Market Conditions: What Pandemic? Bidding Wars in Chicago this Spring
Inventory is low this spring due to the coronavirus pandemic.
Some sellers are afraid to list as they don’t want strangers walking through their home.
Others may be waiting for the state to reopen for business.
But buyers are still looking as Crain’s Dennis Rodkin reports:
“It’s been very busy, kind of crazy,” said Ryan Main, an @properties agent who put her clients’ three-bedroom house on Waveland Avenue in Portage Park on the market Saturday and by Tuesday morning had multiple offers in her pocket.
And prices are holding up, though Rodkin says most of those closings were pre-COVID.
There aren’t the “deals” you may think.
One of those signs is Compass agent Samuel Ciochon’s recent experience. He put a client’s two-bedroom Uptown condo on the market April 29 at $290,000, and had it under contract to buyers May 4 after receiving 11 offers. Ciochon cannot disclose the sale price before it closes, but he said “my seller was ecstatic.”
In the early days of May, Ciochon was involved with three other properties that all got multiple offers.
This is a distinct change from mid-April, when Ciochon told Crain’s buyers were often looking into the market expecting to find slashed prices. “Those people have dropped out,” Ciochon said. “The mindset has changed.” In large part, that’s because they didn’t find the desperation they expected.
But what will happen going forward?
Prices could actually RISE if more inventory doesn’t come on the market. According to Rodkin, the number of single family homes on the market dropped to 2760 in the week that ended May 2.
That’s the lowest number since January 2007. If you strip out all the “luxury” homes priced over $500,000, it’s really slim pickings.
It’s not surprising that the house mentioned above in Portage Park got multiple offers. It’s listed at $359,000, which is the entry level/starter home price range.
Will the Chicago housing market still be red hot this summer?
Real estate prices defy the crisis [Crain’s Chicago Business, Dennis Rodkin, May 12, 2020]
“Prices could actually RISE if more inventory doesn’t come on the market“
Prices could actually FALL OR STAY FLAT if more inventory doesn’t come on the market
So buyers (you know the other 1/2 of the equation) aren’t finding deals so they’re not in the market.
I don’t think the 1300 people laid off from Hyatt are going to be rushing out to buy a new house any time soon.
And define for the studio audience what the criteria this summer is required to designate the RE market is HAWT ™ – measurable criteria preferred
TIA
I hate anecdata and I hate stories of multiple offers. Maybe those properties were underpriced.
The market is definitely getting less bad but weeks of supply is way up although absolute inventory is down. Monthly data shows a small but meaningful decrease in SFH market times but not condos.
Also, there is much ado in the article about median home prices and I’m sure IAR will make a bid deal about that. But I’ll beat that dead horse yet again. Median prices are not “prices”. The reason they are up is that the low end of the market has been hit much higher than the rest of the market. The mix has shifted up.
I meant to say hit much harder.
There will be plenty of bank owned inventory in the future, a few years from now, better buy now or be priced out forever lol
Gary
Is there any data showing the number of units owned by Airbnb superhosts in the city?
I don’t think so. Would be hard to collect. Airbnb would have to show that. You might get a sense just by going to their site and seeing how many places are available a couple of weeks out.
On a separate note…there will actually be fewer distressed properties on the market in the near future because all foreclosure activity has been halted.
So, I know a few people with houses (SFH, not condos) on the market and they are all getting 100% low ball offers. Some are accepting reality, and getting low ballers to come up a little to their ‘floor’ prices, but I’ve not heard or seen anything getting asking prices–which have consistently realistic based on recent comp sales.
Here is the referenced unit with 11 bids:
https://www.redfin.com/IL/Chicago/4350-N-Broadway-60613/unit-402/home/18928897
The listing reads like they intentionally underpriced a bit to create the situation–and that’s supported by the couple of recent sales. Not even as much as 10% under, probably, but enough under to drive some additional interest.
Is airbnb super host even a thing in Chicago? We lack a full year tourism industry. Even in normal times I feel like downtown hotels vary between $200 a night and $800 a night during midweek in the summer. Are Airbnb host good at that price vol? A lot of that’s business travel to and I have no idea if they go Airbnb.
I don’t know why anyone would buy Chicago real estate right now. There’s too much risks. No one knows what kind of federal bailout the city will get. What happens if taxes go up even more than expected?
Conversely if Chicago gets a huge federal bailout and gets to offload their pensions then I’d lift any price on Chicago real estate. But I don’t think private real estate will shift in value fast enough to prevent you from buying. A pension fund bailout and you could see property taxes fall 50% over a couple years. Versus my expectations that they could double or triple. For the average guy buying a home I don’t think that’s a risks you can take. If property tax expectations can vary by a factor of 3-5.
“A pension fund bailout and you could see property taxes fall 50% over a couple years.”
I don’t see how that is possible, even with the fantastical notion of offloading not just 100% of the pension *debt*, but 100% of the normal cost going forward. Less than 20% of the CPS budget goes to pensions (and, with the state funding now related to it, the net cost is lower), and the CPS levy is half the property tax bill. So, zero out CPS pension cost = *maybe* 10% reduction in tax bill. The other half of the property tax bill does not go 80% to pension funding.
More realistic, assuming the completely unrealistic zeroing out of pension obligations, would be a ~20% cut in property tax, with far less need for near term increases.
On the flip side of a tripling of property tax, and again assuming counter-factually that such increase would be distributed proportionately across each of the levying authorities, you’d be taking about an aggregate $13b per year in Chicago–with the CPS increase alone (~$6b) exceeding it’s current total budget, and representing 50% of the pension/retiree medical shortfall–that is, with taxes tripled for *2* years, CPS would have a 100% funded pension.
City of Chicago with a tripling would have an extra $3b per year–which would have to remain in place for a decade to get to 100% pension funding, as would the County.
Taxes ain’t tripling. Nor even doubling. But they probably are going to go up about another 50%, which will be rough enough.
Nice find, anon. Unit 307 was only 1170 SF and sold for 286K in 4 days in early Feb. This one was 1343 SF and listed at 290K. It might have had a partially obstructed view though. But why wouldn’t you at least list it at 300K?
“On the flip side of a tripling of property tax, and again assuming counter-factually that such increase would be distributed proportionately across each of the levying authorities,”
Is there some any analysis of whether other tax increases materially moves the goal posts? meaning sure I can increase the wazoo out of sin taxes cig alcohol but does it make a diff?
* * * complete asking your opinion
does broadening the tax base by taxing services i Illinois make a difference?
and what are the chances of service taxes passing
https://www.avalara.com/us/en/learn/whitepapers/service-taxability-by-state.html
“Are Airbnb host good at that price vol? A lot of that’s business travel to and I have no idea if they go Airbnb.”
Sean, Chicago is a little different than some other cities because most high rises have banned Airbnb so you really can’t get an Airbnb downtown.
Also, most business travelers stay in hotels where they can get reward points and have room service etc.
There are definitely some super hosts in the neighborhoods though. There are plenty of them in neighborhoods like Jefferson Park. They buy building and rent the units along the blue line because that’s how they can sell the place to out of towners- that they can still get downtown easily.
“The listing reads like they intentionally underpriced a bit to create the situation–and that’s supported by the couple of recent sales. Not even as much as 10% under, probably, but enough under to drive some additional interest.”
Good for them. Good agent. Multiple bids will get them a higher price. Supply and demand. I’ve seen it hundreds of times out in California. It sucks for the buyers but great for the sellers.
Like I said a week ago on this blog, I’ve been hearing of multiple offers on houses in the suburbs this spring so these Chicago stories aren’t one-offs. They’re all properties that are at “entry level” prices, i.e. under $400,000. This is the most in demand and there are few on the market at that price point.
“There will be plenty of bank owned inventory in the future, a few years from now, better buy now or be priced out forever”
How long you willing to wait sonies?
As we all know from this blog, it can take up to 5 years, even as long as 8 years, before properties come back on the market that were taken by the bank.
And we haven’t even had foreclosures filed yet. That won’t come for many months. And then it’s years before the court dates here in Illinois. Some other states can foreclose faster. There will be deals in some of those again. People might be able to get a house cheaply in those states again. Imagine what’s going to happen in Las Vegas over the next year? Lots of new building going on there in recent years. Most jobs tied to tourism.
But people have jobs and want to live somewhere. Mortgage rates are the lowest in history. If you can afford the payment, why not buy?
Life goes on. Kids have to get into school (eventually). People want to be settled. It’s human nature.
“Life goes on. Kids have to get into school (eventually). People want to be settled. It’s human nature.”
Second time bot Sabrina has posted this. Bot Sabrina seems to want to promote the position that the global economy isn’t in for a collapse and that RE values will continue on through this not severely adversely affected.
Sabrina probably isn’t a bot, it’s probably an Indian male in a cubicle in Chennai, but in any case, it’s an entity with a strong motivation to paint reality as something starkly different than what it is.
Have the wife cook up some chicken vindaloo for me, “Sabrina”.
“Good for them. Good agent. Multiple bids will get them a higher price. Supply and demand. I’ve seen it hundreds of times out in California. It sucks for the buyers but great for the sellers.“
If setting an artificially low price will get the best return, why doesn’t everyone do it?
Not sure what setting a below market price has to do with S&D. Is it a byproduct of the HAWT Market Theory ™?
“Good for them. Good agent. Multiple bids will get them a higher price. Supply and demand. I’ve seen it hundreds of times out in California. It sucks for the buyers but great for the sellers. ”
I totally disagree. It’s a risky strategy. Suppose you only get one offer in the first week? Why wouldn’t you at least list that property at 300K? It anchors expectations at a higher level and there are some buyers out there who will be searching 300 – 400K and you miss them otherwise.
It’s a de facto auction. If we really believe that’s an effective strategy I could offer that service at an even greater commission discount since it requires very little effort. Any takers?
And I’ve had a conversation with a CA agent about their routinely underpricing listings. They’ve set up this weird cultural expectation so that if you set the price at the market everyone assumes they have to bid higher than that but they don’t think it’s worth it so they don’t bid at all. At least that’s how he explained it to me. And to my prior point I don’t understand why consumers let them get away with charging 6% out there for selling properties in one week.
“does broadening the tax base by taxing services i Illinois make a difference?
and what are the chances of service taxes passing”
Would make a *huuuuuge* difference. Estimates I have seen run in numbers large enough to fund the Edgar Pension Ramp, at least for a few years.
Also useful would be no longer exempting retirement income. The fix there necessitates the graduated income tax, so all income is taxed, but the first (say) $40k is 1%, and then graduated.
I still think that Lil Richie’s debasement of the CTPF was an intentional strategy to get it to approximate funding ratio of TRS, and then convince the state (and CTU) to merge the funds all under state responsibility. Smart, if you thought you could get the politics right, egregiously stupid and arrogant to think you could get the politics right.
“I totally disagree.”
Gary-I know you don’t know enough to provide a “best” listing price for that unit, but do you think it should have been as high as $325?
The best sold comp is 701, which sold for $320, and Redfin sez is ‘worth’ $338, and Zillow $313–AND 701 is a vastly superior unit (tho the carpet needs to go) facing east–away from the train and not into a nextdoor building.
I can see pricing it at $295 or 299, instead of 290, but does that really make a difference? Both game theory wise and in the real world?
$20k isn’t chump change for the seller, but isn’t that the degree of potential difference we’re discussing anyway?
One, two, three, four, one, two
Let me tell you how it will be
There’s one for you, nineteen for me
‘Cause I’m the taxman, yeah, I’m the taxman
Should five per cent appear too small
Be thankful I don’t take it all
‘Cause I’m the taxman, yeah, I’m the taxman
If you drive a car, I’ll tax the street
If you try to sit, I’ll tax your seat
If you get too cold, I’ll tax the heat
If you take a walk, I’ll tax your feet
‘Cause I’m the taxman, yeah, I’m the taxman
Deficit spending (by the Feds) or shorting pensions or issuing bonds are all just deferred tax increases.
