Market Conditions: December Home Sales Rise 12.5% in Chicago YOY
It’s that time of the month again. December was another solid sales month for Chicago.
From the Illinois Association of Realtors:
The city of Chicago saw a 12.5 percent year-over-year home sales increase in December 2013 with 2,080 sales, up from 1,849 in December 2012. The year-end 2013 home sales totaled 27,155, up 21.2 percent from 22,397 home sales in 2012.
The median price of a home in the city of Chicago in December 2013 was $210,000 up 13.5 percent compared to December 2012 when it was $185,000. The year-end 2013 median price reached $220,000, up 18.9 percent from $185,000 in 2012.
Here is the data going back 9 years:
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- 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)
- December 2012: 2080 sales and median price of $210,000
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“A surplus of pent-up buyers helped move the market in 2013,” said Matt Farrell, president of the Chicago Association of REALTORS® and managing partner of Urban Real Estate. “Motivated sellers, paired with attractive interest rates and a sense of a more stable economic climate, helped close deals that might have otherwise not come to the table. The return of the jumbo loan allowed for move-up buyers to buy their next home as a delayed recovery can be in part attributed to the $417,000 federally-backed loan limit and no other jumbo loan options,” Farrell added.
“This year will likely bring stabilization in housing prices. Keys to keeping Chicago affordable and attainable to even the most credit-prepared buyers includes the necessity for our industry to continue to push for increased federally-backed loan limits, so that those trying to purchase in our city can do so without being priced out of their next home,” noted Farrell.
Is the continuation of the housing recovery really predicated on pushing for “increased federally-backed loan limits”?
Does anyone think the $417,000 level is going to come back?
Is a 10% or 20% down payment really that much of an impediment?
Illinois home sales climb again in December; 2013 marks a strong year of housing recovery [Illinois Association of Realtors, Press Release, January 23, 2014]
Personally I think the government should be out of the housing market entirely but that’s a longer discussion.
417 ain’t coming back and doesn’t need to come back. I’ve never had a deal where the threshold made any difference. It just determined what kind of down payment the buyer made and what kind of loan they got. I guess there are some people who really want to stay under the threshold though. But, sure, if more people could buy homes with less than 10% down then sales would go up. But that wouldn’t be prudent would it?
BTW, as I pointed out earlier this month December sales drew down pending home sales. Contract activity has not been showing much growth lately.
right now our lender is offering identical rates on confirming and jumbo’s
obviously the issue with jumbos is that you need more money down
Ages ago, I called the bottom of the market at 12/31/2010. I wasn’t far off, and at least I had the balls to make a call. That’s when I saw things start to heat up with a ton of buyers coming off the sidelines.
Where oh where is what’s-his-name? The so-called housing market expert?
So glad I didn’t listen to him.
Homes are still flying off the shelf in my non-GZ City nabe and most of the buyers are young families replacing elderly homeowners. The problem is there are so few homes on the market.
You can actually get better rates on jumbo’s than you can on conventional loans now.
“The so-called housing market expert?”
Which one? We had about a dozen of ’em.
12/31/10 bottom? I signed my real estate k contract in mid January 2011. we think alike milkster
I’d be up for a CC get together now that the site is nearly dead. but we’ll all have to wear masks like eyes wide shut.
“Which one? We had about a dozen of ‘em.”
I’ll answer for her. G.
“but we’ll all have to wear masks like eyes wide shut”
Well then, we’d all have to show up naked also.
“Well then, we’d all have to show up naked also.”
…and find out why HD’s fraternity nickname was “The Python”
Wow those 10 year rates are *SOLIDLY* above 3% now @ 2.74%… there goes the housing market… oh wait… lol
“Wow those 10 year rates are *SOLIDLY* above 3% now @ 2.74%”
That’s an inverse scale, right?
no its called sarcasm… but you knew that
What percentage of the sales were cash sales?
In most of the country’s housing markets, the majority of the home sales were to cash buyers, which indicates that the typical middle class or lower middle class buyer was not participating and that most of these properties were being purchased by our new Rentier Class of large landlords who either have cash or have lines of credit available to them that enable them to bypass the mortgage process.
I was a cash buyer of a 2-1 in West Ridge in 2013, but buyers like me are anomalies- individuals with a little bit of cash buying a cheaper place than a mortgage would make possible, in order to keep their expenses level and not have a large debt overhanging them as they enter their later years. The bulk of the cash buyers were large corporate landlords, many of whom were using ZIRP money made available by the government specifically to levitate housing prices. That worked.. . for a while, at least with better properties and/or those that could be bought in bulk, like some of the failed condo conversions in Rogers Park and West Ridge.
There’s no way this development helped first time and younger buyers, or could be considered in any way good for our middle classes, and there’s no way a housing market dominated by these well-heeled corporate buyers can be considered a healthy housing market. My belief is that we have seen all the gains we are going to see for a long time, and that we could experience another housing bear market as severe as 2008-2011, or even worse, when the Fed runs out of tricks to keep the financial and housing markets levitated, especially when China, which is in very bad trouble with its massive debt accumulated to build empty cities and roads to nowhere, starts unwinding. Chinese investors are the biggest holders of U.S. debt and if they need to repatriate their money, the dominoes could start falling very quickly. Interest rates would go through the roof and there wouldn’t be a damn thing the Fed could do about it.
Which maybe they have, as we saw on Thursday and Friday.
Now that I’m bagged in a condo and the money spent on it likely won’t be going anywhere until I die, my major fear is for the money I have in bank CDs- I liquidated my funds in a nick of time. What lengths will our overlords go to, to hang onto the wealth they’ve stolen through asset inflation and endless credit creation? Will we have a bank “bail in” like Cyprus, where the bank accounts of the citizens are robbed to offset the losses of the banks?
It’s reality time. I actually analyzed the data a couple of months ago for Chicago. Cash purchases are very common below 100K. From 100K to 200K it’s like 20% and above 200k it’s like 15%.
How can cash purchases be bad? By not stretch of the imagination. The fact that investors with money are jumping on stuff means that the prices have gotten so low that it’s a no-brainer. When does Carl Icahn buy a company? When it’s undervalued for what it could be.
And there are plenty of non-investor cash or high down payment buyers out there. What else are they going to do with their money? Lots of my clients do this. Not everyone feels compelled to buy the most expensive house they can afford.
It’s not the fact of cash purchases per se that is bad, not at all. In my dreams, all the aspiring home buyers in this country would be able to pay cash, or make a substantial downpayment on a decent place to live that they could pay off within 15 years, and be able to pack half their salaries away into savings and solid growth investments.
What is bad is what these cash purchases indicate, which is that about 70% of potential first-time and middle income buyers have been knocked out the market completely and are becoming permanent renters. What is REALLY bad is that our lower end and middling housing stock is coming to be controlled by a small and extremely wealthy rentier class, with very bad economic results for increasing numbers of people who are paying as much as half their incomes for a substandard place to live, and not just in the more expensive markets. Given that 90% of home buyers are dependent upon relatively expensive financing – relative to the rates at which these large investors are borrowing at from the government- even those with sterling credit and large amounts of money to put down are being shut out of lower-priced and medium-priced housing.
Worst of all is how this happened. It happened with the active assistance of our government and the Federal Reserve in their ongoing efforts to inflate house prices and other asset prices while degrading our currency and creating yet another debt bubble even bigger than the one that blew up in our faces in 2008. While the cost of living has continued to rise- checked food prices lately- in the past 5 years, including housing costs, incomes have stagnated and even dropped, and all the “breadwinner” jobs lost in the recession are being replaced by part time and low end service jobs. QE to infinity has mispriced risk while making credit available at much cheaper rates than those available to the general public, to outfits like Blackstone and Homes4rent, so that they can take entire subdivisions and condo developments off the market while bypassing conventional, costly mortgage financing. Thus the government has, with our tax money, and while degrading our savings and raising our cost of living, funneled more of the country’s wealth to the “rentier” rich, to the detriment of not only “ordinary” folks, but the productive, entrepreneurial rich who cannot compete for available capital that is being gently steered into real estate investment suddenly made very advantageous to those who enjoy the flood of almost free money.
“… while making credit available at much cheaper rates than those available to the general public, to outfits like Blackstone and Homes4rent”
ALWAYS has been… There is a reason companies like maintaining AAA credit ratings… GE played their balance sheet for decades to this benefit.. actually I would bet it is a tighter spread now (more favorable for consumer) than historical average. So basically your whole rant is probably based on an incorrect premise. Take it to huffpo where you will be applauded for such nonsense without being checked on it.
…also degradation of the dollar.. against what ?? appears dollar is at it’s 10 year avg vs the index right now..
amazes me how when things don’t go peoples way… they just say any crazy shit to blame anyone…
Grinzo, a lot of people would say that things HAVE gone my way.
After all, I got to buy for cash at a price about half what I would have paid for the same place in 2007. I am one of the lucky few and I emphasize the word LUCKY.
You are ignoring my main point, which is that our Liberal government is goosing the housing market with OUR tax money, deliberately working to keep housing prices levitated to the great disadvantage of first time buyers, who are largely dependent upon credit to buy.
Yes, yes, a corporation with AAA credit will always be able to buy money at a cheaper price, and I accept that.
What I do not accept is government meddling to “rescue” the housing market prevent foreclosures and write-downs that should have been allowed to happen- in all, government interference in the markets that has cost the taxpayers $6Trillion since 2008 in the form of an alphabet soup of “help” and “rescue” programs that have allowed millions of delinquent home buyers to squat in their places for up to 4 years and get substantial principal write downs or short sale deficiency forgiveness, and finally has given large corporations massive assistance in buying up huge swaths of foreclosed homes in order to reduce housing inventory….. all to artificially inflate prices and rentals.
Agree that the government shouldn’t be interfering in the housing market. But I don’t think it’s that bad for the consumer. The benefits of cheap money get passed along to them with rents that are lower than they otherwise would be. And renting is not such a bad option for people. I intentionally rented for 12 years.
I can see no benefit to the consumer in cheap money. It drives inflation and encourages the formation of debt, while punishing savers and retirees. It is the reason our financial system is in such disarray and that most “consumers” have huge debt loads and no savings.
Low debt costs are driving the addition of rental units and keeping rents down so that benefits renters. So many of my investor clients and other investors are rehabbing multi-unit buildings.
Thus far there is no evidence of inflation.
It is definitely punishing savers.
I do not see a financial system in disarray.
I think there are a lot of other things driving huge consumer debt and no savings.
Congratulations on your new home, Laura.
I like West Ridge.
“I do not see a financial system in disarray.”
Really? Why is the Fed in an emergency monetary policy then?
Must be SOME kind of distress in the system.
“in all, government interference in the markets that has cost the taxpayers $6Trillion since 2008 in the form of an alphabet soup of “help” and “rescue” programs that have allowed millions of delinquent home buyers to squat in their places for up to 4 years and get substantial principal write downs or short sale deficiency forgiveness, and finally has given large corporations massive assistance in buying up huge swaths of foreclosed homes in order to reduce housing inventory….. all to artificially inflate prices and rentals.”
Yes- Trillions. Most Americans don’t get it.
