Market Conditions: How Big Is Chicago’s Shadow Inventory?
We’ve chattered about several properties that have taken months or even years to come back on the market once they are bank owned.
This is considered to be part of the “shadow inventory.”
Crain’s has details from CoreLogic on the Chicago-area foreclosure rate in February which was nearly double the national rate.
The foreclosure rate on Chicago-area home loans was 6.28 percent in February, down from 6.35 percent in January but up from a 5.82 percent in February 2011, according to Santa Ana, Calif.-based data provider CoreLogic Inc. The national foreclosure rate was 3.41 percent in February, according to CoreLogic.
Of course, this is for the 8 county Chicagoland area (and not just Chicago or Cook County alone.)
More interesting is what may be coming down the pike as mortgage delinquency rates remain in the double digits.
The local mortgage delinquency rate also increased from a year earlier, as 10.68 percent of area mortgages were at least 90 days past due vs. 10.69 percent in January and 10.42 percent a year earlier.
How big is Chicago’s shadow inventory?
What affect will it have on home prices going forward even as the housing market starts to show some life?
Chicago area foreclosure rate up in Feb. from last year [Crain’s Chicago Business, David Lee Matthews, April 26, 2011]
Not as big an effect as you think……people are not flocking out of the city – they need a place to live. So even if they don’t buy a place or they get kicked out of their houses/homes, they will rent. If all these people are added to the rental pool, rents will soar and investors will buy all the foreclosures and rent them out. Landlords WILL charge a premium and renters WILL pay it because they have no other choice (they can’t buy, etc.). This goes for ALL types of housing. Right now, the rental market is ridiculously hot – once these foreclosures come down the pike, it will become even hotter. EVERYONE (except the people on CC) seems to understand this.
Shadow inventory is huge. Tens of thousands of properties. Not just on bad areas either. Banks wait longer to foreclose of higher priced properties so as to wait longer to take the losses. Shadow inventory will be what continues to drive prices down for years to come. The market has not turned, but volume will pick up as prices continue to drop from the eventual release of shadow inventory.
As we’ve discussed here a few times before the real shadow inventory is all the homes being rented out by the accidental landlords. At the first signs of increasing prices these will all come back on the market.
As for foreclosures…take a look at the long term data from RealtyTrac, which is current through March and looks at just the city of Chicago: http://www.chicagonow.com/getting-real/2012/04/realtytracs-march-foreclosure-report-chicago/ Doesn’t look any worse than it has been – maybe even a bit lower.
Oh…and when the foreclosures do come on the market I don’t see them going any cheaper than non-foreclosure properties. The banks are holding out for good prices and getting them – often with multiple offers.
“Banks wait longer to foreclose of higher priced properties so as to wait longer to take the losses.”
If I were a bank I wouldn’t foreclose until market trades through. FASB doesn’t make them take the loss. Gov’t provides them with liquidity to make up for missing capital. Why sell down when waiting is free (or carrying costs are indirectly refunded by Fed). Just an opinion I came up with, the last time I was licking toads.
Here is some anecedotal evidence about shadow inventory: one of my neighbors, a pair of doctors/ surgeons, moved out of their townhome to Oak Brook (Clio!) last year. They wanted a house. Rather than seel their townhome (purchased for 750, 000 in 2006), they are letting it sit vacant. I talked to the owner the other day and he said they are prepared to do so for years, until the market rebounds.
I guess my point is: there is a large shadow inventory, but I guess from where I stand, people who can afford to do so are sitting on the houses rather than selling them.
Endora, this is a very special case you are talking about. How many households you think are comprised of two high earners? Also these guys were not overleveraged for their income level (they had a $750K property). Most people cannot afford to leave a property empty and buy another one.
“Most people cannot afford to leave a property empty and buy another one.”
Well then it is a net neutral, is it not? Whatever they need to sell will be replaced by whatever they need to buy. One offsetting the other?
