Market Conditions: What Could Go Wrong? “Supply Will Induce Demand” In The Chicago Apartment Market
The housing market is heating up in all directions as single family homes, condos and townhouses are selling briskly in a low inventory market and a plethora of new apartment buildings are under construction as people shun the buyers market and prefer to rent.
We’ve been chattering about all the new apartment high rises for the last year.
From Crain’s:
Demand isn’t likely to cool off anytime soon, according to Appraisal Research Vice-President Ron DeVries.
“We’re going to start out this year with a bang,” he said at a Tuesday luncheon at the Standard Club downtown.
The question is whether demand will be strong enough to absorb the flood of new apartments under construction. Developers are on track to complete 2,695 units this year and 2,530 in 2014, he said. In the coming months, the first residents will start moving into Coast, a 499-unit tower in the Lakeshore East development being built by Magellan Development Group LLC, and a 500-unit building that Related Midwest is developing at 500 N. Lake Shore Drive.
One reason to be worried: Absorption, or the change in the number of leased downtown apartments, totaled just 1,100 apartments in 2012. At that rate, it will take about five years to soak up all the new apartments.
The counterargument: Absorption has been artificially low because there is effectively a shortage of apartments downtown. More renters will emerge when more apartments become available, or “supply will induce demand,” Mr. DeVries said.
“I don’t view this as a five-year supply issue,” he said.
On the flip side, the problem in the condo market is no longer too much inventory, it’s too little. The Tribune reports on the hot downtown new construction condo market.
In addition, only 1,104 newly constructed condo units remain unsold downtown.
“When we see more transactions occurring, that’s a really good indication of demand,” said Gail Lissner, a vice president at the firm. “The look of the condo market has changed in terms of unsold inventory.”
Lissner’s remarks came Tuesday during a lunchtime briefing on the local housing market.
Most of the unsold inventory, more than 500 units, is in the South Loop and the bulk of it is in the newly named and repositioned 500-unit South Loop Luxury by Related.
The three buildings, once called One Museum Park West, 1600 Museum Park and Museum Park Place 2 were taken over by New York-based Related Cos. in July have been renamed the Grant, Adler Place and Harbor View, respectively.
Since December, 40 units there are under contract, according to Related Midwest, which officially launched sales in the project Tuesday.
Other new projects reporting positive sales trends are Park Monroe Phase II, a 48-unit adaptive reuse project with 16 sales and CA3, a 40-unit building with 18 sales.
“These are all great indicators of strong sales,” Lissner said. “Price stabilization has occurred in the market. You don’t hear people talking about bottoming out. That was so yesterday.”
A lot of the bigger “new construction” projects still on the market are left over from the boom (i.e. the Related units). There hasn’t been many genuinely new big developments that have been built from the ground up since the bust.
I once said that it would take 10 years before a new condo highrise building was built. We’re in year 7 right now.
Was I wrong?
Will some of these new construction apartment towers that are slated for occupancy in 2014 really be new condo towers instead?
Downtown apartment owners face test amid construction boom [Crain’s Chicago Business, Alby Gallun, February 12, 2013]
Downtown condo market showing signs of life [Chicago Tribune, Mary Ellen Podmolik, February 12, 2013]
“I once said that it would take 10 years before a new condo highrise building was built. We’re in year 7 right now.”
Did you say this in 2006?
“I once said that it would take 10 years before a new condo highrise building was built. We’re in year 7 right now.”
2007
2008
2009
2010
2011
2012
2013
=7
“The housing market is heating up in all directions as single family homes, condos and townhouses are selling briskly”
Single family homes are NOT selling briskly. It’s all about being downtown.
“Single family homes are NOT selling briskly. It’s all about being downtown.”
What are you talking about? I know people in bidding wars on SFH in Park Ridge, Evanston, Oak Park, Portage Park, Lincoln Square, West Town and on and on.
“I know people in bidding wars on SFH in Park Ridge, Evanston, Oak Park, Portage Park, Lincoln Square, West Town and on and on.”
Much of it fueled by institutional buying to be used as rental properties.
With all these apartment construction in downtown, they are sure going to attract some current lincoln park, wicker park, lakeview residents. If we were to segment the current resident profile in LP, WP, and LV. You have:
budget renters(<500 rent per person per month)
middle class income renters(500 – 1500 per person per month)
high income renters(1500+per person per month)
condo owners
SFH owners
The new construction price point is a little out of reach for your typical budget renters, SFH and condo owners are not going to move to downtown, and that leaves us with high income and middle class renters. high income renters are renting(not in downtown currently) by choice, they certainly could afford to live in downtown but decided not to, therefore, they are unlikely to move to downtown. So, the target market for these condo developers should be middle class income renters. One major factor to move these folks to live in downtown is jobs, are there going to be enough jobs in downtown to attract them? It doesn't seem to be case in the next 5 years…
Respect_my_author – that is incorrect – the yields on any SFH within the city, especially more desirable areas are significantly too low. Those looking to buy and rent are heading west and SW burbs where homes are cheap, rents are increasing, and schools are good.
