Market Conditions: December Inventory Falls Further as Sales Plunge 41.2%
The Illinois Association of Realtors is out with the December data. We already know that it was another slow month from Gary’s monthly updates.
From the Illinois Association of Realtors:
The city of Chicago saw a 41.2 percent year-over-year home sales decrease in December 2022 with 1,425 sales, down from 2,422 in December 2021. Annual home sales totaled 28,265, a 15.0 percent decrease compared to 33,246 in 2021.
The median price of a home in the city of Chicago in December 2022 was $288,000, down 8.1 percent compared to December 2021 when it was $313,500. The annual 2022 median price reached $335,000, the same as in 2021.
Reminder, last year was the highest number of sales since the housing boom year of 2005.
- December 2004: 3719 sales and median price of $267,000
- December 2005: 2847 sales and median price of $283,000
- December 2006: 2241 sales and median price of $279,000
- December 2007: 1629 sales and median price of $287,000
- December 2008: 1263 sales and median price of $235,000
- December 2009: 1820 sales and median price of $208,000 (34% short/REO sales)
- December 2010: 1475 sales and median price of $166,000 (43% short/REO sales)
- December 2011: 1536 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 2013: 2137 sales and median price of $210,000
- December 2014: 2020 sales and median price of $228,000
- December 2015: 2077 sales and median price of $242,000
- December 2016: 1974 sales and median price of $260,000
- December 2017: 2058 sales and median price of $265,500
- December 2018: 1708 sales and median price of $251,500
- December 2019: 1892 sales and median price of $276,000
- December 2020: 2267 sales and median price of $305,000
- December 2021: 2422 sales and median price of $313,500
- December 2022: 1425 sales and median price of $288,000
This was the lowest number of sales since the awful December of 2008 when millions were being laid off, the stock market was crashing and the economy was spiraling downward.
“In December, closed sales, inventory and median sales price decreased, likely because of a few factors: seasonality and inflation, combined with the hope that mortgage rates will taper off soon,” said Sarah Ware, president of the Chicago Association of REALTORS® and principal and designated managing broker for Ware Realty Group in Chicago. “Buyers and sellers should approach their home pricing and offer strategies with this in mind.”
Statewide, inventory fell 9.7% to 20,671 from 22,896 in December 2021.
Meanwhile, Chicago saw a sharper inventory decline, falling 15.5% to 5,310 properties from 6,281 last year. The inventory remained at multi-year lows in December.
- December 2020: 8254
- December 2021: 6281
- December 2022: 5310
“Although the housing market in Illinois has slowed since its peak in June, the decline is largely due to the usual seasonality in house prices and sales,” said Dr. Daniel McMillen, head of the Stuart Handler Department of Real Estate (SHDRE) at the University of Illinois at Chicago College of Business Administration.
“However, the median home price and the number of sales are currently lower than at this time last year. The number of foreclosures has declined over the last year and is not high by historical standards. Although consumer sentiment has become more positive recently, there still is significant uncertainty about the outlook for the housing market. Our forecasts indicate that house prices and the number of sales will increase as the housing market picks up during spring.”
The average 30-year fixed rate mortgage came down to 6.36% from 6.81% in November. It was still over double that of last December, when it was 3.1%.
Chicago average time on the market stayed the same year-over-year at 38 days. It actually fell 15.2% statewide to 28 days from 33 days a year ago.
In Chicago both single family homes and condo sales were hit equally as hard. Single family home closings were down 41.4% year-over-year to 630 while condos fell 41% to 795.
There’s no doubt both buyers and sellers retreated to the sidelines in December. This is why inventory remains near record lows.
However, the market is showing some signs of life in January. Will December be the low in sales for this cycle?
Is the worst already behind the housing market?
Despite dip in December 2022, annual median price of Illinois homes rose as economy seesawed and inventory tightened [Illinois Association of Realtors, Press Release, by Bill Kozar, January 20, 2023]
“The median price of a home in the city of Chicago in December 2022 was $288,000, down 8.1 percent compared to December 2021 when it was $313,500. The annual 2022 median price reached $335,000, the same as in 2021.”
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So what’s not down is flat, and it’s never been up. That’s HAWT!
January closings should still be pretty ugly, given that pending home sales was so low and contract activity so low in December.
December 2021: $313,500 P&I = $1780
December 2022: $288,000 P&I = $1952
Since most housing is a HMAM its interesting where this extra $170/mo is coming from, especially with inflation and most buyers usually trying to maximize their hosung purchase
Seems totally sustainable.
December 2021: $313,500 + CPI = $333k
So, rather than down 8.2% nomiinal, in real dollars it’s down 13.5%.
And in real dollars, the median is lower than any time since 2013. And just barely ahead of 2009.
Wow. Median prices flat over the past 15 years in Chicago! So much for the idea of suffering the Chicago weather and crime to save money to retire in a cheap sunny state in the south. lol. Chicago homeowners are trading their downtown condos for mobile home life in Texas and Florida. Enjoy your SS checks while they last!
“mobile home life”
Oooh, nothing better than an active adult community of manufactured homes.
Chicago, Baltimore, DC, Detroit. They all have something in common… I wonder what it is. But wait wait wait. You factor in closing costs and now the median Chicago 2004 homebuyer will actually lose money on their homes.
“Chicago, Baltimore, DC, Detroit. They all have something in common… I wonder what it is.”
Um…what is it? I guess I’m missing what it is. Why don’t you enlighten us Stacy?
“So much for the idea of suffering the Chicago weather and crime to save money to retire in a cheap sunny state in the south. lol.”
Over 30% of those in Cook County own their homes outright. Hopefully, they didn’t buy during the housing bubble (unlikely.) Most likely bought in the 1980s and 90s. It will be a huge transfer of wealth when they sell and move or die. It’s actually among the highest percentage of homeowners without a mortgage of any major metro area.
“And in real dollars, the median is lower than any time since 2013. And just barely ahead of 2009.”
Yawn. Median means nothing. Lower end is holding up pretty well. Just means that fewer higher end properties sold in December. No one should be surprised by that. It’s the upper middle class that was stretching to get into that $1.5 million house that has moved to the sidelines in Chicago. They can’t afford that payment. And there are few, maybe none, homes to trade down to to buy something cheaper in the neighborhoods they want to be in (Lakeview, LP, Bucktown etc.)
Upper middle class neighborhoods are now very expensive. They will wait because they’ve been told that the mortgage rates are going to come down again this year.
The more interesting thing will be what happens if the rates stay elevated for all of 2023. Eventually, buyers want to buy and will throw in the towel. They will have to start looking in other neighborhoods or cities to buy. That’s when higher priced homes will start cutting prices more aggressively to meet the market and find a buyer.
“Since most housing is a HMAM its interesting where this extra $170/mo is coming from, especially with inflation and most buyers usually trying to maximize their hosung purchase”
Huh?
I would say you’re retired with a comment like this JohnnyU, but the retirees literally just got $150 to $500 more a month from the SS increase. They are fine.
But most people who are working have gotten substantial pay raises. Many companies are actually linked directly to the CPI.
But comparing median prices year-over-year with the change in mortgage rates is just dumb. The median price doesn’t mean that the $313,000 house is now $288,000. It just means that fewer $1.5 million homes sold among that collection of 1400+ properties. It’s the mix. You have to have the data that compares the same property year-over-year.
“January closings should still be pretty ugly, given that pending home sales was so low and contract activity so low in December.”
Agreed. Few were buying in Nov and Dec with those 7% rates. Should see a pick-up in activity this month, with more going under contract, with the rates coming down again.
“So what’s not down is flat, and it’s never been up. That’s HAWT!”
It doesn’t mean what you think it does. I really wish there were some actual economists on this blog.
Also, given what’s happening in other cities, Chicago is doing really well right now (if you’re going to go by median price change.)
By the way, Floridians can come on this blog and complain about Chicago weather, but it’s been beautiful the last few days. Get out of the suburbs people! Stop driving. If you walked places you would appreciate the winter weather.
I was in a cozy dark wood pub over the weekend. It had the fire roaring. I had a pot pie and a beer. Nothing better in America.
*Pats self on back*
Dumped my Chicago condo in 2017 for 800k (Legacy @ Millennium park)
Bought cheap west burbs property for 215k (no mortgage)
2023 Chicago condo latest comp, same layout, same finishes, 10 floors higher = 675k
West burbs property comps now 285-300k
Ok, not life changing numbers but better than bagholding a 2/2 in the Loop right now.