It has raised up some groups- especially the rich. Housing, stock market and art are all at or near record highs (depending on where you are.) And it’s WORLDWIDE because the central banks everywhere have participated.
You can see the result in California. Home prices keep going up there but it’s really only the rich who are participating. The investors are pulling out of that market now that the lower level homes aren’t “cheap.” First time homebuyer has practically vanished (and will continue to be shut out as long as mortgage rates keep rising.) Why is that something that is “good” for the economy? It just exasperates the class divide. Buying a house used to be the American Dream. But the middle class in large swathes of the country are going to be shut out. Much of it is the result of the Fed’s policies over the last 6 years.
The Fed wanted housing to “recover.” And now it has. But it’s as warped and distorted as in 2008- just in a different way.
“In most of the country’s housing markets, the majority of the home sales were to cash buyers.”
I saw a stat that said that nationwide, 43% of sales in December were all cash nationwide.
Some states were much worse. In Florida it was over 60%. Wow. Can anyone say “crash” when those buyers pull out of the market? Yikes. The all cash buyers make up a substantial portion of this housing market. Without them, there really isn’t a housing recovery. The Fed knows this.
“Homes are still flying off the shelf in my non-GZ City nabe and most of the buyers are young families replacing elderly homeowners. The problem is there are so few homes on the market.”
Yes- Vlajos. If inventory is down at “record lows” it will appear that things are “flying off the shelf.” When, in fact, sales aren’t all that great. They’re off the low but not that much different than, say, 2008.
It’s kind of like when you walk into a store and see 100 sweaters. In one day, 10 are sold. But looking at the table, with 90 still there, it doesn’t seem that great.
Right now, there are only 20 sweaters on that table. 10 are still selling. So when you look at that table you see only 10 and you say “wow- we sold a LOT of sweaters.”
Nah- not really.
But it DOES suck to be a buyer right now. There is literally NOTHING to choose from. And it is pushing up prices- especially on the high end where they aren’t quite as monthly payment sensitive.
“Contract activity has not been showing much growth lately.”
Gary- isn’t it really the weather? I don’t want to be one of those that blames it but in this case, it would be warranted. Who wants to look at real estate in this mess? It’s the most snowy and coldest January in 30 years. It’s been bad the entire month and inventory is non-existent. It’s not like you even want to drive somewhere if there is an open house.
I think the weather is also delaying people from listing. Because I’m not seeing much “new” coming on the market. It’s all the same old listings from the last few months that went off the market for the holidays and is now coming back on. They’re the tired listings.
I think people really ARE waiting until after the Super Bowl this year.
I can only comment on Chicago and I only care about Chicago. I’ll repeat what I said above. I have the data: ” I actually analyzed the data a couple of months ago for Chicago. Cash purchases are very common below 100K. From 100K to 200K it’s like 20% and above 200k it’s like 15%.” And why would the all cash buyer be any more likely to abandon the housing market than the buyer with a mortgage? Like I said, the fact that cash buyers are in there is telling us that prices are still low.
“Why is the Fed in an emergency monetary policy then?” Sure doesn’t feel like an emergency. They just want to get the economy back on track. Personally I think the government would be better off just spending money on infrastructure (on which we would get a nice return) instead of keeping interest rates low and extending unemployment benefits.
Real estate in Chicago is unlikely to crash from current levels. My God, we’re still 25% below the peak and 21% below the long term trend line.
Prices are being pushed up across the board. Try buying a 2 – 4 unit building below 350K. You’ll be competing with lots of folks. Same is true with nice condos. I’ve been amazed at some of the prices we can get. Of course, I’m similarly amazed at some of the prices we can’t get.
As a country we would be better off without “the American dream” of home ownership. Renting or buying are just two different ways to pay for a roof over your head. You can buy a car or lease a car. What’s the difference? It’s all just different financial structures. Of course with renting you can’t do whatever you want to a place but you pick up a lot of flexibility.
My comment about contract activity was in reference to the December numbers. I was a bit surprised that it didn’t show any growth. However, in my recap I stated that I believe that inventory is holding it back. Every time I look at the inventory numbers (months of supply) I see it getting lower.
Everyone knows that the best time to list is like March and April so that holds them back but in this environment I tell people that it’s worth a try whenever they are ready.
“And why would the all cash buyer be any more likely to abandon the housing market than the buyer with a mortgage? Like I said, the fact that cash buyers are in there is telling us that prices are still low.”
Yes- cash buyers have been buying at those price points all over America. When there ceases to be anything at that price point- they go away. Prices are still “low” in the outlying neighborhoods. You can buy for $100k in Humboldt Park. But you’re not buying in any of the GZ for that.
I’m not sure real estate will “crash.” But there are massive disruptions in the system. All it will take is for interest rates to pop and suddenly no one is buying again. It’s pretty sad that even a 1% rise in interest rate, still at nearly historical lows, means a huge chunk of people are priced out. Nothing says more about the distortions than that.
Also, nationally, January and February is where we’ll start to see year over year decreases in sales (because last year was so hot.)
They don’t necessarily go away. They just sit there bid under the market, like a 42 dollar bid for 10 million shares when a stock is trading 44.
“It’s pretty sad that even a 1% rise in interest rate, still at nearly historical lows, means a huge chunk of people are priced out”
No one will be priced out. Lots of people buy below what they can afford anyway so they can just spend more. Or if they are at their limit….let’s say the max they can spend will be 400K. At 20% down and 4.5% their monthly payment will be $1621.52. If rates go up to 5.5% then they have to lower their max price to $357K. However, the person who had a max price of $443K (approximately) will now buy that 400K place. It’s basically a wash. Everyone shifts down. Prices will drift down a little maybe but mostly at the upper end where the price distribution of buyers starts to fall off so that there are fewer replacement buyers at the next tier up.
Gary- in California they’re literally priced out. We don’t have that problem in Chicago. You can leave the GZ and buy in Flossmoor and take the train to your job in the loop. Can still get some “deals” there or in other suburbs. In most of the metro areas of California and NY and DC, you’re not as lucky. Heck, I’ve even heard of most people being priced out of Texas in areas like Austin.
Why do you think $400k is the low end? It’s not. If you make $75,000 (common middle class salary) you really shouldn’t be spending more than $250,000.
Also, liquidity is an issue now. Not as many 3% government loans. The younger buyers just don’t have cash to purchase. You can’t get blood from a stone. They are paying student loans. They don’t have $80,000 to put down on a $400,000 2/2.
Gary: the national new home sales reflect what you say you saw here in Chicago in December. New home sales are just signed contracts, not closings. They fell 7% in December and November was revised downward as well.
But it looks like higher prices are also impacting. New home sales are mostly on the upper end of the market now. With average prices nearly $300,000 it’s not really first time buyers anymore. So even the rich appear to be getting a little jittery.
We’ll see lower sales numbers in January/February and probably March due to contracts being light. I think the weather will impact for the next 4 to 6 weeks too.
“no its called sarcasm… but you knew that”
Yeah, and my question was *really* serious. You betcha!
The reason SOME people are getting priced out of markets like Austin and San Francisco has less to do with mortgage rates and more to do with home prices. And prices are rising because the demand is there from a constant influx of well paid tech workers. This is not bad for the housing market in those areas. This is good. Now if you want to lament the fact that less skilled workers can no longer afford to live in high cost cities…well that’s a whole other discussion.
I do believe that we will see lower sales in Chicago in January but it will probably be because of lack of inventory.
“pack half their salaries away into savings and solid growth investments”
Why would we bother when…
” I liquidated my funds in a nick of time. What lengths will our overlords go to, to hang onto the wealth they’ve stolen through asset inflation and endless credit creation? Will we have a bank “bail in” like Cyprus, where the bank accounts of the citizens are robbed to offset the losses of the banks?”
Shouldn’t all that ‘savings’ go into gold, canned goods and shotguns (shells, relaoders, powder, shot)?
“It just exasperates the class divide.”
I get exacerbated when the class divide is exasperated.
“the middle class in large swathes of the country are going to be shut out”
” the metro areas of California and NY and DC”
That isn’t ‘large swaths of the country’. It’s the 5 most expensive markets. And, for the ‘better’ parts of NorCal and SoCal, the ‘middle class’ has been priced out for 3 decades.
Laura, lay off the zerohedge for a little while… jesus christ you have clients that depend on you for sound financial advice for gods sakes.
“That isn’t ‘large swaths of the country’. It’s the 5 most expensive markets. And, for the ‘better’ parts of NorCal and SoCal, the ‘middle class’ has been priced out for 3 decades.”
Um…no, they haven’t. 3 decades? You mean the 1980s when Apple was in Palo Alto surrounded by orange groves? There was plenty of middle class housing then. There even was in the early 1990s in Silicon Valley. San Francisco proper saw prices rise in the early 1990s so, yeah, that has been expensive. I knew a legal secretary who bought in Marin 25 years ago for just $110,000. Her house is NOW worth $2.3 million. ha! ha! What a joke (but good for her. It’s her retirement.)
Heck, just 3 years ago you could buy in the suburbs in the East Bay for pretty cheaply. 10 years ago, the same. I had a friend who bought in a lovely east bay town in 1987 for just $75,000 with views of the water.
So, no, it hasn’t been that the middle class has been priced out for 3 decades. Similar stories from LA and San Diego. San Diego in the 1980s? Don’t make me laugh. There’s a reason population has boomed in Modesto, Sacramento, the Inland Empire of Riverside etc. Those are the areas everyone had to move to get the $200,000 house. But with the price increases over the last year- they are once again having to move out to the boonies as even places like Compton now have an average home price of like $350,000. It’s totally unaffordable now for the middle class.
Same with the DC suburbs, DC proper and of course the NY metro area. How many millions live in these areas? I don’t know. I’m sure someone will tell me. 25 million or 35 million total? That’s a pretty nice chunk of the country.
Rising housing prices are NOT good for the economy without incomes also rising. It’s a non-productive asset.
“The reason SOME people are getting priced out of markets like Austin and San Francisco has less to do with mortgage rates and more to do with home prices. And prices are rising because the demand is there from a constant influx of well paid tech workers. This is not bad for the housing market in those areas. This is good. Now if you want to lament the fact that less skilled workers can no longer afford to live in high cost cities…well that’s a whole other discussion.”
Gary- this is AWFUL. I’m not talking about Silicon Valley, which is far beyond what anyone here even imagines. I’m talking about the entire LA metro area. Did you see December’s numbers from that area? Just awful. The rising housing prices combined with higher rates has priced out the first time homebuyer. It is nearly half of all buyers but in SoCal it fell to half of that. They can’t compete with the all cash offers, rising prices and now money is more expensive.
It’s AWFUL for the housing market. Something will HAVE to give, right? You can’t have a functioning housing market with NO first time buyer. Home prices will have to come down- again.
Here’s more on how the all cash buyers are crushing the first time buyers. You really can’t compete.
http://www.nbcnews.com/business/all-cash-offers-crushing-first-time-homebuyers-2D11980306
Maybe all you GreenZoners don’t understand what the middle class actually is?
It’s not a $400,000 house. That’s a rich person’s home.
Middle class housing is $125,000. Where you getting that- even in Chicago? Some suburbs you still can. But you’re not in Park Ridge, Evanston, Oak Park etc. Those suburbs are NOT middle class. Even in Chicago, the middle class is being forced way out on the periphery or in suburbs where the schools aren’t as solid.