The last 50 years of Illinois governments (both Ds AND Rs) have knowingly, willingly increased future taxes on Illinoisans by ~10x by maintaining and increasing costs without corresponding tax increases–so that they can continue to be re-elected.
The f’ing Edgar Pension Ramp (enacted by: R Guv, R Senate Prez, Madigan) started with a pension contribution that didn’t even fund the then applicable ‘normal cost’–that is, it made the pension deficit *worse* for a number of years. Just so they wouldn’t have to deal with the electoral blowback of either raising taxes, or telling their campaign workers in state and local government “no pay increases for you”.
Illinois is a giant Ponzi scheme, with the “payout” being re-election for a bunch of guys 25 years ago. Which is absolutely fucked.
But people have jobs and want to live somewhere. Mortgage rates are the lowest in history. If you can afford the payment, why not buy?”
——————-
Uh, cuz the banks are going to want to unload property, via low prices or even – gasp — greater willingness to accept short sales, so why buy now when prices will go lower?
Just asking.
Then there’s the question of “if you can afford the payment” — that assumes jobs are secure.
“Gary-I know you don’t know enough to provide a “best” listing price for that unit, but do you think it should have been as high as $325? ”
Without spending much time on this…Looking at unit 307: 286 K X 1343/1170 = 328 K.
Unit 701 was 1500 SF so 320 K X 1343/1500 = 286.5 K.
But there are a lot of other factors. How badly is the view blocked in this unit?
I just don’t like to underprice homes. I think it’s risky. Listing at an even 300K is easy to do and sets a higher expectation of buyers – especially if only one buyer is interested. You could also list at 300K + parking for 10 – 15 K. That sets an even higher expectation but allows you to show up in searches that stop at 300K.
“Uh, cuz the banks are going to want to unload property, via low prices or even – gasp — greater willingness to accept short sales, so why buy now when prices will go lower?”
This blog is a great source of information about how Chicago’s housing market reacts in a deep recession. It tracks prices since 2007.
As we saw, Chicago prices didn’t hit bottom until 2012. The recession was over for years by that point.
Housing is “sticky.” It takes a long time for supply and demand to force those prices down because sellers aren’t going to “give it away” and, in Illinois, it takes years for the banks to take it back.
There could be short sales, sure, but that’s assuming that people are underwater and want to sell. If they are simply not paying the mortgage, then they’ll live in the property for free as long as they possibly can (as we saw during the housing bust.)
For prices to go lower, there needs to be massive inventory and fewer buyers. Right now, we have really low inventory. Where’s the inventory going to come from? From people defaulting? That takes years to build up as we saw in 2007-2012. It’s not like 2009 was the peak of foreclosures in Chicago. It wasn’t.
If you’re willing to roll the dice and “wait” for lower prices, you may be waiting until 2023-2025 time period.
Again, life goes on. People need to live somewhere and put their kids in school. Mortgage rates are at record lows. Most buyers aren’t going to wait for years for the possibility, and not even a certainty, of lower prices.
“If setting an artificially low price will get the best return, why doesn’t everyone do it?”
They do. Everyone uses this technique in California.
“For prices to go lower, there needs to be massive inventory and fewer buyers.”
Nah, just some desperate sellers, and then all appraisers using only those ‘distressed’ sales as the ‘true’ market value.
ALSO: within the city at least, if there is *zero* market for teardowns, you take out the floor price for a given property. In 20 years I’ve seen the teardown price on my block double, halve, and nearly double again (we’re still a little behind ’06/07). We may be heading to another halving, which would mean a decrease of ~$300 in the cost of a hypothetical brand new house, thus dragging down the value of a resale by a similar amount. Yeah, no one should be selling their functionally obsolescent North Center workers cottage that was worth $650k in 2019 for $350k in 2021, but desperation is desperation.
“Bot Sabrina seems to want to promote the position that the global economy isn’t in for a collapse and that RE values will continue on through this not severely adversely affected.”
I never said this. It’s you saying I said it Bob.
Why the gloom? Why are you betting against America?
Lots of factors go into real estate prices. You are going to need a heck of a lot more inventory than what is out there right now. We’re going to need a surge in for sale units of thousands of properties. And why would that happen? Even if you’re not paying the mortgage, that property won’t be on the market for years and years. And the banks will do what they did in the 2009-2012 period and wait to list them so they don’t crush down the market.
And that’s assuming that we have an L shaped recession where we stay depressed for a year or more.
The banks have done a much better job in making sure people had some assets and good credit scores. There’s still a problem of not enough people having equity though. Will those who put down 5% or 10% walk away?
Remember, in 2009-2012, the Feds changed the law so that you didn’t have to pay taxes on the short sale. No such thing has been done, so far, this time around. There’s real ramifications for walking away. The bank can go after the difference.
This isn’t a normal recession. None of us have lived through this. No one has any idea what’s going to happen. But people are buying homes right now.
And even during the worst of the Great Recession, which was pretty awful, there were still people who kept their jobs and still people buying properties.
There were lots of bears on this board, including you Bob. Rightly so, coming off a housing bubble. But this time is different. There’s no housing bubble. There’s no one flipping investment condos. There aren’t 20 condo buildings going up with speculative buyers. There’s near record low inventory.
Totally different ball game.
Completely different market. In CA and some other areas with real housing shortages, people are prepared to have to pay more than asking. In Chicago, most people expect to buy for at least a little bit under listing. And many more people simply will not get in a bidding war, period. There’s never any need for that here, as there are other places that will not require it. Obviously some will, but you could just as easily end up having to sell for the artificially low price.
“Nah, just some desperate sellers, and then all appraisers using only those ‘distressed’ sales as the ‘true’ market value.”
Again, this blog is a virtual day by day playbook of what happens in a declining market. Started it in 2007. Was doing 3 posts a day all through the bust. You, and everyone else, can go look at the arguments from people here in 2010 that “Lincoln Park prices would never fall” – which was well after the recession was over.
Lincoln Park prices finally DID fall. Due to massive inventory in the overall market. It took years for this to finally happen.
In a housing bust, nowhere is safe. Not even the “best” neighborhood in the city. You really have to run through all the inventory first. And finally, that happened. All over the country.
So, again, you’re going to need massive inventory.
And why would someone sell their North Center workers cottage anon(tfo)? They can live there for free for years in Illinois. So, no, they’re not going to sell it. And eventually people will be back to work, right?
If you are alleging that workers cottage will go from $650k to $350k (a price decline which, basically, never happened in Chicago during the housing bust unless the house flooded and blew out the windows during the winter- remember those in the Ukrainian Village? Lol) then the economy is a dark, dark place by next year with the Federal government unable to continue to pump trillions into it.
Again, the person in that workers cottage will continue to live in it, rent free, for years, before the bank would evict them.
I encourage people who are wondering how the foreclosure system works here in Illinois to read some of the “foreclosure” posts here on the blog. Especially those from the later years of even 2014-2015 where the system was still working through foreclosures that had been filed as early as 2008-2009. Yes, it can take THAT long.
“Completely different market. In CA and some other areas with real housing shortages”
There is a housing shortage here in Chicago too. In properties priced under $400,000. In single family homes priced at $359,000 on the north side. A unicorn. Rare.
So, yeah, it can, of course, be successfully deployed here. Are you doing it with a $1.5 million house in Lakeview? No.
SFH inventory is the lowest in 13 years.
Here’s a post where we were wondering how bad the foreclosures would get in 2010.
This was the result of investors owning 5 or 10 condos and having no one to flip them too.
Do we have anything like that today?
Nope.
http://cribchatter.com/?p=8001
This blog is a great source of information about what happened with distress properties during the bust. People should take a look.
This is getting sad seeing KarenZ meltdown
Zillow is showing 53 SFH under $359k. I guess unicorns aren’t that rare
When did JoeZ buy or start running CC?
“There’s near record low inventory”
You’ve been yammering about this of a while, if true prices should have skyrocketed, bidding wars and short time on market would be the norm. And out side of 1 example where the unit was under priced, where’s the proof?
How much of this is due to the shift in Millenial and Genz preference for rent Vs own?
Per Stephanie “Completely different market. In CA and some other areas with real housing shortages, people are prepared to have to pay more than asking. In Chicago, most people expect to buy for at least a little bit under listing. And many more people simply will not get in a bidding war, period. There’s never any need for that here, as there are other places that will not require it….”
Admittedly anecdata but I recently submitted relatively clean full price offer on appropriately priced sub $400K sfr needing abt $80K+ in rehab that had just hit mkt. A short time later listing broker advised receipt of several superior offers, some w/price escalators to thwart higher bids (up to preset cap- apparently a CA thing?). I’m willing to pay more than ask if warranted & required but I’ll never join a blind bidding war re a project purchase when comps clearly show it’d be wrong, barring unexpected upswing in end values in near term. When they refused to counter I withdrew my offer. Unfortunately for my plans lack of inventory apparently worked out for owner & listing broker
“Lots of factors go into real estate prices. You are going to need a heck of a lot more inventory than what is out there right now. We’re going to need a surge in for sale units of thousands of properties.”
…or a lot less demand and we’ve had a lot less demand. Contracts are down more than inventory and showings per listing were way down though coming back. It is not a seller’s market and once we head into the inevitable recession – one that doesn’t have a light at the end of the tunnel – it’s not going to get any better.
In commercial RE, there is a disconnect between sellers and buyers for multi-family residential deals. Cap rates may be about the same, because rates are so low, and haven’t risen. But it’s underwriting that is all over the map. For instance, in your underwriting model, do you increase rents? hold them steady? assume a decrease? RE taxes, what about that assumption now that IL unemployment claims have skyrocketed. Vacancy factor? bad debt allowance? Etc. etc.
“And the banks will do what they did in the 2009-2012 period and wait to list them so they don’t crush down the market.”
—————————
And every time banks even think that they see an uptick in the market they will release inventory, which means no price appreciation, no bidding wars, just a stagnant market.
Not crushed, just a fetid pool.
Banks & credit unions are also going to get crushed. No not your big Wall St banks but Illinois alone has over 360 banks. Wouldn’t be surprised if half of them go away in this downturn & those shuttered banks won’t be making loans to small businesses.
“Wouldn’t be surprised if half of them go away in this downturn & those shuttered banks won’t be making loans to small businesses.”
Wrong again. The banks are the best capitalized they’ve been in years thanks to 2008-2009. They’ve faced pretty tight government regulation over the last 10 years. And they just recently gave out PPP loans to hundreds of their customers.
Credit unions- those are something else especially those where everyone from one employer is in them. WSJ had an article this weekend talking about the Disney credit union, for instance.
But the bearishness about the banks is simply misplaced.
Additionally, there are thousands of community banks in the US. There has been consolidation for years. There needs to be more.
“And every time banks even think that they see an uptick in the market they will release inventory, which means no price appreciation, no bidding wars, just a stagnant market.”
Again, this did NOT happen 10 years ago with massive bank owned inventory and short sales. This blog documented it all. In some months, 40% of ALL sales in Chicago were distressed properties.
And they didn’t dump it all on the market.
Now, some of the condos were simply converted to apartments which took inventory off the market. And then, years later, some of those were released back into the market like the building in River North on LaSalle. Those units are only now coming back on the market.
Get a grip.
This isn’t a housing bust.
Now, if we get a second, third and fourth wave of this virus that causes economic shutdowns and the US economy can’t recover for 12 to 24 months, then that’s a different story. Typical recessions, even the “bad” ones are usually quicker than that. 6 to 9 months. And those didn’t have trillions of dollars being thrown at the economy.
Don’t fight the Fed or the Congress.
“It is not a seller’s market and once we head into the inevitable recession – one that doesn’t have a light at the end of the tunnel – it’s not going to get any better.”
We’re already IN the recession Gary.
All depends on what price point you’re selling in. Like I said, in the burbs, bidding wars for anything under $400,000.
