New Construction 3-Unit Building Selling Out Fast in Lakeview: 1022 W. Diversey
We last chattered about this new construction 3-unit building at 1022 W. Diversey in January 2012 (where we were hoping for snow which never came!)
See our January 2012 chatter here.
At that time, just the second floor 2/2 was on the market and it was listed for $474,900.
At least one of you didn’t see how it would sell for over $350,000 given the square footage. Others thought that it would probably sell around $450,000 because it was new.
Since then, both the second and third floor units have sold.
- Unit #2: 2/2 originally listed for $474,900 and SOLD on April 4 for $435,000.
- Unit #3: 2/2 listed for $550,000 and SOLD on April 16 for $535,000.
That leaves Unit #1, the large 4 bedroom duplex down, as the last remaining unit still available.
If you recall, this building is located directly across the street from the Lincoln Park Athletic Club and just half a block from the Diversey El stop.
Are these sales another sign that new construction is returning at full throttle?
John McNaughton at Prudential Rubloff has the listing. See the listing here (no interior pics).
Unit #1: 4 bedrooms, 2.5 baths, duplex down, no square footage listed, parking included
- Currently listed for $750,000
- Central Air
- Washer/Dryer in the unit
- Assessments of $197 a month
- Taxes are “new”
- Not sure where the bedrooms are located as the listing lists them all on the main floor
uhhhh – have you guys looked at the market in the last couple of weeks? I know that I was saying that things were going under contract pretty fast in March – but just in the past 2 weeks, a ridiculous number of properties have gone under contract in chicago and the suburbs (and this is not just anecdotal info- actual contracts being signed). Whether this lasts or not or whether we see a huge number of units come on the market is anyone’s guess, but something is definitely stirring out there…..
Give us the numbers instead of your blathering. It’s still just ridiculously inaccurate anecdotes out of you.
G – why don’t YOU give us the numbers from the past two weeks (actualy, if you have data up until yesterday, that would be great) – I am talking about signed contracts.
Another thing regular people can do is check redfin daily and see how many properties go under contract each day. In chicago, nearly 1/3 of properties are under contract. This is a huge increase from the bottom (where we were dealing with 10-15%.
Anyone else care to chime in?
Looks like a developer’s half-hearted last ditch effort to sell unit before lender gets it. Asking price is seriously unrealistic, listing itself incomplete, and likely no prospective buyers will tour this place.
The market seems very active in one certain area – Streeterville/Gold Coast condos. I think it’s cash-laden people buying units as a financial hedge. Maybe they’re converting their IRAs into self-directed real estate purchases.
“Looks like a developer’s half-hearted last ditch effort to sell unit before lender gets it. Asking price is seriously unrealistic, listing itself incomplete, and likely no prospective buyers will tour this place.”
It’s comments like this that make me think some people aren’t really awake yet when they post here.
Architect, these bigger duplex downs ARE selling all over Lakeview right now (especially the newer ones.) In fact, one sold just down the street from this one not too long ago (I think I also featured that building.) I’ll do a post on it tomorrow if it’s the one I’m thinking of.
Upper bracket condos are showing some life in Lakeview/Lincoln Park now. Of course, I’m also seeing a bunch of them come on the market now that some are actually selling (which is what I predicted would happen in the condo market. Once there is ANY sign of life- the sellers will list.)
“Whether this lasts or not or whether we see a huge number of units come on the market is anyone’s guess, but something is definitely stirring out there…..”
Spring???
Anyone have Chicago case shiller numbers for February?
Properties I was watching are selling too. I think it is a combination of spring and low mortgage rates, but something else must be there too. Last year this time, I did not observe the same level of activity. I wonder if people are just tired of waiting. It has been now what? 3 years that market has been in vegetative state?
Even HD finally bought : )
“Spring???
Anyone have Chicago case shiller numbers for February?”
Are you kidding Sabrina? Come on – your readers are more sophisticated than that!! Case Shiller numbers for February (which document contract activity in December) has absolutely NO bearing on what is going on right now. If you want to be behind the curve, keep looking at the CSI – just ask those people who did so in 2007 and see how they did.