There are a few different things going on. Prices are rising because there are clearly people out there who can afford it – and yes they push lower paid workers out farther from the city. But that’s just the way the laws of economics work. You can’t fight it. People with the money get to buy the most desirable products. And their time is more valuable so they should be closer to work. And it’s not bad for housing. It’s good for housing.
And if the cash buyers are there then the values are there. They are there because they realize that prices are going up and rents are high relative to prices. Nothing has to give. If people couldn’t afford to live where they live then prices wouldn’t be rising. It’s a sign of an improving economy.
“Middle class housing is $125,000. Where you getting that- even in Chicago?”
In Chicago, the ‘middle class’ who makes $40k/year (1) rents, or (2) buys a condo like Laura did, close to but not in the GZ, or (3) buys a house in Austin (67 SFHs with 3+ br asking under $175k right now) or Belmont Cragin (23 SFHs with 3+ br asking under $175k) or similar.
Middle class =/= median income including all people. The “typical” first-time buyer is a “family”, and the median family income in Chicago metro is $73,600 (using the HUD calculation). For comparison, it’s 63k in NYC, 62k in LA County, 66k in Houston (Harris Cty), 101k in San Francisco, 107k in DC.
And, the median family income matches up quite nicely with the median sales price for the city, and the metro area median was lower ($177,500 for 2013).
The median price of a home in Chicago is something like $170,000. There are a lot of affordable homes out there.
“Shouldn’t all that ‘savings’ go into gold, canned goods and shotguns (shells, relaoders, powder, shot)?”
I don’t like gold.. and from my height advantage I decided to go with high powered rifles….. makes blowing away the povo so much less personal. Just wish when you hit one it flashed up a number of points above their head like a video game, maybe with bonus points for a head shot….
” You mean the 1980s when Apple was in Palo Alto surrounded by orange groves? There was plenty of middle class housing then. There even was in the early 1990s in Silicon Valley”
When was Apple HQ’d in Palo Alto, exactly? How long has it *actually* been since Palo Alto had orange groves, east of Serra/Foothill? And by “orange” you really mean “apricot”, right?
And, notwithstanding what it is now, Cupertino in the 80s wasn’t the ‘better’ part of SV, at least in the areas that were “middle class” (ie, the flatlands).
As to the “affordable middle class housing” in Palo Alto:
In 1980, the median household income was $24,743 and the median home price in Palo Alto was $148,900. (see: http://www.paloaltoonline.com/news_features/weekly25/covermain.shtml) 6x gross *HOUSEHOLD* income, in a crazy borrowing environment. That $119,120 (80%) mortgage at 12% would have cost $1225.28 a month, plus $1,489 in property taxes. So, 65.4% of *gross* median income to buy the median house (not that they’d have got the loan).
Apply that to the median family income in Chicago, now, that’d be about $3,900 per month for housing expense–which is basically 2x as much as a (above median) $375k house (with 20% down–note, a *smaller* ratio to annual income than the 1980 PA do would have been) and a 5% mortgage would cost. Basically, Chicago, right now, is easily twice as ‘affordable’ as Palo Alto was in 1980.
cutting both ways about LA: “Investor activity continued to fall in December, although it remains elevated. Absentee buyers, mostly investors, purchased 26.2% of all homes sold last month — the lowest level since November 2011.”
http://www.latimes.com/business/money/la-fi-mo-home-prices-20140114,0,1196980.story#axzz2rd7HLle9
I’d say at the current interest rates, middle class housing is in the 225k range, which there is a fuckton of out of the ‘my kid needs to be in the 1th%ile school district or else I may as well tattoo “failure parent” on my forehead’ zone
“housing is in the 225k range”
“my kid needs to be in the 1th%ile school district ”
There are *2* “single family homes” (they’re attached) with 3+ beds for under $225k in Stevenson HS attendance area. 2 more in N’ville Central, 2 more in Neuqua, 2 more in Lake Forest. 1 in Glenbrook North. 7 in Prospect HS, 4 in Libertyville. None in N’ville North, New Trier, Hinsdale Central. That’s easily the top 1%-ile ‘burabn HS, and that’s 20 places for sale.
Obv, it’s a lot more if you include townhouses, condos, smaller houses, or if you look at the 2d tier of ‘burban HS (which are still all pretty darn good). But it’s hardly a f’ton.
‘Basically, Chicago, right now, is easily twice as ‘affordable’ as Palo Alto was in 1980.’
Ah, snap! Anon hits it again. Time eases the bite of it all, and things were never as good as you remembered – nor as bad. The big difference today is that there’s a total disconnect between expectations and reality. It’s no different here in Southern CA than it is in Chicago if that makes anyone feel any better. Everyone looking wants the ideal house in the ideal location for the ideal price, and *anything* less is considered housing failure. Sure it sucks when you see a house that was bought last year for $400K and is now selling for $699K just because they added cheap Ikea kitchens/baths and slapped on a little paint, but so goes the housing cycle – would’a could’a should’a.
When politicians tell you things are unfair and it’s someone else’s fault then you start to believe it after a while – whenever you see the slightest evidence of it, which you do when things don’t go the way you’d like them to. Pretty clever political strategy.
you missed what I wrote…I said, OUT of the 1% best school areas, there are plenty of 225k homes to choose from
“you missed what I wrote”
Yep, I either elided a preposition, or read it as a different one.
Still, it goes to your point–even *IN* those 1-percenter districts, there are $225k ‘family’ homes to be had. And if Palatine is ok, then tons.
There’s nothing with 3+ bedrooms last updated less than 30 years ago for less than $300k in my hood. Even homes are busy streets are selling at what I consider to be ridiculous prices. I wouldn’t want to be looking now, and it’s unlikely to get all that much better in the upcoming months. I don’t know anybody who plans on selling, and I know a handful of people who are looking to buy. I don’t envy them. My house has problems and I had to put a ton of money into it, but isn’t that every house that’s older than 20 years old? And if you’re not putting money into it, then the person you bought it from did, and you paid for it when you bought the house.
“My house has problems …. isn’t that every house that’s older than 20 years old?”
It’s (almost) every house, period.
There’s nothing with 3+ bedrooms last updated less than 30 years ago for less than $600k in my hood.
Who cares
“There’s nothing with 3+ bedrooms last updated less than 30 years ago for less than $600k in my hood.”
WRONG!!
http://www.redfin.com/IL/Chicago/421-W-Huron-St-60654/unit-601/home/12715128
well of course I’m wrong, just like HD is too
“well of course I’m wrong, just like HD is too”
Well, I’d say that HD’s point was merely irrelevant–looking at what’s for sale in Ford Heights (that *is* where he bought, right?), there isn’t really much available.
“So, no, it hasn’t been that the middle class has been priced out for 3 decades. Similar stories from LA and San Diego. San Diego in the 1980s? Don’t make me laugh.”
San Diego County
Median *household* income: 1990 = $33,022; 1980 = $17,106
Median home cost: 1990 = $186,700; 1980 = $90,990
So, *including the whole damn county* (ie, including the ‘cheap’ parts), in 1980, the San Diego median house price was at 5.32 times median *household* income, which gets termed ‘severely unaffordable’ *today*, and that doesn’t account for the massive reduction in financing cost. Seems pretty ‘priced out’ to me.
Hi Milkster,
I love West Ridge, too…..except the ugly section of Devon Ave up the street from me.
I scored a beautiful 20s vintage condo, 5 rooms 2 beds with all the vintage details intact, for a great price, and love the place. Great place for a single woman with hobbies requiring space.
However, I hope families with young children can buy nice little SF bungalows for reasonable (under $300K) prices, because a 3rd floor 2 bed condo is no place to raise kids. I’m sure the young family that sold me this place was happy to get its toddlers onto the ground floor and away from 3rd floor windows, into a nice little house with a yard for the kids and the laundry machines one flight of stairs away. I bought miniature models because I’ll be damned if I’ll haul wash down 3 stories to the basement.
Any thoughts on the latest CS?
“Any thoughts on the latest CS?”
Yes, it’s a good thing.
Seriously, though, as a homeowner I want prices to be as high as possible and if they get high enough I’ll sell my house and move to a lower cost of living area. And it’s no surprise that prices are rising since inventory is so low. Demand > supply = higher prices.
Just checked listing activity and it’s way down from last year. Thought for sure it would be up. That has to mean higher prices since the demand is there. So people are staying put much longer than typical, which is not good for the economy since labor needs to be mobile.
“Just checked listing activity and it’s way down from last year.”
month over month or year over year? Of course listings this Jan are terrible compared to last bc of weather–whatever you (or MG, or any others who post here) think about it, most realtors would recommend against.
Down from last year but good point about the weather.
Didn’t everyone say that the taper was going to bring “skyrocketing” rates? TNX 2.675
When is the last time “everyone” was right…
Lower number of listings might or might not mean higher prices. While it’s a good bet that tight inventory will drive up prices in the GZ, other, less prime areas might just experience a drop in sales because they are more reliant on the incomes of likely buyers… which are not rising.
The health of the housing market ultimately relies on the health of the “base” of the pyramid, which is first-time buyers. Those have all been blown out of the water by rising prices, falling incomes, deteriorating employment, and student loan/consumer debt. It is difficult to see how a generation of people graduating college to confront a job market made mostly of part-time, low-wage service jobs, and shrinking professional opportunities in all areas except hi-tech and medicine, can buy homes at the age at which it is traditional for most people to step in, in the 28-35 yrs old age bracket.
And without first time buyers, you have a shortage of “move up” buyers.
There will, of course, always be wealthy and upper-middle-income buyers who can easily afford prices in prime areas, so the GZ will probably see some appreciation over the next couple of years, buy I surely would not count on it in the outer neighborhoods, and least of all in non-prime suburbs, least of all in distant exurbs, which last I believe will continue to lose value over the next couple of decades.
“The health of the housing market ultimately relies on the health of the “base” of the pyramid, which is first-time buyers. ”
Demand is demand. Doesn’t matter where it comes from and the demand is there. Couple that with low supply and prices have to go up wherever this holds true.
“Those have all been blown out of the water by rising prices, falling incomes, deteriorating employment, and student loan/consumer debt. It is difficult to see how a generation of people graduating college to confront a job market made mostly of part-time, low-wage service jobs, and shrinking professional opportunities in all areas except hi-tech and medicine, can buy homes at the age at which it is traditional for most people to step in, in the 28-35 yrs old age bracket.”
The fact that home prices are rising tells you this is not an issue affecting home prices. The demand is coming from somewhere.
Incomes and employment are up. Why all the histeria?
remember when the government shutdown was going to destroy the economy and kill our GDP?
lol
http://www.forbes.com/sites/samanthasharf/2014/01/30/u-s-gdp-grew-3-2-in-fourth-quarter-2013/
Right sonies, 3.2% GDP growth in the 4th quarter of 2013. Lol!
“When is the last time “everyone” was right…”
When we all unanimously agreed that you are an angry elf… 🙂
“Right sonies, 3.2% GDP growth in the 4th quarter of 2013. Lol!”
Too Fast!!! Sound the inflation alarm!!
