Market Conditions: Crain’s- No Bottom Yet For New Home Sales in Chicago
On the heals of the dismal September home sales report, Crain’s is reporting that new home sales continue to sputter and are on track for their 5th straight year of declines.
Who knew things could get worse than 2009?
Real estate industry consultant Tracy Cross at Tracy Cross & Associates says that for the entire Chicagoland area, sales of new homes are trending lower again for 2010.
- 2010: 3,000 to 3200 sales projected
- 2009: 3569 sales
- Peak was 2005: 33,287 sales
In Chicago specific, in the first 9 months of the year, sales registered just 564 properties, down 19.1% from 2009.
This would include sales in the new high rises such as The Elysian, 10 E. Delaware, Walton on the Park, SoNo, 565 Quincy and others. Remember, SoNo and 565 Quincy had to cut prices in order to move units.
The new-home market appeared to stabilize earlier this year, as local builders recorded two quarters of rising sales. But optimism for a recovery has faded in recent months amid a faltering job market, the expiration of federal homebuyer tax credits and a rising foreclosure rate, which has depressed prices.
At this rate of sales how long will it take to finally sell out big buildings like One Museum Park, Aqua, and The Legacy?
- The Legacy– 355 units with 25 listed for sale and 7 for rent. Tribune shows 138 closings.
- Aqua– 264 units with 27 listed for sale and 3 for rent. Tribune shows 132 closings.
- One Museum Park– 300 units with 42 listed for sale and 7 for rent. Tribune shows 254 closings (some may have closed more than once since this building is slightly older than the other two and investors have been trying to sell.)
For new homes, same old tune [Crain’s Chicago Business, Alby Gallun, October 25, 2010]
I don’t think this is very surprising information. We all know that the housing market is down – however, I think that we will definitely see a turnaround in spring 2011 with steady increases in sales/prices going from there. There is an undeniable, unquestionable energy/angst amongst sidelined buyers. They really cannot hold out much longer. Couple this with increased developer incentives, low interest rates and already reduced prices and you have a situation ripe for a rebound. Also, The 3 buildings Sabrina highlighted only have 10% of units for sale (I know this is fairly high, but not really when you consider the remainder of the units -90%- are sold).
Clio,
I am a sideline buyer and I can hold out longer than a seller. Nothing turns my stomach more than purchasing a home only to watch my sizeable down payment get evaporated by continued downward pressure on prices. Of couse I cannot call a bottom, but after thinking we would purchase this spring, my wife and I are most likely wait another year.
On a similiar note, our own agent will try to sell his place this spring and then rent for a year in order to “steal a deal”. When a 10 year vet of the industry is holding out, then you know there is “fear” in the market.
“Nothing turns my stomach more than purchasing a home only to watch my sizeable down payment get evaporated by continued downward pressure on prices.”
You make some good points, Dan. However, there are other issues involved which are far greater and more important that financial considerations. Most people feel like they are putting their life “on hold” if they are in the market and haven’t bought yer. There is truth to this – the sooner you buy, the sooner you can get settled in.
Also, in terms of your down payment being “evaporated”, I suggest that you turn into an ostrich for the 10 years after you buy and don’t pay attention to the home prices – they don’t matter until you are ready to sell. I can guarantee and bet any amount of money that if you buy a good place in a good area right now that you will definitely make money in 10 years.
People are so funny (not directed at you Dan) when it comes to buying houses. They can waste thousands of dollars on vacations, cars, clothes, entertainment, cellphones, electronics, and even education but when it comes to the one thing that can really provide stability and comfort and will appreciate and provide a return, they all of a sudden become extremely concerned and squeamish!!!
Clio – I’m with you on your statement on what people will spend their discretionary income on, right up until you state that a house “will appreciate and provide a return”. The first portion of that statement (will appreciate) is proven false for the majority of residential properties since 2005. Technically you are correct that it will provide a return, but for most that bought since that year it was negative.
Everything else I can get behind – that buying a house provides a level of stability, but in certain cases that are usually well documented here that stability is actually an anchor of debt. Please just try to contain your enthusiasm.
Myself? I’m looking to buy for longer term (10-15 yrs) so I agree with you; but I’ll end up having to put two downpayments down – one to bring cash to the table to exit the 2/2 if I don’t become one of the landlords that the crew loves to bash, and one to secure a 30 yr loan on a SFH in a good school district. Luckily HD would approve of my saving & debt reduction habits with the sole exception of that 2/2 purchase.
” The first portion of that statement (will appreciate) is proven false for the majority of residential properties since 2005.”
I’m talking long term – I should have qualified that statement. Prices are definitely going to be higher in 5-10 years from now – no question about it. I don’t think anyone “in the know” could possibly refute that. All you have to do is look at the history of real estate – there are always downturns which are ALWAYS followed by appreciation. Also, remember that the appreciation is much greater than you realize. Even if appreciation is 3% – it translates into much more because most people only put down 20% and the appreciation is calculated on the full price of the property. All said and done, real estate is still a great investment because it also serves a need.
Clio – what do you do for a living? I think I missed that thread.
I’m a professional blogger…. — just kidding. Although my main job has nothing to do with real estate, I own a samll real estate company and am heavily invested in several properties. I love everything about real estate but am not in it for the money (I am not in any danger of losing any properties, and the money that I make in real estate doesn’t really matter to me) – my obsession is with the dynamics of the market – so interesting!!
“When a 10 year vet of the industry is holding out, then you know there is “fear” in the market.”
Fear leads to opportunity. 10 years in the industry aint $hit, especially if that REA is in his/her 30’s.
“Prices are definitely going to be higher in 5-10 years from now…”
Are we talking in nominal or real terms? Let’s be careful with our use of the the English language.
And yet a building like Library Tower sold out pretty quickly I believe – around 2 years. There’s only a handful of units left. The developer made price reductions where they needed to but it wasn’t like a fire sale.
From the Crain’s article, according to housing consultant Tracy Cross, “It’s going to take five to six years to get back to the price points that we were at in ’06-’07.”
Talk about hope springing eternal. If nominal home prices get back to the 2006-07 level by 2016, that would be a massive recovery by the home industry and everyone ought to be out buying real estate now. My bet is that Mr. Cross’s prediction will turn out to be badly wrong, and nominal prices in 2016 will be about the same as they are now.
“that would be a massive recovery by the home industry and everyone ought to be out buying real estate now”
uhhhh yeah – that’s what most people “in the know” are saying and doing.
“that would be a massive recovery by the home industry and everyone ought to be out buying real estate now”
No burst bubble has ever had a “massive recovery” within years of its bursting in the history of bubbles.
But perhaps this time will be “different.”
Remember- with just normal transaction costs- you would need appreciation of 3% a year for 3 years to just break even during that time. And 3% a year would be on the high side for Chicago, historically.
Clio, what is your day job?
Seasonally Adjusted home prices down 0.4% in Chicago from July to August according to Case-Shiller.
I would say that’s essentially flat.
http://www.standardandpoors.com/indices/sp-case-shiller-home-price-indices/en/us/?indexId=spusa-cashpidff–p-us—-
“Prices are definitely going to be higher in 5-10 years from now”
Say that to the people who bought in 2005. Or 1929. Or Japan in 1989. Making blanket statements like this is just naive and foolish.
“I would say that’s essentially flat.”
When did down 0.4% in a single month become the new flat?
I’m no RE cheerleader but Case-Shiller going from 124.98 in July to 124.45 in August for Chicago doesn’t strike me as much of a change.
I do expect prices to continue to drop however.
“Say that to the people who bought in 2005. Or 1929. Or Japan in 1989. Making blanket statements like this is just naive and foolish”
Comparing chicago real estate to Japan is naiive and foolish.
