Selling a $3 Million+ Single Family Home Less Than 2 Years Later: 1728 N. Cleveland
This 6-bedroom single family home at 1728 N. Cleveland in Old Town/Lincoln Park was first sold as new construction in 2008.
A little under two years later, it is back on the market.
The house has a limestone facade and an in-ground watering system.
5 of the 6 bedrooms are upstairs. The kitchen and baths are all custom designed with upscale finishes.
There is also a wine cellar.
It was built on a standard Chicago lot.
The seller is asking $464,000 more than the 2008 purchase price.
Jennifer Ames at Coldwell Banker has the listing. See all 32 pictures here.
You can also see it in person at the open house on Sunday, Feb 14 from 12-2 pm.
1728 N. Cleveland: 6 bedrooms, 5.5 baths, 2.5 garage, 6200 square feet
- Sold in August 2008 for $3,331,000
- Currently listed for $3,795,000
- Taxes of $3394
- Central Air
Wow, this guy must have had some “friends” with the CROOK county assessor, because the taxes are laughable.
The taxes were for the 2008 year, this was completed the same year, so they were probably based on the previous structure. SSDD
I was thinking that after my post. Either it was taxed as the old structure or as a vacant lot if there was nothing on it for a while. What will the new taxes be in the range of $20k-25K?
“What will the new taxes be in the range of $20k-25K?”
Yes, if it sells for around $2.5M and is similarly underassessed as other $2.5M props.
20 – 25 thousand sounds about right
I can’t begin to imagine what this “should” sell for, but it is a gorgeous home for sure. Very impressive.
Where do i sign up?
yeah this is pretty much my dream home, haven’t seen many i’ve liked more than this one.
Sonies, this place has a yard
That kitchen and master bedroom are to die for. But if I had that kind of money laying around, I would rather buy 919 N Dearborn( might not be the exact address, it’s part of Walton on the Park) and customize it to my exact liking. And have an extra 4000 sq ft….One can dream
The owner was promoted to some senior management position at a mid-market investment bank in early 2007 (pre-lehman). the owner bought the house in January 2008 (not august 2008, that’s just the date the deed was recorded), again, pre-lehman. The credit crunch happened not more than 8 months after this purchase, and now the owner tries to sell the house approximately 24 months after moving in. Talk about jumping the gun.
In addition, even though the owner’s a big shooter living in LP, the owner also has a $2,415,000 mortgage. Yes, you read that correctly, $2,415,000. Instead using the down payment to buy a million dollar home, in cash, well, you get this home instead.
In cases like this I always try to show that much of wealth is a facade, and even if the person has some money, a $1,000,000 down payment in this case, some people will leverage up in real estate as absolutely much as possible to get into the big leagues. And we wonder why LP real estate has ‘held it’s value’ more than other neighbors – LP residents simply have more cash to burn through before they have to take their losses.
Amazing.
I saw that the land sold for $1.2M in ’05. Any guesses on how much it cost to build? Go.
HD, the owner of a 2.5 million dollar mortgage would enjoy two things
2.5 million more dollars for investments in his bank account
and a really BIG tax writeoff. You need to know a little bit about how rich people allocate their assets properly 8)
Sonies, ever heard of the AMT?
and if everybody burns through their cash then we’re out of the mess right, HD? (subsequent foreclosures/bk’s etc)
“And we wonder why LP real estate has ‘held it’s value’ more than other neighbors – LP residents simply have more cash to burn through before they have to take their losses.”
Off topic – but I just received this information in an email from Lending Tree. I have been a long time lurker here and have never seen it mentioned.
