Market Conditions: June Sales Fall 15.7% YoY as Higher Mortgage Rates Bite
We’re finally seeing a cooling in the red hot Chicago housing market thanks to higher mortgage rates.
From the Illinois Association of Realtors:
The median price of a home in the city of Chicago in June 2022 was $367,000, a 4.7 percent increase from June 2021, when it was $350,500.
In Chicago, home sales (single-family and condominiums) in June 2022 totaled 3,293 homes sold, down 15.7 percent from June 2021 sales of 3,908 homes.
Reminder that last June was the hottest for June home sales since our data began in 1997.
Thanks to G for the historical sales data:
- June 1997: 1,817
- June 1998: 2,214
- June 1999: 2,435
- June 2000: 2,513
- June 2001: 2,451
- June 2002: 2,590
- June 2003: 2,891
- June 2004: 3,752
- June 2005: 3,850
- June 2006: 3,557
- June 2007: 3,127
- June 2008: 2282
- June 2009: 1981
- June 2010: 2526 (tax credit sales)
- June 2011: 1841
- June 2012: 2246
- June 2013: 2729
- June 2014: 2846
- June 2015: 3202
- June 2016: 3321
- June 2017: 3380
- June 2018: 3191
- June 2019: 2850
- June 2020: 2072
- June 2021: 3908
- June 2022: 3293
Here is the monthly median price data:
- June 2008: $309,945
- June 2009: $242,050
- June 2010: $234,250
- June 2011: $207,000
- June 2012: $216,700
- June 2013: $254,900
- June 2014: $275,000
- June 2015: $288,250
- June 2016: $299,900
- June 2017: $306,750
- June 2018: $314,900
- June 2019: $319,000
- June 2020: $329,000
- June 2021: $350,500
- June 2022: $367,000
“In June, the median sales price increased despite concerns about inflation and interest rates,” said Antje Gehrken, president of the Chicago Association of REALTORS® and president and designated managing broker of A.R.E. Partners. “This shows that there is still buyer demand this summer, although it’s restricted by inventory, impacting sales.”
Statewide inventory fell 18.9% in June to 25,781 homes from 31,807 homes last year. The average home sold in 21 days down from 27 last June.
Chicago mirrored the statewide trends. Chicago inventory fell 18.8% to 7,312 homes from 9,008 last year. Days on the market also fell to 26 from 32 days in 2021.
“Price growth has continued throughout Illinois while sales remain low,” 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. “Increases in interest rates and concerns about inflation have led consumers to become cautious about home purchases, which is likely to lead to declines in house price growth in the future. However, we do not foresee any major changes in the trends for prices or sales over the next three months.”
The average 30-year fixed rate mortgage was 5.52% in June 2022 up from 5.23% in May and up from 2.98% last year.
With sales slowing, inventory is rising.
But will it be enough to give buyers the advantage this summer and into the fall market?
Illinois homes continue to sell briskly in June [Illinois Association of Realtors, Press Release, by Bill Kozar, July 20, 2022]
The low inventory in June was a surprise but those are from buyers rushing out to close with their lower mortgage rates.
Going forward, the market has slowed. If you’re a seller, do you wait to list? If they wait, it could mean that little new inventory will really come on the market and overall inventory, even with lower sales, will remain tight.
Unlike 2008, it’s not like there are dozens of new construction condo buildings trying to sell units.
“The low inventory in June was a surprise but those are from buyers rushing out to close with their lower mortgage rates.”
How is this surprising? Rising rate enviroment pulled demand forward/FOMO
There’s still a fair amount of disconnect between asking prices at 3% Vs +5%.
Between inflation, (potential) recession, Interest rates and Sellers needing to adjust pricing expectations, I’d expect to see a lot of softness on the buying side
A couple of anecdotal data points
Buyers looking to upgrade are going to have some serious HMAM sticker shock until housing prices come down.
The majority of buyers are becoming pickier based on the above, with un-updated homes bearing the brunt. Either owners are unrealistic in their ask or if they do drop the price on non-updated properties, buyers arent looking to take on a project to update. I get the latter as home contracting is still a goat rope, even with commodity prices softening.
Higher mortgage rates should reduce sales but not necessarily increase market times. Existing homeowners that decide not to buy another place won’t be selling their place either. So supply and demand both go down. Supply will only increase among the very old who are dying off or moving into assisted living.
And if market times don’t go up prices might not go down that much. However, there are indeed rumors of price reductions nationwide so something is not adding up in my logic?
“However, there are indeed rumors of price reductions nationwide so something is not adding up in my logic?”
Price reductions and market declines are two separate calculations. Listing a home for $600 and cutting the price to $550 before its finally sold doesn’t mean the house depreciated if you originally bought it for $500 just means the appreciation wasn’t as much as you originally thought it would be when you listed.
Also the psychology of the seller is probably fine cutting if they finally sell at a 10% appreciation from the original purchase price but are reluctant to cut below what they originally paid for.
“Supply will only increase among the very old who are dying off or moving into assisted living.”
Baby Boomers still retiring at 10,000 a day so they are still selling and moving around the country. May even sell a house in the suburbs and move downtown like pre-pandemic. Or into assisted living, like you said Gary.
And always people who are moving for job reasons too. Not everyone works from home. There are still relocations.
I wonder if we will finally see the return of relocation packages where the company buys your house to make sure you don’t take a loss? It’s been about 10 years since I’ve seen those.
I was just talking to someone who bought a vintage place on LSD in Lakeview last fall and just moved in now and sold their North Shore home. Timed it perfectly on rates and prices. I’m jealous.
“I wonder if we will finally see the return of relocation packages where the company buys your house to make sure you don’t take a loss?”
Around 1993 Circuit City saved my ass. We had lost twice our down payment on a house in NJ. The market in NJ was tanking and nobody knew the right price. CC made a commitment to me and made up for at least half my loss. It’s been a long time so I don’t know the exact amount but it was at least half the loss.
The Case Shiller numbers came out today and it looks like condo prices in the Chicago area are accelerating. For the last 7 months each YOY increase has gone up. For the last 12 months they are up 7.3%
“I was just talking to someone who bought a vintage place on LSD in Lakeview last fall and just moved in now and sold their North Shore home. Timed it perfectly on rates and prices. I’m jealous.”
—————————————-
You’re jealous that they bought at the top of the market and sold with prices softening?
“The Case Shiller numbers came out today and it looks like condo prices in the Chicago area are accelerating. For the last 7 months each YOY increase has gone up. For the last 12 months they are up 7.3%”
Is that a reflection of whats selling/on the market Vs appreciation?
JohnC:
They sold at what are likely near-peak prices for North Shore (home prices there haven’t come down yet), but bought the city unit last year before interest rates exploded.
What’s so complicated to understand?
“Is that a reflection of whats selling/on the market Vs appreciation?”
They look at what’s sold and for each home sold they figure out the appreciation from the previous sale and somehow they aggregate that. So it calculates appreciation based on a sample of what’s sold. You can’t calculate appreciation without a sale.
Just posted my July update: https://www.chicagonow.com/getting-real/2022/08/chicago-real-estate-market-update-july-home-sales-fall-off-cliff/
Sales finally cratered. Lowest sales in 10 years. Contract activity still way off so this is going to be persistent. Months of supply finally starting to rise but market times are still really fast. But that could just be a lagged effect since July closings went under contract in June and even May.
Sales so low its HAWT ™
“Sales so low its HAWT ™”
JohnnyU actually read one of Gary’s updates?
Oh wait- it’s the one that says sales fell off a cliff.
What a shocker. He ignores Gary’s updates for the last 18 months because it doesn’t fit his WRONG bearish narrative and now he shows up and is like, “sales are low.”
Ba ha ha ha.
Pathetic.
Bears really have to get their actual “argument” about the doom Chicago is supposed to be having right now. The only big city where prices have actually fallen nationwide is in San Francisco. Yes, even Chicago is up 6% year-over-year. And our downtown stinks right now but the neighborhoods are holding up pretty well. People still want that single family home.
But buyers have moved to the sidelines. They are adjusting to the higher mortgage rates and that’s going to take some time.
“Months of supply finally starting to rise but market times are still really fast.”
You can definitely see the rising inventory even when doing a simple search on Redfin. A neighborhood that might have had 200 properties for sale in February now has 400. It’s still low, just not record lows like a few months ago. That is good- and healthy- for the housing market.
Downtown condo inventory is growing quickly again, which is a bad sign for downtown. Prices going nowhere. Some sellers selling below their prior purchase price.
Strangely, luxury remains robust, both downtown and in the neighborhoods.
Number of months of inventory is up but it’s still a sellers market.
Mortgage rates have come down from 6% but remain elevated. The market will always be slower over 5%. I expect inventory to remain higher for the next several months.
Thanks for posting the updated data Gary.
“But buyers have moved to the sidelines. They are adjusting to the higher mortgage rates and that’s going to take some time.”
Yes and yet you ignore the effects of a rising rate environment pulling sales forward, creating these records. You can also add in the effects of M2 supply but thats a story for another day
“People still want that single family home.”
Wernt you singing the praises of shitty 2/2’s?
These people are f’d for the next 5 years
“Yes and yet you ignore the effects of a rising rate environment pulling sales forward, creating these records.”
Huh?
I have never done any such thing. I’ve been very clear over the last 3 to 4 months what is going to happen to the Chicago housing market. I’ve been surprised at how resilient it was through the spring, however. I thought we’d see declining sales starting as soon as May. But those under contract who had rate locks at the lower rates went ahead and bought anyway.
The job market is still strong so that is underpinning the market.
You could tell with Chicago’s inventory that it massively slowed down in July but there does seem to be a stabilization now. There isn’t a ton of inventory coming on the market either so inventory levels are remaining higher than earlier this year, but not skyrocketing. A bigger slowdown in the economy is going to impact sales further, however.
Many sellers are just going to decide to wait until the spring, perhaps, especially as the economy slows. If I had the choice, and not everyone does, I would probably do the same.
But the market conditions vary by neighborhood. SFHs are still in demand. Condos, not as much. And inventory is spiking downtown which means prices are lagging. Some buyers will get deals again. I’m seeing some properties selling under 2012 prices downtown again.
“Wernt you singing the praises of shitty 2/2’s?
These people are f’d for the next 5 years”
You shouldn’t buy ANY real estate with the intention of living there a year or two. I don’t care what city you are in. There are too many transaction costs associated with it.
And in Chicago, with lower appreciation rates, you will certainly need several years of ownership just to cover the realtor fee.
I hope that Millennials and GenZ prepare for the future better than GenX who thought they could live in a condo for 3 years and then move to the SFH when they had kids.
“GenX who thought they could”
Ok boomer.
“I have never done any such thing. I’ve been very clear over the last 3 to 4 months what is going to happen to the Chicago housing market. I’ve been surprised at how resilient it was through the spring, however. I thought we’d see declining sales starting as soon as May. But those under contract who had rate locks at the lower rates went ahead and bought anyway.