Comparing what is going to happen in the next 5 years to what happened the last 5 years is also naive and foolish – we are at a low and prices are going to rebound.
Jim,
When you look at the Non-Seasonally adjusted data it’s up 0.4%. Chicagoland did very well with this latest data, all things considered.
In the non-seasonally adjusted data Chicagoland trailed only Detroit which had a 0.5% month/month gain and only four cities showed gains.
In the seasonally adjusted data Chicagoland was down 0.4%, however it had a good showing with only four cities beating Chicago. Only two cities showed basically flat results in this dataset (Boston, NY) and none showed statistically significant gains.
Condo prices were down 2%: http://www.chicagonow.com/blogs/chicago-real-estate-getting-real/2010/10/falling-home-prices-are-back-for-chicago.html
Trying to apply all of these ridiculous numbers/indices to your own personal real estate needs/wants is absolutely ridiculous and stupid. The VAST MAJORITY OF PEOPLE LOOKING FOR HOUSING DON’T GIVE A SHIT ABOUT THIS DATA – they want a house in which they will be comfortable and one will enhance their life. Value is important but is not the biggest determining factor of virtually all of the potential buyers out there.
Please don’t yell at us, it’s very unbecoming. We can read what you type just fine without all caps.
“The VAST MAJORITY OF PEOPLE LOOKING FOR HOUSING DON’T GIVE A SHIT ABOUT THIS DATA “
CHI CS = FLAT.
My call was dead on, which is more than I can say for the pantywaists that can nitpick grammar in posts but couldn’t make an insightful call to save their lives.
Not good news but, sorry, where was the bloodbath again? Maybe by the end of the year. As long as bloodbath = 120.
“Please don’t yell at us, it’s very unbecoming”
Sorry – but I just don’t understand why people don’t comprehend that the vast majority of buyers are not analyzing data. Furthermore, the decline of the average home or condo says very little. All you need is to add a few foreclosures or low end homes and you will get a decrease. Add in a 10 million dollar house, and, voila, an increase. Also, this data means very little to homeowners/buyers/sellers because real estate is so regional/location/building/house specific – if you live in a 10 million dollar condo on the gold coast, does it really matter that a 1 bedroom condo in englewood has decreased in price? This is like warning a young black woman/girl about the increasing risks of osteoporosis!!!
“I would say that’s essentially flat.”
“When did down 0.4% in a single month become the new flat?”
Certainly if you extend 0.4 percent a month for a year, it’s non-trivial, but that’s a big if. I wouldn’t make too much of a small month to month change. Doesn’t really confirm prices are flat, doesn’t really disprove it either.
“One Museum Park- 300 units with 42 listed for sale and 7 for rent.”
It’s been sloooowly selling… Right now you can take list price and ask for 20% off and you should get it. Still overpriced imo.
Now OMP West right next door is a disaster. I can only imagine ridiculous price cuts or an auction. No way they’ll ever sell that thing out the way they’ve been going.
Isn’t part of the problem with Case-Schiller that it depends on sales for data points? I guess that applies to all real estate indices/data. What about all the properties on the market that didn’t sell? If more of them had cleared the market to reach more of a long-term equilibrium balance of supply and demand, the CS would be right at 120, maybe slightly lower.
“#
Famous last words.
“#JMM on October 26th, 2010 at 8:00 am
CHI CS = FLAT.
My call was dead on, which is more than I can say for the pantywaists that can nitpick grammar in posts but couldn’t make an insightful call to save their lives.
Not good news but, sorry, where was the bloodbath again? Maybe by the end of the year. As long as bloodbath = 120.”
Agreed, that building is almost completely dark at night, it looks like maybe 5 people actually live there. A quick look on Redfin shows 226 units for sale.
“Now OMP West right next door is a disaster.”
“Certainly if you extend 0.4 percent a month for a year, it’s non-trivial, but that’s a big if. I wouldn’t make too much of a small month to month change. Doesn’t really confirm prices are flat, doesn’t really disprove it either”
Mastery of the obvious here. If you extend even the slightest sequential change long enough, it becomes material, right? You should give HD some lessons on compounded growth. He can predict the future but has trouble interpreting the present.
I usually don’t talk to much about the prospects for the future real estate market because I believe it’s like politics, there are two sides, neither of which knows what’s actually going to happen and it’s pointless to try to convince the other side that you are right. However, I believe clio’s statement that “the majority of people looking for housing don’t give a shit about this data” is wildly incorrect and contradicts most statements he has made here recently. I agree they want a house in which they are going to be comfortable, but you always talk about the sideline buyers that are waiting…if they didn’t care about this data and only cared about what is right for them then they wouldn’t be on the sidelines in the first place. The mere fact that there are people on the sideline suggests that they do care about this data and are scared to jump in at the moment.
The “bloodbath” is coming. Even if the condo index doesn’t change from this month next month it will be down 7% from last year.
“Mastery of the obvious here. If you extend even the slightest sequential change long enough, it becomes material, right?”
My main point was not to make too much of a one month change, doesn’t prove flat, doesn’t disprove it, but you seem to take it as strong confirming evidence your call was dead on.
“CHI CS = FLAT”
Just to be clear, your call is flat for how long? And nominal, right, because case shiller is nominal?
Kevin,
While my comments are seemingly contradictory, in actuality they are not. Sidelined buyers are NOT analyzing this data – but they ARE listening to the morons interpreting and spinning the data. My point is that the data, itself, means nothing to the individual buyer (as it shouldn’t). However, the idiotic and incorrect conclusions that other people (including the media) derive from the data are important and DO influence the sidelined buyers.
” I’m looking to buy for longer term (10-15 yrs) so I agree with you; but I’ll end up having to put two downpayments down – one to bring cash to the table to exit the 2/2 if I don’t become one of the landlords that the crew loves to bash, and one to secure a 30 yr loan on a SFH in a good school district. ”
I’m with Wicker
“The “bloodbath” is coming. Even if the condo index doesn’t change from this month next month it will be down 7% from last year”
Gary, since you seem to be an upcoming leader of the “doom and gloom posse” are you looking for a new job? If not, why not? Yeah, I thought so – even you understand that there is going to be a rebound in the housing market.
“If more of them had cleared the market to reach more of a long-term equilibrium balance of supply and demand, the CS would be right at 120, maybe slightly lower.”
Kind of like the woman who suggested that because sellers continue to reduce list prices the index price is bound to fall.
You sort of need to know where the cumulative ask is to know if hitting the bid would reduce the index. I am guessing it would, but you don’t know. It’s speculation.
“uhhhh yeah – that’s what most people “in the know” are saying and doing.”
Using the CS index, to get from the index this month back to the highs of early 2007 by 2016 would require increases of 5.25% each year over the next six years. Anything is possible, but that seems very unlikely to me, especially with a lot of commentators and analysts predicting that real estate will continue falling at least through 2011.
JMM, I would think it would be incorrect to assume the opposite – that hitting the bid would increase the index. Agree?
No confidence equals no sales… until potential buyers feel secure in their future prospects and the state of the housing market, things will continue to decline or remain flat for the most part.
Ok – we can all rest a little easier – this is hot off of the presses:
http://www.chicagobreakingnews.com/2010/10/chicago-area-home-prices-improve-for-6th-month.html
So if it falls for another year, say by 5%, it would take until 2018 at that 5.25% growth rate to get back to the peak.
No, it’s actually quite obvious what is happening in real estate. A second bloodbath is happening right now and the stats are only starting to reflect it. Sales are down, way down, prices are going down; yet the CS index reflects an average of the three month before the tax credit expired. Wait until next year when the numbers reflect this year’s end of year closings and next year’s bloodbath.
