Market Conditions: Chicago’s Real Estate Market Ends 2012 On An Up Note As December Sales Jump 14.6%
After a one day delay (since the IAR released the data late yesterday)- it’s finally time to check in on the December 2012 sales.
December continued the trend of 2012 which was rising sales with a rise in the median price (and we all know how the median price can be affected by the mix.)
The city of Chicago saw a 14.6 percent year-over-year home sales increase in December 2012 with 1,806 sales, up from 1,576 in December 2011. The year-end 2012 home sales totaled 22,333, up 22.4 percent from 18,250 home sales in 2011. The condo market in the city of Chicago showed a sales increase of 17.7 percent to 1,037 units sold in December 2012.
The median price of a home in the city of Chicago in December 2012 was $185,000 up 19.4 percent compared to December 2011 when it was $155,000. The year-end 2012 median price reached $185,000, up 5.7 percent from $175,000 in 2011.
- December 2004: 3,719 sales and median price of $267,000
- December 2005: 2,847 sales and median price of $283,000
- December 2006: 2,241 sales and median price of $279,000
- December 2007: 1,629 sales and median price of $287,000
- December 2008: 1,263 sales and median price of $235,000
- December 2009: 1,820 sales and median price of $208,000 (34% short/REO sales)
- December 2010: 1,475 sales and median price of $166,000 (43% short/REO sales)
- December 2011: 1,536 sales and median price of $156,000 (44% short/REO sales)
- December 2012: 1806 sales and median price of $185,000 (39.7% short/REO sales- according to Gary Lucido’s data)
For Condos/Townhouses:
- December 2009: 1,024 sales and median price of $279,700
- December 2010: 827 sales and median price of $222,000
- December 2011: 841 sales and median price of $182,500
- December 2012: 1037 sales
“December showed positive indicators across the board at the height of the holiday season, which is typically a quiet time for home sales,” said REALTOR® Zeke Morris, president of the Chicago Association of REALTORS® and Operating Principal and Managing Broker, Keller Williams Realty, CCG. “In addition, the 18.9 percent decrease in market time from the same time in 2011 shows a continued clearing of inventory, of both single-family homes and condominiums, which should prompt action among buyers and sellers and continue to promote home price stabilization.”
“Positive signs for the housing market continue with the comparative advantage of ownership versus rental generating a significant opportunity for increased housing sales in 2013,” said Geoffrey J.D. Hewings, Director of the Regional Economics Applications Laboratory at the University of Illinois. “The housing market is likely to experience some bumpiness in the first quarter of the year until there is resolution of the fiscal challenges in Washington and Springfield. Declining consumer confidence reflects the uncertainties; consumers are unlikely to explore major purchases, especially of houses, when tax rates, mortgage interest deductions and pension obligations remain unresolved.”
The big story doesn’t seem to be the increase in sales and median prices. It is the lack of inventory.
Check out Gary’s recent analysis of the low inventory for 2 bedroom condos in the city here.
Illinois sees home sales increase in December; 2012 notches 22.9 percent sales gain over 2011 [Illinois Association of Realtors, Press Release, January 22, 2013]
So this may come as a surprise to long time Cribchatter followers but the IAR recently changed their methodology and it has resulted in an UNDERSTATEMENT of the true YOY percent increase. They are now comparing preliminary December 2012 sales to final December 2011 sales. They used to compare preliminary to preliminary. For instance, using their original methodology I get December up 17.1%. Another way to look at it is that they originally reported November up 22.5% over 2011 but now we know that November was up at least 25.6%. It can take quite a while for all realtors to record their sales in the MLS.
the inventory is there, but the gubment is telling the banks to hide theirs to artificially puff the market for a bit to make joe american feel safe and secure so they can hit you with more income (and other) taxes.
and FU to anybody who says there is no shadow inventory. I cut two lawns of boarded up houses in my immediate hood and i still have not seen these properties listed on the market. My moms next door neighbor has a lis pendens filled 3 years ago and nothing is happening they are still in the home.
Also how many accidentally landlords do you know who when the market gets better will sell their condos/rental homes that are not breaking even. How many people do you know that want to move but cant.
its all in the shadows folks, if your really open the flood gates and get the true market you will see the light and also another 20-30% more in your homes value.
have a wonderful morning,
The Groove
I wonder how many of these homes were sold at auction or through some other method where you wouldn’t see a “for sale” sign up or a listing on the MLS.