Also, this spring market is definitely much better than any in the recent past. Sorry to burst YOUR bubble, but the burst real estate bubble is re-inflating!!!
I don’t know about that. I liked HD’s description: dead cat bounce much better.
” Sorry to burst YOUR bubble, but the burst real estate bubble is re-inflating!!!”
“Anyone have Chicago case shiller numbers for February?”
LOOK OUT BELOW!! LOOK OUT BELOW!!! LOOK OUT BELOW!! OUCH I THINK I JUST LOST A FEW FINGERS!!!!
Clio,
Stop using all your family computers, work computers, iPads, etc to come on and vote your comments +1. It’s so obvious.
-6.95% YOY case shiller. amazing numbers. . I just lost 7 of my 10 digits. WOWZERS!!
I think the market is better but prices are sticky. Check out Old Town Triangle – $1-3mm range – many places under contract with some going under contract immediately after listing. That being said it isn’t having an impact on prices yet. After seeing multiple places close / go under contract buyers are feeling better about buying (knowing that places are selling and what the current values are) but are more informed on price and staying disciplined. This is just my opinion.
“Anyone have Chicago case shiller numbers for February?”
Stuff going under contract in April will close in May/June and will be reflected in the Case Shiller numbers for June/July, which will be reported in August/September. I think we will have to wait quite a while to see the real data.
isnt spring time and august the hot seasons for RE? Clio stop licking your chops its not hot hot hot, its seasonal. you for one should know this better than me because you are in the “business” and heard you took a 300 level at UIC about this too
The low interest rates don’t hurt. I think what’s happening is every year you have someone buying, and in recent years the number of people buying has been low — those who could wait did so for various reasons. Now those “waiters” have decided they cannot or should not wait any longer.
Architect, the majority of inventory in Lakeview and Lincoln Park is moving quickly. I am keeping an eye on 3/2 duplexes and I would say that 50% have gone under contract in 30 or less days.
People are buying because prices are really good in many areas & interest rates are low. I venture to guess that many buyers out there never bought in the boom, saved their money these last few yrs and are now in a position to buy. My question is, what happens when seller’s start raising prices a bit? Will the buyers back off? I think what we have right this minute is a perfect storm of low prices/interest rates that make people who can actually run the numbers interested in buying. If prices start raising, will the buyers back off?
why does everyone on this stie have to be such obnoxious offensive assholes?
“Properties I was watching are selling too. I think it is a combination of spring and low mortgage rates, but something else must be there too. Last year this time, I did not observe the same level of activity. I wonder if people are just tired of waiting.”
Miumiu or anyone else, are they selling at higher/lower/similar prices to comparable properties last year? I’m genuinely curious. Especially for any examples.
My observations from watching props in the burbs (Evanston, Wilmette, Winnetka, Oak Park, River Forest) is that anything that is desirable and well priced is under contract days after the first open house. Well priced means 15-20% off the 2006 prices, maybe a bit lower or comparable to 2002-2003 prices. Basically, if you have 4 bdrms, a small yard and a decent finishes (especially kitchen), there’s no problem selling. In Wilmette this is anything in the $600-800k price range within 1-2 miles of the lake, and in Oak Park, $400-600k within a mile of downtown. Interestingly enough River Forest / Winnetka props seems to be sitting longer (too expensive / boring for younger families making the move from the city?). It looks like the rehabbers have caught on (especially in Oak Park) and are buying crappy props for $200-300k, totally redoing (most are very nicely done) and putting them back up for $500-700k.
I don’t think we’re reliving the bubble quite yet, but there’s alot of momentum.
“why does everyone on this stie have to be such obnoxious offensive assholes?”