Beginning early this summer, an FHA loan will cost more. Borrowers will pay an additional $500 per $100,000 financed. The Federal Housing Authority announced the following changes that will raise the cost of government insured loans:
– Upfront mortgage insurance premiums are rising to 2.25%
– FHA maximum annual premium may increase
– A 10% down payment will be required for borrowers with credit scores under 580
– Sellers can only contribute 3% towards buyer’s closing costs
Here’s a link to a Trib story: http://www.chicagotribune.com/business/ct-biz-0120-fha-loan-changes-20100119,0,396567.story
Mortgage interest deduction is capped at $1MM per year so they are NOT getting tax benefit for the remaining $1.415
homedelete — This one is a good example of how people on this blog have no idea what they are talking about. I read the comments for giggles, but seldom comment myself. BUT, I actually know the story on this one. Your guess on the story is off by a mile. Owner is not selling because he over extended or any recent bad fortune. Owner is selling because his fortunes have improved. Hard to imagine, I know, but it’s a good example of how people who post here always assume the worst and without basis.
On the property itself, I’ve seen it. It’s not my taste, but it is very impressive, very well built, and in about as a good of a location as you could imagine. No idea if it will sell because I have no idea how many people are out there as fortunate as the current owner.
HD, if you have a large enough down payment, you can get a $2+ million mortgage with a sub 5% rate. Why would you tie up all of your liquidity if you don’t have to?
HD,
I agree with much of your analysis, but mortgage interest is not an AMT add back if the mortgage is for acquiring, constructing or substantially improving a primary residence and some secondary residences. See the comments on line 4 in the IRS instructions for Form 6251. Some might construe your response to Sonies as a claim that one pays AMT on all mortgage interest.
Ithran
HD is simply a moron. Everything he says supports the fact that he has no idea the way finance works.
Back to your stuido HD!
The tax deduction on the mortgage interest would be practically non-existent due to the AMT (alternative minimum tax).
What do you think the potential population of buyers is for a property in this price range? How many people are children of priviledge (ie. CEO’s son or daughter) or earn more than $900,000 annually to be able to afford this place?
Regarding the immunity of LP. It is probably safer to say that perhaps some elements of LP has been / is / going to be less of a “fall of the cliff” situation like the South Loop because of the cash cushions that some owners have in LP.
If the cash cushion is large enough, you can potential ride it down (death slowly) and then through to the other side. This also points to not overbuying and being able to hold on to a place for 7+ 10+ years.
I’m not saying that its still not a ride down at this point in time.
I stand corrected, mortgage interest is excludable from the AMT calculation.
However, there is a mortgage interest deduction phaseout on large mortgages. I think it’s for interest for the portion of a mortgage over $1,000,000. So interest on $1,000,000 of the mortgage can be deducted, but anything over that is not deductible.
“a really BIG tax writeoff”
Mortgage interest deduction is capped at $1.1mm (I think–it’s indexed from a $1mm base as of 2002 or so; maybe its $1.15mm for ’09). So, only ~half their interest is deductible.
Dave M (does the M stand for moron?) – There have been 13 homes closed int he past 12 months above $2.5 million in Lincoln Park. There are 20 homes currently active and price above $2.5 million. I guess a lot of people have the money you are talking about?
I was just asking for the stats. I’m sure there’s a lot of Crown, Pritzker, and other rich families with lots of offspring with money that can afford these places.
There are a lot more hedge fund people in Chicago now. Lots of them make $400,000-1,200,000 a year, even last year. The heads of these funds could be making $5,000,000 plus.
Who else makes this kind of money and how many of them are in Chicago? This excludes the hedge fund and private equity people.
Biglaw partners – $350,000 – $1,000,000
Accounting firm partners – $150,000 – $700,000
Investment banking directors and above – $400,000 – $2,000,000
CEO’s of large corporations – $500,000+
Consulting firm directors and above – $200,000 – $1,000,000
“there is a mortgage interest deduction phaseout on large mortgages”
There is also a phaseout of ALL itemized deductions for high earners. It’s very slow in ’09 and ’10, but will probably come back in ’11. If you make the $1mm+/yr to reasonably buy this, I guarantee that it will hit you.
Also, I don’t know if I’d tout a (not quite) 15×15 patch of dirt as a “true backyard”. Sounds like just enough yard to be a pita w/o being really useful.
Also, also, does anyone *really* like the facade? I find it rather absurd.
There are quite a few of them. Also left out established doctors/surgeons.
But in Cribchatter land no one makes more than $80k.