“Over 30% of those in Cook County own their homes outright. … It’s actually among the highest percentage of homeowners without a mortgage of any major metro area.”
I’m not intending to challenge this, but cannot find a list–do you have a cite?
I will note that using the 1-year ACS, it appears that in Cook County, it’s higher than 30% (38.4%, by my math)–but that’s with only ~53.3% of housing units being owner occupied. So it’s ~20% of the total housing units in Cook that is o-o and no mortgage.
“Over 30% of those in Cook County own their homes outright. Hopefully, they didn’t buy during the housing bubble (unlikely.) Most likely bought in the 1980s and 90s. It will be a huge transfer of wealth when they sell and move or die. It’s actually among the highest percentage of homeowners without a mortgage of any major metro area.”
Do you have a link to the Home ownership rate? Seeing 22% for the metro.
Its almost like you’re rooting for the olds to die
You’re assuming that the owners
1) Havent HELOC’d their property
2) Arent going to have catastrophic healthcare costs on down the line
3) Havent used their home as a retirement vehicle
Some areas in cook county are painfull to look at – https://www.zillow.com/homedetails/20136-Oregon-Trl-Olympia-Fields-IL-60461/4302308_zpid/?
“Do you have a link to the Home ownership rate? Seeing 22% for the metro.”
I didn’t say anything about metro. It was for Cook County. It’s those who own without a mortgage. Among the highest of any metro area in America, which I was surprised at. Literally over 200,000 people who are sitting on a lot of wealth.
“The median price doesn’t mean that the $313,000 house is now $288,000. It just means that fewer $1.5 million homes sold among that collection of 1400+ properties.”
It doesn’t mean that. It includes that, sure, but it doesn’t mean that.
“it’s been beautiful the last few days”
You enjoy slushy and then icy sidewalks? There have been moments of enjoyable winter weather, but it’s been kinda crappy on the whole. At least here, ~1.5-2 miles from the lake.
“I would say you’re retired with a comment like this JohnnyU, but the retirees literally just got $150 to $500 more a month from the SS increase. They are fine.”
Not retired yet and not as old as you. SSI disagrees with you – https://blog.ssa.gov/social-security-benefits-increase-in-2023/
“But most people who are working have gotten substantial pay raises. Many companies are actually linked directly to the CPI.”
Link?
“But comparing median prices year-over-year with the change in mortgage rates is just dumb. The median price doesn’t mean that the $313,000 house is now $288,000. It just means that fewer $1.5 million homes sold among that collection of 1400+ properties. It’s the mix. You have to have the data that compares the same property year-over-year.”
Yet you do this all the time when theres an increase…
It was a Bloomberg article with all the data but Crain’s talked about it as well. I’ve linked to this before.
https://www.chicagobusiness.com/residential-real-estate/chicago-wont-have-big-home-price-drop-data-suggests
“Among counties with more than 500,000 homes, Chicago had the third-highest proportion of paid-off homes, just under 30%. The others in the top 10 were all in warm-weather states that have big concentrations of retirees, a population group where having no mortgage tends to be high. Among them were Florida, Texas and Arizona.
Because of its sheer size, Cook County has the largest number of paid-off homes on the list, more than 397,000. New York County, which contains Manhattan, has a higher percentage of homeowners without a mortgage, 59%, but the number is relatively small because two-thirds of Manhattan residents are renters.”
“3) Havent used their home as a retirement vehicle”
What does this even mean? You have to live somewhere. Didn’t your grandparents live in a paid off home JohnnyU? Mine did. They sold their home in the Chicago suburbs and moved to another state where it was cheaper and costs were lower. Paid cash for that home. So, yeah, their Chicago home was a “retirement vehicle” but simply to buy a home in a new location.
This is what Chicagoans have been doing for decades. They’ve been moving to Arizona and Florida for 30+ years.
“Some areas in cook county are painfull to look at”
Nice house for $265k, even tho the water situation would probably scare me off. Paid $203k in ’13 out of a FNMA foreclosure. Was $281k in ’01, also out of a f/c. Was $365k in ’98 and $290k in ’95. Guessing the ’98 buyer is the first one to experience the water issue, and it’s been downhill ever since.
“2) Arent going to have catastrophic healthcare costs on down the line”
This is fear put into most people and rarely happens. Most people age, and die, at home. We can debate whether or not this is good for them, and their caregivers, or not. Less than 5% of people will end up in a nursing home, which is the highest level of care and most expensive. Average time in a nursing home is less than 3 years. Alzheimers is the biggest risk as you can be in a memory facility for 10+ years. For most middle class, they will drain their savings, including their house equity, and the state will take up the payments under Medicaid. But we are lucky that there are government programs to cover this kind of care because the middle class can never save for that level of care.
They CAN save for assisted living though. If you’re getting SS and have a pension or 401k/IRA savings, can probably cover most of the cost of assisted living which is around $4500 currently, for a singleton. Savings can last quite a while. Years.
But what is “catastrophic” costs? Few will have this.
“New York County, which contains Manhattan, has a higher percentage of homeowners without a mortgage, 59%”
Co-op owner-borrowers don’t have mortgages, either–and that’s not a small number of units in Manhattan, which has over 2,500 co-op buildings.
It’s still going to be a massive transfer of wealth from the homeowners in Cook County to heirs or to another state where they buy a retirement home there.
And if you’re going to argue that some parts of Cook County are painful, yes, yes, they are. Another reason that a house should never be an “investment.” These housing bubbles have skewed things. Flipping shows have skewed things. It’s simply somewhere to live. You eventually pay it off and you own the land and a lot of maintenance.
A lot of it is simply luck.
“Ok, not life changing numbers but better than bagholding a 2/2 in the Loop right now.”
Congrats AnonIDGAF. Downtown Chicago continues to struggle. Too many units, not enough demand.
“Co-op owner-borrowers don’t have mortgages, either–and that’s not a small number of units in Manhattan, which has over 2,500 co-op buildings.”
They have more renters so it skews things apparently. Still don’t have as many as 397,000 owners as Cook County does. That’s why I was surprised by the data. Chicago’s crappy housing market has kept people here so many don’t sell over the years. They come, they buy, they raise their kids and stay until they retire somewhere.
The Baby Boomers are now starting to move so a big chunk of that 397,000 has to be Baby Boomers. That’s a LOT of firepower. It used to be easy for them to sell the $200k or $300k house here and move to Florida or Arizona. But prices are way too high in those places now. Housing bubbles there will probably keep many Chicagoans in the Chicago area after all. Lol.
“I didn’t say anything about metro. It was for Cook County.”
Hence why I asked for a link
“What does this even mean? You have to live somewhere. Didn’t your grandparents live in a paid off home JohnnyU? Mine did. They sold their home in the Chicago suburbs and moved to another state where it was cheaper and costs were lower. Paid cash for that home. So, yeah, their Chicago home was a “retirement vehicle” but simply to buy a home in a new location.”
Silent Generation didnt manage home ownership like boomers. A non-trivial number of boomers treat their home as a retirement plan.
“‘Chicago, Baltimore, DC, Detroit. They all have something in common… I wonder what it is.’
Um…what is it? I guess I’m missing what it is. Why don’t you enlighten us Stacy?”
I’m going to go out on a limb and guess (hmm…checks notes after watching Fox News and reading everybody’s racist uncles’ comments on the Breitbart Facebook page) that their commonality is that they’re all governed by Democrats (that’s my charitable guess; hopefully it’s not a more unseemly insinuation).
But the whole “Dem governed places are burning to the ground and losing value and GOP governed places are perfect” thing is silly. Leaving aside the fact that Dem governed places like NYC or Chicago or LA or SF or whatever have (generally) not lost value and are in fact way too expensive for most right wingers to live in (but fortunately for the them, there’s enough high-earning knowledge workers in blue areas to subsize the underperformance of MAGA folks with “economic anxiety” in red areas), there really is a distinction lost on a lot of people (across the political spectrum) between Dem governed cities like Chicago and NYC vs. LA, SF, Portland, Seattle, Denver, Boulder, etc.