“You’ve been yammering about this of a while, if true prices should have skyrocketed, bidding wars and short time on market would be the norm.”
We’ve been in lockdown for over 2 months, which coincided with the busy spring season. Everything has been disrupted.
And, yes, some of the younger buyers might just want to rent and don’t care about home ownership.
“Zillow is showing 53 SFH under $359k. I guess unicorns aren’t that rare”
Wow. 53 homes. In an area with, what, 700,000 people living in it?
You’re joking, right?
Your statistic proves my point.
I love all the negative nellies on this site.
Very bullish for the housing market.
When we were seeing the thousands of foreclosures, the chatterati almost NEVER got it right in what the property would ultimately sell for. They were always more bearish than the reality.
I’m expecting a repeat of it again this time.
“Zillow is showing 53 SFH under $359k. I guess unicorns aren’t that rare”
Wow. 53 homes. In an area with, what, 700,000 people living in it?
You’re joking, right?
Your statistic proves my point.
700k people live in Portage Park? You are such a shill.
There are 1301 detached homes under 359K. However, they go down to 14,900 and are uninhabitable as is.
“Get a grip.
This isn’t a housing bust. ”
—————————
Stop misrepresenting what I stated. I specifically said that the banks would not dump inventory on the market, and I specifically said it wouldn’t be a housing bust.
I said it would be a going nowhere, stagnant, fetid pool.
No amount of shilling, whining, or claiming Bucktown goes South of Armitage will change that.
“I love all the negative nellies on this site.
Very bullish for the housing market.
When we were seeing the thousands of foreclosures, the chatterati almost NEVER got it right in what the property would ultimately sell for. They were always more bearish than the reality.
I’m expecting a repeat of it again this time.”
We are in the very, very early stages of this bust. The forbearances have just begun and few have even started the defaults. The layoffs have only started. While the shutdown businesses have laid off their workers, the middle class office workers and professional class are still sorting out their finances. I hear rumblings that professional firms – which started out with pay cuts – are now moving to layoffs, and that other corporate companies are putting together budgets that include far less workers. The state and chicago leaders have promised not to lay anyone off (it’s bad for morale, say Lori Lightfoot) and no one has been laid off yet. But when the fiscal reality of less income meets the inability of broke people to pay more taxes, the government layoffs all around IL will be crushing, just crushing. It’s so premature to even begin to speculate at the depths of this crisis – at least half of which is self-inflicted by poor leadership coming from Springfield – because its going to be long lasting, self-perpetuating, and there’s at least half the nation out there and in DC actively cheering for our demise and default. There will be Illinois bankruptcy parties in certain circles, as cynical as that is, as they actively wish for us to have the worst. And sorry JB, that’s just too much for even a like you to overcome. Our downward spiral has begun and the floor is only the bottom of the ocean – we can only hope we don’t reach the bottom of the Marina Trench.
“The layoffs have only started. While the shutdown businesses have laid off their workers, the middle class office workers and professional class are still sorting out their finances. I hear rumblings that professional firms – which started out with pay cuts – are now moving to layoffs, and that other corporate companies are putting together budgets that include far less workers.”
We’re definitely going to continue to see fallout and impacts. But it’s going to go the other way now on the unemployment number. We’re not going to have 30 million people unemployed by August and September, unless there’s a big second wave shutdowns in the big states. Always a possibility.
So you have to assume that at least half, if not more, will be going back to work. Still devastating.
Doesn’t mean that there won’t be other layoffs as we move forward by companies that decide they just can’t make it after all and have to close. And given that it’s been 11 years since the last recession, a lot of corporations have a lot of excess weight. When times are great, you tend not to lay off “Ted” who came into work late every day and did substandard work. When times are “bad” then Ted goes. And there’s been a lot of years for companies to accumulate a lot of Teds.
Recessions are good for companies in that they get leaner and more productive. It also frees up talent who start new businesses.
A recession is normally the response to excess. To over speculation. We are in a new paradigm here though. We’ve never had a government forced recession before. That’s why so many believe in the “V” recovery because it wasn’t to correct speculation. Should bounce back quickly. But we don’t know as there are a lot of variables including that consumers won’t return to stores and restaurants.
But according to the Sun-Times reporting of Chicagoans surging up to Lake Geneva this weekend to shop and eat out and over to the Lighthouse Outlet Mall in Michigan City to shop (as both have reopened), it sounds like the consumer isn’t going to be scared and stay at home after all.
That’s good news for the economy.
Oh- and HD- you can wish for the demise of Illinois all you want. Not.Going.To.Happen.
All states and cities are going to be bailed out, especially the blue states. Blue states are the majority of US GDP. We ARE the jobs and the American dream.
“There are 1301 detached homes under 359K. However, they go down to 14,900 and are uninhabitable as is.”
On the north side? That’s what we’re talking about. The neighborhood where this house produced a bidding war at $359,000. How many are there? Are they move-in able and fixed up?
If it’s a unicorn, of course there will be multiple bids.
“700k people live in Portage Park? You are such a shill.”
I said the North Side.
Get a grip.
This is a unicorn. High demand for anything under $400,000 on the north side. If you got it, price it a little bit lower, get the multiple bids and win.
“The state and chicago leaders have promised not to lay anyone off (it’s bad for morale, say Lori Lightfoot) and no one has been laid off yet. But when the fiscal reality of less income meets the inability of broke people to pay more taxes, the government layoffs all around IL will be crushing, just crushing.”
You are making the argument that the Dems are making right now on the Hill.
Why would you bail out the airline industry and not bail out state and local governments? There’s even MORE jobs at stake with the states and local governments. You would really have a depression if those jobs are lost. Imagine if the CTA had to shut? Or the NYC subway?
There is NO choice. All of it will get a bailout to avoid a severe recession/depression.
I didn’t see how much was allocated in the $3 trillion package but I’m assuming it covers most of it.
Sabrina says
““There are 1301 detached homes under 359K. However, they go down to 14,900 and are uninhabitable as is.”
On the north side? That’s what we’re talking about. The neighborhood where this house produced a bidding war at $359,000. How many are there? Are they move-in able and fixed up?
If it’s a unicorn, of course there will be multiple bids.
would appreciate a citation or source from a public record like zillow / refin / realtor so we could better understand your position (north side could mean a lot of different things to different people)
“Why would you bail out the airline industry and not bail out state and local governments? There’s even MORE jobs at stake with the states and local governments. You would really have a depression if those jobs are lost. ”
State & Local Government have the ability to tax.
“Imagine if the CTA had to shut? Or the NYC subway?“
Thousands would have been saved from Covid-19. Why do you want to see people needlessly die?
“a price decline which, basically, never happened in Chicago during the housing bust”
Just like the 4x price increases in Lincoln Square, right?
hahaha. Sure. Happened *on my block*. standard lot teardowns trading for almost $700k in ’06, 1.25x lot for ~$440 in ’10. So, yeah.
“single family homes priced at $359,000 on the north side.”
Hmmm, that might be bc there are very few parts of the north side (what’s your western boundary? I’d allow Kedzie, but think it is further East) where $359 doesn’t go to a developer rather than a owner-occupant.
I count 12 (and one more at $368,500), and most of them are in pretty rough shape.
Interestingly, 3 of them share an alley right at Howard and Kedzie–as NW as you can get on the “northside” as I’m, defining it.
“All of it will get a bailout to avoid a severe recession/depression.”
Well, it’s tough to root against an IL bailout since we live here, but honestly IL doesn’t deserve it. The amount of hatred directed at Trump from out citizenry is just pathetic and totally low-brow embarrassing. Imagine how many losers are here in IL that never succeeded at real estate, never made it to Hollywood or in the arts, and never married a good looking woman, or never got a man to proposed to them and never had offspring. These are your rank-and-file Trump haters. Total losers.
Trump really should tell Chicago (Illinois) to go pound sand on a bailout, but like all winners in life, he’ll probably give in, cause he’s too much a nice guy. He should’ve locked Hillary up, but didn’t bother. Too nice.
“The amount of hatred directed at Trump from out citizenry is just pathetic and totally low-brow embarrassing.”
This is coming from a racist, sexist homophobe? That he’s embarrassed? Lol.
He’s not the one giving us the bailout. It’s Congress that will give it to us. With American dollars. OUR dollars. Trump has nothing to do with any of it. He’s spending like a drunken soldier anyway so what’s a few more trillion? He doesn’t care. Not his money.
Imagine how much it must irk the Donald to go down as the worst president in US history?
Worse than Hoover.
It’s going to be a wipeout in the fall. All up and down the ticket. Democrats will re-take the Senate. Texas will go blue this year. Lots of retirees there whose lives are at risk from opening too early combined with the loss of thousands of energy jobs.
Let’s hope the Dems put it to good use and fix the ACA. But what else will they try to push through while they have all 3 branches? I hope it’s something meaningful because odds are they’ll lose the majority in 2 years anyway.
Also will have to do some kind of big jobs stimulus program in early 2021. Maybe there will finally be a huge infrastructure bill.
“There is NO choice. All of it will get a bailout to avoid a severe recession/depression.”
“He’s not the one giving us the bailout. It’s Congress that will give it to us. ”
Talking your book doesn’t make it true. And Mitch McConnell runs the Senate and has already indicated via past policy he’d rather watch the high tax & spend blue states suffer (SALT limitation anyone?).
“It’s going to be a wipeout in the fall. All up and down the ticket. Democrats will re-take the Senate. Texas will go blue this year. Lots of retirees there whose lives are at risk from opening too early combined with the loss of thousands of energy jobs.”
Just because you wish for something strong enough doesn’t make it true. Again Sabrina if you had good judgment you wouldn’t be in the financial position you are in overlong real estate and wishfully believing in a bailout from DC which likely isn’t coming.
Imagine how many basements got flooded the past few days & what sorts of special assessments are coming related to that. Chicago RE market is dead that will be obvious by the fall. Powell can’t buy everyones mortgage.
Housing Starts plunged 30% in April
Building permits dropped 20% in April
LaCk oF iNvEnToRy
“It’s going to be a wipeout in the fall. All up and down the ticket.”
You might want to place some bets in the prediction markets then. Trump is at 49% odds of re-election. It’s incomprehensible but true. Maybe once the death toll gets to 150K that changes.
“You might want to place some bets in the prediction markets then. Trump is at 49% odds of re-election. It’s incomprehensible but true. Maybe once the death toll gets to 150K that changes.”
It’s doubtful that the toll will reach that high, and if it does, the deaths mostly be in blue states, not in red states.
That being said, it’s morbid of you to cheer for the deaths of tens of thousands of additional people so as to lessen Trump’s reelection chances. I can sense the desperation of the Democrat party when even normally level headed and thoughtful posters like you reach new lows like this.
“Maybe once the death toll gets to 150K that changes.”
If Trump gets his way, CDC stats will end up claiming under 60,000 dead from COVID, so that his April prediction will be “true”.
“Worse than Hoover.”
Hoover not the worst, rarely even makes the bottom 5. *Buchanan*
Don’t care about the 19th C, you say? [“ever” includes it, but whatever] Almost every list has *Harding* ranked behind Hoover. And Harding’s administration is a pretty good analogue.
“the Democrat party”
Librul Derangement Syndrome in action.
Noone is going to care if the death toll is 100k or 150k. And lately it looks like it is tapering off.. but if there is a resurgence in the fall which I suspect there will be it could be devastating for him if we’re in the midst of a second wave.
I don’t think the American psyche gets severely damaged with a death toll significantly below 500k. 500k-2MM that’s the grey zone if beyond 2MM I think it definitely gets damaged.
But it’s not just about Trump: the Rs do have a tough slog in November but there are some scenarios where they could still wind up with 51. Nothing at all is given at this point other than we’re in for a very severe economic downturn we caused out of irrational fear.
“Almost every list has *Harding* ranked behind Hoover. And Harding’s administration is a pretty good analogue.”
