Market Conditions: Will 2011 Mark the End of the Chicago Housing Bust?
The Chicago Tribune’s Mary Umberger recently interviewd Barbara Corcoran, the NY real estate mogul who started her own real estate brokerage with $1,000 and sold it for $70 million. She is now the Today Show’s real estate contributor.
While she didn’t talk directly about the Chicago market, I thought some of her comments were interesting given the recent discussion about how “hot” Chicago’s housing market apparently is this spring.
Q. Do you think the real estate industry should shoulder the blame for the buildup and eventual collapse of the housing bubble?
A. Everyone was guilty. First off, no one saw the bubble popping. Everybody helped fuel the bubble — most importantly the buyers. They had a fear of being left behind.
Then, I would put “easy money” on the list. And then the brokers, who were happy to accommodate what was fueling their business.
Q. What’s it going to take put momentum back into the housing market, to stimulate sales again?
A. People aren’t comfortable buying in a market that has a lot of negative chitchat going on. The only reports they hear are the negative ones, the ones that say you have to be foolish to jump out there. The majority of people like buying in a pack, they like waiting in line for a restaurant. If they’re the only ones visiting an open house, they’re nervous.
What’s it going to take? It’s going to take people losing a few houses that they bid on. That’s what turns every market around.
Look at San Francisco, where prices have been going up for about nine months. My stepdaughter wanted to buy a house. She’s smart and rational, she’s traded real estate all her life, and she’s having a baby and needs to buy a bigger house.
But she wouldn’t do it until she went house-shopping and found out that the two houses she liked had already been taken. There’s no better medicine for the shakes than to lose to the next buyer. So she went out and bought a house.
The No. 1 rule in real estate is, everybody wants what everybody wants, and nobody wants what nobody wants.
Some of you were calling a “bottom” in the Chicago housing market in a prior thread.
Milkster actually named the date.
I’m calling a bottom. It was December 31st 2010.
When I first started my search in the summer of 2009, my agent asked me what I wanted. I said I wanted a studio in Lincoln Park for 50K. (The best, most desirable area at a cheap price.) This never happened. Pricing in the GZ has gone down a little, but I’m not seeing any steals.
As a contrast, there are some really cheap properties in the outer neighborhoods, but they often come with a host of problems, so even though they’re cheap, they’re not a steal (i.e. homes in gangland or in need of gut renovation or condos with disintegrated HOAs). I think you need a lot of luck to find your unicorn criteria at a good price.
We’ve been bouncing around the bottom since summer 2009. Back then, there were some cheap things which sat on the MLS for a long time with no takers. Now it’s like if something cheap hits, if you don’t get a bid in at full asking price or higher that same day, you’re cut out of the process.
Chris M hedged his bets about the bottom.
Milkster – I’m not going to call a bottom on prices, but I’m willing to call a bottom on affordability…I believe housing affordability (considering both prices and mortgage rates) may have hit bottom in October 2010. I wouldn’t be surprised if prices fall some more, but I don’t think that monthly mortgage payment will fall below what it was in late fall of last year.
Even Dan, who has been bearish, is reconsidering whether or not this is the bottom.
I am starting to think we’ve bottomed (in the good locations) and that inflation will roar. I think the stock market is maxed out, so I could see someone with financial assets plowing some of that instead into more equity for a well-located house, second home, or something like that. I used to totally agree with HD about the market, but have shifted somewhat due to thinking through the scenario above. What do you think of the rationale?
Has the Chicago market bottomed?
(FYI: We’ll get the March sales data later this week.)
Barbara Corcoran: Turning a negative market into a positive one [Chicago Tribune, Mary Umberger, April 15, 2011]
“Has the Chicago market bottomed?”
No.
(FYI: I’ve seen the March sales data.)
I think it will bottom in Fall 2011. There is still a lot of carnage in the employment market, and unless wages and employment increase significantly for real working white collar professionals outside of law, medicine, and finance, I don’t see much of a bottom yet. The demographics are horrible for Chicago real estate, too, with all these boomer owners sitting on their places. There are so many condo owners just sitting on their places waiting to sell, it’s just crazy. I personally know 7 people who are either renting out their unit or are considering doing so in order to avoid selling.
“Everyone was guilty.” Wow. Well, I guess that since I waited on the sidelines for prices to dip and to ensure I had an adequate downpayment and cash cushion before buying instead of following the herd like all of my friends advised when I moved to Chicago in 2005, I am guilty, too. Thus, I deserve to have my savings crushed by zero percent interest rates and moderate inflation and have my tax dollars go to bailing out the financial institutions, GSEs and proles who got in too deep. I’m glad this expert cleared that up for me. Before, I thought folks who intentionally sat on the sidelines weren’t to blame, but now I realize the error of my ways.
Lots of excess already taken out by both price and time, but I came back on here a few months ago thinking things looked cheap, now I think it still looks like shit.
The rent/own premium is pretty much gone, so as a renter, knowing I was staying put, I would be thinking about buying unless I was 70/30 negative.
If you had $25,000 saved as of November 2008 and put it into the stock market, as of today you would be miles ahead of all the people who bought real estate at that time. The NAR and realtor lobby is full of shills who stretch the truth. People need to be careful when making emotional decisions related to real estate. Prices are still way out of touch with reality in any non-prime areas and the properties are just sitting there for 18 months+. Those properties have to start clearing the market to have any recovery/resurgence in real estate.
This house went under contract in one day. Last year when they tried to sell they could not even get anyone to walk through it, so the owners (who we know) rented it out.
http://www.redfin.com/IL/Northfield/252-Riverside-Dr-60093/home/13802452
If you have a good property priced right (seller willing to take loss) it will sell fast in today’s market.
Stock market reacted yesterday to news that US debt had been downgraded. NPR said 45% (astounding statistic)of American households don’t pay Federal taxes this year. Also heard recently that unemployment was unabated, and “worse than 1983”, a very bad economic year.
Seems that top 2% income-bracket white-collar earners are doing just fine; unfortunately it seems a larger segment of Chicago area for-sale housing market is targeting that demographic and there’s way more product than buyers. I know plenty upper-middle income households here in Chicago area who don’t think they’re doing well, even in that “top 5%” income-bracket, fretting about college costs and retirement savings, driving older cars, buying their clothes at Target, etc.
And then there’s the large blue-collar and low-income households which make the bulk of Chicago’s population, and there’s no “economic recovery” occurring there. I’m anticipating that entitlement and welfare programs will get budget cuts here in Illinois, and the neighborhoods housing a majority of these populations will continue to sag and be even less attractive to hipsters and gentrifiers. Anyone checking the MLS listing prices in NW-side neighborhoods? Berwyn and Cicero? Dramatically low prices, but no more influx of college-educated purchasers seeking real estate deals.
Also, Tracy Cross Associates, the residential real estate market forecast firm relied upon by Chicago metro area residential developers, predicts zero residential market recovery until at least 2016. (Excluding downtown high-rise rental market, which is booming at present, another sign that for-sale residential market isn’t recovering soon.) I’d listen to Tracy Cross before Corcoran and other residential brokers.
“No.
(FYI: I’ve seen the March sales data.)”
First of all – March sales data reflects things that went under contract in Jan/Dec and short sales that went under contract in the fall of 2010. You have to look at July data – and even then you have to consider VOLUME and types of sales.
Second of all – we ARE bouncing around the bottom right now. Anyone who disagrees is NOT in the market, has no skin in the game, and is not familiar with what is going on in real estate right now – period. All this talk about interest rates and sidelined buyers/sellers, etc. is just that – just talk – it RARELY translates into reality and usually when it doesn’t, the morons that blab this shit just shrug their shoulders and move on to other moronic predictions (yes, they are based on data – but they are incorrectly analyzed because there are SO many unknown variables).
Sabrina – Thanks for posting the referred article…I’m sure it will start a lively discussion!
Also, regarding my quote from yesterday, I have not and will not call a bottom on prices…I think they have room to fall further–IMO perhaps up to 5-10% nationwide–but I have no idea as to when we will actually hit the “bottom” on prices.
But, as stated, when you factor into mortgage rates, which were around 4.25% on a 30-year fixed rate loan in October 2010, I think that we may have hit a low in housing payment affordability for desirable areas. Of course, we bounced off those historic lows in mortgage rates are back near 5%, more than 15% higher than where they were half a year ago. At current rates, prices would need to be 8% lower to get us to same level of affordability that we saw in October 2010. An 8% or greater drop could happen, but who knows where rates will be at that time…I believe they will be higher than they are now if and when that occurs.
Hey G – analyze this:
http://finance.yahoo.com/news/Newhome-construction-rises-to-apf-1475755996.html;_ylt=Arcf_L_WlpgMiG0BjxCjT3K7YWsA;_ylu=X3oDMTE1Y3M3aHJiBHBvcwM5BHNlYwN0b3BTdG9yaWVzBHNsawNuZXctaG9tZWNvbnM-?x=0&sec=topStories&pos=6&asset=&ccode=
see, 2 can play at that game.
“At current rates, prices would need to be 8% lower to get us to same level of affordability that we saw in October 2010. An 8% or greater drop could happen, but who knows where rates will be at that time”
Uhhh – Chris, sorry to burst your bubble – but that is NOT how pricing in real estate (or anything) works…..seriously – is anyone out there in the real estate market or now anything about what happens in reality? or is this site just for wannabes who are too scared to get into the game and sit and falsely predict things that they nothing about (like at a bar or old folks home just sitting around blabbing nonsense).