The job market is still strong so that is underpinning the market.”
Complete lie and if the market is so strong why’d it fall off a cliff?
“I hope that Millennials and GenZ prepare for the future better than GenX who thought they could live in a condo for 3 years and then move to the SFH when they had kids.”
The oldest Millennial is 40 – It aint been GenX thats been buying the 2/2 shitbox over the last 10 (and more likely 15 years
Sober up granny
“I hope that Millennials and GenZ prepare for the future better than GenX who thought they could live in a condo for 3 years and then move to the SFH when they had kids.”
First, for about the 100th time, Millennials and GenZ should rarely be mentioned in the same breath. I have neighbors who are millennials and are parents of my kids’ school classmates. They are tenured school teachers and brain surgeons and members of Congress and own plumbing companies and have retired from the military. Many of the Founding Fathers were Millennial-aged. We need to stop conflating them with people who are as young as my fifth grader.
Second, as far as preparing for the future goes, I’d say Gen X overall has done pretty okay. I am one of the only Gen Xers in both my current circle of closer friends and broader social network who does not own a second home. Most of them plan to retire (or be doing very little in exchange for money) in 10 years, at around 60 (I’ll be billing 1800+ a year into my early 70s). Those who obtained degrees and started to buy homes, including starter condos, during the 90s (as most upwardly mobile GenXers did) are generally in much better shape than those who did so during the first decade of the 21st century (as I did).
“I am one of the only Gen Xers in both my current circle of closer friends and broader social network who does not own a second home.”
The humblest of humblebrags.
My “broader social network” includes many doing much better than I, yet I couldn’t describe them as even ‘mostly’ owning second homes.
“Those who obtained degrees and started to buy homes, including starter condos, during the 90s (as most upwardly mobile GenXers did)”
Half of Gen X was 26 or under in 1999. And most even upwardly mobile X’ers were rightly considered slackers through their 20s, and only 1/3 turned 30 in the 90s.
You aren’t comparing yourself fairly.
Pretty big difference between owning a pre-manufactured home on the Wisco River Vs 6Br condo @ JHole
2nd home for most non HNW is a bit of a lifestyle choice/trade-off IME/IMO
Probably depends a bit on how one grew up and what fields they went into
“The humblest of humblebrags.”
Was going to also note that we’re pretty much the only ones who didn’t set foot in Europe this summer, but thought better of it!
“And most even upwardly mobile X’ers were rightly considered slackers through their 20s, and only 1/3 turned 30 in the 90s.”
Perhaps my level of slackerdom in the 90s should have been viewed more favorably than it was.
“2nd home for most non HNW is a bit of a lifestyle choice/trade-off IME/IMO”
True, and probably pretty geographically dependent.
“First, for about the 100th time, Millennials and GenZ should rarely be mentioned in the same breath.”
Yes, they should. Oldest GenZ is now 23 or 24 years old. They are just as much “Millennial” as those 28 year olds who are looking to buy for the first time.
You are thinking of older Millennials who are now 41 or 42 and who consider themselves to be GenX, in all reality, because they did not go to high school with cellphones.
Older Millennials were 22 or older during the great financial crisis and have a different outlook than the younger ones who were not laid off and have never lived in their parent’s basement for years. Lol. The “millennials” is a strange generation because there is such a difference between the old versus the young ones. It will be true of GenZ too but we’ll have to wait about 15 years to see how that plays out.
“Many of the Founding Fathers were Millennial-aged. We need to stop conflating them with people who are as young as my fifth grader.”
No offense, but American lifespans have doubled in the last 100 years so to compare them to the Founding Fathers generationally is silly. Marriage age was also over a decade younger and the Founding Fathers all got married younger too. Does that mean we need to too? Dumb.
“Complete lie and if the market is so strong why’d it fall off a cliff?”
Because mortgage rates rose the most, and quickest, in 40 years and buyers said, “hell no”?
Lol.
Do you ever argue ANYTHING that relates to what is actually happening in the housing market? I know you haven’t bought a property in 30+ years JohnnyU, but maybe you can think back about what it was like to be buying and wondering if the bank was going to approve you (especially now with all the checks they make on your credit and the questions about why you missed that car payment one time in 1995.)
And prices in Chicago were at all-time highs with bidding wars and little inventory. Then suddenly rates surge and those who hadn’t locked in rates yet were spooked and decided to “wait” so they didn’t buy.
It will take time to shake out. Rates are down off the 6%. That will help the market. But anytime they are over 5%, the sales will slow. It happened in 2018-2019 and it is happening this time too.
Chicago’s real estate market has been red-hot for 24 months. It was never going to stay that hot forever. And now it’s cooling.
Keys are:
1. What happens with the job market? If Chicago avoids big layoffs and we have a shallow, 6 month recession, then the market will just slow and we will see little appreciation. Downtown has too many units for sale and it’s still out of favor with buyers so inventory will likely build there again. Buyers can get deals if they are patient. In the neighborhoods, inventory is too low, especially for single family homes.
2. What happens with mortgage rates? If they stay in the 5s, the market will adjust to them in the next few months. Buyers will trade down so they can afford the monthly payment. Rents are at all-time highs so buying can be cheaper depending on the neighborhood. If rates go back to 6% or higher, then the housing market will slow further.
It’s really just about the economy. Currently have a 3.5% unemployment rate. The rich are still buying so they are feeling okay despite the stock market weakness. I never thought I’d see that. They are usually very stock market sensitive.
“The oldest Millennial is 40 – It aint been GenX thats been buying the 2/2 shitbox over the last 10 (and more likely 15 years.)”
Yeah- it actually HAS been GenX and the oldest Millennials buying the majority of the condos. Biggest group of Millennials is 29-33 years old now. They are skipping the condo buying and buying the single family home instead because they will go right to family formation. GenX, who was 33 10 years ago, definitely DID buy that 2/2 that was on sale after the housing bust.
And oldest Millennial is not 40. They are 41 or 42 now. Time flies!
Also, it’s dumb to extrapolate one month worth of data as what the “market” is actually doing.
Sales fell off a cliff in every major metro area in July.
Las Vegas down 36.8%
Denver down 31.6%
Nashville down 19.8%
San Diego down 43.3%
It looks the same everywhere. Chicago is no different. But we didn’t have a bubble here so we’re not going to have a hard landing.
“Because mortgage rates rose the most, and quickest, in 40 years and buyers said, “hell no”?”
On the other hand you argue that Demographics are the unstoppable force and the job market is stronk!
” Do you ever argue ANYTHING that relates to what is actually happening in the housing market? I know you haven’t bought a property in 30+ years JohnnyU, but maybe you can think back about what it was like to be buying and wondering if the bank was going to approve you (especially now with all the checks they make on your credit and the questions about why you missed that car payment one time in 1995.)”
I’m not as old as you granny and you are wrong angain about property purchase. The rest of your post is some Sex in the City -type fantasy about home purchasing. If you’re at 3X income, a decent job, etc you shouldnt be concerned. At 4-5X, yeah you’re living beyond your means. Also buying at 3X allows one the ability to max their 401K and have a chance at $1MM after 20 years
“And prices in Chicago were at all-time highs with bidding wars and little inventory. Then suddenly rates surge and those who hadn’t locked in rates yet were spooked and decided to “wait” so they didn’t buy.”
You keep saying bidding wars, yet there were plenty of properties that languished. To most sober folks 5-10% of properties that meet your criteria doesnt mean that its a buy now or be priced out forever scenario
“Keys are:
1. What happens with the job market? If Chicago avoids big layoffs and we have a shallow, 6 month recession, then the market will just slow and we will see little appreciation. Downtown has too many units for sale and it’s still out of favor with buyers so inventory will likely build there again. Buyers can get deals if they are patient. In the neighborhoods, inventory is too low, especially for single family homes.”
What does this word salad even mean?
“2. What happens with mortgage rates? If they stay in the 5s, the market will adjust to them in the next few months. Buyers will trade down so they can afford the monthly payment. Rents are at all-time highs so buying can be cheaper depending on the neighborhood. If rates go back to 6% or higher, then the housing market will slow further.”
If sellers want to sell, they’ll need to drop their ask. Maybe I hang with a different group but I dont know anyone that downgraded their living arrangements (Excluding a life changing event – Divorce, death, etc) with a real estate purchase. Higher rates are going to mean people that didnt buy a 2/2 shitbox are going to be investing into their properties Vs selling
You are the Jim Cramer of real estate
“Yeah- it actually HAS been GenX and the oldest Millennials buying the majority of the condos. Biggest group of Millennials is 29-33 years old now. They are skipping the condo buying and buying the single family home instead because they will go right to family formation. GenX, who was 33 10 years ago, definitely DID buy that 2/2 that was on sale after the housing bust.”
More BS. Show me some data on GenX buying starter 2/2’s in the last 10 years
How can Millennials be such a large cohort and there not being any SFH inventory mean they’re all buying SFH? I’m sure you have data to back this up…
You have a very active imagination…
“And oldest Millennial is not 40. They are 41 or 42 now. Time flies!”
Thats nit picking, isnt it?
“American lifespans have doubled in the last 100 years”
So, life expectancy at age 5 was under 40 in 1920? Cite, please!
Here’s the citation you need to refute:
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2625386/#b1
“Lifespans” are basically the same. Life expectancy *at birth* has gone up, almost entirely on reduction of deaths before age 5.
“GenX, who was 33 10 years ago”
Only the youngest X’ers were under 35 ten years ago. Time flies!
“Show me some data on GenX buying starter 2/2’s in the last 10 years”
Post-divorce and empty nest. C’mon Johnny, Boomer says so, must be true.
“Only the youngest X’ers were under 35 ten years ago. Time flies!”
Its just a number
“Post-divorce and empty nest. C’mon Johnny, Boomer says so, must be true.”
Wow a whole 3%? market makers!
“Only the youngest X’ers were under 35 ten years ago. Time flies!”
That’s what I said. But you all seem to think the GenXers are over 60. They aren’t. Youngest are in early 40s.
And you think that millennials who are 29-33 are “going right to family formation”, while 33 yo Xer’s in 2013 were f’ing around buying 2/2s?
Ok, boomer.
“How can Millennials be such a large cohort and there not being any SFH inventory mean they’re all buying SFH? I’m sure you have data to back this up…”
I don’t know what you are talking about. Millennials are getting married at the oldest age in US history. That’s when family formation happens. That’s when they buy a home. It may be a condo but the Millennials were renting all along so they are mostly just buying single family homes as they are having kids after marrying. The largest age group of the Millennials are now 29-33, which is the age of marriage and then having kids now.
The housing market will remain hot everywhere in the United States, regardless of the mortgage rates, as long as this group is marrying and moving. That means through about 2024.
GenZ is a big generation too but if they marry around the same time as Millennials (late 20s/early 30s) then we have a number of years before they are heading down this same path. And I haven’t bothered to look at the birth rates to see which years of the GenZ are the largest.