What is happening right now is a repeat of 2007/2008. Increase in inventory; drop off in sales; slight increase in prices for a few months, then flat – and then BAM! the precipitous drop in prices over the winter. It’s basically the same pattern. How can you not see? Does no one pay attention to history?
Clio, I don’t think buyers are analyzing the data but the perception is that there is more pain to come. so until the headlines change perception will stoke fear and fear will cause inaction. which without an opposite reaction will let prices eiter stay flat or fall off.
“If not, why not?”
Uhh because he makes his coin off transaction volume, clio. His horse in the game is completely different from yours (long RE likely on multiple properties). Your horse is the one with two broken legs.
So, Clio, it’s ok to use statistice (damn numbers) only when it backs up your point? That’s a little shady man!
Clio,
I would agree with your last comment. The macro real estate market has little effect on a micro component of that whole market, in the short term. But we’re seeing the macro downturn last much longer than month-to-month or year-to-year, which is when that macro market starts to have a more profound effect on individual components, and is what is going on now. For example, the price of commodities like cotton doesn’t effect the price of cotton t-shirts on a daily basis, but if the commodity is up or down for a long period of time, you’ll start to see the price of t-shirts reflect that. Same thing in housing. We’re seeing the real estate market as a whole start effecting individual units of real estate because it’s been down for a while.
that would be “Statistics” We need an edit function!
“Uhh because he makes his coin off transaction volume, clio”
uhhh – this would mean that there are transactions that are taking place – contradicting everything people (including him) are stating.
“So, Clio, it’s ok to use statistice (damn numbers) only when it backs up your point? That’s a little shady man!”
OF COURSE – (oh, sorry Dr. Funkenstein) – that’s what everybody else is doing. I am trying to provide a balanced counterpoint.
“My main point was not to make too much of a one month change, doesn’t prove flat, doesn’t disprove it, but you seem to take it as strong confirming evidence your call was dead on.”
Your point ignores the historical data, which you should look at but obviously haven’t. Go back 18 periods and see how the prices trend on a seasonally adjusted basis. Allow me to hold your hand:
March 2009 = 124.73
August 2010 = 124.45
“Just to be clear, your call is flat for how long? And nominal, right, because case shiller is nominal?”
My call was for this period.
DZ: “My main point was not to make too much of a one month change, doesn’t prove flat, doesn’t disprove it, but you seem to take it as strong confirming evidence your call was dead on.”
And, of course, the one month change is just showing that August was weaker than May. Which I think everyone knew–it’s actually surprising that it was only 40 bips, when the tax credit was ~400 bips of the average sale price.
JMM: “You sort of need to know where the cumulative ask is to know if hitting the bid would reduce the index. I am guessing it would, but you don’t know. It’s speculation.”
And you need to know the cumulative prior sales prices and sales dates for every one of those props, since the index is keyed to prices as of Jan-00. Every single house currently on the market *could* sell for 25% off current ask and lead to an *increase* in the CS index, if those 25% off sales are more than 24.45% higher than the “value” in Jan-00.
Also, as Gary notes, the headline number does not include condos, which gets glossed over in the discussion more often than not. And condos did *a lot* worse than SFH in August.
JMM: Your call for this period is like saying “it’s going to rain today”. Good job. here’s a gold star.
Now, the easy part is to make the call for March 2011.
sub-120. easy.
“JMM, I would think it would be incorrect to assume the opposite – that hitting the bid would increase the index. Agree?”
No assumptions can be drawn either way. You are speculating.
Kevin,
I completely understand and appreciate your information – very interesting. I think, though, that real estate is so different from any other commodity because it holds a HUGE personal value and truly affects everyday life. These intangible and psychological factors influence the market in ways that are unpredictable. My whole point is that probably 99.999999% of buyers are not interested in CSI/QE2/etc.etc. – they want their nice house with white picket fence and a nice life. Once the media tells them it is time to start buying, these sheep will start buying.
“JMM: Your call for this period is like saying “it’s going to rain today”. Good job. here’s a gold star.”
And your call has been like saying it is going to rain today each and every day. Then you do a little dance when you are finally right and say “I told you so”…
It is something a 5 year old might do, if they had the patience.
BTW, do child support payments figure in back end ratios?
“Your point ignores the historical data, which you should look at but obviously haven’t. Go back 18 periods and see how the prices trend on a seasonally adjusted basis.”
I didn’t realize you were making predictions about historical data.
And your calls about the future are nominal, right?
“And condos did *a lot* worse than SFH in August.”
For good reason. Longer hold periods + more flexibility with SFHs, if they are within reach. I’d hate to be 30 with a child and another on the way in a 2/2 in LP right now.
Anon, as you point out the LTM rolloff is what drives CS (that is last three months, lol). Augst rolls on and May rolls off. Taken that way, the numbers look pretty solid.
And to correct HD, CS now includes two months post expiration — August and July.
DZ — You are too confused to deal with, sorry.
HD:
The thing is you will never know when the bottom hits. By the time the stats reflect it and the media reports it, it will be long gone. Just like the bubble burst before the vast majority realized it.
It is real easy to be armchair pundit with no skin in the game after the bubble burst. However, the same folks who are supposedly so smart couldn’t make money during the run up either.
All these stats are Monday morning quarterbacking to me…
“Sales are down, way down”
Funny thing–check the CS Sales Pair Count data in Dr. Funk’s link–it shows sales *over* 10% higher for every month in 2010 compared to 2009. And June + July 2010 were both slightly higher than J/J 2008.
“The “bloodbath” is coming. Even if the condo index doesn’t change from this month next month it will be down 7% from last year.”
isn’t the “condo index” totally skewed by all the excess crap in the south & west loop, rogers park, uptown, etc.
“My main point was not to make too much of a one month change, doesn’t prove flat, doesn’t disprove it, but you seem to take it as strong confirming evidence your call was dead on.”
It isn’t a one month change. It is 18 periods of data and counting. Go back and collect your thoughts on this one.
“The thing is you will never know when the bottom hits. By the time the stats reflect it and the media reports it, it will be long gone”
Russ, you are a wise man – always correct, succinct and on top of it. I envy and admire your grasp of the situation!!
“And to correct HD, CS now includes two months post expiration — August and July.”
You know, I thought the same thing, but double-checked–Contract had to be signed by 4/30/10, but the closing only had to occur by 9/30/10. So we actually have 4 more months with CS reflecting some tax credit purchases, tho I expect a diminishing proportion in each month thru September.
“It isn’t a one month change. It is 18 periods of data and counting. Go back and collect your thoughts on this one.”
I was commenting on your claim that your call was dead on. If you made the call accurately 18 months ago then congrats (seriously), but I wasn’t aware of it. If your call relates to the past, that’s a little less impressive.
Nominal, right?
Yes but remember the runoff between June and September was very light as they extended at the last minute so anything after June de minimis and reflects a small proportion of deals that had closing issues and delays.
I’ve consistently made the call that we will be flat for some time now.
So what is your call?
Negative TIPS auction yesterday suggests inflation is on the horizon. Smart money is inflation protecting right now. This will be good for housing as I have argued in the past.
Most major food companies have announced price increases. Other commodities are higher, some sharply. PPI will be rising and you can bet it will get passed on.
Best situation you can be in is have a large mortgage through an inflationary period. Housing prices rise, debt depreciates in real terms.
I totally agree with JMM – what he says makes total and complete sense. If you are in the market to buy property, the coming few months is absolutely the time to buy. ALL OF THE SIGNS ARE POINTING THIS WAY (sorry Dr. Funkenstein) – but have to emphasis the obvious here.