Now off to find some toads…
“If I were a bank I wouldn’t foreclose until market trades through. ”
Except that homes deteriorate pretty quickly, and a crankhead with a proclivity for removing copper can cause $100k damage in a matter of hours.
“Rather than seel their townhome (purchased for 750, 000 in 2006), they are letting it sit vacant. I talked to the owner the other day and he said they are prepared to do so for years, until the market rebounds.”
This logic just drives me crazy. This is major, irrational, loss aversion. If they had the cash today that they could get from selling that place would they buy that townhome? No way! Well, that’s exactly what they are doing by letting it sit there. Is that the best use of their cash for the next 5 years? No way! I wish there were a way to sell these homes for people, invest the proceeds and have them pay me the property taxes and HOA, and then give them a call option to buy it back at the sale price. I’d make a fortune.
A question for the people who keep saying prices are going up. Is there any scenario where prices go down?
They keep saying everything has bottomed and they keep providing the same reasons but the prices keep going down year after year. Some people who can afford it have invested their money elsewhere. They pay for the high rents with the returns on the money they would have used for a down payment, while the landlord is being paid to manage a declining asset. In case you haven’t noticed over the last several years what has happened is things you own have decreased in value while things you consume have increased.
“Not as big an effect as you think”
come over to my area, Anon(ufo) will bring a laptop and use cook’s new all in one website to show you all the shadow inventory. i will walk you around to meet all the other shadow inventory that hasnt hit the grid yet.
its simple supply and demand that you should have taken a required 200 level when you were at UIC
endora, as we all know, doctors are terrible with money. I tend to ignore what they do and they actions they take in commerce because my experience is that the type of thinking and approach required to actually practice medicine are antithetical to critical thinking in most other regards. To me, regardless of income and wealth, letting a place stay vacant for a long time instead of selling it at a loss now reflects a fundamental failure at personal financial management. Shit, I know a guy who presumably must be a halfway decent clinician but who lets the people who manage his real estate office make him look bad by putting up a bunch of nonsensical puffery in his name.
With certain ranges of “shadow inventory,” I’m not sure whether it really matters that much if there is a lot of “shadow inventory.” It’s an aspect of the real estate market that people focus on because, in my opinion, they don’t understand the nature of real estate as an asset in the United States. When you focus on the fact that there is a lot of “shadow inventory,” it assumes that “the real supply is higher” or something like that, with the conclusion being that “the real value is lower” or something like that. The real value of something is what people are willing to pay for something now. Any decision to time a transaction a certain way is emotional if it’s not based on a belief that the value of an asset will appreciate enough that holding it for that time frame is beneficial. All that “shadow inventory” reflects is that real estate is illiquid, transaction costs are high, that the value of real estate is highly dependent on exogenous factors and that converting real estate back and forth between a personal asset and a business asset is primarily synthetic.
In short, if you believe that shadow inventory is problematic, articulate an argument about what that means or suggests. Observation of facts is not really meaningful unless you can set forth what you believe to be the consequences of your observation.
“In short, if you believe that shadow inventory is problematic, articulate an argument about what that means or suggests.”
easy: supply and demand. The supply of shadow inventory is high, as shown by default rates, DQ rates, properties in foreclosure 90+ days, etc; and the demand for properties, numerically, cannot absorb the shadow inventory, so prices must consequently fall. I work at a law firm that files foreclosures, and let’s just say, that since the robosigning agreement was reached with the large banks, foreclosure activity in this office has doubled. Rumors are that we’re looking to hire a few more additional attorneys.
Sure, a lot of these properties are in bad areas but there quite a few in good areas too. At least from my perspective, there seems to be no end to teh number of properties in foreclosure. the only thing stemming the tide now are short sales, those homedebtors not willing to go through foreclsoure but instead short sale. that’s nearly 40% of the market now IIRC.