13 in a year is a lot?
If anything, the rich are being more conservative with their money in the city and are not buying that much real estate. 13 closings in 12 months in LP sounds pitiful.
“Biglaw partners – $350,000 – $1,000,000”
Hehe. Top end is more like $8mm (yes, biglaw, not Corboy or Clifford; altho I *think* the 2 I know for sure at that level both live in Glencoe). Mean (not median) at the 10 or so largest firms is over $1mm. But that’s ~1000 folks.
I don’t think there’s that many Biglaw partners in Chicago earning well over $2.0M a year. We are talking 2009 here too, not 2007. Partner distributions was down at most Biglaw firms, correct?
“13 closings in 12 months in LP sounds pitiful.”
Need to define “LP” clearly–Redfin sez 35 in “Lincoln Park”, but the count in Lincoln Elem attendance area appears to be 13.
Also, Redfin sez 52 listings of $2.5mm+ in “Lincoln Park”, with ~20 in Lincoln Elem area.
In any case, it’s ~18 months to clear, assuming no new listings (unreasonable assumption). Which actually isn’t too bad for that price level.
““a really BIG tax writeoff”
Mortgage interest deduction is capped at $1.1mm (I think–it’s indexed from a $1mm base as of 2002 or so; maybe its $1.15mm for ‘09). So, only ~half their interest is deductible.”
On a 2.5 million dollar mortgage (30 years @ 5%)you are only paying about 120k (in the first year) of interest… Still if you’re in the top tax bracket that will save you about 45k a year in taxes
“I don’t think there’s that many Biglaw partners in Chicago earning well over $2.0M a year.”
No, but there are ~1000 averaging $1mm. And the $350k is a reasaonble approximation for those anchoring the average.
It’s probably 150+/- (again, at top 10-12 firms only) over $2mm (many of them likely just over), but most of them live north shore or oakbrook/hinsdale and unlikely to buy a SFH in the city. And yes, that is 2009, not 2006.
“On a 2.5 million dollar mortgage (30 years @ 5%)you are only paying about 120k (in the first year) of interest… Still if you’re in the top tax bracket that will save you about 45k a year in taxes”
Um, what part of capped dedcution was hard to understand? 5% of $1.1mm is $55k. Top tax rate is 35%. That’s $19,250, max, in tax savings attributable to mortgage interest.
And, if your AGI is $1mm, then you’d lose at least $8400 of itemized deductions to the limitation (which doesn’t exist in ’10, but is set to spring back in ’11, as I understand it, and will be for 3%, rather than 1%, as in ’08 and ’09–so the reduction would be ~$25k).
The $1.1M limit is on the size of the mortgage, not the amount of interest paid annually.
Mortgage interest deduction cap is based on the mortgage amount, not the interest amount. In Sonies example, only 44% ($1.1M/$2.5M)of the $120K of interest would be deductible ($53K) resulting in tax savings of about $20K.
“The $1.1M limit is on the size of the mortgage, not the amount of interest paid annually.”
It’s the limit on the deductibility of interest related to a mortgage–you don’t lose the deduction completely if your mortgage is $1.2mm. You can have a $5mm mortgage, but can only deduct interest on the first $1mm (I checked–the limits are $1mm first and $100k 2d, not $1.1m combined)–there’s a table to calculate the ratio of mortgage balance to $1mm and the dedcutible interest. See IRS Pub. 936 for full details.
whatever, I never said I was a douchebag accountant so sue me…
20k is still 20k for not having your cash tied up and is still a pretty good thing.
Re interest – who cares?
If you have the cash to pay for this place the interest deduction is not a deciding factor. It’s just the difference between whether you buy a top of the line Mercedes or a Bentley. Or whether you eat at Alinea every night or Naha.
“20k is still 20k for not having your cash tied up and is still a pretty good thing.”
No, it just reduces your cost of funds from 5% to 3.25%.
Which I agree is really cheap liquidity and hard to pass up–as long as you make over 5 on your free cash, you come out ahead, after taxes.
No one is saying that rich people shouldn’t live in homes like this or that there aren’t plenty of wealthy people.