“isn’t the “condo index” totally skewed by all the excess crap in the south & west loop, rogers park, uptown, etc.”
Yup. Sad to say but if you own a McCrapBox in LP/LV chances are it is holding up in value better than areas where significant overbuilding occurred (ie: WL, SL, RN, etc).
JMM – now don’t upset all the financial geniuses here with your “TIPS” mumbo jumbo
“I’ve consistently made the call that we will be flat for some time now.”
I wasn’t aware you made the call a year and a half ago. I’m not disputing it. As I said, sincere congrats if you did.
“So what is your call?”
Here’s what I’ve said. I would go so far as to say it’s a “call” and I don’t claim to have any great confidence in it. And it’s nominal, as is case shiller.
http://cribchatter.com/?p=9257#comment-90399
“Negative TIPS auction yesterday suggests inflation is on the horizon.”
Under your reasoning, doesn’t this mean housing prices will go up?
“Under your reasoning, doesn’t this mean housing prices will go up?”
uhhh yeah – that’s what most people in the business realize.
I don’t necessarily think home prices will rise dramatically even with inflation. We still have a tight credit issue. People are still deleveraging and I don’t think people are going to be as quick to take on large mortgages like over the past 10 years. Not too mention there is still a ton of supply available.
What drove prices up over the past 10 years was basically 1) lack of supply, 2) cheap credit 3) easy credit 4) confidence
the only thing we have right now is #2. I don’t see 1) and 3) changing anytime soon even if people get more confident in their personal financial situations.
Here we go…the inflation/deflation debate again. Are real incomes rising? If not then PPI rises only reduces disposable income. PPI was sky high in mid 2008 but housing prices were still falling.
Unless we enter a hyper-inflationary environment, there is a lot more downward pressure on house prices. But in that case buying a house will be least of our worries.
I agree with Clio again this morning when he states that the media and other outside influences will dictate when people start buying homes again at a normal rate. People are not watching every report but listening to friends who tell them not to purchase until later. They make uninformed statements like the “bottom of the market is still a year off.” Who knows where the bottom will be, That is a vvery local issue and property dependent.
If you do not believe that the media can influence everything just watch the NFL pre-game shows this week. They were actually reporting on Tom Brady’s hairstyle. Apparently that little teenie punk Justin Bieber even wrote a song about his new long hairstyle. My guess is that there are now millions of little high school boys growing their hair out to be just like Brady. Not me, I’m just like Mike! At least in the hair department anyway.
We need a turn in the media telling people that it is OK to buy a home. Find me more Clio’s and get them on the national pulpit preaching the value of the following strategy. Buy, live in, and hold your home for 10 to 20 years. That will bring the market off of the bottom! Until then every negative article further erodes the confidence of the american home buyer. This forces the individuals that really are in the market and NEED a home to force the sellers to an even lower price so that they believe that they have gotten a “great deal” on the home they select.
nobody has been building for the last 2 years, eventually we will have lack of supply once all this garbage that is out there gets worked through
so everyone knows that eviction notices were handed out to the last remaining residents in the Cabrini highrise yesterday right?…
and I don’t suppose anyone has seen the bids goin in for the what to build land right?
not to mention the most “prime” real estate in Chicago has yet to be developed….
““So what is your call?””
Deflating with CPI, the current Chicago CS Index is basically flat with Aug-89. Also basically flat with Aug-97 and Aug-98–so, in real dollar terms. I think CS has a ~10% downside risk as the f/c rolloff continues, and little real dollar upside potential for the next decade. Any nominal increase in CS will slightly lag inflation, and will significantly lag meaningful (5+) inflation.
If we somehow enter a deflation spiral, then who knows.
“Gary, since you seem to be an upcoming leader of the “doom and gloom posse” are you looking for a new job? If not, why not? Yeah, I thought so – even you understand that there is going to be a rebound in the housing market.”
No, I’m not looking for a new job because:
1) I’m having too much fun
2) From a real estate business perspective I don’t care what prices are. People will buy and sell regardless of prices, though right now they’re not
3) Realtors keep leaving the business, so when activity picks up there will be more for those of us left
4) My business is growing
i can guarantee you there’s one massive group of people who are looking at Chicago real estate now:
foreigners.
if you haven’t noticed an increase in foreigners walking the streets of Chicago you most certainly have not been paying attention.
the dollar’s weakness matters.
“So we actually have 4 more months with CS reflecting some tax credit purchases, tho I expect a diminishing proportion in each month thru September.”
When they release the September index it will include 3 months of significantly lower YOY sales. I think you can expect a big decline.
***old hickory on October 26th, 2010 at 9:27 am
i can guarantee you there’s one massive group of people who are looking at Chicago real estate now:
foreigners.
if you haven’t noticed an increase in foreigners walking the streets of Chicago you most certainly have not been paying attention.
the dollar’s weakness matters.***
this is supposed to be sarcasm, right?
but just to clear the head of anyone who might get this idea….Chicago, while a great city, is not where foreigners buy for a US pied-a-terre or for speculative purchases (rather think Manhattan, Miami or LA).
For a European (with no ties to Chicago) to buy in Chicago is analagous to a Chicagoan to buy their first second-home in Berlin rather than Paris or London or Provence.
“if you haven’t noticed an increase in foreigners walking the streets of Chicago you most certainly have not been paying attention.”
Well, you really can’t tell unless you’re close enough to hear them talking, right? And they may just be visiting.
“so everyone knows that eviction notices were handed out to the last remaining residents in the Cabrini highrise yesterday right?…”
Nope. I saw that article too and I believe it’s incorrect. Those were just 90 day notices–they received their required 180 day notices…ohhh….90 days ago.
“As I said, sincere congrats if you did.”
Could care less. I am not posting for personal validation, and could personally care less if home prices rise, fall or stay flat. I own my own house outright and have owned it outright for some 5 years now, it is an insignificant portion of my net worth and so I have no dog in this hunt. Hell, I will probably die in my home, as most in my neighborhood tend to do.
I don’t think people should really make any money on resi real estate so 10% downside with modest price appreciation for the next decade seems appropriate. While I dont think you will see 110 on the CS, its far, far, far less significant than March 2007 to present. So, who really cares?
“Nope. I saw that article too and I believe it’s incorrect. Those were just 90 day notices–they received their required 180 day notices…ohhh….90 days ago.”
Either way, 90 days and the last high rise is-a comin down! Make way for starbucks, potbelly’s, and chipolte!!!
Gary: “When they release the September index it will include 3 months of significantly lower YOY sales.”
No, it isn’t. You didn’t look at the paired sales count–according to CS, there were more sales in EVERY month of 2010 than the same month in 2009. Ranging from 10+% to about 30% more sales. As far as the CS Index is concerned, 2010 is a better year for sales than either 2009 or 2008.
Gary: “I think you can expect a big decline.”
If that expectation is based on the erroneous belief that 2010 “CS-Sales” is *significantly* below 2009 “CS-Sales”, you may want to revise.
I’d say star bucks chipolte are too small. Think big box stores in awesome proximity to LP residents. Whole foods, the shops on North Ave, and the north ave home depot will likely be getting a competitor soon!
I can not believe hat anyone will be putting up residential in that area for a long long time. It’s a shame as those are some incredible views of the city! I’d love to live there. Just remind me when the towers are coming down. I had a friend that actually wanted to watch then fall. Not me, that was an environmental mess. Im no green party freak but all that asbestos, rat poison, and other toxins floating off those buildings was enou to make me stay away from that area for a few days.
“Either way, 90 days and the last high rise is-a comin down! Make way for starbucks, potbelly’s, and chipolte!!!”