Just because there is inventory doesn’t mean it will see the light of day. Private equity is investing in foreclosures/short sales in bulk to rent out. Many of these homes will not make it to the MLS for regular buyers to purchase. This will distort the market (private equity buys in bulk in severely reduced prices) and the average Joe deals with higher prices b/c invetory is low. Honestly, the best deals for the average Joe have passed. If buying a home makes sense for you (plan to stay long term) and you can afford it, you should probably buy now if you see something you like.
“if your really open the flood gates and get the true market you will see the light and also another 20-30% more in your homes value.”
Are you saying that home values will increase by 30% if there are more homes on the market?
wow we’re totally back to the real estate prosperous year of 2009!
“Are you saying that home values will increase by 30% if there are more homes on the market?”
sorry i phrased it wrong your home value will GO DOWN 20-30% more int hat scenario
Zillow allows you to search pre-forclosures in your neighborhood. In places I’ve searched the pre-forclosures aren’t usually properties that CC types would want. They always seem to be the very bottom of the bucket of the neighborhood. For instance, if you look at them in Park Ridge, they’re not going to be the types of places an hd would actually buy, even when it finally does hit the MLS.
I’ve been looking at 2-bedroom condos. The inventory is just awful. Only a few aging, high-maintenance 2BR/1BA. There also seems to be a lot of 1BR + dens (<100sf) being marketed and priced as 2BR places. I'm not sure why people are paying premiums for these instead of renting. The worst part is that people are jumping on foreclosures at ridiculous asking prices lately. Just look at the garbage under contract on the Homepath website. Guess people have really short memories these days.
“and FU to anybody who says there is no shadow inventory.”
Is a boarded up home really a comp for buyers looking for a house to move into? (That’s the question I’m asking in these two above posts.) Or is there a bifurcated market in the very same submarkets, one for residents and another for bottom-feeders?
“Zillow allows you to search pre-forclosures in your neighborhood. In places I’ve searched the pre-forclosures aren’t usually properties that CC types would want. They always seem to be the very bottom of the bucket of the neighborhood. For instance, if you look at them in Park Ridge, they’re not going to be the types of places an hd would actually buy, even when it finally does hit the MLS”.
So this means those types of places are probably tear-downs and sell at close to land value then? There is a high demand for new construction in well located areas close to metra and 30 minutes or less to downtown.
“and FU to anybody who says there is no shadow inventory”
I didn’t know there are actually people out there contend that there is no shadow inventory. That’s pretty funny.
The level of shadow inventory at this point in time has GOT to be higher than ever before, perhaps by an entire order of magnitude. It’s really seems unprecedented.
If one is still complaining about shadow inventory, one misses the grander point: The Fed and Government have shown a willingness to throw good money after bad, trying to end the housing crash.
They can, and probably will, support the market for the foreseeable future: Abnormally low rates, balance sheet games for banks, etc. The victims will be savers, and the US Dollar.
That said, it’s best to accept the fact that they will never flush out all that inventory unless or until the market stabilizes. Could be years. It ain’t gonna change, so stop making yourself mad!
“So this means those types of places are probably tear-downs and sell at close to land value then? ”
That is my gut reaction too, but I’m not sure about it, so I’m fishing for more opinion on it. Are they real competitive “comp” inventory, or not really inventory at all?
“They can, and probably will, support the market for the foreseeable future: Abnormally low rates, balance sheet games for banks, etc. The victims will be savers, and the US Dollar.”
The real victim is the economy, which is in standstill mode because of all this intervention and meddling. They should have let the market clear, it’s 2013 and people are still complaining and on the sidelines. We should have done an “iceland” and everybody would be back to normal business by now.
If it’s basically a tear-down, why don’t the banks just get rid of these properties at this point? It actually is hurting prices in some areas in my opinion because these blighted undermaintained properties are still standing at all and are dead spaces on their block. I don’t understand the lack of movement of these properties in the market. Put them up for sale as teardowns and move on. Foreclosed condos are a different story, but many of these will go back to being rentals eventually, as the buildings turn over.
“Private equity is investing in foreclosures/short sales in bulk to rent out.” This. The private equity firms have several advantages that regular investors don’t – connections with lenders & gov’t / economies of scale for renting and rehabbing / massive amount of stable $$. These guys are comparing fixed income returns to rent yields and its a no brainer for them. They are focusing on CA / IL / AZ and GA. There is shadow inventory out there (as there always is even during the boom times) but there is also shadow demand. And who do you think a RE agent handling a foreclosure is going to want to deal with – a small time investor who buys a few distressed properties a year or a large PE fund that buys thousands for cash and has a streamlined process and will be a repeat customer? You are dreaming if you think prices will be down 20-30% in the short term.
Yoss, hit the nail on the head. I have a friend, a former MD at a big investment bank, that used to do mortgage backed securities. Left before that tanked but is now running his own fund that PE invests in and is purchasing houses in bulk in Chi town.
