Market Conditions: Chicagoland Housing Inventory Has Risen YOY the Last 4 Months
2013 was famous for having near record low inventory in Chicago.
Lack of product and record low mortgage rates combined to push Chicago housing prices up sharply. In some neighborhoods, prices exceeded previous peaks.
But over the last few months, the Chicago housing market has been changing.
Housing inventories in the Chicagoland area have actually risen, year over year, over the last four months.
In September, according to the MLS, 62,316 homes were on the market, up 5.1% from 59,292 listings last year.
Buyer demand also appears to be slowing as months of inventory has risen three consecutive months to 4.8 months in September. That is, however, still a sellers market as anything under 6 months favors the sellers.
From Crain’s:
“In 2013 we just saw such an acceleration and there was no way that was going to be sustainable,” said Matt Farrell, immediate past president of the Chicago Association of Realtors and managing partner of Chicago-based Urban Real Estate. “In 2014, to me, it’s just kind of a return to normal.”
Inventory steadily fell through the market’s recovery, dipping to just 3.8 months of supply in August 2013 before starting to rise again, according to MRED. Realtors and other groups have cited tight supply as a major force holding back first-time homebuyers and other key cogs of the market competing against multiple bidders or cash buyers. Six months of supply is generally viewed as a balanced market.
“First-time buyers may have had some frustration trying to do something in the last year because they could never beat an all-cash offer, they could never close in 15 days,” Mr. Farrell said. “There are buyers who were discouraged, who were ending up with their third or fourth choice, or deciding to rent for another year.”
The rise in homes for sale has yet to significantly affect sellers, though. Prices are still rising, albeit more slowly than last year, and the average time it takes to sell a home fell to 84 days last month from 98 in September 2013. Distressed home sales have fallen 25 percent through the first eight months of the year, meaning less lender-driven competition and downward price pressure on homeowners.
All the agents are talking about a return to a “normal” market. Yet the Chicago market hasn’t been “normal” for over a decade.
What impact will having a “normal” housing market have going forward?
Is that the end of the dramatic price increases?
More choice for homebuyers as Chicago listings rise [Crain’s Chicago Business, David Lee Matthews, October 30, 2014]
“Is that the end of the dramatic price increases?”
yes
Here’s the data I’m looking at for September: Attached inventory at 4.8 months supply vs. 5.0 months of supply last year. That is based upon contract volume so it will likely go up as contracts die.
Detached inventory is at 4.4 months, down from 6.2 last year. That will also go up a few tenths but it’s still way down from last year.
“In some neighborhoods, prices exceeded previous peaks.”
example please
I wonder if sales will be up in the suburbs, particularly North Shore and Hinsdale, next year. My son is losing several classmates to these burbs, mostly North Shore next fall. The parents sold this summer/fall or are on the market now. I think the 2013 boom inspired confidence which caused the increase of homes on the market that we are now seeing. It seems that many in my cohort are moving to the burbs in the next year or so, which I find surprising given that they have secured their children’s spot in private school and hard part about raising a family in the city (i.e., space and school) is over for them. These folks are in private school and have SFHs in the green zone, not exactly who CCers think will head to the burbs.
What is driving this?
Is this due to concerns about rising property taxes, which will be steep on these SFHs and a big waste of money if you are in private school?
Concern about schools (maybe high school concerns or just not wanting to spend 25K per year per kid when New Trier’s ACT of 27/28 is nearly as good as Latin/Lab/Northside/WP)?
Do they think that prices are artificially high now and they are getting out while they can? This doesn’t seem to make much sense b/c the North Shore and Hinsdale are not better in this regard.
Or, is it the realization, as Gary noted in yesterday’s comments, that housing will not be a great investment in the coming decade and they would prefer to have less expensive housing costs and taxes and that same 2.5 SFH in the city gets you a lot in the burbs such that you could even downsize to a less expensive house (1.8) and get more? Since these are people who can afford the city (CEOs, inherited wealth,etc..) and have SAHMS, I’m beginning to conclude the latter.
“In some neighborhoods, prices exceeded previous peaks.”
“example please”
https://www.redfin.com/IL/Chicago/4237-N-Claremont-Ave-60618/home/13390897
What, you didn’t get 7% above your purchase price?
“What, you didn’t get 7% above your purchase price?”
Beats me, I’m a product of CPS remember
“taxes and that same 2.5 SFH in the city gets you a lot in the burbs such that you could even downsize to a less expensive house (1.8) and get more?”
You mean higher taxes, too, even at a 1/3 lower purchase price, right? Outside of Oak Brook, the tax delta (just as outlay amount) doesn’t favor the suburbs, even at that price difference, and even accounting for the “doomsday” looming over Chicago (which is looming over most of the ‘burbs, too, in similar %age amounts).
DZ that is a mcmansion with a gator deck and everybody know’s they are impossible to stop
not to mentions sold by M Greco who could sell wood to a forest (any forest not named westloopelo)
Our neighborhood is experiencing the opposite of UrbanMommy’s. Almost every home that has sold over the last three years has been empty nesters, estate sale or nursing home goers. In almost every instance, the buyers are young families either with kids are likely to have them soon.
Yeah but Vlajos you are with the rift raft, not the upper echelon, and probably live in an area reflecting that. You or I will never understand the north shore mentality
“You mean higher taxes, too, even at a 1/3 lower purchase price, right? Outside of Oak Brook, the tax delta (just as outlay amount) doesn’t favor the suburbs, even at that price difference, and even accounting for the “doomsday” looming over Chicago (which is looming over most of the ‘burbs, too, in similar %age amounts).”
–Yes, taxes are higher in Hinsdale and the North Shore, but you get school with it. It is overall less expensive to move to the 1.8 million dollar home in the North Shore and pay 30-35k in taxes then to stay in the city and pay 20K in taxes and 25K per kid for private school. With two kids, the cost of city living is 70K and in burbs 30-35. Consider what families with three kids save. Even if you pay less tuition say, 12K for catholic school, it is still cheaper to live on the North Shore.
“It is overall less expensive to move to the 1.8 million dollar home in the North Shore and pay 30-35k in taxes then to stay in the city and pay 20K in taxes and 25K per kid for private school. With two kids, the cost of city living is 70K and in burbs 30-35. Consider what families with three kids save. Even if you pay less tuition say, 12K for catholic school, it is still cheaper to live on the North Shore.”
If we’re talking about the umc and above, seems to me city living should be for people who are happy w cps (at least for elem) or for whom the cost of private is not a big deal. I never understood the nonnys of the world paying (15 years) X $(25K+) X (number kids) when they could not easily afford it.
cps is pretty good deal, even if you just go for elem you can amortize HS costs over 15 years plus.
“rift raft”
excellent
“I will never understand the north shore mentality”
isn’t that your job? also, just about done w aapl options now (except jan 16 expiry). need ideas. maybe sell some covered calls.
hahahahaha no
not a bad time at all to sell covered calls on it, wouldn’t do longer than 3 months though… looks to be nearing the top of its trend channel and is probably due for a pullback soon
“In some neighborhoods, prices exceeded previous peaks.”
Large swaths of River North, Streeterville, Bucktown, Wicker Park, Lincoln Park and Lakeview are above peak depending on the building/property/location.
It’s still building by building in River North and Streeterville. Some buildings are WAY above peak and others are still below. Depends on if they allow renters or not (as investors are pushing up prices in some buildings.)
In other areas of the GZ, townhouses are still hot (especially 3 bedrooms) although I’ve seen that cooling off in the last few months.
This 1 bedroom in Southport, however, is not at peak.
It sold for $263,000 in 2005.
It is finally under contract after seven months and several price reductions. It’s now listed at $200,000. That’s the 2001 sale price.
Ironically, the listing says: “great investment.”
https://www.redfin.com/IL/Chicago/3458-N-Janssen-Ave-60657/unit-1/home/39675962
urbane mom
excellent post
why are we not able to reply directly to OP?
Sonies, good point.
“Even if you pay less tuition say, 12K for catholic school, it is still cheaper to live on the North Shore.”
So sad. It’s about the money and a house? Public schools in places like Winnetka are bastions of “progressive education”. Google John Dewey and then Charlotte Thomson Iserbyt.
Catholics or Jews who value religion cannot honestly turn their kids over to these public schools, because: “Dewey, who was in fact a practicing Christian until his mid-thirties, wrongfully eschewed the mythology and ritualism of dogmatic religious practices such as Christianity. Edmondson argues that Dewey’s enmity toward organized religion has been absorbed in American education and states, “Nowhere has genuine faith been more scorned, both by condescension and hostility, than in the halls of the educational establishment.” To Edmondson, John Dewey’s rejection of religion has been adopted by the educational establishment and has led to the deterioration of morality and traditional values in education. Edmondson views this decline of morals in education as giving rise to many of the current problems that are plaguing modern schools”
it’s not the schools that produce the 27 ACT scores, it’s the raw IQs of the kids inherited from intelligent parents. Everyone knows the SAT has been dumbed down, overall. So the New Trier kids are just placing themselves in the same place: above-average, but on the overall dumbed down bell curve.
Right because you can’t have morals if you don’t believe in Jesus or Moses right? Get the fuck outta here
“Right because you can’t have morals if you don’t believe in Jesus or Moses right? Get the fuck outta here”
Of course it has nothing to do with religion. Having morals is dependent on whether you are gay or not.
UM – in what area of the city do you live? I had one set of friends leave for the burbs (Hinsdale) when their kid was 4 y/o. Strangely they are sending their kid to a private school out there so it wasn’t for that reason. And they paid more for their place out there than in the city fyi. All of my other friends w kids have stayed in the city.
I was at a private school tour this weekend for my kid (a prospective student). Teacher said for the first time she could remember they had zero attrition from JK to Kindergarten.
Regarding taking money off the table in housing. I think its a very rare phenomenon – usually only happens with the final sale when people are spending down the equity in their home. Its a natural thing to want to “move forward and upward” as life goes on. Who wants to sell their house in the city and then spend less to live in a boring bungalow / cr@ppy house in a nice burb? We all want to “progress” which usually means buying a nicer house / nicer car / going to a better restaurant / taking a better vacation. I don’t know anyone in their 20-50s who sold RE and then moved into a cheaper house (or car for that matter – who goes from a BMW to a Honda?). I just don’t think its culturally acceptable to Americans. If that is a good / bad thing is a very long and complicated discussion.
“I had one set of friends leave for the burbs (Hinsdale) when their kid was 4 y/o. Strangely they are sending their kid to a private school out there so it wasn’t for that reason. And they paid more for their place out there than in the city fyi. All of my other friends w kids have stayed in the city.”
We have one set of friends who did this too. Their taxes doubled and they aren’t even using the public school out there. Granted, they left a better CPS neighborhood school than the suburb they moved into.
“I had one set of friends leave for the burbs…Strangely they are sending their kid to a private school out there so it wasn’t for that reason. ”
and
“We have one set of friends who did this too.”
could it be that they moved for a shorter work commute?
I disagree with HH’s erroneous statements including “..it’s not the schools that produce the 27 ACT scores, it’s the raw IQs of the kids inherited from intelligent parents…” People who’ve raised kids know their standardized test scores reflect how much knowledge they can regurgitate when questioned under pressure. The amount of knowledge they’re able to recall is determined partly by heredity but is primarily determined by how much they’ve learned & retained. In my real world experience as opposed to imaginary constructs, hard working students out-score students with much higher IQs who choose to coast thru high school. (Google recent study which concluded that regardless of socio-economic status and intellect, the reason Asian American students are more academically successful than other American students is because they work harder.)
“the reason Asian American students are more academically successful than other American students is because they work harder.”
Academic success = higher test scores? And vice versa?
Me thinks you are blending two separate points, Southbound.
“Academic success” (whatever that means) *is* largely about hard work. Beating standardized tests, much, much less so.
Icarus – “could it be that they moved for a shorter work commute?”
Both spouses work. It shortened it for one and lengthened it for the other. So net neutral but I would guess it was a factor.
In my friends instance, it was driven by day care.
Yoss – I live in River North. The people I know who are leaving are not leaving because of the commute. They are moving up from a 800K condo to a house or are leaving when kid 2 or 3 hits school. Also, bear in mind, that if you live close to the train on the North Shore your commute is less than those who commute (car, bus, CTA)from North Center, Southport and many other city areas with good public schools. The commute from Wilmette/Winnetka is about 30-45 minutes depending on Metra stop. My friends in SoPo and North Center commute for 40 minutes plus.
Your right that most people don’t want to downsize until retirement. But, what I am seeing is people with 2-3 kids leave for a similiar house (1.8 on North Shore gets you as nice as a 2+ million house in Lake View and Lincoln Park). They take the money they save in private school (discussed above) and house and put it into college savings plans/retirement/vacations. So, they are not downsizing as much as spending more money on investments – retirement, college — and less in taxes and private school which do not appreciate. Private school is an investment only to the extent that it is better the public. The North Shore and Hinsdale have such good schools and are on par with many city privates and the money they save gets reinvested in the kids in another fashion – college, music lessions, tutors etc…
UM – in what area of the city do you live? I had one set of friends leave for the burbs (Hinsdale) when their kid was 4 y/o. Strangely they are sending their kid to a private school out there so it wasn’t for that reason. And they paid more for their place out there than in the city fyi. All of my other friends w kids have stayed in the city.
I was at a private school tour this weekend for my kid (a prospective student). Teacher said for the first time she could remember they had zero attrition from JK to Kindergarten.
Regarding taking money off the table in housing. I think its a very rare phenomenon – usually only happens with the final sale when people are spending down the equity in their home. Its a natural thing to want to “move forward and upward” as life goes on. Who wants to sell their house in the city and then spend less to live in a boring bungalow / cr@ppy house in a nice burb?
Yoss – I live in River North. The people I know who are leaving are not leaving because of the commute. They are moving up from a 800K condo to a house or are leaving a SFH in the city when kid 2 or 3 hits school. Also, keep in mind, that if you live close to the train on the North Shore your commute is less than those who commute (car, bus, CTA)from North Center, Southport and many other city areas with good public schools. The commute from Wilmette/Winnetka is about 30-45 minutes depending on Metra stop. My friends in SoPo and North Center commute for 40 minutes plus.
Your right that most people don’t want to downsize until retirement. But, what I am seeing is people with 2-3 kids leave for a similiar house (1.8 on North Shore gets you as nice as a 2+ million house in Lake View and Lincoln Park). They take the money they save in private school (discussed above) and house and put it into college savings plans/retirement/vacations. So, they are not downsizing as much as spending more money on investments – retirement, college — and less in taxes and private school which do not appreciate. Private school is an investment only to the extent that it is better the public school. The North Shore and Hinsdale have such good schools and are on par with many city privates and the money they save gets reinvested in the kids in another fashion – college, music lessons, tutors etc…
UM – in what area of the city do you live? I had one set of friends leave for the burbs (Hinsdale) when their kid was 4 y/o. Strangely they are sending their kid to a private school out there so it wasn’t for that reason. And they paid more for their place out there than in the city fyi. All of my other friends w kids have stayed in the city.
I was at a private school tour this weekend for my kid (a prospective student). Teacher said for the first time she could remember they had zero attrition from JK to Kindergarten.
Regarding taking money off the table in housing. I think its a very rare phenomenon – usually only happens with the final sale when people are spending down the equity in their home. Its a natural thing to want to “move forward and upward” as life goes on. Who wants to sell their house in the city and then spend less to live in a boring bungalow / cr@ppy house in a nice burb?
“The commute from Wilmette/Winnetka is about 30-45 minutes depending on Metra stop.”
What happens if you miss the train? My commute from Lincoln Square takes 30-45 minutes, regardless of when I leave.
“The commute from Wilmette/Winnetka is about 30-45 minutes depending on Metra stop. My friends in SoPo and North Center commute for 40 minutes plus.”
That 30-45 minutes is true if you’re counting time on train only (or plus very short walk on both ends). So, if you live less than 2 blocks from the station in Winnetka, and work west of the river and E of the Xway, b/t Lake and (maybe) Adams, sure; if you work on Michigan, no way.
Brown (+ red, if switching) can suck tho, and is about 30 even when it works perfectly, more realistically the 40 number. Only takes 40 to get home driving if it’s pouring rain or snowing; rarely takes 40 to get in.
Vlajos/Anon – yes I agree the commute from the North Shore is only equal to Northside neighborhoods if you work on the west side, but many people do or they can work from home. My office allows working from home fairly liberally. I think those that work on Michigan or elsewhere stay in the city or move to southern or western burbs. You could take a lot of cabs from Union Station for the amount of money you would save in private school tuition.
Yes, if you miss the train you are behind as next train is often 30 minutes later. But I can’t say that I see this happen with regularity. The suburb commute works as well as the City if you have regular rush hour schedule or are senior enough to walk out the door when you need to. I realize that is not everyone…but it is the group that I see moving to Hinsdale or North Shore 35-40ish with kids. Perhaps that is why they move at this stage of their life rather than earlier. When they were younger, perhaps they were not established enough (e.g., partners, managers etc…) to be able to control their schedule to make the Metra work, and now they can.
“move to southern … burbs”
Serious question (yes, showing my northside bias): Where would one who is opting out of paying $25k elem tuition move to that is a true “southern” suburb? Naperville is west/SW depending on perspective, but certainly not “southern”.
2d serious question: Do those people who are opting out of the $300k tuition bill choose any SD that isn’t north along the lake, N’ville or Hinsdale? Maybe an odd ETHS/OPRF family, of course, and some horsey set in Barrington (tho they weren’t ever city folks), but anything else seriously on the list for the city fleers?
I agree. It’s rare to move South. I know of one family that moved south (Tinley Park) but I believe it was because the second income spouse was a physician at U of C. Otherwise, it seems the private school set leave for Hinsdale and the North Shore.
“Where would one who is opting out of paying $25k elem tuition move to that is a true “southern” suburb? Naperville is west/SW depending on perspective, but certainly not “southern”.”
Isn’t LG/hinsdale ish where all the south siders who went to burbs ended up? That’s about as south as they got in the burbs.
Urbanmommy – Moving to the north shore to some 1980’s house sounds like a real fun time. In addition to having to subject their kids to NewTrier, they will have to spend 300k rehabbing the dated finishes.
You may know a “few” families moving t the burbs, but the overall trend is clearly the opposite. Take a look at the explosion of pre-schools and all the CPS schools facing overcrowding in the Better hoods. Even the older folks in the burbs are moving back to the city. Burbs are for dying and the city is for living.
I won’t even allow myself to be buried in the burbs… Too boring!
Heitman — You mean really ugly 1980’s houses like these?
https://www.redfin.com/IL/Kenilworth/501-Ridge-Rd-60043/home/13784360
https://www.redfin.com/IL/Wilmette/2328-Iroquois-Rd-60091/home/12555677
ww.redfin.com/real-estate#!min_price=1250000&max_price=2000000&v=8&sst=®ion_id=34883®ion_type=7&market=chicago
https://www.redfin.com/IL/Glencoe/57-Crescent-Dr-60022/home/13791477
https://www.redfin.com/IL/Glencoe/428-Woodlawn-Ave-60022/home/13788999
Please, Heitman. I don’t disagree that most people want to stay in the city. I live in the city. However, I am simply noting an uptick in families moving to the North Shore and Hinsdale that I never thought would leave. My point is to discuss what is driving this and if it is related to the increase in supply we are seeing in the city?
You can make your point that more UMC are staying in the city without mischaracterizing the North Shore and Hinsdale, which frankly are far different than the rest of the Chicago suburbs. The houses above are far from 1980s houses in need renovation and are less expensive than the 2.5+ million you need to live in Old Town, Lake View, Lincoln Park in a 25 wide SFH with the same finishes that Chicagoans won’t admit are glorified row homes.
Bashing can go both ways you know: The city is full of generation Xers who truly think they can have it all and have put themselves int the center of their universe to the expense of their children. They have deluded themselves into thinking that cramming 30-35 young children into one class in an oversized, underfunded neighborhood school is as good of an education as the North Shore and Hinsdale where classes are approximately 20-23 with a teacher AND an aid/assistant teacher. What they don’t realize is that their children spend the year teaching to the test, and have far less music, Suzuki, foreign language, and art than children in the burbs, and, on the whole, the neighborhood CPS schools (that don’t skim the best as SEES schools do) perform no better, if not lower, than schools in Hinsdale and the North Shore where children have plenty of specials and extras. They have convinced themselves that annual test scores (which are improving in City schools) equate to a good education on a daily basis. They have turned a blind eye and have convinced themselves that contractors with twice monthly art supplies on a cart is really an art class. Even more hilariously, they believe all of their children (2-3) will test into an SES high school even when the statistics clearly belie this fact. They note how Rahm is increasing SES high schools but ignore the math that shows the new school
equates to less than a 2% increase in slots.
“Where would one who is opting out of paying $25k elem tuition move to that is a true “southern” suburb?”
Um…Flossmoor. Homewood Flossmoor routinely sends kids to the Ivy League.
“2d serious question: Do those people who are opting out of the $300k tuition bill choose any SD that isn’t north along the lake, N’ville or Hinsdale?”
As you said anon(tfo)- there are those who will go to Barrington/Inverness/Long Grove to opt out. But those are people who generally want more land.
Some will “opt out” simply by moving to Park Ridge. There are million dollar houses there too.
“They are moving up from a 800K condo to a house or are leaving a SFH in the city when kid 2 or 3 hits school.”
It’s not only about the city schools. The city itself just gets tiring for some people. You normally don’t fight the traffic or the parking garage madness to shop at the Whole Foods in the burbs. It’s easier to take your kids to doctors appointments. Maybe the sports teams and leagues are better? The libraries are good. And several people here have mentioned the nightmare of trying to get your kid into a basic Park District program.
The suburbs make is so much easier to do all of these things. It’s an added bonus that you don’t have to do any school applications and you know where your kid is going to high school.
“I am simply noting an uptick in families moving to the North Shore and Hinsdale that I never thought would leave.”
Do you actually think this is an increase from what families did in the past? Or is it a function of your cohort reaching the stage where the burbs start to increase in appeal, as they have for every cohort?
And given all of this, why would you stay in the city? Why subject your child to an overcrowded neighborhood school wo enough specials or overpay for private?
Vernon Hills High School average ACT score is 24.7.
My kids have art, music and computers every week in CPS. Not a magnet school. We don’t have a foreign language which pisses me off.
“We don’t have a foreign language which pisses me off.”
I’m pretty convinced there isn’t much learning in my kid’s foreign language class, so not sure you are missing much. Maybe it will be more productive as they get older. Now, if they were at the lycee…
I also don’t understand all the focus on computers, coding, etc.
“Um…Flossmoor. Homewood Flossmoor routinely sends kids to the Ivy League.”
So?
Is it a destination for people who would have otherwise sent their kids to Parker/Latin/Lab (British/Gems)?
No.
“They note how Rahm is increasing SES high schools but ignore the math that shows the new school equates to less than a 2% increase in slots.”