Like all the other S-bux, PB and Chipotles on the other former C-G land? I don’t think that’s in the cards, unless there’s a *major* change in the rules governing the use of CHA land. Nothing’s been built on the White Way land and the New City Y development is near death, too, and that’s privately controlled land, free of excessive restrictions–why would something get built–in the current environment–that isn’t heavily subsidized, which would mean mixed-income resi, like the other stuff built on C-G land.
“I had a friend that actually wanted to watch then fall.”
It’s not very exciting–it’s not like they use explosives, and each building takes a couple weeks, as they smash it section by section, floor by floor, breaking to scrap the rubble out of the way.
“No, it isn’t. You didn’t look at the paired sales count–according to CS, there were more sales in EVERY month of 2010 than the same month in 2009. Ranging from 10+% to about 30% more sales. As far as the CS Index is concerned, 2010 is a better year for sales than either 2009 or 2008.”
But the increase versus 2009 has come down a lot in the last couple months reported. Not sure if that says something about the lag in getting counted in CS? Are the realtors’ numbers based on contract signing or closing or something else?
I think you make it into an open air space and park. And keep it called Cabrini Green. Would be a fitting use for the name.
I’d strongly consider buying if I had tax clarity on the issue. Budget commission is talking about abolishing the mortgage interest deduction atleast for high incomes and Chicago/Illinois budgets are a mess and may be looking to hike property taxes. Those all effect the costs to own and could put price pressure on the market.
I wouldn’t buy in the suburbs, those are dead-money. Baby boomers are looking to downside and we simply are not creating the same kind of families who will demand that type of housing or what suburban living. The suburbs will never re-hit old prices in real terms and will take significant overall inflation to hit nominal levels.
City may have a chance at purchasing.
Clio’s argument on “putting your life on hold” are stupid. People realizing the flexibility of renting provides a lot of benefits like the ability to move for a job.
“Sorry – but I just don’t understand why people don’t comprehend that the vast majority of buyers are not analyzing data.” I assume they are buyers because they are not analyzing the data. Anyone who is analyzing the data is likely not a buyer. I am a sideline buyer but we are really starting to see ourselves as longterm renters, we love the condo we rent and could stay there indefinitly.
“But the increase versus 2009 has come down a lot in the last couple months reported. Not sure if that says something about the lag in getting counted in CS? Are the realtors’ numbers based on contract signing or closing or something else?”
The winter/early spring pop is likely related to the tax credit.
my 3yr old and I watched them using the wrecking ball on one of the high rises a month back. she really liked it, keeps asking to go back. but the last couple weekends the wrecking ball has just been sitting there and the tower remains 1/2 down.
No offense to any realtors out there – but don’t you think it is becoming an obsolete job position/ career? With the explosion of the internet over the last decade, I have found that most buyers I have run into have found all the properties they want to look at themselves. Their realtor simply sets up the showings. And in a city like Chicago, everyone always gets a lawyer so the realtor isn’t very involved in that piece of the transaction either (in markets like Indianapolis the realtor essentially serves as the lawyer and attorneys are typically not hired for real estate transactions). I think the most value with a realtor is likely for people moving to a new city where they are unaware of neighborhoods, etc. But I just don’t see it lasting that much longer.
“keeps asking to go back”
Cabrini isn’t an amusement park. Just ask the family of the convenience store owner who recently was murdered. Tragedies occur daily there.
The best way to solve the state and local budget crises is to get rid of pensions for government workers. Then you don’t have to raise taxes at all. Look at what is happening in New Jersey. Pensions are not protected in the private sector, so why should they be in government? 401k’s for all.
“Cabrini isn’t an amusement park. Just ask the family of the convenience store owner who recently was murdered. Tragedies occur daily there.”
Its still very entertaining to me to see those people who have basically lived rent free for the past 40 years shown the door. They should’ve never been reproducing and the handouts given to them just emboldened them to have more kids.
“Its still very entertaining to me to see those people who have basically lived rent free for the past 40 years shown the door. They should’ve never been reproducing and the handouts given to them just emboldened them to have more kids.”
I don’t agree with Bob about the underlying proposition, but am weary of the “how can you kick us out of our neighborhood?” attitude of many of those living in public housing–why do you get a *greater* right to keep living in a changing neighborhood than those who can no longer afford market rent/taxes/prices?
It’s a different story when it’s people who had their homes bulldozed to create the public housing, but that’s not the case with C-G and most of those for whom it was true are no longer with us.
“You didn’t look at the paired sales count–according to CS, there were more sales in EVERY month of 2010 than the same month in 2009. Ranging from 10+% to about 30% more sales. As far as the CS Index is concerned, 2010 is a better year for sales than either 2009 or 2008.”
Maybe someone who has more time can shed some light on their methodology but I suspect their numbers are a) a total of the 3 trailing months and b) a subset of the total sales since I’m sure they can’t include every sale in their data set.
I can tell you without any doubt that Chicago home sales have been down a lot over the previous year for each of the last 3 months.
“why do you get a *greater* right to keep living in a changing neighborhood than those who can no longer afford market rent/taxes/prices?”
Or…howabout….why do they get a *right* to _live for free_, _at all_?
“Cabrini isn’t an amusement park. Just ask the family of the convenience store owner who recently was murdered. Tragedies occur daily there.”
it’s mostly a ghost town. 1 murder so far this year, less than edgewater, and same as the loop. not the same place you watched the Evans’s live the good times as a youth.
“but I suspect their numbers are a) a total of the 3 trailing months”
So, there were ~200 SFH closings in Metro Chicago in August, but over 2000 in both June and July? No? Of course not.
“a subset of the total sales since I’m sure they can’t include every sale in their data set.”
They are disclosing the n in their index calculation. The n of “CS-Sales” has been significantly higher for every month of 2010 than same month in 2009 and most (all? didn’t confirm)of 2008.
“I can tell you without any doubt that Chicago home sales have been down a lot over the previous year for each of the last 3 months.”
They exclude all sorts of sales, for all sorts of reasons. “CS-Sales” (my term)–the only ones that count in creating the index–have been higher every month this year than last. It doesn’t matter what actual, total sales have been if you are trying to predict where the CS Index will move–it ONLY includes the sales it includes, which have been higher.
Disbelieve if you like, but facts is facts.
“Or…howabout….why do they get a *right* to _live for free_, _at all_?”
So they don’t come knocking on your door?
Like I wrote, I disagree with your underlying premise, which was clear enough w/o the reiteration, but still am *very* pleased to see C-G come down, for a variety of reasons.
I remember watching the 5 o’clock news in 1995 when they first started emptying out the high rises, and the reporter interviewed an elderly woman, who they introduced as a ‘life long resident of public housing’, and she said that it was shameful that they were tearing down the buildings, and that “just like the plantation owner tells the slaves to get up off the land and move, the housing authority is telling the residents of public housing that they gotta get up and move somewhere else now”.
I was young at the time and I remember being so disgusted, this lady who had lived off the public dole her entire life (and proud of it), liking the relationship between her and the housing authority to that of a plantation owner and slave. I’ll remember that quote until the day I die.
“No offense to any realtors out there – but don’t you think it is becoming an obsolete job position/ career? With the explosion of the internet over the last decade, I have found that most buyers I have run into have found all the properties they want to look at themselves. Their realtor simply sets up the showings. And in a city like Chicago, everyone always gets a lawyer so the realtor isn’t very involved in that piece of the transaction either (in markets like Indianapolis the realtor essentially serves as the lawyer and attorneys are typically not hired for real estate transactions). I think the most value with a realtor is likely for people moving to a new city where they are unaware of neighborhoods, etc. But I just don’t see it lasting that much longer.”