I’ll say it’s a bottom but for a different reason. I think the loan market is loosening up faster than people think – it’s becoming much easier to get funded than even 6 months old.
that should say … 6 months AGO.
“Has the Chicago market bottomed?”
With the caveat that I don’t claim to know anything in particular about real estate, no. My prediction is that prices continue to slide the rest of this year until Chicago is around 105 on the CSI near the end of the year. Prices will stabilize around then, but be stagnant (in nominal terms) through the coming economic recovery and next recession, where nominal CSI for Chicago will remain between 100 to 110. So we’re looking at another year of drops followed by no recovery in residential housing price for a decade, and indeed a continued slight slide in real terms.
And as they say, all predictions guaranteed wrong or your money back.
I think looking to the Crib Chatter crew for answers is like asking Ray Charles for directions in a snow storm.
I agree we are bouncing around the bottom right now. But I think that will be the case for the next 1-2 years. We might have another 2-3% dip this coming winter, but overall there’s no boom or sharp increase in sales in the near future. The next major upward cycle will not happen until loans are easier to get and the employment picture is improved. That I don’t see for another 5 years.
I see lots of places in Lakeview with signs about being under cotract or sale pending. I didn’t see these signs last year at this time.
The job market for IT and financial services has bounced back big over the past 6 months. I’ve seen numerous $120-150k positions that have been left vacant because of a lack of candidates. The Big 5 (EY, PwC, Deloitte, etc.) are trying to ramp up their advisory practices, as well as a bunch of local midmarket mom and pop shops. This is starting to trickle down to jobs at the $80-100k level – meaning first time buyers will be in situations where they can consider buying. As interest rates go up, housing prices should decrease, but comparable rents will only increase. Parity will increase – these slightly more affluent buyers have fixed rates for their student loans. So buying will become more attractive still. These buyers will help to facilitate the 1-2 child 30ish two earner familys in 2/2 and 3/2s in GZ and northside to either move to the burbs or a little more space. I see this rolling through the summer and taking full effect by fall of 2012.
1. ” Everyone was guilty. First off, no one saw the bubble popping. ”
seriously? “No one?” Beyond the more-well known guys like Schiller/Shiller (??) just go to the cribchatter archives wayyy back in the beginning when the comment threads for a couple of snippets long. A lot of people (not plugged into the RE marketing machine) saw it coming in early/mid 2008.
2. The big problem with Chicago is jobs, jobs, jobs. NYC’s finance/law/real estate base can drag/has dragged up their entire regional economy. Chicago is/has always been a manufacturing/logistics/industrial town. Chicago’s FIRE base (though top tier) is too small, relative to the entire area, to hold up the entire economy.
Though Daley hypes the hundreds big name corporate of jobs that has moved to Chicago (United, SABMiller, etc). That’s the problem $10,000’s given per job to attract only hundreds of jobs. Chicago doesn’t have enough Fortune 500 companies to employ the middle/junior mangement needed to fill the empty 60654/60605 condos.
If Chicago/Illinois wants to attract more jobs/industry/HQs, it has to stop the back-dealing targeted incentives/subsidies/TIF-finance and do things like cutting use taxes, sales taxes, income taxes. But given the state’s budget, that ain’t happening.
Newsflash: while Chicago is great, it ain’t price inelastic to corporations like NYC or SanFran.
Now given that Rahm and Quinn has CC only his daily to-read list, I’d imagine the problem has been solved.
It’s really odd – when you look at who is making which predictions on CC, I have found the following:
1. older, more experienced people w/ money and jobs in the real estate market typically are saying that the bottom is here (or has passed) and we will start seeing prices rebound (albeit slowly).
2. younger, inexperienced people w/o money in the market (renters) who are not involved in the market typically are saying that we will see prices decline further and further……
I don’t know—- who would you believe?
Clio: You didn’t burst my bubble. I’m not saying prices will decline as interest rates rise. I’m saying that the mortgage payment affordability we saw in late 2010 wont be seen again at current rates unless we see prices drop further. And I acted on this belief by buying an estate sale SFH below market in Oak Park when rates hit bottom late last year.
Here is another house that went under contract in less than 3 days.
http://www.redfin.com/IL/Evanston/2119-Payne-St-60201/home/13630579
I have seen a few others in the North Suburbs go quickly. There is something to this Spring market, either prices ate good or those mid-30 couples with kids are finally moving to the burbs. Something is going on.
“My prediction is that prices continue to slide the rest of this year until Chicago is around 105 on the CSI near the end of the year. Prices will stabilize around then, but be stagnant (in nominal terms) through the coming economic recovery and next recession, where nominal CSI for Chicago will remain between 100 to 110.”
Interestingly, only one person put a number on it. How bad do people really think it’s going to get and what are the odds that they are going to get the exact timing of the bottom right and what are the odds that rates will go up enough to wipe out the benefit of lower prices?
My own opinion if anyone cares? Maybe the bottom is around 110 on the CSI – to be reached in the next few releases for months already behind us.
“First of all – March sales data reflects things that went under contract in Jan/Dec and short sales that went under contract in the fall of 2010. You have to look at July data – and even then you have to consider VOLUME and types of sales.”
As did last March’s sales data (which was influenced by the tax credit as well.) So what’s your point? It’s all data to be analyzed.
I don’t have to consider “type of sales.” We already know what is over 50% of all sales- which are the distressed sales. Until that gets back to a historic norm- which is well under that rate- then I don’t believe we’re anywhere close to a “bottom.”
The regular sellers still can’t sell without massively reducing their prices- to around the 2000-2001 sales price. How many of them can reduce that much? Not many.
For every house that goes under contract within a week- I can give you dozens of examples of houses that are sitting and sitting. Sure, some homes in the “right” location (i.e. school district with a completely gutted kitchen and at an affordable price) go under contract quickly. They ALWAYS have. Yes- even last year.
But with sales still way below what we’ve seen in the last few years- I don’t see how you sell without reducing your price. It’s still a buyers market in all except the cheapest of the foreclosures where there are swarms of people buying.
When interest rates rise in the coming months, homebuyers who determine what they buy simply by the monthly payment amount, will have to trade down. They will no longer be able to afford the $450,000 Lakeview townhouse. So they will look for the $350,000 Lakeview townhouse (which doesn’t really exist.) So either they won’t buy- or they will change neighborhoods/locations in order to buy something they can afford.
But that leaves all the $450,000 townhouses with fewer available buyers.
What will they then do? Sit and wait? Or lower their price in order to get a buyer?
We will have to see.
Gary: I’ve been saying for years that we’re going into the high 80’s or low 90’s. We’re still not there yet but we’re getting closer every day.
2119 N. Payne: Duh it went under K in a few days. $75,000 in improvement and still listed below the 2006 price. A SFH in a nice town in the $300,000. That’s a great price point to try and sell. I doubt there are others like it on the market.
Clio… that article read positively to you??? Horrendous from what I read. 40% of what’s considered healthy. Feb lowest number in 5 Decades.
The “glut” of homes that people are expecting to flood the market is never going to happen. Why?
1. Sellers who want to sell (but don’t need to) are NOT going to sell unless they can get what they want/need to get.
2. Sellers who previously HAD to sell (because of the economy) may see the light at the end of the tunnel and may be able to hang on to their houses (increased and better employment).
3. The number of short sales/foreclosures out there is nowhere near the number of potential buyers. In addition, there are many more investors waiting to snap up any bargains out there. For every offer I have put in this spring (about 18 so far) there have been at least 5-6 other offers being considered.
Therefore, if you take the shadow inventory out, factor in the improving economy you will see that prices are NOT going down further (especially in established neighborhoods/towns). They just aren’t…..
PS – “notClio” is sounding more like “clio” every day
“But that leaves all the $450,000 townhouses with fewer available buyers.
What will they then do? Sit and wait? Or lower their price in order to get a buyer?”
Uhhh – by your reasoning, the “550k” buyers will be looking at the 450k townhouses!!! See how ridiculous this type of thinking is?
What is the downside of being listed for a seller that doesn’t need to get out quick? Days on market doesn’t mean much any more. It doesn’t cost anything to be listed, besides the inconvenience of the occasional showing. There is nothing in a listing that distinguishes the seller that must sell from the one that is out there hoping to catch the elusive buyer. Those who need to sell quick lower prices, those who don’t sit it out until those lower prices properties are off the market and the buyers have to climb higher up the value chain to get something comparable. Therefore, I would expect many props to be sitting.
“For every house that goes under contract within a week- I can give you dozsens of examples of houses that are sitting and sitting.”
But for the most part, buyers are NOT climbing up the proverbial value chain to get something comparable. Sure, a few are, and the term for them is ‘knifecatcher’.
“Those who need to sell quick lower prices, those who don’t sit it out until those lower prices properties are off the market and the buyers have to climb higher up the value chain to get something comparable”
for shits and giggles I’ll guess down another 8-12% on index.
A*man – I totally agree. This is why I often put everything I own (that is not rented) on the market. Sure the chances are low that I will get the price I want – but there is a buyer for every property and I have been surprised more than a few times. The reason most people don’t do this is because they don’t have the psychological strength to deal with the unknown (ie, when and if they sell and where will they move).
There is a predictable progression that will occurs as the renter/buyer moves through different phases of life. People typically size up through marriage, kids, etc and downsize as they become empty nesters. This market might mean that their expectations shift in terms of what price or where they buy/sell/rent, but there is always a balance. The balance shifted very far to one direction during the bubble, and opposite over the past couple of years, but i seems in the next two it will start to be restored.