“Did you say this in 2006?”
How is “new condo highrise building … built” construed to exclude 2520?
Does that also not include the Ritz?
“Does that also not include the Ritz?”
It’ll be “new = not yet planned”, but 2520 was DOA for at least 18 months until GE Pension (?) stepped in with construction financing. The Ritz only got delayed as much as it did because of (bob’s favorite) the MWRD being stupid about an alley (which we will all be paying for with increased taxes/water bills!!).
“Those looking to buy and rent are heading west and SW burbs where homes are cheap, rents are increasing, and schools are good.”
Nope.
I always say that investors invest and builders build. That’s what they do. And if they stop building or investing, they may as well just stop coming into the office. The survey the economic landscape and look for what they believe are the best deals and go forward from there. Sometimes they make incredibly shrewd and profitable bets, and other times they make money from sheer economic headwind. This is one of those cases where the investors and builders are looking around for something to do and were like “let’s build some apartments, what the hell, right? because my other option is to stay at home with the wife and kids and you know I’m not going to do that, hahahahaha!!” so they build some apartments. There is a little bit of headwind towards the downtown market and they’re trying to capitalize on that due to fact that there really isn’t much of anything else going. And if they aren’t building or investing then they can’t really justify their jobs, right?>
The suburbs have been, are, and will continue to be the best bet for parents.
” Respect_My_Authoritah (February 14, 2013, 10:03 am)
“Those looking to buy and rent are heading west and SW burbs where homes are cheap, rents are increasing, and schools are good.”
Nope.”
“How is “new condo highrise building … built” construed to exclude 2520?”
she probably excluded it because it is an a abomination to anybody’s visual senses no matter what the preferred tastes are.
is the legacy a boom or after boom one?
” Respect_My_Authoritah (February 14, 2013, 10:03 am)
“Those looking to buy and rent are heading west and SW burbs where homes are cheap, rents are increasing, and schools are good.”
Nope.”
@RespectMy
are just disagreeing with the the the SW part of that statement or the whole statement?
“The suburbs have been, are, and will continue to be the best bet for parents.”
Nope
http://www.nytimes.com/2012/07/08/opinion/sunday/struggling-in-the-suburbs.html?_r=0
Smart, professional people are having less and less kids though, hd…
In addition:
http://www.marketwatch.com/story/8-reasons-the-city-beats-the-suburbs-2013-02-14?pagenumber=1
The suburbs will continue to become older and less desirable.
Who says that poor people wouldn’t rather live in the city? It’s much easier to be poor in the city than to be poor in the suburbs. Transportation issues to start; housing issues secondly, easier access to social services third…
“Smart … people are having LESS AND LESS kids ”
Heh!
“much easier to be poor in the city than to be poor in the suburbs. Transportation issues to start; housing issues secondly, easier access to social services third…”
Not if ‘city leaders’ can do anything about it, which they’ve been working on (slowly, so as to continue working on it) for 25 years.
shut up anon!
I’ll punch you if I see you Sunday grammar nazi
But HD, I thought your huge issue with the suburbs was the “bang for the buck” are you telling me that isn’t true? That poor people don’t appreciate bang for their buck?
“Smart, professional people are having less and less kids though, hd”
so your saying in ~150 years time the world would be a bunch of dumbarse laborers?
crap come to think of it the scale is already tipped that way 🙁
“There is a little bit of headwind towards the downtown market and they’re trying to capitalize on that…”
Don’t you mean tailwind?
“Smart, professional people are having less and less kids though, hd…”
True, and dumb people are having more and more kids. That is called a “dysgenic nation”.
“so your saying in ~150 years time the world would be a bunch of dumbarse laborers?”
Mike Judge (beavis and butthead creator) made a movie about this: Idiocracy (2006)
Was on the subway to Brooklyn last night thinking that most people are stupid.
I’ve given up trying to be a better person and to have more charitable thoughts.
Yes everyone should watch ‘Idiocracy’ because, it is happening right now
” Milkster (February 14, 2013, 11:28 am)
Was on the subway to Brooklyn last night thinking that most people are stupid.”
how many were gingers?
1 in 5 Americans cannot read past 4th grade level, and the 2013 State of the Union speech they wrote for Obama to read off his teleprompter was the “dumbest” level in US history using the Flesch–Kincaid readability test.