No offense taken. It sounds like you wrote this from the buyer’s perspective. I think the way most realtors run their business it is obsolete for buyers. However, for a job that doesn’t add any value we sure keep ourselves busy – and not just trying to get business. The fact of the matter is that in theory you could do all the work yourself but who has the time? If you’ve really narrowed down what you want or don’t mind seeing a hundred places then that takes eliminates some value of the realtor. I met one buyer that found a place on his own and seemed really proud of the fact that he had visited 100 properties. You tell me if he had anything to be proud of.
The other issue is that surprisingly often weird stuff comes up – stuff that we’ve seen before but buyers don’t often see. Some examples: a home with mold or other serious problems, the listing agent accepts someone else’s offer without ever telling you there were multiple offers, you have a grossly distorted view of values – one way or the other (believe it or not it happens), the seller is really motivated but has a grossly distorted view of values, you’re buying a condo in a new building but worried about future price cuts by the developer, you’re interested in a new construction home right down the street from a foreclosure at a significant discount. I could go on and on.
The real issue is what does it cost you to use a realtor? Some people believe that they can save the co-op commission if they don’t use a buyer’s broker. However, they won’t really know if they saved it until they see the HUD and then it’s too late. In my opinion realtors are overpaid on a lot of transactions. Therefore, it makes sense to rebate the excess to the buyer – above and beyond what the service is really worth. It gives you the best of both worlds.
“They exclude all sorts of sales, for all sorts of reasons. “CS-Sales” (my term)–the only ones that count in creating the index–have been higher every month this year than last. It doesn’t matter what actual, total sales have been if you are trying to predict where the CS Index will move–it ONLY includes the sales it includes, which have been higher.”
But Gary’s thesis, as I interpret it, is something like low sales volume in the market means lower prices. I don’t know if that’s right or not but I think that’s his working assumption.
If N(market) is down but N(caseshiller) is up, I’m not sure Gary is necessarily wrong given his assumption. If there is some technical reason why N(caseshiller) is changing over time, for reasons unrelated to N(market), but P(caseshiller) is still an accurate reflection of P(market) (and if it’s not we’ve got bigger problems), then P(caseshiller) can be down while N(caseshiller) is up. The mechanism by which N(caseshiller) deviates relatively from N(market) may not affect prices.
“I remember watching the 5 o’clock news in 1995 when they first started emptying out the high rises”
They’d been emptying C-G through attrition (ie, no one new got to move in) for about 10 years by then. By 95, C-G was about half empty.
“The fact of the matter is that in theory you could do all the work yourself but who has the time?”
What work are you talking about?!!! I can find the properties in which I am interested. Real estate attorneys do all the “hard stuff” (title, closing, document searches, etc.). Mortgage brokers take care of the mortgage. The title company takes care of the closing. So what really is there left for realtors to do ? Open the door, provide misinformation (not on purpose but because they don’t all know the properties that well), obstruct and prevent direct communication between buyers and sellers, obstruct/block deals because of their commission issues, oh – and collect their checks. It is the biggest farce and greatest ways to legally extort money from people. Ridiculous!~!!!!!
HD — Little myopic view there. Social programs exist to help cure the ills that result from the very system that allows you to enrich yourself. Or at least put food on the table and enjoy a decent life.
If I were you, I’d be more upset at the system that allowed your ex wife to take 1/2 of what you own, force a sale of your house and condemn you forever to renting.
But I focus on the big picture so…
“If N(market) is down but N(caseshiller) is up, I’m not sure Gary is necessarily wrong given his assumption. If there is some technical reason why N(caseshiller) is changing over time, for reasons unrelated to N(market), but P(caseshiller) is still an accurate reflection of P(market) (and if it’s not we’ve got bigger problems), then P(caseshiller) can be down while N(caseshiller) is up. The mechanism by which N(caseshiller) deviates relatively from N(market) may not affect prices.”
This is the most convoluted and uninteresting post of all time on CC.
“But Gary’s thesis, as I interpret it, is something like low sales volume in the market means lower prices. I don’t know if that’s right or not but I think that’s his working assumption.”
Sure, but Gary didn’t write “doesn’t matter to my projection”, he wrote “I don’t believe that CS-Sales are actually up”.
“The mechanism by which N(caseshiller) deviates relatively from N(market) may not affect prices.”
Absolutely true, but Gary’s premise was that sales are declining relative to last year, which therefore means that CS-Index will decline. Which is faulty, as CS-Sales have increased.
Since he was projecting based on an understandable-but-still-faulty premise, perhaps CS-Index will not act as he expects.
Realtors are similar to job recruiters. Most of them hold up the process and actually prevent and slow sales from occurring, but a few of them are very good at what they do and earn every penny of their commission.
“So, there were ~200 SFH closings in Metro Chicago in August, but over 2000 in both June and July? No? Of course not.”
I’m not sure what data you are looking at. The home sale pair count for Chicago (SFH) was 5018. But total sales for Chicago – condos and SFHs – was 5327 for the PMSA. I figure CS is excluding a bunch of sales too.
““CS-Sales” (my term)–the only ones that count in creating the index–have been higher every month this year than last. It doesn’t matter what actual, total sales have been if you are trying to predict where the CS Index will move–it ONLY includes the sales it includes, which have been higher.”
All that means is that the sample they are using has grown. But the actual sales in the market are way down and that depresses prices in their sample because the stuff in their sample competes with stuff outside their sample.
Realtors are glorified cheauffeurs, light switch flippers and internet searchers.
Only worth using one when you want to sell your place, pretty much useless if you’re buying a place.
Public housing and many of the social programs that spawned out of it have been the biggest failures of government ever. All it did was concentrate poverty creating a cycle of dependency and irresponsible behavior which literally has destroyed an entire generation of people. I will be glad when the last brick of all public housing is finally destroyed.
“What work are you talking about?!!! I can find the properties in which I am interested. Real estate attorneys do all the “hard stuff” (title, closing, document searches, etc.).”
Then what do I do all day (when I’m not posting on CC)? I sure seem to have to work through a lot of issues for buyers. I gave you some examples. The buyers I see do not have plan vanilla needs. As for the attorneys…I can’t even count how many times attorneys have screwed up deals, have needed to be managed, have called me up the night before a closing asking me how to prorate taxes.
Like I said, for some buyers, who have the vast knowledge and intellectual superiority that you do, they don’t need a realtor. But then again it’s not clear to me how much if anything they will save.
“All that means is that the sample they are using has grown. But the actual sales in the market are way down and that depresses prices in their sample because the stuff in their sample competes with stuff outside their sample.”
Maybe, probably even, but for CS-Index purposes, sales are up, not down. And we get to guess as to why they excluded so many more sales in 08/09 than they did this year. So far, the inclusion of additional sales appears to have helped maintain Index levels despite significant drops in average sales price, which is, at best, odd.
“I’m not sure what data you are looking at. ”
At this point, I’m not sure either–that may have been a hiccup.
I can’t tell if you’re being coy, collegial, sarcastic or going for my jugular. I don’t even know how to respond to this other than to say that all of your allegations below are categorically untrue and have no basis in reality.
“If I were you, I’d be more upset at the system that allowed your ex wife to take 1/2 of what you own, force a sale of your house and condemn you forever to renting. “
Gary thanks for the thoughts. I have also dealt with a realtor on the selling side. And to be honest that frustrates me even more. My realtor was “the guy” in my old hood. Yet rarely went to showings. And he would complain about how no one was buying but show up 30 minutes late to showings he was able to make it to. If no one is buying and you are struggling….what is the excuse to be 30 minutes late??? I just feel that the profession lets anyone in and that there is a lack of professionalism and urgency required with this type of job. People buying/ selling homes are crazy during that period and the realtors need to cater to that!