Tea dome was 100 years ago and your party still blathers on about it! Get over it already!
(teapot dome)…
“But it’s not just about Trump: the Rs do have a tough slog in November but there are some scenarios where they could still wind up with 51. Nothing at all is given at this point other than we’re in for a very severe economic downturn we caused out of irrational fear.”
Biden is arguably the weakest D candidate since Mondale. At least Mondale was sentient – Biden’s mental health has deteriorated significantly since he announced his candidacy. Politics is one of those weird things in life where the best teams often get slaughtered in the playoffs and the superbowl is between the two worst contenders. if there were ever a case of two bad candidates, Biden and Trump is worse than Hillary and Trump. There were so many qualified candidates in both primaries (going back to 2016) and it was all reduced to this epic battle between two 70 year olds who throw insults at each other. There’s no blue wave coming, they’re not even going to show up at the polls. And anyone who blames Trump for JB horrible economic decision to nearly completely shutdown IL’s economic engine, well, they deserve Biden.
Biden will get the colored people that show up. Oops I meant “people of color”, or is it’s latest incantation spelled with a u now for increased virtue signaling? I know the nomenclature changes every decade or so so want to be sure.
It’s comical watching all of those who want to be his VP pick essentially begging him with their antics.
The electoral college basically allows every state to allocate its electoral votes as it sees fit. And for 48 of those it’s winner take all.
The “National Popular Vote Interstate Compact” is a huge joke as no state in it is willing to act unilaterally to change their allocation methodology instead they are depending on all states doing it at once because they don’t want to increase their risk of losing elections in the near or medium term. So for all the crying about the electoral college from the left in actuality what they are saying is they hate losing elections.
I really don’t see how anyone can call a blue wave except those partisans talking out of their rear at this point as the way I see it most incumbents will be punished for the state of the economy in November.
I also don’t see how anyone can think the unemployment situation will be markedly better by November either. The reported statistics will of course improve as people exhaust their benefits and stop certifying but a large portion of the jobs lost aren’t coming back.
I mean is Sabrina smoking some good dispensary herb & concentrates these days with her belief that things are going to get magically better in months?
Can’t be–even my friends who smoke good weed know shit is not going to be great/better in the months ahead. 2020 will go down in the history books as the event that kicked off the voluntary Great Depression 2.0. If they could magically bring jobs back why did it take so long for the jobs to recover in 2008? People that say it was “structural issues with the financial plumbing” sound like mouth breathers who watch CNBC all day.
“your party still blathers on about it! Get over it already!”
The Civil War was 150 years ago, and *your party* still holds on to all of the grievances of having lost it.
“I really don’t see how anyone can call a blue wave except those partisans talking out of their rear at this point as the way I see it most incumbents will be punished for the state of the economy in November.”
Follow the money. Democrats out fundraising all of the Republicans, by far. At every level. That’s where the blue wave will come in.
Although, I do agree with you Bob, that incumbents will be thrown out if they mismanage the pandemic, no matter what party. The means governors and mayors mostly at risk as they’re the ones managing it.
But the usual bears (HH, Bob, HD) have returned to Cribchatter to be bearish again when this situation is so much different than 2008-2009 as its a government mandated recession, not a speculation/man-made one.
Doesn’t mean it won’t hit hard and that we won’t see high unemployment. We’ve already got that. Should be gradual improvement over the next several quarters. The bottom is already in (unless we have another nationwide, second wave shutdown, that is.)
Look at the data Southwest Airlines just provided. May is tracking better than they thought with revenue down just 90%, instead of their previous guidance of 95%. Revenue down 80-85% in June. They are seeing more bookings than cancellations now. Is it still horrible? Yes, of course.
This is what will happen at restaurants, hotels etc. as things reopen. It will be bad and then gradually improve, unless there’s another big outbreak that sets things back.
It’s not a depression. It cannot be with the Fed and Congress pumping trillions into the economy.
Fed’s statistics are showing that the bottom 40% of earners are getting about 95% of previous income right now through the $1200 stimulus and the extra $600 a week unemployment insurance. This was designed to stabilize the economy so people could pay rent, car payments, Internet, food etc. Sounds like most are certainly able to do so.
“The Civil War was 150 years ago, and *your party* still holds on to all of the grievances of having lost it.”
What? What history did you learn? That’s some seriously messed up education you had if you thought the south won the civil war – even they admit it was the lost cause.
But the biggest mistake (R) Lincoln made during the civil war was not destroying the Democrat party when he had the chance. He could have completely wiped that party off the face of the earth. Instead, he unfortunately allowed them to survive, and the party of slavery morphed into the part of Jim Crow, the KKK, segregation, anti-civil rights, anti-women’s rights, and now it has become the bigoted party of anti-religious and anti-science and forever shutdown.
“It’s not a depression. It cannot be with the Fed and Congress pumping trillions into the economy. ”
There are more other, national housing focused blogs and forums I visit, and they most have different opinions than this. The AIR B&B fiasco is a bubble of its own that finally burst, are the senior/nursing home housing bubbles, education and college, and absent worldwide vaccination, the worldwide travel bubble has popped too (for example, Hawaii has record # of visitors year over year and many prime properties are mostly Air B&B’s). The housing bubble alone angle, which you don’t cover here, is the atrocious lending standards across all the lending market. Subprime became AirB&B empires instead, and the people who only own one home, increasingly bought their homes with credit scores in the low 600’s.
“Follow the money. Democrats out fundraising all of the Republicans, by far. At every level. That’s where the blue wave will come in.”
A blue wave should have held CA-25.
“At least Mondale was sentient – Biden’s mental health has deteriorated significantly since he announced his candidacy.”
What are you even talking about?
He can remember exact parts of bills from 1992! Can you remember what was in some paper you wrote in law school 20 years ago?
He has a stutter which means when he speaks his mind is racing faster than his brain. He has always had this.
The current president, on the other hand, literally has speech patterns that are not normal. So if you want to say Biden has mental health issues, then Trump’s are even more in play. And way, way more dangerous.
There’s a HUGE blue wave coming. All up and down the ticket again. Look at what Biden is polling even in Florida. Biden has already gained several points with voters over 65 there. That means Trump is doomed there.
Heck, Scott Walker just warned Trump he’s likely going to lose Wisconsin unless he starts showing up every few weeks.
Trump wants to kill old people by opening NOW. Do you think they don’t know this?
“And anyone who blames Trump for JB horrible economic decision to nearly completely shutdown IL’s economic engine, well, they deserve Biden.”
What? JB is doing his job.
No, we’re going to blame Trump for not having PPE (still!), for having no plan to reopen, for having no plan on what to do with a second wave. And now for not supporting the struggling workers.
The US has mostly failed to bend the curve. That’s the result of no leadership in DC.
Trump has looked small throughout this entire pandemic. He’s clearly in over his head. It’s obvious.
That’s what’s going to cause him to lose in November. If you’re incompetent, you lose.
And thank goodness we’ll get Biden. He can run the government. We need to restore order and get positions filled.
Also, you’d think 2018’s blue wave would be a wake up call to Republicans but it wasn’t. Democrats and independents, especially women, were pissed then. We’re even more pissed now as Trump gets crazier and crazier.
Just a few highlights since 2018:
Impeachment, still trying to block his tax returns from being released, telling us to drink bleach, trying to “terminate” Obamacare with no replacement, building a wall to nowhere when that money can be used elsewhere, a trade war against China that hurt manufacturing, and now, wait a minute, arms sales to the Saudis that the Congress didn’t sanction.
There will be a huge blue wave. This reality tv show is cancelled.
“I don’t think the American psyche gets severely damaged with a death toll significantly below 500k. 500k-2MM that’s the grey zone if beyond 2MM I think it definitely gets damaged.”
Depends on where you live, right?
If you live in small New Orleans and have 1,000 or more deaths versus just 200 in Atlanta, you might be a little more disturbed by the virus in New Orleans.
“It’s doubtful that the toll will reach that high, and if it does, the deaths mostly be in blue states, not in red states.”
Last I checked, Louisiana was red with a blue governor.
Just had another big outbreak with 100 cases in a Crawfish plant.
“You might want to place some bets in the prediction markets then.”
Sure. No problem.
Question only is: where can Trump actually WIN? It’s not too clear right now. Even Georgia is up for grabs for the first time in 25 years.
“LaCk oF iNvEnToRy”
Yes. Lack of inventory. Pretty much nationwide.
The builders have never gotten back to the levels of the bubble years. Millennials are the largest generation and are entering into their key home buying years after marrying and settling down. That will mean more demand the next 5 years as the largest birth year of the Millennials is now about 28.
As for starts and permits, is anyone surprised at that? While construction has been deemed “essential” it still has slowed considerably. Some construction sites have actually had outbreaks. If you listen to the conference calls from the major national homebuilders, they’ve had employees who have gotten COVID. Have had to make big changes at the sales centers etc to keep people safe.
“Imagine how many basements got flooded the past few days & what sorts of special assessments are coming related to that.”
What specials? Doubtful many high rises had water in the basement.
There is this thing called, “insurance.”
Real estate market will reflect the economy. If we have 10% unemployment, then, yes, the Chicago housing market isn’t going anywhere.
But that’s a given.
“And Mitch McConnell runs the Senate and has already indicated via past policy he’d rather watch the high tax & spend blue states suffer (SALT limitation anyone?).”
You honestly think the Republicans will win Senate seats in Georgia, Arizona and Colorado by telling the states to shove it?
Okay.
I dare them to do it. In fact, I HOPE they do it. That will ensure the Democrats take over the Senate by a wide margin, Mitch himself may lose his seat, and then the states get bailed out in 2021 anyway.
“Doubtful many high rises had water in the basement.”
the willis tower flooded as did several other buildings
“He can remember exact parts of bills from 1992! Can you remember what was in some paper you wrote in law school 20 years ago?
He has a stutter which means when he speaks his mind is racing faster than his brain. He has always had this.”
The rationalization hamster is strong in this one.
Biden is lucky as all get out that he has carefully scripted “interviews” that he still manages to screw up.
I’m shocked that you lost your pink pussy hat with the allegations regarding Biden sexually assaulting someone.
One can only guess why…
“telling us to drink bleach”
I can’t take you seriously when you say stuff like this. This is the crap that CNN pushes, its not news, it’s not real, its just what you want to hear because you hate the man.
I’ll just lurk here for a while, there’s too many other national and regional housing websites where I can discuss properties and the macro economic conditions affecting prices, without the heavy unwanted dose of TDS.
“I can’t take you seriously when you say stuff like this.”
He said it. You’re in denial HD.
Go gaslight yourself HD. The rest of us will exist in the real world.
Stop watching FOX! But hey- even they said he was crazy about the bleach. Also said he was crazy about the hydroxychloroquine (which we know Trump is NOT taking.)
I don’t watch CNN, by the way. I do, however, read the WSJ. Does that count? I guess they’re ALL fake news to you.
“I’m shocked that you lost your pink pussy hat with the allegations regarding Biden sexually assaulting someone.”
Because he hasn’t assaulted anyone?
As we’ve seen with Trump, men who are sexual predators do the assaults over and over again. There are now 22 women who have come forward against the President.
“the willis tower flooded as did several other buildings”
Any condo towers? What about Marina City? I know there was overflow there. Good thing River City sold out to the deconverters because the garage flooded again. Yikes.
But it’s a wake-up call to the developers building along there in Riverline and also the 76 to take into consideration river flooding.
“That being said, it’s morbid of you to cheer for the deaths of tens of thousands of additional people so as to lessen Trump’s reelection chances.”
Where did I say I was cheering for that? I was simply stating facts.
And we will exceed 100K by the end of this month and the current model projections are 143K by August 4. The model projections now look reasonable to me.
“If you’re incompetent, you lose. ”
I used to believe this but no more. People apparently have an infinite ability to rationalize anything.
“He said it. You’re in denial HD.”