“You keep saying bidding wars, yet there were plenty of properties that languished. To most sober folks 5-10% of properties that meet your criteria doesnt mean that its a buy now or be priced out forever scenario”
I urge people who are looking to buy a home in Chicago to NEVER listen to those on this blog who don’t live in Chicago and especially those who haven’t lived in Chicago in many years (or decades.) You really don’t know what is going on in ANY housing market unless you are living in it.
Many of the posters here live in some far-flung suburb in another part of the country. They know nothing.
Every real estate market is local, right down to the street. Some streets sell better than others. Some condo buildings hotter than others. Some neighborhoods more popular than others.
Hire a good real estate agent who knows the market so you can go in with as much knowledge as you can.
“And you think that millennials who are 29-33 are “going right to family formation”, while 33 yo Xer’s in 2013 were f’ing around buying 2/2s?”
Are you THAT clueless?
You honestly believe that GenX’s experience in the housing market at age 33 is the SAME as Millennials?
LMFAO.
Where to even begin? My god. Just go back and read the posts on this blog in 2007, when I started it. Start there anon(tfo). My god. The real estate market has completely changed in Chicago over the last 20 years.
And yes, the Millennials ARE going right to family formation as the data shows. When you get married “later” you have kids 2 to 3 years afterwards. This largest group of Millennials has been marrying for over 2 years now (record weddings this year, by the way, with most Millennials) so those who married during the pandemic are now having kids. They will now move out of their apartments to that SFH.
This is why the SFH inventory in Chicago remains lower than condos and why that market is so darn tight, including in the suburbs.
Also, GenX married younger. You cannot compare Millennials at 33 with GenX at 33.
“Every real estate market is local, right down to the street. Some streets sell better than others. Some condo buildings hotter than others. Some neighborhoods more popular than others.”
Agreed.
“Hire a good real estate agent who knows the market so you can go in with as much knowledge as you can.”
If the agent has owned and lived in a neighborhood for while and continues to do so, or better yet on a particular street, then yes, otherwise, by your own argument, not so much (and I would agree).
“They will now move out of their apartments to that SFH. This is why the SFH inventory in Chicago remains lower than condos and why that market is so darn tight, including in the suburbs.”
I’m not totally rejecting that theory, but I wouldn’t quite bet my life on it. Are there really THAT many people in their 30s who (1) are living with their babies and toddlers in an apartment (2) despite the fact that they are high earners and/or are expecting major downpayment assistance from their parents? #2 is sort of a required circumstance here, because if they’re not using a condo an equity stepping stone, how else would they be going from renting an apartment to buying a SFH?
“I urge people who are looking to buy a home in Chicago to NEVER listen to those on this blog who don’t live in Chicago and especially those who haven’t lived in Chicago in many years (or decades.) You really don’t know what is going on in ANY housing market unless you are living in it.”
How stupid to think that people can’t educate themselves on something they aren’t physically experiencing. It’s like saying never listen to a doctor about your cancer diagnosis unless the doctor has cancer.
Yes, listen to everyone who lives in Chicago because they ALL are so knowledgable. How about considering someone’s intelligence before deciding whether to listen to them? You should try that!
“The housing market will remain hot everywhere in the United States, regardless of the mortgage rates, as long as this group is marrying and moving. That means through about 2024.”
Define HAWT?
“I urge people who are looking to buy a home in Chicago to NEVER listen to those on this blog who don’t live in Chicago and especially those who haven’t lived in Chicago in many years (or decades.) You really don’t know what is going on in ANY housing market unless you are living in it.”
Please explain what special insight you have in the Chicago RE market. Hosting a blog makes you JoeZ. I’m not even going to get into the errors and flat out lies you spew
“Also, GenX married younger. You cannot compare Millennials at 33 with GenX at 33.”
You did.
And you suggested that the 33 yo X’er was *behind* today’s 29 yo Millennial.
You should get on Bailey’s campaign team, fit right in.
“2) despite the fact that they are high earners and/or are expecting major downpayment assistance from their parents? #2 is sort of a required circumstance here, because if they’re not using a condo an equity stepping stone, how else would they be going from renting an apartment to buying a SFH?”
You know you can buy a single family home for $300,000 (or less), right? Some suburbs even cheaper.
It’s really not that difficult for two earning couples who have been saving for a few years to scrap together $15,000 or $30,000 to buy. Are they buying a single family home in Bucktown or Lakeview? No. But this is also why the suburbs were so hot during the pandemic. Many renters downtown simply ran off to get more space and lower prices in the suburbs. All of those “starter homes” red hot.
“Also, GenX married younger. You cannot compare Millennials at 33 with GenX at 33.”
“You did.”
Nope. I literally said you cannot compare the two. GenXers bought condos, even the youngest ones. Millennials have mostly always rented. And younger Millennials even more so because the rentals are MUCH nicer than the condos (a flip of what GenX was dealing with.) GenX couldn’t wait to buy the condo because at least you got granite and stainless steel and maybe a washer/dryer.
Nowadays, you had better renovate your condo to the level of the luxury apartment buildings or you won’t sell. Why would a renter trade down when buying?
Also, people want new. How many new condo high rises are there? I can count them on one hand. All the fun buildings with the cool amenities are rentals.
Millennials are going straight to single family homes in bigger numbers than GenX ever did. They are getting married older. They are saving more for downpayments because no crazy no cash down loans anymore. They will have equity.
“Also, people want new. How many new condo high rises are there? I can count them on one hand.”
Haven’t you been saying for a year how all the developers would start building condos instead of apartments and/or converting apartments into condos….
“Millennials are going straight to single family homes in bigger numbers than GenX ever did.”
As a millennial this isn’t true. They mostly purchase condos first even when their first home is in the burbs. Out of the two dozen or so friends that own a home there’s two that purchased a SFH first; one in a far flung suburb an hour-plus away by car or train from the city and one that lived with his parents for 5/6 years after college.
“You know you can buy a single family home for $300,000 (or less), right? Some suburbs even cheaper.
It’s really not that difficult for two earning couples who have been saving for a few years to scrap together $15,000 or $30,000 to buy. Are they buying a single family home in Bucktown or Lakeview? No. But this is also why the suburbs were so hot during the pandemic. Many renters downtown simply ran off to get more space and lower prices in the suburbs. All of those “starter homes” red hot.”
So this hypothetical sub $300k SFH is in the Green Zone and hasnt sold?
How is this possible?
“You know you can buy a single family home for $300,000 (or less), right? Some suburbs even cheaper.
It’s really not that difficult for two earning couples who have been saving for a few years to scrap together $15,000 or $30,000 to buy. Are they buying a single family home in Bucktown or Lakeview? No. But this is also why the suburbs were so hot during the pandemic. Many renters downtown simply ran off to get more space and lower prices in the suburbs. All of those “starter homes” red hot.”
So, couples who have been renting in downtown Chicago, their next home is going to be a $300k (or less) SFH? The number of such couples does not seem large enough to be very impactful. Some smaller metros elsewhere in the country, sure, but not Chicago.
Nowadays, you had better renovate your condo to the level of the luxury apartment buildings or you won’t sell. Why would a renter trade down when buying?
Also, people want new. How many new condo high rises are there? I can count them on one hand. All the fun buildings with the cool amenities are rentals.
Millennials are going straight to single family homes in bigger numbers than GenX ever did. They are getting married older. They are saving more for downpayments because no crazy no cash down loans anymore. They will have equity.”
So now its New, Sun $300k SFH in the green zone
I thought apartments were too expensive? Why would you have to renovate to match if renters cant afford the rent?
No Millennials bought 2/2’s?
“Why would a renter trade down”
You cannot be serious. I’ve literally typed these exact words any you stongly disagreed with it. Clown shoes
I guess you started early today
“As a millennial this isn’t true. They mostly purchase condos first even when their first home is in the burbs.”
The data in Chicago shows this isn’t true. If they all purchased condos first, Chicago’s condo market wouldn’t be struggling like it has for most of the last decade and they would be building condo buildings hand over fist instead of rental buildings. And yes, they would be converting rentals into condos.
I thought that would be starting soon now that rental prices are soaring. It’s much more expensive to rent in Chicago than to buy. But developers would have to sell the condos for prices much higher than the rest of the market, as they are doing in The Reed in Printers Row. Those prices are at the higher end.
I’m surprised no one is building a condo tower yet in Fulton Market. All of the residential is apartment rentals. Yet I know many empty nester GenXers who want to live there but don’t want to rent (nor do they want to live near their children in the same rental building.) Will be interesting to see what happens there.
I think what people expect/want is very dependent on neighborhood. In my neighborhood of older single family homes, I was shocked when I realized that 2 full bathrooms upstairs was very rare and not in my budget. I was nervous about buying a house with only one bathroom upstairs because what family wants to live like that? I had planned to add a second bathroom upstairs, but instead completely gutted the existing bathroom. I did a ton of research, looking at all sales of houses in my neighborhood and found out that the seller’s agent and my bathroom designer were right when they said that two upstairs bathrooms was very rare.
In my old, trendier area, my moderately updated bathrooms were still considered “too dated” for the area. I had put in granite, LED light fixtures, undermount sinks, and trendy faucets. The tiles were old/ugly by today’s standards though and I used granite and not quartz for the counters. My kitchen in the condo was considered very dated in the neighborhood, but in my new neighborhood, the kitchen in my new house is similarly dated, but is far nicer than the majority of kitchens that I saw when I was looking.
I still sold my condo after only a couple days on the market, but the expectations in my more centrally located neighborhood were far different than the expectations of buyers in my new area.
“I thought apartments were too expensive? Why would you have to renovate to match if renters cant afford the rent?”
We’re at record rental prices and record high occupancy. Please try and keep up with what is happening in the Chicago real estate market from Indiana JohnnyU. It’s changing fast though so a lot to keep up with.
By the way, more big tech layoffs in Chicago recently. GoHealth laid off 100 and Groupon laid off a bunch again. Poor Groupon. It seems there are layoffs there every few years. Not a good way to run a business. Layoffs are going to impact the housing market in the next 6 months.
“So, couples who have been renting in downtown Chicago, their next home is going to be a $300k (or less) SFH? The number of such couples does not seem large enough to be very impactful. Some smaller metros elsewhere in the country, sure, but not Chicago.”
Downtown apartment occupancy went from 95% to 82% in 2020 anonny. Yeah- everyone downtown fled. Many went to the suburbs. Many decided to buy a house with mortgage rates under 3%. Why not?
How quickly we forget the “death of the city” from just 2 years ago.
Do you honestly think all those who are 28 and renting in Lakeview, just got married before the pandemic hit, were in a $2000 1-bedroom apartment with their dog didn’t jump ship to somewhere during 2020? I know several who did just that. One couple moved to Oak Park and one moved to Riverside. Another moved to Wheaton.
They are work-from-home. Two had kids during the last two years, after moving into their SFHs. Lol.
And yes, they bought $300,000 to $450,000 homes.