Regarding the “Supply Will Induce Demand” issue, that really makes me wonder, and I’m trying to recall my Econ 101 days. I’m pretty sure that’s a fallacy as the supply and demand curves are independent of each other.
“Regarding the “Supply Will Induce Demand” issue, that really makes me wonder, and I’m trying to recall my Econ 101 days. I’m pretty sure that’s a fallacy as the supply and demand curves are independent of each other.”
You are correct, that statement is nonsense as the relationship between the two sets a price, if they said stable demand and reduced supply will lead to increased prices per square foot and therefore more demand for units to be built, that could be accurate, as it stands its really dumbed down and doesn’t make much sense.
Flesch-Kincaid Grade Level for Orally Delivered State of the Union Addresses, 1913-2013
Presidential Address Words per sentence Flesch-Kincaid Grade Level
Wilson 1916 33.1 17.1
Roosevelt 1934 30.1 15.7
Wilson 1915 30.9 15.0
Harding 1921 25.8 14.6
Roosevelt 1937 26.3 14.5
Roosevelt 1938 27.5 14.3
Harding 1922 24.9 14.2
Wilson 1918 29.6 14.1
Wilson 1913 28.4 14.1
Eisenhower 1955 21.8 14.0
Roosevelt 1935 25.5 13.9
Kennedy 1961 25.4 13.9
Eisenhower 1960 22.7 13.4
Eisenhower 1957 21.9 13.4
Roosevelt 1940 26.6 13.4
Kennedy 1962 24.1 13.3
Eisenhower 1954 21.2 13.2
Eisenhower 1953 19.9 12.8
Truman 1947 20.8 12.7
Kennedy 1963 23.8 12.5
Nixon 1974 25.3 12.4
Wilson 1917 25.7 12.3
Ford 1977 21.8 11.9
Bush 2005 21.6 11.8
Roosevelt 1939 22.2 11.7
Eisenhower 1958 19.9 11.7
Truman 1950 21.9 11.6
Nixon 1971 23.3 11.6
Johnson 1964 24.1 11.6
Eisenhower 1959 18.9 11.4
Coolidge 1923 17.8 11.3
Reagan 1983 21.2 11.3
Roosevelt 1936 23.0 11.2
Carter 1980 20.7 11.2
Carter 1979 20.2 11.2
Roosevelt 1941 22.2 11.1
Nixon 1972 22.9 11.1
Nixon 1970 22.3 11.1
Roosevelt 1944 21.5 11.0
Wilson 1914 23.0 10.9
Reagan 1988 21.6 11.0
Ford 1975 18.3 11.0
Truman 1949 18.3 10.9
Roosevelt 1943 22.8 10.9
Reagan 1982 20.5 10.9
Johnson 1966 21.5 10.8
Bush 2006 19.2 10.8
Truman 1948 18.4 10.7
Johnson 1969 21.2 10.7
Ford 1976 17.9 10.7
Johnson 1967 19.9 10.4
Bush 2003 18.2 10.4
Johnson 1968 18.9 10.3
Bush 2008 18.4 10.2
Bush 2004 18.8 10.2
Clinton 1999 19.1 10.0
Carter 1978 18.2 9.9
Reagan 1987 18.6 9.8
Reagan 1986 19.8 9.8
Bush 2007 19.3 9.8
Reagan 1985 18.6 9.7
Clinton 1998 19.7 9.7
Roosevelt 1942 20.4 9.6
Clinton 1997 19.5 9.6
Reagan 1984 16.9 9.3
Clinton 2000 18.3 9.3
Clinton 1996 17.7 9.3
Clinton 1995 20.0 9.3
Bush 2002 17.8 9.3
Bush 1991 17.4 9.2
Obama 2013 17.5 9.2
Clinton 1994 18.6 9.0
Bush 1990 18.9 9.0
Truman 1952 18.1 8.9
Obama 2010 16.6 8.8
Truman 1951 16.3 8.6
Johnson 1965 16.1 8.6
Obama 2012 16.6 8.4
Obama 2011 16.8 8.1
Bush 1992 15.8 7.5
Average 21.2 11.2
Table compiled by Smart Politics.
http://blog.lib.umn.edu/cspg/smartpolitics/2013/02/get_it_done_slogans_drop_obama.php
Of course Anon(Tfo) blame Bush, blame Bush.
“Of course”
Facts is facts.
Do note that that is Poppy, not Dubya. Dubya’s lowest higher than Poppy’s highest.
“that statement [“supply will induce demand”] is nonsense as the relationship between the two sets a price”
Is the absorption rate that is being discussed in the article a measure of demand (as opposed to supply)?