This does cost the left credibility when they make claims like this. He did NOT tell people to drink bleach. He didn’t tell people to do anything – other than he suggested that his medical team investigate using disinfectants in the body. I look forward to hearing how those investigations turn out. Definitely worth a few billion in research funds.
Which, BTW, is another perfect example of how people can rationalize his behavior. Apparently he was talking about Ozone therapy (totally unproven), ultraviolet irradiation of the blood, and the Healight. Amazing how he can keep up on all these obscure treatments.
“It’s not a depression. It cannot be with the Fed and Congress pumping trillions into the economy.”
It’s too early for it to be as of now. In fact it’s too early for it to even be a “official recession” until two Qs in a row of GDP growth show a decline and are reported.
But the end of July is coming sooner than you think then that extra $ stops. Are you advocating printing trillions of USD in perpetuity?
The trauma of a lot of deaths still lies ahead (the rationale for the original shutdown) and now the economy has been severely intentionally shocked as well.
There’s dark days ahead because our economy was never designed to be shut down like this cold turkey.
You can’t paper over a debt-ladder collapse of the economy when Jerome Powell can’t buy all the mortgages and even if the banks wanted to postpone payments they can’t as they resell the loans and just service the payments.
“But the end of July is coming sooner than you think then that extra $ stops. Are you advocating printing trillions of USD in perpetuity?”
If there are still 20 million people out of work at the end of July, hell yeah- they’ll extend the money.
But no one has any idea what’s going to happen, how the US consumer will respond, what jobs will or will not come back. Government mandated recessions are usually over with quickly, but, in this case, if the virus resurges and there are future shutdowns, it will delay the recovery.
As the stats are showing, 95% of those who make under $40,000 a year are seeing replaced income. They can pay their rent, mortgage, car payment etc. That is what the extra money was designed to do.
You are underestimating the resilience of the economy and how quickly people want their lives back. Hell, just look at what is going on in Florida and how many are going to Disney Springs Town, or whatever the heck it’s called, just to go shopping.
“This does cost the left credibility when they make claims like this.”
Then why did Clorox and other makers of bleach and disinfectants literally have to issue statements saying, “don’t ingest this”? Because he’s up there at the podium saying it could be a cure.
What a moron.
Seriously. It just gets more of a joke everyday. But there’s only a few months left with him in there and then he’ll just be a lame duck for a few months after that before he leaves us all alone. I’m scared to know what he’ll be doing from November until January though. Hopefully he just goes to Florida to play golf the whole time.
“Landlords are often seen as multimillionaires who can weather financial storms because they own so much property. But the reality is that about half the rental properties in the U.S. belong to landlords who own no more than 10 properties, and many of those 8 million individual landlords rely on the nominal rent they collect.”
rest here
https://fivethirtyeight.com/features/this-first-time-homebuyer-needs-rent-to-keep-his-house-but-his-tenants-are-broke/
This video discusses the Covid-19 death toll and briefly mentions Illinois. The video is less than 2 minutes long.
I tend to like his data scientist math approach and rightfully wrongfully believe he attempts to strip out his own bias
https://fivethirtyeight.com/videos/do-you-buy-that-covid-19-deaths-are-overestimated/
“Then why did Clorox and other makers of bleach and disinfectants literally have to issue statements saying, “don’t ingest this”?”
For the same reason that these exist: https://www.forbes.com/2011/02/23/dumbest-warning-labels-entrepreneurs-sales-marketing-warning-labels_slide.html#60723d2a54fc Remember, roughly half the country has an IQ below 100. And they still get to vote.
“https://www.forbes.com/2011/02/23/dumbest-warning-labels-entrepreneurs-sales-marketing-warning-labels_slide.html#60723d2a54fc Remember, roughly half the country has an IQ below 100. And they still get to vote.”
Or run a blog about Chicago real estate
“Because he hasn’t assaulted anyone?
As we’ve seen with Trump, men who are sexual predators do the assaults over and over again. There are now 22 women who have come forward against the President.L
Biden had someone come forward and accuse him. What were the pink pussyhat crones blabbering about, during the Kavanaugh conformation hearing, something, something, we need to Believe all women?
It’s funny how there are 2 sets of standards depending on who’s being accused.
“There is this thing called, “insurance.” ”
—————————
Regular homeowners insurance coverage for flooded basements is quite limited, and federal flood insurance for being in a flood plain doesn’t cover regular rainfall damage, iirc.
““Landlords are often seen as multimillionaires who can weather financial storms because they own so much property. But the reality is that about half the rental properties in the U.S. belong to landlords who own no more than 10 properties, and many of those 8 million individual landlords rely on the nominal rent they collect.””
I read that article. That landlord is what other sites call a “F****d buyer”. If you read between the lines, his purchase was stupidity at its finest. He way overpaid for a crappy two unit that he could barely afford. He is illegally renting out the third unit and probably isn’t declaring that cash income on his taxes. Now both of his tenants are barely paying rent, his income is likely way down as a realtor in a housing crash, and he’s competing against all the AirB&B land barons who have suddenly pivoted from short term rentals to long term rentals. And A lot of those long term leases don’t generate enough rental income to even cover the rent as the purchase price was based on the AirB&B cash flow. How long can those owners hold on for? The same goes for Chicago too? How many airb&B rentals will suddenly show up to contribute to the affordable rent category?
“Which, BTW, is another perfect example of how people can rationalize his behavior. Apparently he was talking about Ozone therapy (totally unproven), ultraviolet irradiation of the blood, and the Healight. Amazing how he can keep up on all these obscure treatments.”
He literally just walked out of a task force meeting where they discussed these things and he shared his excitement. But his enemies used that opportunity to lie and say that he told people to drink bleach. It’s fundamentally unserious.
It’s really not all that different from that famous 2015 poll that said: “54% of Republicans say that, “deep down,” Obama is a Muslim.” Of course they know he’s not a muslim. They’ve all known that Obama attended Rev. Jeremiah Wright’s church. But Obama was and still is the enemy and we like saying bad thing about him. I know I would have answered the question the very same way too.
Is this really any different than Sabrina claiming Trump told people to drink bleach? But it angers Trump supporters and ridicules the opponent, so it’s OK.
But the reality is that about half the rental properties in the U.S. belong to landlords who own no more than 10 properties,
Is someone who owns, say, 4-10 rental properties really considered a “small” “mom and pop” landlord (how they are described in the cnbc article linked by fivethirtyeight https://www.cnbc.com/2020/04/02/coronavirus-small-landlords-struggle-as-renters-stop-payments.html) I think of a small landlord as someone who owns a 3 flat and rents out 2 of the units or someone who owns a couple of properties. I would imagine that is considerably less than half of all landlords.
RE: Airbnb properties – there’s a 6-flat on our block that has at least 4 airbnb rentals (might be all 6 units), and I was expecting it to be pretty empty, but we got back to Chicago a week ago and there have been people hanging out on the front stoop pretty much every day. Don’t know if the owner found long term renters or if people are still airbnb-ing.
Apparently he was talking about Ozone therapy (totally unproven), ultraviolet irradiation of the blood, and the Healight. Amazing how he can keep up on all these obscure treatments.”
He literally just walked out of a task force meeting where they discussed these things
Yeah, it’s amazing that he has access to experts on every topic and can vaguely remember something he heard 5 minutes ago. It’s also “amazing” that he can bungle something he heard just 5 minutes ago so egregiously that clorox/lysol etc have to release statements telling people not to listen to the president.
Madeline:
https://www.msn.com/en-us/money/markets/a-bargain-with-the-devil-bill-comes-due-for-overextended-airbnb-hosts/ar-BB13k3T4?li=BBnb7Kz
“AirDNA estimates that a third of Airbnb’s U.S. listings for entire homes or apartments—excluding shared rooms—are by hosts with a single property. Another third are run by hosts with between two and 24 properties. The remaining third involve hosts with more than 25 properties.”
There are airB&B empires right now that are crashing and burning. I never knew what a mess air B&B was for local rents. It’s the new subprime – building prices were based on airb&B returns, not rentals or resale values. It’s all gonna come crashing down.
“It’s also “amazing” that he can bungle something he heard just 5 minutes ago so egregiously that clorox/lysol etc have to release statements telling people not to listen to the president.”
That’s disingenuous. nancy pelosi and the news media said moments later that trump said to drink bleach. this is a lie. But if you want to continue the lie that trump said to drink bleach, then I’ll remind you that deep down, Obama was a muslim that hated america. Two can play this game.
“…That’s disingenuous….” was posted by jan, the queen or king of disingenuity ime. But jan neglected to include dt’s explanation for his statements:
“Trump claimed he was just kidding about injecting disinfectants, an explanation that was notably absent from McEnany’s statement. “I was asking a question sarcastically to reporters like you just to see what would happen,” he said during a bill signing. You be the judge:. ”
https://reason.com/2020/04/24/its-not-fake-news-trump-did-actually-suggest-that-injecting-bleach-could-be-a-cure-for-covid-19/
I see my stalker is back again….creepy.
JB is launching Phase 3 on May 29. I haven’t heard if Lightfoot is allowing everything in that Phase to reopen as well on that date in Chicago. I hope so.
We’ll be able to get haircuts. Lol.
And retail and outdoor dining will reopen.
Things will slowly start to reopen. But as you can see with what is happening at the Ford plant on the South Side, which they reopened and then they immediately had someone test positive for COVID, it’s going to be a lot of starts and stops.
“But if you want to continue the lie that trump said to drink bleach, then I’ll remind you that deep down, Obama was a muslim that hated america. Two can play this game.”
That’s all you’ve got? Wow. This is the WORST example I’ve ever seen using Obama.
If Obama had actually said on camera “I’m a Muslim and I hate America” or “I’m a Muslim and America sucks” then you might have a comparison, right?
But he’s NOT a Muslim and it’s pretty far fetched to say he hates America since he’s still living here. Lol.
But Trump literally did talk about using disinfectants (injecting or whatnot) to get rid of the virus! My god. No one is even making this shit up. He is insane. And the entire coronavirus crisis has made him look small and in over his head.
His “briefings” are loony tunes. Every single day.
Is Trump going to run against Obama again? It sure seems like it the way you are talking HD and the way he is talking. Do you honestly believe that THAT is the winning playbook? The Republicans got crushed by women voters in the suburbs and African American women voters everywhere in 2018. Do you think attacking Obama, who is popular with both of those groups, is going to get you the win?
Trump’s playbook of “lock her up” worked in 2016 because Hillary had a lot of negatives and Trump had no track record. He literally could be ANYTHING to the voters. He could stand up there and say, “I’ll get you the best healthcare you’ve ever seen.” And who could say he wouldn’t?
But now, he has a track record. And what is it? He was betting on the economy to push him past all of his weaknesses and maybe it would have. But that is gone now. He will be running on his ability to get this economy running again and protecting people’s lives.
And, too bad for Trump, but he’s running against one of the most popular Democrats who the country has turned to for mourning time and time again over the last decade, AND he was Vice President during the administration that brought the economy back from the brink in the financial crisis.
A good politician might be able to get it done. But I think we can all agree that Trump is a horrible politician. Truly, one of the worst ever. He had a real opportunity to track to the center and actually be one of the most dominating presidents of the last 100 years. But, alas, he doesn’t get it. Stayed with his “base” and will lose big in 2020.
So, please, give me an attack on Democrats that doesn’t involve Obama. He’s not running and is one of the most popular living presidents, as is Michelle as a former first lady.
Do you have any? At least attack the Democrats policy. Or talk about how great Trump’s policy is (whatever that may be.)
But Trump is looney tunes. Nearly every day. Bleach, conspiracies up the wazoo, complaining that voting is illegal and that the Secretaries of States who are sending out absentee ballots should be stopped. My god.
“I never knew what a mess air B&B was for local rents.”
Where have you been?