They couldn’t afford the city. And the city was too scary during the pandemic. More space and deals in the suburbs when they jumped in 2020. Was just talking to one of them recently and they had come down to Wrigley for a game. Now that the city is completely “back” from the pandemic (and it’s not empty and depressing) they WERE lamenting that they no longer lived in the city.
I wonder how many new single family home buyers now living in the suburbs are having buyer’s remorse? Lol. Probably quite a few. But those who had kids are in good school districts and have backyards and parks nearby. It will be fine for them.
“So this hypothetical sub $300k SFH is in the Green Zone and hasnt sold?”
I never said it was in the Green Zone and you know it was not.
City of Chicago is BIG JohnnyU. Hard to believe to someone living in Indiana, I know. But you can buy a house for under $300k in many neighborhoods.
“I think what people expect/want is very dependent on neighborhood.”
Agreed Jenny. Expectations for finishes, as you describe, is very different.
“The data in Chicago shows this isn’t true. If they all purchased condos first, Chicago’s condo market wouldn’t be struggling like it has for most of the last decade and they would be building condo buildings hand over fist instead of rental buildings. And yes, they would be converting rentals into condos.”
Link?
I think you grossly understate the number of Millennials that are not doing well. The number of them living with parents or other family members is quite sobering
How is this not comparing X and Y:
“Biggest group of Millennials is 29-33 years old now. They are skipping the condo buying and buying the single family home instead because they will go right to family formation. GenX, who was 33 10 years ago, definitely DID buy that 2/2 that was on sale after the housing bust.”
Y is doing this
X did that.
“We’re at record rental prices and record high occupancy. Please try and keep up with what is happening in the Chicago real estate market from Indiana JohnnyU. It’s changing fast though so a lot to keep up with.”
Again – YOU were the one complaining about the rents being too damn high amd how buying was a better option. It makes zero sense to me that if I couldnt afford a apartment, I wouldnt expect a condo to have the same level of amenities/finishes
But I’m sober and in West Ft Wayne
“By the way, more big tech layoffs in Chicago recently. GoHealth laid off 100 and Groupon laid off a bunch again. Poor Groupon. It seems there are layoffs there every few years. Not a good way to run a business. Layoffs are going to impact the housing market in the next 6 months.”
JFC – Are all your post today going to be regurgitating things I’ve said in the last 6 month.
“I never said it was in the Green Zone and you know it was not.”
I know its not. However you’ve stated that this blog deals with the Green zone.
“City of Chicago is BIG JohnnyU. Hard to believe to someone living in Indiana, I know. But you can buy a house for under $300k in many neighborhoods.”
Yeah, home many readers are looking to move to Mt Greenwood or West Lawn?
Can you provide a list of areas you’d move with a sizeable number of sub $300k SFH?
Otherwise you’re just blowing smoke
“The data in Chicago shows this isn’t true.”
Cite please.
“Do you honestly think all those who are 28 and renting in Lakeview, just got married before the pandemic hit, were in a $2000 1-bedroom apartment with their dog didn’t jump ship to somewhere during 2020? I know several who did just that. One couple moved to Oak Park and one moved to Riverside. Another moved to Wheaton.
They are work-from-home. Two had kids during the last two years, after moving into their SFHs. Lol.
And yes, they bought $300,000 to $450,000 homes.”
What I’m saying is that, no, I do not accept the claim that meaningful numbers of people went from renting $2k one beds in the city to buying $300k or even at your now-increased level of $450k SFHs. As stated dozens of times, I spend the majority of my waking hours working with people who are in their late 20s – 30s (a group that is refreshed constantly), mostly in the Chicago area. If and when they move out of a building in the city (be it a rental or their condo), they are not going from paying $2-3k/mo for that unit to having a $300k house. They are trading the vibrancy, hipness, and convenience of living in the city for the square footage, yards and public schools of the burbs – they are not doing it to cut housing costs (if anything, their housing cost goes up).
I agree that “it’s only fair” Rodkin divulge his own crib’s price. Storyline: ‘Boomer reduces IL re exposure before its too late.’
https://twitter.com/Dennis_Rodkin/status/1557768610034192388
“I agree that “it’s only fair” Rodkin divulge his own crib’s price. Storyline: ‘Boomer reduces IL re exposure before its too late.’
https://twitter.com/Dennis_Rodkin/status/1557768610034192388”
Isn’t this guy supposed to be a Real Estate expert? One would almost have to work at getting such a piss poor return.
Based on Rodkins history and Sabrina’s comments, I think someone from Terre Haute, IN could provide better insight to the Chicago RE market
I’m intrigued by Rodkin’s use of the private network. No interior photos (because it’s not ready yet) and no showings. It won’t be listed for almost another month. Is the hope that target buyers will hold off on buying something until they can see this?
I’m not a fan of the private network. I used it on my house for about 2 -3 days prior to listing just to get the attention of realtors in case they had interested buyers. But I didn’t put it up until I had all the photos ready and wouldn’t show it until it was publicly listed.
“Storyline: ‘Boomer reduces IL re exposure before its too late.’”
And sell to first time millennial buyer who was renting a one bedroom for $2,500+ in LP, Fulton Market, or River North per Sabrina…
“Storyline: ‘Boomer reduces IL re exposure before its too late.’”
He said on Twitter he is moving in with his girlfriend/wife who also has her own home and she won. So one of them had to sell.
Dennis Rodkin might not be a boomer, or is he? He retired years ago from Crain’s and moved to the Bay Area. But then came back. And is now working for Crain’s again.
“What I’m saying is that, no, I do not accept the claim that meaningful numbers of people went from renting $2k one beds in the city to buying $300k or even at your now-increased level of $450k SFHs.”
Where’d they all go when they fled their Chicago apartments? Apartment occupancy fell to lows not seen in decades. It cleared out. And sales of SFH soared in all of the Chicago suburbs, including Lake Forest which had been dead for YEARS.
Lol. The Silent Generation and Baby Boomers who were trying to sell there for years got their lucky break.
Maybe you don’t remember the pandemic anonny. I know we like to block it out as people lost friends and loved ones to COVID. It’s been a tragedy. But everyone fled the big cities, Chicago included. Streets were empty. Abandoned. All you wanted was outdoor space as we were practically locked inside. Heaven forbid your apartment didn’t have a balcony (and many don’t.)
With rates so low, many decided to flee. Those who worked in industries where they could “work from home” decided that if they didn’t have to commute, they could go out to the suburbs, get a nice big yard for cheaper than renting in some cases.
Many of those I know moved to “urban” suburbs with downtowns where you can walk to restaurants/movie theaters. It’s really not that different than Southport. Lol. Suburbs like Arlington Heights, Naperville, Wheaton, Elmhurst, Park Ridge, Barrington, Evanston, Oak Park, Highland Park, Lake Forest, Flossmoor.
Chicago has some great “urban” suburbs. It’s really not a stretch to move during a pandemic when all they want is space and a backyard.
But- like I said- I wonder how many are having second thoughts now that the city is fully reopened. I wish the media would do follow ups on those that moved even further afar, to Harbor Country in Michigan. Many also fled NYC and moved up to Hudson Valley after buying a house in the country. How many of them have ditched it by now? Lol.
Where in the majority of the burbs you listed are you buying a SFH within downtown for $300k?
Elmhurst – no f’n chance.
Naperthrill – maybe a tear down cottage
Wheaton – no
Park Ridge – no
HP – highly doubtful
You might have a chance at a lower tier burb (Villa Park, Elk Grove) but even that’s doubtful
You’re just trolling at this point
“Dennis Rodkin might not be a boomer”
Pomona College, class of ’83.
Boomer. But at the tail end.
This isn’t your suburban dream home, JU:
https://www.redfin.com/IL/Naperville/1020-Eagle-St-60563/home/18077703
“This isn’t your suburban dream home, JU:
https://www.redfin.com/IL/Naperville/1020-Eagle-St-60563/home/18077703”
Nice tear down cottage 🙂
Doesnt meet the walk to downtown criteria tho.
Just make it up as you go…
“Doesnt meet the walk to downtown criteria”
Didn’t realize that you, too, have the CC aversion to walking.
It’s a mile to downtown N’ville, and .75 to the Metra stop.
Do I walk that in January, in a blizzard? No. Is it “not walkable”? GTFO!
Sabrina, what did I write above that indicated that I don’t understand pandemic-related urban/suburban housing trends? You have asserted that a meaningful number people who had been renting $2k/mo apartments in the city skipped their condo phase and instead purchased $300k SFHs. I rejected that assertion. That’s all.
“But- like I said- I wonder how many are having second thoughts now that the city is fully reopened. I wish the media would do follow ups on those that moved even further afar,”
As for this, my guess would be that very few people who left the city for a burb of that city are having second thoughts, at least not enough to prompt a move back. The family that pulled their kids out of Latin/Parker and moved away, but who can now get them back in there, and they’ll buy a $2M+ plus back in the city? Sure. But the people who left their $2k+/mo rental in the city and bought an $850k place in a burb? I imagine they’ve adjusted to taking $40 Ubers home after a night out in the city and their main regret is that too much of their free time is dominated by soccer. The group with second thoughts and who are moving back to their urban life are probably those moved to mountain towns or Montana or whatever.
“Didn’t realize that you, too, have the CC aversion to walking.
It’s a mile to downtown N’ville, and .75 to the Metra stop.
Do I walk that in January, in a blizzard? No. Is it “not walkable”? GTFO!”
Nope just using the CC criteria of anything > 0.25Mi isnt walkable
I do think its over a mile to Downtown FYI (still walkable)
I’ll take waling in the winter over walking in the summer
“I do think its over a mile to Downtown”
Is Downtown, for purposes of measuring how far away one is, the near edge of downtown, some agreed point in the middle, a specific notable place with, or what? When it gets discussed here w/r/t the Loop, we get sometimes get (i) Wacker, (ii) the first el stop arguably in the Loop on whichever line the poster uses, (iii) State/Madison, (iv) wherever the poster last worked proximate to the Loop, (v) something crazy like Oak to Roosevelt, west to Halstead.
That crackerbox house is a mile from the edge of “downtown” Naperville nearest to it by foot, being the corner of Benton and Washington, right next to the big parking deck you’re probably walking from if you drive.
You prefer using a ‘middle’ point; fair enough. We’re both right on this one.
“I wonder how many new single family home buyers now living in the suburbs are having buyer’s remorse?”
Moving out of dense city area to a neighborhood of single family homes was a culture shock. My new neighborhood seems to be full of patriotic white people. I have some amenities within walking distance at least, but I can no longer get any possible thing within a 15 minute walk. The trade off has been worth it to have a yard and peace and quiet. I can take a walk at lunch and not see another person or even a car drive by.
I really miss the diversity though. I feel like an oddball here since I don’t have kids. Every imaginable type of person lived in my old area, so there were always interesting people to meet. At least we have a lot more tree equity in my new area vs. my old area.