Welcome to the Internet.
http://www.redfin.com/IL/Chicago/1844-W-Cuyler-Ave-60613/home/13389144
LOOKIE HERE PRICED ABOVE THE ’05 PRICE AND UNDER CONTRACT AMAZING I FEEL LIKE CLIO NOW TOO BAD THE CS NUMBERS SHOW CHICAGOLAND CR-CR-CRASHING!!!! WHOZE THE LIAR HERE? ???!!
“Well priced means 15-20% off the 2006 prices, maybe a bit lower or comparable to 2002-2003 prices.”
Uhhh – even things going for 10% above 2006 prices are selling within one day!!:
http://www.redfin.com/IL/Chicago/1727-N-Winchester-Ave-60622/home/12698457
”
“Well priced means 15-20% off the 2006 prices, maybe a bit lower or comparable to 2002-2003 prices.”
It could also mean 20% higher than 2004 prices!!!
http://www.redfin.com/IL/Chicago/714-W-Webster-Ave-60614/unit-3E/home/13351141
“TOO BAD THE CS NUMBERS SHOW CHICAGOLAND CR-CR-CRASHING!!!! WHOZE THE LIAR HERE? ???!!”
HD – are you kidding me? You are looking at Feb CSI numbers (which reflect activity in December and includes properties and areas that, for people on this site, are completely irrelevant). What we need is data on contract activity in the past month in the green zone – that is much more accurate as to what is going on RIGHT NOW. Anyone with half a brain would understand this.
Clio ur a dimwit. And dumb.
Hadn’t seen that 3/2 at 714 W. Webster. It’s not surprising that it would go for more than the 04 price, as it looks like they’ve made lots of improvements (namely the kitchen and baths). If it had parking, they could have listed for at least $500k and closed for $450k+. With no parking, and listing at $424k, I imagine it will close right around $400k. For a small family that doesn’t care about having a parking space (which I can’t fathom, but I know they’re out there), 714 looks like a solid deal at $400k.
Ballpark: How much to get the kitchen in 714? Where does one even start, at a store, or by calling a contractor?
“It’s not surprising that it would go for more than the 04 price, as it looks like they’ve made lots of improvements (namely the kitchen and baths).”
And with HD’s listing, there are redfin comments suggesting recent upgrades and, of course, the perceived value of being in coonley is significantly higher now than 7 years ago.
I just went to contract at ’03-’04 prices.
“If prices start raising, will the buyers back off?”
Interesting question, which I suppose we’ll see the answer to in time.
I’m somewhat anticipating a bump in prices at least in the short term. It may well be a dead cat bounce, but in any case, the supply of real estate in the Chicago market is heavily constrained right now and the lower prices and low interest rates are definitely pushing demand outward. Increased demand and decreased supply will usually result in increased prices, but I do have a suspicion that marketwide price increases may well scare away buyers. As was mentioned earlier in this thread, a lot of the buyers out there now are the ones who shied away from the bubble, and I think if they start seeing prices increase they may well shy away again.
I’m definitely in that boat. I’m looking to purchase at the moment, but the supply is so constrained that I haven’d had much luck. I’ve mentally promised myself, however, that if prices start trending upward I will back off for a while, and I will not, in any circumstance, get into a bidding war.
In any case, I think the next few months are going to be very interesting as far as the real estate market is concerned.
When I mentioned to my cousin, who is a realestate lawyer, how tough I thought things were out there, he laughed in my face. He is so busy the past two months with closings that he can barely manage….Maybe Clio is on to something…..
@ DZ, I have the exact thing on my mind. They are only under contract so I have to see what price they close at. Here are some properties I have seen through my MLS alerts:
CTG:
1211 S Prairie Ave Unit 1303, 1102
1335 S Prairie Ave Unit 805
PEND:
1235 S Prairie Ave Unit 2304
1335 S Prairie Ave Unit 701, 602, 610
233 E 13th St Unit 2106, 2005
The only one, I have seen closed is 1211 S Prairie Ave Unit 1902, listed at $599K sold $632K.
“Maybe Clio is on to something…..”
If/When Clio is correct, it is just by the law of the broken clock
“He is so busy the past two months with closings that he can barely manage….”