This has been an issue in nearly every city in the world, especially those that are “tourist” epicenters. It’s why they’ve been banned in the downtown and why New Orleans banned them in the French Quarter. That hasn’t stopped Treme from being destroyed by short term rentals though. And it’s probably why the apartment rents have gone up everywhere in that city.
As a business, it makes sense. You can rent out a 2-bedroom house for $3,000 a month or make $6,000 a month renting it out nightly as a hotel.
It’s unclear how many are going to go under during this. Also unclear how quickly the business can come back. Some cities are banning all short term rentals right now as they don’t want outsiders coming into town and possibly spreading the virus.
I’ll be interested to see what happens in places like Key West etc.
“He literally just walked out of a task force meeting where they discussed these things”
They said he never attended the task force meetings. Only Pence went. That was part of the problem with those “briefings.” He was given a one page outline with bullet points. That’s it. He gets his “theories” from Twitter, the Internet and watching Fox. Literally.
“He literally just walked out of a task force meeting where they discussed these things and he shared his excitement. But his enemies used that opportunity to lie and say that he told people to drink bleach. It’s fundamentally unserious.”
It’s been well documented that he never went to the task force meetings.
Those were serious meetings that went on for 2 hours. Pence and his staff would go. Fauci, of course. Birx. And others. But not the President. He has no patience to sit there and listen to that kind of discussion.
That’s why Pence always knew more details at the briefing and could talk about how many ventilators, what was happening with the PPE etc. Because Pence was actually in the meetings.
“It’s funny how there are 2 sets of standards depending on who’s being accused.”
I believe all women. They should all be heard. Come forward.
She has come forward.
But a man who sticks two fingers up a woman’s vagina in a public hallway in the Capitol building, isn’t doing that only one time, as we’ve seen with Trump, Cosby and others. They keep doing it. They get more bold.
“Or run a blog about Chicago real estate”
You don’t have to be here JohnnyU. No one makes you click on the site or post comments.
I never understand people who hate and go on sites and just hate, hate, hate.
It must be a really sad life.
HD
“I read that article. That landlord is what other sites call a “F****d buyer”. If you read between the lines, his purchase was stupidity at its finest. He way overpaid for a crappy two unit that he could barely afford. He is illegally renting out the third unit and probably isn’t declaring that cash income on his taxes. ……”
I’m not sure he was planning on doing anything illegal. The article stated (and whether or not we believe the article) ” Some tenants already lived on the second floor, though he hoped to rent the second and third floors as a single unit.”
looking closely it seems that there are multiple tenants given that there is sublet going on.
anyways as you and others have commented on. Two flats multi unit buildings – buyers
aren’t necessarily looking to fully cover a mortgage but looking at the property depreciation and long term price gain. Just as an example from cc
https://www.google.com/search?q=site%3Acribchatter.com+two+flat
we’re all americans here plus one troll 🙂
FWIW HD – I hope it works out for you and you got your cushion (ladder CDs HYS etc.)
and maybe in a making lemonade out of lemons, you’ll get a glut of work coming out of this health crisis.
sincerely speaking plus I had a Goose I pale ale or two
@ HD
“There are airB&B empires right now that are crashing and burning. I never knew what a mess air B&B was for local rents. It’s the new subprime – building prices were based on airb&B returns, not rentals or resale values. It’s all gonna come crashing down.”
Your statement is backed up by this summary. I’ve snipped part of it (it’s again less than a 2 minute read)
“in aggregate, the growth in home-sharing through Airbnb contributes to about one-fifth of the average annual increase in U.S. rents and about one-seventh of the average annual increase in U.S. housing prices. By contrast, annual zip code demographic changes and general city trends contribute about three-fourths of the total rent growth and about three-fourths of the total housing price growth.”
https://hbr.org/2019/04/research-when-airbnb-listings-in-a-city-increase-so-do-rent-prices
for those who want to dig deeper and fall asleep here is the full paper
https://marketing.wharton.upenn.edu/wp-content/uploads/2019/08/09.05.2019-Proserpio-Davide-Paper.pdf
Sonies
Did you every start the AirBNB?
https://cribchatter.com/?p=26162
“Your statement is backed up by this summary. I’ve snipped part of it (it’s again less than a 2 minute read)”
I read that link, but not the paper, and I can say that there’s all kind of air B&Bs that aren’t regulated and on the books with the special permits in chicago.
“FWIW HD – I hope it works out for you and you got your cushion (ladder CDs HYS etc.)
and maybe in a making lemonade out of lemons, you’ll get a glut of work coming out of this health crisis.
sincerely speaking plus I had a Goose I pale ale or two”
i appreciate that, I’ll be just fine. I wish the best for you too.
I’m sorry to trigger you Sabrina. You are the proprietor of this blog, for many years now, and I shouldn’t come into your house and piss you off. And apparently I’m on your shit list now. I’ll back off a bit. Its just these are difficult, partisan and trying times we live in.
“I’m not sure he was planning on doing anything illegal. The article stated (and whether or not we believe the article) ” Some tenants already lived on the second floor, though he hoped to rent the second and third floors as a single unit.””
But he was doing something illegal: he was renting out both units illegally. And then they both stopped paying full rent. and he could barely afford the mortgage in the first place.
*and he was a realtor*
You can’t make these stories up. There’s millions of them. Various blogs chronicle these stories. Thats the problem is that these clowns and bozos artificially drive up the price of real estate. They show up with 3% down – basically a large tax refund – a 610 credit score and the will to become a land baron, and outbid every other legitimate homeowner or investor. That property that they overpaid for becomes the new comp, because property prices are set at the margins, and now we’re watching this newest bubble collapse. I will admit, that after taking a hiatus from this blog, and other blogs for some times, that I was not fully appreciative of the airB&B bubble that was brewing. I was aware of aibB&B but not the amount of properties. I always stay at hotels because the kids want pools so I stayed off air B&B. But other than that, I knew prices were crazy.
” he was renting out both units illegally”
(from above)
I meant just renting out one unit illegally…sorry!
I closed the link and got some other stuff now, but I thought there was one renter and then another renter that sublet a room? It wasn’t clear to me that Mr. Concepcion was the one that signed those rental contracts. I read and maybe wrongly that he inherited the renters.
Yeah he was a realtor but 1) errr that not a high standard hello sq footage and floor plans and 2) he a new realtor a rookie, a nugget
I ruby lenses and all thought it was good that he was hustling and trying to pull himself up working multiple jobs and angles versus hanging out on the dole.
fire away HD – at least it doesn’t bother me. put on the MAGA hat wave the flag honk the horn we all good. It’s shades of Friday night bob and it would be nice to have bob back. I like the dialogueI learn new stuff and get a new perspective;
it’s the troll (HH) bigotry and hate speech that really isn’t necessary for the blog
“It’s shades of Friday night bob and it would be nice to have bob back.”
If Joe’s on Weed brings back nickel Tuesdays, we’ll probably get that Bob back at least one night a week.
“Sonies Did you every start the AirBNB?”
Yes I got it remodeled, but just as I was starting to furnish it, this virus hit and with all the economic uncertainty, I’m just taking it slow finishing it up, buying stuff as I have the money for it, no need to rush right now as I doubt many people are using them here at the moment. Maybe if they open up the casinos and Tahoe parks again.
There were quite a few people doing rent arbitrage with airbnb
(ie. rent a place from someone else and airbnb it out for profit)
I would imagine those people are totally fuxored
IL unemployment rate of over 16% far surpassing the previous peak of 13.1% in 1983. No way can banks sit on inventory and not sell REOs at steep discounts because the banks themselves are in much deeper trouble this time. They got away with murder last time because the crisis centered around them. Looks a bit different this time. You are going to see a lot of banks go under again.
If you’re not a bear on RE these days you fall into one of two categories:
1) You’re smoking crack.
2) You’re talking up your book and really trying to project your unrealistic opinion onto reality. Which, unfortunately for you, will have no effect.
Bob, logically I would think you are correct but then look at stocks like PHM and RDFN. They tell a different story. However, RLGY and RMAX don’t look so great but then they have an obsolete business model also.
“No way can banks sit on inventory and not sell REOs at steep discounts because the banks themselves are in much deeper trouble this time. They got away with murder last time because the crisis centered around them. Looks a bit different this time. You are going to see a lot of banks go under again.”
The crisis centered around RMBS (and the CDO and CDO-squared on the subordinated tranches and the CDS backing all of it) last time, particularly the $2T+ originated by the likes of Countrywide and IndyMac, and largely issued by Bear Stearns and Lehman, and then the tsunami of defaults related thereto.
ps: ‘private label’ RMBS had it’s biggest year since the ’07, and hit all of 6% (yes, six) of the issuance level.
“Bob, logically I would think you are correct but then look at stocks like PHM and RDFN. They tell a different story. However, RLGY and RMAX don’t look so great but then they have an obsolete business model also.“
Pulte will probably be fine until land prices drop and the banks come knocking looking for $ a la 07-08
Redfin and Airbnb – depends on how much and what they’re holding. Abnb took down a couple of $B (not a business friendly deal valuation or rate) and cutting it workforce back by 25%. I don’t think that paints a very bullish picture
“The crisis centered around RMBS (and the CDO and CDO-squared on the subordinated tranches and the CDS backing all of it) last time, particularly the $2T+ originated by the likes of Countrywide and IndyMac, and largely issued by Bear Stearns and Lehman, and then the tsunami of defaults related thereto.”
The banks are going to be more willing to give loan mods this time around. How long these loan mods last for remains to be seen, as long as business remains shut down. Probably a long time. A loan mod or forebearance means nothing you’re out of work for an extended period of time. I have a freezer full of food right now, don’t plan on eating out much; nor do I plan to travel or upgrade my vehicle (still have that old used car 150,000 miles now when I first started posting here years ago!). I planned on upgrading this year but that has been put on hold given that now I drive less than 100 miles a month, to Jewels and back mostly (well, once in a while a dispensary). Not that I am the economy, but if my decisions are reflect of any small portion of the economy, that U or V shaped recovery will look more like a bathtub shaped U than a pint glass or stemless wineglass shaped U.
“If you’re not a bear on RE these days you fall into one of two categories:
1) You’re smoking crack.
2) You’re talking up your book and really trying to project your unrealistic opinion onto reality. Which, unfortunately for you, will have no effect.”
For existing multi resi, generally speaking, I agree. I think we’re seeing/will continue to see greater interest from young families looking to move to a burb for schools/space/yard/home office sooner than they had been in recent years, but there’s still a lot of boomers living in their non-updated houses that will keep the pricing even within that sub market pretty flat, despite the increased demand.
But there are some things that will keep some folks in the RE biz busy. For example, in the student space there’s going to need to be a private bedroom for everybody, including freshmen, who aren’t going to be required to cram into dorms anymore. Common areas will be re-imagined, with an emphasis on covered outdoor space. College and K-12 school facilities will also be undergoing lots of changes. That’s in the near term/immediate future. A bit further out, I’d bet we’ll see some interesting changes/retro-fitting happening to Class A office buildings in cities (into housing and some as yet unknown uses). If I were running a consulting firm, major law firm, etc., I’d be taking a hard look at my footprint/leases right now. A lot of this activity will be “value add” types of deals rather than ground up development, but activity nonetheless.
“Pulte will probably be fine until land prices drop and the banks come knocking looking for $ a la 07-08”
The home builders are in their best position since the housing boom. None are over extended. They all have plenty of cash. And they are still selling plenty of houses AND have pricing power. Margins at multi-year highs.
40% of all existing homes had bidding wars on them in April in the country.
Unless inventory rises dramatically everywhere, you bears have no chance with the housing market.
“IL unemployment rate of over 16% far surpassing the previous peak of 13.1% in 1983.”
Bob the Bear: it’s not going to stay at these levels. And people who are unemployed are getting $4000 a month right now. And if you have two unemployed in the house, you may be getting $8,000 a month.