Some of you may remember that I have been a critic of dense urban areas for quite some time – decades actually. I’m now only 6 weeks away from moving to almost an acre of land surrounded by pine trees. Yeah, I’m going to miss all the restaurants and bars so we’re trying to hit all our favorites over the next few weeks. And my wife is going to miss being able to walk to some of those bars and restaurants. But I can’t wait. Finally, I can buy a new car with only a 3% sales tax and not be a carjacking target. And my property taxes should be about 1/3 of what I would have been paying here.
Congrats Gary
“Some of you may remember that I have been a critic of dense urban areas for quite some time – decades actually.”
I’m so sorry you have been living somewhere you have not wanted to live for “decades” Gary. Ugh. It’s a big country. Glad you are going to live the dream on your land.
I have a friend who spent 20 years in the city living on a standard Chicago lot and just couldn’t take it anymore. The neighbors knew everything. You could hear people talking in their homes next door if their windows were open. There wasn’t even privacy in the backyard. Everyone on the block gossiped. She wasn’t worried about carjackings or the like but she moved out to Geneva and also got a house on a big lot (not an acre- but big enough where she doesn’t hear the neighbors.) Lots more trees, less noise pollution.
She is not concerned about walking to bars and restaurants. She can bike ride to downtown Geneva and to St. Charles.
She loves it.
Good luck Gary.
“Where in the majority of the burbs you listed are you buying a SFH within downtown for $300k?”
There is such a thing called “sold properties.”
Please look at it.
Thanks for playing.
“Everyone on the block gossiped”
Oh let me tell you, while the folks with the swanky acre lots are a half mile or so from our house (a quarter as the crow flies), generally speaking, SFH communities, probably especially the more desirable ones (like our squalid 7,000 sq ft lot hood of late 60’s junk builds but from which we can walk to schools and places to eat and shop), are short on privacy and are hotbeds of gossip. We got rid of our pandemic pool, but the same neighbors who hated that have an almost equal hadred of our trampoline. Kid noises, barking dogs, leaf blowers, the high schooler who’s made his car sound louder, on and on – everybody has their complaints in a SFH hood. An anti-vax family we’re friendly with felt so silently judged a year ago, that just last week, they executed their plan (months in the making) to move to another state for a year (one that is also mountainous but notably less vax-conforming).
“buy a new car … and not be a carjacking target”
Just don’t take a nap in a highway rest area down there.
“Find me a SFH that isnt a teardown in Elmhurst thats within walking distance to downtown (Use York & the CNW as the basis) and <$300k"
You have to define the distance, too.
And a handy filter to exclude most fixers/teardowns is 2 bathrooms.
“You have to define the distance, too.
And a handy filter to exclude most fixers/teardowns is 2 bathrooms.”
Most CC’ers balk at anything over 0.25 mi
I’ll say 0.5 mi or the quarry to the West, North Ave to the North, St Charles to the S,
“[Elmhurst]”
So this one was right on the corner of your area–and is on the corner of North Ave (which sux)–but was such a steal at $265k in Oct-20, that there has to be something shady:
https://www.redfin.com/IL/Elmhurst/280-Oak-St-60126/home/17981870
Note the Redfin estimate is now $655k, and the zestimate is $641k.
Couple older sale also under $300k, and also this one from Nov-20:
https://www.redfin.com/IL/Elmhurst/253-N-Emroy-Ave-60126/home/18114690
with a current estimate of ~$425k. And it was neat and clean, but otherwise pretty terrible.
Only three SFH with 2+ baths in that area currently listed under $790k, and 2 are U/C and the third is a $530k “as-is”.
$340k is getting someone this crackerbox:
https://www.redfin.com/IL/Elmhurst/171-Melrose-Ave-60126/home/18114693
Which looks nice enough, but is in a, imo, very undesirable location, on a a weirdly shaped lot. Same house on a standard lot halfway down the block is probably $50k more.
“https://www.redfin.com/IL/Elmhurst/171-Melrose-Ave-60126/home/18114693
Which looks nice enough, but is in a, imo, very undesirable location, on a a weirdly shaped lot. Same house on a standard lot halfway down the block is probably $50k more.”
The new owner better like the sounds & smells of semis running 24/7. Had family that lived west of here and a 1/2 block off North. Cant imagine its much better with North being a designated truck route
So nothing under $300k
Sabrina should be paying you to do her work
“paying you”
You see how I get paid around here.
“So nothing under $300k”
I excludes houses with less than 2 bathrooms, as that’s a step back for most of the cohort we’re talking about here.
“So nothing under $300k”
Perhaps there is a correlation between increased supply of $2k/mo one bedroom apartment rentals in the city and decreased supply of $300k SFHs in the burbs.
There were 2 SFH houses under $300k in Elmhurst one north of 83 and the other one pretty far north. Neither would be walking distance to downtown Elmhurst (the one N of 83 might be walking distance to downtown Villa park)
On your second post indubitably. If anyone has their finger on the pulse of millennial/GenZ $2k/mo apartment dwellers, it’s Sabrina. She’s like the JoeZ of this group
“Perhaps there is a correlation between increased supply of $2k/mo one bedroom apartment rentals in the city and decreased supply of $300k SFHs in the burbs.”
In 2020 and 2021, yep.
You all do realize that suburban Chicago home prices are up 20% or more in the last 2 years right? And with everyone rushing to buy, the starter homes were red-hot and prices surged?
But many of you don’t live in Chicago, or even in the state of Illinois, so no, you probably don’t realize what happened in the Chicago housing market the last 2 years.
Still waiting a list of $300k homes within walking distance to downtown Elmhurst
“a list of $300k homes within walking distance to downtown Elmhurst”
It’s stupid simple. The only closed sale truly close to DT and under $300k in the last *3* years is this obvious teardown (listing has no pix; no copy):
https://www.redfin.com/IL/Elmhurst/129-N-Elm-Ave-60126/home/18112978
Here are the rest:
321 N Berteau Elmhurst IL 60126 288000
168 W North Ave Elmhurst IL 60126 299500
253 N Emroy Ave Elmhurst IL 60126 270000
285 N Oak St Elmhurst IL 60126 245000
329 W North Ave Elmhurst IL 60126 182000
249 W North Ave Elmhurst IL 60126 155000
216 E North Ave Elmhurst IL 60126 250000
238 E North Ave Elmhurst IL 60126 250000
280 N Oak St Elmhurst IL 60126 265000
“In 2020 and 2021, yep.
You all do realize that suburban Chicago home prices are up 20% or more in the last 2 years right? And with everyone rushing to buy, the starter homes were red-hot and prices surged?
But many of you don’t live in Chicago, or even in the state of Illinois, so no, you probably don’t realize what happened in the Chicago housing market the last 2 years.”
For the (I think) fifth time, WHAT I AM SAYING IS THAT NOBODY WENT FROM RENTING A $2,000 ONE BEDROOM APARTMENT TO BUYING A $300,000 SINGLE FAMILY HOME. Most of such former renters probably paid in the $600-700’s, maybe some in the $500s, and some close to a million or more.
“It’s stupid simple. The only closed sale truly close to DT and under $300k in the last *3* years is this obvious teardown (listing has no pix; no copy):
https://www.redfin.com/IL/Elmhurst/129-N-Elm-Ave-60126/home/18112978
Here are the rest:”
Was hoping to get Sabrina’s expertise on this, not having you do her work for her
“NOBODY”
focusing on that one word with anecdata in 3…2…
“it is at best unusual that someone…”
The irony is rich if she does pull that card
The queen of N=1 = absolute truth
And I agree with Anonny, with a N=2 they’re spending closer to $500k
“For the (I think) fifth time, WHAT I AM SAYING IS THAT NOBODY WENT FROM RENTING A $2,000 ONE BEDROOM APARTMENT TO BUYING A $300,000 SINGLE FAMILY HOME.”
Thousands of people did. Lol. Who do you think bought all of the thousands of houses that sold in Chicagoland in what was the hottest market in 15 years? Baby Boomers? All of those “fleeing” to Florida as everyone talks about on this blog? Chicagoland housing inventory plunged to a multi-year low.
Downtown apartments crashed. Everyone moved with many going to the suburbs because they BOUGHT HOUSES. Occupancy down 15% by the fall of 2020. I know several who did this myself, as I have said. I was glad for the one couple as they had a golden retriever in a one bedroom near Lincoln Park. It just must have been hell at the start of the lockdown. Wasn’t surprised when, surprise, they suddenly bought a house with those 3% mortgage rates in the suburbs. They have a child now. And yes, they are exactly the age all of this is happening to. They are 30.
My kids were too young. They stuck it out in their apartments. No desire to buy a house right now for them. They are GenZ though.
“Thousands of people did.”
Q: How many of them did so and moved out of a (i) $2k+ per month (ii) 1-bedroom apartment (iii) in the GZ, and bought (iv) a SFH, (v) in the suburbs, (vi) for under $300k?
A: Satisfying all 6 points: Very few. Not none, but certainly not many.
Oh, and for anecdata:
I do know someone who moved straight from a one-bed rental to SFH, but rent was under $2k, location was fringe GZ, so that’s a couple strikes against the premise.
But the SFH was in the burbs and under $300k.
It was also in the fall of 2000.
“Q: How many of them did so and moved out of a (i) $2k+ per month (ii) 1-bedroom apartment (iii) in the GZ, and bought (iv) a SFH, (v) in the suburbs, (vi) for under $300k?
A: Satisfying all 6 points: Very few. Not none, but certainly not many.”
Well- there were thousands of people who moved out of $2k downtown apartments. They spread out in the suburbs and bought. Why is it “under” $300k now? They bought homes! How hard is it to understand???
Every single suburb had hot sales of starter single family homes. From Geneva, to Oak Park, to Berwyn, to Brookfield, to Westmont, to Highland Park, to Libertyville, to Naperville, to Downers Grove, to Bartlett, Park Ridge, Arlington Heights, Palatine, Barrington, St. Charles. Heck, even Lake Forest, but not sure how many found starter homes there. Lol.
We have never seen anything like it. Either the complete fleeing of the city OR the buying in the suburbs, all within a year to 18 months.
Those buyers were Millennials. They were renting somewhere. I’m sure some were renting in the burbs too and just stayed out there. But apartment occupancy downtown literally dropped to the low 80%. THOUSANDS of apartments were vacant. THOUSANDS of homes in the suburbs sold at the same time.
Go figure.
And based on what everyone says on this blog, it’s not like we had a bunch of people suddenly moving to the state, right?
Maybe you all don’t remember the little thing called the pandemic. Everyone thought they would die riding in the elevator. They wanted a yard. They didn’t want to be by people. The city was dead with no tourists, no Cubs games and restaurants closed.
My god. Such short memories.
This is why I’m now saying, how many of those buyers are now having second thoughts? How many want to move back to the city? Maybe they like the suburbs and like walking to the restaurants in their own suburban downtown (which are, frankly, not that different than the city.)