There’s a 2% increase in slots *just from the Payton expansion*.
“Some will “opt out” simply by moving to Park Ridge. ”
Again: Are these the folks who were seriously considering spending $75k/year for their 3 kids to go to Catherine Cook?
No. They’re the people who were doing the math on sending two kids to Viator’s and deciding that the tradeoffs favored the burbs.
DZ, I agree about foreign language in schools, it doesn’t really take with kids in my experience (unless they are truly emmersed in it, which doesn’t happen in public schools). I just like the thought of it. I didn’t take a foreign language until 7th grade. Most kids hate it anyway.
“Gems”
Wow that’s expensive.
“3 kids to go to Catherine Cook”
Who is sending their kids there, or any pricey-ish school wo a HS (like chicago city day)? Is it for kids who couldn’t get into latin/parker? You wouldn’t pass up the HS otherwise, right?
and who goes to british these days? is it clearly behind latin/parker?
“It’s easier to take your kids to doctors appointments.”
…IF you have a SAHP (of WFHP). Otherwise, it really means a day off work. I’ve never found it hard to take a kid to the doctor in the city.
“Where would one who is opting out of paying $25k elem tuition move to that is a true “southern” suburb?”
Orland Park
Please don’t look to Parker as being a top of the line school. Parker is for families who want their kids catered to and not challenged. Parker feeds into small private colleges with few going to larger and more competitive schools. Send your kids to Parker if you already have their future paved (i.e., trust-fund), or if you want your kids to meet people of this caliber. Lab, Latin, and British will all give your kids a better education and life learning experience than Parker.
Hinsdale Central and New Trier and both plagued with serious drug problems. I’m not saying that there are not issues at Payton and the other selective schools int he city, but the atmosphere and education in the suburban schools do not come close to what you can get in the city. If I know several college recruiters at NW and U of C, and they all feel the suburban schools (in general) do not produce the quality of students that the city schools do. They are looking urban and this trend will continue for many years to come.
Do you actually think this is an increase from what families did in the past? Or is it a function of your cohort reaching the stage where the burbs start to increase in appeal, as they have for every cohort? And given all of this, why would you stay in the city? Why subject your child to an overcrowded neighborhood school wo enough specials or overpay for private?”
Evidently, I’m not economically rationale and overpay for private and am relieved that we have a private with high school. I initially thought it was a cohort effect, but in talking with other parents, including parents at other schools, it seems the percentage leaving is higher than in prior years, not just at our school but a few others too. Maybe its just families who couldn’t sell in 2008-2012 and now they are moving and always wanted to. They waited until the second or third child hit school to move so maybe this is it. Or maybe its that state of the Illinois economy and the realization that eductional opportunities in high school are not going to increase at the rate taxes will. Even if Payton increases 2% and Obama adds slots (though there is some notion of a neighborhood program here), raising slots 8% doesn’t do much if more people stay. It’s not keeping up with growth.
Maybe people would rather “cut bait” now and compromise on suburbs so that their children can have lifetime friends rather than moving when the kids hit high school and options are not great. Although my choice is to stay in the city long term, I think moving to the burbs with young kids is far preferable then staying in the city and moving when they hit high school. How do you establish a life in the burbs then? Maybe these people are just hedging.
Steve Heitman – Several of the people we know that moved to the North Shore are doing public K-8 and said they will rethink high school when the time comes. They may try to test in the SEES in the City, or go to Loyola or another city private. They plan to save the money they would spend in private K-8 and reevaluate later. It does make some sense in that you get a great K-8 and its easier to move back into the city when the kids are older and you don’t need a play room and yard.
“The city itself just gets tiring for some people. You normally don’t fight the traffic or the parking garage madness to shop at the Whole Foods in the burbs. It’s easier to take your kids to doctors appointments. Maybe the sports teams and leagues are better? The libraries are good. And several people here have mentioned the nightmare of trying to get your kid into a basic Park District program.
The suburbs make is so much easier to do all of these things.”
LOLWUT? I never really have much trouble taking my kids to the doctor or hospital (and both are some of the absolute highest quality in the world). If I need to, I leave work, pick them up, take them there, often we even park on the street and it’s pretty easy to do so in a lot of places for no more than like $5 / hour. No idea how that works in the burbs unless you also work out there.
The grocery is also really easy – Jewel, Mariano’s and Whole Foods all have free parking, and it’s only with WF that it’s ever even at all a problem, and it maybe takes 5 minutes extra. But mostly we walk to the grocery. LIbraries, the ones around me are pretty good, but it’t not like we spend that much time there, we’re just getting or returning books. I don’t mind the bums, as I don’t want my kids growing up in some fake vacuum.
Sports leagues, I may give you that one, if you want to spend thousands a year for kids to play sports year round and get top quality instruction in something that they will never make any money in and probably end up super stressed about, you are better off in the suburbs. You don’t have kids do you don’t really get it, but really kids’ sports are important for having fun, making friends, learning social skills and staying in shape, you aren’t getting that part of it in the top travel leagues and if you are moving to the suburbs to have your kid be the next Madison Bumgarner frankly you are a fool. And this is coming from someone who played a (non-rev) (non Big 5) college sport for a couple of years, until I wised up and decided to have some fun.
The people I know who moved to the suburbs are the ones who gave up – they couldn’t figure out where to live, they didn’t make enough money, they aren’t willing to figure out the schools, etc. More power to them, but they’re the ones who are constantly talking about “the burbs” with a big chip on their shoulders about it. The people I know in the city aren’t really defensive about it – we don’t really give a shit what people in the suburbs think. I just think that it’s funny that someone who doesn’t live in the suburbs and doesn’t have kids is drawing conclusions about why people with kids move to the suburbs.
Urban mama –
We understand you have a bias towards the burbs which is fine. Please do understand that all the facts support the opposite of this “suburban flight” you are suggesting. The prime areas of the city are seeing a huge influx of families staying for the long-term. This trend is only beginning and will continue for many years to come. Urban and walkable areas are the future, and suburban sprawl is the past and is not coming back.
Urban sprawl is the cause of so many negatives in peoples lives. It leads to higher pollution, higher expenses, longer travel times, higher healthcare costs, health problems, and an overall decline in the quality of life. Don’t do it people!!
Heitman – Where do you get off saying that I am baised toward suburbs? I live in the CITY. If you look at old posts, I am the urban mom complaining that there are not enough large condos suitable for long-term familiy living. I think the SFH in the far north is ridiculous as people should be living more dense and cutting their commute.
I just play devil’s advocate because you seem so entrenched in your position that the city is superior for everyone in every way. You can’t see that for some, possibly many, the suburbs make sense. Many people work in the suburbs, many find it more economical, and even some people who can afford the GZ lifestyle, including private school, see more value for their money in the suburbs. There is nothing wrong with this. I agreed with you that the stats indicate that more upper middle class and middle class are staying in the city. But, unlike you, I don’t make blanket categorizations of what is better. Perhaps we are just returning to post suburban fight, to normal so to speak, where their are good options in both places.
Moreover, I think your categorization of all suburbs as being simliar — less green, less desirable, less walkable — is a mischaracterization of many suburbs. I would not lump the North Shore in with Schaumburg. Moreover, what about the city folks who live in North Center, work in the Loop, commute 40 minutes and then put their kids on a bus to a selective enrollment school that is 30 minutes from their house. How is that green, walkable and less of a commute? These people exist all over the city. Many of my colleagues think they are so superior to my suburban coworkers because they live in the city except they ride the CTA for 40 minutes and alternate carpool to a better school and then drive their kids to Menomenee and the Licoln Park for AYSO soccer and stop at Target on the way home. Really, this is no more urban than living in Wilmette. I just call it for what it is — city folks living a quasisuburban lifestyle and pretending they are somehow superior to suburbanites.
I choose city and lived in NYC without a car for years. That is urban living, not what may CCers like to call their commute from Old Irving Park.
I grew up in the suburbs of Dallas and have lived in Chicago for the last 15 years (time flies). The reality is that suburban living is easier and less stressful. However, it’s also true that when you live in Chicago for a while you just get used to the inconvenience and you know how to navigate it. You know that you might find street parking on that stretch of Franklin and that Wabash is a disaster around lunch time and we can park in my wife’s parking garage when we go to movies downtown. You get used to the smells of the subway and the potholes. And the city has it’s advantages also. I can walk a couple of blocks and get a killer burger (literally) or a decent slice of pizza and there are hundreds of bars and restaurants to pick from.
When friends visit from out of town they are taken aback by what we put up with. At the end of the day there comes a point where you sit back and say “you know….there’s an easier way”
It’s an interesting dilemma and I think Urban(e) Mommy has the guts of the calculation laid out. We chose to stick with the city due to the walkability primarily and the proximity to work. Lincoln Square yes, has a 40 min brown line ride to the loop but also has a 12 min Metra ride.
We debated certain western burbs as well (Downers primarily, Elmhurst, Evanston) for same reason: as long as we could get a house walkable to train and to a ‘downtown’ strip. In the end, LS ended up offering both but still in the city. The car really only comes out of garage regularly for drop offs (day care / jk currently, both will go to same walkable school from house eventually) and for Target/Costco/Grocery visits.
It’s great, and the density has also allowed friends to live walkable to our place as well – and we (adults, kids) meet up often, even with spur of the moment type plans.
Friends that have made the hop to the burbs either west or north have different lives than that, but none put the priority on walking that we had.
Most kids in good suburban school districts end up going to UofI, Indiana and Mizzou.
Most kids in good suburban school districts end up going to UofI, Indiana and Mizzou.
—As do most kids going to Parker, British and Lab. The bulk of the kids go to this caliber of school. When asked, Parker flat out told us that UofI was the number one most frequently attended college. The few schools that have slightly higher rates of selective placement also have more legacy/alum parents who donate. Thus, it’s the parents, not the school, that gets them in. Don’t choose a private because of placement, choose it becaues you like the education, environment, location etc… If you are not a legacy/alum/VIP, then your child will still have to earn it. For many unaffilitated, non-VIPs, their kids changes are just as good out of New Trier/Hinsdale and they don’t have to pay 25K per year to end up in the same place as the average Parker kid. Actually, really bright unaffiliated kids do better at publics because their his no pressure for teachers/counselors to recommend the kid who is a child of a donor over the non-legacy kid.
Heitman – Three sincere questions:
1) Are you reading Urban Mommy’s posts all the way through, or just replying after seeing any reference to people leaving the city for the burbs?
2) W/R/T the drug problem at New Trier, are you claiming that it’s materially worse than it was back in the 80’s?
3) Can you elaborate at all on what formed your deeply held Parker views?
Sabrina: I’m sure Floosmor and Park Ridge are very nice. They sound very nice. But the first and only subsequent times I’ve ever heard of them have been here on CC. I know that’s a result of my having not grown up in the area (and having a much celebrated/pilloried geographic preference within Chicago), but bit of ignorance on my part didn’t keep us from enrolling a kid at one of the private PK-12 schools in town.
DZ: We considered CC, but got into one of the PK-12s (but my wife, who’s the more education-focused of the two of us, was seriously interested in CC). I’ve met a handful of families at British, and they all seem to love it. But unless a family has a strong preference for the uniforms/British style of education (and I recognize there are such folks), I doubt many families are turning down Parker/Latin for it.
Sorry, I meant Parker British and Latin. Lab has higher placements in selective schools, but again, a higher rate of legacies to these colleges. You don’t teach at U of C unless your a graduate of a prestigious college.
“I would not lump the North Shore in with Schaumburg.”
Hope someone kills me if I ever have to live in either of those places. I’d almost pick schaumburg over north shore. NOt really but at least you’re resigned to living somewhere subpar.
“Moreover, what about the city folks who live in North Center, work in the Loop, commute 40 minutes and then put their kids on a bus to a selective enrollment school that is 30 minutes from their house.”
Certainly, the nortcenter quasi-urbanites (even if they walk their kids to school) are among the worst hypocrites (my v green commute is 25 min a2a). But why do you care? You are the last true urban poster standing now that nonny is off in his (somewhat more urban using a selective local comparison) SFH.
“what about the city folks who live in North Center, work in the Loop, commute 40 minutes and then put their kids on a bus to a selective enrollment school that is 30 minutes from their house.”
What kind of dope moves to NC and sends their kids to an SEES that’s 30 minutes away? There are 2 SEES *IN* NC, and the neighborhood schools are more than adequate anyway?
I think you know a lot of stupid people.
“We considered CC, but got into one of the PK-12s (but my wife, who’s the more education-focused of the two of us, was seriously interested in CC).”
Interesting. Don’t know why some of those schools don’t expand to HS. Seems like there is demand. I’m sure space/land/etc but still people seem desperate for HS spots. Speaking which I think you ahve to count Lane in the expansion of slots. It’s either become acceptable recently or will in near future for many. Good enough to get into U of I at least. And not that hard to get into at the moment. Even our neighbors’ not particularly bright middle child got into lane AC.
“What kind of dope moves to NC and sends their kids to an SEES that’s 30 minutes away? There are 2 SEES *IN* NC, and the neighborhood schools are more than adequate anyway?”
The kind of dope like you who thinks that you actually have control over which SEES you can attend. Many accept only Tier 4 kids who are in the 99% (e.g., Skinner North) and don’t realize that even though your kid is smart and scored 96% that you can’t get into the one down the street, and instead are offered other SEES schools outside of your neighborhood. It is nearly impossible to have 2-3 kids and have them all test into the same SEES in this city.
“Many accept only Tier 4 kids who are in the 99% (e.g., Skinner North) and don’t realize that even though your kid is smart and scored 96% that you can’t get into the one down the street, and instead are offered other SEES schools outside of your neighborhood. It is nearly impossible to have 2-3 kids and have them all test into the same SEES in this city.”
our neighbors and another family we know have both kids in skinner n (their first choice). cab driver I met has both kids in skinner w (his first choice); he said he just bribed them to do well. I’m not sure it’s really that difficult. Know several other families w multiple kids at same (good) SEES.
“Speaking which I think you ahve to count Lane in the expansion of slots.”
People who haven’t counted Lane over the past 5 years are dopes, or live south of North Ave. Distance is a fair basis to exclude–but then you’d exclude Northside, too, and then…
Anyway, for those who only count the ‘big four’, there are 1400 seats per class. The Payton expansion adds 100–which is +7%, not plus 2. And the Not Obama College Prep is another 300 seats, which is also more than 2%, even after you deduct the (alleged) neighborhood seats. And if you count only the big four, compared to 5 years ago, there are 50% more seats, bc 5 years ago it was a big three–Jones only moved up with the new building on the horizon.
So, from a certain pov, we’ve gone from ~900 acceptable seats/class to 2400. Yes, only ~50% of those are available to the sorts who we are discussing, but that doesn’t change the 2.5X increase in seats.
“When friends visit from out of town they are taken aback by what we put up with.”
My out town friends are taken aback at how nice and livable the City is. Probably depends on where they are from.
DZ – I don’t know that I’d consider myself green but I do live just north of North Center so could be clumped in with that grouping. I have put significant capital into making my 120+ yr old place more energy efficient but have a ways to go. Not quite ready for the photovoltaic upgrade; need better insulation on exterior walls first. Or a Tesla if I’m dreaming.
I thought you’d give me the pass on hypocrisy because our planning involves walking the kids and taking public transportation for work. Should I look into personal carbon offset credit trading?
🙂
“You are the last true urban poster standing now that nonny is off in his (somewhat more urban using a selective local comparison) SFH.”
what is the criteria for True Urban Poster?
“Skinner North”
If you want to send your kids to SN, and Bell/Coonley/whatever is beneath you, why are you buying in NC? Doesn’t make sense.
Seems like UrbanMommy has a very high bar for urban. Basically only NYC qualifies in the US.
“I thought you’d give me the pass on hypocrisy because our planning involves walking the kids and taking public transportation for work.”
I think it all hinges on whether you keep telling urban mommy’s suburban colleagues that you are superior to them.
What is your neighborhood school? Waters? We may yet end up in lincoln square-ish.
Hah, luckily enough I haven’t recently expressed distain for another’s housing choice.
Well except for a friend that bought a 1 bedroom (zing!).
We’re in McPherson.
“We’re in McPherson.”
And you’re fairly happy w mcpherson (prospectively)? That’s a sincere q. Have not heard it talked up a lot.
“So, from a certain pov, we’ve gone from ~900 acceptable seats/class to 2400.”
Wow. That’s it? Yikes. No wonder everyone moves to the burbs. That’s barely three of the top high schools combined (using just its entering classes.)
Most people’s kids are average or maybe slightly above average. It makes more sense that you’d rather your kid was average at Hinsdale South or Naperville Central than deal with trying to get them into a private high school in the city.
Someone’s kid is in the bottom 25% at New Trier or Hinsdale Central. Why is everyone so obsessed by the high school? Most of the upper middle class ones do a good job of preparing students for college.
“Most kids in good suburban school districts end up going to UofI, Indiana and Mizzou.
—As do most kids going to Parker, British and Lab. The bulk of the kids go to this caliber of school. When asked, Parker flat out told us that UofI was the number one most frequently attended college.”
Yes! Thank you Urban Mommy for saying what I have said for 7 years on this blog. Who really cares about the high school? Your kid will end up at the SAME college either way. If your child is Harvard/Princeton/Yale material- they will get there from whichever upper middle class high school you send them. Everyone else gets fed to the same state schools or good private schools. The so-so Latin student will end up in PoliSci 101 with the top 25% from Downers Grove North or Libertyville High at U of Illinois.
Actually, it might be to your benefit to NOT go to Parker, British, Lab, NT, Hinsdale Central etc. The universities look for diversity in location and experience.
“Many people work in the suburbs, many find it more economical, and even some people who can afford the GZ lifestyle, including private school, see more value for their money in the suburbs.”
If you worked at any of the major companies on the North Shore I don’t see how you could do the city and commute up there. I’m talking Abbvie, Walgreens, Allstate etc.
I realize that’s why a lot of them are now moving their offices to downtown Chicago (because the millenials don’t want to live in the burbs) but not all of them have. So it would make sense to live up there if you work up there.
“I just think that it’s funny that someone who doesn’t live in the suburbs and doesn’t have kids is drawing conclusions about why people with kids move to the suburbs.”
I’m not making any conclusions. I’m drawing from things said here on this blog by many different people over the years as well as articles in the Reader and other Chicago publications as to why people who have lived in the city for 10 years are fleeing to the suburbs. Many of them talk about schools, the difficulty of getting kids into programs through the Park District and all the things that just make it really hard to live in the city versus the suburbs.
And yes- these are upper middle class people but they’re not rich. They don’t have thousands of dollars extra to be throwing around. When they do these articles they’re not talking to people who live in million dollar houses. They talk to people who live in $400k and $500k houses. One woman in the Reader article got her kids into two different good schools but she spent like 45 minutes (each way) driving them there and back every day. Why is that fun? Why is that normal? Who would want to do that? After awhile you are just exhausted.
There was another woman with 3 kids who spent 1.5 hours driving each way- just to get them to school!
No thanks. It’s SO much easier in the burbs for families.
Once you have kids in a ton of activities- what do you do in the city that you can’t do in downtown LaGrange or Hinsdale or Evanston or Park Ridge? Your time is limited anyway once they’re in soccer and dance and whatever else. All these towns have movie theaters, Trader Joes, nice restaurants, ice cream shops, Starbucks, Potbelly. All the things that Lincoln Square has and even MORE than North Center (not much going on around there) or Roscoe Village. They have metra for fast commutes downtown.
Only the truly rich have the choice of a million dollar house in the city and private schools and the big house in the exclusive burbs. Everyone else have a more difficult decision to make.
“Maybe its just families who couldn’t sell in 2008-2012 and now they are moving and always wanted to.”
Urban Mommy- good point to bring up the fact that maybe some of these people were trapped in their houses due to the housing market being so weak. But the last 2 years have opened the door so now they can at least break even and get out. And maybe some even made a bit of money.
“Hinsdale Central and New Trier and both plagued with serious drug problems. I’m not saying that there are not issues at Payton and the other selective schools int he city, but the atmosphere and education in the suburban schools do not come close to what you can get in the city.”
Wow- really? I just thought it was anywhere there was money, there was a drug problem. Mommy and daddy are too busy running the corporation to pay much attention to Junior.
“DZ, I agree about foreign language in schools, it doesn’t really take with kids in my experience (unless they are truly emmersed in it, which doesn’t happen in public schools).”
What are you talking about Vlajos???? In Oak Park, they’ve had a Spanish immersion program for 10 years. It used to be voluntary, but it was so popular that they had to start doing a lottery for it. The kids who were in it have completed college level Spanish courses by high school. It’s truly amazing.
Any school that waits until 6th or 7th grade to begin teaching a language (and hopefully it’s Spanish since that’s the second language of choice in North America) are idiots. Heck, even the suburban Catholic schools which have resisted language training (for whatever dumb reason) are now incorporating it at least 1 to 2 days a week for students as young as third grade.
“I didn’t take a foreign language until 7th grade. Most kids hate it anyway.”
By the way- the kids today are very different. The culture is more diverse. Spanish is everywhere. They see it on television, in movies, in music and even on street signs. None of that existed just 20 years ago. You really can’t escape it. So they don’t “hate” it. They think it’s normal.
The upper middle class kids also travel more than 20 or 30 years ago. It’s not weird for them to go on vacation to Mexico, Dominican Republic, Puerto Rico etc. where Spanish is being spoken. The kids I know want to learn it.
One major issue with learning second languages is the quality of teachers and instruction. Still many of these teachers themselves are not that fluent in the language and fail to make it fun. In my son’s daycare, they teach them Spanish. It is just pathetic how they pronounce the stuff and how it is all based on memorization.
If you want the kids learn a language you have to immerse them in it.
I attended some foreign language classes here at the university level and they were pathetic. It was all memorization and the professor spoke in English all the time. I wanted to strangle him.
Sabrina, I was not aware of Oak Park’s language program. I doubt that is a common set up in most school districts.
“By the way- the kids today are very different.”
No they aren’t. I have three kids, how many do you have?
“The kids who were in it have completed college level Spanish courses by high school.”
I did that without an immersion program. Not that hard to do.
“I did that without an immersion program. Not that hard to do.”
If you start taking Spanish in 6th or 7th grade, you’re not at college level by 10th. Sorry! Nice thought though. The kids that start learning it in late junior high or high school won’t be fluent in it enough to even test out of it in college.
“One major issue with learning second languages is the quality of teachers and instruction. Still many of these teachers themselves are not that fluent in the language and fail to make it fun. In my son’s daycare, they teach them Spanish. It is just pathetic how they pronounce the stuff and how it is all based on memorization.
If you want the kids learn a language you have to immerse them in it.
I attended some foreign language classes here at the university level and they were pathetic. It was all memorization and the professor spoke in English all the time. I wanted to strangle him.”
miumiu is absolutely correct. I recall some of my foreign language teachers having worse accents than I do. I had fantastic profs at university though, many of which were native speakers.
“No they aren’t. I have three kids, how many do you have?”