Two questions about the future:
1. How many return to their jobs
2. What happens if the extra unemployment isn’t extended past July
Apartment landlords in Chicago report that 95% of renters are paying rent. The CARES Act is working to stabilize the economy.
And, no, the banks aren’t going to go under this time. They’ve been regulated for a decade. They are really well capitalized. Haven’t been giving away crazy loans. And Jay Powell isn’t going to allow a second financial crisis, even if it was possible.
So what will the actual unemployment be come, say, August?
No one knows. Too many unknowns.
But as soon as those malls started opening, according to the retailers, the American consumer went and shopped. So someone has a job, or feels good enough, to buy non-essential clothing and shoes right now.
“The home builders are in their best position since the housing boom. None are over extended. They all have plenty of cash. And they are still selling plenty of houses AND have pricing power. Margins at multi-year highs.
40% of all existing homes had bidding wars on them in April in the country.
Unless inventory rises dramatically everywhere, you bears have no chance with the housing market.”
So you’ve stress tested/run sensitivity analysis on Pulte?
How much raw land do they own and what’s the effect of a 20% decrease in the value of their land holdings?
Link to your 40% figure?
I’m not as concerned about Pulte. I’m concerned about the garage loans Quicken Loans and loandepot have been writing for half a decade. I’m concerned about the viability of commercial real estate in a world where no one wants to go into the office for the next 18 months without a mask. I’m concerned about the retail bubble that is popping as we speak – it’s not just amazon eating their cake, it’s the fact that there is just too much junk to buy and too few buyers with credit. I’m concerned about the restaurant bubble that’s been going on for years – even the restaurant industry has admitted as much. I’m concerned about airB&B rentals all flooding rental market at the same time Lori Lightfoot and the DSA city council wants to make it near impossible to NOT renew a tenant’s lease. I’m worried about subprime car loans, and subprime home loans still in their loan mods from 10 year ago, and still underwater. I’m concerned about a job market that might not come back to 3.5% unemployment levels for another decade. I’m worried about any sort of job involving the travel or entertainment industry – hotels, airlines, venues, concerts, shows, theaters, fests, events and so on. This is the part of the economy that is concerning, and will make everything else crash down hard.
“I’m concerned about the retail bubble that is popping as we speak – it’s not just amazon eating their cake, it’s the fact that there is just too much junk to buy and too few buyers with credit.”
What??? This isn’t what the retailers have been saying now that stores are reopening.
American consumers are still spending. Plenty have credit.
And why would we see 3.5% unemployment again? It was a 50 year low. Once in a lifetime. It will take a few years to get it back to like 5% and that’s if nothing else goes wrong.
And, yes, travel will be in pain. But, again, you’re underestimating the tourists who are already getting on airplanes. By 4th of July they will again be on the Mag Mile, even with the corona threat.
When they opened Yellowstone a week ago, the park rangers were shocked to see people there from Florida and New York, who both got on a plane. The Florida family said they had been tired of being couped up and when they heard the park was opening they decided to go for it. You couldn’t even stay overnight in the park as the lodges were still closed.
Lol.
Economy only “crashes down hard” if the extra $600 a week isn’t extended for a few more months, the state and city workers are laid off, college employees are let go, airline pilots are permanently furloughed.
A lot of lessons were learned from 2008-2009 in terms of how quickly to move to help the economy. They’ve moved very fast this time but will have to do more when we see how many businesses can, or will, try and reopen.
“So you’ve stress tested/run sensitivity analysis on Pulte?”
I’m not a home builder analyst. Are you?
I trust those that are and can easily access their reports. This isn’t 2007. People need to move on. Those homebuilders which have survived the housing bust have done so for a reason.
They have pricing power with low inventory. Each home builder has different specialties. Pulte isn’t my favorite, but, fine, if that’s the one you want to focus on.
Here’s the link.
Sorry, it’s Redfin offers that had 40%, not ALL properties, but some markets saw as high as 60% with multiple offers.
Inventory is at lows. For the country, it’s 4.1 months for single family homes. It will jump in June as states reopen and people feel comfortable listing again. But like I said, I know people involved in bidding wars in the western suburbs. Crain’s has tracked some multiple bids in Chicago. They ARE happening at certain price points and locations.
https://www.fool.com/millionacres/real-estate-market/articles/low-supply-sees-bidding-wars-40-all-offers/
Here is the original Redfin report: https://www.redfin.com/blog/multiple-offers-report-april-2020/ This really leaves me scratching my head because it has Chicago at a 30% rate. Could there be some kind of bias in the types of properties that Redfin clients go after? No way 30% of Chicago properties are in bidding wars. Like I’ve been saying weeks of supply is pretty damn high right now.
So here are some recent thoughts I’ve been having about the long term impact of this stay at home thingy. I think it will have some long term benefits that will also cause some pain. I think it’s made everyone re-evaluate what they do, how they do it, and where they spend their money. Let’s face it…Americans waste a ton of money. We buy a lot of useless shit that doesn’t make us any happier. And we’ve had way too much retail space for way too long and now we just discovered we have way more office space than we need and we spend too much time commuting. And I bet a lot of bosses discovered who the real essential employees are. If you don’t find yourself talking to one of your employees every day either they are doing an incredible job or you don’t need them.
So I could see unemployment staying much higher for much longer, less consumer spending, more commercial real estate vacancies, more free time, and greater productivity. Not all bad but painful for plenty of folks.
“I’m not a home builder analyst. Are you?
I trust those that are and can easily access their reports. This isn’t 2007. People need to move on. Those homebuilders which have survived the housing bust have done so for a reason. They have pricing power with low inventory. Each home builder has different specialties. Pulte isn’t my favorite, but, fine, if that’s the one you want to focus on.”
No, but I have a pretty good idea of what gets developers in trouble. Pricing power and low inventory doesn’t mean a whole lot, if as I noted land values fall. Think a little bit about what I posted Vs creating a strawman
“ Here’s the link.
Sorry, it’s Redfin offers that had 40%, not ALL properties, but some markets saw as high as 60% with multiple offers.
Inventory is at lows. For the country, it’s 4.1 months for single family homes. It will jump in June as states reopen and people feel comfortable listing again. But like I said, I know people involved in bidding wars in the western suburbs. Crain’s has tracked some multiple bids in Chicago. They ARE happening at certain price points and locations.”
So the number is based on properties that Redfin put in an offer and there was at least 1 other bidder. That sure as hell isnt the whole market. It’s a subset of a subset
How can there be multiple offers on a suburban property? It goes against the HAWT Market Theory ™
“Economy only “crashes down hard” if the extra $600 a week isn’t extended for a few more months”
from NYT:
Nonetheless, Larry Kudlow, director of the National Economic Council, knocked down the idea of extending unemployment benefits. “I do not believe that more government spending is going to give us a strong and durable recovery,” he said Thursday at an event sponsored by The Washington Post.
“multiple offers”
Have a couple of neighbors with listed homes–one has accepted, one has not.
They both have received multiple offers–every single one has been a low ball. But those count as properties with “multiple offers”.
“No way 30% of Chicago properties are in bidding wars.”
As noted, 2 lowball offers = “multiple offers”.
Want to know the %age of “multiple offers AND closed above list”.
To HD’s points:
“The number of borrowers who stopped paying their home loans spiked by 1.6 million last month, according to Black Knight, a real estate data and analytics company.
“Not even during the Great Recession did delinquencies rise this fast.
“The national delinquency rate soared to 6.45 percent in April, up from 3.06 percent in March and three times the previous single-month record set in 2008.”
https://www.washingtonpost.com/business/2020/05/22/mortgage-delinquencies-april/
“To HD’s points: *** ”
These are the people that immediately defaulted. What about the people who can make it a few months off savings? They will default in the upcoming months. What about those that can make it six months? They will default in the 7th month. How about businesses that shut down and open? They’re looking at extended periods of losses for the medium term future. What large restaurant in Chicago can survive only on outdoor seating during phase 3? Keeping tables 6 feet apart greatly reduces the seating in that outdoor area and they will have losses extended indefinitely. It’s going to be very ugly out there.
“Want to know the %age of “multiple offers AND closed above list”.”
Not sure the data scientists that are Realtors(tm) can keep track of that data. Does that stat even exist outside of small individual offices? Do sellers’ realtors even enter this down? In the when I’ve had to help out realtors with multiple offers for estate sales, they just lazily email me contract after contract and ask me to go through them. They couldn’t even be bothered to put it into a spreadsheet. As going back to the multiple offers, there’s all kinds of scams where buyers put in above list offers just to take the property off the market while they inspect the property, and then withdraw or renegotiate during the 5 day attorney review period. Does that really count as going under contract above list?
“Does that really count as going under contract above list?”
Which is, of course, why I want to know about *closings* above list.
If anyone tracks that sort of info, its someone like CoreLogic or Green River or Black Knight, not the realtors directly. And it would have to be a data scrape from MLS plus public records, not anything from realtors directly, to be even reasonably reliable.
Just to be clear…the Redfin analysis is based on all properties on which they submitted an offer. If there was another offer then it counted as a bidding war. So, unless their clientele biases the sample this should be legit.
The claim of 4.1 months of supply is flawed. It uses an average sales rate for the year. I argue you should use the current sales rate which is dramatically depressed. On that basis inventory is high.
When I want to see how competitive the market is I look at close/ original list price for SFHs. Can’t look at condos because parking is often extra so it raises the ratio. When I look at this I didn’t see anything impressive for April.
It took 76 months for employment to recover from the Great Recession and the peak amount of job losses were around 6%–the most in any recession since WW2.
This time the % of job losses so far is 14% and didn’t take around 30 months to hit this hit overnight.
The economic fallout from the government response to coronavirus will make any societal health effects from it look minuscule in comparison.
https://www.cnbc.com/2020/05/08/coronavirus-jobs-losses-dwarf-those-in-prior-recessions.html
“This time the % of job losses so far is 14% and didn’t take around 30 months to hit this hit overnight.”
Any comparison to 2008-2009 is meaningless. That was not a government induced recession. It’s a very different animal. 2008-2009 didn’t involve $600 a week extra in unemployment or $1200 per adult in stimulus (with more likely to come), nor PPP, nor forebearance on mortgages and whatever else they’ve done. I could go on and on.
Remember the debate about bailing out the auto makers and their 1 million jobs? There’s been NO debate this time. And that $12 billion was pocket change compared to what the Congress has already done.
Doesn’t mean the job losses won’t be intense and real. But the economy wasn’t slowly falling into a recession like 2008 with months of increasing job losses. In fact, there were no initial job losses at all.
Many weak restaurants won’t make it so those jobs aren’t coming back. Same with weak retailers. Anyone who lives in Chicago has already seen the restaurants and stores that have shuttered permanently. They have already put the signs up on the door.
By June, however, we should already seen the jobless claims starting to fall as people go back to work.
The bigger problem will be the consumer confidence. They are scared. Already pulling in spending.
After 2008, the saving rate rose for the next 4 years reaching 12% by 2012, which coincided with the bottom of the housing market. But then, gradually, Americans went back to their spending ways.
This is a unique experience for everyone. None of us has lived through this before. No one knows how the economy will adjust and react.
“These are the people that immediately defaulted. What about the people who can make it a few months off savings? They will default in the upcoming months. What about those that can make it six months?”
Who’s immediately defaulting?
Hell- even when the flippers just dumped all their units in 2009 into foreclosure, it took years for the banks to take those properties back. I know someone who lived in condo where the landlord hadn’t paid in about 5 years. The condo association finally went to court to take the rental payments to cover the assessments. And then the sheriff notified them that they were going to be evicted as the bank was retaking it. Again, all of this took YEARS.
Also, don’t forget, the government is allowing you to tap your 401k/IRA for up to $100,000 without any penalty. Presumably, if people really want to hold onto the house and the $4,000 a month UI isn’t enough, then they can tap other resources.