In fact, Crain’s recently had an article about how the big restaurant groups are opening in the suburbs because the downtown clients all moved out there during the pandemic and now want their favorite restaurants. The business is there. Lol.
Oh. My. God. Sabrina, you keep hurling a bizarre stew of non sequiturs and blanket ad hominems about this. One. Last. Time: THE PROBLEM WITH YOUR ASSERTION IS THAT YOU ARE CLAIMING THAT A SIGNIFICANT NUMBER OF PEOPLE WHO WERE RENTING $2K/MO ONE BEDROOM APARTMENTS FLED THE CITY AND PURCHASED $300K SFHS. WE AAAAAAAAAAAAAAAALLLLLLLLLLLLLLLLL AGREE THAT LOTS OF PEOPLE FLED THEIR APARTMENTS AND PURCHASED SFHS. BUT THEY PURCHASED SFHS FOR AT LEAST DOUBLE THE PRICE THAT YOU ARE ASSERTING THEY PAID. THAT. IS. ALL.
“One. Last. Time: THE PROBLEM WITH YOUR ASSERTION IS THAT YOU ARE CLAIMING THAT A SIGNIFICANT NUMBER OF PEOPLE WHO WERE RENTING $2K/MO ONE BEDROOM APARTMENTS FLED THE CITY AND PURCHASED $300K SFHS. WE AAAAAAAAAAAAAAAALLLLLLLLLLLLLLLLL AGREE THAT LOTS OF PEOPLE FLED THEIR APARTMENTS AND PURCHASED SFHS. BUT THEY PURCHASED SFHS FOR AT LEAST DOUBLE THE PRICE THAT YOU ARE ASSERTING THEY PAID. THAT. IS. ALL.”
One last time anonny: I never said everyone who was renting a $2000 apartment only bought a $300k house. But many did. Chicagoland is cheap. The suburbs were super affordable in 2020 with 3% or less mortgage rates. Job market was red hot and people got raises.
If you bought a $600k house when you were only renting a $2k apartment, good for you but I don’t know many 30-year olds who went from that low of rent to that high of a home price. For those renting the $4500 2-bedrooms, sure. But not at the lower price point. Many of the $4500 2-bedroom people fled too. Some were DINKs there too and they had firepower. This is why the starter homes sold like hotcakes. This is why thousands of homes in all the suburbs were grabbed.
It was cheaper than the city and cheaper than renting. You got a big lot. You got space. And you can still walk to Starbucks, Chipotle, Lou Malnati’s, Barnes & Noble and whatever else you walk to in the city (outside of Wrigley Field, of course.)
My friend who was renting in LP bought in the $300,000s in the suburbs. They can’t afford anything more than that. Their income is less than $150k a year. This is why they lived in a 1-bedroom apartment prior to the pandemic.
Most living in downtown apartments anonny aren’t upper middle class. They make $75k to $100k, if they are lucky. I don’t know how they all pay those crazy rents. My kids team up with friends and split the rent but it’s still so much more than we spent back in the day as a percentage of salary. But it’s their reality.
Still, their mortgage has got to be much less than their rent ever was. And even if you add in the property tax. It was a real deal to buy something as long as they will be there for awhile and not have second thoughts about the move.
A lot of the cheap homes are gone and prices have gone up but you can still buy a house in the $200,000s and $300,000s in towns with nice downtowns near the train.
Wheaton has several that are within a few blocks of downtown.
https://www.redfin.com/IL/Wheaton/819-N-Main-St-60187/home/18130327
https://www.redfin.com/IL/Wheaton/311-E-Madison-Ave-60187/home/18130319
https://www.redfin.com/IL/Wheaton/306-S-Gables-Blvd-60187/home/18129587
Go look at all the suburbs if you want. Prices have jumped in a big way the last 2 years though. The deals are gone and the rates are higher. Sales have slowed but inventory is still really low. Some are still buying even with higher rates because the job market is good. I’ve seen some flips on the cheaper homes, where they have put in all new finishes. They are selling immediately.
Riverside still has some cute cheaper starter homes.
https://www.redfin.com/IL/Riverside/220-E-Burlington-St-60546/home/13290468
https://www.redfin.com/IL/Riverside/335-Lionel-Rd-60546/home/13289749
Also, anonny, you always act like everyone is like you: a big firm lawyer making big income. But they’re not. Many Chicago professionals are buying $300k to $400k homes. But that might be out of reach with 5% mortgage rates for many of them.
Kinda funny you left Elmhurst off your list…
“My friend who was renting in LP bought in the $300,000s in the suburbs. They can’t afford anything more than that. Their income is less than $150k a year. This is why they lived in a 1-bedroom apartment prior to the pandemic.
Most living in downtown apartments anonny aren’t upper middle class. They make $75k to $100k, if they are lucky. I don’t know how they all pay those crazy rents. My kids team up with friends and split the rent but it’s still so much more than we spent back in the day as a percentage of salary. But it’s their reality.”
You were a vocal proponent of 4 to 5X as normal for a home purchase, now its 2-3X?
So a Union carpenter isnt middle class?
“Most living in downtown apartments anonny aren’t upper middle class. They make $75k to $100k, if they are lucky.”
Huh? The Median household income in Chicago is $62K and Cook County is $68K so an individual making $75K – $100K makes 20% – 60% more than the median are not mostly “upper middle class”?
“Their income is less than $150k a year. This is why they lived in a 1-bedroom apartment prior to the pandemic.”
so 2.5x median income is your definition of upper-middle class?
“Many Chicago professionals are buying $300k to $400k homes. But that might be out of reach with 5% mortgage rates”
If that is remotely true, then the RE market is going off a cliff.
If 3.5x income is “out of reach” at 5% rates…I dunno.
Unless it is mainly about not having the $100k+ saved to not pay PMI on a $500k+ house.
“I never said everyone who was renting a $2000 apartment only bought a $300k house. But many did.”
She got you there nonny!
Never said “everyone”–just “thousands”. Who had been living in the Green Zone. In a expensive-ish 1-bedroom. Bought SFH in the burbs for under $400k.
Thousands.
“Thousands.”
Thousands left downtown Chicago apartments during the pandemic. Thousands bought in Chicago and the suburbs. Unless thousands moved to the suburbs from out of state, then the only possible explanation for the purchasers were the people fleeing their Chicago apartments or those fleeing suburban apartments.
It was the hottest housing market in 15 years. Someone was buying and it wasn’t the Baby Boomers who were selling to move to Florida or Arizona.
“If that is remotely true, then the RE market is going off a cliff.”
It’s already happened. July sales have already fallen off a cliff to 10 year lows. People are priced out. No longer qualify for the loan with the higher rates.
And most first time buyers DON’T have $100k to put down. That’s a fantasy. If you have a high FICO score and meet the income requirement you can do 5% or 10%.
Most of you are so out of touch with reality of 20-somethings today. Seriously.
“the only possible explanation”
And I suppose the “only possible explanation” for the rebound in apartment occupancy since then is people fleeing their newly purchased suburban homes, right?
WTF is with all the stupid absolutes around here lately? “Only” “never” “NOBODY”?
“most first time buyers DON’T have $100k to put down”
Most renters can’t afford a $2k/mo one bedroom, either, but that’s the cohort we mostly talk about here.
“Unless thousands moved to the suburbs from out of state, then the only possible explanation for the purchasers were the people fleeing their Chicago apartments or those fleeing suburban apartments.”
Or fleeing to their parents house in the suburbs or their parents lakehouse or winter home.
Or the person renting a $2K+ apartment was able to work remotely and temporarily moved out of state
Or the person renting downtown decided to rent in the burbs since the city was shut down. Suburban occupancy continued increasing during Covid. Where did these people come from?….
Or people living in the city decided to purchase a condo in the neighborhoods of the city.
Or or or
“July sales have already fallen off a cliff to 10 year lows.”
How can you say the market is “off the cliff” when there is still less than 4 months supply? And market time in Jul-22 are *lower* than in Jul-21?That’s still a red hot market!!
We can’t say that the market isn’t hot until market times start rising and we have months of supply over 5 months for at least a couple months in a row.
Just because sales are down from record setting numbers doesn’t mean the market isn’t sizzling hot.
“ It’s already happened. July sales have already fallen off a cliff to 10 year lows. People are priced out.”
Why are you rooting against America?
USA!!!USA!!!USA!!!
“How can you say the market is “off the cliff” when there is still less than 4 months supply?”
Huh?
If you have sales of 1000 and the next year they are 500, that’s “falling off a cliff.” Sales volumes has nothing to do with inventory.
We know from Gary’s data that July sales were at 10 year lows. That was the BOTTOM of the housing bust. Lol.
No one was buying anything in July. The speed of the rate increases really just crushed sales nationwide. Buyers moved to the sidelines. Was always going to happen when rates went above 5% but when they went to 6% people freaked out.
It’ll be interesting to see what happens as buyers become “used to” these higher rates. Job market is still good so that will put a floor under the market in Chicago.
“Or fleeing to their parents house in the suburbs or their parents lakehouse or winter home.
Or the person renting a $2K+ apartment was able to work remotely and temporarily moved out of state
Or the person renting downtown decided to rent in the burbs since the city was shut down. Suburban occupancy continued increasing during Covid. Where did these people come from?….
Or people living in the city decided to purchase a condo in the neighborhoods of the city.”
None of this explains how thousands of homes sold in the suburbs, does it? WHO bought all those houses????
You have no explanation unless it’s massive instate immigration which everyone on this blog says is NOT happening. And, let’s be honest, we weren’t Florida during the pandemic.
So how did Chicagoland housing inventory drop by 50% and thousands of homes sell?
There is only one explanation. And just because some 25 year old moved back home for the first few months of the pandemic, doesn’t mean they stayed there, right? Suburbs housing market was hot the last 2 years.
Massive Millennial buying in the suburbs.
“And I suppose the “only possible explanation” for the rebound in apartment occupancy since then is people fleeing their newly purchased suburban homes, right?”
Nope. Hot economy. Companies still hiring. Heck, Google has bought an entire high rise because it is maxing out its space in the West Loop. GenZers continue to graduate from college and continue to move here. All of the big companies still have their college hiring plans intact. For now.
“Most renters can’t afford a $2k/mo one bedroom, either, but that’s the cohort we mostly talk about here.”
My friend who is married could afford $2000. This is why I said the young people are not living by themselves. They all have roommates to keep the costs down on these outrageous rents. There are couples living in those $2000 550 sq foot 1-bedrooms. But they’re young and don’t have much stuff and are used to their small college apartments so they just do it. Lol.
Kind of like GenX and Baby Boomers who lived in those crappy, unrenovated apartments in Lakeview in the 1990s. Let’s be honest, they were dumps.
“My friend who is married could afford $2000. This is why I said the young people are not living by themselves. They all have roommates to keep the costs down on these outrageous rents. There are couples living in those $2000 550 sq foot 1-bedrooms. But they’re young and don’t have much stuff and are used to their small college apartments so they just do it. Lol.”