I have two. Want a medal because you have three????
Grow up!
“If you start taking Spanish in 6th or 7th grade, you’re not at college level by 10th. Sorry! Nice thought though. The kids that start learning it in late junior high or high school won’t be fluent in it enough to even test out of it in college.”
Really, I started in 7th and tested out of it in college. I ended double majoring in a foreign language, so I took it for all four years, but I didn’t have to.
“Sabrina, I was not aware of Oak Park’s language program. I doubt that is a common set up in most school districts.”
I’ve never looked into how common it is- but I just googled it and see that some Naperville and Schaumburg schools also offer an immersion program. Who knows how many others. It continues to gain in popularity.
Like I said, some Catholic grade schools in the suburbs which didn’t offer any language training is now teaching Spanish to kids as young as third grade. It’s not immersion and it’s just one or two days a week, but it’s better than nothing. They are feeling the pressure to offer it at earlier ages now. Parents want it taught.
In my experience, my kids are pretty much the same as I was at their age. Maybe it’s just my family. Doubt it though.
My kids are exposed to WAY more diversity than I ever was. They have many more experiences. The Internet has made the world much smaller. Air travel is also much easier/cheaper than when I was a kid. They have friends from all over the world. I never did.
It’s fantastic. But that’s why I push the language learning on them. We’re the only country in the world that doesn’t emphasize languages probably because of our size- but the world, as I said, has shrunk.
“Really, I started in 7th and tested out of it in college. I ended double majoring in a foreign language, so I took it for all four years, but I didn’t have to.”
The immersion kids are like 4 years ahead of everyone else. In 9th and 10th grade they are already taking freshman/sophomore college level language classes. Which makes sense since they’ve been immersed in it for years.
That’s how it should be done.
“The immersion kids are like 4 years ahead of everyone else. In 9th and 10th grade they are already taking freshman/sophomore college level language classes. Which makes sense since they’ve been immersed in it for years.
That’s how it should be done.”
I agree.
“The kids that start learning it in late junior high or high school won’t be fluent in it enough to even test out of it in college.”
There’s probably a kid or two (thousand) in this world who started a foreign language in Jr High or HS and LOVED it enough to work hard and pursue it enough to be fluent or test out of it in college. There’s probably a kid or two (thousand) in this world who started a foreign language in Jr High or HS and HATED it and only learned enough to pass the tests but is not fluent or could not test out of it in college.
But this is Crib Chatter where we just need one example of someone who did or didn’t do something and we can project and interpret the results to meet our narrative.
Shame on you Vlajos for forgetting the unwritten rules of the Chatariti
“Wow. That’s it? Yikes. No wonder everyone moves to the burbs.”
It’s 8% of the 9th grade population that gets into the “Big 4” + Lane. That’s only about half of the *total* SEHS seats, and doesn’t count the highly (and moderately) regarded IB programs. Something close to a quarter of CPS HS kids are in a special program. Listening to whingers isn’t an accurate representation of what’s going on.
DZ – yes, after tours, meeting with neighbors whose <3 grade kids are going to McPherson, and with friends who send upper grade children there as well we're comfortable that the kiddos would prosper there. Likely would need to take advantage of Old Town School of Music and Lillstreet to get a better dive into arts & music, but at the kids' pace.
That stated, we've enrolled with the Lycée primarily for the language, secondarily for the instruction methods & IB track, and long term because of the high school. It's been outstanding so far.
“we’ve enrolled with the Lycée primarily for the language”
so you have approval of sabrina w her two (seemingly brand new) kids and vlajos w his three (not sure if previously enumerated) kids. and they never agree on anything, so that is pretty impressive.
thanks also for info.
“Isn’t LG/hinsdale ish where all the south siders who went to burbs ended up? That’s about as south as they got in the burbs.”
Maybe Orland Barf.
“Maybe Orland Barf.”
Don’t they have all your favorite crappy chain restaurants?
Sabrina has kids? Is she taking them overseas? Or are they grown up?
– also, Spanish immersion is a waste of time.
First of all, schools should be immersing Spanish speaking children in English, not the other way around.
-Secondly, as far as difficultly goes, it’s more difficult for English speakers to learn other languages than the other way around because our verb conjugation is way more simple than most other languages, and our syntax is reversed. And then it’s just a jumble of other dead languages mixed in.
– Third, what is the usefulness of speaking spanish? Ordering the servants around? talking to the lawn care people? ordering a burrito in spanish? Seriously, unless you’re an international business traveler focusing on the central american, or south american business market, it’s of minimal importance.
-Finally, I’d rather see today’s kids learn to speak the queen’s english, than to speak both english and spanish poorly.
(don’t even get me started on teh common core….)
“Don’t they have all your favorite crappy chain restaurants?”
Orland is just TOO FAR. I had a meltdown going out there on METRA one day because there was a train delay and we kept shunting back and forth in Englewood. I felt sorry for my fellow passengers cuz I went all Brooklyn and stuff. I just don’t understand how people do that EVERY DAY. It took hours. I don’t understand! Plus I can’t find my way around cuz everything looks the same. I only go there to be fair to my boyfriend. He is a born and raised Southsider from McKinley Park and then West Elsdon by Midway Airport.
And now we’ve got the OG on Addison 🙂
“DZ, I agree about foreign language in schools, it doesn’t really take with kids in my experience (unless they are truly emmersed in it, which doesn’t happen in public schools).”
“What are you talking about Vlajos???? In Oak Park, they’ve had a Spanish immersion program for 10 years. It used to be voluntary, but it was so popular that they had to start doing a lottery for it. The kids who were in it have completed college level Spanish courses by high school. It’s truly amazing.
Any school that waits until 6th or 7th grade to begin teaching a language (and hopefully it’s Spanish since that’s the second language of choice in North America) are idiots. Heck, even the suburban Catholic schools which have resisted language training (for whatever dumb reason) are now incorporating it at least 1 to 2 days a week for students as young as third grade.”
Maybe a foreign language can be of use to people in certain circumstances or people just want to say they know another language, but from an ROI perspective, Spanish is basically worthless. Many students would be much better served by being able to use that time to augment their English courses. Check out the Freakonomics podcast “Is learning a foreign language really worth it?” People who consider themselves “proficient” in a foreign language see a whopping 2% increase in salary. Spanish is the lowest return, though, while rare languages actually are the highest since those people can find jobs catering to that qualification. However, knowing English well has a HUGE ROI implication (obviously….). Maybe for these upper-middle class students, they can do both, but many students do hate learning a language and would be better prepared for careers in life by allocating that time to some other study. (Not saying there aren’t other values in learning a language, though — money isn’t everything).
“so you have approval of sabrina w her two (seemingly brand new) kids”
Are we 100% sure they are not cats?
““so you have approval of sabrina w her two (seemingly brand new) kids”
Are we 100% sure they are not cats?”
Wow. You know nothing about me. I could be as old as the one who shall not be named and have grandchildren. You have no clue.
Like I said- grow up.
And no- no cats.
“Wow. You know nothing about me. I could be as old as the one who shall not be named and have grandchildren. You have no clue.”
That’s right. She could even be a man.
“– Third, what is the usefulness of speaking spanish? Ordering the servants around? talking to the lawn care people? ordering a burrito in spanish? Seriously, unless you’re an international business traveler focusing on the central american, or south american business market, it’s of minimal importance.”
Um…yeah. The jobs are in Spanish speaking countries. If you’re running that auto plant in Queretaro, you’d better know Spanish.
Americans are so ignorant sometimes. It’s a bilingual world.
“That’s right. She could even be a man.”
I find THIS to be hilarious. It’s only the men on here who think I’m a man. Milkster and the other women know. You can’t fake a voice. You think I could fake being a woman for 7 years? Really?
You think I made up Dan? Or Cleo?
I’m really NOT that talented.
But this is the arrogance of men on the Internet.
What woman could run a successful blog site for 7 years?
What woman I ask you?
She couldn’t. So therefore, Sabrina MUST be a man.
Yawn.
Let’s get back to real estate- shall we?
The only time there have been personal attacks on this blog is when the housing market wasn’t doing so well (because when it IS doing well everyone is Happy, Happy, Happy).
There has been a shift in tone on this blog in the last 6 months. Maybe it is because the original format is back. I don’t know. But people are really unhappy even though the conditions for real estate are the best they’ve ever been:
1. Unemployment under 6%
2. Mortgage rates at record lows
3. Record level for the major stock markets
4. Bonds continuing on a 35 year bull run
What more does anyone need?
So why isn’t real estate seriously booming?
I said could, not must.
BTW, tried speaking Spanish in Mexico once. Total disaster. When you do that they answer in Spanish.
“BTW, tried speaking Spanish in Mexico once. Total disaster. When you do that they answer in Spanish.”
ha!
Yeah. You’d better know more than just your high school Spanish.
Sabrina is definitely a woman.
She has in the past talked about her nanny saying “my nanny” so yes she has kid(s). Also no man says “my nanny”, they always say our or our kid’s nanny. Finally she cannot be that old given that statement.
I am very happy. I bought a place that at pretty much the bottom, love it, as I love Chicago, also I am happy you switched back to the old format.
I just wish Bob, Cleo, Jenny, and Groove would come back!
Sabrina and Chuck don’t kill me but I think you’ve got chemistry 😉
“I just wish Bob, Cleo, Jenny, and Groove would come back!”
Yes- where IS Jenny?
Come back Jenny!
“I find THIS to be hilarious. It’s only the men on here who think I’m a man. Milkster and the other women know. You can’t fake a voice. You think I could fake being a woman for 7 years? Really?”
Well, your reaction to what was clearly a joke proves you are a woman to me at least.
““BTW, tried speaking Spanish in Mexico once. Total disaster. When you do that they answer in Spanish.””
I was clearing customs yesterday at MIA and the agent directing people to lines actually said, when pointing to the right lane… “All U.S. citizens con el passaporte”
“BTW, tried speaking Spanish in Mexico once. Total disaster. When you do that they answer in Spanish.”
Of course you can… how long do you think westloop faked being a boy?
“So why isn’t real estate seriously booming?”
Because it went up too far too fast.
“Well, your reaction to what was clearly a joke proves you are a woman to me at least.”
Gary was joking? Really?
So all those other times (dozens of times) I’ve been accused on this blog of being a man were also a joke?
Huh.
Go figure.
Just in case Sabrina is not joking about not knowing that I was joking I was in fact joking. I thought it was pretty obvious.
Back to real estate. I just posted the October recap: http://www.chicagonow.com/getting-real/2014/11/october-chicago-real-estate-market-update-home-sales-still-not-as-bad-as-they-seem/
Sales down a bit but again it’s entirely attributable to the decline in distressed sales.
“So why isn’t real estate seriously booming?”
With market times so low I think it’s doing pretty darn well.
“So all those other times (dozens of times) I’ve been accused on this blog of being a man were also a joke?”
Most that I recall were made by Joe Z. So that just counts as trolling you. spose there were other variety misanthropes who trolled you about it, too, but I don’t recall them.
Sabrina is totally a woman, how else could you explain her “logic” or lack thereof?
Why does Sabrina think the real estate market is “broken” simply because sales went down a bit yoy? What makes her think last year was the benchmark for “normal”? Prices were really attractive in 2012 & 2013 and therefore there was a larger group of buyers looking to purchase. With prices rising back to what I consider fair market value, it is obvious to this professional that sales would slow a bit (lack of investors), and market times would increase. The rise prices also explains why there are no longer 20 bids on a property the first weekend it is listed.
If you follow my previous guidelines of what to look for in a property, you will be just fine.
– Location
– Utility
– Quality
– 5+ year hold
– Don’t pay up for new construction unless you except that finishes depreciate (there is exception).
Real estate is a convenience and lifestyle choice and should not be viewed as an investment. Yes, you can make money buying real estate, but you will most likely have more expenses than profits when you consider maintenance and selling expenses. However, with rental rates as high as they are today, your monthly housing cost should be significantly less than what you would pay renting. When you add up the monthly savings and offset maintenance and closing costs, you can make your own informed decision if renting or owning is best for you.
The most overlooked fact in owning real estate is as follows: Land appreciates over time (historically) but the building itself and the interior finishes depreciate the day you take ownership. Every appliance, furnace, a/c, sink, roof, ect, will need to be replaced over time. Paying up for new construction is like buying a new car. You are paying a huge premium for the “newness” that will not be able to be passed on to the next owner.
The above is also the exact reason that buying in the city is viewed as a better investment than buying in the burbs. The % of the purchase price that is pure land value will determine how much depreciation you should calculate from the building and finishes. The land value % in the city is usually 70% or higher, and usually only 30% in the suburbs. With a $1,000,000 purchase, your depreciation value would start at $300,000 in the city and $700,000 in the burbs. Using a blended 20 year depreciation rate, your maintenance expense is $15k in the city, and $35,000 in the burbs. Using the same metric, if real estate prices appreciate 20% over a 10 year hold period, you would have a net $50k gain in the city and a $150k loss in the burbs.
Just my 2 cents…
“The land value % in the city is usually 70% or higher”
Wot?!???!!! “Usually”????
Perhaps “usually” in Stevo approved “not gonna lose money” locations, but that’s maybe 5% of the city, and well less than half of the GZ.
The townhome for sale at 1910 n Mohawk is a perfect example. The complex has 26 units that sits on 10 full city lots. Each lot would sell for $1.1 million plus, or $11 million for a round number. You would own .385% of 1 lot if you bought this home, or an approx land value of $423,000. This would represent 75% of the purchase price if you purchased this townhome for $560,000.
Over the past few years it was easy to find a property where the land itself was worth more than the sales price. This is why so many developers have bought up entire townhome complexes and knocked them down for SFH new construction.
Too many people buy the pretty finishes in a property and don’t stop to think where the true value lies.
Look at 1920 n Lincoln ave. The property was an eye-soar with the units selling for $150k for the commercial spaces, and $175k – $200k for the condos above. There were 18 total units. A developer came in and paid $4.2 million for the land, or $233,000 per unit. Ugly buildings can be really profitable!
So, like I said, in Stevo approved “not gonna lose money” locations.
That does not = “usually”.
I guess that is why some make money and some lose money buying and selling real estate.
Holding prices constant over a period of time, all real estate should lose value unless upgraded to its original state. To think otherwise is to believe you can buy a car and it somehow will hold its value after 100k miles are added.
Using 2 sales points of a specific property to justify if the market is moving higher or lower is ridiculous. If you want to know if real estate is appreciating in general you have to look at pure land values. Anything else is like comparing apples to oranges.
CC is in bizarro world. SH is making sense for once (even though he’s talking about very specific neighborhoods) and he make a valid argument. He did not attack anyone individual or engage in ad hominim attacks, just straight up said what he believes land value to be. and he might be right, although in the city 70% is a bit much … because the price to build a new house is not 30% of the purchase price; or conversely, building an expensive house on a piece of land doesn’t increase the land value….but yes, 50×130 lots just outside the city limits in upper middle class bedroom suburbs are $250 or $300k; but a 25×125 lot in LP is $1,000,000…..given SH’s concise argument I doubt its’ really even him posting.
“Air travel is also much easier/cheaper than when I was a kid. ” PLUS:
“I could be as old as the one who shall not be named and have grandchildren. You have no clue.”
This would indicate that perhaps Sabrina is aged 60 or older. Anyone growing up from the 80’s – 2000’s would never make a statement about air travel like that, because intl travel was already commonplace, easy, and cheap. Today it’s almost a given a RT flight to Europe is over $1000, even in winter. Used to be cheaper. Real old-timers remember when air travel was not easy or cheap, like when you had to fly Pan Am in a suit and tie, and they still had hot-looking stewardesses, etc.
PS I still can’t believe Urban Mommy and so many here think all these HSs are interchangeable. Like Hinsdale Central and Whitney Young are alike? A jewish school like GBN or Highland Park versus Loyola Academy? New Trier versus a school named after community organizer Barack Obama? Northside Secular Leftist Prep versus a St. Ignatius? British school versus Blaine or something in Vernon Hills? Parents must not pay attention to anything but housing prices and ACT scores. There are other considerations, like the peer groups, gay agenda, all kinds of teacher biases etc. I think Hinsdale Central is nothing like Northside Prep, (which is “a bunch of weirdos” according to one kid I know who went there and didn’t like it.)
“With prices rising back to what I consider fair market value, it is obvious to this professional that sales would slow a bit (lack of investors), and market times would increase. The rise prices also explains why there are no longer 20 bids on a property the first weekend it is listed.”
We are a monthly payment nation. When mortgage rates rise, the monthly payment will go up. Who will buy it then?
We’ve been so conditioned on mortgage rates only going down- and rightly so when that has been the norm for the last 20 years. But that norm is about to change. And, unfortunately, salaries are not rising.
It’s a mess. The housing market is only going to get more challenging, not less. And because of that many of the millenials will opt to just rent.
Renting, by the way, has been in vogue before. All of the big luxury high rises built along the lakefront in the 1910s and 1920s were built as rentals. Yes- the rich rented. They didn’t even THINK about buying. It was only after WWII with the GI bill and the suburbs being built thanks to Fannie/Freddie and government backed mortgages that the “American Dream” was foisted on the country.
“And because of that many of the millenials will opt to just rent.”
Aside from the fact that you don’t need a down payment renting can not be cheaper in the long run. The cost of owning and the cost of renting should roughly track each other.
“What woman could run a successful blog site for 7 years?
What woman I ask you?
She couldn’t. So therefore, Sabrina MUST be a man.”
I alway knew sabrina was a woman, thats why for the past seven years i have been trying to hack her and milkster’s iCloud account for their nudie pics.
“Renting, by the way, has been in vogue before. All of the big luxury high rises built along the lakefront in the 1910s and 1920s were built as rentals. Yes- the rich rented. They didn’t even THINK about buying.”
You do realize that all those rentals are owned by someone, right?
“You do realize that all those rentals are owned by someone, right?”
Yes. They were these strange mixes of syndicates and other weird ownership. Most went under in the Great Depression. The buildings went into foreclosure. Co-ops were the result as the renters decided to “buy out” the buildings in order to continue living where they were living.
“Ownership” in large cities is a recent phenomena. The rich a hundred years ago didn’t have the concept of “owning” where they were living. And don’t forget- these buildings were built with maids quarters. Some had an entire floor of the building devoted to “staff.” They weren’t for the every man.
Everyone else simply rented in the interior of the city- away from the lake where it wasn’t as nice.
It actually took six years before any developer built a rental apartment building after the great depression hit. And I believe it wasn’t even in Chicago. They built in Evanston. There was an excess of supply in Chicago at that time and many buildings were still trying to come out of foreclosure.
“Aside from the fact that you don’t need a down payment renting can not be cheaper in the long run. The cost of owning and the cost of renting should roughly track each other.”
Gary- when you have $100k in student loans, scraping together $30,000 to $100,000 for a down payment is a big deal. That’s why they’re renting instead. All the downtown towers are fancy and nice (with pools!). Why save money to buy the exact same thing you can rent?
It’s smart! Finally- the millenials get it. No one else has. You’re not going to live there forever. You’re going to be there for 3 to 5 years. And then you’ll be married and with a kid. Maybe the millenials will simply skip the whole “I’m buying a 2/2 condo in the city thing” as they’ll rent that instead. They won’t lose money when they go to sell less than 5 years later and, like I said, they still have the same lifestyle in the neighborhood they want to be in.
The developers are building another 6,000 apartments over the next 18 months.
They must know something, right?
Sabrina,
Do you not see a correlation between interest rates and income levels? you stated that rates have decreased for 20 years without mentioning that incomes have been stagnant over the same period. They are directly correlated! Rates will stay low until incomes begin to rise. They will offset each other.
The booming markets in the GZ represent the class of people whose incomes have risen dramatically while the middle class has remained flat. This group has enjoyed the best of both worlds: low rates and exploding incomes. End result… sky rocketing prices in the higher demand areas of the city.
I should charge for all this information….
This is the cribchatter I love!
“We are a monthly payment nation. When mortgage rates rise, the monthly payment will go up. Who will buy it then?”
GZ isn’t a monthly payment nation. Those problems are MC and below. Also – as always – mortgage rate rising != lower housing prices. Depends on a lot of factors.
I hope I count as an urban poster. I have 2 kids, used to live in NYC and live in LP/OT.
UrbanMommy – check out GoogleExpress and Instacart. For $95/yr you get free same day delivery w/ no mark up from Costco/Walgreens/Treasure Island/etc. Instacart is 1-2 hr delivery from WF/Plum/Mariano’s w/ no delivery charge for same price / yr. No more complaining about parking at WF!
The above services are reasons why urban is the way to go. I don’t begrudge anyone moving to the burbs. When I visit my friends in Hinsdale it is lovely (aside from the drive out there) and a nice oasis. But that is what it is – your own little island. It feels disconnected and you have to plan everything. No more deciding spur of the moment to hit Chinatown for dim sum or zipping to the Shedd on Sunday morning for a quick pop in to see some fish or deciding at 4pm to meet friends at the new coal fire in LV for dinner w/ the kids or checking chicago magazine for stuff to do on friday night and then actually going the next morning. The burbs are like the train schedule – gotta have everything planned out. There is a lot of time sitting in your finished basement watching your big screen TV w/ the family. Nothing wrong with this but not my cup of tea. Also – I think a great indication of the burbs is the # of golfers and the financial health of country clubs. Both are suffering.
Regarding public schools – it isn’t only about getting into an Ivy. At any public school you are a user of a public resource and are subject to associated bureaucracy. Your kid gets the cr@p teacher next year that has tenure? Tough sh!t. All his friends are put in a different class? Tough sh!t. Your kid has allergies / dietary restrictions? Tough sh!t. You got a problem with an administrator being an a-hole? Tough sh!t. At a private school you are a customer – big difference. Any of the above happens and the school works with you. If they don’t you start making noise to change things or stop donating or switch.
“No more deciding spur of the moment to hit Chinatown for dim sum or zipping to the Shedd on Sunday morning for a quick pop in to see some fish”
Both of those are prob roughly the same from la grange as from nortcenter, which may mostly be a proof that nortcenter (finished basement, big screen tv, etc.) is not urban.
“I think a great indication of the burbs is the # of golfers and the financial health of country clubs.”
I think that’s much more golf specific than burb related.
I just picked up golf in the last few years, and while I enjoy playing very much, it is a serious time and financial commitment. There’s a lot of other distractions going on (family, work, friends) that spending an entire afternoon isn’t as appealing as it was when I was 30, single and flush with cash. Also, there’s so few warm outdoor months in Chicago (we only had 5 snow free months this year, May through September, that it’s not a realistic sport to play regularly.
I know quite a few members of country clubs and they’re generally choosing to withdrawal their memberships because they don’t quite have the appeal they used to…for a variety of reasons. Heck I know of two people who’ve resigned as members in the last few months and it had nothing to do with financial reasons, and everything to do with not wanting to spend their time ‘socializing’ with stuffy retired people. There’s a million places to go out to eat within a 3 mile drive of where they live, and they just dont want to eat steak diane anymore.