However, the fact that this guy has a $2.4 mil mortgage (for a $20k tax savings) on a $3.3 mil home (up for sale 24 months later) tells me that this guy jumped the gun on buying his multi-million dollar home. Too many people jumped the gun and moved up one or two brackets higher than they should prudently should have and now they’re collectively paying the price.
There is definitely a large amount of facade and people who like to play rich when in they’re just upper-middle class. The owner is less than 40 years old. Maybe after 10 years of $1,000,000 salary + bonus a year he’ll be ‘wealthy’ enough to afford a place like this but a $2,400,000 mortgage is like mortgaging your future income just to get the good life now.
And if any has learned anything this recession, it’s that your income will probably not remain constant nor will it always exponentially increase year after year.
“the count in Lincoln Elem attendance area appears to be 13”
There’s no way to search by school easily, is there? You are doing a count based on knowledge of boundary?
“Limestone” facade? NOPE. Cast limestone (a mortar mix). Big difference. But most buyers don’t recognize it…If you want real stone you will have to find one of those old Greystone homes. Seems a liability for sellers to list as limestone when it is’nt.
Does anyone really like the facade?
Out of proportion: too small a front door for the size of the home (seems more narrow than the first floor windows) and the top floor is trying to imitate a Paris artist garret (feebly).
As to truly wealthy people: they pay cash.
Homedelete –
Again lack of imagination and unfounded assumptions.
I don’t know this owner’s exact financial circumstance, but considering what you already know about his profession I think you should assume something more like $500k year salary, with $1m -$3m a year in bonus. He may be less than 40, but he was probably in a position to pay cash if he wanted to. He probably CHOSE not to pay cash NOT because of the mortgage deduction but because he could earn more on his money than he would pay in interest.
Like it or not, there a lot of people in this city that have more money than you know what to do with. Many of them got there by being smart about money.
re: Taxes–
2009 assessed value is $321,122. If EqF is ~3 (likely) and tax rate is ~5% (also likely), taxes will be over $40k, possibly over $45k.
All I know is that I’m filing my adoption papers. If they trade me out for that baby (named Clara if the photo is correct) and adopt me I’ll be the butler. With that lux home, fully stocked wet bar, wine cellar, and media room I might never leave. I’d even contribute some rent cash so that they don’t have to sell.
Good pad! Great taxes. Somehow that tax bill seems low for plain dirt in that location. Suspicious…..
DZ: “There’s no way to search by school easily, is there? You are doing a count based on knowledge of boundary?”
Nope and yep. And just approximating the boundaries, so there might be +/- 1 or 2.
hd: “The owner is less than 40 years old. Maybe after 10 years of $1,000,000 salary + bonus a year he’ll be ‘wealthy’ enough to afford a place like this but a $2,400,000 mortgage is like mortgaging your future income just to get the good life now. ”
Didn’t check *her* out, did you? Wealthy parents, so who knows?
“Somehow that tax bill seems low for plain dirt in that location.”
Land is *seriously* under-assessed. The supposed market value of the land is $226,800 (=AV of 22,680), and was $142,881.25 in 2008 (with an improvement value of $5k).
Agree with Anon on his last point.
HD seems to assume the owners’ (there are two) wherewithal comes simply from current income. That is not a safe assumption in this price bracket. The mortgage here is likely collateralized by additional assets / sources of wealth, which one could reasonably assume are liquid securities. High net worth families use this type of funding all the time for obvious reasons.
I love that we have Stevo hear to beat the drum of borrowing and buying. God bless and good luck.
In many ways all of us are unprepared for what comes next, having lived through the biggest credit expansion in history and having to unlearn the lessons we were taught. I don’t know about you, but the most valuable thing that money can buy is peace of mind. It’s great not having to worry about buying food or paying rent, or where my career is headed, or what my egotistical boss thinks of me, or whether a clerk at the bank thinks I’m a good risk. No fancy clothes, car, or house comes close to giving me the same level of contentment.
Anyway, this place is all about ego. Just look at that retarded facade.