But for the most part, buyers are NOT climbing up the proverbial value chain to get something comparable. Sure, a few are, and the term for them is ‘knifecatcher’.
“Gary: I’ve been saying for years that we’re going into the high 80’s or low 90’s. We’re still not there yet but we’re getting closer every day. ”
“for shits and giggles I’ll guess down another 8-12% on index.”
Then you guys need to enter my forecasting contest (I’m giving away $500): http://CSForecast.com Right now the consensus is just under 112 for the June numbers.
That balance consists of grandma and grandpa trying to sell their north or northwest suburban home for a hundred thousand dollars above what interested buyers are willing to pay. A handful of younger couples bite the bullet and overpay, but most are still stuck in their 2/2’s in the city toughing it out.
“This market might mean that their expectations shift in terms of what price or where they buy/sell/rent, but there is always a balance.”
Gary, what is your game, here? You are obviously a smart guy and involved in the real estate business. You KNOW that the CSI means NOTHING to the individual buyer. NOTHING at all – to properly assess property, etc. – you have to look at the specific neighborhood, type of housing, and price range. If you don’t understand, let me explain in real terms: A 1/1 foreclosure in Englewood shouldn’t be used as a comp for a 3 million dollar house in the gold coast.
“That balance consists of grandma and grandpa trying to sell their north or northwest suburban home for a hundred thousand dollars above what interested buyers are willing to pay”
HD – I didn’t realize that people stopped having children and the population was drastically decreasing…. come on – don’t be stupid. Gen X, Gen Y and the millenials will all be looking for these suburban houses in the next 10-15 years. As a collective group, they far outnumber Boomers. Again, don’t be so myopic and idiotic.
I agree that there are many unrealistic sellers out there. Luckily, as more properties go under contract, a more reliable set of comparables are available for the savvy buyer/seller/realtor to set a reasonable expectation of what they should ask or bid. As we’ve seen, things are still slowly ticking down, but at a slower pace. I’m not in the camp that all things are rosy nor that it’s all doom or gloom. However, I do believe we are stabilizing and more sellers and buyers understand what is reasonable for different types of properties in todays market, be it foreclosure, short sale or desirable property.
“That balance consists of grandma and grandpa trying to sell their north or northwest suburban home for a hundred thousand dollars above what interested buyers are willing to pay.”
“It’s really odd – when you look at who is making which predictions on CC, I have found the following:
1. older, more experienced people w/ money and jobs in the real estate market typically are saying that the bottom is here (or has passed) and we will start seeing prices rebound (albeit slowly).
2. younger, inexperienced people w/o money in the market (renters) who are not involved in the market typically are saying that we will see prices decline further and further……
I don’t know—- who would you believe?”
I would put that another way.
You have the ‘sellers’ saying now is the time to buy (big suprise), and you have the potential buyers (first-time home buyers) saying there’re not going to buy yet.
What is the down side of waiting? Taxes and maintanance fees that still need to be paid. Also as Clio has said it, it means you are putting your life on hold. There is a reason people list a property for sale.
“Therefore, if you take the shadow inventory out, factor in the improving economy you will see that prices are NOT going down further (especially in established neighborhoods/towns). They just aren’t….. ”
Yes, and if my aunt had balls, she’d be my uncle.
“1. older, more experienced people w/ money and jobs in the real estate market typically are saying that the bottom is here (or has passed) and we will start seeing prices rebound (albeit slowly). ”
Is it really a surprise that those with a financial stake are talking their book? Besides, no mention of me as an exception? I am older than clio, more experienced in real estate, have made money and worked in real estate for 25+ years, and have a proven track record of calling this correction right here on CC. Nope, better go with the shills since their track records are stellar.
Wow, she has some nerve claiming “Nobody saw this coming”. I wonder if it gets easier to tell a bold-faced lie with practice.
Owner too.
If we’re talking primary residence, I imagine taxes and maintenance fees need to be paid regardless if you own, or priced in if you rent. Each seller weighs the trade-off between putting their life on hold and losing an additional % of $$ by lowering their price to sell more quickly. There becomes a fine line between the knife catcher and the lucky seller depending on the situation, but it is completely in their power to decide based on their preference.
“Taxes and maintanance fees that still need to be paid. Also as Clio has said it, it means you are putting your life on hold.”
“Yes, and if my aunt had balls, she’d be my uncle.”
OK – G – if this is your counterpoint to my statement, it is quite obvious you have nothing pertinent to say about the subject.
What more comment is necessary about the made up nonsense that you would be better off sharing with your shrink?
Since there’s no 100% foolproof way of timing the bottom in the stock market or the housing market, what’s the difference whether you pay 200K or 225K for a house today? Amortized over 30 years, 25K is peanuts, and values will rise in the meantime.
The bottom line is, you’re seeing a large discount buying today versus buying in 2006. Especially if you’re at buy/rent parity for a primary residence which you intend to hold a long time, or if it’s an investment property where you are cash flow positive. If you find a house you love, you’re getting a significant discount, you can afford the monthly payments, and it works for you, why not just buy it?
I bought in Brooklyn back in January 1997 when no one wanted to buy. I kept trying to convince my friends in NY and DC to buy and no one wanted to. Eventually some did, but paid huge premiums by buying after the market took off and it was a sellers market. Others kept renting but by now their rent has doubled. My monthly assessments, property taxes and utilities have gone up too, but nowhere near as much as if I was paying rent.
Milkster is absolutely right – and most buyers think the same way she does. This is why all of the doomsday predictors are absolutely wrong – the vast majority of buyers out there are not analyzing exactly when is the best time to buy from a financial standpoint – most are looking at it from a social/personal standpoint/timeline (ie children, marriage, schooling, weather, etc.). It really isn’t that hard to understand..
“You KNOW that the CSI means NOTHING to the individual buyer. NOTHING at all”
It’s a good indication of the overall market conditions. I have no doubt that a substantially lower index indicates downward pressure in all areas. Some more than others.
“to properly assess property, etc. – you have to look at the specific neighborhood, type of housing, and price range. If you don’t understand, let me explain in real terms: A 1/1 foreclosure in Englewood shouldn’t be used as a comp for a 3 million dollar house in the gold coast.”
No one would disagree with you here and I discuss this with buyers all the time. However, this is a separate issue from the one above. Lincoln Park is softer than it was in 2006.
“and most buyers think the same way she does”
If so, where are they?
BTW, here’s a crude sales forecast for the rest of the year: http://www.chicagonow.com/blogs/chicago-real-estate-getting-real/2011/04/chicago-home-sales-forecast-2011.html
“Milkster is absolutely right – and most buyers think the same way she does. ”
I just wanted to make a small clarification. I’m looking for a place I love, but I’m also crunching the numbers and seeking out a deal. I’m not working purely on emotional appeal. In this market I think the whole point of buying is to score a deal. I am somewhat flexible on my unicorn criteria, but I’m not buying in a dangerous nabe, and I’m only looking at condos with active HOAs and money in reserves.
Wow, Gary – you have access to a computer and can make a graph. Anyone who would actually try to sell their predictions as “real data” (perceived) is unethical – period.
” Anyone who would actually try to sell their predictions as “real data” (perceived) is unethical – period.”
You mean exactly like NAR?
“Amortized over 30 years, 25K is peanuts, and values will rise in the meantime.”
I agree, if the $200k buyer has no problem eating an additional $47k over 30 years (@ 4.75%) then they should just buy at $225k. Or, they can wait and buy it for less. No problem with me how people choose to spend (or “invest” lol) their money.
But G –
We’ve already established that good properties in good repair in good locations are not that easy to find, even in this market. Even bears like HD will agree on this. So if you found something which fit your needs below your price ceiling, why wouldn’t you buy it? It’s not like there are 10 houses out there at 225K to choose from.
Milkster,
Right here, in what I believe is your position, I wouldn’t criticize you for buying instead of renting.
Clio — can you possibly disagree with other posts WITHOUT personally attacking the commenters? You sound like a petulant little child and it’s getting tiresome.
“or is this site just for wannabes who are too scared to get into the game and sit and falsely predict things that they nothing about”
“Anyone who disagrees is NOT in the market, has no skin in the game, and is not familiar with what is going on in real estate right now – period. ”
“Anyone who would actually try to sell their predictions as “real data” (perceived) is unethical – period.”
If I wanted to buy a condo for 50K but I found one which satisfied my unicorn criteria at 60K, I would buy it today.
“So if you found something which fit your needs below your price ceiling, why wouldn’t you buy it?”
Because the lack of volume and shadow inventory are sure signs that prices will be falling further. Besides, isn’t your argument simply “it’s always a good time to buy as long as you can afford it”?
The problem is that few can or are willing to sell at today’s prices; and that is met with equal resistance from buyers who are also unable or unwilling to buy at today’s prices. Investors have basically replaced first time home buyers in today’s market – and the stats (Which I don’t have available at the moment) bear this out. Grandma and Grandpa need to sell before they die but in their obstinance they refuse to sell for less than $200 psf; “but we don’t have to sell they say” – to which I retort “then why bother listing it on the market?”
“If I wanted to buy a condo for 50K but I found one which satisfied my unicorn criteria at 60K, I would buy it today.”
Unless you are a typical howmuchamonth buyer, then the $60k would be impossible.
I’ve said this for years here: I don’t care what anyone pays for real estate, but if it is a better deal you seek then be patient.