Blame texting.
“Of course Anon(Tfo) blame Bush, blame Bush.”
note the steady downward slope of the trend: http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2013/02/20130212_SOTU1.jpg
amazing isn’t it?
“Blame texting.”
Blame Wilson (just like Glenn Beck does), then radio, then TV, then cable news. Damn thing was delivered as a written document for 112 years til that professor decided it would work as a lecture. Be better off if it still were, instead of the ridiculous sound-bite-athon and photo op it is now.
Say’s Law: Supply creates its own demand.
Test your knowledge of Chicago neighborhoods:
http://click-that-hood.herokuapp.com/?city=chicago
Eric posted: “With all these apartment construction in downtown, they are sure going to attract some current lincoln park, wicker park, lakeview residents…… SFH and condo owners are not going to move to downtown, and that leaves us with high income and middle class renters….One major factor to move these folks to live in downtown is jobs, are there going to be enough jobs in downtown to attract them? It doesn’t seem to be case in the next 5 years…”
I disagree w Eric. There is now and will continue to be excellent job growth #’s in River North portion of Loop (both new tech job creation and transfer of existing jobs / divisions currently located in less desirable locations (ex. – transfer of 3000 employees of former Motorola division from NW suburbs to 500K sq feet @ Merchandise Mart.) How many will elect renting within a mile or 3 of work vs commuting 30-40 miles? If you are responsible for new tech hires would you prefer pitching a downtown location or pitching Schaumburg/Naperville/et al? And many times when an HD buys a suburban SFH (yes relatively few did in last 3-5 years but more will going forward) an aging, likely former city resident has a decision to make – stay in boring blandvilles or move to GZ area. The safest & net cheapest way for both new hires & relocating middle aged sellers to learn if downtown living is for them is to rent (even @ $3K-$5K mo) rather than buy a condo they may want to sell within a few years.
we all can have dreams southbound …
More and more people work out of their homes, don’t forget that. It can be city or suburbs, doesn’t matter, and office suite companies like Regus are in both places too.
Southbound, that’s an interesting point you brought up.
But consider this, when Motorola moves it’s company to downtown, do you think their current employees are going to sell their houses in the burbs, rent an apt in the city and move their kids to city school? The last point is probably the main reason these people will not rent in the city. There are a lot development in the city for start-ups, it’s very exciting, and could potentially attract young people to live in the city. But majority of start-ups are low on cash flow and probably can’t afford to rent at the downtown apts, wicker park or south loop might be more reasonable solutions.
“How is “new condo highrise building … built” construed to exclude 2520?”
Lincoln Park 2550 (as it’s now being called) and the Ritz were both planned/approved/started before the bust.
There have been no NEW condo highrises constructed since the bust. Plenty of apartment buildings though.
“So, the target market for these condo developers should be middle class income renters.”
But it can’t be. Units are renting at $2.75 per square foot. A typical 750 square foot downtown rental would be about $2062 a month (that’s not even with parking.)
That’s not “middle class.”
Why do you think the “middle class” renter lives in Lincoln Park/Lakeview/Wicker Park? Your money goes further (well- at least one of the reasons. There are others too.)
“I know people in bidding wars on SFH in Park Ridge, Evanston, Oak Park, Portage Park, Lincoln Square, West Town and on and on.”
Much of it fueled by institutional buying to be used as rental properties.”
You’re nuts. An institution is not buying a $500,000 renovated single family home in Oak Park so they can rent it out. Get real. These are real buyers looking for a home.
Southbound lives in a fantasy world.
1) Significant residential units were brought online during the boom in the downtown & near downtown neighborhoods.
2) Jobs are still 2% lower than their peak in 2007, and around where they were when BO took office.
3) Wage increases are set at the margin like RE, so the higher unemployment rate creates significant downward pressure on wage increases going forward.
4) Student loan debt will cripple the future spending ability of the target market for downtown living.
4) Interest rates are up 1/8th from their historic lows, and nowhere to go but up.
3/8ths of a point might not sound like a lot to you old timers, but when APR was already at ~3.10% (created by the Fed printing trillions of dollars), that’s over a 12% increase in i, 5% increase in payment on a 30yr 350k mortgage at the outset.
All stops were pulled out to keep the valuation train running as long as possible. The Fed tried to hoodwink more and more people into buying property to bail out older and over-extended. And now housing valuations are in a huge pickle with a huge headwind as far as the eye can see.
Just think what late 90s interest rates would do to house valuations today. Think what affect this would have on local school districts taxes (Chicago is different but most of the rest of the country is valuation based) and you see how the powers that be are completely screwed if valuations fall, as they will.