“a RE agent handling a foreclosure is going to want to deal with – a small time investor who buys a few distressed properties a year or a large PE fund that buys thousands for cash and has a streamlined process and will be a repeat customer?”
Are individual realtors *really* dealing with the bulk sales? C’mon, I need some evidence to believe that.
so the assumption is that a boarded up home is automatically a tear down?
can a boarded up brick home not be a jewel that just needs a touch up, or is it just a dud and nobody will buy it?
and please when thinking about this expand your mind and realize chicago area is not just the hoods covered here LP, LV, RN, GC, Evanston/northshore. there are perfectly wonderful areas like dunning which has one of the top highest in the city for foreclosures but is still a decent areas.
“Are individual realtors *really* dealing with the bulk sales? C’mon, I need some evidence to believe that.” Never said that. What I implied is that PE buyers don’t participate in *only* bulk sales and will purchase *regular* foreclosures through similar channels as smaller investors. Not every foreclosure is part of a bulk sale. And any RE agent with half a brain will seek out whichever buyers are easy to deal with and have the money because they are more interested in volume than price.
“Yoss, hit the nail on the head. I have a friend, a former MD at a big investment bank, that used to do mortgage backed securities. Left before that tanked but is now running his own fund that PE invests in and is purchasing houses in bulk in Chi town.”
Considering that prices are flat, I doubt this guy is making a big return. What about the concept that eventually the market will HAVE TO CLEAR, and that’s it’s inevitable that it will, and all the bad debt will eventually have to be liquidated, it appears now, later than sooner. I think it’s the Austrian economists that say this, so prices could go down on the stuff that’s still being manipulated and isn’t in a free market.
Imagine, for argument’s sake, if the Gvt. and Fed had conspired to prop up the dotcom bubble, and dotcom equities after 2002….and kept them on life-support for 4 more years. Basically, they would have been propping up a false economy, non-economic equities, fake prices, etc. Does anyone think that dotcom “dogs” would have somehow eventually resurrected themselves into profitability? No, probably they would have slowly leaked downwards despite the intervention, eventually reaching their true market valuations, which were zero. So, what makes us think the Fed and Gvt. propping up housing can delay or fix the inevitable market correction and true pricing?
“Imagine, for argument’s sake, if the Gvt. and Fed had conspired to prop up the dotcom bubble, and dotcom equities after 2002….and kept them on life-support for 4 more years.” Completely different investments – equities are a claim on future earnings and mostly based on subjective value (that people attempt to use quantitative methods to predict). Housing is currently a yield play – the PE investors aren’t buying for *appreciation* (the only way to have made money in dotcom stocks) but for *cash flow*. RE prices could be flat in 10 years but if you earn a 10% cap rate per year on the property you have made over 100% in REAL returns. Of course if prices go up they will make $$ on both appreciation and cash flow.
“any RE agent with half a brain”
That’s a high treshold you’ve set.
“*appreciation* (the only way to have made money in dotcom stocks)”
False. Many made much betting ‘don’t pass’.
“Yoss, hit the nail on the head. I have a friend, a former MD at a big investment bank, that used to do mortgage backed securities. Left before that tanked but is now running his own fund that PE invests in and is purchasing houses in bulk in Chi town.”
Considering that prices are flat, I doubt this guy is making a big return. What about the concept that eventually the market will HAVE TO CLEAR, and that’s it’s inevitable that it will, and all the bad debt will eventually have to be liquidated, it appears now, later than sooner….Imagine, for argument’s sake, if the Gvt. and Fed had conspired to prop up the dotcom bubble, and dotcom equities after 2002….and kept them on life-support for 4 more years. Basically, they would have been propping up a false economy, non-economic equities, fake prices, etc. Does anyone think that dotcom “dogs” would have …resurrected themselves into profitability? No, probably they would have slowly l…. reaching their true market valuations, which were zero. So, what makes us think the Fed and Gvt. propping up housing can delay or fix the inevitable market correction and true pricing?”
No shock that Sherlock the would be speculator doesn’t get it. The difference is dotcom boom pricing was essentially based on knuckleheads flipping stock for profits driven by demand unsupported by business’s generating real net income so eventual failure was inevitable. Investors are buying sfh and condo residences today based on securing fairly predictable rental income streams from diverse tenants. If the value of sfh or condos go down but rent stays stable investors will likely increase unit purchasing and reap increased investment yields. Does anyone see a scenario where rents for middle class/ working class residences go down in foreseeable future? The apartment construction boom, which may result in an oversupply in certain locations is targeted in upscale areas not middle class or working class neighborhoods.