I will throw my hat into the ring and say that as long as interest rates stay low or slowly increase (which they might as QE2 is finally ending so there won’t be as much artificial distortion of the market) The housing market will remain relatively stable with at most another 10% drop in the chicagoland Case shiller over the next 2-3 years
Besides, isn’t your argument simply “it’s always a good time to buy as long as you can afford it”?
No. As a matter of fact, I think everyone should be conservative and live below their means and actively save and invest. And I hate debt.
I’ve been interested in buying an in-town in Chicago since 2000, but prices rose sharply and I didn’t think it made sense. I monitored the market casually until 2009 when I actively started looking to buy again.
As far as my primary residence, I’m 38 years old and I’ve always owned and I fully embrace the benefits of owning. I’ve only rented for one year, 1996, the year I moved to NYC when I had a series of crappy shares and sublets.
“If I wanted to buy a condo for 50K but I found one which satisfied my unicorn criteria at 60K, I would buy it today”
Milkster,
Just curious, what area are you looking for a 50K condo. Are any decent ones out there. (I am curious, not condescending).
Hi G –
Can you please clarify this:
“Unless you are a typical howmuchamonth buyer, then the $60k would be impossible.”
Are you saying it’s impossible to buy a condo for 60K in Chicago?
“Are you saying it’s impossible to buy a condo for 60K in Chicago?”
Sheesh, yeah that’s what I’m saying since I know nothing about the local market. Try reading it again.
“Just curious, what area are you looking for a 50K condo. Are any decent ones out there. (I am curious, not condescending).”
I’m looking all over the North and West Sides and I’m aggressively lowballing condos in the 75K and below range and houses in the 200K and below range. I’m seeing the largest volume in cheap condos in Rogers Park which is not my favorite area. I’m seeing the largest volume in cheap houses in western Logan Square and western Humboldt Park. I’m seeing some really well-priced stuff in general in Edgewater, and Albany Park. Despite everyone’s low opinion of Uptown, there aren’t many deals popping up there.
My situation is probably more flexible than most of the buyers on CC. It doesn’t matter to me whether it’s a studio or a 2/2. I say if you like something, aggressively lowball.
“Sheesh, yeah that’s what I’m saying since I know nothing about the local market.”
Thanks G for being a man and admitting that you really know nothing about the local market. This clarifies things for others reading these posts.
http://www.bloomberg.com/news/2011-04-19/americans-shun-most-affordable-homes-in-generation-as-owning-loses-appeal.html
I cannot help but think the same herd mentality that drove the bubble is now flocking to renting in an overweighted way. Call it a negative bubble, but it’s overdone. And rents seem to show it, at least anecdotally. How can it not? Unless each landlord is prepared to lose money to subsidize their renters, rents be below cost for an appreciable length of time, particularly when the economics are all about cash flow with little or no appreciation at this point.
The funny thing is that this article discusses “owned occupied” ownership. Obviously, someone always owns the property at the end of the day (and banks are not long term owners so they do not count). If someone prefers to rent from an owner who extracts profits in the form of rent, that is a model that is well understood and well accepted particularly in Europe. Frankly, people are more transient.
But to suggest that owner occupancy rates are some how condemning housing is incorrect. To the conrary, our rental portfolio is benefiting. And, take a look at what 2/3 flats are selling for in Lakeview if you want any indication of where housing is doing reasonably well.
60k condo.
http://www.redfin.com/IL/Chicago/2315-W-Waveland-Ave-60618/unit-B/home/18925833
“Thanks G for being a man and admitting that you really know nothing about the local market. This clarifies things for others reading these posts.”
You should realize more than anyone, clio, that people will make their own determination as to the validity of any comments here regardless of what the commenter personally claims.
By the way, here is a huge lot value price for North Center. Holding up very nicely.
http://www.redfin.com/IL/Chicago/3846-N-Oakley-Ave-60618/home/13389596/mred-07706963
Total builder ask at $225 / sq ft implied by pricing. Cost most likely 175-200.
Put that in your pipe and smoke it.
JMM – you are absolutely right – this why smart people who do not embrace the “herd mentality” are those who come out ahead. Believe me, in 10 years, buying will be the “in” think again and all of the buyers today will realize significant gains.
Oh yeah, clio, thanks for being a man and admitting your ongoing need for mental health assistance yesterday. This clarifies things for others reading these posts.
JMM landlording is not always a passive activity, and the rent extracted is often earned the hard way. And yes 2 and 3 flats are selling briskly all over the city: in the $100’s and $200’s, which at the end of the day, after taxes, insurance and years of maintenance, it may or may not have been a sound investment.
“. And, take a look at what 2/3 flats are selling for in Lakeview if you want any indication of where housing is doing reasonably well.”
Builders build. That’s what they do. They buy lots with the hope of building and reselling at a profit. As of right now it’s still infill spec housing that remains unsold.
“As of right now it’s still infill spec housing that remains unsold.”
Uhhhh- try driving around the suburbs (Oak Brook, Hinsdale, Elmhurst) – they are tearing down and building like crazy!!! Do you know something that these seasoned builders don’t?
“like crazy”
Exactly.
good one, G.
Builders build. That’s what they do. They build until they can’t build any more. Hasn’t the last few years of homebuilder wreckage been proof enough of their insanity?
http://articles.chicagobreakingnews.com/2011-04-08/news/29398773_1_bankruptcy-action-lists-assets-kirk-homes
“Do you know something that these seasoned builders don’t?”
Homebuilder Pasquinelli files for bankruptcy
By Mary Ellen Podmolik | Tribune reporter
April 08, 2011
Pasquinelli Homebuilding LLC, the Burr Ridge-based homebuilder whose business started in Chicago’s south suburbs but expanded to seven other states, has filed documents with U.S. Bankruptcy Court to liquidate the company.
The Chapter 7 filing, made late Thursday by the company headed by Bruno Pasquinelli, lists assets of between $500,001 and $1 million and liabilities of between $10 million and $50 million. It also said the company has between 10,001 and 25,000 creditors.
However, an attorney for the company said late Friday that despite the disparity between assets and liabilities, there likely would be some funds for even unsecured creditors.
“JPS on April 19th, 2011 at 9:25 am
Clio — can you possibly disagree with other posts WITHOUT personally attacking the commenters? You sound like a petulant little child and it’s getting tiresome.”
Of all of the posters on this site, Clio has made the game the most personal, has hurled the most insults and has generally acted the most pompous, egotistical and condescending. That is why he/she is so easily singled out and ridiculed.
Remember, folks: you aren’t just wrong. You’d have to be a complete and utter IDIOT to believe what you do.
Clio: the fact that you’d reference “seasoned” builders as an indicator of improving health of the market shows that you learned nothing from the downturn. How many builders went bankrupt in the downturn? How many HOAs were left high and dry went shoddy development work turned up and the builders didn’t exist anymore?
As HD said: builders build. If someone will give them money and a contract, they’ll build something. Whether it is a good idea to build is irrelevant to them. They get paid for their work regardless.
Your behavior on this thread cements you as a cartoonish (and amazingly childish) cheerleader for RE. Get a grip and start acting your supposed age. You come off as a complete d**k.
“You’d have to be a complete and utter IDIOT to believe what you do.”
Not true – there are some people on this site who are very smart and know exactly what is going on. They are geniuses!!! It would be nice to come back in 10 years and see how many people who listened to G and HD are ready to bash THEM because they listened to them and lost out……
Clio – what if I’m right?
There is no way of accurately forecasting the bottom of the market so as long as one is being rational about the decision to buy and specially considers contingency plans (assuming one can lose his/her job, health issues can arise, and so on) and then finds something they like at a decent market price, I cannot see why they must wait indefinitely as it is suggested by some. We bought a 1BR in 2009 and have been enjoying it as an in town ever since. Sure the prices have gone down, but it I enjoyed having a place in Chicago for the last two years and losing 30K is not a big deal to me. There is not way if we have not bought this place, we would have come as often to Chicago. If I die tomorrow, I will be happy about my decision. It is not all about investment.
That being said if 30K matters so much to someone they should absolutely be careful and might want to think twice before buying. At the end of the day it is all about utility and risk tolerance of the people who buy.
Clio: that was a parody of you. It was a characterization of your comments towards posters with whom you disagree. Though the word characterization isn’t quite right: I’m pretty damn sure you’ve used those exact words in the past.
Keep it classy!
“Keep it classy!”
I look to you as a role model….
Wow, assuming the numbers and listing comments are accurate, that Payne house was a bloodbath for the owners. Bought for $531, poured in $75k worth of updates, and now selling @ $379? So many sales over the last few years are a red flag to me (and it’s a short lot), but from the visuals seems like a good price.
Now, a house selling at that big a loss (and below its ’01 price, assuming it doesn’t go for over list) is hardly a sign that prices or activity are on the rebound. Looks more like a seller very interested in getting a deal done–if they had to lower it to that price to do so (again, I don’t know what the contract price is), that is not a good sign for that area. For example, what does it mean for 2212 Payne, the short sale across the street (much bigger lot, tho)?
#
notClio on April 19th, 2011 at 7:43 am
Here is another house that went under contract in less than 3 days.
http://www.redfin.com/IL/Evanston/2119-Payne-St-60201/home/13630579
I have seen a few others in the North Suburbs go quickly. There is something to this Spring market, either prices ate good or those mid-30 couples with kids are finally moving to the burbs. Something is going on.