PR country club:
“Attire – Our dress code requires proper golf attire. Blue jeans, cut-offs, shorts (other than bermuda shorts), tank tops and tennis wear are not acceptable attire. Commencing at dinner hour, gentlemen are requested to wear a coat and tie in the main dining room. Ladies are required to dress appropriately.”
“Click here to view the Club’s brochure (PDF) (Caution: this is a large file that may take some time to download)”
ON what? A dial up connection? It’s a 4.5 mb file for goodness sake.
“And while today’s dynamic city of Park Ridge is no longer country by any stretch of the imagination,
Park Ridge Country Club remains a symbol of its memorable past, an example of its vibrant
present, and a harbinger of its bright future. It’s a place where men and women meet in the friendly
competition of a round of golf played over lush fairways and immaculate greens; where fathers,
mothers, and children work on their tennis skills; where families spend many a hot summer day
cooling off at the swimming pool; and where families, friends, and business acquaintances come to
enjoy a cool beverage in the Heritage Lounge, a delicious lunch served al fresco on the clubhouse
porch, dinner on one of Chef Glenn’s culinary delights in the Grill Room, or a wedding reception
hosted in the Main Dining Room. In short, it’s a place where old friends meet and new friends are
made.”
SNOOOOOOOOZERS
“when I was 30, single and flush with cash”
Wait, I thought you were struggling with student loans when you were 30…were you mythologizing then or now?
“Wait, I thought you were struggling with student loans when you were 30…were you mythologizing then or now?”
Depends. Are you asking regular HD, or Bizzaro-HD that turned into irrational bull for 3 months?
“Wait, I thought you were struggling with student loans when you were 30…were you mythologizing then or now?”
Flush is a relative term:
“A sweet, soft, southern thrill.
Worked hard all week;
got a little jingle, On a Tennessee Saturday night.
Couldn’t feel better, I’m together, With my Dixieland Delight”
Back in my 30’s I had some spare change for a 40 of ice house.
I’m still struggling with the student loans. F$$$ you Navient f/k/a Sallie Mae a/s/o Citibank a/s/o Sallie Mae a/g/o ISAC.
“Club’s brochure”
it’s nice that a private club doesn’t feel the need to feature URMs in its brochure (or doesn’t have any to feature). Might have been a couple asian kids but those are prob just the (de rigeur) adoptees.
“Both of those are prob roughly the same from la grange as from nortcenter, which may mostly be a proof that nortcenter (finished basement, big screen tv, etc.) is not urban. ”
Nortcenterians would probably go to Uptown for Dim Sum though…
“Nortcenterians would probably go to Uptown for Dim Sum though…”
@fo please tell us you (and your ilk) do not go to furama.
“Nortcenterians would probably go to Uptown”
“do not go to furama”
Uptown is too scary.
Those whose Chinese dining preferences I know take the ride to C-Town. But maybe I just know the weirdos.
“it’s nice that a private club doesn’t feel the need to feature URMs in its brochure (or doesn’t have any to feature). Might have been a couple asian kids but those are prob just the (de rigeur) adoptees.”
It’s park ridge. What did you expect? They’re all a bunch of rich white Aholes…
http://censusviewer.com/city/IL/Park%20Ridge
“I just picked up golf in the last few years, and while I enjoy playing very much”
So HD likes stroking balls.
I know a lot of people who are members of country clubs and social clubs in the city. After many years analyzing these people I have made the following conclusion: the vast majority of club members seek daily recognition of who they are and the need to fill their narcissistic egos. Why have dinner at your club when there are hundreds of restaurants 10x the quality blocks away? Because at random restraunts these folks don’t know anyone, and more importantly, the folks around these people don’t know them. When these social clubbers have dinner at their clubs, they can see the same people daily who can ask the ego feeding questions that stranger can’t. “How’s the fund these day?” “Are you heading up to New Buffulo for the weekend?”
Social club members = douchebag narcissist
“The booming markets in the GZ represent the class of people whose incomes have risen dramatically while the middle class has remained flat. This group has enjoyed the best of both worlds: low rates and exploding incomes. End result… sky rocketing prices in the higher demand areas of the city.”
Yes. This is the Fed distortion. It will go away (especially as the difference between rich and poor grows ever larger and the Fed starts to feel political pressure.)
I don’t know about you- but I really don’t want to live through the 1920s again. I don’t want mansions in Newport Beach with marble imported from Italy.
The result was a Great Depression and crime so bad in the cities that everyone fled to the suburbs. No thanks.
By the way- who has “exploding incomes”?
The rich?
Lawyers haven’t gotten a pay raise in 10 years. They continue to lay off associate attorneys, paralegals. One of the big firms just eliminated another round of secretaries and is getting rid of night time secretaries (sorry lawyers- you’re on your own!).
What about doctors? I haven’t heard that their salaries are “exploding.” If anything else- they are actually in the decline as well.
If you work in finance, the last few years have been good for you.
If you’re an executive at Groupon or GrubHub, outside of stock options, is your income “exploding”?
The economic data is showing this is not true.
The only reason the GZ housing market is doing as well as it is is because the stock market is at record highs. Most of the rich have their wealth in the stock market. How can you NOT be getting insanely wealthy right now off of stocks? Unfortunately for the middle class, they really don’t invest, so it’s not helping them.
And with housing prices now stalled out (and seemingly going to be for the foreseeable future) how do they grow their wealth? They don’t.
My doctor friends are making anywhere from 300K to 2 millions. Yes million.
Examples: cardiologist friend 300K, his chief 2 million, dermatologist 700K, radiologist 400K.
I don’t know what you have in mind, but it is a lot of money.
Don’t forget restauranteurs, small business owners, and then there are the start ups.
I really don’t know what crowd you’re hanging out with, I see a lot of well off young people.
There are still quite a few people who in the past 6-7 years have been promoted and moved up in the world. The boomer retirements are increasing, especially those who are heavily invested in the stock market, of which many either live or work downtown or in the GZ. I would argue that more of the middle and upper middle class invests than you are saying. At my company, every hire is auto-enrolled at a 4% 401k contribution invested in a target date fund based on your age, and you have to fill out lots of paperwork to not be autoenrolled – this is becoming more and more common and many companies even escalate the contribution (with an opt-out of course) up until can you hit the full match. Won’t get you rich, but it is investing. There is a huge increase in technology jobs in Chicago that pay very good wages from the 70-120k range most often(look at River North office rental rates psf in 2014 compared to 2010). Chicago is back on the rise despite an absurd amount of regulation and big city headaches and taxes.
Yeah seriously, I know tons of people that are doing great, you must just roll with a bunch of negative nelly losers in life. You must adapt or die. With technological advances jobs are disappearing at an even more rapid rate than ever. Shit, my job might not even be around by the time I need to retire. Work on starting your own businesses on the side and hustle, make money any way you can with this technology.
Sabrina – “It will go away (especially as the difference between rich and poor grows ever larger and the Fed starts to feel political pressure.)”
Are you aware of the current election results? Republicans trounced the Dems (even in IL gov race!!!) yet liberal social issues also won big time. This country wants fiscally conservative and socially liberal leadership.
“The result was a Great Depression and crime so bad in the cities that everyone fled to the suburbs. No thanks.”
The flight to the burbs mainly happened post WWII and was not primarily a result of the depression / financial reasons but because of African Americans moving to urban centers.
“By the way- who has “exploding incomes”? The rich?”
YES! Literally search “income growth 1%” and you will find many articles on this. The lawyers I know (my SO included) make 50%+ more than they did in 2008. I don’t know many doctors. Finance doing well. But its tech that is absolutely killing it. And I see more Maseratis / Ferraris in the EBC parking garage than ever before. Every row of cars has Cayennes / RRs / Panameras / Teslas. In the last 2 weeks three 2-5mm homes within 3 blocks of my house are under contract.
“If you’re an executive at Groupon or GrubHub, outside of stock options, is your income “exploding”? ”
The government considers this income – why not you?
Yes, I think people on this site greatly ignore the technology sector. I’m a Software Engineer and I make more than DOUBLE what I made in 2006. Every time you hear about a tech company creating new jobs, those jobs are 75-150k jobs. Your Google, Lenovorola, Braintree, ChannelIQ, Uber, Yelp, GoGo Wireless, Trunk Club, KCura, Groupon, MethodCare, Twitter, Vivid Seats, Fieldglass, etc now employ THOUSANDS of people in the city at a 6-figure average salary. Many are young people, 2-3 years out of college making $75k! These are the people renting $3200/mo 1 beds in River North. These are the people with exploding incomes.
“I see more Maseratis / Ferraris in the EBC parking garage than ever before. ”
It’s funny, yesterday I turned off the wrong exit and wound up in a real shithole. I couldn’t get back to the highway fast enough, but what caught my attention was that all these shit shacks had BMW’s and Mercedes in front of them. Bet there was a Bentley or two in those garages.
“My doctor friends are making anywhere from 300K to 2 millions. Yes million.
Examples: cardiologist friend 300K, his chief 2 million, dermatologist 700K, radiologist 400K.”
If you know this, you need to find better things to talk to your friends about. I’d punch any of my friends if they tried telling me what they make for a living.
I’d punch my friends just for talking about their jobs! So annoying! I hate that shit!
Sabrina,
No one cares about your lawyer friends. There are too many attorneys, and naturally their salaries on average will remain flat, if not fall. However, the good attorneys are killing it and these are the folks buying up the GZ. I reiterate that the world does not revolve around attorney incomes. Look at the exploding tech and financial sectors moving to the city. These are the folks buying everything up and forcing prices higher. If you think the trend will change for new companies moving to the city, then yes we will have flat prices moving forward. But as long as we get fresh start-ups moving in, there will be plenty of really rich people looking to purchase in one of the better Chicago neighborhoods.
The trend is your friend. Don’t try to fight it…
“Lawyers haven’t gotten a pay raise in 10 years.”
Where do you come up with this nonsense?
“Where do you come up with this nonsense?”
She looks at the starting salary for associates at certain big firms, and then ignores the fact that there was a raise for some/many of them in the spring of 2007.
Or she rounds 7.5 to 10.
“Where do you come up with this nonsense?”
A few years back the ISBA figured that lawyers on average earn about a 1% pay increase per year, over a 20 year period. There’s the same number of lawyer jobs/partnerships with a lot of churn. But the income levels are flatter than a pancake…
“She looks at the starting salary for associates at certain big firms, and then ignores the fact that there was a raise for some/many of them in the spring of 2007.”
You mean the associates that are on a pay scale that includes annual raises of more than 10%?
“A few years back the ISBA figured that lawyers on average earn about a 1% pay increase per year, over a 20 year period. There’s the same number of lawyer jobs/partnerships with a lot of churn. But the income levels are flatter than a pancake…”
There’s so much fail in this short passge that it makes me really suggest that you spend a little time with Khan Academy courses on logic, math and reasoning.
OK let me try to rephrase this for you JJJ who obviously spend enough time him or herself on Khan academy…. In 1983 IIRC the ISBA took a survey of Illinois attorneys. ISBA performed the same survey again in 2003. In each survey the ISBA asked individual attorneys salary and income information for the preceding year. The results of the survey showed that attorney incomes and salaries among those ISBA members who responded to the survey increased on average about 1% per year between 1983 and 2003. Did some attorneys at the very top have very large increases? Yes. Did some attorneys at the bottom have flat or decreasing incomes? Yes. Did some attorneys in the middle also have flat or stagnant income? Again yes.
Now, it’s no secret that the legal profession is shrinking – in $ and in size. There’s also a lot of churn in the profession. People come and go. Countless associaties at my firm have come and gone- many move back ‘home’ or leave the profession entirely. My personal opinion is large #’s of attorneys and the shrinking legal market make for stagnant partner incomes, and the churn (such that an attorney can be replaced in a heartbeat in any office) keeps associate incomes down too. But whenever, I just typed up something real fast about lawyers as I ran to catch my train, and then some A-hole insults my intelligence.
““She looks at the starting salary for associates at certain big firms, and then ignores the fact that there was a raise for some/many of them in the spring of 2007.”
You mean the associates that are on a pay scale that includes annual raises of more than 10%?”
Individual lawyers have pay increases but the pay for that associate position by class may be stagnant, I don’t know as much. I do know that many, many associates drop out of the largest law firms and take HUGE paycuts….only to be replaced by the next crop of grads who earn the same salaries and pay increases.. and then move on when they don’t make partner…
“She looks at the starting salary for associates at certain big firms, and then ignores the fact that there was a raise for some/many of them in the spring of 2007.”
“You mean the associates that are on a pay scale that includes annual raises of more than 10%?”
Do we have to go over this AGAIN? Really????
Oh- sorry- I forgot about 2007. Okay- it’s been 7 years (and in a few months it will be 8 years) since big law attorneys have gotten a pay raise. And no, JJJ, getting your lock-step higher salary every year isn’t a pay raise because that’s the exact same one that someone 7 years ago also got. If you account for inflation (yes, there’s been some in that time period), biglaw attorneys are actually paid quite a bit LESS than 7 years ago- by thousands of dollars.
The more senior associates are really getting the shaft thanks to inflation. And meanwhile, the cost of going to law school has gone up tremendously during the same period. Why is anyone going to law school anymore?
Oh- and you don’t get a 10% lockstep increase anymore. According to NALP, at the biggest firms the pay goes like this:
1st: $160,000 (same as it’s been for 7 years now- but in Chicago not as many firms pay this anymore)
2nd: $164,500
3rd: $175,000
4th: $190,000
Doesn’t look like 10% to me. Average number of years at Biglaw used to be 3 years. Is it even that high anymore? That was before the Great Recession. With firms shrinking dramatically and the layoffs, it might even be less now.
Here’s what NALP said in 2013 (but nothing has changed in 2014. If anything, the legal market has gotten worse. And it won’t be improving in 2015 either.)
From NALP:
Starting associate salaries at large law firms have remained essentially flat since 2007, despite some erosion of the prevalence of $160,000 as the norm. New research from NALP reveals that first-year associate salaries of $160,000 are still widespread at large law firms of more than 700 lawyers — especially in large markets — and became somewhat more prevalent in 2013 compared with 2012, as a result pushing the median for this group of firms as a whole back up to $160,000 after it had dropped to $145,000 in 2012. Thus once again more than half of first-year salaries were reported as $160,000, as has been the case every year since 2008 with the exception of 2012. In 2013, about 56% of the starting salaries at firms of more than 700 lawyers were $160,000, compared to nearly two-thirds of the salaries in 2009, thus confirming the characterization of 2009 as the recent high point for large firm salaries. It also remains the case that $160,000 is also the high starting salary at these firms and has been the high since some firms moved to this starting salary in 2007. In this sense large firm salaries have remained essentially flat since the recession, as the high has generally remained unchanged for six years.
“The story is really one of no change, or at least not much change,” noted James Leipold, NALP’s Executive Director. “Compared to the period of 2006 through 2009, when associate salaries were rising year on year at a steady clip, in the period since the recession we have seen associate salaries remain more or less static. At the largest firms in the largest markets, a starting salary of $160,000 remains the norm, though its prevalence has ebbed and flowed a bit over the last several years. Associate salaries at smaller firms have shown very modest movement, both upward and downward, over the last four years, also remaining essentially flat. And,” he concluded, “there is nothing about the current market that suggests starting associate salaries will be moving up any time soon.”
http://www.nalp.org/associate_salaries_sept2013
“Lawyers haven’t gotten a pay raise in 10 years.”
“Where do you come up with this nonsense?”
Sorry. It’s 7 years. And in two months it will be 8 years.
No raises in 8 years!
Yeah- lawyers are the ones buying everything in the GZ. NOT.
So why does my comment above get 4 thumbs down?
“Look at the exploding tech and financial sectors moving to the city.”
But you said their INCOMES were exploding. What exploding incomes? I haven’t heard that any of these companies are paying anything more than they were paying, say, 2 or 3 years ago. Are they? Are they that desperate to hire that they are willing to pay, say, $100,000 when 2 years ago they were only paying $80,000?
If so- that’s a good sign for the economy (last time we saw that was in 1999.) It also means the Fed will have to raise interest rates sooner and faster than anticipated. But that would be NORMAL. That’s what you need to do in a normal economy that is growing strongly. We would need to be back to 4% or 5% on the Fed funds rate if incomes were “exploding” in all of these industries.
So far the economic data is not showing that kind of pressure where employers have to raise salaries dramatically to get and retain workers.
“My doctor friends are making anywhere from 300K to 2 millions. Yes million.
Examples: cardiologist friend 300K, his chief 2 million, dermatologist 700K, radiologist 400K.”
Many doctor specialties are actually seeing a reduction in income when you account for insurance premiums and other things. Yes, an internal medicine doctor is lucky to make $100k.
The dermatologist and radiologist (I LOVE how your friends all seemingly work in the highest paid specialties) were already making those salaries BEFORE the recession. They’re not seeing exploding salaries higher. Their exploding salaries aren’t the reason the GZ is hot (which is what Steve Heitman tried to argue.)
I just want to know what salaries are exploding higher. It’s not doctors or lawyers. I gave some options. Traders are doing well now (with the stock and bond markets rallying). But who else? Are mid-level managers at Groupon getting massively higher salaries now than they were 3 or 4 years ago?
I’m legitimately asking this.
Because that IS what we saw happening in 1999.
“I see more Maseratis / Ferraris in the EBC parking garage than ever before. ”
Autos, of all kinds, are at record level of sales in the United States. Higher than before the recession. Luxury cars are selling at an even higher rate. But that says nothing about “exploding incomes.” That just tells you the stock market is higher. Same with art sales and luxury home sales. If the stock market were to fall 30% from the highs suddenly, luxury home sales would drop off dramatically.
“Many are young people, 2-3 years out of college making $75k! These are the people renting $3200/mo 1 beds in River North. These are the people with exploding incomes.”
Thanks for the update Fred. This is what I want to know. Are all these people buying in Lincoln Park suddenly? Is THAT where the money is coming from because it’s not doctors/lawyers.
“Are you aware of the current election results? Republicans trounced the Dems (even in IL gov race!!!) yet liberal social issues also won big time. This country wants fiscally conservative and socially liberal leadership.”
Um…actually that’s NOT what they voted for.
Did YOU see the results?
When they did exit polling one of the #1 issues the voters said facing the country was income/wealth inequality. The Fed will face really strong political pressure (actually they already are) to “fix” it.
Voters are actually aware that the rich have done disproportionally well over the last 5 years while they’re still struggling to save for college and retirement. They don’t like it (and it’s not healthy for the economy.) Runaway asset prices was supposed to help the middle class because at least their homes would rise again in price. And that HAS happened. But it’s not enough. Too many people are still underwater. And now home price increases have stalled out.
Now what?
“If you’re an executive at Groupon or GrubHub, outside of stock options, is your income “exploding”? ”
“The government considers this income – why not you?”
That’s always been there. From Morningstar to the CME. All had stock options. No one was talking about “exploding incomes” when they went public. Because it has nothing to do with that argument.
Incomes AREN’T rising. When they start to- hooray! For all of us. Maybe the Fed will FINALLY do the right thing and end this ridiculous emergency financial measures we are currently being subjected to.
But why? Why risk it?
Jim Paulson was just on tv the other day talking about how the Fed will not raise interest rates until they are forced to (frankly, they’re too afraid to. And times have been too good up until now. Why ruin a good thing?) But when you’re “forced” to do something, that means something bad is usually happening.
The Fed is ALWAYS behind the curve and it will be again on the reflation.
But I hope and pray salaries start exploding. Unemployment for those with a college degree is just 3.1%. At some point, employers have to pay more to get the talent.
“The flight to the burbs mainly happened post WWII and was not primarily a result of the depression / financial reasons but because of African Americans moving to urban centers.”
One of the mansions we’ve chattered about in Lincoln Park right along the park was literally abandoned in the 1930s by its rich owners because there were so many burglaries and break-ins in the city.
http://cribchatter.com/?p=12005
“Located directly on Lincoln Park on the corner of Lakeview and Arlington, the mansion was built in 1894 for brewery baron Joseph Theurer in the Italian Renaissance style.
According to Wikipedia, he sold it to the Wrigley family in 1911 but they largely abandoned the property in the 1930s. Apparently, during the Great Depression, according to Wikipedia, many mansions became subject to burglaries and kidnappings, such as that of the Lindbergh baby.”
“My doctor friends are making anywhere from 300K to 2 millions. Yes million.
Examples: cardiologist friend 300K, his chief 2 million, dermatologist 700K, radiologist 400K.
I don’t know what you have in mind, but it is a lot of money.”
Miumiu: they were making this before the recession as well. These are not “exploding incomes.” They weren’t making $200,000 3 years ago and are now suddenly making $300,000 for doing the identical job.
Right, homedelete, you don’t know. You don’t know why you can’t generalize from some silly unnormalized survey the ISBA did, you don’t know the difference between the value of a survey and the value of real data, you don’t know why an 11-year-old survey is worthless, you don’t know that everyone’s experiences aren’t the same as yours, you don’t know what selection bias means, you don’t know anything about partner income, you don’t know what kinds of jobs former Biglaw associates take, you don’t know what people who aren’t in your little corner of the profession make, you don’t know why the fact that the pay is the same at the same level as time changes doesn’t mean that individuals aren’t getting raises, you don’t know why only certain associates have stagnant incomes, etc., etc., etc. You don’t know how much it reveals about you that I point out that the idea that “lawyers aren’t getting raises” is nonsense and that you think that you’ve supported this absurd statement by what you provided. You don’t know how easily you can find the official data on how much employee lawyers in Chicago make, and you don’t know how much more non-employee lawyers are making. Even if you could support the idea that aggregate lawyers’ wages or their wages per capita haven’t risen, which you can’t, in fact you can’t even understand what it means to show something like that, it’s meaningless to the faulty argument that is made here everyday, that luxury Chicago real estate is a bubble constantly on the verge of collapse, I suppose, partly because aggregate wages aren’t keeping pace with inflation. Most of all, you don’t know that your suppositions on top of assumptions on top of logical fallacies on top of normative views about how much real estate should cost are, literally, meaningless ramblings.
Anyone else see the recent House Hunters with the 20-something Chicago couple looking for a 2/2 in Lakeview?
That’s what we see ALL THE TIME on CribChatter. They are the perfect demographic. Both seemed to have solid jobs. No kids. They were soon to be married. Each had their own apartment.
They wanted:
Dark hardwood floors
White kitchen cabinets (a “white kitchen”) with granite counter tops
Laundry in the unit
2/2
Parking
No garden apartment
Crown molding/character
They were pre-approved for $380,000 but the husband wanted to keep it around $350,000
I thought it was interesting because those dark walnut floors are still “in” and the white kitchen is now the preferred choice (bye-bye maple or, heaven forbid, cherry.)
Did they get what they wanted?
No!
It’s hard to get a 2/2 now for around $350,000 in east Lakeview with all of those requirements (they didn’t specify central air either.) They wanted to be near the lake.