I made an offer on a property nearly a year ago now. It was a short sale and had been sitting empty for months. My offer was accepted by the owner. The bank asked the owner to bring $25k to closing. He refused and did a deed in lieu of foreclosure. The property is still empty. I walk past it from time to time. The lock was broken on the door and I can tell by the door handle that it is still broken.
This is just one of thousands of properties sitting vacant. Every neighborhood has several. They go unnoticed.
As old people die, their houses often sit vacant too. My friend’s neighborhood has one of these. The amount owed on the mortgage is more than it’s worth. The family doesn’t want anything to do with it, so it just sits vacant. It’s been this way for several years. I can think of several friends of mine whose parents owe more on their houses than they are worth and as those parents die, the houses will sit empty since the family has no reason to take over the mortgage and the bank is slow to foreclose and then even slower to put the foreclosed properties up for sale.
“they need a place to live. So even if they don’t buy a place or they get kicked out of their houses/homes, they will rent. If all these people are added to the rental pool, rents will soar and investors will buy all the foreclosures and rent them out. Landlords WILL charge a premium and renters WILL pay it because they have no other choice (they can’t buy, etc.). This goes for ALL types of housing. Right now, the rental market is ridiculously hot – once these foreclosures come down the pike, it will become even hotter. EVERYONE (except the people on CC) seems to understand this.”
Let me get this straight. When the renter pool increases, rents soar. When the foreclosures are all turned into rentals and the apartment pool increases, rents also soar?
I know several properties in a two block radius that have sold at list price within three months of listing.
Anecdotes are fun.
Joe – I think prices stay at the current levels for an extended time. I don’t agree with your statement “They pay for the high rents with the returns on the money they would have used for a down payment”. Interest rates (which most other assets are bench marked against) are the lowest in decades so there is very little yield to collect on the down payment without taking much more risk (going out on the yield curve, buying equities, etc.) while rents are increasing. The reason I think we’re near bottom is just that the cap rate on current properties is very attractive (another way of saying the rent vs own is very skewed to own in Chicago). Unlike other markets where you have to bank on intangible reasons to justify property prices (ex NYC – saying everyone wants to live in NYC even while rent vs own is strongly in favor of renting) the Chicago market is empirically “cheap” or at least attractive.
“I know several properties in a two block radius that have sold at list price within three months of listing.
Anecdotes are fun.”
what does that have to do with anything?
“while rents are increasing. The reason I think we’re near bottom is just that the cap rate on current properties is very attractive”
What happens to prices when rents start decreasing?
G – You say “when” but you should say “if”. The “math” is very in favor of buy vs rent so even IF rents decrease it will still make sense to buy (unless rents fall by a very significant amount). I don’t think rents continue to increase – my opinion is they stay steady or decrease slightly. Housing prices don’t have to appreciate for buyers to make money – they just need to outperform the alternative investment (ie renting or for financial buyers the return on other asset classes).
“G – You say “when” but you should say “if””
yoss–You say “should” but you should say “could.”
G – So I take it you don’t disagree with anything else I stated?
Maybe the docs are letting their townhouse sit vacant because they can afford the $x0,000 loss per year from holding onto it, but they can’t afford the $x00,000 lump sum loss if they sell right now. Although, I don’t understand why they wouldn’t just rent it out and recapture at least some of their carrying costs.
yoss, It’s just the basics, so what’s to disagree with? Your bottom call? I like to see those.
“Let me get this straight. When the renter pool increases, rents soar. When the foreclosures are all turned into rentals and the apartment pool increases, rents also soar?”
Makes sense to me. Did you think people were opting for cardboard boxes or maybe just occupying a random park.
“Except that homes deteriorate pretty quickly, and a crankhead with a proclivity for removing copper can cause $100k damage in a matter of hours.”
from where the Bank is Standing, wouldn’t the eventual land value offset that loss? Assuming a quality property in a quality location attracts a high enough land value and a low quality property wouldn’t sell for much more with or without copper?