“And yes 2 and 3 flats are selling briskly all over the city: in the $100’s and $200’s, which at the end of the day, after taxes, insurance and years of maintenance, it may or may not have been a sound investment.”
Try more than the price of a SFH home…
http://www.redfin.com/IL/Chicago/1418-W-George-St-60657/home/13363854
Fairly reasonable on a cap rate basis it is just that the rents are frothy ($63,600 in gross receipts!)
I guess we’re still at 02/03 pricing for three flats? No return to 1999?
“Uhhh – by your reasoning, the “550k” buyers will be looking at the 450k townhouses!!! See how ridiculous this type of thinking is?”
How is that ridiculous? Clio, your comments that most buyers are not price sensitive seems to be based on your dealing primarily with the high end market. A $5 million buyer isn’t necessarily going to become a $4 million buyer — for the high-end, a home and a mortgage are not the biggest items on their balance sheet. But for the $450K, $550K, and even the $850K buyer, the home is generally their biggest asset, and the mortgage their biggest liability. Of course they’re price sensitive — especially when there’s no confidence that values are going to increase in the next few years, and a good chance they’ll continue to fall.
Personally, the example given fits me. I could afford to spend $550K, but I’m looking at $450k places. I would stretch on price if I thought there was a good chance of 2-3% appreciation per year, but I don’t. And if I don’t find anything I like at $450K I’ll continue to rent and wait it out.
Ahh it’s the yearly spring bounce when the shills come out of the woodwork to call a bottom: not a yearly localized bottom, but an overall bottom of this real estate depression. Hope springs eternal to those whose paychecks depend on it. Nothing to see here folks…move along.
“Personally, the example given fits me. I could afford to spend $550K, but I’m looking at $450k places.”
First time homebuyers who say they can afford x but are looking at y basically can only afford y (in reality, perception notwithstanding). The costs of home ownership are *always* more than a non-homeowner understands when first getting into a home.
When interest rates rise in the coming months, homebuyers who determine what they buy simply by the monthly payment amount, will have to trade down. They will no longer be able to afford the $450,000 Lakeview townhouse. So they will look for the $350,000 Lakeview townhouse (which doesn’t really exist.) So either they won’t buy- or they will change neighborhoods/locations in order to buy something they can afford.
But that leaves all the $450,000 townhouses with fewer available buyers.
followed by:
“Uhhh – by your reasoning, the “550k” buyers will be looking at the 450k townhouses!!! See how ridiculous this type of thinking is?”
Actually, this is an incredibly important analysis and I’m still trying to wrap my head around it…. What clio says makes total sense, but if it were true then housing prices would never have fallen. The guy selling a $1.4 million SFH would never have had to drop his price, because the person who had wanted the $2.0 million house would come along problem solved….but we all know that prices have fallen.
“First time homebuyers who say they can afford x but are looking at y basically can only afford y (in reality, perception notwithstanding). The costs of home ownership are *always* more than a non-homeowner understands when first getting into a home.”
I haven’t focused on this a lot, but fear that the big surprise for me will be new furniture. But, serious question, how much should you budget for say a $1MM house? I know it’ll vary by the particular house and person and all kinds of stuff, but what’s the ballpark range?
Hi Dan –
Prices have fallen across the board in all price ranges. There are less buyers across the board in all price ranges. I don’t follow high-end real estate, so can’t guess at what will happen there, but at the low end lately based on personal experience there is a ton of activity and competition all of a sudden.
JMM: come on, that’s not a fair example. That’s a nice building, well kept, in a very nice area, with high rents. That three bed allegedly rents for $2,550 probably split between three college grads. For every $700k+ three flat I can show you one just a few miles north or west, that sell in the 200’s or a little more a little less. Of course some place like this will sell for more.
I think we are near or at the bottom.
First, when the herd starts yelling about there is more pain to come, it probably means it has already passed. We saw this with the bubble run up and will see it with its deflation. Just as everyone became a “real estate investor” at the height of the market, everyone is now a permabear and throwing out all kinds of analysis about how the market is going to keep going down further.
Second, I am seeing some loosening with lending. Not the crazy lending we saw before, but I am seeing some evidence of guidelines loosening which will help credit. Banks actively touting construction lending, second mortgages, etc. Mortgage lending over corrected big time and now they are trying to find a reasonable middle ground.
Third, I am seeing some pretty hefty job offers for young professionals out of top tier schools. Not too mention, just talking with friends/family who don’t seem to having any problems getting very well paying jobs.
There is pent up demand to buy. I just think people are being more discerning about their purchase and there is still a general lack of confidence. I don’t expect that we are going to see huge appreciation gains any time soon, but I also don’t think we will see a massive second dip.
I just did an MLS search of all 3-unit properties in the GZ that sold within the last 12 months. For GZ I used the following coordinates: 1600N to 4000N; 0W to 2400W.
There were 61 3-unit sales, of which 3 were priced below $300k: 2237 W Fullerton Ave ($194,000), 2325 W Fullerton Ave ($206,400), and 2308 N Hoyne Ave ($275,000). 19 sold above $700k. The average sale price was $612,654. The median sale price was $545,000.
G –
You’ve said a few times you look forward to the day when homeownership is more affordable for more people. If we’re not there now, then when? How much further will the market fall? If I’m wrong in what I posit that we’re at the bottom now, convince me otherwise with some facts.
Since you have access to the numbers, do you have time to list sales data for Q1 2011 for the following:
Average sales price for studios, 1BRs, 2BRs, SFHs and Multifamilies in:
Lincoln Park
Uptown
Edgewater
North Center
Logan Square
Humboldt Park
Albany Park
Then, can you also provide us with your estimates of how much further everything has yet to crash? And when that will happen?
Interestingly, the 3 properties that sold below $300k are all within a stone’s throw of the Kennedy.
Here are the 19 3-unit properties in the GZ that sold above $700k in the last 12 months:
07700312 CLSD 2124 W CONCORD PL 8024 712000
07390482 CLSD 634 W BARRY 8006 727135
07620924 CLSD 2121 N MAGNOLIA ST 8007 735000
07656636 CLSD 2737 N Kenmore AVE 8007 750000
07650212 CLSD 1418 W GEORGE ST 8006 752500
07667832 CLSD 639 W Wrightwood AVE 8007 755000
07408477 CLSD 2660 N ORCHARD ST 8007 800000
07483870 CLSD 841 W George ST 8006 805000
07325821 CLSD 3706 N Magnolia ST 8006 853400
07664597 CLSD 1752 N MOHAWK 8007 860000
07550844 CLSD 3221 N RACINE 8006 874900
07476913 CLSD 2617 N MILDRED AVE 8007 890000
07595500 CLSD 1620 N HONORE ST 8024 925000
07482255 CLSD 913 W WEBSTER AVE 8007 952000
07522775 CLSD 2643 N Mildred 8007 985000
07448890 CLSD 927 W ALTGELD ST 8007 1025000
07617333 CLSD 2058 N Dayton ST 8007 1250000
07487003 CLSD 1948 N BURLING ST 8007 1350000
07472703 CLSD 1017 W Altgeld ST 8007 1425000
“You’ve said a few times you look forward to the day when homeownership is more affordable for more people. If we’re not there now, then when?”
Tomorrow it will be more affordable for more people. Chicago real estate SFHs are down 7.6% year/year in January. Condos are down an astounding 13.8%.
What catalyst do _YOU_ honestly think will turn around this freefall? A new Disney movie?
Chris M
Sold on 03/16/2011
$181,000
(last list price) 3910 N Mozart St
CHICAGO, IL 60618
Sold on 03/22/2011
$190,100
(last list price) 3805 N Sacramento Ave
CHICAGO, IL 60618
Sold on 01/20/2011
$190,000
(last list price) 3624 N Albany Ave Unit 2ND
Chicago, IL 60618
Sold on 03/31/2011
$336,525
(last list price) 3435 N CLAREMONT Ave
CHICAGO, IL 60618
Sold on 02/18/2011
$180,000
(last list price) 4327 N Sawyer Ave
CHICAGO, IL 60618
Sold on 03/30/2011
$225,000
(last list price) 4207 N KEELER Ave
CHICAGO, IL 60641
Sold on 04/08/2011
$70,000
(last list price) 3315 N kostner St
Chicago, IL 60651
Sold on 04/06/2011
$125,126
(last list price) 4119 N KEDZIE Ave
CHICAGO, IL 60618
Sold on 04/15/2011
$145,000
(last list price) 3020 N SAWYER Ave
CHICAGO, IL 60618
I can’t confirm whether these are two or three units (no direct access to MLS) but you can see that if you step outside the green zone the price drops off quite dramatically.
Anecdotally, I’ve seen prices rising over the last year due to insatiable demand for multi unit properties from investors.
“Look at San Francisco, where prices have been going up for about nine months. My stepdaughter wanted to buy a house. She’s smart and rational, she’s traded real estate all her life, and she’s having a baby and needs to buy a bigger house.”
BZZZZZT! Incorrect–that’s a lie. Barbara Corcoran you should stop lying. SFHs in San Fran are down for the past six months, and down 1.7% year over year. Condo values are down for the past six months in a row, and down 6.5% year over year.
It’s ALWAYS imperative to fact check propaganda articles like this as they like to slip in non-truths to make a case for a bull or stable market. Those wanting to believe in the bull or stable market clinch to these non-factual statements to construct their false reality and take the plunge.