Let’s take Chicago vs. Denver as an example. Both are Dem governed with solid liberal majorities. Does Chicago have a crime problem? Yes, but it does not have the same appearance of “lawlessness” that Denver has. Within the Green Zone in Chicago, particularly in important public/civic/cultural/commercial/retail areas, it’s rare to see encampments, people laying around, stolen bike chop shops, etc. There may be low grade wars going on in neighborhoods just a few miles away, but not on the Conservatory lawn in Lincoln Park or at Daley Plaza or at Oak Street Beach or on Riverwalk, etc. But in Denver (or, say, SF, to a far more severe degree), the Mad Max vibe is a real thing. It’s been brewing for many years. I went to Denver from Chicago for interviews in ’13, and was shocked; things people shrug about in Denver, SF, etc. as simply being a part of life wouldn’t be tolerated for more than five minutes in Chicago or Manhattan, and the pandemic has made things much worse (the main branch of the Boulder Library was closed for weeks due to “unacceptably high” levels of meth; bus stations and libraries elsewhere on the Front Range have since had closures for the same reason; there’s no way that would be happening at the main branch in NYC).
Personally I think it’s a matter of political will, and in Chicago and NYC, the seeds of that will were sown by younger boomers and Gen X wanting to make their cities safe and desirable places to live and work in (and invest in) again. So in the 90s you have Giuliani clearing out encampments in places like Thompkins Sq Park in the EV and then having foot patrols kick anyone off a bench who doesn’t look like they live in a market rate apartment nearby (with only radical/activist types batting an eye – most otherwise liberal-minded folks just averted their eyes to the harsh measures and enjoyed the new Disney vibe in Times Square and elsewhere), and Daley spending (well, borrowing) huge sums for world class projects like Millennium Park and then ensuring that they are clean and orderly. I guess maybe there just wasn’t the same sort of flight to the burbs in the 70s and 80s and then the 90s and 00s urban renewal in places like LA or SF or Denver, etc. (all for varying reasons).
It’s a matter of serious crime (but mainly in places you don’t live, work, recreate or shop) vs lawlessness (in places you work, recreate, and shop).
“This is fear put into most people and rarely happens. Most people age, and die, at home. We can debate whether or not this is good for them, and their caregivers, or not. Less than 5% of people will end up in a nursing home, which is the highest level of care and most expensive. Average time in a nursing home is less than 3 years. Alzheimers is the biggest risk as you can be in a memory facility for 10+ years. For most middle class, they will drain their savings, including their house equity, and the state will take up the payments under Medicaid. But we are lucky that there are government programs to cover this kind of care because the middle class can never save for that level of car”
So after they drain the home equity, what is left to transfer?
I dont see the majority of boomers down grading their assisted living options in order to pass $ onto their kids. 5 to 10 years at an independent/assisted living facility isnt cheap
“Still don’t have as many as 397,000 owners as Cook County does.”
Cook County has something north of 2.2 million housing units.
New York County has about 1.6 million *people*. And 916k housing units–75% of which are not O-O. So if 100% of owner-occupants in NY County owned free and clear, it would only be about 250,000.
“So after they drain the home equity, what is left to transfer?”
I keep hearing about this wealth transfer, but medical costs are a real issue, especially if you need a skilled nursing facility for any amount of time. Medicare Advantage plans weasel out of the 100 days you’re supposed to get with traditional Medicare. They’ll deny coverage while you’re in a skilled nursing facility with no way out except to spend down your estate to qualify for Medicaid. If you do manage to get out of the skilled nursing facility, there will be little money left to cover daily life, let alone the properties taxes, upkeep, and utilities on a single family home. The wealth transfer will go to a combination of skilled nursing facilities and the government.
It’s gotten to the point where it feels pointless to save money if it’s all just going to end up going to Medicaid/skilled nursing. Take the big trip you always wanted. Upgrade your house as you like. Why bother saving? Medicaid can’t take your house while you’re still alive, but they will leave you destitute to the point where you can’t pay your property taxes or utilities. I keep seeing estate sales come on the market in my neighborhood. You can see how the properties ended up becoming neglected as people’s money starts being drained for medical expenses.
“Oooh, nothing better than an active adult community of manufactured homes.”
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You gotta make stag films somewhere.
“I keep hearing about this wealth transfer, but medical costs are a real issue, especially if you need a skilled nursing facility for any amount of time.”
Again, less than 5% of people end up in nursing homes. Massive amounts of wealth is going to be transfered. Look around at the number of assisted living and nursing homes just in the Chicagoland area compared to the population. Does it look like all the Baby Boomers are living in those? Come on.
Skilled nursing only lasts for 3 months because if you aren’t able to bounce back after 3 months, then you are likely being admitted to the assisted living or nursing home facility. Skilled nursing is “rehab” for most people. They will only pay for so much rehab.
And yes, 99% of those who are in rehab get out. They are usually not even in the rehab facility for longer than a month. Depends on the age and the reason. Broken hip is one of the huge reasons. But strokes are up there. Might need all three months with a stroke but, if it’s really severe, then you may end up in either assisted living or a nursing home.
My grandmother was not wealthy. When she died in her early 90s she had an estate worth less than $300,000. She did own a house but it obviously was not in California or NYC. There was a debate in the family about doing assisted living. Her assets would have covered 7 years before Medicaid would have taken over. And she was a basic middle class person without a million dollar stock portfolio. In fact, she had no stocks. She only lived another year after the debate started and died at home.
So, again, no, most people’s money will NOT go to a nursing home or the government. It may go to assisted living, but you are getting help to live safely with some independence in assisted living. You have to live somewhere and some cannot live independently at home alone.
Also, I get annoyed when people think that “the government” is taking all their money if they DO end up in nursing home care. Really, the care that is most expensive is Alzheimer’s and memory care. I had an uncle that lived for 10 years with it. He was in a memory care facility. Many middle class Americans try and manage their loved one at home. Not all can do so. And it can be a LONG haul. But the cost is very high: $8k to $15k a month, depending on the facility.
So you get help and put your loved one in a facility. They have $500k in assets, including a house. That gets sold off and those assets are exhausted in 3 or 4 years, depending on how much of a pension/social security they get.
Then Medicaid kicks in and starts paying. My uncle lived for another 6 years. The government would have covered ALL the costs. Taxpayers would have paid over $500,000 for his quite extensive care. And the family wouldn’t have had the crushing burden of caregiving. And it IS crushing.
Seems like a decent deal to me.
“It’s gotten to the point where it feels pointless to save money if it’s all just going to end up going to Medicaid/skilled nursing.”
Who does this even happen to? No one I know. Not a single person.
You can buy long-term care insurance, but the payments are high and you might as well just put it into an IRA and save the money yourself. If you have a million dollar retirement fund, that is enough money to pay for 10+ years in assisted living. Most would never live in assisted living that long. It’s even enough to live in more expensive nursing home care for 5+ years. 99% of people don’t live that long in expensive nursing home care.
But long-term care insurance doesn’t make much sense for the middle class because they can’t afford it anyway. And Medicaid will kick in for them if they DO end up in the most expensive facilities for years. But that is rare.
“I didn’t say anything about metro. It was for Cook County. It’s those who own without a mortgage. Among the highest of any metro area in America, which I was surprised at. Literally over 200,000 people who are sitting on a lot of wealth.”
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Only in nominal dollars. In real dollars, those owners are behind the game. For real money growth, those owners needed to be somewhere else.
“I dont see the majority of boomers down grading their assisted living options in order to pass $ onto their kids. 5 to 10 years at an independent/assisted living facility isnt cheap”
Differences between “independent” living facility and “assisted living” facility. In Illinois, assisted is called “supportive” living. Each state is different and offers different options. Illinois has one of the better supportive living programs.
The privately owned “independent” facilities can range from $3,000 to $10,000 a month for a 1-bedroom. If you are at the St Clare in the Gold Coast you are paying Gold Coast prices. You have assets and Medicaid is not paying for you to live there in a luxury building. Some independent living facilities have indoor pools, extensive entertainment and classes, etc. It’s America. It’s capitalism. There’s something for everyone.
Supportive living for a 1-bedroom apartment is around $4500 a month, but can be less if you choose a studio. The buildings that will allow Medicaid are often not as luxurious, but all of these businesses are still building for the Baby Boomers which DO have higher end tastes. I am excited to see that they are building loft apartments in retirement communities and putting in things like quartz counter tops. Lol. The Boomers will not settle for bingo either.