“Rather than seel their townhome (purchased for 750, 000 in 2006), they are letting it sit vacant. I talked to the owner the other day and he said they are prepared to do so for years, until the market rebounds.”
and
“Maybe the docs are letting their townhouse sit vacant because they can afford the $x0,000 loss per year from holding onto it, but they can’t afford the $x00,000 lump sum loss if they sell right now. Although, I don’t understand why they wouldn’t just rent it out and recapture at least some of their carrying costs.”
If you put a price on the cost of being an accidential landlord especially for a busy doctor, doesn’t it make sense on some level to simply wait it out IF you CAN afford to wait it out.
What would that $750K townhome sell for today? If you’re talking a six figure difference, I think you wait. Though I would think you would find someone friend to rent it to even for half the mortgage just to offset those costs.
Yoss,
I did mean riskier investments than banks. I think real estate is just as risky and has been proven both highly risky and wrong over the last 5 years. The lower interest rates are forcing people to chase yield in riskier investments and the people who have done so have been richly rewarded. You can argue with the Feds policies but the results are fairly clear at least up until now. Buying a house because you want to live there and considering it an expense makes sense. Buying one and considering it an investment at this time doesn’t seem to me to make a lot of sense.
“No way! I wish there were a way to sell these homes for people, invest the proceeds and have them pay me the property taxes and HOA, and then give them a call option to buy it back at the sale price. I’d make a fortune.”
Gary, Ze would advise against that trade.
“wrong over the last 5 years”
Not if you live in Rio 🙂
buying a home as an investment: it better cash flow hansomely or else it’s not worth it. you can get nice homes in marginal areas that cash flow hansomely but that’s work. so is buying and rehabbing properties. That’s work too. The days of buying a two-flat and collecting a hansom profit for a little work are over, and everyone and their mother is looking for that property, and it drives prices up and yields way down.
Real world example of a bank leaving a house vacant and the damage that can be done. 2035 W. Henderson. I’m going to use approximate numbers as I don’t remember the details. On sale for 1.3 or something like that. Vandals break in and steal copper worth less than $100. but cause flooding which causes mold. Bank eventually drops price and sells for 660,000.
1. I don’t think the townhome would sell for that much less, although realtors on site might disagree (It is a 3-4 bedroom in Dearborn Park II; from my knowledge of the market, the prices on these have remained fairly constant)
2. I think the bottom line with the townhome that I am talking about is that they don’t need the money. Two big time oncologists, affiliated with a prestigious university. It is not what I would do (or could do, for that matter) but it is their choice.
“what does that have to do with anything?”
Everyone gives their anecdote, thinking it means much in the scheme of things. Sarcasm.
G – I’m not “calling a bottom”. But I do think the total return on real estate will be positive one year forward. This could mean prices are flat but an investor made 5% yield or a buyer is 1% better off owning vs renting.
Joe – I understand your aversion to real estate investing. It is much different that owning a stock or bond (liquidity, transactions costs, etc.). I personally think it is currently less risky than the stock and high yield market.
I would think that property management on behalf of “accidental landlords”, allowing them to recover at least some of their carrying costs without the hassles of tenant management, would be a good business to be in right now. And a property occupied by good/vetted tenants is less likely to deteriorate than one that sits empty for years.
@joe, you referring to 2035 W. Hutchinson? If you had cash to buy it, it was a steal at $660K. You couldn’t get a Bank loan on it in it’s condition.
I have a beautiful Tokyo condo that I bought in 1989. I have been holding on to it and I will sell it when prices increase…..It was either that or invest in Apple stock.
I know an accidental landlord and his realtor told him to wait until next year to list…
“Makes sense to me.”
GDR, ’tis a pity, really.
Just think of the timing. The foreclosures mean more renters today. More renters today drive up rents today. Banks sitting on REO mean more rentals tomorrow. More rentals tomorrow drive down rents tomorrow. Lower rents create more foreclosures, thus continuing the virtuous cycle of increasing housing affordability.
