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]