Again, how long your assets last has so many factors. Middle class won’t last that long in supportive living at $4500 a month but can likely last 5 years or more depending on how much they get for SS/Pensions etc. Upper middle class can last 10+ years because they likely have planned for it and have million dollar stock portfolios plus a home plus their SS. It’s really not that hard to run the numbers.
If you live to be 100 and you’re middle class, you likely don’t leave much to transfer to anyone. That’s just how it goes. There’s a lot of costs in that last decade. Need more caregiving. Upper middle class probably will still leave quite a bit.
Yes, billions of dollars are going to be transferred to the next generations.
“Many companies are actually linked directly to the CPI.”
Outside of a Government and/or union position seems unlikely.
“that their commonality is that they’re all governed by Democrats (that’s my charitable guess; hopefully it’s not a more unseemly insinuation).”
Literally ALL big cities are run by Democrats, give or take a few like Salt Lake City. So that can’t be it. Why isn’t NOLA on this list? Miami?
Honestly, I don’t have any idea why she has singled out THAT group of cities.
“Silent Generation didnt manage home ownership like boomers. A non-trivial number of boomers treat their home as a retirement plan.”
Really? What did they do? Not buy? Silent Generation is 79 to 90, or thereabouts.
If you are a boomer treating your home as a retirement plan, then you likely live in California where, yes, you CAN treat it as such. They have a million dollar asset sitting there. All they have to do is move to Arizona, pay a third of that, and live off the rest. Seems like a legit strategy to me.
Similarly, Chicagoans used to do the same thing. Sell their expensive home in the Chicago suburbs and move to Florida where homes cost much less. But now they can’t do that because Florida prices are even higher than Chicago prices so there’s going to be difficulties there. Many Chicagoans will have to go to cheaper states like Alabama, Mississippi, Louisiana etc.
“Outside of a Government and/or union position seems unlikely.”
I guess my friends are lying when they tell me that their large Fortune 100 firm gives them raises based on CPI. But maybe they are at rare companies and the rest aren’t doing it like that.
Here’s what CNBC said most companies will be raising this year. Obviously under the current CPI.
https://www.cnbc.com/2022/11/18/employers-plan-2023-pay-increases-of-4point6percent-slightly-above-2022s-4point2percent.html
“Only in nominal dollars. In real dollars, those owners are behind the game. For real money growth, those owners needed to be somewhere else.”
They don’t care johnc. Your home is not an investment. They are raising their family there. Making memories. LIVING.
Chicagoland is a great place to raise kids. Excellent schools and good universities. Lots of jobs. Great summers and places to vacation. There are millions of people who have decided to spend their lives living in the Chicagoland area. It has been that way for over 100 years.
But it IS a surprise because it means that most move here and don’t leave. Because those who own their homes are overwhelmingly seniors so it’s no surprise that Florida has high home ownership or parts of Arizona. But you wouldn’t peg Cook County as having it too. Baby Boomers aged in place here. And, apparently, haven’t left yet.
“Oooh, nothing better than an active adult community of manufactured homes.”
I would love to live in one of these, specifically one in Santa Barbara. Prices need to come down though. Lol.
“Within the Green Zone in Chicago, particularly in important public/civic/cultural/commercial/retail areas, it’s rare to see encampments, people laying around, stolen bike chop shops, etc.”
You really have to visit more often anonny. I love you but you don’t live in Chicago and visiting for work every few months doesn’t give you the full picture.
In the last 4 weeks along the Mag Mile:
1. A big nation landlord put up yellow “caution” tape all around its building on the Mag Mile and signs saying “no trespassing” to keep people from sleeping in the empty doorway (entire building is empty).
2. There’s several tents half a block off the Mag Mile in the Gold Coast. It’s really tough for the unhoused out there in the winter. A local organization set up the tents. Similar tents in Fulton Market now too.
Just because you don’t see them, doesn’t mean the unhoused don’t exist in Chicago anonny. It’s just like every large city right now.
Crime is really bad downtown, in Lakeview and Lincoln Park. Just the petty stuff like stopping the car and getting out and robbing people. Muggings and burglaries. The carjackings are still going on. Bad carjackings in the Gold Coast 2 weeks ago on a weekend night but the police did catch a few of them when they fled west and then tried to run from the car.
Or check out this video footage of a police chase during the day time hours in the Clybourn Corridor from 2 weeks ago.
https://www.cbsnews.com/chicago/video/thief-clings-to-hood-of-car-during-near-north-side-police-chase/#x
“I guess my friends are lying when they tell me that their large Fortune 100 firm gives them raises based on CPI.”
What industry? Also, what positions do they hold within the firm i.e. senior management or analyst/associate level?
“Who does this even happen to? No one I know. Not a single person.”
I know someone who this is happening to now, but luckily she doesn’t have a spouse. Medicare Advantage refuses to pay for the skilled nursing facility even though she is doing the rehab. She would have rather left her money to her kids, but that’s not how it’s going to work out. She could have spent her money an some really awesome vacations or indulged herself in other ways.
I have a long term care plan through a previous employer that will never go up in price. It should be enough to cover a decent portion of assisted living or home healthcare. The price of the skilled nursing facility was jaw dropping and it was disappointing to realize that my coverage will be fairly limited if I need nursing care.
My argument overall is that we aren’t going to see as much wealth transfer as people seem to be expecting and it’s not something people should expect or plan their lives around. It’s also incredibly depressing to see someone spend money to live in a facility where her diaper doesn’t get changed due to staffing shortage and this is at a “top rated” facility.
This really touched a nerve I guess. /rant
“Just because you don’t see them, doesn’t mean the unhoused don’t exist in Chicago anonny. It’s just like every large city right now.”
I didn’t say there weren’t unhoused in Chicago – I said you don’t really see them (and more). Whereas in, say, Denver or SF, on the courthouse/capitol lawn or museum/library steps or whatever, it’s like there’s a standing casting call for a post-apocalyptic movie. And it’s not just the usual demographics of the unhoused (for whom much more should be done). It’s not simply a matter of housing or resources – the lack of those is a part of the issue, but it’s not the whole story.
As for your description of the current state of some of the nicest parts of the city, wow, that sounds dire. It’s clearly deteriorated rapidly over the past couple months, and my inlaws, colleagues, and client contacts are either constantly endangering themselves because of their denial or obliviousness or are being legendarily stoic in the face of such danger. You’ve painted a picture that calls to mind Will Smith closing the steel shutters on his fortified Washington Sq Park home in “I Am Legend” at sunset.
“it’s been beautiful the last few days”
Hah! Earlier today I sent some friends back in Chicago a screen shot of my weather app for Chapel Hill. High was 64 today. Back in Chicago it was like 10.
Had a guy at my house working on some storage. He left his van in my driveway with the doors open all day. I had my garage door open all day too.
The only downside is that I’m doing back door Roth conversions and that income is taxed in NC but not in Illinois.
“Again, less than 5% of people end up in nursing homes. ”
Check that number. I believe it’s 5% of seniors are IN nursing homes now. But a much higher percentage of seniors will end up there.
Your home is not an investment but people who bought in the 80s/90s are going to have a massive wealth transfer
You really can’t make this up.
“In the last 4 weeks along the Mag Mile:
1. A big nation landlord put up yellow “caution” tape all around its building on the Mag Mile and signs saying “no trespassing” to keep people from sleeping in the empty doorway (entire building is empty).
2. There’s several tents half a block off the Mag Mile in the Gold Coast. It’s really tough for the unhoused out there in the winter. A local organization set up the tents. Similar tents in Fulton Market now too.
Why do you hate bIG CiTy lIVinG? mOVe OuT tO tHE sUBuRbS
“99% of those who are in rehab get out.”
Not amongst teh olds that are being discussed:
“After rehabilitation in a Skilled Nursing Facility (SNF), on average 73% of the geriatric patients are discharged to their home situation.”
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6697645/
“Medicaid will kick in for [the middle class] if they DO end up in the most expensive facilities for years.”
Who in the middle class w/o LTC insurance and median-ish assets gets into the “most expensive facilities” in the first place?
“Who in the middle class w/o LTC insurance and median-ish assets gets into the “most expensive facilities” in the first place?”
Its just a number
“Who in the middle class w/o LTC insurance and median-ish assets gets into the “most expensive facilities” in the first place?”