The Fed hoped to keep interest rates low enough long enough to soften the descent and allow stuck owners to build up some equity to resell. The problem is the bubble got so big this was an impossible goal from the outset. Remember the days when the FHFA conforming loan limit was rising by _ten percent a year_ like a stock?
Hopefully the tea party takes a hard line against Obama and does NOT allow the FHA loan limit extension to be renewed again come 2014. If you’re living the debt dream it’s about time you were shown the poor house. Let cash be king as it should be.
Err up 3/8ths of a point. Which happens to be close to 1/8th 🙂
This article sheds a little light on what is happening, in addition to the Feds interest rate fixing..
http://www.zerohedge.com/news/2013-02-14/boomerang-foreclosures-are-back-bernankes-second-housing-bubble-begins-pop
But it can’t be. Units are renting at $2.75 per square foot. A typical 750 square foot downtown rental would be about $2062 a month (that’s not even with parking.)
That’s not “middle class.”
Why do you think the “middle class” renter lives in Lincoln Park/Lakeview/Wicker Park? Your money goes further (well- at least one of the reasons. There are others too.)
2062 might seem high for one person, but would seem affordable if there are two people sharing a unit(roommate, couple). 1K for rent(or even 1500) maybe at the high end of middle class, but someone with 50K annual salary can afford that.
“2062 might seem high for one person, but would seem affordable if there are two people sharing a unit(roommate, couple)”
the 2062 number is for a 1BR unit. i doubt this works for a roommate situation but yes for a couple.
“the 2062 number is for a 1BR unit. i doubt this works for a roommate situation but yes for a couple.”
But it’s NOT affordable compared to where these people already live. A couple living in Lakeview for $1500 or even $1700 a month (which would likely be a 2 bedroom place) isn’t suddenly going to say, “let’s move to 750 square feet for $2100.”
Why???
There’s a reason people live in Lakeview, Lincoln Park, Lincoln Square in an apartment. They’re living there because it’s cheaper. 1,000 people aren’t suddenly going to up and pay the moving costs and then pay even MORE money when they have student loans and haven’t gotten a pay raise in 3 years.
The target market for these rentals are NOT the “middle class” north side renters.
“You’re nuts. An institution is not buying a $500,000 renovated single family home in Oak Park so they can rent it out. Get real. These are real buyers looking for a home.”
Absolutely true.
“The counterargument: Absorption has been artificially low because there is effectively a shortage of apartments downtown. More renters will emerge when more apartments become available, or “supply will induce demand,” Mr. DeVries said.”
I think the way DeVries said this is not necessarily correct. The lack of supply is what holds back absorption. Units are being added to the market overall and vacancy is still falling.
Bob posted “Southbound lives in a fantasy world….Let cash be king as it should be.”
So Bob since HH states he immigrated from South Africa (why would he – isn’t apartheid right up at the top in his value system?) I wonder if you are an ‘expat’ but from Rhodesia? But seriously your incorrect analysis supports my point. The harder it becomes in the future for current owners to refinance or purchase repacement homes & condos the larger the pool of potential renters becomes. And yeah while only certain segments of Chicago’s economy are growing jobs tech growth is booming & leading the River North/ downtown recovery. And in response to Eric posting “…current employees are going to sell their houses in the burbs, rent an apt in the city and move their kids to city school? The last point is probably the main reason these people will not rent in the city.” Eric I suspect the tech companies hope their middle aged techies opt out of working downtown – the half life of a tech education is probably 5 years so why not replace existing employees with younger people, who are (relatively) cheaper and better trained in today’s technology?
I have no doubts the apartments will eventually be filled. the middle class is being squeezed. Most people in the middle class are going down, but a few are going up too. Starting salaries at major companies for new grads from good schools is high – two 25 year olds in in an apartment downtown is a household income in the middle 100’s or even far higher. All the professions, and tech companies. Chicago has a lot of high paying jobs. there are the same number of doctors, and lawyers, consultants, professionals, college grads, etc that are able to make that jump from teh middle class income to a lower-upper middle or higher income. Plenty, many of my friends, co-workers, peers. However, this is not the majority.
The lower class is growing larger every day too – as evidenced by the fact that 1 in 2 children in America will live off food stamps at one point in their childhood; and 1 in 3 residents in Illinois live in poverty. We all tend to forget that 5,000 new apartments a year for upper middle class college grads is not reflective of chicago, Illinois, or the country as a whole.
“1 in 3 residents in Illinois live in poverty”
Um, no. It’s “1 in 3 is poor”, which runs up to income levels of about median HH income:
[big pdf; don’t click while mobile]:
http://www.ilpovertyreport.org/sites/default/files/uploads/Illinois_33percent_PovertyReport_FINAL.pdf
May as well say “2 in 3 Illinoisans are rich”.