Of course, foreclosures aren’t the only rentals to come. Many units constructed in the condo bubble have still never been occupied. Many new apartment units are currently under construction. Nearly all of these units will be occupied someday.
I did mean Hutchinson. I know you needed cash and it was a steal.
“buying a home as an investment: it better cash flow hansomely or else it’s not worth it. you can get nice homes in marginal areas that cash flow hansomely but that’s work. so is buying and rehabbing properties. That’s work too. The days of buying a two-flat and collecting a hansom profit for a little work are over, and everyone and their mother is looking for that property, and it drives prices up and yields way down.”
All the real estate geniuses and experts here, all the mini-Trumps of Chicago should take a look at the 10 year chart for PSA. In hindsight, it’s been the ultimate armchair “little work” RE investment. Talk about profit and not having to get your hands dirty with landlording.
“Yoss – I’m not “calling a bottom”. But I do think the total return on real estate will be positive one year forward. This could mean prices are flat but an investor made 5% yield or a buyer is 1% better off owning vs renting.”
If you buy and prices remain flat you are much better off renting.
” I personally think it is currently less risky than the stock and high yield market.”
i’ll agree with that…
JPS, decent prop mgmt is costly, and good prop mgmt is very costly. Accidental LL’s tend to underestimate this cost, not surprising given the general lack of understanding that got them to that point.
I laugh at the thought of hedge funds believing they will buy hundreds, or thousands, of cheap crapshacks nationwide for rentals. Small property management, like residential lending, requires local knowledge and oversight.
” I personally think it is currently less risky than the stock and high yield market.”
i’ll agree with that…”
But I’m sure you are both aware you have been wrong over the last several years. I don’t think real estate is day trading and picking a bottom can be dangerous. Always remember the trend is your friend.
” I personally think it is currently less risky than the stock and high yield market.”
Versus high yield – probably so
Versus equities- absolutely not. You confuse realized return for expected risk.
I’m not stating opinions. Just telling you what the market sees 1 year forward. Agree or disagree all you want. Again, not my opinion.
Joe – That is not true. Take a 2BR renting at $2500 with a market value of $325k and yearly costs (taxes + common charges) of $11k. Total cost to rent = $30k. Total cost to buy assuming 4% mortgage w/ 20% down = (1241.29×12) + 11k = $25.9k. Need to subtract the return you’d make on the 20% down payment – assume 4% x $65k = $2.6k so total cost to buy is $28.5k. Need to include the mortgage deduction (worth approx $2.5k for 25% tax rate) and property tax deduction (worth another $1.25k) = $3.75k. Total savings to buy vs rent = $1.5k + $3.75k = $5.25k per year. That assumes no closing costs for buyer but guessing they are less than $5k so you will still be ahead. That assumes no property price appreciation. This is a real world example of a 2/2 in River North that is currently being rented.
“joe (April 27, 2012, 10:44 am)
” I personally think it is currently less risky than the stock and high yield market.”
i’ll agree with that…”
But I’m sure you are both aware you have been wrong over the last several years. I don’t think real estate is day trading and picking a bottom can be dangerous. Always remember the trend is your friend.”
I am not wrong over the last 5 years because I am giving an opinion of the future volatility – I expect the future volatility of housing prices to be lower than the future volatility of the stock market. We’ll have to check back in 1 year to see if I’m correct.
Yoss,
Just at a quick glance your closing costs would be much closer to $20,0000. There is almost no scenario where buying is better than renting if you are only staying 1 year.
“There is almost no scenario where buying is better than renting if you are only staying 1 year.”
Nearly always true, no?
“how big is chicago’s shadow inventory?”
SOOOOOOOOOOOOOO BIG!!