Wait, youre the one always crowing about how this age group are all pulling down 6 figures working in tech and now, now this same group cant afford $2k/mo?
Who are these poors and why do they think they deserve the right to live in chicago
Make up your mind Sybil
“Nope. Hot economy. Companies still hiring.”
Hmm, the experts don’t really agree:
many Chicagoans who fled to the suburbs during the pandemic are now returning to the city. Some who bought in the ‘burbs were able to sell at a profit as the housing boom continues there, and others had sheltered with parents or family and are now coming back, said Kyle Stengle, senior managing director at Marcus & Millichap.
https://therealdeal.com/chicago/2021/09/07/chicagos-downtown-rental-market-heats-up-as-employees-return-to-offices/
Record fast sales in July:
https://www.chicagobusiness.com/residential-real-estate/chicago-area-homes-selling-faster-ever
Sizzle!
“Hmm, the experts don’t really agree:”
Why are you citing an article from a year ago? Completely different market and time.
Hey- if some people bought in 2020 and flipped their homes in 2021 to move back to the city, good for them. But that means they still left their apartments in the city and bought in the burbs. And it means that someone else has bought the home they are flipping. Wonder who those buyers are as no one is moving here from outside the state?
In fact, how is it that Illinois housing inventory has plunged by 40,000 homes over the last 2 years, sales were at 15 year highs, Chicago’s apartment occupancy is back to near record highs while they continue to build thousands of units while thousands of people are fleeing the state?
“Wait, youre the one always crowing about how this age group are all pulling down 6 figures working in tech and now, now this same group cant afford $2k/mo?”
We’ve talked about Chicago incomes and demographics ad naseum on this blog for the last 15 years. Go look at those posts.
Not everyone works in tech. In fact, that number is probably very small. And there are those who work at a tech company in HR, marketing, accounting and other things where the salaries aren’t the same as engineers.
Lol.
My kids wish they were making six figures. But, alas, they are not. Very small percentage of the population makes this. People reading this blog have really skewed perceptions on incomes in this country.
There was an article out this week about the big western ranches out west and the billionaires who are buying them. Some selling for $135 million or more. The article talks about how there are 700 billionaires in the US and out of those only about 75 are actually qualified to buy a property at that price.
It’s similar to Crain’s tally of homes selling in the Chicagoland area for over $4 million. It seems like everyone is buying at that price point. But it’s really, really rare. If you even get 200 sales a year that is considered really hot.
“My kids wish they were making six figures. But, alas, they are not. Very small percentage of the population makes this. People reading this blog have really skewed perceptions on incomes in this country.”
JFC can you stick with one story?
You were crowing how all these Millennials buying $750k condos (And spare me the oldest millennial is 40) and now they’re stuck buying $300k SFH not within walking distance to their chosen suburbs downtown
“You were crowing how all these Millennials buying $750k condos (And spare me the oldest millennial is 40) and now they’re stuck buying $300k SFH not within walking distance to their chosen suburbs downtown”
Cities are powerhouses with good paying jobs. Not everyone lives in the GreenZone or can afford to buy there. SFHs on the north side of the city are over $1 million now. Many are opting out and going to the burbs now.
And rising rates will make people make different decisions.
My kids are GenZ, by the way. Big difference with a Millennial out in the workforce for 10+ years and someone in the first few years of their career. Big difference with pay levels, savings etc.
GenZ makes up only about 5% of those taking out a mortgage right now.
“My kids wish they were making six figures. But, alas, they are not. Very small percentage of the population makes this. People reading this blog have really skewed perceptions on incomes in this country.”
You literally said yesterday to be considered upper middle class you needed to make $150K+…. So which one is it now?
“Cities are powerhouses with good paying jobs”
That you can work remotely from or come in two or three days a week instead of five days now. CTA is just above half of pre-covid ridership levels.
Weekend ridership is doing much better than weekday ridership. The MTA reported that their weekend ridership is 70% of pre-covid levels whereas weekday ridership is at best 60%.
“SFHs on the north side of the city are over $1 million now. Many are opting out and going to the burbs now.”
Because they are buying condos and would buy a condo on the northside but alot of the 3 flats where torn down for SFH’s over the past ten years given our ridiculous zoning policy.
“There was an article out this week about the big western ranches out west and the billionaires who are buying them. Some selling for $135 million or more. The article talks about how there are 700 billionaires in the US and out of those only about 75 are actually qualified to buy a property at that price.”
Talk about non-sequiturs, WTF does this have to do with Chicago real estate?
6666 sold for more that that and T Boone’s has dropped from $250MM to $175MM. If you think these ranches arent producing significant revenue you are clueless
“Talk about non-sequiturs, WTF does this have to do with Chicago real estate?”
Ya’ll think everyone is rich and can afford a million house or a $135 million ranch in Wyoming. But that article discussing who are the actual buyers for these properties shows that the people who in the upper income/wealth bracket are actually quite small.
But when your world is very narrow of the GreenZone or your big firm law firm, you don’t really understand that it’s really only the top few percent and the rest of America doesn’t live like that.
So, yeah, a lot of middle class Millennials will leave Chicago to go to the suburbs to buy now simply because they are priced out of their preferred neighborhoods and they want more space.
“That you can work remotely from or come in two or three days a week instead of five days now. CTA is just above half of pre-covid ridership levels.”
Yep. Surprisingly, that hasn’t stopped the surge of people wanting to live IN the cities. Record high rents in NYC, Miami, Chicago, LA and other cities. I think it’s only San Francisco that is still below the pre-pandemic highs.
Apparently, there are reasons you live in a city that might have nothing to do with going to work. But WFH has certainly given a lot of people a lot more options. Some, like Gary, want to escape the density and just want to live on their acre in the far out suburbs. It used to be you had to wait for retirement, like Gary, to move where you wanted and to live how you wanted. But we are becoming untethered from the white collar office. This is a good thing.
The future is going to look very different. Cities will have to offer something more than just a short commute.
“You literally said yesterday to be considered upper middle class you needed to make $150K+…. So which one is it now?”
I never said this. All depends on your city, standard of living there etc.
We have talked about what makes someone upper middle class in Chicago ad naseum on this blog for 15 years. Go read those posts for more.
“Chicago’s apartment occupancy is back to near record highs while they continue to build thousands of units while thousands of people are fleeing the state?”
Because they haven’t been building the past two years and absorption has outstripped supply but that is projected to change next year and even more so in 24.
Separately, not much new condo or SFH neighborhood development being proposed or currently in the process of being built in the city. People need to live somewhere. People don’t want to live in the 1960’s Gold Coast apartment complex that hasn’t been updated/maintained since the 80’s.
Lastly, are we discussing population trends of the city of Chicago or the State of Illinois? The State overall is at best flat and potentially down people over the past 10 years due to population loss in rural areas whereas the City of Chicago is at best marginally up in the city and potentially flat overall. However, if you look across the city there is no question that the city is losing people on the south and west sides of the city which is offset by population gains in the loop and north side. Have to build to accommodate the growth in certain areas. Can’t move the apartment building from the neighborhood losing population to the one that’s gaining population….
“I never said this. All depends on your city, standard of living there etc.”
Your comment from August 16th below literally defines upper middle class as someone making $150K+ as people making $75K – $100K living downtown aren’t considered UMC per your standards…
“My friend who was renting in LP bought in the $300,000s in the suburbs. They can’t afford anything more than that. Their income is less than $150k a year. This is why they lived in a 1-bedroom apartment prior to the pandemic.
Most living in downtown apartments anonny aren’t upper middle class. They make $75k to $100k, if they are lucky. I don’t know how they all pay those crazy rents. My kids team up with friends and split the rent but it’s still so much more than we spent back in the day as a percentage of salary. But it’s their reality.”
“Ya’ll think everyone is rich and can afford a million house or a $135 million ranch in Wyoming.”
Said no one ever
“But that article discussing who are the actual buyers for these properties shows that the people who in the upper income/wealth bracket are actually quite small.”
By inspection any property >$100MM is going to have a small buyer pool.
In other earth shattering news water is wet and snow is cold
“But when your world is very narrow of the GreenZone or your big firm law firm, you don’t really understand that it’s really only the top few percent and the rest of America doesn’t live like that.”
But I live in Muncie, so thats not my world. YOU are the one harping that Millennials and Z are going to be buying up all the $750k properties and builders better make more. Which is it sybil?
“So, yeah, a lot of middle class Millennials will leave Chicago to go to the suburbs to buy now simply because they are priced out of their preferred neighborhoods and they want more space.”
Same as it ever was
IMO and generally Millennials lack the drive to gentrify new hoods. GenX couldnt afford to buy in LP so they branched out North and West. I dont see Millennials willing to do the legwork to stay in the city
“Why are you citing an article from a year ago?”
Because that is when apartment occupancy recovered?
Apropos of gen Z:
xkcd DOT com/2660/
Yep- I said those making $75k to $100k were middle class. Didn’t say anything about $150k. And you ARE middle class making $75k to $100k in Chicago.
My definition of middle class versus upper middle class is this: are you maxing out your 401k? The middle class cannot. They’ve got to live. Only the upper middle class can.
“Because they haven’t been building the past two years and absorption has outstripped supply but that is projected to change next year and even more so in 24.”
Huh? But that indicates everyone surged to the city as there were thousands of empty apartments. And, yes, new apartments actually HAVE come on the market in the last 2 years. Those buildings under construction continued on including One Chicago which has like 1000 apartments. But agreed, that there will be a lull going forward because in 2020 the banks wouldn’t lend thinking that the cities were doomed. They quickly turned that around but supply isn’t going to meet demand for the next few years because Chicago is just too hot right now.
19,000 apartments are expected to be built downtown in the next 5 years. They all might not get built as it depends on the economy of course.
Oh, and WP, they are actually building NEW apartment buildings on both the South and West side now because there IS demand there. Big new development going in in Roseland and a nice development in Englewood. This investment is much needed.
There won’t be a new post tomorrow as I’m not feeling well so I’m just taking the next few days off. Sorry.
We’ll resume on Monday. Chicago real estate is SLOW right now anyway.
“Big new development going in in Roseland and a nice development in Englewood”
Market rate? Unsubsidized construction?
“Huh? But that indicates everyone surged to the city as there were thousands of empty apartments.”
No. It doesn’t indicate that everyone surged to the city….
“And, yes, new apartments actually HAVE come on the market in the last 2 years. Those buildings under construction continued on including One Chicago which has like 1000 apartments.”
You can only name one new apartment building of 1,000 apartments in a city with 2.7 million people. WOW……
“They quickly turned that around but supply isn’t going to meet demand for the next few years because Chicago is just too hot right now.”
Supply is actually expected to exceed demand next year and the year after per Crains but ok go with what you want to hear. Projects were temporarily paused at the beginning/during parts of Covid pushing their completion dates off.
“19,000 apartments are expected to be built downtown in the next 5 years. They all might not get built as it depends on the economy of course.”