“Just look at that retarded facade.” I am calling Sarah Palin right now. You are introuble…
This home has inspired me to finally buy and read Baudrillard’s “Simulacra and Simulation.”
““Just look at that retarded facade.” I am calling Sarah Palin right now. You are introuble…”
I think Chris is actually Rush (or at least a friend), which means he gets a pass.
Heaven forbid. Is that the vibe I give off?
“Heaven forbid. Is that the vibe I give off?”
Not at all. Just a dig at SP that you were dragged into thanks to lowercase stevo.
HD, you make way too many assumptions about people’s finances. What it looks like and what is really going on in this price bracket can be world’s apart.
Case in point. I have a client who was also at Lehman right before the bust but in NYC. I did his mortgage for $1.4 million. He was making about $1 mill/yr at the time.
He left right before Lehman folded and went to another bank and landed at a hedge fund. I got a call from him yesterday looking to buy at $3.6 million dollar place. He sold his other place after barely 3 years of ownership. He only put 20% down when we he bought it. He is now looking for a $2.5 million dollar mortgage with around 30% down. He made nearly $5 million last year and around $3ish the year after he bought his first place.
But of course, if we just look at what was recorded on the first place, you would assume like in this case, that the owner is leveraged to the hilt with no cash and the only reason they are selling is because they can no longer afford the place.
“I have a client who was also at Lehman right before the bust but in NYC”
The subject individual never worked at Lehman; HD was using it as a calendar reference.
You know this is pointless, it’s pointless to speculate how wealthy these owners *must* be because they live in a three million dollar house. I shatter the ugly facade and posit the question, what if they’re not truly rich but in fact have a decent income with a lot of leverage.
I mean when I see the guy driving the escalade with the spinning rims and the chrome bumpers and the tinted windows, I think yeah, he must be really rich, just because he’s got a really nice car.
Because of course, as we all know, people never flash wealth or buy fancy expensive homes or cars on credit; and that never happened in early 2008. Truly wealthy people buy three million dollar homes and take out 2.4 million dollar mortgage for the tax write off, of course. That must be it.
Sort of reminds me of a Seinfeld episode:
Jerry: So, we’re going to make the post office pay for my new stereo now?
Kramer: It’s a write-off for them.
Jerry: How is it a write-off?
Kramer: They just write it off.
Jerry: Write it off what?
Kramer: Jerry, all these big companies, they write off everything.
Jerry: You don’t even know what a write-off is.
Kramer: Do you?
Jerry: No, I don’t!
Kramer: But they do. And they’re the ones writing it off.
Jerry: I wish I had the last twenty seconds of my life back.
Extrapolating from other tax bills I’m seeing for Chicago houses in various price brackets, the taxes for this house should be about $40K on the next tax bill.
It’s beautiful, and I wish I could afford it. It is worth $2M.
But is it worth $400K more than it worse worth in 2008, really? Is ANYTHING worth more than it was in 2008, except a recently developed lot?
“You know this is pointless, it’s pointless to speculate how wealthy these owners *must* be because they live in a three million dollar house.”
You’re right, your post is pointless.
“I mean when I see the guy driving the escalade with the spinning rims and the chrome bumpers and the tinted windows, I think yeah, he must be really rich, just because he’s got a really nice car. ”
If you think that, you’re a dumbass.
” I wish I had the last twenty seconds of my life back.”
Pretty much sums up how I feel after reading your post. I really hope you weren’t serious.
Hey Sonies, you’re the guy who tells rich people to take on $2,400,000 mortgages for the tax benefits, and you’re calling me the dumbass?
“Extrapolating from other tax bills I’m seeing for Chicago houses in various price brackets,”
But you *can’t* know what the tax bill is based on other tax bills–all we have so far is a bill that is 55% of last year’s bill (which for this place will result in a HUGE 2d half bill, no matter what). NO ONE at present knows the actual amount of 2009 (payable ’10) proeprty taxes, nor will they ’til at least July (I’d wager that they get them out early b/c (1) they’re broke and (2) you don’t want the bills coming out right before the election).