“so everyone knows that eviction notices were handed out to the last remaining residents in the Cabrini highrise yesterday right?…”
If you want a good read on recent Chicago history, try “Gang Leader for a Day: A Rogue Sociologist Takes to the Streets” by Sudhir Venkatesh. (His research was also discussed in “Freakonomics”.) He lived with and studied a crack-dealing gang in the Robert Taylor Homes in the 90s before they were demolished. It describes the business model of the gang which works just like any corporation. And also the micro-economies of the projects themselves.
“HD — Little myopic view there. Social programs exist to help cure the ills that result from the very system that allows you to enrich yourself. Or at least put food on the table and enjoy a decent life. ”
I’ve always suspected you were an idiot who was disconnected from reality JMM and this basically proves it. But keep talking about things like this at your little leftist-leaning wine parties if it continues to be a requirement of the high society/elitist social set. Just know that you are responsible for destroying the lives of countless people with this political belief you and your ilk hold.
Even with all the bad Realtors out there, most of the transactions that come across my desk with no Realtor involved wind up being fusterclucks. The average buyer (no matter how smart they think they are) simply does not have the working knowledge of the process involved in buying a home.
Residential real estate is very much an experienced based profession as you learn from doing. Simply reading a book or posting on Crib Chatter will not prepare you a transaction.
It is kind of like calling yourself a pilot because you have a few hundred hours in a flight simulator without actually having ever flown a plane.
Good agents are kind of like general contractors. It isn’t an easy job. If it were you would see many more successful agents.
Gary,
My post was obnoxious and meant to stimulate conversation on the subject of realtors. In my opinion, the most important role of a realtor is to provide psychological support to buyers/sellers. So many buyers are such big p@#sys that they need hand-holding, reassurance and “friendship”. They NEED people to tell them that what they are buying is a good deal. Sellers also NEED realtors to tell them that they are priced correctly, etc. This all goes back to my theory that real estate is more psychological than most people know or would care to admit. Realistically, there is no true need for realtors. Psychologically, realtors are absolutely necessary for most buyers (who are little “fraidy cats” probably terrified of their own shadow),
Everybody but him got that you were joking about the ex-wife and kids, I guess. And I thought clio was obtuse.
“I can’t tell if you’re being coy, collegial, sarcastic or going for my jugular. I don’t even know how to respond to this other than to say that all of your allegations below are categorically untrue and have no basis in reality.”
“it’s mostly a ghost town. 1 murder so far this year, less than edgewater, and same as the loop. not the same place you watched the Evans’s live the good times as a youth.”
Only one murder because the Cabrini youths don’t know how to aim properly. Multiple shootings so far this year.
Here she talks about a shooting and stabbing back in February:
http://trueslant.com/megancottrell/2010/02/16/dueling-memories-inside-cabrini-green-with-doreen-ambrose/
Here is the cabbie who was d_mn near killed back in May. Not sure if he survived or not.
http://webcache.googleusercontent.com/search?q=cache:hGHBP6U_4ykJ:cbs2chicago.com/local/cab.driver.shot.2.1697853.html+cab+driver+shot+cabrini&cd=1&hl=en&ct=clnk&gl=us
TG for Google Cache the MSM likes to bury these after not too long. Wonder why?
“I was young at the time and I remember being so disgusted, this lady who had lived off the public dole her entire life (and proud of it), liking the relationship between her and the housing authority to that of a plantation owner and slave. I’ll remember that quote until the day I die.”
This is what I had in mind that time a few weeks back when I said I hate it when people don’t pay taxes. Right now 47% of Americans do not pay federal income tax at all. My taxes go to support all the people making bad decisions with their lives on a daily basis.
http://money.cnn.com/2009/09/30/pf/taxes/who_pays_taxes/index.htm
“And I thought clio was obtuse.”
I’m actually quite fit.
“Right now 47% of Americans do not pay federal income tax at all. ”
And the MSM is quiet on what amount of THOSE are actually net recipients of federal dollars, either directly via the EIC or indirectly via other programs. My guess is a fair amount.
The direct recipients, at a minimum, need to be cut off from receiving any sort of refund: the tax code was never intended as a direct wealth transfer mechanism.
You’d be amazed how many people are bilking the system. I know of people who are mostly paid in cash who pay no income taxes and get $5k back. Its disgusting.
Bob,
I know that it can be frustrating to you – I was the same way when I was your age. The BEST thing you can do is to let it go. You can’t and won’t change it – and it will turn you into a bitter and negative person. When I decided to “let it go” it was cathartic and led to my sometimes optimistic, but usually perpetually happy and positive personality!!
“When I decided to “let it go” it was cathartic and led to my sometimes optimistic, but usually perpetually happy and positive personality!!”
I’m not letting nothing go I’m not letting JMM get away with his unsubstantiated statements. This guy is so far removed from reality its funny.
I see tax returns all the time. The common frauds are to claim head of household when you are in fact married, or single and live alone; they claim non-working relatives as exemptions; and they claim their non-working relatives’ children as deductions; I’ve seen people claim their children living in foreign countries as exemptions; of course there is the business losses – the part time neighborhood computer repair who makes $3,000 a year in cash on the side claims $15,000 in losses on their tax return. if the IRS actually cared to go after the little guy for these nefarious infractions that 47% rate I bet the non-paying rate drop below 10% I bet. And I see hundreds if not a thousand tax returns a year.
Well, the IRS is actually starting to do something about this. Very soon IIRC tax preparers have to register with the RIS to prepare taxes so as to prevent fraud and hold the preparers liable. The preparers might be less likely to claim 5 children in mexico as dependents if they could be found personally liable for the fraud.
The other thing I love is when these debtor (usually debtors) get a $5,000 tax refund; and they have a car payment of $500 a month. So basically the government is paying the 47% of people who don’t pay taxes enough money to buy a $550 a month car payment. Amazing.
You’d be amazed how many people are bilking the system. I know of people who are mostly paid in cash who pay no income taxes and get $5k back. Its disgusting.”
I think it’s reasonable that people approach a decision to buy something that costs 3 to 4 times their annual income with caution. You appear to be interpreting that as weakness.
“So many buyers are such big p@#sys that they need hand-holding, reassurance and “friendship”.”
..
“Psychologically, realtors are absolutely necessary for most buyers (who are little “fraidy cats” probably terrified of their own shadow),”
I briefly dated a guy who grew up in the NYC projects. He broke the cycle, moved out, became a Commodities trader and bought a condo. However his mom was a project lifer. I was shocked when he told me she worked and made about 35K a year in a NYC school cafeteria. Yet she was on Medicaid. Her utilities were completely paid for by NYC. She was on food stamps. She paid a nominal rent of something like $300/month. She bought new furniture every couple of years. The projects were in Chelsea. (A totally SWEET location.)
He also had an uncle on rent control in Williamsburg, Brooklyn paying about $100/month, but he was hardly ever there because he spent most of his time in the house he OWNED in Florida. Once you’re in the system you’re in and you can work it. I’ve made far less than 35K in various jobs and I wouldn’t have qualified for the sweet benefits-for-life package they did.
Clio:
You are right to a degree. I have seen way too many deals come close to falling apart over the smallest little thing. All the professionals involved have to step in to help the buyer and seller see rationally. I’m talking $400k purchases falling apart over $200 bucks because neither side wants to give in. Yet it cost both of them a couple of thousand in carrying costs to not give in.