“anon (tfo) (January 23, 2013, 11:40 am)
“*appreciation* (the only way to have made money in dotcom stocks)”
False. Many made much betting ‘don’t pass’.”
Jeez you are a nitpicker. If you were a long investor (which is what helmet was talking about so that is what was implied in my response) without appreciation you only had dividends – very rare among dotcoms. If you are saying not buying was profitable I would say not losing is not equivalent to making money. If you were talking about shorting dotcom stocks then that wasn’t relevant to the discussion.
The analogy to the idea of propping up a dotcom bubble was only for illustrative purposes, obviously the beta is different for the two asset classes. That’s not the point. The point I’m asking about is: does propping up any asset class forestall or turn around what the Austrians say cannot be done: the liquidation of the bad debt and seeing the market eventually clear to “free market” levels.
So, if the Fed had propped up the dotcom bubble, the intervention may have postponed the stocks hitting zero, but they would have eventually hit zero, if that was their true value. For RE, I’m suggesting the free-market values, without our current intervention, ZIRP, etc. would be lower than what our private equity managing director might believe. I’m not saying they’re going to zero like a dotcom stock. It’s a matter of degree.
We can all agree that without Fed and Gvt. intervention, prices would be lower. Question, again, is can the Fed and Gvt. intervention actually turn things around? and keep the market from hitting the level where some say “the market clears”?
Southbound, why don’t you stick to what you’re good at: spending $160K for a Notre Dame education and coming out of it with pro-abortion views. Now that’s a bad investment, you could have just blown that money at the casino and came out with the same moral values.
“what the Austrians say cannot be done”
meant to say: what they say must occur…
PS I guess the “propping up” of Bank of America, measured by its stock price, prove that Gvt. and Fed intervention can produce a new free market value? Or is BAC stock totally mispriced?
yoss: didn’t read half of the exchange for well-established reasons, and not sorry about it.
The reasonable comparison is the Gov did not bail out the dotcom gamblers (mostly playing with mostly their own $$), but did bail out many of the housing gamblers, bc in the latter, (a) can’t readily tell who was gambling and who just didnt see that they were buying into a dicegame/ponzi, and (b) they were playing mostly/entirely with house (pun, sorry) $$.
” anon (tfo) (January 23, 2013, 12:35 pm)
yoss: didn’t read half of the exchange for well-established reasons, and not sorry about it. ” Well that makes it quite difficult to discuss the points made then. You should probably refrain from commenting on things you don’t read as again your follow up comment is correct but not relevant to the original comment (which you won’t read) that compared the future prices of two fundamentally different assets (dotcom equities vs. real estate) post a government bail out. It had nothing to do with the motivation or moral issues of bailing out the respective parties.
“any RE agent with half a brain”
I like that the head of CAR is named “Zeke”.
“You should probably refrain from commenting on things you don’t read”
Sound advice.
I’d give some back to you, but it would violate the spirit of my self-ban.
I know what’s happened to the shadow inventory. It’s a lot of different things, actually.
Loan Mods: For starters, the banks and lenders and servicers have been a lot more lenient with loan mods. In fact, in places like Will County, your first court date is a mandatory mediation for a loan mod. And they just give them out like candy these days, unlike days of the past, when they were hard to get. So these 40 year loan mods are just treading water until they default again.
Short sales: short sale market is huge, up to 40% of the market overall, and much much higher in some area. So 720 of Dec’s 1800 sales were shadow inventory disappearing.
Bulk sales: These happen, don’t get me wrong, they do, but they’re not as prevalent as everyone thinks. there’s only been a handful of major deals I’m aware of.
Investors: Some investors have exclusive agreements with servicers and banks to buy REO’s and distressed properties and flip them. Whether or not they split the profit, I don’t know. I do know that park ridge has all these weird sales properties that pop up out of nowhere in the 100’s and 200’s and then are flipped in the $300’s and $400’s a few months later by some LLC.
Judicial auctions: I see and hear of third parties intervening in foreclosure cases and judicial auction buyers on a regular basis these days. That was pretty unheard of even as recently as 12 months ago but today it’s happening more and more often.
Clogged up court system: The system is clogged up. I know of 2009 and 2010 cases making their way through the system in cook county, northwest side properties, and the banks just taking their sweet time.
Investors: investors are snapping up evertythign they can get their hands on these days. any and all of the above ways listed.
I wouldn’t say the market is hot, or has even turned a corner, but investor demand has definitely stabilized the market to a large degree; but overall sales are still a half to a third of what the were during the boom.