The luxury supportive or independent living facilities like the St Clare are for rich people. If you have the million dollars, you get in.
Middle class goes to the other facilities which are found all throughout the city of Chicago, actually. You can google them. They are privately owned but many take Medicaid once it kicks in. On the nursing home category, there are certainly 4 star and 5 star facilities that do take Medicaid. Price of the facility doesn’t necessarily equate to the quality of care, by the way.
“Who in the middle class w/o LTC insurance and median-ish assets gets into the “most expensive facilities” in the first place?”
Also, anyone with money??? Some may want to go into the expensive private facilities because they may believe they aren’t going to live there long and it’s quality of life. Why does someone buy a $600,000 home versus a $300,000 home? You want bigger and nicer.
“As for your description of the current state of some of the nicest parts of the city, wow, that sounds dire. It’s clearly deteriorated rapidly over the past couple months, and my inlaws, colleagues, and client contacts are either constantly endangering themselves because of their denial or obliviousness or are being legendarily stoic in the face of such danger.”
She’s totally convinced me nonny–putting the house on the market this week and moving to someplace that isn’t a scary, crime-ridden, hellhole. Any suggestions?
“After rehabilitation in a Skilled Nursing Facility (SNF), on average 73% of the geriatric patients are discharged to their home situation.”
Even more of a reason why it’s so great that there’s the Medicaid program so that there are options. But Jenny’s complaint that Medicare Advantage only pays for 100 days is because they won’t go home and yes, no insurer is paying for endless physical therapy. But this is why there is assisted living and nursing homes for those who need a higher level of care because going home isn’t safe.
One big thing: don’t break your hip when you’re over 80.
Medicare has really been working in recent years on getting people home. In fact, they WANT you to stay home. It’s cheaper for them to bring in home caregiving than to do assisted living. And most people prefer this although assisted living is just a senior apartment with more help like a nurse on staff, physical therapists and a cafeteria.
“Middle class goes to the other facilities which are found all throughout the city of Chicago, actually.”
You said just before that that St Clare is the “most expensive”, so, do the MC folks go to the “most expensive” or not?
Just trying to get the facts straight here.
“Your home is not an investment but people who bought in the 80s/90s are going to have a massive wealth transfer”
Yep, there is going to be a massive wealth transfer as the Baby Boomers have finally paid off that asset. Life expectancy has doubled in the last 100 years. No other generation has gone all in, lived long enough to pay it off, and now will pass it on. It’s going to have big impacts, especially in states like California. But Cook County has a ton of wealth just sitting there. 400,000 homes that will go somewhere.
“I would love to live in one of these, specifically one in Santa Barbara. Prices need to come down though. Lol.”
This seems pretty reasonable:
https://www.redfin.com/CA/Santa-Barbara/333-Old-Mill-Rd-93110/unit-146/home/14990135
Doesn’t include the space rent in the listing, tho, but is apparently $500-800/month. You could live your SB retirement dream!
“Check that number. I believe it’s 5% of seniors are IN nursing homes now. But a much higher percentage of seniors will end up there.”
Well, have to look at the number of people who actually live long enough to be a “senior.” You can’t get into assisted living until you are 62. So how many people are 62 and older and have made it that far? Then look at the number living in assisted living and nursing homes.
I have to say most of you have no clue about ageing and what happens. Did your grandparents end up in a nursing home? Your parents? Assisted living facilities are fairly recent. Those haven’t been around as long. State programs through Medicaid really expanded in assisted living over the last 30 years as they’ve been preparing for the large Baby Boomer generation. Nursing homes are short-term stays, for the most part. You have to be bed-bound or in a wheelchair. Need highest level of care.
With the great hospice care now, which Medicare will provide in your home 24/7, including sending nurses 24/7 if necessary, all of it free, there isn’t as much of a reason to end up in a nursing home at the end.
“Hah! Earlier today I sent some friends back in Chicago a screen shot of my weather app for Chapel Hill. High was 64 today. Back in Chicago it was like 10.”
It’s beautiful in Chicago today as well. 3 degrees and sunny. Light dusting of snow on the church steeple in my neighborhood. We’ve had a really easy winter so far (knock on wood.) I wish we had more snow though. Still have February to come so we should get more.
I feel for those in the South and Southeast today with that big ice storm. Nothing worse than ice. Ugh.
“I didn’t say there weren’t unhoused in Chicago – I said you don’t really see them (and more).”
But you do. Even right on the Mag Mile. You just choose not to look, apparently.
And yes, the crime IS bad. You don’t live here. You come in as a tourist, jog around and think it’s fine. You haven’t been preyed on. Suckered punched while walking to the grocery store. Had to cross the street because something was suspicious on the other side. Heard gunshots. Heard the helicopter hovering and having to check to see where the carjacking was.
The city just announced yet another initiative to crack down on the carjackers. I mean, they just jacked two SUVs right in the Gold Coast at 10 pm at night who were simply driving down the street minding their own business. It’s absurd now. And they’re teenagers.
And yes, women are still not carrying their phones or purses when going out and about, especially in Lakeview and Lincoln Park. The random “stop the car, get out and rob the person at gunpoint” is happening again. One of my friends is wearing her purse underneath her winter coat so they don’t see her carrying anything.
Crime is the number one issue in the mayoral campaign followed by the breakdown of the CTA. The police have seemed to get the wildings under control on the Mag Mile and Oak Street. There haven’t been as many thefts from the luxury stores recently. The retail task force did track down those professional teams that were stealing from the luxury stores so that helped.
But violence and crime are up in ALL big cities. Chicago is not alone. Oh, and the suburbs are seeing a lot of this stuff too. Not just a city thing.
“Life expectancy has doubled in the last 100 years.”
You really think that life expectancy at birth in the US in 1920 was 37 years for men and 40 for women?
Since we’re talking about paying off a mortgage, childhood deaths are irrelevant–it’s what life expectancy at age 20 is/was. In the past 100 years, it’s gone from ~65 for both men and women, to about 75 for men and 80 for women. Which ain’t doubling. Go back another 70 years, in was a little under 60 (at age 20) for both men and women. So, at best, a change from 40 years to 60 years of remaining life expectation–a huge increase, but not doubling.
“Medicare Advantage refuses to pay for the skilled nursing facility even though she is doing the rehab.”
No offense, but insurance, even your private blue cross blue shield through your employer, is never going to cover more than 3 months in a rehab facility. They have cut offs. The point of the rehab is to move the patient home. They do watch it closely. I’ve had some relatives where they wouldn’t pay for the Rehabilitation Institute (the top facility) because they didn’t think my relative would improve enough to justify it. So he was sent to a regular rehab facility. Medicare has certain restrictions. They allow only a certain time limit in the rehab.
But now, suddenly, your friend is going to spend her life savings doing rehab because Medicare cut her off?
Is she not well enough to go home? Does she need to move into assisted living or a nursing home? I’m sorry she is enduring that. But I still don’t understand the thought that “it would have gone to her kids” or “you could have gone on a vacation.” Some people are going to need a lot more care. They are too weak to drive and need a doctor/nurse on site, for instance. The kids can always do the caregiving. But this can be crushing to the children and is not ideal for the parent either. Every person has a choice, right?
There are no guarantees. But too many people buy into the fear that is sold them about retirement and aging. You probably are saving too much Jenny. Take that vacation.
As I said, if a middle class person really needs to stay 10+ years in assisted living or over a year in nursing home care, they probably won’t be able to afford it (depends on what part of the country they live in and where they own their home. California million dollar home owner can still afford it.) But the middle class is not supposed to be able to afford it. It’s just not possible.
Upper middle class doesn’t need long term care. It’s not worth buying it if you have a million dollar stock portfolio, or more. Can easily cover your care.
There’s all this fear about “nursing homes.” Few people end up in one and those that do are at the end. They usually live a short time at that level of care.
And yes, there’s going to be massive wealth transfer.
“Had to cross the street because something was suspicious on the other side. Heard gunshots. ”
That’s been Chicago for decades. Nothing to see on those two counts.
“It’s also incredibly depressing to see someone spend money to live in a facility where her diaper doesn’t get changed due to staffing shortage and this is at a “top rated” facility.”
All nursing homes have struggled during the pandemic. They don’t have enough staffing because there is a nursing shortage and the nursing homes don’t pay enough.
But it’s not nurses changing the diapers, that’s CNAs.