“When we all unanimously agreed that you are an angry elf…”
And the time before that was when we all tried to set up Bob and Jenny.
Idiots have been warning about inflation for a while. Obama, stimulus, gays, fed, abortion something or other.
“The fact that home prices are rising tells you this is not an issue affecting home prices. The demand is coming from somewhere.”
Rising home prices and “demand” are not the same thing. Pending sales plunged badly nationwide in December (and yes, it’s adjusted for seasonality.) It was, of course, the worst out West where prices have risen the most. Buyers are priced out. You can’t get blood from a stone. They simply will just keep renting. Pending sales were down 13% year over year in the west in December. They weren’t down as much in the Midwest but they were down in every national geographic area.
Mortgage applications are also telling us sales are going to slow- at least in the first few months of the year. Mortgage applications continue to be weak.
You can’t ignore the data.
So why are home prices going up?
It’s all about inventory. Sales are off the bottom, of course, but they’re not THAT great. But if you only have 3 months worth of inventory, then a buyer has to pay whatever the sellers wants them to for that product.
When do home owners finally figure it out and start listing in order to cash in? Apparently they still can’t because they’re STILL underwater from the bust. In the Chicago metro area, 25% are still underwater even WITH the recent price increases.
“Didn’t everyone say that the taper was going to bring “skyrocketing” rates? TNX 2.675”
It’s a 2.64 today.
Cramer was just on CNBC saying that it’s crazy unless there is a crisis coming from somewhere. Um…yeah. China and the emerging markets. What happens if the Ponzi scheme finally collapses in China? The US economy is actually doing pretty well right now. But I’m not sure we could sustain a Chinese recession without serious ramifications. China hasn’t actually had a recession since 1976. No one knows what will happen when it all blows up. But I’m thinking it’s not going to be good.
“San Diego County
Median *household* income: 1990 = $33,022; 1980 = $17,106
Median home cost: 1990 = $186,700; 1980 = $90,990”
anon(tfo): In the LA metro area, home prices went up 15% from 1991 to 1999. From 2000 to 2007 they went up 140%.
So, no, the areas along the coast have not ALWAYS been unaffordable. Overall, their nice areas have always been more expensive than the “nice” areas of other parts of the country. So you’d spend 5x your income to get a place in Pac Heights but it was just 3x in Lincoln Park. But to live in the “regular” middle class areas- you could always do that.
Have you ever been to Oakland? Enough said.
Oh- by the way- has anyone else seen the rental deals that are starting to appear? Obviously January is the “slow” season for rentals and the weather doesn’t help. But several of the luxury towers are now giving away free monthly rent again. I think we’ll start to see more and more of this as the spring goes on and as more towers get built and supply soars.
“Have you ever been to Oakland?”
That’s like using Ford Heights and Lansing as an argument that Chicago is affordable.
It’s irrelevant and embarrassing, unless it’s a joke. And I’m pretty sure you aren’t joking.
” the areas along the coast have not ALWAYS been unaffordable”
NEVER said it. Said “for the past 30 years”. Meant 35 (trapped in 2010).
I bet you don’t look at the nominal median incomes, and instead look the much-easier-to-find real dollar incomes.
“In the LA metro area, home prices went up 15% from 1991 to 1999.”
Cite, please? Don’t use C-S, because you have been focused on median prices, and median incomes.
Honestly, throwing a months free of rent to get people into your new rental tower isn’t desperate, its smart… people that live in places like that typically don’t move after 1 year, so getting them in with an incentive like that is smart business… especially since doing an 11 month lease is way better than a 0 month lease if you have vacant space.
As for China, Sabrina, thats something I will agree with you about 🙂 and that Cramer is an idiot and nothing more than an entertainer
Here’s some actual data (not your faulty recollection, plus a couple of basically irrelevant data points) about affordability in CA back to 1988:
http://www.car.org/marketdata/data/haitraditional/
It’s from the CA Realtors, so it will paint the *best possible* view of affordability. LA County was *always* significantly less affordable than national average. And *always* less affordable than CA as a whole. And it is important to remember that LA County makes Cook County look tiny–you’ve saying “sure, the Cook median is low, but who’s going to live in Ford Heights or Lansing”, the answer, in LA County for 40 years has been “half the people live in places that are about as nice (better weather, sure) as Lansing–and ALL of them *must* drive to work–no trains”.
You really are delusional.
‘anon(tfo): In the LA metro area, home prices went up 15% from 1991 to 1999. From 2000 to 2007 they went up 140%’
Southern CA functions only on boom/bust cycles; it’s just the way it is. I’d say that housing prices for the good areas are up 30% from the last year or two – and people still buy them. It doesn’t mater what the future holds, it’s purely for the moment.
I looked at a new $850K house last week for fun, nothing special mind you, and I inquired about mortgage information out of curiosity: 5% down if you have good to decent credit (and if CA is your state of residency). That opens the door for a lot of potential buyers. Also what I find truly *amazing* out here, is the staggering amount of buyers with roommates/grandma taking a room/garage rented out as a studio/buy and sell a year later/co-buyers, on and on. The distances people are willing to drive to their job is also amazing – it’s not uncommon to live in Riverside County where housing prices are that of Chicago’s burbs, and drive 60 miles each way, either to Orange County or LA…. that’s 120 miles a day, up for 2hrs each way. That’s just the way it is.
Sabrina bases her affordability opinion on a midwestern value system, and I confess that’s something I do too. How does a ‘normal’ working family like The HDs living in CA afford a house and still plan for the future? Many do function just like the HDs, but I can assure you *way* too many home owners, the very ones that skew the housing data, always have a scheme (see above list), or just don’t give it a second thought – it’s sunny again today, so what? It’s just something we cannot comprehend in the midwest.
“Rising home prices and “demand” are not the same thing. Pending sales plunged badly nationwide in December (and yes, it’s adjusted for seasonality.)”
Again, I’m only focusing on Chicago. You can’t have rising home prices without strong demand relative to supply. Supply is indeed low and as I pointed out in my December update. Pending home sales in Chicago did decline because of lack of growth in contract activity. It’s a reflection of lack of inventory, which is resulting in decreased contract activity. But the demand is still there. In Chicago either we will see continued strong price increases or more supply coming on the market. Thus far this year listing activity has been weaker than last year but it could be weather related.
We will probably see very low sales in January but months of supply will remain low as will market times.
Jay: “bases her affordability opinion on a midwestern value system”
She’s claimed that SF, LA, SD have been genuinely affordable at times since 1980, AND that the fact that outside of the GZ is affordable doesn’t matter, Chicago is unaffordable today, AND tosses f’ing *Oakland* in to support her point. Doesn’t seem midwestern to me.
If I’m not mistaken, you’ve spent a fair amount of time in LA for at least a couple decades–during that time, was there any part of LA County that you (*real you*) would have considered living in if your (*hypothetical you*) budget were based on 2 times the then median income, and you had to have 3 bedrooms for whatever reason. Think of a budget where you’d be willing to devote 35% of gross to PITI, and you had the 20% DP (whatever the nominal amt) in cash from a good week in Vegas, or inheritence or whatever. Also, I don’t mean that you heard of a house that sold for a good price–the ‘typical’ price for a house.
Yeah–realize I made that complicated enough that you may not bother, but still curious your opinion.
Jeez anon you are soooo numbery for an end of month Friday
I think you need some of what ze’s smokin
‘She’s claimed that SF, LA, SD have been genuinely affordable at times since 1980’
The only time the LA GZ has been ‘affordable’ in the last 25 years has been during a bust, and don’t forget the LA GZ wasn’t so green in the late 80’s either – people who bought then took a risk on what was considered a dicey area by the masses who were moving to white-bread Orange County.
I looked at a house off of Melrose in West Hollywood in the late 80’s (boom) that was asking $650K: typical 30’s Spanish style, maybe 2K sq ft, 3br, garage, old pool, nice in character. In the early 90’s (bust), I looked at houses in that same style/size off of Beverly (almost the same area), that were selling in the mid $400K. Today (boom) all of those houses would sell in the $1.4MM range, a few of years ago (bust) they’d sell in the $1.1MM range. Those are examples of houses/neighborhoods the *real* me would live in, and they’ve never been 2 times the median income.
A relative of mine bought an old dump of a house about 70 miles west of Chicago in 1961 for $14K; a brand new modern ranch was selling for $19K. Today that house (fixed up in a country sort of way – no ss/granite) would sell for $200K. Sounds affordable to me, but would any CC reader live there? Hell no. Sure, maybe houses in the metro LA/Chicago areas are *somewhat* disproportionately higher compared to one’s income than they were decades ago (and even more disproportionate today in the urban GZ), but don’t forget that interest rates in the late 80’s when I bought in LP were about 11.5% on a jumbo (anything over $250K, maybe a bit higher in CA), and 20% down was mandatory. But what has most certainly changed over the decades, are people’s ever growing unicorn criteria list – I want mini Yale grade schools, a garage, tons of closets, a bedroom for each kid, kitchen/family room combo in LP at 1992 (bust) prices, but at 2012 interest rates. Anything less = affordability crisis.
Mini Yale is funny. So many fools think a school in napperville is going to make a difference in little chad and/or trixies life. Most likely won’t. And your kids wont hate you.
Of course good schools make a difference in a kids life and you’d be foolish to think otherwise. We live in a very stratified society and to deny the effects of a good school shows either ignorance, naively, or a combo of both. Simply attending a good school isn’t the only important factor, but it’s a very significant factor, along with obviously parental involvement.
Jay, I understand your point but in today’s market there is the upper end, and then everything else. Every place outside the green zone is Schaumburg, or oak lawn, or worse. For example, the difference between highland park, where the upper middle class lives, and des plaines, is jarring. There’s a lot of competition for the green zone areas and families could easily “have it all” if they would go to Schaumburg with their incomes. But in Schaumburg your neighbors are all plumbers and tradesmen, or speak a language with a non-Latin based alphabet, and they don’t fit in. There are more haves today than 10 years ago competing for the handul of areas too pricey for the have nots. This is the problem, this is the double income trap that Elizabeth warren talks about. The cost to maintain the upper middle class existence is expensive.
I just find it so amazing that the Schaumburgs of the nation (not the little village it probably once was, but the sprawl that it has become) are now considered the epitome of all things average: neighbors of plumbers, tradesmen, broken English speaking foreigners. Of course the city has all of that too, but they don’t exactly live in the desirable GZs. It isn’t that the Schaumburgs of the nation are inherently bad or wrong for an average family, far from it, it’s that they’re common. The absolute irony of it all, is that those kinds of suburbs are where the masses fled when they left the city and neighborhoods like LP to rot.
I’m going out on a limb and guess that people like yourself (and this is not a dis) don’t want to be surrounded by common. I’m sure the lovely people of Schaumburg are a wealth of information regarding the merits of Cancun resorts, who’s winning on The Bachelor, and silly holiday ties, but that’s not what you nor what you want your children to be surrounded by. It’s isn’t that GZs are full of just wealthy people, far from it, it’s that they also tend to be full of clever people with just enough money, people who live, know, and do uncommon things, and there-in lies the real desire. The problem is that the wealthy, not the country club old money types but the newer jeans/baseball cap approachable millionaire next-door wealthy, really want that too and are able to outbid others, maybe more ‘deserving’ others, for homes in the process. It’s that sweet spot that’s so desirable in LA and Chicago, it’s the expensive GZ… hardly something Elizabeth Warren was referring to.