Joe – I have stated many times it depends on your time horizon. My analysis is for one year and doesn’t assume you sell every year. The broker fee needs to be prorated over the horizon. So assuming 20k in closing costs you would need to stay for approximately 4 years to justify buying vs renting. If you stay for 5 years and see no appreciation you will make money and not lose money.
“I am not wrong over the last 5 years because I am giving an opinion of the future volatility – I expect the future volatility of housing prices to be lower than the future volatility of the stock market. We’ll have to check back in 1 year to see if I’m correct.”
Volatility can be an investors best friend. Slow declining prices an enemy. There are many reasons to buy a house. Buying one and thinking you are making money is not one of them. The returns you have been able to receive over the last several years not buying real estate easily have been able to pay the higher rents.
I have no idea if housing is going to go up or down. I don’t think anyone else does either. I think people buying and expecting a return (especially if they have limited capital) doesn’t make a lot of sense.
Current US homeownership rate is ~63%, down from the 04 peak of 69%. But what if the US rate continues to trend towards Germany’s 43% rate? Then prices would be unlikely to “revert to the mean” and “buying the dips” would be a loser because the story would then be “Paradigm Lost.”
http://en.wikipedia.org/wiki/List_of_countries_by_home_ownership_rate
“I think the bottom line with the townhome that I am talking about is that they don’t need the money. Two big time oncologists, affiliated with a prestigious university. It is not what I would do (or could do, for that matter) but it is their choice.”
Academic physicians make far less (over 50% less) than docs in private practice. In fact, two academic docs probably make less than one private practice doc (and they each probably make 150-200k each) – that is a great income, but now what most people think 2 docs bring in
“how big is chicago’s shadow inventory?”
bigger than my mother in-law’s azz
bigger than my wife’s hair in the 80’s
bigger than Ze’s stash
bigger than anonny’s unicorn list
bigger than annony’s jealousy of a groove nod in bri bri’s posting
bigger than icarus complaining he gets left out of lists
bigger than things that jenny dislikes
bigger than CC’er going off topic 5 posts in
bigger than Miu miu’s pompousness
bigger than anon’s cyborg brain
bigger than Chichow olny coming out for old town properties
bigger than G’s spreadsheets
bravo! groove.. bad scooter has been waiting for that one..
Yoss,
If you earned only 4% on your money versus a 4% mortgage after 5 years of appreciation I’m sure it would be better to buy than rent.
My numbers are dramatically different than that. Is there anyone who hasn’t earned double digit returns in the market over the last several years. Is there anyone who hasn’t seen declining real estate prices over the last several years?
Joe.. Yoss is correct…
“I expect the future volatility of housing prices to be lower than the future volatility of the stock market. We’ll have to check back in 1 year to see if I’m correct.”
with the exception of the above… 2 of 3 are already very very liquidly estimated. No need to wait.
Joe – Volatility can also be their worst nightmare. Currently it is much cheaper to buy than rent (with the typical caveat about time horizon) and if prices are flat in 10 years I will be ahead financially when looking at what I’m paying to own vs what I would pay to rent over that horizon.
and Groove for the work alone, whoever gave you the negative 1, you must find and beat like the lil’ bitch that they are.
as for anon.. time to out him!
http://www.rottentomatoes.com/m/prometheus_2012/trailers/11164096/
“if prices are flat in 10 years I will be ahead financially when looking at what I’m paying to own vs what I would pay to rent over that horizon.”
Yoss – it depends. If you don’t get any appreciation after 10 years you probably could have invested that money and gotten a better return somewhere and then you would have been better off renting. You have to get a return on your money or else you get crushed financially by inflation.
Joe – Again – past performance is not indicative of future performance. I’m not arguing that you would have been better of investing in RE 5 years ago (you wouldn’t), I’m arguing you’d be better off buying RE vs renting now (normal caveat on time horizon – aka NCOTH). The rent vs buy calculation is transparent. Whether you would be better taking your 20% down payment and investing in the stock market while paying rent vs buying a place will depend on the future return on stocks. RE investing should be compared to other fixed income assets – high yield / sov debt / treasuries as it is mainly a yield product. That is why cap rate is the benchmark on RE investing – not expected appreciation of the property.