They eneded up near the brown line somewhere (you can see the elevated train tracks in the background, still in Lakeview, in a 3-unit vintage building.
It was a 2/1 but NO white kitchen (it had maple cabinets.)
I thought this episode was at least a realistic portrayal of 20-somethings looking to buy in the GZ. Not all of them can afford the $400k 2/2. And with the recent price appreciation, we are again back to that level for most 2/2s with the parking.
Actually, Sabrina, if you’re serious that the NALP “Biglaw” scale is some sort of measure of aggregate lawyer wages, in reality, Biglaw associate salaries (which you seem to have misstated anyway), while they present a convenient vantage and reference point for people outside the profession, aren’t really that informative in that respect. In part, like you noted, most people spend only a few years on that scale before they venture off into something very different with a very different curve. And there are a lot of those folks out there. I knew that you were referring to that pay scale but I think that you have to move far past the basic public data to understand whether “lawyers are getting raises.” The BLS data is a good place to start but also doesn’t account for the common types of career transitions, e.g. lawyer to BD, mid management, c-suite, PE, etc. It doesn’t account for making partner at big firms or smaller firms, or for one’s own business, or for bonuses. Even if you ignore that, really you need to get deeper into the data for any real analysis (not sure how deep is publicly available?), but you can at least get the median compensation of employee lawyers in the BLS data, looks like it is ahead of inflation in the Chicago metro, somewhere around 3% a year or so, plus I believe that misses all the self-employed or partner lawyers. There is plenty of data about them in Biglaw, if you want to keep your focus there, and that is well ahead of inflation. Overall, one could make a very good, SUPPORTED argument that lawyers’ wages are rising both above wages generally and above inflation.
Overall, you are far too dismissive of the complexity of these issues and too quickly look for anything that supports the way that you have decided that things are so that you can discard any alternative information.
And regardless of what lawyers’ wages are, do you really think that the relatively substantial Chicago legal market is not a significant driver of real estate in luxury areas? Again, by ignoring nuance and looking for a magic bullet as opposed to contributing factors (“Is THAT where the money is coming from because it’s not doctors/lawyers”) you misjudge greatly. You can easily see exactly who is buying this real estate and can easily determine what they do – even the simplest spot check would reveal gobs of lawyers and doctors, both of whom I have found to be far more likely, as they age, to stay in the city near their jobs instead of heading to the suburbs, most likely because they have the incomes to make the city workable. It’s a running joke on my street how many doctors and lawyers there are.
“Overall, one could make a very good, SUPPORTED argument that lawyers’ wages are rising both above wages generally and above inflation.”
Could you provide your support for this?
I don’t think you have any idea what an ahole you are. A close family member of mine died two days ago and I have a ton of things related to that to do. I write a short little post on cribchatter and you come along and insult my intelligence in your caffeine and coke induced rambling posts. Yet I’m going through hell right now with this death and my family, but what do you care? YOu’re a troll, a bad, bad person that insults everyone for no apparent reason, and selfish. You really need to get a life, or post like a civilized person. I”m going through hell over here and you think you go around insulting people and you have no idea, just no idea what your rambling semi-incoherent posts do to other people. Go back to your cave.
“Miumiu: they were making this before the recession as well. These are not “exploding incomes.” They weren’t making $200,000 3 years ago and are now suddenly making $300,000 for doing the identical job.”
This might very well be true. Most if not all of these guys were doing fellowships in 2005 so I cannot really speak to the gradient.
The point I was trying to make is there are many people who make a lot of money. GZ is pretty small compared to rest of Chicagoland. These high earners suffice to sustain a luxury market in GZ. It is not the Great Depression. We are not all George and Lennie.
condolence HD. It is hard to deal with loss. I wish you patience and strength. Without face to face conversation, sometimes things look harsher than they were intended to. It is the unfortunate side of email and web posts.
“The point I was trying to make is there are many people who make a lot of money.”
Of course. But this has ALWAYS been true. So what’s different right now? Are income going up faster than in 1999 or 2006?
Steve Heitman says they’re exploding.
But there’s no actual evidence that this is true.
The rich are doing extremely well because all asset classes have moved sharply higher and, in some cases, housing/art/bonds, are at all-time records.
If incomes were actually moving sharply higher, then that would trickle down to the upper middle class and the middle class as it did in 1998-1999. But that’s not happening.
“Biglaw associate salaries (which you seem to have misstated anyway), while they present a convenient vantage and reference point for people outside the profession, aren’t really that informative in that respect.”
Excuse me?
Who the hell is buying in the GZ then? The one working at the med-mal 10 person firm as a first year attorney? Pulease.
The GZ is about biglaw. And they haven’t seen salary increases in 7 years and won’t for years to come. The entire legal profession is a mess. But I agree that there are a lot of other professions out there that pay well. Heck, nurses can get paid $100k if they’re in the right specialty.
But while everyone goes on and on about tech (which IS creating good jobs) – it doesn’t create the $200k or $300k jobs either. One of the former CEOs in Silicon Valley wrote an op-ed a few years ago saying how he would tell his kids NOT to go into engineering as a profession because you basically max out your salary at like $90k to $150k (depending on your specialty) and that was it. You started high (with starting salaries higher than your peers in other areas) but that was it.
I’m not saying that these engineers aren’t buying in the GZ. But they’re not buying the dozen $1.5 million houses that are being built in Lakeview right now.
Sorry for your loss HD. You’re in my thoughts.
The people buying the more expensive houses in the Greenzone I typically see are:
Partners/Principals at consulting firms
Upper level execs at all manner of other professional service firms – advertising, accountants, etc
VPs or MDs at i-banks, pe firms, vc firms
Upper level folks at commercial banks
Upper level execs at F500 companies (typically sr. brand managers, vp of finance, vp of operations, etc)
Doctors (typically surgeons or other specialties like radiology) GPs/internist don’t make squat from what I’ve seen relative to their schooling compared to the other professions.
Sr. Associates or Partners at Big Law firms. I see a lot transition from biglaw into corporations. They don’t make biglaw partner money, but they aren’t doing bad by any measure.
Sales executives
Traders
Business owners
Heck, just got a call from lotto winner.
Chicago is a major city and I think far too many underestimate how many people live in this city that make very good incomes. Almost all the buyers I see are DINKs or have young children. Both typically work until one crosses the $400k mark and then the wife usually starts staying home.
Chicago is still CHEAP compared to other major cities imho.
@ Sabrina – I like how you say “one of the issues” exit polls showed was income inequality… BULLCRAP! I don’t see that anywhere even on a liberal website like CNN or a conservative one like the WSJ
45% People are concerned about “the economy” but what else is new. Bill Clinton knew it “The economy, stupid” was his motto or whatever you want to call it. Why else do you think every single president since him has tried to juice the economy one way or the other?
Sabrina – “When they did exit polling one of the #1 issues the voters said facing the country was income/wealth inequality. The Fed will face really strong political pressure (actually they already are) to “fix” it. ”
Are you making things up to fit your narrative? The number 1 issue was the economy – NOT income inequality. Here are two quotes from an article on the exit polls:
” 45 percent say the economy is the most important issue in their vote (out of four choices). That’s down from 2012 when 59 percent chose it and 2010, and 2008, when 63 percent said it was their top issue – but still a big number. ”
“In another question, voters split pretty evenly: around a third of voters said it was getting better, getting worse, and staying about the same.”
So to summarize – voters said the economy was the most important issue EVERY ELECTION SINCE 2008 (don’t have #s before that) and said NOTHING about income inequality. Do you recall the phrase “its the economy stupid” that James Carver coined back in the early 90s?
Regarding legal incomes. 1. Starting big law associates are NOT in the 1%. 2. Big law Partners ARE in the 1%. So if you are looking at GZ prices you need to look at Partner incomes – and not just any Partner incomes but the upper level law firms’ partner incomes (cause who cares about the partner income at some rinky dink firm w/ 5 attorneys?). Partner incomes in big law have been going up precisely because they are making fewer partners (rich getting richer!) and have not raised salaries for junior lawyers in 8 years.
Now – just to round things out – YES starting lawyers salaries have been stagnant since 2007. BUT – you are picking the TIP TOP of the legal market to look at numbers. If you look from 1995 to 2014 starting salaries have grown by 3.5% on average per year – handily beating inflation. Again – this is besides the point since starting lawyer salaries don’t matter for GZ prices. Also – everything I said about lawyers applies to doctors also. When looking at GZ prices you need to look at the 1% – which doesn’t include internal medicine and GP’s but includes the highly paid specialists.
There is a reason MiuMiu ONLY knows the highest of the high paid doctors. SHE IS IN THE 1%! The GPs making $100k wouldn’t be rolling w/ MiuMiu (which by the way is the name of a Prada label therefore reinforcing my thought that she is a 1%-er or above).
HD – so sorry to hear about your situation. I hope you get through it. Regarding your experiences in the legal profession. You are not in the 1% (which I believe is not a controversial statement) so therefore your experiences are with the 20-5%-ers who have under participated in the income growth that has gone to the 1%.
Sonies:
The question that is interpreted as being about ‘income inequality’ was:
“Do you think that the U.S. economic system generally favors the wealthy or is fair to most Americans.”
If you’ve seen that question discussed, it was a meta discussion of ‘income inequality’; if not, then you weren’t digging deep into election post-postmortems that covered exit poll responses. It’s out there, it’s just vague.
“A close family member of mine died two days ago and I have a ton of things related to that to do.”
I’m really sorry for your loss – I wouldn’t wish this terrible experience on anyone. I give as good as I get in debating and the back and forth here, but I am truly sorry this whole thing found you at such a terrible time – please take care of yourself and your family.
It’s very easy to look at income levels in Chicago. The Census publishes this every year. They recently released stats for 2013.
Families with incomes of $100K+ totaled 138,356 in 2012. In 2013, there were 144,593 families in that bracket. That’s an increase of 4.5%.
Families with incomes of $150K+ totaled 68,672 in 2012. In 2013, there were 73,141 families in that bracket. That’s an increase of 6.5%.
@anon thats a stupid fucking question to begin with…. if you already have money of course its easier to make more, what moron wouldn’t think that. Is it fair? Sure its fair if you want to work really hard, get educated, and not do bad things like sell drugs or join gangs or knock up tons of random women. People whine soooooo much they don’t even know how good they have it or how good they COULD have it. Think of all the whiney people you have on facebook, just think if instead of whining on the internet how much money they could be making doing something else during that time.
Families with incomes of $200K+ totaled 38,342 in 2012. In 2013, there were 40,471 families in that bracket. That’s an increase of 5.6%.
“Could you provide your support for this?”
Sure, although, to really fully state the case in a rigorous manner would take way more time than I’m willing to spend. Start with the BLS data, supplement with what you can find about salaries for people who aren’t included in that data, prepare some data on the demographics, etc., probably need to do a few case studies and try to find a way to generalize based on the cross-tabbed demo data, the quartiles, etc.
However, I don’t really think that it matters whether or not wages for all or most lawyers are rising. Lawyers are but a piece of the puzzle, and the lawyers driving the kind of real estate we’re talking about are way above the medians, or even the top quartile, even in the Chicago metro area. The supposition that lawyer wages aren’t rising has been offered, as best I can tell, as a reason that the “GZ” won’t “boom” (whatever that means). The fact is, there are plenty of individuals making plenty of money, more than enough to drive up market prices (which is exactly what happened over the last few years).
“thats a stupid fucking question to begin with”
Not least of which bc there are some who answered it who consider an income of $75k to be “wealthy” and (maybe) others who consider it to mean $10m+ investable.
“Wealthy” is so much a matter of perspective–it would be a more valid question if it were asked in Marxist terms using the capital/labor dichotomy, tho that would need to be re-phrased to be congnizable.
““Wealthy” is so much a matter of perspective–it would be a more valid question if it were asked in Marxist terms using the capital/labor dichotomy, tho that would need to be re-phrased to be congnizable.”
You know… if the world was still 95% agrarian, I probably would have even agreed with Marx.
Even better, in 2007, Chicago had 127,766 families with incomes of $100K+ vs. 144,593 in 2013 (13%+ increase). In 2007, there were 31,076 families in the $200K+ bracket vs. 40,471 in 2013.
That’s an increase of 30%.
“Anyone else see the recent House Hunters with the 20-something Chicago couple looking for a 2/2 in Lakeview?”
Are you aware that House Hunters is basically totally faked? I’ve known or have had friends who have known multiple people/couples on it, and there are many blogs about it as well, all confirm that they basically make up a bunch of stuff and pretend and try to craft an interesting narrative.
…and HD, May I extend my sympathies and wish you and your family the best.. very sorry to hear you are going through a loss.
“The GZ is about biglaw. And they haven’t seen salary increases in 7 years and won’t for years to come.”
Yes, those raises had been overdue (relative to increases in partner comp), and haven’t changed since. Note that there were two, within a span of months: from $135k to $145k, then up to $160k. As someone who was about to summer at a big Chicago office in 07 (and summers are paid the 1st year rate), I was happy to see the $10k bump happen before I got there. Then, I think it was during the third week of my summer – the $15k bump kicked in (I remember because the next check was the biggest regular check I’d get until I was a 2nd year, because they had to pay a catch-up to reflect the second raise). One thing that gets short shrift in the whole “there hasn’t been a raise since 07!” discussion is that Chicago biglaw was put on the NY pay scale with that second pay increase. That’s a lot of additional real estate buying power. As a third year in Chi, $185k could mean buying a 2/2.5 in ELP; a third year in a NY office was not making a comparable purchase. Also, as noted by JJJ, I think you’re a tad off on the lock step raise amounts. And, while bonuses were drastically reduced in 08 (and never really recovered though I seem in to remember a “spring bonus” in 2010 and/or 11), there were/are still bonuses…and if someone’s still hanging in there as a 4th or 5th year ($220k, $235k), they’re likely getting anywhere between $15-30k. Are 1st year classes smaller than they were in 07/08? Sure. But not so much smaller as to depress the GZ market. As for “no raises” and buying power – I’m making less now than I did as a first year in 08, but it’s not like we sold our condo and moved under a bridge.
“Sure, although, to really fully state the case in a rigorous manner would take way more time than I’m willing to spend. Start with the BLS data, supplement with what you can find about salaries for people who aren’t included in that data, prepare some data on the demographics, etc., probably need to do a few case studies and try to find a way to generalize based on the cross-tabbed demo data, the quartiles, etc.”
Sorry, I thought you had actually looked at the data to reach your conclusions and might be able to share. (I know this sounds a little snarky but it’s really not, or at least mostly not.)
Why do biglaw associates’ salaries move so discontinuously? Some of the recent lack of movement may be in part due to the economic crisis, but why generally does it seem to move in big increments. I have a vague understanding of the matching other firms effects, but why are the increases so infrequent and therefore so big?
“Why do biglaw associates’ salaries move so discontinuously?”
Because lawyers are bad managers?
“Sorry, I thought you had actually looked at the data to reach your conclusions and might be able to share. (I know this sounds a little snarky but it’s really not, or at least mostly not.)”
I did, just for a few minutes – the medians are pretty flat, 0 – 2%, in about half the years since the late 1990s, and then the other half are bigger increases – 5% or so (but none of those in the last few years). (All in nominal dollars.) Total increase 99 (first year in HTML, not gonna open the spreadsheets) – 13 was $90k –> $132k or about 47%, or somewhat but not greatly ahead of inflation over that period. Didn’t open more than one spreadsheet to get the quartiles but median for the top one for the most recent data is $170k
BUT, excludes “self-employed, owners and partners in unincorporated firms” so excludes a lot. Total count for Illinois in 2013 for the BLS data was 29k, which is far off the ARDC registered lawyers of 91k and also not even half of some other data I have seen suggesting that 63k are “active and resident” and also undercounts all the in-house lawyers who don’t have active registrations any more. BLS wage data is probably pretty poor for the legal profession (but still the best that we have), as it probably greatly over-emphasizes younger lawyers who are far more likely to be employees.
Not about income levels, but looking at race and ethnicity in 2013 vs. 2012, whites are now the largest ethnic group in Chicago. It appears that the black population continues to decline. White population is growing now, along with hispanic and asians.
I’m just having a bad day. This is actually the second death in less than six months. It’ been a hard year, which probably explains a lot of my inactivity posting here in 2014 (among other things).
JJJ: there’s a difference between ‘good debating’ and this:
“Most of all, you don’t know that your suppositions on top of assumptions on top of logical fallacies on top of normative views about how much real estate should cost are, literally, meaningless ramblings.”
You can dispute the ISBA member surveys, or knock the BLS surveys, or or dispute my opinions on real estate, but referring to me as illogical rambling moron (without using the word moron) really rubbed me the wrong way this moron.
Lawyer incomes have been flat for a long time. I don’t really understand why this is shocking to anyone. It’s like trying to dispute that salaries in the oil industry in the Dakotas has increased.
“referring to me as illogical rambling moron (without using the word moron) really rubbed me the wrong way this moron.”
Oof. Did you mean “rubbed this moron the wrong way”? [kidding–take care of yourself, HD]
“Do you think that the U.S. economic system generally favors the wealthy or is fair to most Americans.”
Well, appears orgasms share the bias… and people ridicule me for not being serious… whose laughing now!!
http://www.dailymail.co.uk/sciencetech/article-2831326/What-s-love-got-Women-stronger-orgasms-partner-funny-family-high-earners.html
“One thing that gets short shrift in the whole “there hasn’t been a raise since 07!” discussion is that Chicago biglaw was put on the NY pay scale with that second pay increase.”
Actually, if you look at the NALP data, something like 90% of the firms over 700 attorneys in second tier cities like Chicago and Texas firms (as opposed to NYC and LA/SF) were paying those higher salaries in 2009 but it had declined sharply by 2012 to anywhere from 50% to 75%. In NYC, for competitive reasons, more firms stuck with those 2007 increases.
But frankly- things were so bad in 2008-2010 that many firms outside of the coasts just couldn’t keep paying the $160k. A number of them reduced.
How many in Chicago even pay the $160k anymore? 5? 10? It can’t be more than ten or so- can it? (including small branches of big firms in other cities.)
Oh wait- this just in from NALP in October of this year. Like I said- they’ve been shrinking down that first year salary in most cities except those on the coasts. Not many firms in Chicago pay that $160k anymore.
“Coveted starting salaries of $160,000 for associates were prevalent at large law firms in 2009, when nearly two-thirds of BigLaw starting salaries were at that level.
The pay picture is quite different in 2014. Now, only 27 percent of the starting salaries paid by large law firms are at $160,000, according to a press release by the National Association for Law Placement. The large-firm category consists of law firms with more than 700 lawyers.
The reason for the shift, NALP says, isn’t because large law firms are paying less to new associates. Instead, the shift is due to a change in the types of law firms with more than 700 lawyers. More law firms in this category are made up of smaller regional offices that don’t pay $160,000 to new lawyers.
The NALP press release notes that $160,000 is still the most commonly reported salary for the largest firms in the largest markets, though the salary isn’t as common as a few years ago.”
http://www.abajournal.com/news/article/change_in_biglaw_ranks_leads_to_shrinking_prevalence_of_160k_starting_pay
“Are 1st year classes smaller than they were in 07/08? Sure. But not so much smaller as to depress the GZ market.”
First year biglaw class nationally in 2009: 5100
First year biglaw class nationally in 2012: 3600
“Are you aware that House Hunters is basically totally faked? I’ve known or have had friends who have known multiple people/couples on it, and there are many blogs about it as well, all confirm that they basically make up a bunch of stuff and pretend and try to craft an interesting narrative.”
Sure.
The truth is that the people have already bought a house. It’s usually the one without any furniture in it. Then they show them looking at two other properties that fit the “story” (i.e. in this case, the husband wanted a 60s vibe so they looked at 340 W. Diversey.)
Maybe they made up the “we want a 2/2” and they really wanted a 2/1 and that’s how they ended up with it- but I doubt it. Who wants 1 bath if you can have 2?
It’s still interesting to see what they are able to get for their money and the compromises they have to make (in this case- the one bathroom.)
This is the demographic we talk a lot about on Cribchatter. They didn’t end up buying a $400,000 2/2. It’s still really difficult for 20-somethings to afford that even with record low mortgage rates.
“The supposition that lawyer wages aren’t rising has been offered, as best I can tell, as a reason that the “GZ” won’t “boom” (whatever that means).”
No. This is completely wrong.
Heitman said that the GZ was doing so well because incomes were “exploding.”
I said- what incomes? Certainly not lawyers or doctors. Obviously there are plenty of other professions like finance and tech that are doing well.
Yet no one has yet to offer any evidence that those salaries are “exploding” in those fields either. But maybe they are and no one is talking about it yet.
“So if you are looking at GZ prices you need to look at Partner incomes – and not just any Partner incomes but the upper level law firms’ partner incomes (cause who cares about the partner income at some rinky dink firm w/ 5 attorneys?). Partner incomes in big law have been going up precisely because they are making fewer partners (rich getting richer!) and have not raised salaries for junior lawyers in 8 years.”
Okay. Let’s only look at the very top echelon of partners.
How many of those are there in Chicago? 200 to 300? Tops? You know- the ones actually making like $1 million a year.
Then assume that a big chunk of them live in the suburbs.
Then look at the sheer size of the GZ. GZ isn’t just Lincoln Park. It’s Lakeview, Bucktown, Wicker Park, Gold Coast, Streeterville, River North, Loop and South Loop with Andersonville, North Center and Lincoln Square thrown in for good measure.
Partners are a drop in the bucket in the GZ. It’s almost not worth mentioning. So who is REALLY buying all the $1.5 million houses they are now selling all over Lakeview?
A few years ago- new construction in Lakeview was $1.2 million. Now it’s $1.5 million. And those buyers will be expecting to sell for $1.7 or $1.8 in just a few years.
Will $2 million be the new entry level price for a new construction McMansion in Lakeview by 2017 or 2018?
“Chicago is a major city and I think far too many underestimate how many people live in this city that make very good incomes. Almost all the buyers I see are DINKs or have young children. Both typically work until one crosses the $400k mark and then the wife usually starts staying home.”
I love this. So many of you need to get out more. Your lives are SO narrow. Chicago is a massive city. Most of it isn’t rich. ha! If you spend all your time in Southport, though, I could see how you’d think there is so much money sloshing around everywhere.
Take the blue line over to Jefferson Park and look around.
“Social club members = douchebag narcissist”
You obviously haven’t dined recently at RPM or Siena Tavern. I find it funny that some folks go to their private clubs, aren’t out there acting like douche-bags in public at some Melman-brat restaurant concept/scene, yet are still maligned simply for eating dinner in private at a club, bothering nobody. Why is that narcissistic? The RPM diners are the narcissists. Who cares about Bill Rancic and Melmans? You know Chicago is lame when we have no true celebs to speak of here. Our newscasters are the celebs, like running into Lou Canellis or Giangreco at Sunda or RPM beats dinner at a private club? Not so sure….