Using reasonable guesses of EqF (3) and mill rate (5), and assuming no successful appeal of AV, taxes should be north of $45k.
“you’re the guy who tells rich people to take on $2,400,000 mortgages for the tax benefits,”
I never said any such thing, where did you get that from?
“‘you’re the guy who tells rich people to take on $2,400,000 mortgages for the tax benefits,’
“I never said any such thing, where did you get that from?”
This:
“20k is still 20k for not having your cash tied up and is still a pretty good thing.”
could reasonably be interpreted that way.
Yeah, um no. If it were anyone asking advice from me, I’d have told them to not buy a 3 million dollar 6200sqft house… nobody needs a 14 room 6200sqft house unless you have 12 kids and even then you should be saving money for their college educations instead of wasting it on a money pit!
OK sonies, upon review, you’re right, you never said that you tell people to do that. I’ll retract my statement.
“#Sonies on February 18th, 2010 at 9:18 am
HD, the owner of a 2.5 million dollar mortgage would enjoy two things
2.5 million more dollars for investments in his bank account
and a really BIG tax writeoff. You need to know a little bit about how rich people allocate their assets properly 8)”
So, for almost $4M I get a LR/DR combo?
“So, for almost $4M I get a LR/DR combo?”
And an open kitchen. I can’t believe no one’s complained about the open kitchen.
anon (tfo), you are right. I was only going by the “eyeball” method since doing a close calculation of taxes on a $2M house is a pretty pointless exercise for someone in my price bracket.
But I am sure doing it on the properties I’m looking at for myself. I hate big surprises.
i’m smarter than you are.
Laura–just trying to clarify. I think that 1.5% of the 2009 assessor’s MV is going to be reasonably close (I hope it’s lower–more like 1.25%–but have low expectations), so I’d suggest using that as your reality check.
“a close calculation of taxes on a $2M house”
Even with everything else, if this were listed for “only” $2mm, it would have sold before the open house (if the post is correct that the OH was last weekend).
No matter what, anon, the tax hit is going to be cruel in all price brackets.
The additional tax load has to have downward pressure on prices, especially in lower price brackets. It might not matter for upper bracket homes like this- if I had the money to buy it, an extra $20K in taxes would not wound me, even though I would resent it like hell.
“So, for almost $4M I get a LR/DR combo?”
“And an open kitchen. I can’t believe no one’s complained about the open kitchen.”
I dunno, I kinda like the open kitchen…
Seriously, I don’t understand why in this price bracket you would get a double lot? How much is this lot? Is it more than $500K? $600K? Why wouldn’t you put some of the money toward that?
I know the builder is building on the lot he has, but aren’t lots cheap enough that it would make sense to only build pricier homes on double lots? Same as how it wouldn’t make sense to put a really fancy home in a crappy neighborhood. Why put it on a single (and thereby crappy) lot?
“I don’t understand why in this price bracket you would get a double lot?”
I meant why you WOULDN’T get a double lot.
“if this were listed for “only” $2mm, it would have sold before the open house ”
Agree 100%. This house trades well above that.
“but aren’t lots cheap enough that it would make sense to only build pricier homes on double lots?”
I think in that area you are *still* around $1M per 25×125 and there is a 10% to 25% premium for contiguous lots, so no.
Quoting a set % for taxes on a wide range of prop values does not take into acct that the homeowner’s exemption is a flat amount, thus diminishing %-wise as value rises.
As for those bills coming out early in an election year? No way unless they are absolutely positively cross-their-hearts certain that the voters won’t see higher tax bills. Besides, the assmt level change basically put the entire county into play for appeals so the Board of Review will be lucky to complete their hearings by July.
DZ, I couldn’t agree more. This price range should not be on a 25-footer.
“How much is this lot? Is it more than $500K? $600K? Why wouldn’t you put some of the money toward that? ”
Per PDubbs above, the lot (actually a reasonably nice looking (outside) 2.5 floor brick cottage) was $1.2mm. There is a real difficulty in finding available adjoining lots in OT (or LP, for that matter). Your best bet is to by something next door to a small old house still occupied by someone who bought in the 60s or 70s and hope to get a cahnce to buy before they list.