Man who can give groove’s post thumbs down. Even I who were mocked gave it a thumb up. You guys need a sense of humor. BTW, why you are at it Groove add to the list:
Bigger than Groove’s American exceptionalism
i.e, he is an accountant himself but says all other accountants are boring yet he thinks he is the exception to the rule : )
Joe – You don’t have to get an explicit CASH return on your money! You just need to outperform the alternative – which is renting. Use the example above but for 10 years. You save $5.25k per year in cash = $52.5k. Assuming no appreciation for 10 years you pay $20k for broker fees and sell for $325k (pre-broker commish). Your current loan balance is $206.5k so you get $118.5k minus the $65k you put down = $53.5k. Total out-performance of buy vs rent = $52.5k + $53.5k – $20k = $86k. This is on a capital commitment of $65k = 132% return over 10 yrs = 8.8% compound return. Not bad in my book.
“Oh…and when the foreclosures do come on the market I don’t see them going any cheaper than non-foreclosure properties. The banks are holding out for good prices and getting them – often with multiple offers.”
Generally I would disagree with this. However, a few weeks ago I placed an offer on a foreclosure, and the bank quickly responded that there were multiple offers. I put in my highest offer and after two weeks, no response and the unit isn’t under contract. I guess the bank is expecting a good price, but they aren’t getting it from multiple offers….. What now for the bank?
“But what if the US rate continues to trend towards Germany’s 43% rate?”
It won’t at least for a very long time, like another 100 year at least. Housing and land is way too cheap here.
“Man who can give groove’s post thumbs down. Even I who were mocked gave it a thumb up. You guys need a sense of humor.”
I didn’t thumbs down it, but I am glad I didn’t make the list. 🙂
Yoss –
it all comes down to the return you can get on your money. If you get 4% annually on your money then you should buy. If you can get more and real estate stays flat then you should rent. I think the low rates are pushing up the markets and commodities and that’s where your investments should be. I think your house should be viewed as an expense and a place that provides enjoyment.
“Bigger than Groove’s American exceptionalism
i.e, he is an accountant himself but says all other accountants are boring yet he thinks he is the exception to the rule : )”
LOL, but in all fairness i am not a public accountant.
“benjamon9 (April 27, 2012, 12:26 pm)
I didn’t thumbs down it, but I am glad I didn’t make the list”
bigger than beji9 passive aggressive way of saying “what about me?”
Anecdote #452:
My friend who borrowed $450k to build a new house on her old house’s lot hasn’t paid a dime since 2009. She had quit her job, and hasn’t worked for years, either, but her sons live in the house, too, and keep the utilities on. She’s in the middle of the second foreclosure proceeding (1st one dismissed; robosigning I think), and she’s gotten yet another continuance. Since 2009; that’s 3 years of mortgage payments, and the house is severely underwater. This is part of the shadow inventory, too.
GROOVE; what’s this “use cook’s new all in one website to show you all the shadow inventory.” that you’re talking about?
“use cook’s new all in one website to show you all the shadow inventory”
ccrd
treasurer
assessor
all in one website. Sorry for the grammar and spelling
huh? what? someone say Old Town???
TRICKED! DECEIVED! SWOON-DOGGLED! *grrr*
guess I’ll go back to juking everyblock stats for 60610 and 60614
“GROOVE; what’s this “use cook’s new all in one website to show you all the shadow inventory.” that you’re talking about?”
Cook county has a new website that combines the info contained on ccrd’s, assessor’s, etc’s websites. One stop shopping for your real estate info.
http://www.cookcountypropertyinfo.com
“huh? what? someone say Old Town???