“Your Google, Lenovorola, Braintree, ChannelIQ, Uber, Yelp, GoGo Wireless, Trunk Club, KCura, Groupon, MethodCare, Twitter, Vivid Seats, Fieldglass, etc now employ THOUSANDS of people in the city at a 6-figure average salary.”
You sure? I know someone who left Coyote Logistics because the owners are cheap, cheap, cheap-asses that aren’t paying or letting salespeople get big commissions.
Russ wrote: “The people buying the more expensive houses in the Greenzone I typically see are:”
Didn’t anyone notice that real estate brokers aren’t on his list? Lol.
“Because lawyers are bad managers?”
The best blog about lawyers is: http://thelawyerbubble.com It’s a Chicago based blogger too.
“Heitman said that the GZ was doing so well because incomes were “exploding.””
Nah, the upper end is probably more about leverage. interest rates cut in half just allowed for loanable principal levels to double as debt coverage levels remained the same. Throw in “some” increase in income, and a solid increase in balance sheet and you have a good explanation for home appreciation on the upper end. The guy who could have gotten 750k at 6% now can get 1.7 at 3% and bid into areas he would never have been able to live. Well the guy who could have gotten 1.5 is now good for 3.4 and has to keep the new 1.7 out of the home he wants.
The uber high end will be fun to watch when int increases… nothing fundamental under it.. lots and lots of air…
“You obviously haven’t dined recently at RPM or Siena Tavern. I find it funny that some folks go to their private clubs, aren’t out there acting like douche-bags in public at some Melman-brat restaurant concept/scene, yet are still maligned simply for eating dinner in private at a club, bothering nobody. Why is that narcissistic? The RPM diners are the narcissists. Who cares about Bill Rancic and Melmans? You know Chicago is lame when we have no true celebs to speak of here. Our newscasters are the celebs, like running into Lou Canellis or Giangreco at Sunda or RPM beats dinner at a private club? Not so sure….”
I stand corrected. The new restaurant seen is filled with douche bags that feel they have to be seen. Pretending to understand the wine they are paying 3X the actual price for. I hate douche bags even more than i hate the suburbs!
How do you know if you are a douche bag?
1. Do you talk about yourself more than you inquire about others?
2. Do you check in on Facebook whenever you head out to dinner, or do you feel the need to report on Facebook who you are with?
3. Do you have vanity plates?
4. Do you read the WSJ or Vanity Fare prior to heading to a social event simply for the purpose of having something to talk about?
5. Do you think you are more important then you really are?
Douche bag defined above!
“Yet no one has yet to offer any evidence that those salaries are “exploding” in those fields either. But maybe they are and no one is talking about it yet.”
Where are the executives at the companies I mentioned living? Even if incomes aren’t exploding, there has to be an influx of new upper middle class people in the city. The president of the small software company I work for lives in a SFH near Fullerton/Racine.
“You sure? I know someone who left Coyote Logistics because the owners are cheap, cheap, cheap-asses that aren’t paying or letting salespeople get big commissions.”
I haven’t heard that, but if its true they will be in trouble soon. The job market for developers is very good right now so anyone not willing to treat developers appropriately won’t have staff. No developer worth a damn is going to put up with shenanigans.
“I love this. So many of you need to get out more. Your lives are SO narrow. Chicago is a massive city. Most of it isn’t rich. ha! If you spend all your time in Southport, though, I could see how you’d think there is so much money sloshing around everywhere. ”
And most real estate in chicago isn’t priced rich at all… Hell you could live anywhere in town from anywhere from $50 to $300 a sqft which is extremely affordable for most folks even the middle class. Yes some immigrant Mcdonalds workers won’t be able to afford a house in the south loop or pilsen, they won’t live there anyways.
YOu bitch about prices Sabrina but have you seen prices all over town? Its like you are comparing green zone rich part of town prices and then bitching about how middle class people can’t afford to live there… which is the typical liberal “fair share, income inequality” bullcrap.
You can get a totally liveable home for well under 150k in a large majority part of town which with a 30 year fixed mortgage at 100% financed is 700 bucks a month, I would say that anyone with even an average income can easily afford that if they exercise a little self restraint and act smart with their money.
“Partners are a drop in the bucket in the GZ. It’s almost not worth mentioning. So who is REALLY buying all the $1.5 million houses they are now selling all over Lakeview?”
I know about a dozen people who, as senior associates or newly minted partners, made such purchases (in LV and NC) within about a 3 year span (2009- 12). I can really only remember one senior assoc/new partner heading to the burbs during that time frame (which isn’t to say that the vast majority of partners 40 and older weren’t living in the burbs).
sonies is 100% right, and so is Sabrina. I recently drove for kicks Archer Ave., Cermak, 26th St and S. Kedzie thru Marquette Park on the way to/from a meeting in Beverly. It’s more interesting than Epcot. There is no lack of affordable housing in Chicago, there’s TONS of it. Large swaths of it.
Then, you hear some liberal “advocate” always whining about the “lack of affordable housing” in Chicago, and it’s just false. I think the liberals think immigrants and illegals, uneducated, drop-outs, single-slut moms, etc. have the civil right to be subsidized to live in the GZ.
For the most part “immigrants and illegals, uneducated, drop-outs, single-slut moms, etc. have the civil right to be subsidized to live in the GZ.” Don’t even want to live in the rich parts of town, they’d rather be with their own people.
Sabrina, you’re arguing against an irrelevant strawman. I’ve shown you that the real data that’s available, along with reasonable, stated assumptions, easily disproves your personal beliefs about how things are or how things should be. Your arguments are illogical and border on the nonsensical.
Groups like Cedar St. are getting squeezed by the “there’s no affordable housing” activists. Fifield’s kid has being getting it too, etc.
EAST VILLAGE — The developers of an apartment and retail complex that could revitalize a vacant lot along Chicago Avenue have agreed to offer more affordable housing than initially planned as well as donate money to a park that abuts the project, Ald. Joe Moreno (1st) says.
For several months, developer Steven Fifield has been at odds with some members of the East Village Association over a zoning change request needed to build a 59-unit apartment building with retail storefronts at 1822-50 W. Chicago Ave.
As part of the zoning change, Fifield would either be required to offer six apartments that meet the city’s affordable housing requirement or “buy out” of the requirement by giving money to develop affordable housing elsewhere.
“There is a reason MiuMiu ONLY knows the highest of the high paid doctors. SHE IS IN THE 1%! The GPs making $100k wouldn’t be rolling w/ MiuMiu (which by the way is the name of a Prada label therefore reinforcing my thought that she is a 1%-er or above).”
Ok for whatever its worth, my childhood cat was called “miumiu” which is the sound of a cat, yup I know very creative. The first time I used the moniker Miumiu, I had not even heard of Miu Miu the label. Later on I liked the double entendre.
As for why I know these people is because they are either my childhood classmates (sometimes family friends or neighbors) or their spouses who are for the most part immigrants. If you want to immigrate to US (legally) you need to be a skilled worker. In our case were the bookworms. There is a reason this country remains to be number one, because its higher education institutions attract the best from all around the world. The loss of these skilled workers which their original countries invested a huge amount in their preparation, is US’s gain.
““miumiu” which is the sound of a cat”
Bengali?
The bottom line is that expensive homes are selling. Doesn’t really matter where the money is coming from. I think Russ’ experience should carry some weight here since he sees a pretty high volume of transactions. In my own neighborhood (East Village) I look around and the people buying the 900K – 1.2 MM homes are: doctors, consultants, sales people, traders, own their own businesses, dual income, tech managers.
“Where are the executives at the companies I mentioned living? Even if incomes aren’t exploding, there has to be an influx of new upper middle class people in the city. The president of the small software company I work for lives in a SFH near Fullerton/Racine.”
There has been a big increase in high income families moving/staying in Chicago. I put these number up yesterday, but here they are again. All from the census.
Families with incomes of $100K+ totaled 138,356 in 2012. In 2013, there were 144,593 families in that bracket. That’s an increase of 4.5%.
Families with incomes of $150K+ totaled 68,672 in 2012. In 2013, there were 73,141 families in that bracket. That’s an increase of 6.5%.
Families with incomes of $200K+ totaled 38,342 in 2012. In 2013, there were 40,471 families in that bracket. That’s an increase of 5.6%.
In 2007, Chicago had 127,766 families with incomes of $100K+ vs. 144,593 in 2013 (13%+ increase). In 2007, there were 31,076 families in the $200K+ bracket vs. 40,471 in 2013. That’s an increase of 30%.
Vlajos:
You have a link to that data? or working from a prop database?
“doctors, consultants, sales people, traders, own their own businesses, dual income, tech managers.”
Once again on CC, real estate pros and brokers are not on the short list of those making money to afford a million home.
Anon, here is the census link.
http://www.census.gov/acs/www/
“Once again on CC, real estate pros and brokers are not on the short list of those making money to afford a million home.”
Nor should they be. If they can they are overpaid. And several of them are and do own expensive homes. But not sure what your point is. You don’t see new car sales people owning million dollar homes either or nurses either.
Link directly to the IL and Chicago economic stats:
http://factfinder2.census.gov/faces/tableservices/jsf/pages/productview.xhtml?pid=ACS_13_1YR_DP03&prodType=table
I was using families, if you look at households there are over 58,307 households making $200K+ in 2013. In 2010, there were 40,561 households makeing $200K+. Almost a 44% increase.
^^^^
Sorry, my first posts regarding income levels in Chicago was using families. If you look at households, which is a broader statistic, there were 58,307 households making $200K+ in 2013. In 2010, there were 40,561 households in that income bracket. Seems pretty straightforward that the City is getting richer.
Why does it continuously take the the blog reader (us) to point out how wrong the blog writer (Sabrina) is about facts of the real estate market? Isn’t she supposed to be the expert?
Vlajos is spot on with his income data he supported. The city is attracting high income earning families and therefore real estate in the desirable areas is in high demand and appreciating. Prices are not going up because rates are low, they are going up because people with money are bidding the prices up. I’ve talked about this trend for years and we are at the beginning stages.
The city is for living and the burbs are for dying…
“Prices are not going up because rates are low, they are going up because people with money are bidding the prices up. I’ve talked about this trend for years and we are at the beginning stages.”
It’s an amazing coincidence, then, that you can track the increase in real estate prices nearly identically with the decline in mortgage rates over the last 20 years.
Imagine that?
And I think someone should notify Janet Yellen that low mortgage rates do nothing to push up housing prices. (She might want to know before taking on a few more trillion in debt.)
“There has been a big increase in high income families moving/staying in Chicago. I put these number up yesterday, but here they are again. All from the census.”
Okay- this is a COMPLETELY different argument than the one I was making. I asked someone to please give me data that says incomes are exploding higher.
So far- NO ONE has been able to do that (because, um, they’re not.)
But when they DO explode higher, that’s a wonderful sign for the ENTIRE economy, including many in the middle class who will see their first pay increase in like 6 years (or sometimes longer- depending on your profession.)
Whether or not more upper middle class people are moving here- I don’t know. That’s NOT the argument that was being made by me. The Chicago census maps show a decimation of the middle class in places like Irving Park over the last 10 years – being replaced by the upper middle class- so these statistics wouldn’t surprise me.
We are soon to live in a city where there is little middle class. It is either upper middle class/rich or poor.
“The bottom line is that expensive homes are selling. Doesn’t really matter where the money is coming from.”
But Gary, we KNOW where the money is coming from. It’s where it always comes from: the stock market.
When was the last time a ton of McMansion houses were selling? Gasp- what a coincidence- the last time the Dow/S&P 500 were at record highs. In 2007.
So THAT is not a surprise.
But there are a lot of $1.5 and $1.7 million houses being built in Lakeview. All on spec. All now sitting there waiting for buyers. Sure- there’s a lot of money in Chicago- but there are only so many buyers for a $1.7 million cookie-cutter house in a so-so school district. Many aren’t even being built in the top districts.
“Your arguments are illogical and border on the nonsensical.”
Check back in in 3 to 5 more years JJJ when lawyers are still making the same as always. Did you know that there are 50,000 graduating every year still and only 25,000 jobs? Yeah- that’s a bit of a problem if you’re looking for a salary increase. Not going to happen.
And the poor law schools. Having to cut back on their entering classes. It’s the only smart thing to do. Their graduates can’t get jobs. What a disaster. You really feel for those who have graduated into this awful job market in the last 5 years.
But thankfully people are getting smarter about even going to law school. The applications to take the LSAT keep dropping every year.
“I recently drove for kicks Archer Ave., Cermak, 26th St and S. Kedzie thru Marquette Park on the way to/from a meeting in Beverly. It’s more interesting than Epcot. There is no lack of affordable housing in Chicago, there’s TONS of it. Large swaths of it.”
I’ve said this before, but there is something like 3,000 empty lots in Englewood near where they’re building the new Whole Foods. Why aren’t developers grabbing that land for cheap and building affordable middle class housing? They can at least build townhouses there. They don’t need to go all the way out to Naperville or Plainfield to do it. The lots are there. One resident said that her nearest neighbor was “miles” away (and I don’t think she was kidding.)
Dan/helmethofer: you never cease to amaze me. Your comment about the south side being “more interesting than Epcot” makes me think you never leave your house. The entire city of Chicago is a melting pot. Not just the south side. Walk down any of the major arteries for a few miles- even starting in the GZ and into Wicker Park/Bucktown.
The area near Albany Park on the North Side is especially interesting. There are Mexican restaurants and grocers and then you turn the corner and the signs are in Persian and then you turn again and they are in some Asian language (I couldn’t even figure out what it is.)
That’s why I LOVE Chicago! It’s so amazing.
“I know about a dozen people who, as senior associates or newly minted partners, made such purchases (in LV and NC) within about a 3 year span (2009- 12). I can really only remember one senior assoc/new partner heading to the burbs during that time frame (which isn’t to say that the vast majority of partners 40 and older weren’t living in the burbs).”
Stop it. Now you’re telling me no lawyers are buying up all those houses in Hinsdale, Glencoe, Winnetka, Long Grove and wherever else? Come on. Give me a break.
Yeah- they’ve ALL decided to stay in the city.
Okay then. Who is buying all the $1.5 million in Hinsdale? And Glencoe? And Evanston? Because those are selling pretty darn well too. It’s not lawyers- because anonny says no one HE knows has moved out there.
“I know about a dozen people who, as senior associates or newly minted partners, made such purchases (in LV and NC) within about a 3 year span (2009- 12).”
By the way- you’d have to be REALLY sure of yourself and your financial future as a “new” partner to be buying a $1 million house in 2009 during the worst recession in 75 years when law firms were literally firing hundreds of people and some went under. You’d have to think you were GOLDEN.
None of my lawyer friends were that dumb. They were hanging on for their lives. They STILL are. I know some just hoping to make it 3 more years until they can retire. (fingers crossed.)
Additionally- people’s perception gets skewed if they never leave their neighborhoods. If you walk around Lakeview/Bucktown you might think that there is a TON of construction going on everything. There’s a new mansion house being built on nearly every block.
But in reality, we’re still at record low building in the city. They’re only building like 20 houses in those neighborhoods (even though it seems like more when you walk around). And this is in a city of 2 million people!
The housing market is also not healthy when the only thing that is being built is luxury housing. But, so far, that’s all I’ve seen being built or proposed to be built.
There are now 2 condo mid-rises being proposed for River North (they haven’t been approved by the alderman yet) and both are luxury buildings.
It’s a bad sign.
That’s why it’s also a bad sign that median price keeps rising in Chicago. That means that more on the top end is selling and not much of anything else. There are plenty of properties under $400k just sitting there on the market right now. Heck- even in the “inbetween” range of $550-$700k, sales are pretty dead.
The first time homebuyer is priced out still. You can’t have a healthy housing market without them.
Chicago’s population in 2013 is 2,718,782.
“It’s an amazing coincidence, then, that you can track the increase in real estate prices nearly identically with the decline in mortgage rates over the last 20 years.”
Home prices came down from 2006 – 2012 despite dropping rates and did not decline in the 70s and early 80s with rising rates.
“But Gary, we KNOW where the money is coming from. It’s where it always comes from: the stock market.”
Not true. Most people borrow most of the money to buy these expensive homes. That mortgage has to be supported by income. Now, maybe they put a bit more down but that would require them to take money off the table from the stock market.
Ask Russ.
“The housing market is also not healthy when the only thing that is being built is luxury housing. But, so far, that’s all I’ve seen being built or proposed to be built.”
That’s not the only thing being built. There are plenty of rowhomes and SFHs being built west of Western and also northwest. Also gut rehabs. I can show you the skyrocketing average sales prices in certain neighborhoods as this happens.
“We are soon to live in a world where there is little middle class. It is either upper middle class/rich or poor.”
fixed that for you.
“But Gary, we KNOW where the money is coming from. It’s where it always comes from: the stock market”
It’s a lovely narrative, and very convincing if you begin in 2009. Disingenuous and intellectually dishonest, but convincing!!
Much more fair would be to look at mid move from ’02-’07, which would be 1190 in March of ’05. From that point the market is up about 6% a year for a whopping 9-10 year gain of 70%.
Now of course that means you beat out 99% of funds that could not return that over the same time period. I’ll leave out dividends (+) and taxes (-), which I would think when added would make the average portfolio returns even lower.
“Whether or not more upper middle class people are moving here- I don’t know. That’s NOT the argument that was being made by me. The Chicago census maps show a decimation of the middle class in places like Irving Park over the last 10 years – being replaced by the upper middle class- so these statistics wouldn’t surprise me.”
But that is the important thing driving real estate. Income levels of people living in Chicago. Here you go:
2010
412,708 Households with income of $0-34,999
411,637 Households with income of $35,000-$99,999
190,231 Households with income of $100,000+
2013
403,749 Households with income of $0-34,999
407,237 Households with income of $35,000-$99,999
219,150 Households with income of $100,000+
From wikipedia http://en.wikipedia.org/wiki/Chicago
“1950 3,620,962 6.6%
1960 3,550,404 ?1.9%
1970 3,366,957 ?5.2%
1980 3,005,072 ?10.7%
1990 2,783,726 ?7.4%
2000 2,896,016 4.0%
2010 2,695,598 ?6.9%”
People are leveraged up as the money is so cheap. Most of the jumbo borrowers are only putting 20% down as larger down payments may only save them an .125% at best. Not worth giving up the additional cash.
The incomes easily support the mortgages. Jumbo buyers are not stretched. Dodd-Frank basically made it very risky for lenders to allow debt ratios above 43% now on jumbo mortgages. Credit scores are higher too. Not too mention a lot of lenders have some pretty high liquid reserve requirements after down payment/closing costs.
It is nothing like it was during the boom where anyone with a pulse could get a NINJA mortgage to buy. The prices are supported by supply and demand. Higher income folks want to be in the city and they are driving up prices. It really is that simple.
Sabrina – “But Gary, we KNOW where the money is coming from. It’s where it always comes from: the stock market.”
Have you considered that the stock market going up is correlated to the economy in general doing well? Cause it is.
“Stop it. Now you’re telling me no lawyers are buying up all those houses in Hinsdale, Glencoe, Winnetka, Long Grove and wherever else? Come on. Give me a break.”
Its not binary – ALL partners or NO partners. Its about the shift in %.
“The housing market is also not healthy when the only thing that is being built is luxury housing. But, so far, that’s all I’ve seen being built or proposed to be built.”
I disagree. Luxury homes bring in higher tax revenues and more spending into the city. To say the MC/LMC doesn’t benefit this is not healthy is incorrect. Look at all of the schools that used to be cr@p that are now acceptable or good. There is a reason Rahm is adding more SEES seats to schools – he knows if you continue to bring the wealthy / UMC+ to the city it will flow down.
“By the way- you’d have to be REALLY sure of yourself and your financial future as a “new” partner to be buying a $1 million house in 2009 during the worst recession in 75 years when law firms were literally firing hundreds of people and some went under. You’d have to think you were GOLDEN.”
Restructuring and Litigation were doing very well during that time. Not all practice areas are correlated to the stock market. And they obviously made prudent financial decisions given they probably made $$ on their purchases. Of course Ze will say they should have put it in the stock market…
Sabrina – I think you are too focused on your immediate circle. There are plenty of other professions out there. Look at all the companies that moved part or all of their headquarters downtown. The 1% are doing very well in general (again – just google “1% income growth”) and there are more of them coming to the city (per data provided by V). Combine that with low rates and high rental prices and you have higher home prices in the GZ. And of course it flows from there – the 5-2%-ers now buy in the peripheral areas and gentrify because they can’t find the cheap rehabs and THs in LV/Bucktown.
Yoss. I would never say that. I go with the bobby knight on shrooms theory of investing. You gotta ride the wave and lay back and enjoy
“But that is the important thing driving real estate. Income levels of people living in Chicago. Here you go:”
Don’t forget the large number of unmarried couples (both straight and gay, or poly) that wouldn’t be included in household income because they don’t file joint tax returns. Unless it’s already computed that way by the IRS linking up the same address, who knows.
“Okay- this is a COMPLETELY different argument than the one I was making. I asked someone to please give me data that says incomes are exploding higher.”
Sabrina, maybe it was worded wrong but I think all of us were referring to income levels / wealth levels of people living in the better neighborhoods of Chicago. The rich are getting richer and they are choosing to move from the burbs to the city. My default, income levels in these areas are exploding as compared to where they were 10 years ago.
Census definition of household:
A household consists of all the people who occupy a housing unit. A house, an apartment or other group of rooms, or a single room, is regarded as a housing unit when it is occupied or intended for occupancy as separate living quarters; that is, when the occupants do not live with any other persons in the structure and there is direct access from the outside or through a common hall.
A household includes the related family members and all the unrelated people, if any, such as lodgers, foster children, wards, or employees who share the housing unit. A person living alone in a housing unit, or a group of unrelated people sharing a housing unit such as partners or roomers, is also counted as a household. The count of households excludes group quarters. There are two major categories of households, “family” and “nonfamily”. (See definitions of Family household and Nonfamily household).
I’m curious how Millenials are affecting these numbers. 28yo’s making 6 figures living alone have to account for some of the numbers.
I highly doubt there’s enough 28 year olds making 6 figures to really make a difference
So when I filed tax returns as single using my address, and my GF at the time did the same thing, the IRS combined the two returns for the same address to make a household income figures? interesting…
Also 3 28yo roommates making $67k/each would fall into the $200k+ category.
“Also 3 28yo roommates making $67k/each would fall into the $200k+ category”
Also a 3-flat with 12 people making $9/hr falls into that category, too.
Realize, tho, that those stats are done thru sampling, not a address by address compilation.
pretty sure they just use tax returns and don’t cross match every address but what do I know. also as i read that definition 5 frat boys living under the same roof but filing separately doesn’t count as 1 household
My broader point was: with Millennials putting off getting married until later in life than the historical average, are there more upper middle class single 28yo’s living alone or with multiple roommates therefore affecting those household income numbers?