I looked up several of those on the MLS…most of those are 2-flats. But, yes, I agree that generally speaking prices on these properties outside of the GZ or other popular neighborhoods are much lower.
HD –
Out of that list you just sent, would you consider living in any of those with your family? I looked up the 70K place on Kostner because it was so cheap. It’s a great price, but FAR from the el and a crappy frame which needs a lot of work, so who knows how much you’d have to put in to make it liveable?
http://www.redfin.com/IL/Chicago/3315-N-Kostner-Ave-60641/home/13457081
Bob: You’re correct. SF has dropped since July 2010, though the numbers are currently 13% higher than the March 2009 low.
Barbara Corcoran gave an interview in March 2005 headlined “Of Course, There’s No Bubble”.
http://www.businessweek.com/bwdaily/dnflash/mar2005/nf20050315_6227_db093.htm
BC backed her thesis (“There’s no bubble”) with anecdotal evidence & opinion that should have been taken as evidence of the very bubble she claimed was nonexistent, to wit:
“Bidding and overbidding are the norm of the day.”
“People are buying their second or third homes, retirement homes, very early. … In the last nine months or a year, I’ve seen a big uptick in that.”
“One of [the next ‘it’ locations] is downtown Detroit.”
I don’t criticize Barbara Corcoran for being an idiot. But I think the Tribune & Mary Umberger deserve reproach for publicizing the irrational, dead-wrong, fear-mongering views of such persons.
Milkster: No I would not consider living any of those places for my family. However, like the old saying goes, the dealer is not suppose to use his own product….
Why doesn’t the average home sell for $10,000,000? Or $5,000? Seems pretty obvious, but I have to write it: INCOMES. Most people don’t make enough to afford (with or without financing) 10mm. Almost everyone could afford a 5k home. Incomes drive home prices. The qualitative features of a home (location, size, finishes, etc) and non-standard costs (taxes, assessments) determine tiering amongst homes, but home prices don’t just ‘exist’. Even for the most desirable properties, this relationship still exists, sorry Clio. If the nicest 10% of properties for sale are priced such that only the wealthiest 0.5% of buyers can afford them, then most of those properties will not sell. Unless
a) they lower their prices
b) everyone’s incomes go up faster than home prices, for a while
c) (as happened in 05/06/07) buyers will commit 60%, 70% or even 200% of their incomes to housing and then use hope-and-pray financing tools (such as pay-option-arm, interest only or even 5/25s) to rearrange their payments so they can “afford” their first few years. if they can’t subsequently sell or refinance the home at an even more nonsensical valuation- they can either default or just keep making massive payments which hurt their lifestyle, savings rate and future.
Why do people seem to think the natural rate of home price appreciation is 5%? 10%? 15%? What’s the right natural rate of wage growth? Does anyone think its 5%? 10%? 15%? Why do we think that they should be different? I trade mortgage back securities for a wall street bank. Mortgages aren’t black magic that make homes go up faster than your ability to pay for them.
Clio – you have this ridiculous point you always make that the higher dollar price homes won’t go down because those owners don’t ‘need’ to sell. Let me just give you some numbers. For non-conforming (>417k loan size) prime (fico > 720) fixed rate loans originated in the second half of 2005, 10.4% haven’t made a payment in at least 2 months. Of all the categories, prime fixed is the BEST performing. These homes take 21 months, on average, to go from 60 days late to sold by bank. So pick your favorite street in Wilmette or Glenview and put a for-sale sign in front of 1 out of every 10 houses. That’s what’s coming… Who cares about the guy who doesn’t ‘need’ to sell.
HD –
Why don’t you just bid what you want to pay on a house you like? Just because they are asking 500K for a house, it doesn’t necessarily mean they will get it. If you think it’s worth 250K, bid 250K. What have you got to lose? Just don’t go above what you want to pay. Take advantage of the seller’s market.
Sorry – meant buyer’s market.
coogan… Clio is a creation of NAR. Read corcorans first 2 sentances of the second response and Clio makes complete sense. U work with smart guys, strong opinions, ever see such intellectual dishonesty amongst any of them? Can’t come on here and say broker without being called a shill, so create someone of a respectable profession, with experience in RE, and some wealth, to give advice and to try and undo what corcoran herself called the biggest problem, people listening to negative comments.
4100 unique hits per month on this site… People are lurking. If i were NAR i’d create Clio.
“Milkster: No I would not consider living any of those places for my family. However, like the old saying goes, the dealer is not suppose to use his own product….”
Are you the dealer?
Also, why wouldn’t you live in the Claremont one? I’m sure there must be some issues with the house but that’s a decent location.
Milkster: Quite frankly there’s nothing I like at the current listing prices. I don’t want to waste anybody’s time low balling.
Cmon now HD, that’s not what you’ve said before. In fact you’ve posted some OIP houses that seemed quite reasonable, and said you didn’t put in offers because you’d have to do so within a day or two of listing and didn’t like that situation. There was one small, cute house in particular that seemed like a great deal to me (maybe I’ll try to dig it out, I’d be interested to see what it sold for).
“coogan… Clio is a creation of NAR. Read corcorans first 2 sentances of the second response and Clio makes complete sense. U work with smart guys, strong opinions, ever see such intellectual dishonesty amongst any of them? Can’t come on here and say broker without being called a shill, so create someone of a respectable profession, with experience in RE, and some wealth, to give advice and to try and undo what corcoran herself called the biggest problem, people listening to negative comments.”
I actually agree here. I’ve always suspected clio is a larger than life apparition. The more “facts” that seem to come to light about him the less believable that there is a real person under there is.
A surgeon driving a Lambo? Possible but not likely: most surgeons aren’t nearly as flamboyant and would likely buy a high end Jag or Aston Martin if they had self-esteem issues.
A surgeon who supposedly had the free time and made a ton of money flipping properties in Boston in the 1990s? Yeeeahhhh….riiiiight.
Nice try Ms. Corcoran and the NAR.
Clio is probably some lowly intern or a relative of one of the execs in the industry earning $8/hour. They probably have a bunch of such people and send one out to each major RE blog is my suspicion.
Clio drives a lambo, don’t you want to drive a lambo? Clio also LOVES real estate.
Clio went to Harvard, Stanford, and UC, so he must be smart. Do you want to be making the same decisions as smart people? Oh and Clio LOVES real estate.
Clio has made enormous amounts of wealth off of real estate. Don’t you want to make huge amounts of wealth in real estate?
Clio is the walking, talking infomercial here on cribchatter. Those who claim to have “verified” his identity likely “verified” someone who doesn’t even post on here and doesn’t even know someone online here is purporting to be him.
Some bungalow just sold for $255,000, there’s only like one or two of those a year that pop up and they go under k instantly for more than list.
and to clarify, I’m not interested in bidding wars either.
and the other reason is that due to ‘life events’ my purchase timeline changed until I have to figure out elementary school), is it going to be private? neighborhood? Will my verifiable but limited clout in the CPS get me into Disney II (probably not anymore!) now given a regime change!) So now that things have changed, I’m just waiting for teh right opportunity.
Don’t forget I was actively looking last summer, ready to sign on the dotted line, but I became discouraged for various reasons I’ve laid out before.
Remember Steve Heitman? Clio is just the latest embedded propaganda agent from the industry shills to try to temper the honest opinions on here who are bearish on housing with an alternate point of view to appeal to the emotions of those on the fence.
“If I’m wrong in what I posit that we’re at the bottom now, convince me otherwise with some facts.”
I’ve posted sales volume figures monthly that continue to show decades lows (despite the fact that condo units have exploded in numbers in that same time.) I have also posted foreclosure filing and REO numbers for comparison. I have pointed out the high ratio of recent foreclosures:sales volume (even in the GZ). I have also posted many times that current contract volume is nowhere near the levels that you, clio, and many others claim. Those are facts. You either don’t understand or choose to ignore them and instead rely upon anecdotes to conclude that the bottom is in, and I could not care less. Buy now or be priced out forever. Every dollar wrung out of New Yorkers, miumiu’s in-laws, or any other out-of-towners or foreigners for overpriced Chicago RE is a win for the city, in my book.
BTW, that’s an awful lot of average sale price data you requested. You obviously operate at a level of sophisticated analysis that is beyond my understanding. I’m sure clio can get you that data; he owns a real estate business, you know.
I know of several people who have sat on the sidelines amassing a cash/investment war chest, all while renting/living at their parents/sharing a small 1 bed with their GF. If you save up for 5 years, you could easily have $75,000 in cash sitting around. What’s their incentive to buy now and lock into an illiquid asset other than emotional reasons? To have ownership of a large cook county tax bill?
“BTW, that’s an awful lot of average sale price data you requested. You obviously operate at a level of sophisticated analysis that is beyond my understanding. I’m sure clio can get you that data; he owns a real estate business, you know.”
Okay if that’s too hard, pick 2 neighborhoods out of my list. Give us the Q1 2011 data. Then tell us at what price points and when things will bottom out.
“I know of several people who have sat on the sidelines amassing a cash/investment war chest, all while renting/living at their parents/sharing a small 1 bed with their GF. If you save up for 5 years, you could easily have $75,000 in cash sitting around.”
Who wants to live like this for 5 years or longer?
My cousin is a surgeon (urogynecologist to be precise) and drives a Lambo and no he is not Clio…lol
“A surgeon driving a Lambo? Possible but not likely: most surgeons aren’t nearly as flamboyant and would likely buy a high end Jag or Aston Martin if they had self-esteem issues.”