Who are his clients? We’re seeing increased activity from investors (who are often willing to pay slightly more than a regular home buyer). I’m wondering if this accounts for any substantial part of his business.
And let’s not forget that it’s spring and we had a mild winter… extremely mild when compared with last year’s (for any of you who were stuck with me for 3 hours on a bus on LSD). And we still have record low interest rates. Essentially, this is a perfect storm.
I also think developers are getting smarter and selling units at the right price. Some anecdotal evidence: I just purchased a new construction 3/3 in West Loop for 550k. One of my neighbors sold his unit for 650k. For a variety of reasons (view, layout), my unit should easily sell for more than that. His bargain was that a buyer would want to take advantage of the low interest rates and move in today. He was right.
And when I signed the contract, there was no negotiation. The developer offered it at 550k and wasn’t going to budge. In fact, they’re only increasing prices on their remaining units.
“Ballpark: How much to get the kitchen in 714? Where does one even start, at a store, or by calling a contractor?”
You can probably start off by going to their show room in Old Town.
April contract activity is not up significantly in Chicago, since ~22% will fall out. Here’s some actual data for 4/1 – 4/21 for each year. Once again, contracts indicate ~10% increase in sales over a very bad year.
4/1/xx – 4/21/xx
Chicago sfh/condo/th contracts
2012 2,083
2011 1,483
2010 1,826
2009 1,420
2008 1,610
2007 2,599
Chicago sfh/condo/th closed
2012 1,045
2011 921
2010 1,137
2009 850
2008 1,154
2007 1,677
Well Sabrina, I stand by my comment: that $750,000 for this duplex-down 3-flat spec-built facebrick/block narrow-lot building is nuts. Agent didn’t show interior, but that front door sure looks like Home Depot merchandise, and those two older frame apartment buildings flanking the condo aren’t showcasing the property either. Yes, some buyers are seduced by “new”, but this isn’t a prudent buy.
“I think we will have to wait quite a while to see the real data.”
Gary, is this your “fourth time’s a charm” bottom call? I’d say you have no shame, but that is obvious.
“Chicago sfh/condo/th contracts
2012 2,083
2011 1,483
2010 1,826
2009 1,420
2008 1,610
2007 2,599”
Thanks G – for proving my point – we are up over 25% in contract activity comparet with last year. Also, in the past 3 days (since this data, there have been over 400 homes go under contract). I am not saying that we are going into a full-fledge real estate boom – but I AM saying that the bottom has passed and we are going to slowly ascend. Unfortunately, those who waited for the great deals are out of luck – not saying that there aren’t going to be any deals, but there will be 10:1 buyers out there looking now that the storm has passed.
There’s no doubt contract activity is up, even with the 22% failure rate, but closings are coming in a bit closing than contract activity. This is no bottom, especially as more properties hit the market.
I hate this builder with a passion. These clowns have been tearing down beautiful all brick two flats all over Lakeview for these pieces of shit lately… the quality of masonry work, not to mention the general aesthetics, is disgusting.
One might also interpret the data as.. people want to buy but banks don’t agree that they can. That is the worst looking percent closing so far… can’t say that’s a good thing.. then again what the hell do i know about interpeting data.
Don’t worry, dude, some day, in our lifetimes, lakeview will turn into a lower middle class swath of tenement housing with the masses crammed into these terrible quality, highly congested units that infest the northside.
Ok,that’s a bit of an exaggeration but seriously, these things are uggo.
Not to be too finicky, but isn’t going from 1483 contracts to 2083 contracts actually a 40% increase?
That’s pretty significant, I have to say. But if you discount 2011 as a bad year, we’re doing almost 20% better than the early 2010 numbers, which were inflated b/c of the last vestiges of the housing credit, right?
That’s got to count for something. If in retrospect we see Operation Twist having even more of an impact on home sales than the credit did, it will be interesting to see what the cost differential to the government was between the two programs.