Also the Millennials who live at home with their still working parents giving other households a 3rd income.
a few years ago my buddy’s brother rented 1 bedroom in a four bedroom, 3,000 sq foot condo, and he and his roommates were all consultants $100k+ a year incomes…according to the IRS that’s the 1% right there!
“a few years ago my buddy’s brother rented 1 bedroom in a four bedroom, 3,000 sq foot condo, and he and his roommates were all consultants $100k+ a year incomes…according to the IRS that’s the 1% right there!”
Yeah I’m sure there are like 2 total households like that in Chicago.
“Yeah I’m sure there are like 2 total households like that in Chicago.
You must not know anyone under the age of 30 in LP. I can think of one other household arrangements like that…an old bosses son was doing that too up until 2 years ago when he got married. It happens a lot more than you think – especially with crazy rents and the size of the student loans kids graduate with these days. Heck 10 years ago when I lived in Roscoe village the apartment below me had three females attorneys each probably earning $80k a year…cheap rent = money to go out and to pay student loans..
I guess that explains the increase in the $200,000 + incomes in the GZ. A bunch a $80K singles living together.
“I guess that explains the increase in the $200,000 + incomes in the GZ. A bunch a $80K singles living together.”
I’m just saying it happens. Not that it’s totally common or anything, but happens a lot more frequently than 2 households in all of Chicago…
“The rich are getting richer and they are choosing to move from the burbs to the city. My default, income levels in these areas are exploding as compared to where they were 10 years ago.”
The rich are only getting richer because of the stock market. Their incomes aren’t rising (same as with everyone elses.) No one has provided any data that the upper management guy at Kraft is making any more right now than he did 5 years ago.
But, yes, the Fed is inflating all asset classes. If you own those, you’re loving it.
“Have you considered that the stock market going up is correlated to the economy in general doing well? Cause it is.”
Ha! Pulease. Without the Fed, the stock market isn’t at record highs.
If you think otherwise, you just don’t get it.
“The prices are supported by supply and demand. Higher income folks want to be in the city and they are driving up prices. It really is that simple.”
Why are first time home buyers at 30 year lows then Russ? If affordability isn’t an issue- where are all the first time buyers?
We’re already seeing the results of all the investors pulling out of the market. That’s why sales are down. Look at California. Prices are starting to trend lower because the investors have pulled out now that prices are so high. Everyone else can’t afford to buy so home sales are declining. It was the worst October in 3 years in SoCal.
That’s what’s going to happen in Chicago. The market has slowed. The investors were the only ones propping it up and they have left the scene. It’s only a matter of time before prices start declining again.
“But Gary, we KNOW where the money is coming from. It’s where it always comes from: the stock market”
Ze- the rich have always gotten their wealth from the stock market. That’s why the upper bracket crashed in 2008/2009 right along with the stock market. It was no surprise. Crain’s had pretty extensive coverage of what was going on in those years.
When the stock market does REALLY well like it is doing now- the luxury home market explodes. It doesn’t take much to look at your stock portfolio and feel REALLY good about what is going on. So instead of the $1.1 million house, you buy the $1.5 million house. After all, your portfolio has doubled/tripled/quadrupled.
Sabrina:
I think we aren’t seeing as many first time home buyers for a combination of reasons.
First, I believe people’s attitudes towards home ownership are changing. There simply isn’t a rush to buy like in the past. Even among my own client base which includes a lot of FTHB but skews towards the higher income set, I don’t see as many buyers fresh out of b-school, law, or med school like in previous years. It used to be almost all would buy as soon as they graduated or maybe a year later. Even the singles. Now they seem to rent longer, but buy more expensive/larger places once they decide to buy. They are skipping the starter condos. They seem to be giving more thought to job and family stability before making a decision to buy because you can no longer count on buying and selling in two years without a loss.
Secondly, marginal buyers have no financing options. Even FHA is harder to get than in years past. I also think we see the income inequality rearing its head in that the upper middle class is still buying, but the lower middle class is being progressively shut out.
Third, renting long term doesn’t appear to have the same social stigma like it did. Also, with rental units being updated, it is a viable option. When I bought my first home, part of the reason was the rental options sucked so bad that if you wanted a half-way decent place, you had to buy something. Now, you can get rental units nicer than some of the condos on the market.
At the end of the day though, real estate is local and there are always buyers. In the GZ specifically, you have an influx of higher income buyers who want to be in a limited area with limited inventory which drives up prices. Home prices in Austin are irrelevant to what is happening in the Greenzone.
“Why are first time home buyers at 30 year lows then Russ? If affordability isn’t an issue- where are all the first time buyers?”
Culture shift. Current 20-somethings don’t want to be tied into a 30 year contract, so they rent with 1 year contracts instead. A growing number of 20-something live at home/rent from when they graduate until they get married at 30 and then possibly until the first kid is school aged. Rent from 23-34 until little Johnny goes to pre-school, then buy a home in the suburbs. The era of buying a 1 or 2 bed at age 26 is coming to an end.
Gee, this is terrible for the owners of “starter” condos! Since homeowners will not buy them, these condos will be worthless and current owners of these condos will lose all their money, right?
Well if your starter unit costs far less than renting you’re probably going to be fine
“That’s what’s going to happen in Chicago. The market has slowed. The investors were the only ones propping it up and they have left the scene. It’s only a matter of time before prices start declining again.”
And if prices decline guess who will be back… the investors! There is a base in real estate values that is calculated off of rental rates. The absence of 1st time home buyers means these folks are renting. More renters equates to higher rents, which in turn creates more investors when prices hit a certain level.
Do you understand economics?
Russ just nailed by exact thoughts. well said… well written Russ!
“And if prices decline guess who will be back… the investors! There is a base in real estate values that is calculated off of rental rates. The absence of 1st time home buyers means these folks are renting. More renters equates to higher rents, which in turn creates more investors when prices hit a certain level. ”
This is also why no building should ever disallow renters. Having tough rental restrictions takes the investor support out of a property and creates a bottomless base. Investors are the base when owner occupants are on the sidelines.
“Gee, this is terrible for the owners of “starter” condos! Since homeowners will not buy them, these condos will be worthless and current owners of these condos will lose all their money, right?”
They certainly won’t be worthless, but prices will drop as demand for owner-occupied 1 and 2 beds dries up. When the price gets low enough, investor buyers come back into play. Many starter condo owners like myself will likely sell for less than they bought, but they certainly aren’t holding a worthless asset and shouldn’t be forced into foreclosure or bankruptcy or anything.
“Gee, this is terrible for the owners of “starter” condos! Since homeowners will not buy them, these condos will be worthless and current owners of these condos will lose all their money, right?”
The concept of starter CONDO is ridiculous. It It used to be rent a 1bedroom/2bedroom get a starter HOME!
Good luck buying a “starter home” unless you want to live in a far flung area with a long commute or the ghetto
“The concept of starter CONDO is ridiculous. It It used to be rent a 1bedroom/2bedroom get a starter HOME!”
Hmm…
1)
We rented a 2/2 condo in ELP for about 2.5 years. Rent was $2,350/mo, plus $150/mo for parking a block away. Once we were a month or two into our second year (by then on a month-to-month), the unit owner indicated that there was a decent chance that he would be asking us to move out (so that he could move back in). For 2.5 years, we received zero tax deductions for the $2,500/mo we had paid; while the unit was very nice, we were unable to make any “personal taste” changes to the unit; maybe a quarter of the building residents were renters; and we were facing the prospect (subject to the landlord’s housing needs, not ours) of having to scramble to find a place for our family to live.
2)
We then purchased a 2/2.5 condo (10 percent down on a 5/1, with an extra .5 percent on the rate for lender-paid mortgage insurance) a few blocks away. Mortgage payment was around $2k/mo, plus about $350/mo in fees and about $500/mo in taxes. For 3 years, of our $2,850/mo housing cost, $2,500/mo led to a meaningful tax decution; we spent a modest amount ($12-15k?)improving the place to our liking; all of our neighbors were longtime owners; and nobody was going to tell us to move out. Three years of principal reduction covered a good chunk of our transaction costs, and we sold for roughly $50k more than we paid.
Which of the above is more “ridiculous,” 1 or 2?
You guys are saying that a non-homeowner can live in a condo/apartment, and that the fact that they are going to pay rent to the owner may actually have some value to someone? So would the value of such a unit actually depend on how much revenue it can generate instead of only what it can be sold for, or do those things, like, have some relationship or somethin’?
Annony. You also could have needed to write a check for $50k at the closing which probably would have changed your opinion about owning for 2 or 3 years. I’m not disagreeing with you as I realized a similar benefit when I owned a condo, but I’ve also seen the other side where people bought thinking they’d own for 2 or 3 years and then were unable to sell.
I’m just seeing where a lot of younger buyers are realizing that life happens and thus are making longer term decisions so they don’t get stuck. Owning a home can be a huge anchor around your neck in the short term.
“Which of the above is more “ridiculous,” 1 or 2?”
I would say the ridiculous part of the two would be either
1. Your poor planning being on a month to month lease
2. Your ridiculous ideal only to live in East Lincoln Park (which isn’t a actual separate his)
“I’ve also seen the other side where people bought thinking they’d own for 2 or 3 years and then were unable to sell.”
Yes, the ridiculous part of what nonny said is the assumption that everyone can be like nonny. not icarus, he.
“Yes, the ridiculous part of what nonny said is the assumption that everyone can be like nonny. not icarus, he.”
Well, if you follow the Heitman rule of only buying in primo locations, then you’ll be fine.
‘course that means that if you can’t afford primo location, you shouldn’t buy (a short-timer condo, at least), but that really isn’t that far from the truth.
where was this site when I was looking at condos circa summer 2003?
http://www.dnainfo.com/chicago/20141117/garfield-ridge/wall-street-is-chicagos-new-landlord
“Yes, the ridiculous part of what nonny said is the assumption that everyone can be like nonny.”
I fully agree with Russ’s point that it could have cut the other way for us. While it was a primo location, I really was surprised at just how hot the market got when we listed at the end of last summer (it was certainly nicer to be a buyer in 2010 than 2014). My point is that the conventional wisdom as to condos and, to a greater extent, mortgage products, might not always be so wise. Crazy as it sounds, I think the safest short-term housing bet is an ARM with the minimum down on a condo.
“So would the value of such a unit actually depend on how much revenue it can generate instead of only what it can be sold for, or do those things, like, have some relationship or somethin’?”
But rents also have a relationship based on INCOME, not just the purchase price.
“wall-street-is-chicagos-new-landlord”
So, Blackstone owns the equivalent of two large-ish (but not *huge*) apartment buildings? Aren’t there about a dozen REITs that already owned more units than that? Planned Property Management owns twice that number.
Why does it matter that they are SFRs rather than under shared roofs?
“We then purchased a 2/2.5 condo (10 percent down on a 5/1, with an extra .5 percent on the rate for lender-paid mortgage insurance) a few blocks away. Mortgage payment was around $2k/mo, plus about $350/mo in fees and about $500/mo in taxes. For 3 years, of our $2,850/mo housing cost, $2,500/mo led to a meaningful tax decution; we spent a modest amount ($12-15k?)improving the place to our liking; all of our neighbors were longtime owners; and nobody was going to tell us to move out. Three years of principal reduction covered a good chunk of our transaction costs, and we sold for roughly $50k more than we paid.”
Can we say “unicorn”?
Jesus. I’m glad you’re so special anonony- but if everyone made home ownership decisions like this the market would be even more messed up than it is. I would estimate that the number of condo owners STILL losing money (after transaction costs etc.) in the neighborhood areas of the GZ (NOT downtown in the high rises) is over 80%. And that’s even of people who have bought at the “low”.
Condo prices haven’t risen enough (and are now softening again) for people to get out with anything after paying their realtor, transfer fees etc.
The market right now is very different from 2013. I said months ago that if people didn’t sell in 2013 they lost out. There are no more multiple bids. Properties are sitting again. It’s like the buyers have just gone away.
“Good luck buying a “starter home” unless you want to live in a far flung area with a long commute or the ghetto”
You can get a brick house between $200,000 and $300,000 in Portage Park and Jefferson Park. This isn’t a “long commute” or “the ghetto” (it’s like 25 minutes on the METRA from JP.) I would say these are “starter” homes for the upper middle class.
“And if prices decline guess who will be back… the investors! There is a base in real estate values that is calculated off of rental rates. The absence of 1st time home buyers means these folks are renting. More renters equates to higher rents, which in turn creates more investors when prices hit a certain level.”
So you’re admitting that prices are going to decline, right? That’s what is already happening out there. The market is going the other way again (and most sellers don’t even realize it’s happening yet. That’s why properties are just sitting there. They’re priced too high.)
But more interestingly- after going 70 years without ANY price declines in the housing market, we’re about to go through our fourth “dip” in prices in the last 7 years. Quadruple dip! Another dead cat bounce on the way to finding the bottom of this market. Even WITH record low mortgage rates.
“‘course that means that if you can’t afford primo location, you shouldn’t buy (a short-timer condo, at least), but that really isn’t that far from the truth.”
What’s a “primo” location? Plenty of people taking losses in both LP and Lakeview- areas you’d think were “primo.”
The definition of “primo” is SO vague- to be almost useless. It’s literally block to block and even building to building. Someone will make money on one side of the street and lose it just across on the other side.
Who’s willing to take that risk? Anonny got lucky that he chose correctly. 80% of others won’t be so lucky. Trying to buy for just 2 or 3 years is a stupid financial decision. There are also other variables (such as mortgage rates) that you have NO control over.
Anyone else see yesterday’s Crain’s article about the cool down in the downtown apartment market?
Q1: 1000 apartments rented
Q2: 1000 apartments rented
Q3: 129 apartments rented
No wonder the incentives have appeared again.
The article says that there is usually a third quarter slowdown, so the landlords aren’t freaking out. But what I want to know is- how does this slowdown compare with last year’s and the year’s before? Does it usually slow down THIS dramatically or does it slow down to just 300 or 400 units rented?
The article doesn’t give any perspective.
I guess we’ll have to wait to find out if there is something more to this cool down. The next couple of quarters should be telling.
It’s interesting that both the apartment market and the condo buying market fell off a cliff at the same time this year though.
http://www.chicagobusiness.com/realestate/20141117/CRED02/141119820/downtown-apartment-market-cools-off
“It’s interesting that both the apartment market and the condo buying market fell off a cliff at the same time this year though.”
Condo buying market fell off a cliff this year? When? Contract activity and market times are similar to last year as of October and November isn’t looking that bad.
“Another dead cat bounce on the way to finding the bottom of this market.”
To be clear, you are predicting we go below the 2012 lows?
“So you’re admitting that prices are going to decline, right? That’s what is already happening out there. The market is going the other way again (and most sellers don’t even realize it’s happening yet. That’s why properties are just sitting there. They’re priced too high.)”
There are some properties priced too high that are just sitting there. That has no bearing on whether or not sale prices are heading up or down. You could have rising sale prices and still have lots of properties overpriced.
The concept of condos is a bigger scam than derivatives market
Also both are a big game of hot potato, when the music stops last one holding gets burned
Its not that bad, its about equal to renting but you’re your own landlord IMO you don’t deal with rent increases, just assessment hikes and specials, while your taxes and mortgage interest decrease. Its a wash sort of but nice if you enjoy repairing things yourself as I do.
“But rents also have a relationship based on INCOME, not just the purchase price.”
Not really, not a very strong one at all. You can’t demonstrate that incomes have to go up for rents to go up, or that rents will go up when the incomes go up. Rents have been rising for years, including in Chicago. Income is flat. Different markets have very different rents (and drastically different once the data is normalized) based on often similar incomes. People in NY and the Bay Area just spend way, way more on housing than we do in Chicago. Same with overseas. In particular, Chicago doesn’t need rising incomes to have rising rents. In part, this is because rental residential real estate and owned residential real estate are very good substitutes for one another. Also because everyone has very similar consumption requirements for real estate.
JJJ – your business school professors would be proud of your analysis.
I’m not even sure if that is intended to be an insult or a compliment, or just sarcasm.
JJJ: Ah sorry! Compliment; the wording and argument structure fondly reminded me of my time at Booth. In particular: discussion of substitute goods, use of the word consumption.
Thanks Wicker, but FUQUA YOU! 🙂
Sabrina – ” I would estimate that the number of condo owners STILL losing money (after transaction costs etc.) in the neighborhood areas of the GZ (NOT downtown in the high rises) is over 80%.”
You are ignoring the alternate cost. So if you “lose” $25k after sales price / fees are counted but would have paid $30k for equivalent housing (what JJJ would call “consumption requirements for real estate”) you are actually $5k better off having “lost” (using your terminology) $25k.
“Condo prices haven’t risen enough (and are now softening again) for people to get out with anything after paying their realtor, transfer fees etc.”
See above – they may not be getting out with anything but they may still be better off.
“I’m glad you’re so special anonony- but if everyone made home ownership decisions like this the market would be even more messed up than it is.”
“Anonny got lucky that he chose correctly. 80% of others won’t be so lucky. Trying to buy for just 2 or 3 years is a stupid financial decision. There are also other variables (such as mortgage rates) that you have NO control over.”
So let me get this straight. Anonny does some basic math on rent vs buy – realizes he would be better off renting instead of buying – buys near the low – lives there for 3 yrs – and MAKES $$ on his condo not even including the money he saved by not renting (ie he probably still would have been better off even if he sold for what he purchased for) – and you are saying he is lucky? As far as I’m concerned he is a better housing analyst than you. His mistake is extrapolating his experience to everyone else.
“I would say [$200-300k PP+JP houses] are “starter” homes for the upper middle class.”
You’ve defined UMC down to anyone over the median *family* income?
Sabrina – I agree the rental market will cool off. It has gone farther / faster than condo prices. Combine that with the supply coming in 2016 and it seems like some of the peripheral buildings being built will do poorly and have to cut rent.
“His mistake is extrapolating his experience to everyone else.”
Ok, but did he even do that? All I saw him do was say, what’s so ridiculous about a starter home, here is what I did, it turned out ok for me and is a reasonable thing to do. And he’s right.
Also don’t forget that his experience had interest costs (at least $15k a year), opportunity costs (probably 20% a year of appreciation pretax over that period was lost out on) and was probably a good bit more risky that just renting. But he still made great money – tax free – for taking a reasonable risk.
The lesson is, don’t just follow the truisms in real estate – “renting is throwing money away” or “real estate always increases in value” or whatever the pro-renting ones are, but make reasonable decisions based on your own situation.
I’ve thought about bringing what I consider to be my real estate grand slam to market, but the reality is we’re living in it, and it’s been great for us in that respect, and we’d have to find another place to live and deal with all the issues that go along with it. Plus I’ll be damned if we’re not going to enjoy all these improvements we’ve made over the last years, which, trust me, have been at a great opportunity cost given what the market has done.
“I would estimate that the number of condo owners STILL losing money (after transaction costs etc.) in the neighborhood areas of the GZ (NOT downtown in the high rises) is over 80%.”
And when did you think that home ownership was ever a winning game? By the time you pay your property taxes, utilities, insurances, maintain the place, HOAs, broker fees, transfer taxes, on and on, it becomes a game of loss – the less you loose the more you’ve won. I’ve never known anyone who made money off the food they ate either, but like a roof over your head, it just another thing you need to survive.
“after going 70 years without ANY price declines in the housing market”
Only if you look just at nominal prices, which are on the whole pretty meaningless.
“What’s a “primo” location?”
It’s a post hoc definition.
“I would estimate that the number of condo owners STILL losing money (after transaction costs etc.) in the neighborhood areas of the GZ (NOT downtown in the high rises) is over 80%. And that’s even of people who have bought at the “low”.”
This is meaningless gibberish. They are only “losing” money if they bought the condo speculating that it will go up in price and never lived in it or rented it out. How many people are doing that?
5 years of rent at $2500 per month = $150,000
So, if you “lose” less than $150k after all costs, who is the real loser?
when did loose/lose become a thing… just curious as it really grinds my gears when I see it
“I’ve never known anyone who made money off the food they ate either”
I have, for real
I lost 100% of my investment in Grace within about 24 hours of eating there. Doesn’t mean it wasn’t awesome!
“within about 24 hours”
A little disconcerting what you seem to place value on.
A $300K house is upper middle class? Fuck, I must be loaded!
“The market right now is very different from 2013. I said months ago that if people didn’t sell in 2013 they lost out. There are no more multiple bids. Properties are sitting again. It’s like the buyers have just gone away.”
Yes it is Sabrina. Prices are much higher which softens demand. nothing else has changed.
“But more interestingly- after going 70 years without ANY price declines in the housing market, we’re about to go through our fourth “dip” in prices in the last 7 years. Quadruple dip! Another dead cat bounce on the way to finding the bottom of this market. Even WITH record low mortgage rates.”
Really Sabrina? I guess housing did not decline from 2008 – 2013 right? What is wrong with you?
Sabrina:
1) How long have you been renting?
2) How much do you think you have spent in rent over that period of time?
“when did loose/lose become a thing”
too easy to do on the interwebz when it doesnt really matter, espercially if typiing on a aphone.
it does matter… they mean different things… don’t tell me you’re one of those stupid common core english teachers that let kids get away with stuff that is spelled “sorta close to how it sounds”
You seem way too anal for that
“don’t tell me you’re one of those stupid common core english teachers that let kids get away with stuff that is spelled “sorta close to how it sounds”
@fo is certianly not one of hte rift raft.
“you’re one of those stupid common core english teachers that let kids get away with stuff that is spelled “sorta close to how it sounds””
Yes, thats write, ima cps grammer teacha. Totes sutes ma personalitize. Ebonics be engorged in ma clazzrum.
If I ruin my kids, it will be bc I’m too picky, not bc I’m too lax, about shi…stuff like that. That said, intertubez comment threadz ain’t the place to expect good editing.
“hte rift raft”
East African Rift?
Oculus Rift?
Mid-Atlantic Ridge(rift)?
And what is the salience of a raft for any of those?
“And what is the salience of a raft for any of those?”
you’d have to ask sonies, bc I’m sure he wouldn’t use a spelling just bc it was just sorta close to how it sounds.
One of my friends used to have a (not fully educated) roommate who was convinced that the “blah” in “blah blah blah” was an abbreviation for “blase” (sorry snoies too lazy to put in the aigu). So in formal gatherings, he would bust out w “blase blase blase” when the occasion called.
“So in formal gatherings, he would bust out w “blase blase blase” when the occasion called.”
I like it. I’m gonna start doing that.
hahaha does he say it like blaze? or blah-zay?
“does he say it like blaze?”
When he sez it like that, he’s meaning something else, methinks.
“does he say it like blaze?”
“When he sez it like that, he’s meaning something else, methinks.”
easy @fo, he is not one of the rift raft. and he would, of course, say it comme il faut.
“he is not one of the rift raft”
I’m sure he only blazes the finest quality, fair trade, Humboldt stuff.