“Then, can you also provide us with your estimates of how much further everything has yet to crash? And when that will happen?”
You can go back years on this site and see that I’ve always said that it will be the length of the correction that will surprise even more than the depth. Not that the depth won’t be surprising (like it is already to the current crop of bottom callers.) I’ll let you know when we are there, or shortly thereafter. No different than what you, Gary, clio, Russ, and others have done on this very thread (not the first time for some, either.) Why should I be held to a different standard?
“I know of several people who have sat on the sidelines amassing a cash/investment war chest, all while renting/living at their parents/sharing a small 1 bed with their GF. If you save up for 5 years, you could easily have $75,000 in cash sitting around.”
Who wants to live like this for 5 years or longer?
There’s a lot of people doing this – the next generation of young people isn’t as materialistic as their parents, and would much rather rent, and travel, and save up. It’s a whole new outlook and this will affect the RE market a lot over the next 10 years.
bob… The numbers don’t add up in excel either, even if u make VERY favorable assumptions, but my bet is realtor who drank their own cool aid and now gets hostile at everything.
Like I said, Milkster, you obviously operate at a level of sophisticated analysis that is beyond my understanding based on your belief of average sale price as market indicator. Now, that is truly too hard for me to understand.
yep miumiu my brother in law is a cardiologist at a prominent NYC hospital, lives very nicely, nice cars i think, but no way had time to do anything for 10 years of his lfe. And no way could have built the numbers clio claims without having used insane leverage, and gotten it all right. Do the math yourself. To me it’s more the lack of accepting anyone elses argument. Not even the polite brushoff of ‘I hear what you’re saying … But…’ just true intellectual dishonesty. When you interview or work with so many people from u of c or harvard u just know they don’t talk this way. Think anon or jmm… Even when jmm is bitchy with g there is still openess and intelligence behind the calling one another out. Clio is all nar talking points.
Milkster – Here you go, all the condo sales in Albany Park during the last 4 months:
MLS # Status Street Number Compass Point Street Name Street Suffix Unit Number Area Search Price # Rooms Bedrooms – All Levels Total Full/Half Baths
07597347 CLSD 4610 N Monticello AVE GE 8014 12000 3 1 1
07589713 CLSD 4906 N Whipple ST 1 8014 23000 4 2 2
07722909 CLSD 4901 N AVERS AVE G 8014 38000 4 2 1
07701281 CLSD 4946 N HARDING AVE 1W 8014 38500 6 3 2
07360344 CLSD 4816 N AVERS AVE 1E 8014 40000 5 2 1.1
07699278 CLSD 4450 W Gunnison ST 2C 8014 40000 3 1 1
07698310 CLSD 3818 W AINSLIE ST 3 8014 43250 4 2 1
07691435 CLSD 3440 W LELAND AVE 2 8014 43500 4 2 1
07693324 CLSD 4816 N AVERS AVE 2E 8014 44000 5 2 1
07679883 CLSD 4901 N AVERS ST 2 8014 46500 4 2 1
07555181 CLSD 4456 W GUNNISON ST GA 8014 46900 4 1 1
07550436 CLSD 4202 W LELAND AVE 2 8014 50000 4 2 1
07694233 CLSD 3653 W LELAND ST 2E 8014 50022 4 2 2
07518215 CLSD 4437 N ELSTON AVE 1F 8014 54900 5 2 2
07721572 CLSD 4902 N DRAKE AVE 2 8014 55000 5 2 1
07703363 CLSD 3105 W LAWRENCE AVE 3 8014 55200 4 1 1
07699192 CLSD 4906 N DRAKE AVE 3 8014 60600 5 2 1
07627085 CLSD 3100 W Argyle ST 1 8014 62000 5 2 1
07687141 CLSD 3305 W AINSLIE ST 1 8014 64900 4 2 1
07587876 CLSD 4704 N KASSON AVE 2 8014 69000 4 1 1
07609596 CLSD 4654 N ST LOUIS AVE 3F 8014 90000 5 2 1.1
07668179 CLSD 3000 W LAWRENCE AVE 2B 8014 102000 5 2 2
07691571 CLSD 3004 W LAWRENCE 3B 8014 106000 5 2 2
07696437 CLSD 3009 W GUNNISON ST 2S 8014 109500 4 1 1
07539933 CLSD 3113 W Lawrence AVE D201 8014 114500 5 2 2
07668834 CLSD 3113 W LAWRENCE AVE A202 8014 115000 5 2 2
07663087 CLSD 3009 W GUNNISON ST 3S 8014 117000 4 1 1
07436660 CLSD 3104 W LELAND 1 8014 120000 4 2 1
07464605 CLSD 4956 N RIDGEWAY AVE 2 8014 123000 5 2 2
07771976 CLSD 4445 N Kimball AVE 3 8014 123000 7 3 2
07489542 CLSD 3001 W GUNNISON ST G 8014 129000 6 2 1
07539982 CLSD 3514 W Leland AVE 2 8014 139500 5 2 2
07634937 CLSD 3550 W MONTROSE ST 404 8014 141000 5 2 2
07544646 CLSD 3043 W GUNNISON ST 3 8014 180000 8 3 2
07633213 CLSD 4953 N St. Louis AVE 2 8014 220000 6 2 2
“Milkster actually named the date.”
Looking at indices Milkster is already wrong. Heck had you bought a Chicago condo according to the index you would’ve lost 4% of your property’s value by January 31, 2011. Poof there goes your 3.5% FHA down payment you’re underwater now. I don’t hold much faith in Milkster’s predictive abilities as noted on that other thread.
“I know of several people who have sat on the sidelines amassing a cash/investment war chest, all while renting/living at their parents/sharing a small 1 bed with their GF.”
Honestly, I’m actually surprised that I don’t know more people who are taking that approach. Mind you, I know a few young people who are living with their parents or sharing a small rental with a significant other or friends, but that’s because they’re either in their early 20’s or broke, or both (i.e., they’re simply not at a point in their lives to be buying, regardless of market conditions). But among the late 20 somethings/early 30 somethings I know who could comfortably buy a place, I can only think of one or two who are “strategically” renting. For instance, several people who are at or around my same class year (i.e., 2 – 4 years out of law school) purchased a place within the past year.
Generally speaking, there are only two places in this country where younger upwardly mobile people (e.g., doctors, lawyers or MBAs just a few years out of school, or up-and-coming/soon-to-be-successful business people) continue to rent because it’s the “smart choice”: Manhattan and SF. And by “smart,” I mean to say “only,” given the absurd real estate prices and attendant sky-high downpayments
“But among the late 20 somethings/early 30 somethings I know who could comfortably buy a place, I can only think of one or two who are “strategically” renting. ”
It’s because paradigm’s by and large haven’t changed much yet. The real estate bust reminds me of the dot-com bust: when real estate was booming it was all the talk at the cocktail parties and people couldn’t wait to tell you they owned as they associated it with a status symbol and being shrewd. Now that the same people are losing money hand over fist you don’t hear about it much. Its like 2002-2004 all over again but a different asset class.
“But among the late 20 somethings/early 30 somethings I know who could comfortably buy a place, I can only think of one or two who are “strategically” renting. For instance, several people who are at or around my same class year (i.e., 2 – 4 years out of law school) purchased a place within the past year. ”
Sales volume indicates that this is a case of selection bias and/or there are not that many “younger upwardly mobile people” in Chicago who are capable of buying.
My peer group of owners are mostly FB’s.
Ze, I work with many Harvard, Stanford, MIT graduates as well and I tend to think they vary a lot. In fact I claim there is as much in class variation as there is variation among general public. BTW, the aforementioned cousin tends to be very emotional about arguments like Clio.
BTW, I think some of Clio’s points are valid. It is definitely true that there are not that many amazing deals out there if you want to buy in GZ in good buildings. Now as soon as one says that everyone feels like they have to attack them. I would love to see the prices go down and I have never been in real estates, have been a realtor, or have an agenda. I think Milkster, Jennifer, and many other folks on CC belong to my category and we all have seen the same effect. I agree that it is immature to resort to personal attacks to make a point but a lot of people have huge egos and not enough humility to deal with criticism.
BTW, talking about price reductions, here is an other one:
http://www.realtor.com/realestateandhomes-detail/225-North-Columbus-Drive-Unit-5510_Chicago_IL_60601_M76545-33149
“But among the late 20 somethings/early 30 somethings I know who could comfortably buy a place, I can only think of one or two who are “strategically” renting. For instance, several people who are at or around my same class year (i.e., 2 – 4 years out of law school) purchased a place within the past year.”
I know of several early 30-somethings doing the same thing but mainly because their parents are telling them, “you’re dumb to be renting.”
To me this is just a perfect example of why we’re not at the bottom yet. When you truly hit a bottom, you don’t want to buy that asset class- EVER.
There are some recent articles in other parts of the country indicating that there may be a bottom there though including one where a 20-something woman who is renting a house for $1500 in California basically said she didn’t think she would ever buy because there was no point when it was so much easier, and cheaper, to rent the house with the granite and stainless steel.
But here in Chicago- I have yet to run into anyone who is scared to buy. In fact, most are extremely eager to buy – even if they’re stuck in their underwater condo. They still believe in real estate- hook, line and sinker.
“Like I said, Milkster, you obviously operate at a level of sophisticated analysis that is beyond my understanding based on your belief of average sale price as market indicator. Now, that is truly too hard for me to understand.”
I was trying to make it easier on you because you’re extra cranky today.