And a developer will make much more money building two houses than one house with a vacant lot.
“As for those bills coming out early in an election year? No way unless they are absolutely positively cross-their-hearts certain that the voters won’t see higher tax bills. Besides, the assmt level change basically put the entire county into play for appeals so the Board of Review will be lucky to complete their hearings by July.”
So you think the bills won’t be due until 2010? I don’t think they can float that, can they? Remember, the election is November 2; they can’t rewasonably send out the bills *after* that and have them payable in the first week of December (which is also too late, I think).
And, on the flat %, of course not. As with any super easy RofT, the accuracy will be suspect, but it’s better than taking some interested party’s word for it or stabbing around blindly. Plus, it probably overestimates actual o/o taxes on the low end (where it matters more to be conservative in estimating) and may underestimate slightly on the high end, where if $200/month causes a problem, you have a hell of a lot bigger fish (like frickin moby dick) to fry.
Dave M,
Profits per partner were up this year at many firms thanks to the big layoffs last year. WSJ legal blog has a story on it – http://blogs.wsj.com/law/2010/02/17/biglaw-profits-up-up-up/.
Interesting though that one could have Tony Rezko’s house for less. Yes it’s not Lincoln Park, but it solves the double lot question. Plus you can hit Ricketts up for Cubs tickets while out walking the dog.
http://www.redfin.com/IL/Wilmette/1250-Chestnut-Ave-60091/home/13784970
“one could have Tony Rezko’s house for less”
If my only two choices were these, at ask, with the ~$20k tax differential, I’d take Rezko’s pad. And I *really* like OT.
“No matter what, anon, the tax hit is going to be cruel in all price brackets.”
How come you keep saying this? I don’t necessarily doubt you, but where are you getting this impression?
“How come you keep saying this? I don’t necessarily doubt you, but where are you getting this impression?”
Shift (expected) of tax burden from commercial/industrial to residential + reasonable expectation that the levy will increase.
“There are a lot more hedge fund people in Chicago now.”
I disagree with this. I’ve met some Citadel folks, yeah. But when I was in b-school the constant theme from the hedgies was that most all the opportunities were in NYC and to land a Chicago position you really needed to know somebody or be blessed.
“CEO’s of large corporations – $500,000+”
C-level execs of large corps are such a small population its not really worth mentioning. Also every large corp I’ve worked for around Chicagoland I remember the C-level execs all seem to live in the burbs. Old money would be a better segment to list.
“Shift (expected) of tax burden from commercial/industrial to residential + reasonable expectation that the levy will increase.”
Makes sense, I think the ambiguousness of “cruel” is what scares me.
Congrats CribChatter! You made it 84 comments before the burbs crept in… unless I misssed something.
“JMM on February 18th, 2010 at 2:03 pm
Interesting though that one could have Tony Rezko’s house for less. Yes it’s not Lincoln Park, but it solves the double lot question. Plus you can hit Ricketts up for Cubs tickets while out walking the dog.
http://www.redfin.com/IL/Wilmette/1250-Chestnut-Ave-60091/home/13784970
“C-level execs of large corps are such a small population its not really worth mentioning.”
Yeah, but with a $500k income threshold, we’re not exactly talking about actually *large* corps.
“So you think the bills won’t be due until 2010? I don’t think they can float that, can they? Remember, the election is November 2; they can’t rewasonably send out the bills *after* that and have them payable in the first week of December (which is also too late, I think).”
We’ll see. Keep in mind that the 2008/pay2009 second installment wasn’t mailed until 10/27/09 and was due 12/1/09.
They will not get them out early due to the number of appeals. The assmt level change put the entire county in play, as opposed to the typical 1/3 in a year. They will not send bills out close to election day if they contain bad news for homeowners. They will act in their best interest only and I wouldn’t be surprised to see “unexpected” delays. They will delay it more and borrow to get an advance of the revenue at interest cost to taxpayers if needed, rather than cost themselves an election.