Yep, one of my wife’s friends they are practically destitute with two kids, one works in a dry cleaners making $10 an hour, her husband is a an alcoholic mechanic making $12 an hour, they filed chapter 7 bankruptcy last year and still managed to get about 8k from the government and took a nice vacation with that money (thankfully in the USA)
wtf, where’s my vacation paid for with irresponsibility?
“I think it’s reasonable that people approach a decision to buy something that costs 3 to 4 times their annual income with caution. ”
I think it is reasonable and should be done with extreme caution. My point was that realtors only really provide “psychological” support for this decision (much like a mommy does with a little child – cheering them on at soccer/baseball games. She doesn’t provide any real advice on how to improve their game – but does add psychological support). As long as this is goes unrecognized, there will be arole for realtors.
“if the IRS actually cared to go after the little guy for these nefarious infractions that 47% rate I bet the non-paying rate drop below 10% I bet. And I see hundreds if not a thousand tax returns a year.”
I assume HD is using the below 10% for rhetorical effect. While I’m sure there are some people who fraudulently don’t pay federal income taxes, the major reasons people do not pay federal income taxes are the Earned Income Tax Credit (EITC) and the child tax credit, as explained here:
http://keithhennessey.com/2010/04/15/off-the-rolls/
ah bob, you know those 2 data points are pretty meaningless. unfortunately, most of the websites dont make it easy to compare area stats. for the past 90 days the near north side is approximately 20% ahead of lakeview in violent crimes (161 to 135). over the past 2 weeks things have been worse within a half mile radius of your e lv locale (3400 n halsted) than cabrini (500 w division).
Calderon: single people making $30,000 a year don’t get EIC (or much of a refund) but as soon as you file head of household, claim dependents and then a business loss, you’re getting a $4,000 refund. All those tax preparers in the low income areas specialize in these types of situations. The tax payer doesn’t really even know what’s going on, they just know that they go to the tax preparer who gets them the biggest refund. I’m just telling you that it’s not often that you see somebody of the 47% of people who don’t pay taxes actually have a legitimate tax return.
“over the past 2 weeks things have been worse within a half mile radius of your e lv locale (3400 n halsted)”
Oh crap man I know this. I’ve actually been looking to move (for this but also other reasons). There are certain times of night you definitely don’t want to be out and about where I live by yourself, especially when the weather is warmer.
A lot of people get a false sense of security about my area and it is filled with recent transplants from out of state but it definitely changes after dark, for the worse.
“I’m not letting nothing go I’m not letting JMM get away with his unsubstantiated statements. This guy is so far removed from reality its funny.”
Bob, your extremist right wing views notwithstanding, I would suggest there are many very influential and successful private sector executive-types that agree with me. Sorry you cannot take an opposing view without getting angry. But then again that is where “angry white male” came from…
We agree on some things though. Retirement entitlements among them.
“over the past 2 weeks things have been worse within a half mile radius of your e lv locale (3400 n halsted)”
I’m over that way a lot – and I’ve never had any problems with anyone – ever. Sure, people look a little different and strange, but they are extremely nice and don’t bother you. I don’t think it is dangerous at all.
“I’m over that way a lot – and I’ve never had any problems with anyone – ever. Sure, people look a little different and strange, but they are extremely nice and don’t bother you. I don’t think it is dangerous at all.”
And now is when someone posts how much more crime occurs in Lakeview than around 800 N Western ….
“I have also dealt with a realtor on the selling side. And to be honest that frustrates me even more. My realtor was “the guy” in my old hood. Yet rarely went to showings. And he would complain about how no one was buying but show up 30 minutes late to showings he was able to make it to. If no one is buying and you are struggling….what is the excuse to be 30 minutes late??? I just feel that the profession lets anyone in and that there is a lack of professionalism and urgency required with this type of job”
Yeah. This is EXACTLY what I’m talking about. Most realtors out there are awful. Guess how often I have trouble getting listing agents on the phone? Makes my blood boil. I could go on and on. Your experience with the celebrity realtor is common. And just try hiring realtors from this pool.
or he could come watch the wrecking ball at cabrini, might turn into the ray charles scene in blues bros if he drives the sports car.
“Bob, your extremist right wing views notwithstanding, I would suggest there are many very influential and successful private sector executive-types that agree with me.”
Yes because 1) they don’t want to be perceived as a disconnected Scrooge McDuck Mr. Moneybags type and not compassionate and 2) they have no clue as to the reality on the ground.
When one can afford to live in a gated community insulated from the effects of these kinds of positions and one’s experience with these types is small to non-existent it likely does indeed change one’s views. Hence the term “limousine liberal”.
To heck with these dumb study abroad programs that allow American kiddos to goto Europe and party their arse off with reckless abandon. They need to be replaced with study INbroad programs where these clueless people have to live in a random neighborhood on the south side, for instance.
is the bottom in for this particular property in bronzeville?
http://blogs.vocalo.org/bey/2010/10/a-dollar-sale-in-bronzeville-buy-an-historic-home-for-1-monday/40706
I bet the shadow buyers will be all over this steal of a deal!
“study INbroad”
hehhehheh.
I’ll tell you what will drag down the CS index – crapshacks and foreclosures. There seem to be very very few regular transactions going on. From my casual observations, at least in the areas I watch, there are quite a number of foreclosures, short sales, estate sales and crapshacks selling in the low $100’s and very little. Now some of these houses are falling down and some are in decent shape. Regardless, hardly any of these crapshacks break the $200’s and the market in the $300’s and $400’s is nearly dead … of course the green zone is a little different b/c there are less estate sales and crapshacks but as a result overall sales have slowed down. Over time i would imagine these sales are going to reflect a drop off in prices because the foreclosures are a 50% off sale and the estate sales, crapshacks are selling at their roughly 1990 prices. This of course will affect the move-in condition properties when all that sells are dumps. Everyone all the sudden wants a move-in-ready place for a crapshack price.
and that’s where we are now.
http://www.redfin.com/IL/Chicago/4638-W-Addison-St-60641/home/14371600
$98,000 bungalows in portage park.
“Your experience with the celebrity realtor is common. And just try hiring realtors from this pool.”
They are horrible, one who touts he got a JD (and blah blah blah) is the selling agent on a short sale that I have on offer on and he NEVER returns my realtor’s calls. I would think in a more complicated transaction even with no news they might want to send back a call/e-mail saying there has been no change!
HD – that is probably why see Clio’s price recovery headlines upthread. there is a huge gap that comes between the crapshacks and viable housing that is making everything look like an outlier.
HD- how do you even know that place is in “move in condition”?
also, the property I linked is for $1 for the house and $1 for the lot next door LOL
“I’ll tell you what will drag down the CS index – crapshacks and foreclosures.
…
$98,000 bungalows in portage park.”
Which appears to be over it’s ’95, non-arms-length sale (looks like an estate sale to one of the kids, with a $76k mortgage). And with a likely 50+ year period from the last real sale, that one will have–at most–a tiny effect on CS.
“They are horrible, one who touts he got a JD (and blah blah blah) is the selling agent on a short sale that I have on offer on and he NEVER returns my realtor’s calls.”
This wouldn’t be south lakeview would it?
“is the bottom in for this particular property in bronzeville?
http://blogs.vocalo.org/bey/2010/10/a-dollar-sale-in-bronzeville-buy-an-historic-home-for-1-monday/40706”
I’m certainly not an expert, but the idea of moving a 140-year-old house to a different lot seems strange. What are the chances of the house surviving the move intact, and how much would it cost to restore the house to a livable condition once it arrived on the new lot even if the move goes well?
This wouldn’t be south lakeview would it?
No, Northern portage park, almost Jeff Pk.