“Those are examples of houses/neighborhoods the *real* me would live in, and they’ve never been 2 times the median income.”
Or even 3 times. LA was a *f’ing disaster*, jobs wise, in the early 90s. The contraction of the defense industry combined with the general recession just *crushed* the typical LA County UMC family. Yes, those who had jobs still could easily ‘afford’ a family home off Topanga Canyon (in the *valley*, of course) or ‘greater’ Pomona, or (parhaps) Irvine. The best of which was and is comparable to Naperville–which *used to be* affordable, too.
“It isn’t that the Schaumburgs of the nation are inherently bad or wrong for an average family”
Jay, everyone here is from Lake Wobegon Hills–the tony neighborhood where everyone is *way* above average. “Average” (typical is the better word, in any event) just doesn’t enter into the discussion, unless it is in support of an inaccurate perspective on the past, present or future.
http://www.nytimes.com/2014/02/03/business/the-middle-class-is-steadily-eroding-just-ask-the-business-world.html
Here’s an example article from this week describing how the divide is coming to appliances, retailers, and restaurants. My comment above is about real estate and it applies there too. Schaumburg is a craphole of 70’s townhomes and apartment buildings, and some of single family homes, few if any of which sell above $300,000. There’s non sense of community, few subdivisions even have sidewalks or parks, and there’s a large non-English speaking contingent. Which there’s nothing wrong with that, but, it’s not the neighborhood where most UMC households choose to to live. Like the article above implies, there’s the high end, and then everything else. The same goes for real estate in this increasingly bifurcated income society.
“She’s claimed that SF, LA, SD have been genuinely affordable at times since 1980”
Yes- I’ve lived there, have you? I’m NOT TALKING ABOUT THE FUCKING GREENZONE OF THESE CITIES!!!!!
The GZ is the GZ for a reason. It is NOT middle class. But Noe Valley in 1992 was a crappy, yucky neighborhood that got sun. And now the houses are $3 million simply because you can drive down to Santa Clara from there. If you bought there in 1992 it was affordable. Gasp. Yes it was. And people thought you were crazy for living there.
Remember how the cities were in 1992? Yuck. Chicago was scary. Rent came out in early 1990s in New York. There were homeless camps in that musical! Ha! ha!
Everyone thinks it’s like it is now- with massive money. There was Bernie Goetz shooting at teenagers on the subway. Chicago was no different. Suburban parents wouldn’t even let their kids GO downtown, let alone live there. The area around Wrigley Field was totally working class.
Wow- you guys are nuts. But what’s new????
The world doesn’t revolve around the GZ. There is a BIG, BIG world of millions of people who don’t spend 5 times their income for housing.
Homedelete: I disagree with this article. It tries to make a point that Barneys is replacing Loehmann’s as the middle class vanishes. But that’s a bunch of crap. Loehmann’s was dead a decade ago when the sites starting popping up that let you buy designer goods online for the same price. The thing that made Loehmann’s cool back in the day was the Back Room where it truly had designer clothes massively marked down. Without the internet, where could us mere mortals get a $1,000 pair of Calvin Klein pants for $150 (as I used to be able to buy at the fantastic Loehmann’s near Union Square in San Francisco).
The retailers started opening up their own discount/outlet stores with older designer stuff, and that ate into the supply. And then once you could buy it online, Loehmann’s was even more doomed.
So I disagree with this article. If anything, more goods are available to the middle class than ever before because of the expansion of credit. How is it possible that the middle class buys a new television every 2.7 years? But according to the article over the weekend in the Tribune, that’s exactly what the average time is.
Anyone else see the article in the Tribune over the weekend about rising household debt? There was this interesting story about a millennial couple with children and college loans of $40,000 (which isn’t even that high compared to many these days.)
The school loans ARE going to have an impact on the millenials ability to buy homes, save for retirement, heck, even buy cars.
This couple is in their 30s and their parents are helping them pay off the student loans.
http://articles.chicagotribune.com/2014-02-02/site/ct-household-debt-0202-biz-20140202_1_credit-card-debt-household-debt-consumer-debt
Sarah Lin and her husband are carrying student-loan debt of nearly $40,000, though that’s about half of what it was. She has a master’s in library science from the University of Illinois at Urbana-Champaign, and he has a doctorate in neurobiology from the University of Chicago.
They sold their Wheaton home in a July short sale, with help from the DuPage Homeownership Center, because they couldn’t afford the mortgage along with their student-loan payments and other expenses, including caring for two children, ages 4 and 11 months, and three cats.
Shortly after finding out that they were expecting their second child, her husband found out that he’d be losing his job, which he eventually did. He was unable to find work in the Chicago area. So they sold their house in a short sale for about $50,000 less than they owed and about $80,000 less than they bought it for.
On Christmas Eve, they left Chicago, and, after living with family for a few weeks, they found a small apartment in Santa Clara, Calif. Her husband also found a full-time job. Lin’s Chicago employer, a law firm, gave her a transfer to a California office.
But she still worries, even as her parents help with the loan payments.
“I am terrified of our financial future, wondering how we will every buy a home again or afford another child if we want one or even a bigger car,” said Lin, 32. “We have eight years left on the student loans, so there’s not really an end in sight.”
“:If I’m not mistaken, you’ve spent a fair amount of time in LA for at least a couple decades–during that time, was there any part of LA County that you (*real you*) would have considered living in if your (*hypothetical you*) budget were based on 2 times the then median income, and you had to have 3 bedrooms for whatever reason.”
Gosh- think of Venice and neighborhoods like that in 1991-1992. What a craphole. No one wanted to live there. Drug dealers openly selling all over the place. (wait- what’s changed??? ha!)
People who lived in Santa Monica in the early 1990s routinely got their cars busted into. The police “chases” were not uncommon back then. Really high crime rate. Yes- people fleeing to the “safer” suburbs further out.
People forget what was happening even just 20 years ago. Hell, in Chicago, you wouldn’t have even lived in the West Loop because it was too scary. Lakeview was crappy. You certainly weren’t living in North Center (unless you were working class.) The police all lived in Park Ridge (along with some firemen.)
Those neighborhoods have all changed as it became more fashionable to move back into the cities.
“We will probably see very low sales in January but months of supply will remain low as will market times.”
“Sales” in January meant they went under contract in November and December. No polar vortices back then. So what does the weather mean for sales in February and March? Even lower for those months too then.
I agree that inventory is extremely low. It’s now after the Super Bowl. But I don’t see hardly anything coming on the market (two snowstorms this week alone may have something to do with that.) But until this cold/snow breaks, it looks like it’s going to be pretty pathetic.
At the same time, some of the big luxury high rises are starting to offer months of free rent again which means supply is growing quickly in apartments.
1) “People forget what was happening even just 20 years ago. Hell, in Chicago, you wouldn’t have even lived in the West Loop because it was too scary. Lakeview was crappy. You certainly weren’t living in North Center (unless you were working class.) ” Can we all agree that the world has gotten better. It always does in the long run.
2) I read articles about Sarah Lin and husband and I see how they got in trouble. A series of bad decisions in my mind. A master’s degree in library science and a PhD in neurobiology? What was the plan? At least the neurobiology degree should be useful. How much do they spend on 3 cats? It can be expensive with vet bills and destruction of property. Moving to California? I would never live there. Too damn expensive.
“Sabrina bases her affordability opinion on a midwestern value system, and I confess that’s something I do too.”
Um…no. I base it on actual affordability. Which is why housing sales and prices are starting to go the other way in Southern California. No, money doesn’t grow on trees. That school teacher and engineer husband don’t make enough money to buy a $850,000 house. Sorry. They don’t. And I don’t know anyone doing 5% down on a $850,000 loan anymore. Please tell me who. They just lowered the Freddie and Fannie limits in California this year down into the $600,000s.
I lived in California for 7 years. My best friend bought a house in 2002 (after the dotcom bust) in one of the nice East Bay suburbs for $375,000. As a doctor (and his wife a nurse) that was affordable for them (it was a 3-bedroom 1950s ranch with 1 bath. Nothing to write home about.) Because of the price increases of the last year, they were just able to sell it after 12 years for $585,000. It’s about 1600 square feet.
I’ll have some new housing posts coming up later this week. I’m busy on a few other things. Even though there’s almost nothing coming on the market right now, there are a few things that are interesting out there.
I’ll be posting my January update on Friday but preliminarily it looks like January closings will be down around 11% and the NAR, which compares preliminary closings to final closings, will show an even bigger decline. And contract activity will be weak and inventories low.
Thanks Gary, how about prices?
Don’t really know about prices. That’s a Case Shiller thing. I can talk about median prices, which are up, but that only tells you what people are buying, not how much they are paying. For instance, if you look at Lincoln Park the median prices are way up because the mix is shifting to SFHs. That’s interesting but it doesn’t tell you about prices.
“in Southern California. No, money doesn’t grow on trees. That school teacher and engineer husband don’t make enough money to buy a $850,000 house. ”
Show me the $850k house in a non-GZ part of SoCal. Show me.
Yes, I lived in Cali. Yes, I *know* that the nicer parts of Sili Valley were GZ-equivalent in the 80s, in large part bc (most of) EsEff was not. No, you can’t reasonably claim (as you did) that Palo Alto was “affordable” on a approximately median income at anytime after Prop 13 became effective. Yes, you could get an ‘affordable’ 1400 sf (total sf, no basement for a rumpus room), bungalow in RC or MV at times in the 80s and 90s, and not any longer–but that wasn’t a ‘family’ home for a 60th %ile family then; those people *still* wanted a bedroom for ever kid and 3 bathrooms. But the places that 60th %ile families wanted to live weren’t “affordable” then, either. I know someone who worked in San Mateo county and in *1990* bought in f’ing *Modesto* because there wasn’t anyplace closer that was affordable. And he’d grown up in Milpitas, so it wasn’t a “that town ain’t good enough for me” thing.
So you got zero lotline stuff like redwood shores, where newer/bigger places like this:
http://www.redfin.com/CA/Redwood-City/842-Newport-Cir-94065/home/1785868
got built for a near-bottom price of $399k (still not “affordable” in ’96–that’s over 5x median household income then). Yes, the 1.2m they are asking now is *more* unaffordable, but it’s always been “GZ priced”, and in a school district that’s ok-ish now, but wasn’t desirable 20 years ago.
Oh how I don’t like the stories of woe in terms of racking up tons of debt. Unless you have some unforseen illness or tragic sudden huge home repair or something there is really no excuse for having 30 grand in credit card debt. That is absurd
Where to begin? Lets start with this one:
‘People forget what was happening even just 20 years ago. Hell, in Chicago, you wouldn’t have even lived in the West Loop because it was too scary. Lakeview was crappy’
While I wouldn’t call what is now considered the GZs of Chicago great even 30 years ago, I wouldn’t call them bad either; same can be said for the now GZs of LA, SF, NY and even London. It’s all a matter of perspective, and if you’re basing your perspective on lets call it a suburban model, or a better yet, what the masses of Americans want – ‘affordable’ housing that has bedrooms/baths/closets/parking for all , good schools, safe, then yes, all of the above cities came up way short and they still come up way short if those are your expectations. ‘Lakeview was crappy’. It was NOT crappy, dicey in areas perhaps, but it’s called city living; it has always been that way and will always continue to be that way – it is not suitable nor will it ever be suitable for the suburban inclined.