Real numbers = 15% in poverty; 22% of children.
Minor nitpick. Mobility laid off 700 employees last year, so that makes it 2300 jobs coming to Chicago. Add into the fact that Libertyville and the nearby towns have a Metra line, it’s more likely that many people will commute instead of move their families/look for another job.
“Chicago has a lot of high paying jobs. there are the same number of doctors, and lawyers, consultants, professionals, college grads, etc that are able to make that jump from teh middle class income to a lower-upper middle or higher income. Plenty, many of my friends, co-workers, peers. However, this is not the majority.”
According to the bartender at the Blue Agave mexican restaurant at K Station across from Blommer chocolate, the building is filled with people around 35-45-ish (who probably are paying the $2.50 psf rent) but also lots of 20-ish types who the bartender believes are being subsidized by parents. America’s university degrees can be BOUGHT. Foreigners are pouring into the top schools because they pay full tuition. I think many of the 20-ish subsidized renters in Class A buildings meet this stereotype.
Did anyone read the CRED (Crains) story: SEC files fraud suit against developer of hotels near O’Hare
Big Money involved: “Mr. Sethi and his companies used the lure of a pathway to U.S. citizenship to convince investors to wire a minimum of $500,000 each plus a $41,500 “administrative fee” to U.S. bank accounts, according to the charges.”
Mr. Sethi sought city approval in 2010 for the three-tower hotel project, which would include 995 rooms and a 190,000-square-foot convention center on the site of the former Chicago O’Hare Garden Hotel, at 8201 W. Higgins Road.
The USA runs a massive trade deficit every year. All those dollars then travel abroad and are held by foreigners. It makes sense to me, that many of those dollars will end up back here…invested as per the above, and being used to buy their kids’ way into American colleges, jobs, and Class A rental apartments.
I love the irony in reading a foreigner (sorry I meant ‘expat’) posting his outrage that “Foreigners are pouring into the top schools..”. Who cares? The trade deficit exists because there are foreign companies (many owned by US companies or US investors) who produce better and/or cheaper goods. The US now specializes in selling value added products like software, legal services & education none of which are counted in calculating trade deficits.
Many in the world, particularly Asians, send their offspring to America for education because they see USA as the best place in the world for their offspring’s future & getting educated here makes it easier to find a way to stay. Immigration is not limited to refuges from places where the natives finally rebelled against minority rulers who historically ruthlessly milked the natives natural resources and labor out of every last rand! And yeah when I read the Crain’s article I thought of one of our posters who likely used his family’s accumulated rands to buy an E-2 or EB5 back door visa so he could flee to the safety of US where he is bitching about those damn foreigners.
SEC files fraud suit against developer of hotels near O’Hare
Big Money involved: “Mr. Sethi and his companies used the lure of a pathway to U.S. citizenship to convince investors to wire a minimum of $500,000
Southbound: do you honestly think I could know so much about Chicago and be an expat from South Africa? LOL.
“Many in the world, particularly Asians, send their offspring to America for education because they see USA as the best place in the world for their offspring’s future & getting educated here makes it easier to find a way to stay.”
That’s exactly what I am saying. The young K Station 20-ish non-white renters paying over $2.50 psf are subsidized by their foreign or newly immigrated with-foreign-money parents. Americans take on debt to “consume” (how many times do we hear about increasing consumption to get the economy kick-started?), and then we send those dollars overseas to the people who produce. Grad schools in sciences and computer science in particular love the full-tuition paying foreigners, because they’re better customers than Americans who don’t have money and are indebted already. Sure, Obama can pump some more student loan money for indebted, consuming, but non-producing Americans….but the universities are a racket too, and they want the cold-hard currency they foreigners are willing to put up.
You can view all of this as positive, because you’re not that sophisticated of a thinker, but it’s obvious that globalism and WTO free trade stuff hasn’t helped American Main Street, and we cannot even afford the rents! Coastal cities will do better than Chicago because foreign money, tons of US Dollars sloshing around outside the USA, that money will end up on the coasts first, bidding up rents and prices there.