Okay fine, so what would give a better picture – picking a neighborhood and giving the highest sale, the lowest and the median for the past quarter?
Or provide ALL condo sales in a specific like Chris M did? (Btw, thanks, Chris M!)
And maybe a list of asking/closing prices?
And then if you can’t time the bottom give us your opinion on how much further prices have to fall?
I’ve never told anyone to pay full asking price, btw even though I’m calling a bottom now. Just to set their ceiling, do not go higher and aggressively lowball. If you want to buy this is a good time to try get what you want at a price you like. If you get what you want, that’s great. If not, you can wash your hands of it and go on.
“I have yet to run into anyone who is scared to buy. In fact, most are extremely eager to buy – even if they’re stuck in their underwater condo. They still believe in real estate- hook, line and sinker.”
that is because you must run in very smart, sophisticated, and educated circles Sabrina!!! Actually, to be serious, people will ALWAYS believe in real estate for many reasons:
1. It is a tangible asset (people are scared of stocks/bonds, etc.)
2. It serves a dual purpose – you can use/enjoy real estate AND still make money on it.
3. People’s homes (esp in the US) have become a reflection of who they are (or who they want to be perceived as).
Why don’t we do another comparison? Who would you rather be out of these 2 30 year olds who both graduated from the same school with the same degree from a big 10 school 8 years ago? Both started with $20,000 in student debt and have paid over 1/2 of it off at this point.
30 year old A
– rented for 2.5 years, then bought a 2/2 condo in Lakeview in 2007 with 5% down, total PITI of $2,750, annual income of 85-90K. Unit’s value has dropped 20% since the purchase. Outside savings remaining of $20K. Wants to move to another part of the city, but is stuck in the condo due to the value decline.
30 year old B
– still renting on the North Side in Lincoln Square, has saved $140,000 since starting working. Considered buying in 2009, but no one lowered their price much at all.
Or G –
Why don’t you just take Chris M’s data on Albany Park since he already did the work for you and tell us how much further prices will drop there?
house warming parties aren’t the same if our renting
Hi Dave M –
I would rather be “30 year old B”, obviously. Is that your story, btw? 😉
But what if in today’s market you could buy a place you were going to live in for more than 2.5 years, lived with your significant other or room-mates to save even more money and arrived at the same place savings-wise? If I had to be more flexible on the neighborhoods I was looking at but could achieve this, I’d be happy.
Also, in your original example, yes, I think everyone should live below their means and save everything they can. I just don’t like the idea of grown kids living with their parents rent-free so they can travel indefinitely or bank their entire paycheck. I don’t know if this is what you meant though. I’m fine with grown kids living with their parents as long as they contribute financially and don’t freeload.
“I don’t hold much faith in Milkster’s predictive abilities as noted on that other thread.”
Bob, you were heavily in debt until recently so I wouldn’t take any investment advice from you.
Yeah, it’s ok to scrimp for a while to build a cushion, and then move up and spend some of that savings on something worthwhile.
Dave M – I don’t get it – how did 30 y.o. B save 140k?
Actually, I would love to be 30 y/o C who bought this house in hinsdale 8 years ago for 746 and sold it in two weeks in 2011 for over 900k!!!
http://www.redfin.com/IL/Hinsdale/409-S-Bodin-St-60521/home/18021757
my point is that your scenario is so fictitious and “out there” that you could make up a million scenarios to prove whatever point you want to make. Each person will decide for themselves what is the right thing to do. Those that are bulls and mavericks will buy, those that are meek and sheep will rent. There is nothing wrong with being meek – remember they shall inherit the earth (or whatever).
God – reading over my last post – I feel like making fun of myself for such terrible grammar, sentence structure, and wording. Pathetic!!!
Clio- for every homeowner who bought 8 years ago in Hinsdale making money- there are one, two or three others that are losing money. So I really hate the links to properties that say, “see- they’re making money.”
Good for them. Some sellers have prime properties. Most do not. Again, I can show you a dozen other Hinsdale properties where the owners are taking a loss.
And, in case you haven’t notice, this is not a housing blog about Hinsdale. I doubt many people reading here care about what is going on in Hinsdale. It is less than 1% of 1% of the Chicagoland housing market.
If you’re buying today- you’d better be buying for the long haul. Only buy if you think you’ll live there for 10 years or more. So if you’re going to have kids, you’d better investigate the schools. And you’d better be okay without having a parking spot (if there is no deeded parking available.) And if there is no elevator and it’s on the 3rd floor- you’d better be okay walking up and down stairs with the strollers.
I’m just saying. The Baby Boomers did not buy their first real estate purchases with the intention that they would be able to move in 3 years. They bought to raise their families. People need to start thinking long term. If that means moving to the suburbs- so be it.
Oh- and there is no way there are enough Generation X buyers to buy up all the Baby Boomer homes that they DID buy for the long term and now want to sell. The demographics don’t add up. They won’t get nearly the money they thought, just a few years ago, they’d get. There simply aren’t enough buyers.
And Generation Y is a decade or more away from buying at that higher price point.
The Baby Boomers dying/retiring guarantee a housing surplus for years to come.
If you were a renter in Chicago the last 5 years and saved any money- the world is now your oyster. I routinely get e-mails from current homeowners lamenting that they now have to sell a property to buy another. They say things like, “I envy the renters.”
Yes- I’m sure they do.
“Actually, I would love to be 30 y/o C who bought this house in hinsdale 8 years ago for 746 and sold it in two weeks in 2011 for over 900k!!!
http://www.redfin.com/IL/Hinsdale/409-S-Bodin-St-60521/home/18021757‘
By the way- this hasn’t “sold”.
It is simply under contract.
And that didn’t happen in 2 weeks. It’s been on the market for 13 months. At least try and get some of the “facts” right.
“I routinely get e-mails from current homeowners lamenting that they now have to sell a property to buy another.”
Well, duh!!! It is a well known fact that only people that are hurting or mad actually write and complain. Why would anyone who was comfortable in their situation write you? I bet there are 10 people that are happy with their situation to every person that writes you!!!
” It’s been on the market for 13 months. At least try and get some of the “facts” right.”
Wrong – It was put on the market last year for a few months – didn’t sell and then taken off the market so it hasn’t been on the market for 13 months. This further adds credibility to my statement that the market is improving (after all, if the house didn’t sell while it was on the market for a few months last year and sold in 2 weeks this year, maybe the market is improving!!!).
Does this make sense to people? What does this builder think is going to happen to all the individual owned condos that people are renting?
http://www.suntimes.com/business/4922099-417/developer-hopes-for-high-rise-in-greektown.html
I would be surprised if he would get approval to build that tall at that location. They have already shot down a huge high rise across the street that they had to scale back to 22 stories.
Apartments are hot right now. Everyone wants to rent. Apartment buildings have an advantage over individual condo landlords- they don’t charge any security deposit. Usually it’s a $300 move-in fee and you can walk in the door. When you don’t have any money- that is much more attractive than paying $1500 to move into a condo.
I know that apartments are hot right now – but this guy has to realize that by the time all is said and done – the apartments won’t be ready until 2013 at the earliest – who the heck knows what will be happening then!!!
Then he just converts them into condos. But I don’t see how that’s going to be an issue. All the apartments built in the 1980s weren’t converted into condos until at least 15-20 years later.
They’re building a massive apartment building on the old Peshtigo site along Lake Shore Drive. And there are plans to build a high rise apartment building on the lot across from the East Bank Club in River North. Oh- and they actually got the loan and have started construction on the new high rise apartment building on south wells (almost at Division)- which is much needed in that area of Old Town.
They are building the high rise apartment buildings everywhere they can.
That west of I-94 greektown location isn’t ideal for a high-rise apt. tower, but I also didn’t think Alta at K Station was that good either and they’re leasing that up nicely. If he offers a free shuttle bus up an down Madison and Monroe into the loop it could work.
“he wanted the building’s renters to have access to hotel services from his Crowne Plaza.”
That dump? He must be talking about hookers and pimps.
I love how they mention bringing a grocery store to the neighborhood because the hotel rooms already overlook the Dominicks right there at Madison and Halsted!
30 year old B saved over $1,500 per month over the 7+ years they rented.
30 year old A saved some money initially when renting, but then the condo drained a lot of money for furniture, a special assessments (related to the cinder block sides of their building and new roof), and also real estate taxes. This person has finally started saving a little more ($200 per month), but only because of a recent promotion and raise.
“That’s a nice building, well kept, in a very nice area, with high rents. ”
Not sure but someone labeled it a good, but not great location. One block over the garden apartment on George was deemed uninhabitable. Yet the three flat sells for 750k? Which by the way is almost the going price for a newer SFH in Lake View. Just saying.
Plus the siding on this 3 flat is cheap vinyl. I realize that is practically a copper roof and limestone facade by 3 flat standards, but come on.
“everyone is guilty” well I have been looking for deals and have Bern researching the circumstances. One condo I looked into sold for $211K but the dude took out $460K in equity within three years! Stupid Bank. Another condo building had all low income owners. The building went condo and the guy flipping the building sold condos to people with very low incomes for $260,000 each. Think of the worst apartments you can imagine selling for $260,000. They are now selling for $10,000 – $14,000. Stupid bank, unfortunately stupid people that were easily scammed by a condo converter who convinced the poorest to buy way above what they were paying for rent out of fear that they would loose their apartment. I have a little more sympathy for these folks but they were stupid too. The answer is simple DO THE MATH.