I wouldn’t put up with that Jenny. You have choice. She has choice. Move her. Check the Medicare ratings. Those are constantly changing because the facilities are inspected regularly and, yes, they do check staffing. But if it has a low rating on staffing, you should move her.
It’s those on Medicaid who have it harder. There is usually a waitlist to get one of those in a skilled nursing facility. Might have to wait 4 to 6 months.
“You really think that life expectancy at birth in the US in 1920 was 37 years for men and 40 for women?”
Yep, life expectancy has doubled in the last 100 years. There has been a lot of articles about this lately because it’s been so dramatic and we all take it for granted how much has changed even just since the early 1900s.
Really, pasteurization of milk was one of the big turning points.
“That’s been Chicago for decades. Nothing to see on those two counts.”
In Lincoln Park, Lakeview, the Gold Coast, River North, Streeterville, Bucktown? The GreenZone?
This is anonny’s point. The crime and violence ISN’T happening in the GreenZone. But he’s totally wrong.
I would say the GreenZone is more akin to the 1990s in crime level right now. It’s been a long time since women had to carry pepper spray but that may come back soon. However, all the bad guys have AK-47s or whatever other automatic weapon now so the pepper spray is worthless.
“Yep, life expectancy has doubled in the last 100 years.”
That is 100% demonstrably false.
It hasn’t even doubled since 1900: https://www.cdc.gov/nchs/data/hus/2017/015.pdf
“The police have seemed to get the wildings under control on the Mag Mile and Oak Street. There haven’t been as many thefts from the luxury stores recently.”
Most of the stores are vacant. For the ones that remain, looks like they are still dealing with the issue. Canada Goose got hit over the weekend.
https://www.cbsnews.com/chicago/news/canada-goose-michigan-avenue/
“However, all the bad guys have AK-47s or whatever other automatic weapon now so the pepper spray is worthless.”
Don’t worry JB solved that one. All the legal gun owners have to register their weapon with the State. Problem solved…….
“She’s totally convinced me nonny–putting the house on the market this week and moving to someplace that isn’t a scary, crime-ridden, hellhole. Any suggestions?”
East Ft Wayne is completely full
Maybe look at Muncie
“She’s totally convinced me nonny–putting the house on the market this week and moving to someplace that isn’t a scary, crime-ridden, hellhole. Any suggestions?”
I mean, seriously, if things are even half as bad in the GZ as Sabrina is making them out to be (and no, things are not that bad in ALL big cities, whatever “big” is), leaving should be an urgent priority for any rational person who is able to do so, unless a person needs to stay because of a job (which cannot be comparably replaced elsewhere or done remotely and losing it result in financial ruin), medical treatments (which cannot be adequately resumed elsewhere), caring for sick or dying family, insufficient funds to afford to move and pay a deposit and first month’s rent in lower cost area, or they are some sort of aspiring crime-fighting superhero.
“No offense, but insurance, even your private blue cross blue shield through your employer, is never going to cover more than 3 months in a rehab facility.”
They aren’t covering the 100 days that she is supposed to get. They are trying to say that she can’t do the rehab even though she is doing the work with the physical therapists. She’s tried 3 facilities now. They were all rated highly, but none of them have been pleasant and they have all been short staffed. I encountered the same issue with my grandparents. The facility gets the highest rating, but then the treatment isn’t great due to staffing shortages. It’s all very depressing and is making me rethink my saving strategy.
“Did your grandparents end up in a nursing home? Your parents?”
I know a lot of people that did. Basically most people that make it to around 90, which are increasing odds. Both of my parents, aunts, relatives, parents of friends. FYI…my mother spent around 5 years in a nursing home, confined to bed. Had a killer LTC policy that paid off in spades. I had an aunt that spent more than 10 years in a nursing home after a stroke left her basically vegetative. Wife of a cousin had dementia.
“I wouldn’t put up with that Jenny. You have choice.”
Not really. My mother was in the best or one of the best nursing homes in Dallas probably 5 years ago. Staffing shortage. The way we solved the problem is we paid our own caregiver to be with her around 10 hours per day in addition to paying more than $4000/ month for the nursing home.
Totally off-topic but I hope Sabrina posts this unit. The interior decor and kitchen appliances are a constant source of laughter since I shared the listing with my wife yesterday. I was last in this building in about 1977 (my brother’s friend lived there at the time). This unit looks like it was last decorated prior to that. And original kitchen, I’m sure.
https://www.realtor.com/realestateandhomes-detail/1555-N-Astor-St-Apt-10SE_Chicago_IL_60610_M76102-53874
“I was last in this building in about 1977”
It’s where we stay when in town.
“This unit looks like it was last decorated prior to that.”
Can’t get close to this one for only $90k in work, right?
https://www.redfin.com/IL/Chicago/1555-N-Astor-St-60610/unit-7SE/home/14126437
Seems like the closing price should start with a 3.
Agree, anon. It’ll have to come down. Even in perfect shape the views suck.
“This unit looks like it was last decorated prior to that.”
I’ve seen a lot of units like this in that part of town. The demographic is pretty old. They redecorated 30+ years ago and that’s what they know and are comfortable with. Like Sabrina would say they made memories there and wouldn’t want to wipe them away plus it’s too much trouble plus they still like it 🙂
I knew a 90ish woman that lived in a co-op with a kitchen from before the 50s. The unit had been in the family for at least 70 years.
“The facility gets the highest rating, but then the treatment isn’t great due to staffing shortages. It’s all very depressing and is making me rethink my saving strategy.”
Maybe you should go into senior living for a career jenny.
“I mean, seriously, if things are even half as bad in the GZ as Sabrina is making them out to be (and no, things are not that bad in ALL big cities, whatever “big” is),”
Jesus. No one knows what a “big” city is anymore?
How about the San Francisco nightmare? LA with its carjackings, burglaries, muggings, unhoused everywhere. Philly, NYC, Washington DC.
And on and on.
New Orleans is back at crime levels they used to see like 10+ years ago. It’s terrible there.
Are you all really THAT clueless? Don’t read the news or watch the local news stations? Don’t read the alerts from the local police departments?
Yeah- it sucks in Chicago. I keep hoping for a big snowstorm or arctic blast so maybe they will stay home for a weekend instead of mugging and carjacking, but it’s not happening and we’re having a mild winter.
“Canada Goose got hit over the weekend.”
Again? Literally, there is a cop car sitting right in front of it. My god. I thought they had stopped robbing on the Mag Mile as they have cops every block now. But apparently I was wrong.
The next mayor really has to do something about the Mag Mile before it drags the rest of the city way, way down with it. How they are even allowing that landlord to wrap its building in yellow “caution” tape is beyond me. It looks horrible.
“Most of the stores are vacant.”
This actually isn’t true. I think the street is like 30% vacant now because Banana Republic and Coach both just shut.
Oh, and just wait until the 24/7 casino opens in the middle of River North later this year.
Ba ha ha.
What a nightmare that is going to be.
“Not really. My mother was in the best or one of the best nursing homes in Dallas probably 5 years ago. Staffing shortage.”
By the way, if they have a true staffing shortage, it will show in the rankings on the Medicare website and really bring down their overall ranking. If you get the dreaded 1 to 3 stars, you will lose patients. They actually DO pay attention to that.
Currently, because of the COVID nightmare in these facilities, staff has simply quit. And the pay is double, or more, in hospitals or for travel nurses so there’s little incentives for them to work at a senior facility, unfortunately. But the private owners are getting crushed by wage inflation, food inflation and COVID. And Medicaid regulates what they can charge. Can raise it on private payers though but you can only raise it so high. At $10k a month more people will do what you did Gary and just hire a full time caregiver for the person in their home.
“Had a killer LTC policy that paid off in spades.”
These don’t exist anymore, do they? All the financial advisors these days are mostly telling people not to bother. Same with the senior living people I’ve talked to. The policies are expensive, and can go up even 20 years from now, and the benefits aren’t that great.
“Oh, and just wait until the 24/7 casino opens in the middle of River North later this year.
Ba ha ha.
What a nightmare that is going to be.”
Why are you rooting against Chicago?
“This actually isn’t true. I think the street is like 30% vacant now because Banana Republic and Coach both just shut.”
Give it time
You obviously read the Crains piece on the Mag mile, its funny to listen to urban planners, always a day late and a have no skin in the game.