I don’t think it makes a lot of sense to use short term data to call a bottom or a top. The trend for real estate is down and will continue to be so until the job market changes. A couple of months of upticks will not matter in the long run. Buying a home to live in for financial gain at this time just doesn’t seem that smart.
Call me crazy, but I just don’t understand why people pay more than half a million dollars to live in a basement.
“Not to be too finicky, but isn’t going from 1483 contracts to 2083 contracts actually a 40% increase?”
Apples to oranges, without the adjustment I mentioned. The prior years don’t include the contracts that fell out and were reactivated. The current data includes many that will do just that. What I’ve seen lately indicates ~22% of the 4/1/12-4/21/12 contracts will fall out and reactivate. Adjust the 2,083 accordingly and you will get a much more accurate picture than what the shills hoped you’d conclude.
Amen, joe.
“we are up over 25% in contract activity comparet with last year. Also, in the past 3 days (since this data, there have been over 400 homes go under contract). I am not saying that we are going into a full-fledge real estate boom – but I AM saying that the bottom has passed”
A simple year over year comparison of a single month is not a statistically relevant data set to work with to declare the bottom has passed. Now, I’m not saying it has or hasn’t, but just because contract activity is up 25% over last year, that doesn’t mean the real estate market is in the clear by any stretch of the imagination.
There are many issues with with the real estate market, such as government intervention, which make the market less predictable that other asset types. But even with other asset types, markets don’t either move up or down. They fluctuate along a trend. This month could simply be a spike in a trend that continues downward, stays even, or goes up and we really won’t know until we have a larger window to work with.
Take a recession as a hypothetical example, you can’t call a recession just because April 2012 is down over April 2011. You typically need two declining quarters to call it. I’d say we’d need a few periods of sustained growth in real estate transactions AND sale prices to say we’re past the bottom. Right now, we have a month of increased contract growth, meanwhile sales prices are mostly stagnant or declining:
http://money.cnn.com/2012/04/24/real_estate/home-prices/index.htm?hpt=hp_t1
As I said earlier, a short term bump is possible given the constrained supply at the moment, but I’m highly skeptical that we’re entering a run of sustained growth in real estate.
Ahh, I didn;t catch that. Makes more sense now.
“Apples to oranges, without the adjustment I mentioned. The prior years don’t include the contracts that fell out and were reactivated. The current data includes many that will do just that. What I’ve seen lately indicates ~22% of the 4/1/12-4/21/12 contracts will fall out and reactivate. Adjust the 2,083 accordingly and you will get a much more accurate picture than what the shills hoped you’d conclude.”
“Not to be too finicky, but isn’t going from 1483 contracts to 2083 contracts actually a 40% increase?”
UIC math…..
“why does everyone on this stie have to be such obnoxious offensive assholes?”
Pot, meet kettle.
“Not to be too finicky, but isn’t going from 1483 contracts to 2083 contracts actually a 40% increase?”
clio: “UIC math…..”
LOL
clio:
“Chicago sfh/condo/th contracts
2012 2,083
2011 1,483
Thanks G – for proving my point – we are up over 25% in contract activity comparet with last year.”
You can’t make this stuff up, folks.
““why does everyone on this stie have to be such obnoxious offensive assholes?”
Pot, meet kettle.”
Self-parody meet whiff.
seriously, let’s just all accept that clio knows what he’s talking about and the market is H to the O to the double T.
Now, if you’ll excuse me, I have a 5lb tank of N20 under my desk, and a package of balloons, so let’s just say that I have a lot of work to do before my day is over.
“You can’t make this stuff up, folks.”
I had a diarrhea attack and then fell asleep only to awake to Clio 800SAT diarrhea of the mouth… i love it… divided the change by the new number… I am pissing myself!! Honestly… I’ve fired people for less.
” I have a 5lb tank of N20 under my desk, and a package of balloons, so let’s just say that I have a lot of work to do before my day is over.”
Ze will be right over!!! Whippet.. whippet good… just whippet!!!