Or, perhaps you are suggesting he keeps with the OED word of the year and doesn’t–technically speaking–‘blaze’.
http://www.iu.edu/~econdept/workshops/Fall_2007_Papers/Davis_wages_rents_qol.pdf
Wages, Rents, Quality of Life
Data from the NIPA and from the Decennial Census of Housing s
how that the household expenditure share on housing is remarkably constant over time and across U.S. metropolitan areas (MSA).
THIS is middle class:
https://www.redfin.com/IL/Oak-Lawn/8825-Merrimac-Ave-60453/home/13179872
The only way to get a house this cheap on the north side is to threaten the seller with “your signature or your brains…”
Some of you folks are so detached from reality about what housing costs in the rest of the chicagoland area…
‘anon (tfo) on November 18th, 2014 at 11:40 am
“after going 70 years without ANY price declines in the housing market”
Only if you look just at nominal prices, which are on the whole pretty meaningless.
can I offer the seller the real price of the house of 1999? Or is it the nominal price in 1999 in today’s real dollars…I get confused…
whats with your obsession of the drone pics HD 🙂
“can I offer the seller the real price of the house of 1999? Or is it the nominal price in 1999 in today’s real dollars…I get confused…”
HD, Ignore the troll. I thought, with all those big words he uses, he probably knew what he was talking about. I went into a bank with a $100 bill printed in 1999 demanding they deposit $138 into my account. Almost got me arrested. Actually I did get arrested, but that was because the girl helping me was smoking hot and I answered honestly when she asked me if I had anything else I wished to deposit with her.
Oh well.. in the immortal words of my great philosopher aunt Roseanne Rousseau Rosannadanna.. “If it ain’t one thing, it’s another”
“can I offer the seller the real price of the house of 1999? Or is it the nominal price in 1999 in today’s real dollars…I get confused…”
You can offer based on your ’99 income and savings.
“Really Sabrina? I guess housing did not decline from 2008 – 2013 right? What is wrong with you?”
Duh Steve. That’s what I said. We went 70 years without any price decreases in Chicago. From the Great Depression to the Great Recession. Chicago even escaped price declines in the 1980s when many other metro areas had them (especially in Texas) although in the mid-1980s prices didn’t rise for about 6 years.
But since 2008- we’ve seen three dips and we are about to see a fourth.
“A $300K house is upper middle class? Fuck, I must be loaded!”
Yes- it is. Someone making $50,000 is not buying a $300,000 starter home.
As someone else said on here- most of you have no idea what the rest of the Chicagoland area lives like (and what they pay for housing.) $150,000 is pretty common in many of the suburbs. THAT is middle class housing. $300,000, $400,000 and $500,000 is definitely upper middle class.
“This is meaningless gibberish. They are only “losing” money if they bought the condo speculating that it will go up in price and never lived in it or rented it out. How many people are doing that?”
It’s losing money if you don’t have enough after paying transaction fees and your realtor to put down on the next house. If your original downpayment was $50,000 and you’re walking away with $30,000, you’re losing money.
I hate when people try and argue that paying down equity isn’t losing money. Of course it is. That’s why everyone is stuck. They don’t have the down payment on the next property because they can’t make enough off the sale of this one. And they’re unwilling to “give it away” unless they HAVE to move.
It’s still really brutal out there. The belief that housing is some kind of money making venture has gone completely out the window and it hasn’t come back. If you’re buying, you’d better be willing to be there for a LONG time (10 years) in order to have it pay off for you financially. Don’t buy that condo with the thought that you’re only going to be there 2 or 3 years. You’ll lose money. Lots of it.
“It’s losing money if you don’t have enough after paying transaction fees and your realtor to put down on the next house. If your original downpayment was $50,000 and you’re walking away with $30,000, you’re losing money.”
No, you are not. You lived in it. That has a cost.
“I hate when people try and argue that paying down equity isn’t losing money.”
I hate when people try and argue that paying rent isn’t “losing” money.
“The belief that housing is some kind of money making venture has gone completely out the window and it hasn’t come back.”
Who said anything about making money? It is about SPENDING LESS money. If rent costs me 150k for 5 years, and owning a house costs me 100k, then I’ll take owning a house. If owning costs me 200k, then I’ll take renting. It’s that simple.
” If you’re buying, you’d better be willing to be there for a LONG time (10 years) ”
Amount of time there is meaningless. Timing however, is everything. You pick 10 years because that gives you time to pick an exit point. But what if the end of your 10 years is 2010? Someone that bought in 2012 is now fine 2 years later. So, amount of time held (other than amortizing closing costs) is basically meaningless. Basically, “buy low, sell high” regardless of holding period.
“Who said anything about making money? It is about SPENDING LESS money.”
You’re not making money by picking an alternative that leaves you w more money?
“Amount of time there is meaningless.”
There are significant fixed costs of buying/selling. If you knew you were going to live somewhere for 3 months, would you plan to buy and sell? Agree that timing has been a big deal given the volatile market we have had in the last several years. Less of an issue if the market is less volatile. And timing does matter.
“You can offer based on your ’99 income and savings.”
I’ve been putting together a stash of george schultz dollars…
“You’re not making money by picking an alternative that leaves you w more money?”
You sound like my wife when she comes home from shopping at a “sale”.
“If you knew you were going to live somewhere for 3 months, would you plan to buy and sell?”
Yes, I didn’t literally mean “meaningless” (despite saying just that). And some of the fixed costs can be minimized, esp on the buy side. I would gladly pay an extra 1/8th for no closing costs if I thought I might not hold that mortgage for more than 5 years. The commission on the sell side is tough to avoid, and I still can’t believe that FSBO hasn’t been more successful with the internet. I assume most people don’t buy PLANNING on moving in less than 3 years. And given the right timing, appreciation can offset the costs of selling (buy in 2011, sell in 2014). But who knows where things will be in 10 years? If you buy in 2011 and sell in 2021, maybe it will be a disaster. So, other than the amort of fixed costs, length of hold is “meaningless” IMO.
“I still can’t believe that FSBO hasn’t been more successful with the internet.”
Well, you have to be on the MLS, which can be done for a lot less than 6%. The real question is why are the traditional brokers still garnering such a large share at 5 – 6% commissions – something I think about a lot. When you talk to lots of sellers what becomes clear is that there is a ton of wishful thinking going on – i.e. if I hire the right agent they are going to get me more for my home. So the traditional brokers play to that and succeed. I could go on and on.
Oak Lawn is the best! I often hang at the bar at Palermo’s on 95th. Stop on by!
How can anyone dispute what Sabrina is saying about condo ownership cost? Assuming the monthly cost is about the same as renting, then what she’s saying is that the price better appreciate by the amount of the broker commission (6%) or you’re losing money. In a 2-3 year horizon, who can safely say a depreciating asset, with finishes getting dated by the year, will appreciate?
“Someone making $50,000 is not buying a $300,000 starter home.”
Sure, but I’ll tell you something else someone making $50k is not:
NOT UPPER MIDDLE CLASS!!!!
Is a person (living in metro Chicago) with a household income of $100k buying a $300k starter home? That’s *also* probably a ‘no’ (HD notwithstanding), as that person is likely looking at things closer to $400k in the current rate environment.
“when people try and argue”
To Sonies earlier lose/loose issue:
WTF is with this? Why does NO ONE seem to understand that it is “try TO argue”? I get eliding the difference in the spoken word, but when written, it just doesn’t make any sense.
“other than the amort of fixed costs, length of hold is “meaningless””
I guess, but the (substantial) fixed costs are the reason for the conventional advice (which sabrina is exaggerating). Not saying it can’t make sense to go against that advice, but amortization of fixed costs is the core reason for that advice, which it makes sense to consider.
“Well, you have to be on the MLS, which can be done for a lot less than 6%.”
I just don’t see why that can’t be supplanted by an Internet Listing Service (ILS) of some sort. Actually, I kinda do see why. People that are selling FSBO are a one and done mostly. It is hard to get inertia in something like this when you lose interest in it the second you sell.
But yes, the real “solution” probably lies in reduced commissions. 4% (2 and 2) sounds much more reasonable to me.
“The commission on the sell side is tough to avoid, and I still can’t believe that FSBO hasn’t been more successful with the internet.”
Because realtors have some super secret agreement within their cartel to not show their clients properties that are FSBO because they won’t get paid enough
“Well, you have to be on the MLS, which can be done for a lot less than 6%.”
If you had waht would be a “hot” property, I’ve always wondered what would happen if someone used a flat fee MLS listing service and put it on w no coop commission or a much lower than standard commission. These days I gotta think a lot of people are looking at listings for themselves.
A lot of the FSBO listings are at delusional list prices and jsut sit forever.
“WTF is with this? Why does NO ONE seem to understand that it is “try TO argue”? I get eliding the difference in the spoken word, but when written, it just doesn’t make any sense.”
1. on the interwebs, people write as they speak.
2. sonies, hope you realize what you ahve unleashed.
3. these math probs are getting way too hard; my kid’s school would try to classify them as “algebra”
“Because realtors have some super secret agreement within their cartel to not show their clients properties that are FSBO because they won’t get paid enough”
Maybe it’s just me, because I have some experience buying/selling, but I am not even sure realtors are needed. For me, they are a negative that just get in the way. P2P real estate would be much more attractive to me. But maybe that first time 20-something couple needs their hand held.
“I’ve been putting together a stash of george schultz dollars…”
Those 72s or 74s? The 72s are worth 18% more
“Because realtors have some super secret agreement within their cartel to not show their clients properties that are FSBO because they won’t get paid enough”
I know you’re being somewhat facetious but the reality is that we focus on the MLS because that’s where 95% of the properties are. There really is no reason not to be there.
Now if we become aware of a FSBO property we find out if the seller is paying a commission and how much. If it’s not “enough” then we ask the buyer to make up the difference.
“Assuming the monthly cost is about the same as renting”
Because that is a terrible assumption. There is a reason why renting apartments is a business. They aren’t in business to supply you with product “at cost”.
“But yes, the real “solution” probably lies in reduced commissions. 4% (2 and 2) sounds much more reasonable to me.”
You can do the flat fee MLS listings and cut further. But then you’d have to put up with all the assholes complaining about your house.
Another problem w the people who currently list as FSBO w or w/o MLS exposure is they don’t invest in some proper photos.
“If you had waht would be a “hot” property, I’ve always wondered what would happen if someone used a flat fee MLS listing service and put it on w no coop commission or a much lower than standard commission. These days I gotta think a lot of people are looking at listings for themselves.”
Anything less than a 2.5% co-op receives pushback from *some* realtors and it makes me nervous. Less than 2% and the buyer’s agent will probably ask the buyer to make up the difference.
And there are numerous ways to cut the commission on the sell side short of going the no-service route.
“if I hire the right agent they are going to get me more for my home. So the traditional brokers play to that and succeed.”
If the MLS weren’t a cartel, there’d be some sort of success bonus structure–1.5% up to a number, 10% beyond that–and the buyer’s agents wouldn’t be seeing 3%.
“There is a reason why renting apartments is a business. They aren’t in business to supply you with product “at cost”.”
REnting is a business and a pretty competitive one. Do you expect it to be systematically cheaper to buy (supply your own housing) than to rent (have someone else supply)?
” on the interwebs, people write as they speak.”
So the fact that the NY Times is on the interwebz makes it ok to use that construct in news articles?
“Less than 2% and the buyer’s agent will probably ask the buyer to make up the difference.”
What if the buyer refused to pay the agent? Is the buyer precluded from buying the house? Is it obligated per contract to provide a certain level of commission to the agent?
“Maybe it’s just me, because I have some experience buying/selling, but I am not even sure realtors are needed. For me, they are a negative that just get in the way. P2P real estate would be much more attractive to me. But maybe that first time 20-something couple needs their hand held.”
I’ve thought about this a lot too. In theory you are correct but in practice you would not believe how many times things go wrong and we know how to either avoid it or fix it. Not to mention that what we do in one hour – e.g. create an MLS listing – would take you two hours. I use the oil change example. I could change my oil myself but I don’t.
The bigger question is why do realtors get paid a $60,000 commission for 20 hours work and the seller is delighted that they worked with a celebrity realtor?
“So the fact that the NY Times is on the interwebz makes it ok to use that construct in news articles?”
okay, on the interweb chat/comment type thingys, people write as they speak. (sonies, what have you done!!!!)
“I am not even sure realtors are needed”
Varies a little by state, as some states they essentially substitute for attorneys. Not “necessary” in IL.
“Do you expect it to be systematically cheaper to buy (supply your own housing) than to rent (have someone else supply)?”
Actually, yes.
“Actually, yes.”
And why, systematically? I’m asking about cheaper as opposed to other benefits such as having control over your own place etc.
“Not to mention that what we do in one hour – e.g. create an MLS listing – would take you two hours.”
Yes, but you are talking tens of thousands of dollars sometimes. If you were talking 500 hrs vs 1,000 hours, then maybe it would be worth it.
“If the MLS weren’t a cartel, there’d be some sort of success bonus structure–1.5% up to a number, 10% beyond that–and the buyer’s agents wouldn’t be seeing 3%.”
Co-op in Chicago is usually less than 3% but not always. I saw one the other day that sold with a 0.5% co-op. Have to believe the buyer paid the difference.
The incentive structure you describe is totally permitted and has been discussed in realtor circles. It creates an interesting conflict of interest. The realtor then has an incentive to lower their estimate of the value of the property.
“And why, systematically?”
Perhaps I don’t understand what you mean by systematically. I don’t believe it works in all periods of time (buying cheaper than renting). But in a market like the last few years where rents are very high relative to the cost of buying, I think everyone (systemically?) could have bought for cheaper than they could have rented. So maybe rent cost is $2k, and I can supply a place myself for $1700 per month, and the “professionals” can do it for $1500 per month. Yes, they have that $200 advantage over me due to economies of scale, etc. but I can still supply it cheaper than renting. On the other hand, they have overhead that I do not (administrative, advertising, etc). So, I’m not even 100% sure they can do it cheaper than me all the time.
Unless I am totally missing your point….
“What if the buyer refused to pay the agent? Is the buyer precluded from buying the house? Is it obligated per contract to provide a certain level of commission to the agent?”
Well, it gets interesting. Many agents get their buyers to sign a buyer’s agreement that obligates the buyer to do this. If they don’t have an agreement like that in place they will certainly put one in place as soon as FSBOs start presenting themselves. But if an agreement is not in place and the buyer refuses to pay then in all likelihood the buyer will proceed on their own without the agent’s help and the agent gets screwed for all the time they invested with that buyer.
“Yes, but you are talking tens of thousands of dollars sometimes.”
Precisely why sellers should focus on what an agent is going to DO for them and what it’s going to cost. For a lot of sellers it just makes sense to pay the realtor by the hour but they are going to pay regardless of whether or not the place sells.
“For a lot of sellers it just makes sense to pay the realtor by the hour.”
Does this happen? I didn’t even know it was an option. This would make a lot more sense to me.
“So maybe rent cost is $2k, and I can supply a place myself for $1700 per month, and the “professionals” can do it for $1500 per month. Yes, they have that $200 advantage over me due to economies of scale, etc. but I can still supply it cheaper than renting. On the other hand, they have overhead that I do not (administrative, advertising, etc). So, I’m not even 100% sure they can do it cheaper than me all the time.”
Just meant are there fundamental reasons why we would expect owning to be cheaper than renting. Obviously at any particular point in time one could dominate. If the rental market is sufficiently competitive (and it’s not for SFH and may not be for other segments) is there any reason to expect the rental price to deviate substnatially/sysmatically from cost of ownership (when doing apples-apples)?
“is there any reason to expect the rental price to deviate substnatially/sysmatically from cost of ownership (when doing apples-apples)?”
I think over all time, renting systematically has a built in premium. Similar to how renting a car has a premium over buying one. You are paying for the flexibility.
“okay, on the interweb chat/comment type thingys, people write as they speak. ”
I wasn’t clear–the NYTimes does in fact use the ‘try and’ construct in news articles.
DZ wrote “1. on the interwebs, people write as they speak.
2. sonies, hope you realize what you ahve unleashed.
3. these math probs are getting way too hard; my kid’s school would try to classify them as “algebra””
I laughed… thanks!
Regarding rent vs buy. I looked at this pretty religiously for my own situation over the last 14 years. It varies over time and really the NYT calculator is the best way to look at this. From 2000 – 2011 renting made a lot more sense for me. By 2012 owning made a ton more sense – hands down.
“Does this happen? I didn’t even know it was an option. This would make a lot more sense to me.”
It’s pretty rare in the industry but we’ve been offering an hourly option for both buyers and sellers. It works out well for sellers who know they aren’t going to dick around. There is another interesting dynamic that occurs when we get paid by the hour…our clients believe what we tell them.
“I wasn’t clear–the NYTimes does in fact use the ‘try and’ construct in news articles.”
outsourcing, thats why
Any idea what an average number of hours spent is for people that go this route? What kind of rates are we talking? $100-150/hr?
“I wasn’t clear–the NYTimes does in fact use the ‘try and’ construct in news articles.”
weird that i can’t find internet outrage over “try and argue”. not saying that I gthooi, but normally these things are easy to find. also saw a use of “try and argue” as in try and argue a case. not sure that fully makes sense either.
“It creates an interesting conflict of interest. The realtor then has an incentive to lower their estimate of the value of the property.”
Easy enough to take the realtor out of the value estimation–$250 buys you an appraisal, tie the strike price to the appraisal–say up to 98% of appraisal gets 1.5%, anything over that gets 10% within 30 days, 7.5% from 30 to 90, 5% after 90 to expiration of listing agreement.
So whats preventing people to just use attorneys or fill out the ever so difficult “offer page” themselves?
ILS put your property up, buyers with no realtard e-mail to set up time to see place. Offer via their attorney, counter offer, negotiate blase blase blase deal done, tens of thousands saved on both sides.
Its happening in every other middleman type business, why not the realtard profession? Oh because its a cartel, that’s why! Tired, hungover, no time for grammarz
“weird that i can’t find internet outrage over “try and argue””
Because it’s a close question, and an accepted idiomatic usage in spoken English.
“when did loose/lose become a thing… just curious as it really grinds my gears when I see it”
Ohhhhhhh sonies. Not everyone sits at a proper desktop on company time composing an internet thesis. Some people rely on a new iPhone 6 that autocorrects/suggests itself way too quickly compared to the past models, while sitting on the patio in the blinding sun having their morning coffee and keeping an eye on the pool cleaner so he doesn’t miss a spot. Just how many tasks should a person be expected to juggle simultaneously? However, no excuses.
Aaaah I had a feeling it was partly the fault of auto-correct!
There’s a reason realtors are still around *despite* the cartel, and FSBO, and P2P and craigslist…it’s because most sellers and buyers are complete morons when it comes to buying or selling a home. Most FSBO’s I’ve seen are COMPLETELY overpriced – but magnitudes more than even the craziest realtor priced properties – and quite frankly, even though realtors have their moments, a below average realtor is still better than an above average FSBO seller looking to squeeze a few pennies out of a transactions.
I will argue that a sophisticated seller, somebody like chuk or sonies or most people who post here, would konw a little enough about real estate to stumble through a transaction and be OK. but for the average person whose finds ‘a house with character’ to be the most desirable feature in his or her home hunt, well, they’re gonna need a realtor to guide them through the process.
Seriously, watch house hunters. I know it’s *fake* on most levels, but the buyers aren’t actors, They’re giving real comments. They want ‘character’ whatever that means – old, no insulation, goofy looking interior….
Here’s an example of a ridiculous FSBO priced $100 per sq foot above the median price…
https://www.redfin.com/IL/Park-Ridge/213-S-Home-Ave-60068/home/22894709
“keeping an eye on the pool cleaner so he doesn’t miss a spot”
good god man, isn’t that what you pay a pool cleaner monitor to do? it’s as if you are down to a single footman.
“Aaaah I had a feeling it was partly the fault of auto-correct!”
I”d be surprised if autocorrect suggested that unless it learned that’s what jay thinks is correct.
Plenty of landlords lose money; or at least don’t make any. They’re hoping for long term appreciation, subsidization of the rent (as in the case of owner-occupied); and of course depreciation of the building as a deduction against other income. After many years, the appreciation, rent inflation, and payoff of the original mortgage, the property might start producing income. Look at many rental properties for sale. Three flats and such are junk, nobody has updated them in 30 years. That’s because teh original owner had it for 30 years, took the deductions, and is now selling for the appreciation. Look at the selling prices of properties these days. Few of them even cash flow – especially if you buy with a mortgage and not with cash, and some dont’ even cash flow at the cash price. It’s a long term investment. Not that it’s a ‘bad’ investment, such as buying a two flat in wicker park in the 90’s or logan in the 2000s but you get what i’m saying.
Re: using brokers, be it on the buy or sell side. We’ve now purchased and sold a condo, and purchased a SFH. Didn’t use a buyer’s broker on either purchase; used a broker on the condo sale (same Chi lawyer handled both the purchase and sale of the condo). If we could do it over again, I would use a broker on both purchases, and will do so on our next purchase (and unless there’s a drastic change in how residential RE is marketed, I’ll use one when we eventually sell again). I was a RE broker, managed associations, practice transactional law, and am a RE junkie like most of the longtime regulars on here. But an experienced and professional broker (I’d say they’re in the minority) can make the whole process a lot smoother and lower-stress.
“it’s because most sellers and buyers are complete morons when it comes to buying or selling a home.”
Agreed.
“Most FSBO’s I’ve seen are COMPLETELY overpriced”
Agreed.
“You can get a totally liveable home for well under 150k in a large majority part of town which with a 30 year fixed mortgage at 100% financed is 700 bucks a month, I would say that anyone with even an average income can easily afford that if they exercise a little self restraint and act smart with their money.”
I just discovered the Mr. Money Mustache blog and wanted to share:
http://www.mrmoneymustache.com/about/
I have one of those old-fashioned man-powered reel-cutters he mentions for my lawn in Norwood Park, btw. Home Depot sells them. My neighbors think it’s funny, but I enjoy cutting the grass and it really does work your arms and abs.
“Muscle Over Motor”:
http://www.mrmoneymustache.com/2011/12/05/muscle-over-motor/
“But an experienced and professional broker (I’d say they’re in the minority) can make the whole process a lot smoother and lower-stress.”
So how does one go about finding one of these?
Given the choice between a majority bad broker or going it alone, which one would you choose?
“So how does one go about finding one of these?”
A lot of people go off of referrals, which is not bad but has it’s own problems. You’d be surprised how many people go off of how many signs they see from an agent or how many “Just Sold” postcards they get from someone.
Thankfully, there are more and more online reviews out there – Yelp, Angie’s List, Trulia that give a much more concrete picture.
Most importantly, when you interview an agent find out what they are going to DO for you, which many won’t discuss. What they really want to talk about is who they are and how much they sold and where.
Not using an agent is pennywise and pound foolish imho. There is so much that you don’t know you don’t know. Good agents are worth it. Same thing with lenders, attorneys, inspectors, etc.
“Good agents are worth it.”
I don’t doubt it, I’ve just never met one.
Some call for a competent broker?