Americans buy Apple products, part of our money then vanishes from America as Apple makes its products in China. That money is gone from our economy, and it enters into China’s. When Apple sells a IFag product to someone in Korea, the Koreans’ money likewise goes to China, it doesn’t get to the American mainstream. When someone in Europe buys an Apple product the money doesn’t enter America eithe, the transaction totally bypasses our economy outside of a few thousand Apple jobs. So Apple is called an “American” company, but when it sells a product here and abroad, hardly any of the sale helps America or Main Street because most of their “employees” are workers at Foxconn and other parts makers abroad. Some of that cash revenue goes to Apple profits, sure, but that money is held by Apple Corporation as a hoard, it doesn’t circulate among America’s Main Street citizens, many of whom borrowed to consume in the first place! So, America borrows to consume, we create the dollars via fractional reserve money creation (thin-air), and then we send those dollars abroad, in return for electronics that don’t last, and then the foreigners have MONEY, and we have old Apple products and DEBT. That’s why they can afford the rents at $2.50 psf and to pay full-tuition and Americans can increasingly not, but have debt instead of money.
HH posts so many lies it is impossible to know what is true – but I believe his prior postings that he immigrated here from segregated S Africa, likely once his life, liberty and finances were in dire jeopardy. Understanding he is a D.P. goes a long way toward explaining his deep seated hatreds & anger and need to post bs here – I seem him as cc’s John Demjanjuk. And it explains his need to constantly anonymously express his hatred of blacks, brown people, Asian people, people of Jewish heritage, and everyone who is not identical in look and thought to HH.
HH’s latest posting of crap is just that. Anyone who chooses to party at Blue Aguave can afford $2.50 psf/ month rent. While I am not as sophisticated a thinker as HH I know that people graduating with tech, particularly computer sci degrees are in tremendous demand and will earn great pay checks whether they were born white or not, owe college debt or not…. They are producers. Chicago tech companies are not offering as high salaries as companies in other locales in part because even at $2.50/ psf, living downtown is cheaper & equally if not more attractive than living in Silicone Valley, SF, Manhattan & Boston.
“Americans buy Apple products, part of our money then vanishes from America as Apple makes its products in China. That money is gone from our economy, and it enters into China’s.”
I thought HH claimed he took econ courses – but likely it either isn’t true or HH is ineducable. The % of the cost of assembling Apple or other products in China is fractional relative to revenue from their sale. The cars Toyota sells here may be assembled in Alabama but Alabama is far from the biggest beneficiary of revenue from sales of cars assembled there. AAPL sells a lot more products than Toyota.
“Anyone who chooses to party at Blue Aguave can afford $2.50 psf/ month rent.”
That comment is ridiculous. It’s just a mexican restaurant with free chips and salsa, and has pretty potent margaritas, but it’s not Le Francais. (yes, I know it’s closed, and being an expat from Durban it’s amazing I’ve even heard of Wheeling!)
I’m just telling you what the bartender told me. You can believe her or not. I do. She had no reason to lie, that was her observation of the renters in the building.
“They are producers.”
Groupon produces? what? Do they help with our trade deficit with China? Chicago used to be HQ of Standard Oil/Amoco. That was a company that actually produced something, brought money in, not sent it out.
“Anyone who chooses to party at Blue Aguave can afford $2.50 psf/ month rent.” “That comment is ridiculous. It’s just a mexican restaurant with free chips and salsa”
HH has a hard time keeping consistent with his past postings – from his post in Sept: “.. these luxury high-rise renters get raped when they go out for local drinks in their expensive hoods. We’re talking about $7 beers and $10 drinks……a BASIC on the rocks margarita at the new Blue Agave at K Station is $9!! Add that obligatory dollar tip, and we’re talking about $10 a drink.” So the wealthy D.P. is a big tipper too.
Standard Oil was never headquartered in Chicago. Amoco was one of the Baby Bells of that breakup. These hi-tech companies that Southbound talks about will be gone/a shadow of their former selves five years from now because their business model sucks. Chicagoland is about CPG and transportation/logistics and financial services related to those.
I don’t think long-term it looks so great for Chicago proper or even Chicagoland for middle-class folks. The political environment is such that we have an out of control legislature and are in fiscal crisis, and the only solution they’re going to have for that is increasing personal & corporate taxes. We’ll go the way of Califorinia it looks like.
http://www.forbes.com/sites/baldwin/2012/11/25/do-you-live-in-a-death-spiral-state/
Boomers are idiots. No doubt about that. The lot of ’em. It’s so evident and obvious how much they’ve screwed things up for everyone else.
I’m not defending southbound at all. He’s a raving tin-foil hat psycho who tries to call you & me an African immigrant LMAO! He would probably try to use my apparent grammar faux paus of saying “you & me” in lieu of “you and I” in an attempt to say how I didn’t understand proper grammar hah.
He’s a half-bred idiot with a lot of grey hairs. Reminds me of a poster on here who used to own a competitor’s website that I won’t mention by name. But I do find Southbound’s downtown renaissance via the tech sector hypothesis humorous.