If you’re going to use Sarah Lin experience as an example of how difficult it is to survive, no wait prosper in this country, then go sell crazy somewhere else, like maybe a life coach convention. Student loan debt for at least one semi-unmarketable degree + home ownership + TWO kids + 3 cats + too young at 32 for all you want/have + Wheaton, yes Wheaton = what in the bloody hell did you expect? ‘…afford another child if we want one or even a bigger car’ Wait, WTF? You did not just say that to a reporter did you? *Stupidity* exists in both boom and bust economies, and you can’t save people from financial suicide nor themselves.
I miss the thumbs up button.
Jay,
1) Wheaton is very expensive, it’s a very nice suburban DuPage County kind of place. Too pricey for Ms. Lin. She needs to live in Des Plaines or Oswego if she wants it all.
2) Lakeview used to be a suburb back in the days. It’s gotten substantially more crowded over the years, but our concept of a suburb has also changed over the years too.
3) Jay, you are correct that americans cannot ‘have it all’ and the GZ areas aren’t for everybody. However, you also fail to address that reality has changed; and the purchasing power of the middle class has been stagnant, at best, for those lucky enough to stay in the middle class and while the norm a few years ago involved far more affordability. the former poster Dan or HH, once in a while, he had a salient point, and he was commenting on someone’s post that the million dollar market for chicago homes was very limited prior to the real estate boom but after the boom and into today, million dollar listings are nearly all single family homes east of western. Not too long ago half a million dollars bought a nice home for a lawyer, a doctor or an airline pilot. These days, to get a nice home, it’s million dollars, and it’s a banker, an executive or law professional firm partner. I cannot be all blamed on inflation either, it’s truly a bifuraction of the market.
“1) Wheaton is very expensive, it’s a very nice suburban DuPage County kind of place. Too pricey for Ms. Lin. She needs to live in Des Plaines or Oswego if she wants it all.”
Wrong-o, HD. they paid less than you did, all in:
http://www.redfin.com/IL/Wheaton/1503-W-Liberty-Dr-60187/home/18129247
Almost a quarter acre, too.
“even just 20 years ago. Hell, in Chicago, you wouldn’t have even lived in the West Loop because it was too scary”
You wouldn’t live in the west loop in 1994 bc there were barely any residential units. I knew people who lived in the west loop then–in a giant loft-y loft that was barely heated and had one bathroom and half a kitchen. But there were 4 or 6 of them splitting something like $1200/month. And it was convenient to the loop, wicker, ukie and the northside, and their pot dealer, esp by bike.
HD, I’ll give the fact that the purchasing power of the middle class has been stagnant over the last decades. Yes, this is true. However, what constitutes a middle class norm has *dramatically* changed over the last decades too.
A few observations regarding the middle class when I was an impressionable midwestern kid in the 70’s: only the wealthy/prosperous flew and went on sun vacations or during the holidays, went to a real university (unless you were truly scholastically gifted), went out to dinner regularly, had a new or more than one car, had air conditioning in their car or home, kept their indoor heat over 67, had a dishwasher, had more than one bathroom, had a bedroom for each child, had a large(r) house, took shopping excursions to a mall, on and on. There were no Starbucks, gym memberships, $150 a month I-phone bills, cable, expensive health care premiums because you just died or wasted away if something bad happened to your health, you went to the neighborhood school that was assigned to you and either swam or sunk, on and on.
Now, correcting all of the above is a nice thing, however, it comes with a price. What is considered a standard middle class norms today is *not even close* to a middle class norm when I was a kid. All those ‘things’ that many think are just a given today (not for all who are in the middle, but many – the country is FULL of them), were reserved for those with real money, or for those who put themselves into financial risk to get them – those people are now in their 60’s and broke.
Wheaton is not very nice. Its average for the metro. The median home price is like $295k, hardly very expensive.
This Jay guy must be my long lost twin brother.
They lived on the crappy northwest side of wheaton, the south side is much more pricey and a lot nicer
its like the barrio over there now compared to just 20 years ago
“A few observations regarding the middle class when I was an impressionable midwestern kid in the 70?s: only the wealthy/prosperous flew and went on sun vacations or during the holidays, went to a real university (unless you were truly scholastically gifted), went out to dinner regularly, had a new or more than one car, had air conditioning in their car or home, kept their indoor heat over 67, had a dishwasher, had more than one bathroom, had a bedroom for each child, had a large(r) house, took shopping excursions to a mall, on and on. There were no Starbucks, gym memberships, $150 a month I-phone bills, cable, expensive health care premiums because you just died or wasted away if something bad happened to your health, you went to the neighborhood school that was assigned to you and either swam or sunk, on and on.”
We had cable and union-based medical insurance, but that sounds about right.
Some interesting comments on this story – nice to see the activity. I think what we are seeing is the continued reversal of suburban flight that occurred in the 70s/80s. The 1% (maybe more like the 5%) are choosing the city (and they want the GZ). The middle class are moving out to the burbs because housing is less expensive and the public education options are better. Thus the GZ and gentrifying parts of the city are becoming out of reach for the middle class while the burbs remain affordable. The ones who end up in financial trouble continue to be those that 1. try to keep up with the jones 2. make poor financial decisions. This phenomenon is happening all over the country. NYC is now a playground for the rich (0.1% there) and there are protests in SF about the cost of living in the city (see the articles about the google corporate bus being blocked by protesters).
Chicago remains an attractive city for the middle class – can live in a burb with quality schools within a 1 hour commute for a reasonable price. Try doing that in a Northeaster or West Coast city.
“They lived on the crappy northwest side of wheaton, the south side is much more pricey and a lot nicer
its like the barrio over there now compared to just 20 years ago”
The barrio sounds better than the other part of Wheaton.
LOL
No offense, but your comments about growing up in the 1970’s when times were simpler sound like the diatribe of an old man looking back. Life wasn’t simpler back then, somethings were just far more expensive:
“only the wealthy/prosperous flew and went on sun vacations or during the holidays, ” Yes, and then they deregulated the airlines and southwest came along – aka the bus on wheels, and along with it was lost the classiness of flying;
“went to a real university (unless you were truly scholastically gifted), ” State U’s were mostly built and expanded in the 1960’s hence the old crappy dorms still in existence at most schools today
“kept their indoor heat over 67” I can’t speak to that …
“had more than one bathroom” That’s because most plumbing in older homes was outdoors, and when it was finally brought inside, they only had room for one bathroom. Most homes I’ve seen built after 1910 have two or more bathrooms. I’ve been in crappy 1960’s townhomes in run down suburbs with more than one bathroom.
“went out to dinner regularly,” This I can concede, but there were more stay at home mothers who were able to cook though, the rise in the working mother meant less time at home to cook and more going out to eat, and fast food too; also people were married at a younger age, and had less disposible income earlier in life. My household in my late 20’s was cruising well north of $100k a year with lots of disposible income and no kids!
“had a new or more than one car, ” Uh that’s not the way I understood things were. Most 1960’s+ houses have 2 car garages; the homes from the 1950’s and earlier mostly have one car garages
“had a dishwasher,” These have been around for a long, long time.
“had air conditioning in their car or home,” That’s because AC wasn’t really popular or probably even invented yet. An AC costs $99 at HOme Depot these days.
” had a bedroom for each child, ” That’s very family specific, but generally, people had much larger families., Birthrates have fallen considerably and now kids can have their own rooms.
” took shopping excursions to a mall, on and on.” The department store came about in what, the late 19th century? Malls in teh 1950’s and 1960’s? People were definitely going to the mall all the time in the 1970’s. Tht’s when many of them were built.
” There were no Starbucks, gym memberships,” OK, so these take up disposable income, I’ll give you that….
” $150 a month I-phone bills, cable,” Telephone was regulated and it was a monopoly and it was EXPENSIVE to have a phone, but everyone had to have one….and $150 a month iphone bills is pretty high end, there are plenty of andriods (Which has a far higher market share than iphone) with internet access for $50 bucks a month out there.
“expensive health care premiums because you just died or wasted away if something bad happened to your health,”
That’s not true, health care 1) didn’t have the same advances as today and 2) it was much less expensive. Routine Dcotors visits with xrays didn’t cost $250 like it does today, it was nowhere near that. Health care has risen much much faster than the rate of inflation in the last 50 years. It was different healthcare, but people still got health care.
“you went to the neighborhood school that was assigned to you and either swam or sunk, on and on.”” This is totally incorrect. In fact, many kids went to private catholic schools around teh city and suburbs, pricisely because they were perceived to be better than the local public school. Today, all those private schools are closing, and the public schools (in the areas where people actually live, not inclusive of the underused chicago school closings) are actually completely filled, like the neibhorhood schools on the northside in teh GZ.
So again, you have a very romanticized view of the ‘way things were’ when in fact, that’s not true at all. Things were obviously different in some ways, but not to the extent that you make the ‘modern world’ to be.
There was nothing romantic about Jay’s recollection of the way things were. In fact his whole point was that we have it much better today than then. Our standard of living and expectations are way higher today than back then. It is a fact that houses were smaller then and air travel much more expensive relative to income. What competition has done has IMPROVED air travel. Obviously the market doesn’t want flying to be classy. We did not have central air conditioning back then or microwaves or flat panel color TVs or cell phones or microwaves or the Internet or MRIs and Leukemia was almost always fatal vs. a 20% mortality today…you get the idea. And cars are much nicer today. The point is that our standard of living is higher and some, but not all of that, has come at the expense of more labor per household. So people are working harder and probably spending more but living way better. If they want to spend less they can ratchet it back a notch and end up in early 90s.
I took his version of 1970’s middle class to be simpler time with less extravagance, when in fact, some things have become cheaper like air fare and phones but others far more expensive like housing, healthcare and schooling. It’s the same then as now except that middle class incomes have stayed flat for some time. Simply making a hedonic argument that the middle class has a higher standard of living today than in 1970 is irrelevant to the fact that middle Americans living actually are going down today despite these technological increases.
These guys explain it far better than me but you can’t look at the middle class situation without considering the improvement in technology: http://online.wsj.com/news/articles/SB10001424127887323468604578249723138161566
Hopefully you can read this without a subscription.
‘…sound like the diatribe of an old man looking back.’ Lol… now you kids get off my lawn! I guess I do sound like that, and thanks for reminding me that my 40’s will expire very soon.
I could spend hours on CC telling you how things were when I was a kid (good and bad), as a teenager/young adult in the Sheffield neighborhood, and as an adult in LP – I’m in the same house I bought in ’88. I could tell you that for the last nearly 40 years I’ve lived here, that the city actually wasn’t that bad (not always that great either), and someone will shoot back that this neighborhood was a craphole, that neighborhood was a dump, another neighborhood so tormented mothers that they wouldn’t let their kids go outside and play, all the schools were horrific…. on and on, and on, but it’s pointless as your mind is already made up, and that’s fine.