Its always the dumb consumers that arent smart enough to eat the bugs
“The next mayor really has to do something about the Mag Mile before it drags the rest of the city way, way down with it. ”
I think any “drag” the mag mile has on the city already occurred within the past 5 years. The next mayor needs to ensure that it is contained to the mag mile and doesn’t spread to the neighboring areas given the vacancy rate currently on the mag-mile.
“This actually isn’t true. I think the street is like 30% vacant now”
Wow i was sooo wrong “only 30%” not anywhere near half…… 30% vacancy is pretty horrible.
“New Orleans is back at crime levels they used to see like 10+ years ago”
10 years ago NOLA was still pretty empty-feeling post-Katrina.
Unless it’s flashing back to euro tourists being mugged by hammer blow to the back of the head (circa 93/94), it won’t feel bad to most with a longer memory arc.
But that all sounds like a pitch to move to the suburbs, and minimize domestic travel.
I only see such negativity about American cities from MAGA types.
“Wow i was sooo wrong “only 30%” not anywhere near half…… 30% vacancy is pretty horrible.”
Water Tower Place is a huge problem. MetLife has been handed back a ton of mall space, and WTP is just one of their larger challenges.
“Water Tower Place is a huge problem.”
Actually, I disagree. They installed the Harry Potter experience which still brings people into the building. And there are still quite a few shops inside. When you walk by it, it’s not empty. There are people going in and out.
What is a “huge problem” is the entire block across the street. Only H&M and the Verizon store remain and H&M is leaving this summer. It’s just abandoned now. No one on the street there. Will be really, really bad when H&M closes shop. Like a ghost town.
I hope the owners (there are 2 big national REITs that own both parcels) decide to sell to a developer soon. Apparently, something might be going on with the old Disney Store building soon. That’s also owned by a national REIT and is a low rise building that could be replaced by a high rise tower. Fingers crossed.
“10 years ago NOLA was still pretty empty-feeling post-Katrina.”
2013? Nah. 2008-2009 was pretty dead because of the Financial Crisis. No one was traveling. You could get some real deals on hotels then. But crime was bad during that period because not enough people on the street to deter. But it’s bad again. Be careful late at night. In any city.
“Unless it’s flashing back to euro tourists being mugged by hammer blow to the back of the head (circa 93/94), it won’t feel bad to most with a longer memory arc.”
How old you gotta be to “remember” when it was worse? 70?
Come on.
“Wow i was sooo wrong “only 30%” not anywhere near half…… 30% vacancy is pretty horrible.”
As I’ve been saying for months (years???). Again, how many of people on this blog actually live IN the city of Chicago? I really think it’s just like 3 or 4 of us. Everyone else used to live here 10, 20 or 30 years ago. Things change quick.
Yeah- the Mag Mile is in real trouble. And it’s a huge economic driver of the city. The next mayor MUST do something. It needs to be completely re-thought. They need to dream big. But will they? Who’s the visionary who can do it? Who will be the next Rahm and bring us the River Walk but on the Mag Mile?
“I think any “drag” the mag mile has on the city already occurred within the past 5 years.”
5 years? Pre-pandemic? You can’t seriously be arguing that. Come on.
And if you knew anything about downtown, you would already know that the problems on the Mag Mile are NOT spreading anywhere. In fact, Oak Street and Rush Street Corridor are booming. Why? Because they have lower rents, smaller stores, more foot traffic. Retailers don’t want the 3 story stores anymore. They lose money. If Banana Republic was smart, they’d open in the old Artizia space on Rush (it’s one of the few going bigger right now, but it’s a red-hot brand.)
The closures are mounting. Banana, Lush, the Coach store all just closed in the last few weeks. I think Victoria’s Secrets will probably be next. Big store, and space.
The Mag Mile is among Chicago’s biggest tourist attractions. You really don’t have a downtown without it thriving. A new vision must be laid out.
“Give it time”
Just another dumb comment from someone who lives far, far away and who, yes, read all about the Mag Mile’s problems in Crain’s because he hasn’t lived in Chicago for 30+ years.
I need to have some “skin in the game”? You haven’t for 30+ years. You come on this blog blathering and bullying people with nothing to add because you really don’t care about the real estate or architecture and you are now wishing for Chicago to fail (as all the bears on this blog seem to do.) But, surprise, Chicago hasn’t failed.
The foreclosures that Bob the Bear predicted so breathlessly aren’t happening.
Prices aren’t plunging.
Chicago is still attracting new corporate headquarters and talent.
Chicago is the only city building 70+ story apartment and condo towers on a yearly basis.
Chicago has the hottest neighborhood in the nation with Fulton Market.
Does it have it’s problems? Hell yes. Crime and the CTA is terrible. Both will impact the economy unless they can be course corrected, and soon.
“Why are you rooting against Chicago?”
Ever have the Chicago police helicopter hover over your neighborhood JohnnyU? No? Oh wait, you don’t live here.
Yeah- those of us who DO are very fearful of the temporary casino. Pardon us if we don’t believe that Bally will keep things under control at a location that is steps away from the Red line and 2 blocks from the Mag Mile.
They can’t build the new casino fast enough. I think it will be a great addition to the city. I’m especially excited to see the outdoor concert venue and restaurants they put in. I hope there is a water taxi stop there.
You need to sober up, I was clearly talking about Urban Planners
“how many of people on this blog actually live IN the city of Chicago? I really think it’s just like 3 or 4 of us.”
I did until September. Apparently I got out just in time because since I left the Mariano’s 3 blocks away (Damen and Chicago) has become the site of two gang related assassination attempts (one succeeded) and other gang activity.
“Apparently I got out just in time because since I left the Mariano’s 3 blocks away (Damen and Chicago) has become the site of two gang related assassination attempts (one succeeded) and other gang activity.”
Yep. That violence was really tragic. Not late at night either. Plenty of people just going to the grocery store when it happened.
That’s a bullish sign for Chicago RE
“Ever have the Chicago police helicopter hover over your neighborhood JohnnyU? No? Oh wait, you don’t live here.”
Why do you think you have the market cornered on crime/civil unrest?
The city has voted for this (elections have consequences) and from a government level its and being as charitable as possible tolerated. Lori/Toni/Kim can talk the talk but fail to walk the walk.
“5 years? Pre-pandemic? You can’t seriously be arguing that. Come on.”
The original comment was in regard to crime specifically robbing stores on the mag mile. The flash mobs started pre-pandemic.
“The Mag Mile is among Chicago’s biggest tourist attractions. You really don’t have a downtown without it thriving. A new vision must be laid out.”
The Mag Mile was last generations downtown nostalgia. Times have changed and the new downtown is Fulton Market, River North, and Oak Street due to restaurant quality and boutique shops.
Every store you have named on the Mag Mile is a big-box chain where most people have already been to at least month in their life. You can order all those items online and have it dropped off at your door or pick-up in store within 48 – 72 hours now. You know what you are getting and what you like. There’s nothing special about it. It’s fairly generic and often overpriced.
“How old you gotta be to “remember” when it was worse?”
Remember when NOLA was worse than now? Come on.
How old does someone need to be to remember 1994? 42? 45?
Same thing applies to Chicago.
Denying it is just recency bias.
“I really think it’s just like 3 or 4 of us.”
So you, me … who else do you believe hasa 606 zip?
“Every store you have named on the Mag Mile is a big-box chain where most people have already been to at least month in their life. You can order all those items online and have it dropped off at your door or pick-up in store within 48 – 72 hours now. You know what you are getting and what you like. There’s nothing special about it. It’s fairly generic and often overpriced.”
You can order all items online from Chanel on Oak too. Same with Madewell on Rush.
Yet these retailers will tell you that sales have surged at their stores since the pandemic reopening and they actually sell more volume in the stores than online ever will.
Humans love to shop. They want to go to stores and markets. They want to talk to other humans. Look at the merchandise. It is an adrenaline rush. It makes people happy.
But as I’ve said several times now “a new vision must be laid out.” If you bring in experiences, cut out several lanes of traffic, bring in restaurants and cafes and dining outside, bring in food trucks and unique shops, yes, they WILL come.
Look at the success of the Mexican pop-up shop. They have even held food events outside the store, but that’s because they have an alley next to the store where they can park a food truck or stall.