Another segment of shadow inventory: People like me. Cook county judges do not seem to be allowing deficiency judgements. So after initially listing my place as short sale I said screw it and just let it go to foreclosure then Sheriffs sale. The bank released its right to pursue personal deficiency in exchange for shortened “redemption” period. Then this is the kicker, The bank NEVER bought it back at the sheriff’s sale. So a 3rd party investor bought my place for $45K and I bought it from them for $61K (all cash from 401K). Comps in my hood are near $100-120K so I’m happy. And I get to walk away from original mortgage of $240K (after fees and interest). Plus the 2007 Mortgage Debt forgiveness act means I don’t have to pay any taxes on the forgiven debt. I can’t be the only one with this experience.
Congrats, all_cash. That is what you call a foreclosure success story!
I can see why banks mostly don’t bother with deficiency judgments. Most foreclosees are too poor to pay, and have nothing worthwhile to seize. No real chance of garnishing wages either, as a bankruptcy filing would wipe that out. And since a foreclosure already trashes someone’s credit rating, the BK filing wouldn’t make it that much worse.
CC’s vilest said: “Southbound, why don’t you stick to what you’re good at: spending $160K for a Notre Dame education and coming out of it with pro-abortion views. Now that’s a bad investment, you could have just blown that money at the casino and came out with the same moral values.”
As always Dan/ Helmuthead/Deanolds could not be more wrong – I paid about $12K for my U of I education. It is ironic that you who chooses to honor the name of an alleged murderer of a middle aged woman attempts to lecture about moral values. It is none of your business but several of our kids were educated @ ND. They went in with & came out with great moral values. Unlike you what I am good at is convincing someone to be my partner, making a lifetime commitment & co-raising kids who excelled enough to be admitted to and finish ND. And unlike you I succeeded at making enough to raise children in a manner that they could qualify to attend and finish ND.
all_cash, your story is (almost) unbelievable.
Are you sure you don’t have pay any taxes on the forgiven debt?
Was the third party investor who bought your place at auction a friend of yours? Why the auction winner agree to sell it back to you for only $61k when comps in your hood were near $100-120K. ?
‘It is ironic that you who chooses to honor the name of an alleged murderer of a middle aged woman attempts to lecture about moral values’
So SB, is that what ‘helmethofer’ means then? Interesting. If memory serves me correctly, one day while in the bathroom burning a difficult mule, I was trying to de-scrable it but all I could come up with was Fred Phelps. Interesting.
“burning a difficult mule”
Never heard that one before.
“They went in with & came out with great moral values.”
Says you. Every parent thinks their own kids are beautiful. All I know is you sent your kids to ND and you’re pro-abortion. Whatever dude. You never make sense.
“Loan Mods, Short sales, Bulk sales, Investors, REO’s, distressed properties, Judicial auctions”
This is shadow inventory for investors…not homeowners. This means that the real “move-in” inventory must be in very short supply, and less supply means higher prices in Econ 101. So where are the price increases? Must not be that much demand then, to keep things so stable.
Demand is not up much for Homeowners. Other than myself and one other couple, most of my cohort bought during the boom or hasn’t bought yet at all.
“Cook county judges do not seem to be allowing deficiency judgements. ”
After years of giving this advice, this is changing. Very much so. Even the bigger banks are taking deficiencies these days. Probably to sell the paper for .01 cents on the dollar to NCO or portfolio associates (Which are little more than separate entities owned by the big banks anyways). The better route these days is the consent judgment – which waives the deficiency in exchange for shortening the redemption period – and sounds like that’s what you did all_Cash. that’s totally different from going to judgment, and then the bank waiving the deficiency at the order approving sale hearing. Banks are taking personal deficiencies on default judgments all the time now.
Sorry for the slow site. I’m working on it with my host.
” Pete (January 23, 2013, 11:15 pm)
“burning a difficult mule”
Never heard that one before.”
i didnt see a copyright so it is now stolen and will be put into use today, i say around 10:30 am
@TBV
They sold to me because (1) I had the cash (2) and if they didn’t sell I was gonna trash the place. I live in Rogers Park so they believed me.
you forgot 3 they made a 20k profit in about a month
“3 they made a 20k profit in about a month”
Payday loans type returns!!
“Or is BAC stock totally mispriced?”
Since you’ll never know what kind of crazy ass derivative is actually on their books at any given time, yes… absolutely
““3 they made a 20k profit in about a month”
Payday loans type returns!!”
LOL. yep and they probably didnt incur any carrying costs. they seemed to just to be a pass through and *only collected 20k for the middleman. i will take that type of return any day. Its also seems like a good way to launder/laundry money
“Or is BAC stock totally mispriced?”