But the one thing I’ve come to understand from reading between the lines on CC, is that many deep down just aren’t cut out for city living. From last years ‘urbanmommy’ daily spew about not being able to find a ‘family comes first’ apartment… only to have Sabrina show her 10 on the market within her price – ‘OMG, there’s no mommy and me room, no fucking way’, to my first post 5+ years ago when someone wanted to know what kind of fool would spend so much on a beautiful ELSD apartment, one that had white painted Peacock cabinets (the kinds that shelter magazines still show years later)… someone who doesn’t ever want to have to share an elevator with the likes of you, that’s who. There’s a place for all those people to live, you know what it’s called, and all urban dwellers are thankful that it will never *ever* disappear.
GL – thanks for the great link.
I read the wsj article. It has valid points yet it tries to justify the fact that bill gates has a personal jet by stating that it only travels as fast as commercial airliners. Yet on the titanic, the rich were in private rooms and the poor were in steerage, but hey, they were traveling at the same speed! Yes we as a society have shared in technological advances but the money is concentrated in the top, and feeble attempts to distract the ,masses with $99 iPhone 4’s from how poor they actually are compared to the rich seems to be working.
Jay, don’t kid yourself. Lincoln park is not urban living. It’s a playground for the wealthy and selective and highly selective college graduates. It may be urbanized but it’s not urban. Drive outside the GZ for urban living where the rest of the city lives. That’s urban. You live a playground for the wealthy.
Homedelete, so you think it’s more important that you get the same share of the pie than that you get a bigger piece of pie? I’m all about how big my piece is. When Mark Zuckerberg became a gazillionaire, wealth inequality got worse but we were all better off. The same for Steve Jobs and Bill Gates and Jeff Bezos and Sam Waltorn. I really don’t care how much money my neighbor has. Doesn’t impact me.
“So again, you have a very romanticized view of the ‘way things were’ when in fact, that’s not true at all. Things were obviously different in some ways, but not to the extent that you make the ‘modern world’ to be.”
I’ll kinda agree w HD but from a different perspective. I think what jay lists as expectations today is really for the umc+. My b-i-l who is an attorney at a kinda regular attorney job (respectable chicago firm) lives closer to jay’s claimed 1970s mc lifestyle. They’ve taken one airplane vacation in 8 years, two v old cars, kids go to cps, just barely use a/c. Yeah they go to sbux sometimes but they don’t got to fancy restos. They don’t even have cable, a fact which I can’t fully believe. Their 2 kids each have own room, but wouldn’t if they had a third. They have 1.5 baths.
“Hopefully you can read this without a subscription.”
Only the umc+ have subscriptions to the wsj.
“so you think it’s more important that you get the same share of the pie than that you get a bigger piece of pie?”
Are you new to cribchatter Gary? HD is *all* about how big his share is or is not. Those northshore kids with their fancy lifestyles…
“Obviously the market doesn’t want flying to be classy.”
On my last trip out to Cago I flew Delta out of JFK.
I waited in the terminal surrounded by morbidly obese families, a man with multiple facial tattoos, several Arabs in full garb, a sloppy guy with food stains on his t-shirt, assorted mouth-breathers mesmerized by Candy Crusher, some asshole who kept coughing on me without covering his mouth, trash of all colors, and a creepy Somali dude who kept staring me up and down and finally asked if he could use my phone to call his brother – probably in Somalia. It was just a depressing collection of the chronically unsuccessful and ugly. My mom calls it “The DMV Crowd.” These days they are in every public space.
I miss you, Dannyhofer. Come back!
“morbidly obese families, a man with multiple facial tattoos, several Arabs in full garb, a sloppy guy with food stains on his t-shirt, assorted mouth-breathers mesmerized by Candy Crusher, some asshole who kept coughing on me without covering his mouth, trash of all colors, and a creepy Somali dude who kept staring me up and down ”
Is anyone else worried about how many of these boxes they can check off?
“Obviously the market doesn’t want flying to be classy.”
I wonder how a discounted first class ticket compares in real terms to olden days regulated coach fares. You can often buy discounted first ORD to the west coast for ~$1400. Of course, domestic first these days may be worse than olden days coach.
“Jay, don’t kid yourself. Lincoln park is not urban living. It’s a playground for the wealthy and selective and highly selective college graduates. It may be urbanized but it’s not urban. Drive outside the GZ for urban living where the rest of the city lives. That’s urban. You live a playground for the wealthy.”
So NYC isn’t urban?
The standard of living for the lower income today is higher than that of the middle/upper classes 30-40 years ago. The difference today though for the middle class is that people are convinced you just have to buy more stuff that no one would have been buying 20-30 years ago. All the consumerism is what is driving the fact you need dual incomes, not necessarily that people aren’t making enough money. The expectations have changed imho.
Chicago has plenty of “affordable” housing. The affordable housing just isn’t in neighborhoods where people want to live. Even people living in poverty can afford to buy a house in Chicago (http://www.estately.com/listings/info/8747-south-burley-avenue). The middle class needs to choose either to have kids and live like paupers or not have kids and have money. I chose the no-kids route. I find it difficult to believe that a family of 4, making $80,000 is considered middle class. That seems poor to me. Two Chicago bus drivers likely make more than that. Where are all of the jobs paying under $40k a year? Fast food restaurants?
“Of course, domestic first these days may be worse than olden days coach.”
How ‘olden days’? Mid-70s? Or 707/DC-8 era?
‘Lincoln park is not urban living. It’s a playground for the wealthy…’ So I no longer live in LP, I live in PFTW. So unless it’s dicey, it’s not urban… sounds logical to me.
Hey folks living in West Hollywood, the vast majority of lower Manhattan, most of SF, Beacon Hill & Back Bay, most of London, the Left/RIght bank of Paris, you don’t live where you think you live, you live in PFTW according to some suburban guy who regardless of how smart/hard working/better than common he believes himself to be, can’t afford your lifestyle, the lifestyle he’s convinced himself he deserves, and is so angry of his situation he’d rather degrade/dismiss your own experiences of what it actually took to get to your level (be it hard work, some luck, or taking a *huge* risk by buying into your neighborhoods when they were undesirable as the terrified masses flocked to the burbs that are now slowly but surely losing their dominance), than elevate himself which could include buying in say Logan Square – the type of neighborhood yours used to resemble (non-English speaking minorities, plumbers, working folks, ‘outsiders’ aka hipsters today – gays/artists/leftists/dreamers and the other socially disposable of your day) and staying the coarse like you did through the highs and often very lows until one day it too/maybe/who knows becomes PFTW. How go ahead and lick your screen right at his posts, taste that? It’s called bitterness with a distinct saveur of victimhood.
“So NYC isn’t urban?”
NYC is urban, except for Manhattan south of ~96th, and certain parts of Brooklyn.
“How ‘olden days’? Mid-70s? Or 707/DC-8 era?”
as olden as needed to make the numbers work out.
“as olden as needed to make the numbers work out.”
Possible that that becomes olden enough that you have to account for the doubling of travel times, in the pre-jet era. I googled the hell out of it, but couldn’t find ready answer to “1977 unrestricted CAB airfare from Chicago to Cali” (or anything similar).
“staying the coarse”
Heh. If intentional, brilliant.
The 1% (or maybe 5%) are choosing urban living over the suburbs. This is a reversal of the suburban flight from the 70/80/90s. This is driving up GZ prices in all cities and pushing the middle class and below to the burbs where they can find value. This is going on all over the country. This is why prices in the GZ are back to near bubble levels and rents are sky high.
The upper MC people that would have been able to afford the GZ in the past (although if it was actually GZ 20 years ago is up for debate) are gentrifying other hoods and will be expanding the GZ over time.
It used to be the burbs were oasis of tranquility and services (country clubs / amazing schools / high end malls) while the city was very dicey. Now the oasis have moved into the city. Wealth / gentrification attracts wealth / gentrification.
That being said, Chicago is still one of the most affordable big cities for the MC. A decent house in a decent school district within a 1 hr commute can be purchased for a reasonable price. That is not the case in Northeastern / West Coast cities.
Heh. If intentional, brilliant.
How did I know that you understand snark.
“I find it difficult to believe that a family of 4, making $80,000 is considered middle class. That seems poor to me.”
Good to see you back.
How that sorts out on a ‘poor’-MC comparison depends largely on whether that’s one income or two and if there is nay educational debt. A single earner, 4-person family, with $0 in edu-debt, living in metro Chicago is *definitely* middle class. If they are 2-income, needing childcare (at least after-school) and have $100k in edu-debt from their MFA and MSW, then they’re effectively ‘poor’ (bc they are broke), even tho not really *poor*.
As to “Where are all of the jobs paying under $40k a year?”, that’s most of the ‘available’ jobs, many of which aren’t really full-time. It’s not applicable to people you know, but you, as most here, are ensconced in a quite UMC milieu.
“A decent house in a decent school district within a 1 hr commute can be purchased for a reasonable price.”
The better than average commuting options from the exurbs is a big help.
this is the cribchatter I remember!
@yoss –
You’re exactly right. I look at the desire for urban living in a Whole Foods kinda way. I’m guessing when a bunch of ‘hippie’ farmers decided to grow organic decades ago, they didn’t set out to do it in order to make lots of money. It was the desire to eat in what they thought was a more natural/befitting to their lifestyle way, and for a laundry list of reasons it just took off – it’s still a small expensive yet desirable portion of the overall US who eat/live that way. The vast majority of us didn’t move to the city years ago, invest our time and money here in something that would make us real estate wealthy; it was a way of living that we just couldn’t image otherwise – we were willing to take our lumps whatever they may be and few expected a return on their investment. I was certainly not the first wave of people moving to the city (in LP that started in the 60’s/70’s), but even in the 80s it was still a big risk. That’s why I don’t agree that the city and certain neighborhoods were a craphole back then, as it was a haven for those of us that just couldn’t imagine suburban living… dangerous, or better put the perception of dangerous, or not.
I admit to enjoying urban living in a Whole Foods way. I grew up in the city. My parents couldn’t stomach the suburbs (although their parents were white flighters from the south side). I was perfectly happy growing up in the city in the 80s/90s. I can’t imagine having grown up in the suburbs. The vast majority of the suburbs make me feel sad. I especially hate the suburbs without alleys – where the fronts of all of the houses are taken up by the garage.
I am very tempted at this point to move to The Gap neighborhood in Chicago because the houses are so pretty from what I’ve seen on real estate sites. Anyone here spend any time in that area?
“family of 4, making $80,000”
“How that sorts out on a ‘poor’-MC comparison depends largely on whether that’s one income or two and if there is nay educational debt. A single earner, 4-person family, with $0 in edu-debt, living in metro Chicago is *definitely* middle class.”
Well, that’s my b-i-l though I dunno what he makes exactly. I’m guessing closer to $100k than $80k but prob not over $100k. And he lives more like jay’s 1970s mc family.
“I googled the hell out of it, but couldn’t find ready answer to “1977 unrestricted CAB airfare from Chicago to Cali” (or anything similar).”
Seems as if you are getting lazy (I know you are lazy but not cribchatter lazy). I know there are studies out there of changes (real and nominal) in airfares since dereg. Thought you might back into it somehow.