“Boomers are idiots. No doubt about that. The lot of ‘em. It’s so evident and obvious how much they’ve screwed things up for everyone else.”
My parents always lived within their means & were never 1%ers at all & are doing okay. If the rest of the boomers suck then lump them in with the rest of American society & blame those that gave them too much financial credit.
The problem with the boomers is as a group they are so large they can vote themselves other people’s economic rents.
Not that we did not know you are full of it Hater in chief:
helmethofer (December 20, 2011, 2:57 am)
“Only 8 comments and we’ve got references to crack dens and malt liquor. You can tell the posters here are white, and haven’t spent much time on the south side.”
Actually, I am white and highly educated, and highly street smart too. I am also an expat from South Africa, so I don’t need a sermon from the likes of a midwestern fool like you.
I know about diversity. Where I used to live in Sandton we had an internal gate sometimes called “anti-rape cage”, it goes in the corridor that goes to the bedroom. The idea here is that it protects the family from the home invaders that want more than to just steal a few things (that explains the name) or at the very least, it buys you some time.
In a well designed home, this gate provides an important barrier, especially if the home invaders aren’t aware of it until they go in. Of course, it achieves nothing if you don’t keep in mind to lock it every night.
Bob posted “He’s a raving tin-foil hat psycho who tries to call you & me an African immigrant LMAO!” No Bob since you share very similar views w/Dan who repeatedly has identified himself as an immigrant from S Africa I asked if you might be an ‘expat’ from Rhodesia – but you chose not to answer.
MiuMiu: Thanks for calling Dan out as the liar he is and re-posting what he now attempts to deny.
Also from other postings by Dan/ HelmutHofer/ DeanOlds; “Nov 13, 2012 – I moved to Chicago a few years ago from South Africa and while I had a furnished house there, it just didn’t make economic sense to schlep all..”
Dan immigrated here from segregated S. Africa, likely once his life, liberty and finances were in dire jeopardy. Understanding he is a D.P. goes a long way toward explaining his deep seated hatreds & anger and Dan’s need to post bs here. So after repeatedly revealing his status as a foreign ‘expat’ (not an apparently lesser ‘immigrant’ by any stretch of his imagination) Dan sees no contradiction in posting his delusional nonsensical hatred here directed at foreigners & immigrants among others. It’s clear who the raving psycho(s) are here.
Homedelete: “I always say that investors invest and builders build.” Builders only build when investors and lenders will fund. And given the investment alternatives vs likely returns from building commercial RE or apartments, investors and lenders are so far agreeing with developer’s pitches locally.
Those investors could choose to follow Dan’s advice to short Apple – let’s see, an opportunity where investor takes unlimited downside risk (if anything causes value of AAPL stock to soar) vs upside of making a few speculative dollars if Dan guessed right – oh yeah there’s a shrewd play! Newly built apartments or single tenant buildings may not soar in value (so far new comm’l RE value continues soaring due to lack of better alternative investment returns) but new comm’l RE in upscale parts of Chicago will very likely continue to promise delivery of net income for lenders and investors resulting in investors and lenders funding more developements.
Bankers lend and builders build. As a banker why go into the office if not to make loans? These days collateral and credit worthy is all you need.
Bankers go into the office to keep their steady paycheck arriving with the apparent motto that ‘no banker has ever been fired for saying no to a loan request’. Collateral and credit is not enough these days. Given your practice you probably already know that it is a felony for an FDIC bank to make a loan to a borrower who has ever defaulted on any other loan.
“Groupon produces? what? Do they help with our trade deficit with China?”
What does Facebook or LinkedIn produce? Yet they create thousands of high paid jobs to Silicon Valley.
You’re showing your age Dan. We have moved from an industrial economy to an information economy. That’s where the jobs are now being created. Heck, Chicago is also home to one of the fastest growing Internet companies- GrubHub. They just moved into new office space in the loop as they continue to grow. Chicago needs these jobs and this kind of economy to remain relevant and attract talent. The talent is no longer in accountants for Standard Oil. It’s in web designers, social media specialists and the like.
“The USA runs a massive trade deficit every year. All those dollars then travel abroad and are held by foreigners. It makes sense to me, that many of those dollars will end up back here…invested as per the above, and being used to buy their kids’ way into American colleges, jobs, and Class A rental apartments.”
The foreign students helps reduce the U.S. trade deficit. There is a huge influx of Chinese students and all (or nearlly all) pay full tuition. At least 2/3s of my building is Asian split roughly equallt between Chinese and other Asians. The Chinese are generally students and the Indians and and Patistanis are generally contract workers. Twenty years ago many of these Chinese sturdents would have stayed in the United States after graduation, but these days they go back to China where the opportunities are better.