it was an auction, just noticed it was the same house relisted under a new MLS number. I contacted my agent to submit a bid and then she found out it was also an online auction and there was a minimum price you had to meet in order to bid. But I do not think this house is worth their minimum.
I guess the banks are going to get better prices for their distressed properties at auction than as REOs. It’s an opaque process with a lot of red tape. But maybe the fact that it is an auction will get people fired up to place high bids and compete with each other?
Depends on if he bought them or not – I would say that they were property of the original owner and part of the unit thus the bank has a claim on them so if he were to sell them that would be stealing.
“what if brad sells the appliances and fixtures on ebay a week before he moves out? WOuld that be OK too?”
rv- hd was being sarcastic.
Brad – I have some clothes that don’t fit me – do you want me to send them to you? Think of the money you could save…
Interesting comments…
Well, they were until the classy and almighty one got on his high horse to degrade someone who is doing what he feels is the right and ethical thing to do in his situation.
The way I see it, Brad is totally correct in his actions. If anything he should be PAID by the bank for maintaining this unit…something Rogers Park sorely needs at this stage of the game.
When one person feels the need to accuse another person of having no class, or committing unethical business practices, or even for not having what they believe are high morals, it is not the person who is being accused, but rather the person passing judgement who is the ‘classless, corrupt and morally bankrupt’ one.
But who am I to remind CCers of this basic human fact? I think we see it on a daily basis here on CC and the guilty person has proven time after time that it is he who is without morals, character and class.
Just saying…it’s much easier to keep your own character in check than to police all you come in contact with and throwing out such dangerous comments.
“If anything he should be PAID by the bank for maintaining this unit”..
Ha ha ha ha – are u kidding me? Come on…..
Also, you are definitely not one to talk about people on their “high horse”. I seem to recall many posts by you stating how new york was so much superior to chicago, etc. Well, if it is SO great, why don’t you go troll around some new york real estate sites….
“3. Do you honestly think that anyone (even people with “class”) will just sit their and let anyone say anything about them and not do anything about it? Believe me – they are the first ones to attack anyone who threatens their reputation or insults them.”
You could not be more wrong here clio…those with true class and impeccable character will allow their actions and behavior to speak for them. Only those who have severely low self esteem will engage those who attempt to place a negative shadow on them.
OK westloop – I’ll make this easy for you so that you can take your leave: i have no class, am stupid, am a moron, a douche, an idiot, have multiple personalities, am a liar, cheater, alcoholic, ugly, smelly, etc. There – are you happy? Now either talk about real estate or leave.
@ gringozecarioca, It seems to me you mix the notion of criminal and ethical.
While your activities are legal (I cannot judge that but I trust you know what you are doing), they are not ethical.
From a now worked up, low self esteem character:
“I seem to recall many posts by you stating how new york was so much superior to chicago, etc. Well, if it is SO great, why don’t you go troll around some new york real estate sites….”
When I do make comments that NYC is superior to Chicago (RE wise) I am simply stating facts and nothing more. Nothing high horse about that.
BTW, I work for a living and do not have the time to ‘troll’ RE sites boasting of my superior living status and passing judgement on anonymous internet posters…can you state the same fact?
“…i have no class, am stupid, am a moron, a douche, an idiot, have multiple personalities, am a liar, cheater, alcoholic, ugly, smelly, etc.”
Finally we get some truth out of your postings!
Thanks!
BTW, not sure why you all feel like ganging up on people. Clio is entitled to his belief about Brad and to be honest I am not sure it is a clear case either way. I personally tend to empathize with him somewhat but the fact that he is paying the assessment fees is a necessity not to get evaded by the association not some gallant act of chivalry as some of you are portraying it.
“BTW, I work for a living and do not have the time to ‘troll’ RE sites boasting of my superior living status and passing judgement on anonymous internet posters…can you state the same fact?”
Uhhh, yes I can. I already have been outed on this site and it has been verified by others that I DO have millions in real estate, DID go to U.of C, Harvard, and Stanford, and DO have a job/career.
Clio, you’re being a jerk to Brad for no apparent reason. making continuous personal attacks on someone who hasn’t done the same to you is classless and low.
@miumiu – you put things very well and are the voice of reason on this thread!!! You are absolutely correct – Brad’s actions are probably somewhere in the middle (not horrible but definitely not commendable).