Jay -“From last years ‘urbanmommy’ daily spew about not being able to find a ‘family comes first’ apartment… only to have Sabrina show her 10 on the market within her price – ‘OMG, there’s no mommy and me room, no fucking way.”
Jay, you are so off with your comments. My complaint was not that I could not get “suburbs” in the city. Its that Chicago, is not as urban as other cities — New York, London etc. In Chicago, if you want 4 beds and playroom, you are pretty much relegated to a SFH or old Lake Shore Drive buildings with old people who are not happly about you having Junior in the lobby. There is not much product in a highrise or in denser areas with large space (as much as a SFH) one one floor in family friendly buildngs.. In other cities — NYC, London, Singapore — you find these types of family apartments in highrises in dense areas. The point I was making is that Chicago has not adapted to families who want to stay in the dense part of the cities. Families are relegated to North Center, Ravenswood, LP, Lakeview, etc.. which are quite frankly suburban in style. I prefer an urban environment where I can walk to everything (you can’t really do this in LP in the winter), live in large communal buildings (yes, actually see neighbors in elevators) that are child friendly (the old folks in LSD apartments are not happy when they see you lug the stroller into the elevator). So, in essense, JAY, I’m more urban than you. As a die hard NYCer, I’ve lived in much more urban environments than LP ever qualifies as.
“I am very tempted at this point to move to The Gap neighborhood in Chicago because the houses are so pretty from what I’ve seen on real estate sites. Anyone here spend any time in that area?”
There was at least one semi-regular who lived near there. Dunno if still lurking.
” I know there are studies out there of changes (real and nominal) in airfares since dereg. Thought you might back into it somehow.”
Didn’t find anything with route specific info when GTHOOI. Aggregate data not too useful–I don’t care *at all* about the relative cost of routes bt, eg, Allentown/Bethlehem-Columbus; Atlanta-Moline, III.; Austin-Lexington; Baltimore-Monterey; Baltimore-Portland, Oreg,; Bangor-New Orleans; etc. as discussed here: http://object.cato.org/sites/cato.org/files/serials/files/regulation/1985/7/v9n4-6.pdf
I wanna know what a bona fide useful flight pair cost in nominal dollars in ’77. The SIFL rates are partly instructive, but not clear enough in the amount of time I’m willing to dedicate.
“So, in essense, JAY, I’m more urban than you”
UrbanM, HD has already confirmed that LP is nothing more than a playground to the wealthy, no need to rube Jays nose in it.
“no need to rube Jays nose in it.”
Heh, if intentional, brilliant again.
urbanmommy, where did you end up?
” Didn’t find anything with route specific info when GTHOOI. Aggregate data not too useful–I don’t care *at all* about the relative cost of routes bt, eg, Allentown/Bethlehem-Columbus; Atlanta-Moline, III.; Austin-Lexington; Baltimore-Monterey; Baltimore-Portland, Oreg,; Bangor-New Orleans; etc.”
I thought you were all about CEWTTETN. Thought industrywide changes in e.g. $/mile would do it.
I’m still downtown, contemplating purchasing neighbors apartment, which might be a real possibiliy, versus waiting until something that fits our needs and price range comes to market (real laundry room for the many loads, room for stroller, etc…). Hoping new condo buildings with large units come back soon because I would prefer that over SFH. Definately have not moved to the burbs as I like my walk to work.
“I thought you were all about CEWTTETN”
Thought that was Russ.
‘Its that Chicago, is not as urban as other cities — New York, London etc.’
New York, it’s dense all right (about 8 million people compared to our 3 million people – not even apples and oranges), and it that’s the definition of urban to you, then there you have it. But London? Ever been to a neighborhood called Chelsea, or Fulham, or Knights Bridge, or Holland Park? They are all about as dense as LP (I’ll give you a bit more) and highly prized/priced for their quite rows of terraced houses; not a high rise in sight. Lets say you could actually afford to live in the Boltons, you’d have about a 1 1/2 mile walk with your stroller to get to Bibendum for lunch…. rows of houses and a few shops all along the way, and not a tube stop anywhere, in other words nothing really urban.
“As a die hard NYCer, I’ve lived in much more urban environments than LP ever qualifies as.’ Then as a die hard NYCer you understand that you’d be paying at least 5x as much in NYC for that similar Chicago apartment. There are *plenty* of family downtown apartments in Chicago ala NY Style, but I imagine just like your dream NY classic six (maybe 7 for you) they are well beyond your budget (and you think Chicago co-op boards are difficult?)…. so you keep looking and commenting that it’s just not urban enough for you. Interesting excuse. But, best of luck to you.
“dream NY classic six (maybe 7 for you)”
I took her complaint and comparison to be that nothing *new* is being built in that fashion, bc she referenced a project or two in NYC. ‘course, iirc, they were starting at $3mm, and were there as many as 100 families in Chicago with a $3mm budget, and as strong a preference to live in a new highrise of mainly family-sized and occupied apartments, then something with 3 or 4 dozen units could get built.
But I doubt there is that much market; as anonny [sniff] liked to remind us all, most midwesterners are troglodytes who want to have a rumpus room, some bluegrass, and space for a trampoline. Which, come to think of it, sounds a lot like Cali preferences, in the lower-upper bracket, too (swap the rumpus room for a pool, maybe).
“Thought that was Russ”
Seems to me you tried to popularize it for a while.
“I took her complaint and comparison to be that nothing *new* is being built in that fashion”
What about that full floor building on chestnut at I think rush? Residents too mean to the precious darlings?
“Seems to me you tried to popularize it for a while.”
Sure, but that was to tease Russ.
“What about that full floor building on chestnut at I think rush?”
All floorplans only 3 brs, and with I think a weird layout of the brs: http://www.50eastchestnut.com/floors8_35.html
“Residents too mean to the precious darlings?”
Perhaps, but that precise location is simultaneously a great and awful location for a family with younger kids. I wouldn’t want to be right on Rush, myself, with younger kids.
There are plenty of options if you have the resources….. 5 bedrooms with 3 living rooms. Cant get much more urban than this http://www.thelegacyatmillenniumpark.com/residence-plan/penthouse-residence-full-floor/
If your going to cite a criteria and then mention New York City in the same breath you should easily have the resources for this.
If you didn’t like my last one, here another at a much lower price point http://www.homefinder.com/IL/Chicago/3500-North-Lake-Shore-Dr-17PH-100538589d Has everything you need and a complete steal if your a real New Yorker.
‘and were there as many as 100 families in Chicago with a $3mm budget, and as strong a preference to live in a new highrise of mainly family-sized and occupied apartments, then something with 3 or 4 dozen units could get built’
I get what she’s saying, but if one had to live in a new building in a family sized apartment, one could always buy two units and combine then into one larger family unit… sounds very NY to do such a thing. And I also understand her observation that many neighborhoods in the city don’t have an ‘urban vibe’. I felt similarly when I lived in Sheffield… good luck walking out your door and getting a cab. But if you’re going to use NY as the golden standard of non-stop urban hustle in every direction you turn, then *every* other city in the US is going to leave you wanting more – northing compares to NY, in a good way and a bad way. In London, the holy grail of living is to own your own house (freehold), the quieter the street and the more uninterrupted it is from post WWII council flats (ie apartment buildings), the more expensive it becomes; Londoners don’t really like living under the same roof with strangers if they can help it. So Chicago, LA, SF with their abundance of SF houses… guess they/we are just a bunch of rubes and not very NYish… whatever.
“this is the cribchatter I remember!”
I was thinking the same thing.
DZ, your brother-in-law still lives way better than we did in the 70s. He has a microwave and the Internet and Facebook and Amazon and iPhones and On Demand TV and Netflix and his health care is better and his car is better than what we drove in the 70s.
“All floorplans only 3 brs”
No problem. Room sharing, even boy/girl, is all the rage in real cities: http://www.nytimes.com/2014/02/06/garden/my-brothers-bunkmate.html Seems like no fireplace either.
“I wouldn’t want to be right on Rush, myself, with younger kids.”
Recall that you’re relegated to the suburban backwaters. If you hate then perfect for urbanmom. Seriously, it’s an okay location. Not so far north that you get the full rushness, esp at hours little kids are likely out. That little (not the viagra) triangle has a coffee shop now. Walking distance to ogden. Good powerwalk to work for urbanmom.
“But if you’re going to use NY as the golden standard of non-stop urban hustle in every direction you turn, then *every* other city in the US is going to leave you wanting more – northing compares to NY, in a good way and a bad way”
Very true
““this is the cribchatter I remember!”
I was thinking the same thing.””
I’d agree, had “he whose name is not be be mentioned” chimed in to express his views on all good and bad in NY and the NYT reading, abstract paint lovin, always dressed in black like a bunch of modern day stylish but none the less Hassidic, latte drinking crowd…
” Londoners don’t really like living under the same roof with strangers if they can help it”
Say it ain’t so, Jay! Londoners are less urban/urbane than Manhattanites? What are you, tired of life?
” Londoners don’t really like living under the same roof with strangers if they can help it”
It’s no Shake Shack. You get those little coffee shops in little parks in the ‘burbs, too. Too common.
“I’d agree, had “he whose name is not be be mentioned” chimed in to express his views on all good and bad in NY ”
It’s fine to say “westloopelo”. The other guy (whose name really is NOT to be mentioned, bc: google alerts) doesn’t have much to say about NYC unless you tie it into antisemitism.
Oh, and this:
” If you hate then perfect for urbanmom.”
is probably true.
“” Londoners don’t really like living under the same roof with strangers if they can help it”
It’s no Shake Shack. You get those little coffee shops in little parks in the ‘burbs, too. Too common.”
Oops–that was supposed to be ” That little (not the viagra) triangle has a coffee shop now.”
Just posted my January market update: http://www.chicagonow.com/getting-real/2014/02/chicago-real-estate-market-officially-slower-in-january/
Sales fell 7.1% (9.4% using the IAR methodology). Contract activity still weak. Inventories low. The real surprise was market times spiked up. Hmmmm.
Gary, whats your expectation for an increase in inventory in the future, and how much would increased inventory benefit a buyer? Enough to keep waiting?
An increase in inventory is only going to come with an increase in prices. It will be a double edged sword.
“Gary, whats your expectation for an increase in inventory in the future, and how much would increased inventory benefit a buyer? Enough to keep waiting?”
Man, I wish I knew the answer to this question. I was expecting more supply to come on the market about now but it hasn’t materialized yet. If more supply did materialize it would be great for a buyer. If you’re not finding anything you like then wait a few more weeks to see what happens. However, if you see something interesting move on it. Just checked out 2/2s in Lake View and Lincoln Park. There are plenty of nice ones out there but maybe buyers just don’t like the prices. Lots of outdated kitchens out there if you can just accept them or are up for a project (stuff built 10 years ago is usually outdated by today’s standards).
Buyer don’t like prices because they’re still priced 20% above market prices on a psf basis. I see some sellers getting really confident on their prices. It’s like the neighbor down the block sold 5 months ago for $235 psf for an updated home, so they try to list at $270 for their older home. It’s complete ridiculous.
http://www.redfin.com/IL/Long-Grove/4275-Hilltop-Rd-60047/home/17642995
Amazing home Long Grove. DIscuss