TRICKED! DECEIVED! SWOON-DOGGLED! *grrr*”
LOL
welcome back 😉
Logansquarean –
Are your friend’s sons working adults or just kids?
If they are adults and still live at home they should help their mom with the mortgage.
Is this the same lady you mentioned some time ago who had quit a job which was too stressful?
“easy: supply and demand. The supply of shadow inventory is high, as shown by default rates, DQ rates, properties in foreclosure 90+ days, etc; and the demand for properties, numerically, cannot absorb the shadow inventory, so prices must consequently fall”
You’re grossly overstating the commoditization of real estate and anyway prices fall only if the market actually clears at lower prices. As is, there’s all kinds of inventory sitting around – that’s the whole point. Shadow inventory is a result, not a cause, of lower prices.
#Cook county has a new website that combines the info contained on ccrd’s, assessor’s, etc’s websites. One stop shopping for your real estate info.
http://www.cookcountypropertyinfo.com
OMG, that is BRILLIANT!
thanks for sharing that.
And, yes, Milkster, this is the same lady I mentioned before. One kid is in college works p/t, the other is modestly employed, but between the 2 kids and a boarder, they couldn’t scrape up the monthly mortgage, after the rate adjusted, and at this point she’s so much in arrears, that the only way she could ever swing it is if they forgave over half the principal, and all the interest, and she still needs to GET A JOB. I think she’s just given up on that, however I think she should take any old job at this point, but hey, that’s just me…
“they can’t afford the $x00,000 lump sum loss if they sell right now”
That makes little sense as apparently the doctors can purchase a new home. Are they doing that with or without a mortgage? If without then they clearly should sell and just take out a small mortgage to defer the hit of selling it over a short time frame. If they are using a mortgage for the new place then perhaps they should look at a community college for a basic economics class. They must have been too busy taking science classes. My guess is that your friend is confused. If they think that they can afford to let it sit empty for years then they are financially really stupid. The risk reward of empty is much likely higher than a well researched and decently financed rental tenant who agrees to a large security deposit. Yes they do exist! Or perhaps an employee at their practice that can take the value of a significantly reduced or free town home rental as deferred compensation. That in turn would make them more money in the practice in order to get out of the current situation. It would also make for a happy employee, great tenant, and bridge to get them the years needed to potentially break even. It also minimizes the risk of and added insurance costs of being left empty.
BTW Groove – great list!
“You’re grossly overstating the commoditization of real estate and anyway prices fall only if the market actually clears at lower prices”
So if there are no bids on my asset it means that it isn’t listed for too much?
You’re an idiot.
“Cook county has a new website that combines the info contained on ccrd’s, assessor’s, etc’s websites. One stop shopping for your real estate info.”
I find the blockshopper website interesting and full of good info.
“The local mortgage delinquency rate also increased from a year earlier, as 10.68 percent of area mortgages were at least 90 days past due vs. 10.69 percent in January and 10.42 percent a year earlier.”
This is huge. But what it doesn’t do is break out how seriously delinquent these mortgages are. There is a big difference between a mortgage 120 days past due and one where the owner has been living there free for over a year.
I don’t see how Chicagoland RE can bottom with such a statistic in any case: over 10% of people not only are late on their mortgage, they’re over three months late. This statistic should tell those hoping for high valuations how screwed they are, but hope springs eternal.
“All the real estate geniuses and experts here, all the mini-Trumps of Chicago should take a look at the 10 year chart for PSA. In hindsight, it’s been the ultimate armchair “little work” RE investment. Talk about profit and not having to get your hands dirty with landlording.”
Yes but many people don’t treat tangible and non-tangible assets the same. Many people need to see something tangible to trust it. Usually these people don’t have a lot of money, but if you give them leverage like a $424,000 place for only $14,350 down yes they can sometimes come up with the 14k to influences RE prices at the 400k+ level. In Cali I think its all the way up to 647k with 22k down.