Riz: “Clio, you’re being a jerk to Brad for no apparent reason. making continuous personal attacks on someone who hasn’t done the same to you is classless and low.”
Oh really Riz?!! – Read below:
Brad: “but you Clio judging by your posts seem to live a very wasteful existence and worse yet you seem somewhat proud of it.”
OK – let’s stop making this about my “personal attacks” on Brad and let’s look at the facts:
1, Brad is using the system – while millions of hardworking americans are struggling to pay their rent/mortgage, Brad is making a silent mockery of them by living rent free (it is like a big silent F-U to the world).
2. While Brad might be just one person – if everyone started doing such things and believing that they were entitled to do such, chaos would result. It is not good for society or real estate in general. Just because the banks are allowing him to do it does not mean that it is the right thing to do (just like a parent letting a 10 year old smoke – yeah they gave their permission, but it is not right). As a society, we HAVE to stop this type of thinking or behavior – you guys may be too myopic to see the long term consequences of this type of thinking but, believe me, it is NOT good.
“Uhhh, yes I can. I already have been outed on this site and it has been verified by others that I DO have millions in real estate, DID go to U.of C, Harvard, and Stanford, and DO have a job/career.”
I don’t know about that. send me a link to your name and your graduation date and i’ll buy it. Otherwise anything on the net, including lambos, ivy league schools, and anything else is taken at face value. Why 3 universities?
“Oh really Riz?!! – Read below:
Brad: “but you Clio judging by your posts seem to live a very wasteful existence and worse yet you seem somewhat proud of it.””
that seems a lot less harsh than calling someone a prostitute, a john, asking them to pick up food from a food pantry, and then asking them to take your donated clothing.
sorry, parasite* not prostitute.
“Why 3 universities?”
uhh – college/med school, residency, and fellowship….
Ah , okay gotcha. great institutions. we have one in common. where did you do residency?
“where did you do residency?”
MGH/Brigham
Awesome. I interviewed at MGH as well, great place. stayed local for the gf, still regret it.
Ok, just for kicks, let’s ask ourselves what would happen if Brad moved out.
1) Associan dues would not get paid
2) Unit would be allowed to deteriorate and could potenially cause damage to surrounding units if not maintained.
3) Unit would lose value not being maintained.
Why would an association want this to happen, I also don’t think it is in the Bank’s best interest for this to happen. Clio, it sounds really harsh what you are saying here. Could this be considered a victimless crime?
In honor of the move to Lincoln Square I have officially changed the avatar.
“Could this be considered a victimless crime?”
No – while it may seem like a win-win situation, the intangible and obscure dangers of such behavior are ever-present. This type of behavior leads others to think the same way (hey, if he is doing it, why can’t I?) – and once people start thinking like this, the real estate recovery and all sense of normalcy will be lost. Here is an analogy- friends with benefits but no commitment. What is wrong with this? Both parties are getting exactly what they want out of the relationship with no strings attached. The thing that is wrong, again, is that this type of thinking molds your character into something that is not necessarily the best for the individual or society. It is a hard concept to understand which is why most on this site (who tend to think in absolute concrete terms) cannot grasp it’s potential to cause serious harm to our society.
Brad’s actions are not a crime, they are the unintended consequences of the crimes that created the housing/credit bubble.
“Brad’s actions are not a crime”
of course not – but they are unethical. He could also come to the Hinsdale food pantry and get free food – that also is not a crime – but is unethical and very very low brow.
miumiu… Please tell me how what i am doing is any different than the guy purchasing a home before some tax credit expires or even any different than making your kids a deduction?????? I am adhering 100 percent to the lettr of the law, lying about nothing, now legally and properly following tax code is about ethics? I have to use the same tables as everyone else to calculate my payments regardless of where i live in the world, why should i not be entitled to the same deductions.
“DID go to U.of C, Harvard, and Stanford, and DO have a job/career.”
Since you’re making such a big deal out of it, internet says you went to UIC, what gives?
It does seem that my comments have struck a nerve with the Pontiff in a Lambo. It’s illustrative that in all of Clio’s condemnation, judgments, and shaming he did not provide a single point as to what I should have done differently.