“Since you’ll never know what kind of crazy ass derivative is actually on their books at any given time, yes… absolutely”
Speaking of stocks, I was wondering what sonies’ current advice is re aapl, and if it differs by whether you already hold it, have held it in past and sold, or anything else pertinent.
I am also wondering whether D#2 took sonies’ prior advice, in whole or in part, and what his current view is.
Did anyone buy on the drops? Should we buy on the latest drop? Thank you.
@Groove77
It was actually 20K in 3 months 🙁 Yes not bad for them but at least I have a roof over my head without having a crappy 40 year modified mortgage.
@TBV
No…the 3rd party investor wasn’t a “friend” and the 2007 Mortgage Debt Forgiveness Act (just extended another year by congress) allows for no tax on (most) debt forgiven via foreclosure or short sale.
” All_cash (January 24, 2013, 11:13 am)
It was actually 20K in 3 months 🙁 Yes not bad for them but at least I have a roof over my head without having a crappy 40 year modified mortgage.”
just remember the universe drop some darn good fortune in your lap to take advantage of, dont forget to make it full circle and give out a little pay-it-back in anyway you can to someone else.
I had not held AAPL stock or options recently, but I started buying in the last few weeks and have continued with the drop due to the earnings “miss”. The P/E is something like 8.0 ex net value of onshored cash, that is nuts that it is that cheap. I get that the margins are slipping and the volume numbers are down a little and they’re not going to be as amazing a growth story over the next five years, but to me anyone selling AAPL now is relying far too much on technical momentum “no support until $300” voodoo and ignoring the fundamentals, which are extremely strong. I think that there are some good homerun opportunities in long expiration out of the money calls as well, if you are aren’t too risk averse. The street can be crazy when it comes to earnings and to me this is a classic “buy when the others are selling” opportunity.
Jay asked “So SB, is that what ‘helmethofer’ means then? Interesting….” He signed off on a posting in May as “Dean (not Dan) Olds” . If you google Dean Olds & Helmet Hofer you can see a tawdry tale. It is classic behavior by a (closeted?) conservative that while he desperately aims to impose strict moral conduct by the rest of the world, his choice of behavior is best predicted by his decision to emulate & honor a gay male prostitute who allegedly killed his sugar daddy’s divorcing wife for financial reasons.
Then the biggest asshat on cc pontificatingly posted “Says you….All I know is …you’re pro-abortion…” The key words are “All I know”. Dan/Helmuthead knows zero. I never share my moral beliefs here (on a real estate site?) or anywhere else. Nor do I try to impose my beliefs or moral judgments on others.
Based upon fundimentals it would be a good time to buy AAPL at the current price levels, I’ve been buying small pieces in the low 500-515 range so 439 is a heck of a deal and I will probably be buying more as it approaches the magical 425 level
wow way to spell fundamental wrong genius
think of AAPL now this way, who would you trust to pay you back 2.4% yield over the next 20 years, AAPL, or the US government? Who runs their business better? lol
I called AAPL at its “blow off top”, Sabrina disagreed. I didn’t have the guts to short it, but it’s blow-off spike up to $700 was almost the same (technically) was what happened on the Silver chart when it hit $49. Apple is a broken stock technically, you could probably look at the Silver chart as a guide as to what Apple stock will do for the next 1.5 years. Float around where it is… Helmet is one of my favorite bands. Southbound, you are sanctimonious like most liberals, now you’re backpedaling to deny it.
“who would you trust to pay you back 2.4% yield over the next 20 years, AAPL, or the US government?”
Apple paid a dividend for 29 quarters, then stopped for 17 *years*. They’ve been back for *3* quarters.
Seems that Apple is about 200 years away from being as dependable payor as the US government.
What I can’t figure out is what MSFT has been doing with all their cash? These companies have so much cash they can afford to pay the world’s top computer programmers whatever they want, and MSFT comes out with Windows 8 so late? the Surface?
“Seems that Apple is about 200 years away from being as dependable payor as the US government.”
Oh well, maybe sonies has some technical analysis for the “magical 425” (that presumably differs from you know who’s tech anal).
“technical analysis for the “magical 425?”
At 424, the yield hits 2.5% (assuming they don’t decide to change the div). Maybe some funds buy at that div. level?
“Apple paid a dividend for 29 quarters, then stopped for 17 *years*. They’ve been back for *3* quarters.
Seems that Apple is about 200 years away from being as dependable payor as the US government.”