So the answer isn’t 19,000 you just pulled that one out of your ***. There’s ~8,500 – 9,000 coming online over 23 and 24.
“NEW apartment buildings on both the South and West side now because there IS demand there. Big new development going in in Roseland and a nice development in Englewood. This investment is much needed.”
Can you name a non-subsidized development? Aren’t those both South by SouthWest projects?
“Supply is actually expected to exceed demand next year and the year after per Crains”
Only in ‘green zone’ ‘luxury’ units.
There is a dearth of ‘affordable’ (and I mean, AMI-ish affordable, not subsidized–also too few there, but that’s a different issue, imo) housing in Chicago, in the burbs, and nationwide, due to both underbuilding in general, and overbuilding of ‘lux’ over the past 15 years.
So, I rate Sabrina’s statement “true, but misleading in context”.
“My definition of middle class versus upper middle class is this: are you maxing out your 401k? The middle class cannot. They’ve got to live. Only the upper middle class can.”
So someone making $130k and putting 15% into their 401k is UMC?
Interesting
“Stengle is a broker who specializes in GZ multi-family bldgs. so in essence “he’s talking up his book”.”
“Renters could be a different story”
So, do you think that someone who was ‘talking their book’ re MF properties was talking about renters, or nah?
“There is no proof whatsoever that people who bought in the suburbs in 2020-21 have recently sold (within this two years’ time) and are buying back in the GZ.”
I think I know five families who bought in the Chicago burbs in 2020-21. Four have given no indication that they intend to uproot their young kids, downsize, and move back to the city. (The fifth, who had what appeared to be the nicest house of all, just moved to Austin. I know another guy who had been in the Chicago burbs for maybe 6 years, and they just moved to the Denver area.) I think it’s probably almost entirely kid-driven (i.e., no kids in the house, sure, move back to the city; kids, probably not).
“So someone making $130k and putting 15% into their 401k is UMC?”
A single person doing so–arguably yes.
A dual income couple doing so is of course not maxing both, so no.
The tax code (by implication) sez it’s $170,050 AGI, double that for marrieds, and add $20,500 for 401k and $10k for health insurance, and it gives you ~$200k ($400k married) for a gross income number.
Among all 2021 taxpayers (ie, a wildly over-inclusive group for purposes of assessing UMC (bc, among other things, retiree UMC status ain’t tied to AGI, at all)), top 10% was AGI over $154,589 and top 5% AGI over $221,572.
With that in mind, $200k for a single is the right ballpark, but $400k for married is probably too high a threshold–it’s probably more like $250-275k, so your $130k example works for a couple where they *both* make that.
This all assumes, of course, living in an area with COL something like between 95 and 125 of US avg–that ain’t going to feel UMC in EsEff or Manhattan, and it’s going to feel basically rich in West BFE.
“There is a dearth of ‘affordable’ (and I mean, AMI-ish affordable, not subsidized–also too few there, but that’s a different issue, imo”
Don’t worry the State Legislature will pass legislation to “lift the ban” after Pritzker wins re-election. Rent control has proven to be so effective….
“Don’t worry the State Legislature will pass legislation to “lift the ban” after Pritzker wins re-election. Rent control has proven to be so effective….”
The only fools dumb enough to put on rent control given all the evidence that it doesn’t work are those in Florida. It’s on the ballot in Orlando in November.
“So someone making $130k and putting 15% into their 401k is UMC?”
Again, if they can max out every year they are UMC. With or without a company match. So, yeah, a singleton who is making $130k and puts 15% in and maxes out is upper middle class.
We know from Vanguard and Fidelity’s 401k data, the two largest providers which cover millions, that only 10% of those contributing are maxing out. That’s because it’s mostly the upper middle class who is doing it. And there aren’t that many of them.
Many of those making $130k in the coastal cities, depending on housing costs, might decide they cannot do the full 15% and save money, travel, own a car etc. So they won’t max out. And then I would say they aren’t upper middle class either at that salary on the coasts.
“You can only name one new apartment building of 1,000 apartments in a city with 2.7 million people. WOW……”
Nope. Plenty of others. Others opening in the West Loop, Lakeview and other neighborhoods. There were buildings under construction when COVID hit and they kept going.
The 1,000 apartments were just for downtown because that’s what they track. It’s not the entire city. The 19,000 were just for downtown which includes Fulton Market too. Some of the 19,000 won’t get built if there’s a recession and lending slows for a couple of years.
Also, according to income data, $129,000 is top 10% in income.
Everyone has to live. Most want to buy a house, own a car, go on a vacation. The upper middle class can max out AND do those things. Middle class cannot.
So the difference between UMC and MC is if they chose to drop $10k on a vacation or fund their 401k?
Honestly you sound dumber with each attempt at rationalizing your opinions.
Congrats
“So the difference between UMC and MC is if they chose to drop $10k on a vacation or fund their 401k?”
No, there’s no “choice” with the middle class. They have to live. And I don’t know many taking $10,000 vacations either. Do you know you can go to an all inclusive in Cancun for under $2000 for a week JohnnyU? Imagine that.
They have housing, car payments, yes, vacations and other things that take priority. ANYONE who has been middle class knows that you aren’t maxing out your 401k in the major cities in America. It just can’t be done if you want to “live.” No financial advisor is telling someone who is already paying 30% or more of their income on housing to also put 25% or 30% into their 401k. Just not happening.
In fact, most financial advisors recommend 15% of your salary once you are older and have gotten some pay raises. That would be a stretch for someone making $75k to $90k in some parts of the country. If they have a good match can get it to 15% perhaps.
Again, you have to LIVE. Middle class is just barely getting by. Have you bought a new or used car lately JohnnyU? Do you drive at all? The average monthly payment is now close to $500 a month and that’s before gas and insurance.
The middle class doesn’t max out. Only the upper middle class has that kind of firepower.
The data supports this. You can gaslight the data all you want JohnnyU, as I’m sure you will attempt to do.
Also, no middle class person is spending $10,000 on a vacation unless it’s all on a credit card and it’s like a once in a lifetime Disney World family vacation and the family just throws all budgeting to the wind. A single middle class person spending that much also has some serious spending habits.
And if they’re doing that, and putting it on the credit card, then they aren’t ever contemplating “maxing out” their 401ks.
Lol.
Middle class can’t max out. Upper middle class can. It’s an easy way to determine the difference between the two.
Here’s Vanguard’s report for 2021:
“During 2021, 14% of participants saved the statutory maximum amount of $19,500 ($26,000 for those age 50 or older) (Figure 42). Participants who contributed the maximum dollar amount tended to have higher incomes, were older, had longer tenures with their current employer, and had accumulated substantially higher account balances.
Fifty-eight percent of participants with income of more than $150,000 contributed the maximum allowed, as did 4 in 10 participants with an account balance of more than $250,000. And 1 in 6 participants older than 65 contributed the maximum in 2021.”
Like I said, you are upper middle class if you are maxing out your 401k.
https://institutional.vanguard.com/content/dam/inst/vanguard-has/insights-pdfs/22_TL_HAS_FullReport_2022.pdf
“Like I said, you are upper middle class if you are maxing out your 401k.”
What if a person doesn’t have a 401k? Can they not be UMC (or higher)?
“The only fools dumb enough to put on rent control given all the evidence that it doesn’t work are those in Florida. It’s on the ballot in Orlando in November.”
It’s popping up across the country over the last couple of years and it isn’t going away. The State Fair was held this past week and there was article after article about the new lift the ban legislation that was filed. Assuming Democrats maintain their super majorities in both the house and senate I think it passes shortly after November or shortly after the Chicago municipal elections next year.
The whole second half of the link below is on the new rent control bill filed in Springfield. Chicago Tribune this morning first article is on rising rental prices.
https://www.sj-r.com/story/news/politics/state/2022/08/17/illinois-democrats-rally-target-gop-on-governors-day/65406519007/
“The 19,000 were just for downtown which includes Fulton Market too. Some of the 19,000 won’t get built if there’s a recession and lending slows for a couple of years.”
These are proposed units. Maybe half or a little more than half are actually built with residences moved in over the next 3 – 5 years. That’s not many.
I’m surprised there hasn’t been any news from the Lincoln Yards developers wanting to speed up the residential development timelines.
“Like I said, you are upper middle class if you are maxing out your 401k.”
Meh from a financial planning perspective I think you need to look beyond 401K maximization; I would argue maxing out your HSA is probably more important than maxing out a 401K if you look at overall medical debt and reasons why people file for BK in this country.
Yes 401K is important but that money is effectively untouchably for decades whereas you, your spouse, or child will have an unexcepted medical bill (likely multiple) at some point prior to retirement.
“I would argue maxing out your HSA is probably more important than maxing out a 401K if you look at overall medical debt and reasons why people file for BK in this country.
Yes 401K is important but that money is effectively untouchably for decades whereas you, your spouse, or child will have an unexcepted medical bill (likely multiple) at some point prior to retirement.”
I’ll say. Having a high deductible ($5k) family insurance plan was fairly painless when kids were very young, but lately it seems like there’s always a couple of ER visits that result in paying that full $5k out of pocket every year.
“I’ll say. Having a high deductible ($5k) family insurance plan was fairly painless when kids were very young, but lately it seems like there’s always a couple of ER visits that result in paying that full $5k out of pocket every year.”
HSAs are vital with kids. You will need the money. Might as well get it tax free.
“Yes 401K is important but that money is effectively untouchably for decades whereas you, your spouse, or child will have an unexcepted medical bill (likely multiple) at some point prior to retirement.”
Again, the middle class doesn’t have many options. Only the upper middle class even thinks, “gee, maybe I won’t max out my 401k and instead I’ll put some money into an HSA.” Same argument with people who say you should be maxing out your 401k AND putting something in an IRA or Roth IRA.
It’s just not possible for the middle class. And that’s okay. No one needs to max out all of these accounts at the expense of living for today. You will have plenty for retirement if you start in your 20s and keep going, even doing smaller amounts. Don’t buy into the fear.
“These are proposed units. Maybe half or a little more than half are actually built with residences moved in over the next 3 – 5 years.”
I said some may not get built. The demand is there but if banks tighten apartment lending, then they won’t get built even in the hottest neighborhood in the country.
But thousands of apartments are slated for downtown over the next few years. I wish some of them were condos however.
“Assuming Democrats maintain their super majorities in both the house and senate I think it passes shortly after November or shortly after the Chicago municipal elections next year.”
Nah. Illinois isn’t THIS dumb. We’ll leave that to Florida.
Although the Orlando referendum caps it at 10% a year increases.
“What if a person doesn’t have a 401k? Can they not be UMC (or higher)?”
I never said anything about people who don’t have a 401k. If they work for themselves, and are maxing out the solo contribution of $61,000, they are NOT middle class.
I think it’s pretty obvious that the middle class isn’t “maxing out” anything, whether they have a 401k or not. If you make $60,000 a year, are you maxing out the IRA? Unlikely.
Something is better than nothing, however. Small amounts add up big.