“Nonetheless, Larry Kudlow, director of the National Economic Council, knocked down the idea of extending unemployment benefits. “I do not believe that more government spending is going to give us a strong and durable recovery,” he said Thursday at an event sponsored by The Washington Post.”
And Larry said the virus was “contained” in February.
So?
Who cares what Larry is saying. He is clueless.
This is an election year. It’s highly unlikely the President, nor the Republican senators up for re-election, truly want double digit unemployment with people not able to pay their bills as the second wave hits.
Meanwhile, the White House is also proposing a capital gains tax holiday. Because that helps who again?
LMFAO.
But it depends on how many go back to work, right? By the beginning of July, we should have some clue in most states. And then it will be clearer whether or not its humane to extend it until, say, September, or not.
“Think a little bit about what I posted Vs creating a strawman”
So you have no clue JohnnyU.
Maybe you should listen in on the conference calls of these companies. They’re pretty illuminating as to what is going on in their businesses. As you obviously have no idea.
“Maybe you should listen in on the conference calls of these companies. They’re pretty illuminating as to what is going on in their businesses. As you obviously have no idea.“
“ I’m not a home builder analyst. Are you?
Do you mean earning calls? I’m guessing if you’re listening to conference calls you get a lot of “buy now or be priced out forever”.
So now you are an analyst, shill or you just listen to earning calls for fun. Pick 1
Since you listen to the “Conferene Calls” answer my question, What happens when the value of their land holdings drops by 20%?
“Since you listen to the “Conferene Calls” answer my question, What happens when the value of their land holdings drops by 20%?”
They are builders, they’ll just keep building until the lending dries up! What’s the point of being a builder who doesn’t build? it doesn’t matter if the houses sit vacant, as long as someone, somewhere, will lend them money to build.
“ They are builders, they’ll just keep building until the lending dries up! What’s the point of being a builder who doesn’t build? it doesn’t matter if the houses sit vacant, as long as someone, somewhere, will lend them money to build.”
No, much like Sabrina you’re not answering the question and are creating a strawman
FYI – You still could get project financing when the bottom fell out in 07-08
“No, much like Sabrina you’re not answering the question and are creating a strawman”
I’m just being a smartass.
“FYI – You still could get project financing when the bottom fell out in 07-08”
The big home builders provide their own financing. I’m talking single family homes here, not big condo buildings.
And what do you know? The April new home sales were POSITIVE.
LMFAO at the bears.
As for condo buildings, those lenders are mostly lending only if there’s a hotel or an apartment building in the project with assured money flowing in. The banks mostly learned their lesson from the housing bubble/bust. Mostly. Some are worried about Bank OZK’s lending, especially in Miami. But they’ve lent on some of Chicago’s largest apartment buildings which seemed risky but until 2 months ago, was working out for them. We’ll see going forward.
“The big home builders provide their own financing. I’m talking single family homes here, not big condo buildings.”
Just to clarify you think Pulte, et al are self financed?
“The big home builders provide their own financing.”
“Pulte, et al are self financed?”
Even the *small* homebuilders aren’t self-financed. Sure, the big guys don’t typically get construction loans for each individual SFH, but they have a loan (sometimes a line) secured by the dirt, and then usually get a construction loan for the infrastructure. And then, frequently, each large tract development they have an equity partner, too, providing mezz, or mezz-type equity, funds.
So, they often have *3* “lenders” to keep happy.
“Even the *small* homebuilders aren’t self-financed. Sure, the big guys don’t typically get construction loans for each individual SFH, but they have a loan (sometimes a line) secured by the dirt, and then usually get a construction loan for the infrastructure. And then, frequently, each large tract development they have an equity partner, too, providing mezz, or mezz-type equity, funds.”
Not directed at you but that’s kind of a “No Shit”, The sky is blue, water is wet kind of answer.
Nice that you are giving Sabrina an in your face hint as to the original comment wrt the large homebuilders. Not sure if she’ll take it or double down on the foolishness
Pulte pulled $700M of there revolving LOC, I wonder what that was for when they’re slowing/postponing land acquisition and development
You would think that someone that touts listening to earnings calls would understand this as it was specifically noted in the earnings call
Pulte had $1.9 billion at the end of Q1. It did tap $700 million from its revolver just to be safe but sales rebounded sharply into the end of May from the March slowdown. April sales still down 50% yoy, however.
Backlog of $5.6 billion.
Has $2.5 billion in notes with total debt for house and land inventory of $7.8 billion.
They provide mortgages to homebuyers as well, but a small part of the business with just $20 million in the quarter.
Plenty of cash. And May sales were likely higher than April, which were higher than March.
Great another strawman…
Where’s Bob the Bear?
Not here today to talk about those awful April new home sales? Lol.
RV sales are up 160% right now. RVs, even the small attached ones like the Airstream, aren’t cheap. Plenty of people feel good enough financially right now to buy one though.
“Where’s Bob the Bear?”
He’s probably lowering his estimate of Q2 GDP.
On May 1 Bob said he hoped Q2’s GDP decline wouldn’t exceed -9.33%.
http://cribchatter.com/?p=26755#comment-1039027
But now that model forecast Q2 decline = -35.5%.
Atlanta’s model predicts 2Q GDP = -51.2 percent.
So it looks like “Bob the Bear” was too bullish, his hopes too high.
https://www.frbatlanta.org/cqer/research/gdpnow
Cue Orange man bad Rant in 3..2..1..
“RV sales are up 160% right now. RVs, even the small attached ones like the Airstream, aren’t cheap. Plenty of people feel good enough financially right now to buy one though.”
Maybe they plan on living in the RV after their ‘jingle keys’ (sending keys back to the bank in the mail).
People (the whities & those who act like them) are going to be fleeing for the suburbs en masse just like after the late 1960s.
Whities get freaked out by things like rioting, it’s a bit too much of an “edgy” or “hip” urban experience for them.
“Atlanta’s model predicts 2Q GDP = -51.2 percent.”
Yeah the RE bulls live in a fantasy world indeed. This is Mad Max numbers and with the ensuing activity you’d expect from it.
Lori did a great job tonight with crowd control. I saw so many masks and lots of social distancing. Anyone else want to chat about the value of downtown Chicago real estate?
I will remove any comments about the protests on this forum. Many of you don’t even live in Chicago so I don’t really care about your opinion.
And if you think for one minute that a 1-day mass looting will deter anyone from wanting to live downtown, then you truly do live in Long Grove. It will only make the neighborhood stronger.
“Whities get freaked out by things like rioting, it’s a bit too much of an “edgy” or “hip” urban experience for them.”
Wrong.
Most Americans support the protests, of all races. The looting? Not so much. But just because there were some stupid looters after the Cubs won the World Series, doesn’t mean everyone fled Chicago.
Sorry Bears. So, so, wrong.
“Maybe they plan on living in the RV after their ‘jingle keys’ (sending keys back to the bank in the mail).”
You still need a good credit score to buy an RV, HD.
“Atlanta’s model predicts 2Q GDP = -51.2 percent.”
Um…yeah, we know wojo. Tell me something new. The US economy was basically shutdown.
But there’s this little thing called, “$6 trillion” that was pumped into the economy. If Mitch decides that July is the end of the $600 a week even if unemployment remains above 10%, then we are going to have a problem.
But we aren’t there yet, are we?
Sounds like the Democrats are proposing that the $600 stays in as long as certain economic metrics remain elevated. I haven’t seen the actual proposal but I’m assuming it’s something like, “as long as the monthly unemployment level is above XYZ then the $600 stays.”
One month after it falls below that, it starts to get cut. $500. $400. $300 and whatnot until it’s removed as people find jobs.
This would be fair and would prevent a sudden shock to the economy of millions who can’t pay the mortgage/rent if they aren’t back in a job.
Sabrina isn’t like even a woman who lives in Chicagoland. “She” rarely drops hints of being a local that others haven’t already mentioned and are googable. And now denizen in India in a cubicle is advocating policy for the US. This is a Google run blog.
“She” should leave US policy to US citizens and instead focus on the train schedule in Chennai.
Yeah- they’re looting at Yorktown, Woodfield and Oak Brook malls now.
Targets in the western suburbs near Oak Park have already been looted. Police have blocked off the off ramps to those three big malls. Not sure what’s happening at any others. I have family out there who are reporting back.
I guess all the “whities” will be fleeing those suburbs, huh, Bob?
Oh, peaceful protest going on in Santa Monica right now. But looters gotta loot, so they went to the Promenade (prominent, outdoor walking mall if you know the area) and are looting while the protest is peacefully going on a few blocks away.
Good times.
And why you think I’m a man, is beyond me. Voice is very obvious on the Internet, and you’ve been listening to mine for 13 years now.
And it’s amazing that, being in India, I’m able to get pictures of properties from around the city. Presumably, I’m hiring some photographer to drive around and do this for me.
But that’s quite the extra cost for a blog that makes almost no money.
“I will remove any comments about the protests on this forum. Many of you don’t even live in Chicago so I don’t really care about your opinion.”
Last time I checked, ‘Chicago’s’ problems are looting their way through the suburbs, as we speak.
Yes they are HD. So the comments about how it’s going to “hurt” downtown real estate really aren’t very relevant anymore, now are they?
“RV sales are up 160% right now. RVs, even the small attached ones like the Airstream, aren’t cheap. Plenty of people feel good enough financially right now to buy one though.”
Link?
“You still need a good credit score to buy an RV, HD”
Not necessarily. They’ll finance a $15k pop-up for 15 years, so yeah these folks ain’t coming in with an 800 FICO. If you want an Diesel motorhome, yeah at $350k they’re going to want someone credit worthy
Just as an FYI, I know 2 families that bought pull behinds in lieu of “Normal” vacation (air/hotel/rental)
Obviously no one here is familiar with the RV culture but gov. campsites are full of them with people who live there a week or two at a time then move on to the next one.
“And if you think for one minute that a 1-day mass looting will deter anyone from wanting to live downtown, then you truly do live in Long Grove. It will only make the neighborhood stronger.”
hasn’t it been like 3 days of mass looting now? I would think they have ran out of places to loot by now but who knows… I’m sure the nice warm temperatures tomorrow will help
“hasn’t it been like 3 days of mass looting now? I would think they have ran out of places to loot by now but who knows”
Yes, and they are spreading out. Looting north of Irving Park last night.
“Obviously no one here is familiar with”
Two or three people say something about it, and you conclude that it is obvious no one knows about it–except you, of course. Solid logic.
So many things to say, so many, but I will honor Sabrina’s request, on her blog, to avoid talking about the riots. It’s counter productive to yell at people on social media. It accomplishes nothing.
But I will advise you, to do as I do, and sleep with a loaded gun in your nightstand, no matter where you live.
“Two or three people say something about it, and you conclude that it is obvious no one knows about it–except you, of course. Solid logic.”
You are pedantic, aren’t you. It was the rhetorical “no one”.
“It was the rhetorical “no one”.”
Obviously, counselor. Obviously.
Obvious to everyone but you!
“It’s counter productive to yell at people on social media. It accomplishes nothing.”
What else are the Karen’s going to do now that Covid/Masks/Social distancing aren’t front page news?
“What else are the Karen’s going to do now that Covid/Masks/Social distancing aren’t front page news?”
COVID hasn’t gone away. And every person taking the Metra, bus or subway to work every day is going to have to wear one.
Same in their office or place of business. If you work at Trader Joe’s you will wear a mask every day.
“But I will advise you, to do as I do, and sleep with a loaded gun in your nightstand, no matter where you live.”
Sure Jan.
“hasn’t it been like 3 days of mass looting now?”
No.
1 day of looting downtown. That was it. Saturday night. And because they brought in the national guard there, yes, they are now looting in other neighborhoods and suburbs.
So, no, to HD’s “claim” that it’s going to hurt downtown housing values, um…no. It’s not.
Are people going to rush to move out of Santa Monica? Downtown Nashville? Beverly Hills?
No. No.
And no.