If you had any clue how big cap stocks operate, trust me in 6 months they will raise their dividend another 8% minimum and do that like clockwork every year until they somehow run out of that 100 billion in cash they are doing nothing with, and that of course is assuming they don’t have any more free cash flow for the next 10 years… where as our government is leveraged nearly 1x its income and growing quickly, apple has a horde of assets and income to back up those payments. Trust me, i’ll take apple over the next 20 years vs the treasury ANY day of the week
“Helmet is one of my favorite bands.”
Meantime = amazing album
see here: http://people.hofstra.edu/jean-paul_rodrigue/images/bubblesandmanias.gif
My buddy bought AAPL twice in the $600s recently, right where it says “Public” and “Greed”. I guess public also included every mainstream mutual fund that had Apple in its top 10 holdings.
“until they somehow run out of that 100 billion in cash”
You think they’re re-patrioting ~$60B (+ tax effect) this year? Domestic cash on hand covers a little over 4 years of dividends (ignoring any corp tax consequences).
win 8 metro is awful. the os is decent but the interface is terrible. go to the windows App Store. it looks like the desktop of a dysfunctional 50 yo cat lady. no rhyme or reason to the mish mash of icons everywhere. my Apps screen in metro has like 100 random apps just scattered all over the desktop. metro is not made for pc. it’s a terrible interface. I regret upgrading from 7 the best operating system since win2000. I’d go back to 2000 if I could.
I bought AAPL at $380 in 2011, so technically, I’ve still made money. But it’s depressing to watch so much of my paper gains go away. I’m holding on, but being an AAPL shareholder is frustrating. They’ve missed Street expectations almost every quarter I’ve owned them; they pay a dinky dividend and show no signs of being willing to raise it; they sit on a huge wad of cash that they refuse to spend to improve the business (i.e. acquisitions) or buy back shares; they seem to not ever consider a stock split that might attract more retail investors and they have no new, innovative products – instead, they just keep introducing variations of existing products. I know they’re doing great financially in many ways, and the stock seems incredibly cheap at these levels, so that’s why I’m staying in it. But I’m not happy.
@homedelete What do you mean by third parties intervening in judicial auctions? Judicial sales have been long popular…
“What do you mean by third parties intervening in judicial auctions?”
The third party bidder takes over the foreclosure process from the bank after the judicial sale. Judicial sales went out of vogue for a while because most properties at auction were far underwater. That’s slowly changing; and banks are starting to recognize their losses earlier in the game rather than at REO sale.
SHADOW INVENTORY:
4020 W. Grace, the old 1876 two-flat next to Smoque. Been in foreclosure since 2010. It was listed for sale at some point in there and no bites. Judicial auction in May 2012 and went back to the bank. The other day I drove past the home and the place is nearly gutted and workers are swarming….
LOok up the history and the bank sold it two months after the judicial auction to “hope holdings LLC”. for a whopping $61,000 per teh special warranty deed in ccrd. That’s a JOKE. The property was never even listed on the MLS, nor is the sale listed anywhere (zillow, redfin, etc). Lots in the neighborhood are going in the $200’s, and even with the discount because it’s a corner lot on an alley next to smoque shouldn’t mean it’s for sale for $61,000.
Who knows what it’ll flip for, but there are inside deals going on everyday to distribute, split up, and reduce the shadow inventory. The people on the outside trying to buy don’t stand a chance. The insiders got it all soaked up.
The market is picking up but it’s definitely hot for investors. Crazy stuff.
Regarding shadow inventory and the low-middle / middle class foreclosed homeowners. If they KNEW what the big investors were paying for their homes at the Sheriffs auction there would be a bloody revolution. A
A fellow homeowner in my condo assoc who is still paying her “bubble” mortgage fell into tears when I told her what my place went for at auction. She even dipped into her 401K when she was unemployed to keep current. I didn’t…thank God.
“If you had any clue how big cap stocks operate, trust me in 6 months they will raise their dividend another 8% minimum and do that like clockwork every year until they somehow run out of that 100 billion in cash they are doing nothing with, and that of course is assuming they don’t have any more free cash flow for the next 10 years… where as our government is leveraged nearly 1x its income and growing quickly, apple has a horde of assets and income to back up those payments. Trust me, i’ll take apple over the next 20 years vs the treasury ANY day of the week.”
Apple has $137 billion in cash- up $16 billion from last quarter (but presumably the holiday quarter is one of its biggest.) But it’s still likely to see $40 billion in extra cash to investors this year. It could do several big special dividends and still have $50 to $75 billion in the bank. At some point, it becomes ridiculous.
Steve Jobs hated dividends. The only reason that Apple is paying one now is because Steve is dead. Remember, when he took over the company the second time it was literally about 30 days away from bankruptcy. It was completely broke. Microsoft gave it cash infusion to stay afloat in the 1990s! That stayed with Steve. He felt he needed to hoard the cash in case the company ever got into trouble like it did in the 1990s.