Let’s put cafes in the alleys. Let’s put in a permanent outdoor theater in the big park behind the art museum. Food stalls are what makes the riverwalk great. Can repeat it on the Mag Mile. But they really have to rethink the traffic. In Europe, they have narrowed the street, put in more trees and bike lanes. Let’s cut it from 3 lanes each way to 2 each way. Extend the sidewalks.
“Why do you think you have the market cornered on crime/civil unrest?”
So it’s coming down to “my city has more crime than yours” now?
Pathetic.
You don’t live in Chicago. You have no idea what is going on here and never have. I will stop even talking about it with the foolish on this blog who have no “skin in the game.”
“So it’s coming down to “my city has more crime than yours” now?”
LOL
“Ever have the Chicago police helicopter hover over your neighborhood JohnnyU?”
Sorry but you dont have the market cornered on crime/civil unrest. Its really dumb to think you do…
“So you, me … who else do you believe hasa 606 zip?”
You can add me even though Sabrina doesn’t think so.
“You can add me even though Sabrina doesn’t think so.”
So, only space for one more.
jenny? Lauren?
I lived in Chicago for 20 years and left in 2018. I visited in 2021 and saw that most of my favorite restaurants were closed and a lot of the mag mile shops were boarded up with blm posters and graffiti.
Sorry to hear it got worse but hey, we all saw it coming and some of us chose to leave. The place I sold is down 20% and the new place I bought in FL is up nearly 100% (according to zillow).
There’s no hope for Chicago and the rot is spreading quickly nationally. FL is going to be just as bad as Chicago soon enough and by that time there will be nowhere to run. Sad!
I’m in the 606, but only half the year. Do I count? (
“I’m in the 606, but only half the year. Do I count?”
Sure. That counts Madeline. At least you’re walking around on the streets at some point during the year. Lol.
“There’s no hope for Chicago and the rot is spreading quickly nationally. FL is going to be just as bad as Chicago soon enough and by that time there will be nowhere to run. Sad!”
It’s kind of crazy to see a comment like this and then see one from anon(tfo) with the article about Fern Hill’s huge development in Old Town.
Lol.
Also, kind of hilarious to hear about the “rot” spreading “nationally” when unemployment just hit a 50 year low.
LMFAO.
I feel like Florida is like a collection of all the doom and gloomers and I wonder why that is. Is it because so many are retired and not working so they are really pessimistic about things? Like, “this is the best there is after 50 years of working. This sucks so I want everyone else to be unhappy too.”
The bears on this blog never move to, say, California. They are always in states like Florida and Indiana (or Nevada, in sonies case.) The optimistic states. The ones where you go to live the “American dream.”
Maybe self-selection? Optimistic people are normally attracted to optimistic places like California and pessimistic people are attracted to pessimistic places like Florida.
“I feel like Florida is like a collection of all the doom and gloomers and I wonder why that is.”
Have you managed to completely avoid Governer Ronnie? Lucky!
“Sorry to hear it got worse but hey, we all saw it coming and some of us chose to leave. The place I sold is down 20% and the new place I bought in FL is up nearly 100% (according to zillow).”
It hasn’t gotten “worse.” Nothing is boarded up on the mag mile. There is no graffti and I’m sorry the BLM posters disturbed you Stacy. (rolls eyes)
But there has been more closures of stores, even this year. And the next mayor must come up with a plan. There must be a new vision for the street. It’s too important to the city. There is absolutely no reason to go there unless you’re going to the Starbucks Reserve.
As far as restaurants, thank goodness that most of those that closed have been replaced. I would say Chicago’s restaurant scene is as vibrant as ever. The huge spaces are struggling to be filled though. I’m thinking of Lawry’s Prime Rib which is still empty.
But Gordon Ramsay is opening up another restaurant in that big Mexican restaurant space in River North, which will really help that block. And the Chicago winery has already opened in the closed steakhouse in River North too. That’s also a wedding and event venue with a real winery inside.
Anyone been?
“Have you managed to completely avoid Governer Ronnie?”
Yeah- but it was pretty gloomy down there even before he took over, wasn’t it? But I’m not disagreeing that it’s gotten more pessimistic since he took over. He has taken it to a new level with the book banning.
Check out the graph of the Burns Value Home Index since 2000:
https://fortune.com/2023/02/01/housing-market-bifurcated-home-price-correction-crash-no-decline-charts/amp/
The article is mostly about how West Coast prices are coming down right now, while cities like Chicago are staying at current levels, but looking at that graph shows that Seattle, LA, and San Francisco are at **slightly** different levels than Chicago as it relates to price appreciation since 2000. 😉 (As we all know). So, yeah, a 10% drop might be impactful for those that bought one year ago, but for the vast majority of the population, they’ve seen huge increases in wealth compared to Chicago homeowners.
“During the Pandemic Housing Boom, Chicago and San Francisco had similar paths. ” Uh, yes, they both went up but one much more than the other so I can’t say they were “similar”. And that’s true if you look starting at 2020.
I guess everyone has “recency bias” to an extent.
“So, yeah, a 10% drop might be impactful for those that bought one year ago, but for the vast majority of the population, they’ve seen huge increases in wealth compared to Chicago homeowners.”
Everyone knows that the west coast is unaffordable to the entire middle class now. Something is going to give at some point. I’ve lived out there. Housing was a nightmare. I will gladly take Chicago. Thanks.
Finally got around to posting my January update. Sales sucked once again and will almost certainly suck big time in February as well. But inventory is not that high and market times aren’t that bad either. In fact, condos/ townhomes are selling faster. https://lucidrealty.com/chicago-real-estate-market-update-almost-a-14-year-low-in-home-sales/
How does Chicago’s distressed numbers compare to other major markets?
Thanks for the update, as usual, Gary.
Sales are going to be terrible the next couple of months. These are people that would have had to be buying with over 7% or even mid to high 6% mortgage rates due to the lag time between going under contract and closing. There weren’t as many who wanted to buy at those rates, that’s for sure.
Contracts may not pick up that much, though, unless inventory really starts to come on the market. The buyers that are now out there with mortgage rates around 6% are just waiting for new properties to come on. They don’t want the old stuff that is lingering. Anything that is renovated and priced correctly is going under contract almost immediately right now. But I don’t think it’s going to make that much of a difference on sales in the next few months because there simply isn’t enough to buy. But we should come off the lows of this winter.
If rates fall back into the 5s, that will help. Also have to wait and see what happens with employment. The more layoffs at the big tech companies or Groupon and the like in Chicago, the more sales will lag.
“How does Chicago’s distressed numbers compare to other major markets?”
Real estate is local. It doesn’t matter. Distressed properties are still extremely low nationwide though. Still below pre-pandemic levels in Chicago according to Gary’s data. I’m starting to see the number pick up but strangely they are usually among properties that were bought a decade to 15 years ago. Still seeing some bubble properties go into foreclosure.
Nationally, that’s also the case. The 2006-2008 mortgages are the ones that are most in distress. It doesn’t really make sense because they should have paid down so much equity by now but it’s possible, in some parts of the country, that they are STILL underwater on it because of the sky-high bubble price they paid. It’s crazy though.
In downtown Chicago, we KNOW you could be underwater if you bought in 2005 on price. But I still don’t understand why those sellers don’t have equity.
In Chicago, we will need more layoffs to have distressed properties really soar. I could see a scenario where someone bought in 2020 or 2021 during the boom and is now laid off of their high paying tech job. But they only stop paying the mortgage if they can’t find another high paying tech job. Job market isn’t that weak yet. Those laid off are finding new jobs.
Also, just a reminder, that Illinois goes through the courts on foreclosures. During the housing bust, it could take as long as 8 years for a property to finally revert back to the bank. But that was when they were overwhelmed. It does look like the process is moving a little bit faster these days. 1 to 2 years for the bank to take it back.
For those hoping for foreclosures to flood the market in 2023, they are going to be very disappointed.
“The more layoffs at the big tech companies or Groupon and the like in Chicago, the more sales will lag.”
I thought Chicago was diversified and Tech layoffs wouldnt have an effect?
“I thought Chicago was diversified and Tech layoffs wouldnt have an effect?”
We have a big tech industry. Our economy IS diverse. As I said yesterday, there are plenty of companies reporting record earnings. They are not laying off. But if you lose several thousand high paying tech jobs, it’s going to impact the GreenZone housing market unless they are picked up quickly elsewhere, which may happen. Too soon to know.