I believe it’s a combination of people getting restless and finally buying after 3 years, it’s spring-time, the stock market is up significantly, and interest rates are at all-time lows…..plus there’s sun outside today. What can happen? It could’ve be gray, cloudy out the day Sabrina posted this, and the stock market corrects significantly because of European contagion. AAPL is down $100 from its high, Netflix just disappointed, etc. I don’t think we’re at a bottom.
“AAPL is down $100 from its high, Netflix just disappointed, etc.”
Yes but Buffalo Wild Wings beat expectations, so we can call it a wash on the day….
“Yes but Buffalo Wild Wings beat expectations, so we can call it a wash on the day….”
If you think BWW has good wings, I’m going to take you out back and beat you with a switch.
Buffalo Wild Wings is down almost 6% after hours.
BW3 wings taste like they were created in a lab by a scientist. And I’m sure the ingredient list looks like a chemical formula more than a recipe.
“BWW”
It’s been all downhill since they cast aside the weck.
Are kimmelweck rolls available for purchase in the Chicago area?
“Are kimmelweck rolls available for purchase in the Chicago area?”
http://www.keefersrestaurant.com/menu-kaffe.html
“Are kimmelweck rolls available for purchase in the Chicago area?”
Keefer’s gets them from somewhere.
“Keefer’s gets them from somewhere.”
Oh, I see, did anonny just want the rolls? What’s the big deal about the rolls, isn’t it just a hard roll or a kaiser roll?
Could always get the sandwich, hold the meat and everything else. He didn’t set a budget.
Maybe I’ll see if Keefer’s will sell me a few to-go so that I can attempt to make seitan on weck at home.
Regarding contract activity. I take a 24 month snapshot on the 7th of every month for my blog. I whack the most recent month by 20%, the previous month by 10% and the month before that by 5% to account for the failure rate of contracts. I’m showing January – March of this year 20 – 40% above last year. February was almost 40% higher than last year and I adjusted this February down to 28 days.
So what is a good place to have wings?
On topic– pics of former two flat, which was purchased many moons ago in 2008. http://www.urbanrealestate.com/property/1022-W-Diversey-CHICAGO-IL-60613-4CXHBVWU4V3JG.html
Off topic, but nevertheless a very worthwhile subject — wings. If we are not limited to wings tossed in sauce with celery sticks on the side, I vote for the Happy Cafe on Wentworth. Not sure I want to know where they get wings that huge — that’s got to be a seriously large chicken — but they are excellent!
fwiw, Shiller said (again) today:
“There really hasn’t been any uptrend in home prices for 100 years.”
and
“I worry that we may not see a really ‘major’ turnaround in our lifetimes.”
http://www.reuters.com/video/2012/04/24/housing-may-not-turnaround-in-our-lifeti?videoId=233843997
“If you think BWW has good wings, I’m going to take you out back and beat you with a switch.”
I’m turned on by just the thought, but despite that, can’t say I ever had BWW.
“Buffalo Wild Wings is down almost 6% after hours.”
Good… if it gets to 71 wake me up.. we can buy some there.
“I worry that we may not see a really ‘major’ turnaround in our lifetimes.”
Wojo- this is the very thing that most people don’t understand about the housing market. Most people are still thinking like it’s the bubble years where home prices went up 10% to 20% a year. They think we’re going back to that. We’re not going to see that for a long, long time.
When we hit bottom (whenever that will be)- and when we start seeing prices going up- it will be 1% to 3% a year. That is “normal” for Chicago. That’s why I’ve said that with transaction costs- you’ll have to live there 3 or 4 years just to break even (in a “normal” market.)
And that’s why this market is screwed for a long, long time to come. Too many people are 20% to 30% (or more) under where they bought their house. Many don’t have any equity. It will take a decade or more to just get back to the price where they bought. Look at many of the 2010 buyers right now. They are getting CRUSHED in this market. And that’s after having bought just 2 years ago. They are down, in some cases, 20% in the GZ. Sure, there will be some locations and some neighborhoods which will “recover” a little faster. But it’s still going to be a long, drawn out process.