“What I can’t figure out is what MSFT has been doing with all their cash?”
These are cash generating machines. MSFT paid out a big special 10 years ago to get rid of a bunch of its cash and has built that cash back up in the interim (all the while paying a decent dividend.) It has about $65 billion now. Google has $48 billion and it doesn’t even bother to pay a dividend. I’d rather they keep it (and pay me a special) than do dumb acquisitions. Microsoft just invested a couple hundred million into Barnes & Noble- i.e. The Nook. But it would take a lot of those investments to whittle down the $65 billion.
There’s plenty of shadow inventory out there- especially in condos. Yeah, the market is hot right now. But everyone is still selling for below 2008 prices. So if you’ve been holding on all this time and/or renting out for a loss every month, at some point you’re going to throw in the towel and just short sale it (or let it go into foreclosure.)
The reality of this “hot” market is now hitting home. Yeah- if you price your property right it will sell fast. But unless you did a major renovation, you’re still going to lose money. Prices aren’t going up (and if they are- it’s only like 1% or so.) People are sitting on 25% to 30% losses! They won’t recoup that for decades.
“The third party bidder takes over the foreclosure process from the bank after the judicial sale. Judicial sales went out of vogue for a while because most properties at auction were far underwater. That’s slowly changing; and banks are starting to recognize their losses earlier in the game rather than at REO sale.”
That a long-winded way of saying the banks are letting investor bidders at the auctions be the high bidders.
right?
“Apple has $137 billion in cash”
That makes them one of the biggest “hedge fund” type investors in the world, more here: http://www.zerohedge.com/news/2013-01-27/600-billion-trades-four-years-how-apple-puts-even-most-aggressive-hedge-funds-shame
“4020 W. Grace, the old 1876 two-flat next to Smoque. Been in foreclosure since 2010. It was listed for sale at some point in there and no bites. Judicial auction in May 2012 and went back to the bank. The other day I drove past the home and the place is nearly gutted and workers are swarming….
LOok up the history and the bank sold it two months after the judicial auction to “hope holdings LLC”. for a whopping $61,000 per teh special warranty deed in ccrd. ”
Wait….so is this crap stuff considered shadow inventory, or only when it reaches post-rehab, market rate status? I think Sabrina is saying there’s alot of shadow inventory sitting there, not yet on the market, but it doesn’t include all the lis pendens stuff, because all of that is the crap (not move-in ready). Is that right? Are we including lis pendens stuff in the shadow inventory or not ? or only the stuff treading water?
Shadow inventory are properties that have or will soon change hands but is not in the MLS. 4020 w grace is a perfect example of a house that was only briefly in the mls as a short sale yet still changed hands.
I’m definitely ready for a “special” from Apple and I wish they’d stop hoarding and do something with the damned money. Either spend it to buy an interesting company or give it back. Maybe a share buy back would work, as well.
Funny how all the analysts who were raising their price targets to $750 and even $1,000 back when Apple was moving relentlessly higher are now pulling back and putting their targets as low as the 460s. If I had any real courage, I’d sell when the analysts were all raising targets and buy when they lowered.
Kind of like Rodney Dangerfield having the phone call with his broker in Caddyshack. “Everyone’s buying? Then sell! Sell! Everyone’s selling? Then buy! Buy!”
“I’m definitely ready for a “special” from Apple and I wish they’d stop hoarding and do something with the damned money. Either spend it to buy an interesting company or give it back. Maybe a share buy back would work, as well.”
Why does their holding cash matter that much to you? Do you think you would get a better after tax return on it if they gave it to you? After all, the cash is the basis for sonies liking it as being more dependable than fed govt.
Also, why so down on the stock? Company doesn’t seem *that* much different from end of last year, when I thought you were somewhat more bullish.
“Regarding shadow inventory and the low-middle / middle class foreclosed homeowners. If they KNEW what the big investors were paying for their homes at the Sheriffs auction there would be a bloody revolution.”
I would like to know. What are the big investors paying? Can someone please cite more examples from the Northside like HD’s Smoque house?
@Milkster
Anecdotal example. They got my place for $45K and the comps for my hood (Rogers Park) are $90K-$120k. 2008 bubble price of $225K.
As expected January was a real blowout month with home sales up around 35.5%. Note that IAR will probably report it around 31.9%. I’ve just posted my January update here: http://www.chicagonow.com/getting-real/2013/02/january-chicago-home-sales-record-activity/ with 5 different metrics I track.