Keep in mind that I was a full paying renter when I moved into this place in early 2009. I closely follow financial news, so I knew of the overall issues in RE and made an effort to avoid any problems. The owner used a realtor as a rental agent, I specifically asked the agent if there were potential foreclosure issues with this unit. (I of course did not want to lug all of my stuff here, just to have to move shortly thereafter.) Her immediate reply to my question was absolutely not. She claimed that the unit was owned by a wealthy “investor” whom she knew personally and that there was absolutely no risk of foreclosure. She essentially gave me whatever answer was most likely to result in a hefty commission check. I do not fault her for that, I am just illustrating that this problem/turned benefit is something that found me, not something I sought out. When the unit went into foreclosure I was initially dismayed, but then thought it was no big deal because I would just be paying my rent money to the bank instead of the landlord for the remainder of my two-year lease if not longer. When the bank essentially told me that they did not want the rent money but are not asking me to leave, I thought wow that seems crazy, but then again everything else I’ve seen the banks doing in the news has seemed crazy too, so it is at least consistent. So what started as a potential problem of having to move before I wanted, turned into a financial benefit. The only way for me to have turn down the bank’s largess, would have been to move out, leaving the place vacant. This would also have left the association dues unpaid and leave me out of a security deposit, which the “owner” indicated she no longer had. The story is that the “investor/owner” financed multiple expensive homes all over the city and has supposedly left the country to hide from creditors.
It may seem like I’m living with zero costs, but in reality the assessments are somewhat high. They are about one-third of what the rent is supposed to be. So I’m getting essentially a two-thirds discount on what I already deemed a good deal when I moved in. I’m not complaining, I’m just pointing out that it is not entirely free. Not to sound ungrateful, I realize this is unplanned yet fortuitous for me, so THANK YOU BAC/Countrywide for letting me stay here and telling me you don’t want any rent money. I suppose they can pass along the thanks to whomever makes it possible to run a for-profit business in this way.
The fact of the matter is that there are many hundreds of thousands if not millions of Americans living in nice unpaid homes without rent or mortgage payments due to the bubble of “investors” in RE. This has resulted in gains and losses depending on where one is in the scheme, not chaos to society Clio mentioned. In my case I was not part of the RE investment party, but as a renter I’ve still been affected by it. My landlord for whatever reason decided to rent this place out rather than live here. It’s my guestimate that if the banks foreclosed, kicked out the tenants and former owners, then sold everything then they would be bankrupt by ungodly amounts. Since the government has chosen to prop them up, they have little incentive to do this as it would show what the true market value of all of this shadow inventory.
@Clio. Sarcastically, I’m sure we all appreciate your pontificating on morals and especially class. You are clearly one to set the standard to which others should aspire in this regard…haha. Clio said, “Believe me – [people with class] are the first ones to attack anyone who threatens their reputation or insults them.” Uhmmm…yeah, that sounds spot on Clio. I really wish I knew someone as classy as you…LoL.
To respond to your oh so tactful post about sending me your ill fitting clothes. Don’t worry I’m not taking it literally, I recognize it as an attempt to shame someone. Truthfully though if a random person (other than you) for some reason sent me clothing that was used but up to my personal standards I would gladly accept it. Indeed, when I was a college student I shopped at (and made donations to) a second-hand non-profit clothing place. I don’t do that now only because my tastes have gone up, not because I consider myself somehow above second-hand goods. Now I shop for used golf clubs or other luxury goods online. I for one know that society and the individual is better off when more things are reused and less things are wasted. When I read the economic and ethical theory that being wasteful in a world of limited resources is immoral, I immediately recognized the truth in that. Unlike you, I take no pride being wasteful. And this applies regardless of one’s wealth. Indeed it is more important for the wealthy individual to use resources responsibly, because he/she has the ability to do the most harm to society. A man with access to things and resources who is wasteful should be ashamed of himself not boastful.
So to answer your sarcastic question, no I would not have you send me the clothes, solely because judging by your posts you are one of the last people I would want having my address. Professional achievement and wealth do not always mean that a person is good for society, classy, or even sane. Indeed positions of privilege can sometimes attract the worst of individuals.
This will likely be my last substantive post on this matter. I find cribchatter and the comments to be highly entertaining, but I hope I have better things to do professionally and personally than defend myself against the sort of person who makes personal attacks in anonymous message boards.
To those who have defended what I’ve written, I appreciate it.