“Most people are still thinking like it’s the bubble years where home prices went up 10% to 20% a year. ”
Except they rarely did. It was 10% y/y in April 2005 for the NSA SFH index, Sabrina. Only double digit y/y month on record for that index.
So you’re biased. But it’s okay I am too. But let’s not get our biases in the way of facts lest we miss the bottom! Hahaha.
*by that above statement I meant since 1990.
sabrina I don’t disagree with the gist of your thinking but let me nitpick.
“[W]hen we start seeing prices going up- it will be 1% to 3% a year. That is ‘normal’ for Chicago.”
I think what’s “normal” for Chicago is house prices keeping pace with inflation. Case & Shiller reported in 1987 that nominal appreciation for Chicago SFH between 1970-1986 was 7% per year, much greater than your guesstimate of 1-2%/ per year — but in real (inflation-adjusted) terms the price appreciation was only 0.3% per year (Table 2, p. 49):
“In Atlanta and Chicago, existing home prices remained remarkably constant in real terms over the 65 quarters [1970-1986] of the sample period. While nominal prices nearly tripled, so did consumer prices in general” (p. 49).
http://www.wellesley.edu/Economics/case/PDFs/prices.pdf
So for your prediction of a return to 1-2% nominal price gains to recur, Bernanke or the Gods will need to succeed in reigniting inflation, which I still just don’t see happening . . . ever. I’m kidding, sort of. I’m talking my book.
btw & ot, did you see that NYT article about Manhattan rents?
http://www.nytimes.com/2012/04/22/realestate/manhattan-the-city-of-sky-high-rent.html
unbelievable.
“Most people are still thinking like it’s the bubble years where home prices went up 10% to 20% a year. They think we’re going back to that. We’re not going to see that for a long, long time.”
HAHHAHAHAHA – there are examples all around of people selling right now for 10% more than they did when they bought the place last year (and not talking about rehabbing). There IS appreciation- you just need to know what to buy.
More importantly, real estate is NOT an investment to most people. This is a place for them to live/enjoy life. This is where they provide appropriate shelter for their family – this is where they make many happy memories. I DON’T think many people are greedy little ogres who are only buying to turn a profit in a couple of years. In addition, buying IS cheaper than renting in the long run. In 15-30 years when the mtg is paid off, compare their living costs to someone who rented.
As an investment, even if you don’t have significant appreciation, you can actually make very decent money (5% or more) by renting out the units. Then, there is depreciation, etc.
So – there doesn’t have to be 10-20% appreciation to make people bullish on real estate. You have to understand psychology to understand why people are buying (you also have to be married/have kids to understand why an owned and safe/stable home is important to many people). Money isn’t everything to everyone, Sabrina. I know it’s hard for YOU to understand it, but try.
I still find it funny. Few people can predict even an hour forward, but are certain that they can tell you what a market will be like in 3-5 years…
“So – there doesn’t have to be 10-20% appreciation to make people bullish on real estate.”
Yeah there does if you’ve lived in your Ukranian Village condo for 3 years, have a baby, and need to sell to move to a neighborhood with a decent school. It’s ALL about the money for these people. They are stuck – for years and years. Not everyone can move and rent it out. Many can’t get loans on the second property because they don’t make enough money (or even have a downpayment.)
Housing, right now, is ALL about the money.
“btw & ot, did you see that NYT article about Manhattan rents?”
Did you see the one about wait lists and multiple bids in the bay area? (that’s how it was there in 1998 and 1999.) It was in the WSJ (subscription only though.)
“Except they rarely did. It was 10% y/y in April 2005 for the NSA SFH index, Sabrina. Only double digit y/y month on record for that index.”
Okay- let’s just say that if you bought in 2002 and sold three years later you made money. It was simple and easy.
We’re not going back to that for a long, long time. People need to think about real estate in terms of decades.
“Yeah there does if you’ve lived in your Ukranian Village condo for 3 years, have a baby, and need to sell to move to a neighborhood with a decent school. It’s ALL about the money for these people.
Housing, right now, is ALL about the money.”
HAHAHAHA – yeah, Sabrina, because EVERYONE who is in the housing market fits that description (young couple with a baby living in Ukranian Village). Open your eyes and widen your perspective. Sure there are these people – but they are few and far between. You just THINK they make up a huge number because:
1. They are probably your demographic (age and financial status)
2. These are the whiners that complain the loudest (people who are secure don’t complain).
Remember, though that these are NOT the people who define the market.
“So what is a good place to have wings?”
Full disclosure: in my early twenties, I managed a chicken wing restaurant. If you can stomach the not-insubstantial “poorly-dressed women as objects” theme, Hooters actually really has excellent wings and some good sauces. The key to a good wing is a substantial, meaty wing/drumstick with some real weight to it. We used to serve primarily “60 count” size wings – that means that there are 60 to every ten pounds (I believe this is a frozen weight, but I’m not sure). So, 6 to a pound is a pretty big wing. Hooters has really huge wings, and I wouldn’t be surprised if they have 50 count wings. This used to be the biggest you could buy from the big distributors, but Hooters surely has gets a custom product, probably that’s even bigger.
Crappy places like BW3, first they use a much smaller wing – probably 120 count or smaller, and then they don’t change their fryer oil very often. There are also some things you should do to properly thaw, marinate (not everyone does this) and sauce the wings that a lot of crappy places don’t do. I don’t eat a lot of wings these days but Hooters is the only breastaurant I patronize.
“Regarding contract activity. I take a 24 month snapshot on the 7th of every month for my blog. I whack the most recent month by 20%, the previous month by 10% and the month before that by 5% to account for the failure rate of contracts. I’m showing January – March of this year 20 – 40% above last year. February was almost 40% higher than last year and I adjusted this February down to 28 days.”
There appears to be a flaw in your analysis. Where are the closings? They were only up 12% YOY in Feb, 10% in March and 14% for the fist 3 weeks of April. Median days from contract to close have been ~45 in recent months.
http://www.ritholtz.com/blog/wp-content/uploads/2012/04/Case-shiller-data-is-2-months-old.png
“CH (April 25, 2012, 1:41 pm)
http://www.ritholtz.com/blog/wp-content/uploads/2012/04/Case-shiller-data-is-2-months-old.png”
CH, is today Phallic theme day for you?
ha. not intentionally
“Did you see the one about wait lists and multiple bids in the bay area?”
No, I didn’t. Please post the link.
Wojo: Here’s the article about the crazy San Francisco Bay Area rental market.
http://online.wsj.com/article/SB10001424052702304299304577348033620139396.html?mod=WSJ_RealEstate_LeftTopNews
thanks sabrina.
“real-estate broker James Wavro says he is seeing some homeowners opt to cash in on the lofty value of their homes by selling them and moving into rental housing.”
So even with the seemingly outrageously expensive cost of rentals, that broker says renting is still cheaper than homeownership. Wow.
It’s a shame Chicago seems unable to develop its own miniature Silicon Valley — stretching from UIC, including IIT, all the way down to the U of C. We could use it.
“It’s a shame Chicago seems unable to develop its own miniature Silicon Valley — stretching from UIC, including IIT, all the way down to the U of C. We could use it.”
We don’t have the VC money they do- but we’re not chopped liver in the tech department. We just choose to focus on other areas. Is it any surprise that Chicago has become the capital of the internet coupon? It’s not just Groupon either. There are something like 50 coupon companies headquartered here basically because this is where the “talent” is in that area so most companies have moved here.
Also- we have GrubHub which is moving into bigger office space in the loop shortly.
It’s my take that Chicago tends to have the leg up on the “practical” types of internet/tech companies. Food, coupons and things like that. The guy who sold Siri to Apple has just moved back to Chicago to work on his new venture (he’s originally from here, I believe.) That’s the kind of energy we need in the city right now.