“Keep in mind that the 2008/pay2009 second installment wasn’t mailed until 10/27/09 and was due 12/1/09.”
That, of course, would be the worst scenario for the incumbants–people receiving their bills a couple of days before the election.
Does anyone here actually work or do you just make negative comments on properties you can’t afford? “Madeline” and the anonymous “TFO” should be living in Plainfield together where they can get a living room and dining room that are not combined.
Yes, so what’s another week’s delay?
“so what’s another week’s delay?”
Disgusting, despicable and totally, totally expected.
Hey G and anon-
Just following up re: my recent purchase and tax bill questions. Dug around a little more last night and figured out what happened. There might be others on here that are thinking about buying or have recently purchased, so I thought it might be useful to post. I wish someone would have laid it out for me. I guess I thought that was what a buyers agent is for. Silly me…
During the negotiations, the existing low tax figure was a real selling point for us. We are in a relatively ‘un-hip’ area of the NW side, out near the Francisco brown line stop. I figured that the low taxes was a product of the neighborhood.
Turns out, our AV went up 50% between 2008 and 2009. The catch: previous owners had purchased in 2007, so their taxes for last two years were based on earlier valuation. Fortunately, for them, the home had been in the same family for 20+ yrs prior and was being assessed at much, much below market rate. Unfortunately, for us, the reassessment brought the valuation up to market value, which in turn bumped up our tax burden considerably.
Thankfully, we purchased well under what would be comfortable for us to manage, so $100-200/mo isnt going to send us to the soup kitchen. However, I definitely wish I would have had a better grasp on the upcoming changes prior to purchase negotiations. But, as they say, hindsight is 20/20…
[JCB’s situation]
This *should* be one benefit of the reset on the AV:MV ratio–you can tell (approx) what should happen to your taxes based on what you pay and the current AV–you should expect a re-assessment to ~10% of purchase price, unless you’re paying less than current MV (which will likely require an appeal to get the reduction).
“I thought that was what a buyers agent is for.”
JCB,
Common sense does not apply there. You are safest to assume that they are only around to access the mls and unlock doors. Everything else falls under caveat emptor. I’m not saying there aren’t any good agents. I am willing to bet that the very best listing agents are well aware of the timing necessary to take advantage of this situation.
I’d be very curious to see what some of our regular realtors that work with buyers here, say Eric Rojas or Gary Lucido, have been instructing their buyers to do with the proration clause in their contracts?
I timed the sale of my last investment props as much due to the 2006 reassessment as in my belief we were at the peak. I was in a rapidly gentrifying area where AV increases lagged in prior years and thought that the 2006 reassessment could help to trigger the start of the correction. It probably did a little bit, except not until the 2nd bill arrived in 2007. That’s when most people realized what that notice of assmt they received up to a year earlier really meant.
I hope a buyer is reading this today and has learned to mercilessly negotiate this point with a seller in you honor.
Enjoy your home.
“I thought that was what a buyers agent is for.”
If you are buying in an area where you already live and have a good attorney, I can’t figure out why you’d give up 2.5% to an agent. Not that you’re necessarily going to get a $ for $ reduction in the price for the savings on the commission (I’m sure the selling agent would try to take it all) but it’s at least a negotiating point. At least that’s what I hope 🙂 My boyfriend (who is a partner at a “biglaw” firm, hence access to a good attorney) and I are looking and are not using an agent. That said, if you’ve never bought before, don’t happen to know the area, and/or don’t happen to know a good attorney, I can see the value.
Need to check with the bf on the “biglaw” salaries; I’m pretty sure the range (in Chicago) is more in line with what Dave M proposed ($350,000 – $1,000,000) although the upper end of the range is probably more like $2-4mm; I’m sure there are a handful of top partners making >$4mm, but that’s maybe 25, 50 people in the whole city? I consider those outliers.
knm477, you can also go with a discount broker as your buyer’s agent that refunds part of the commission to you. I think redfin, buyside and webdigs are examples but haven’t dealt with any of them so due diligence rules the day.
Did anyone who reads Crib Chatter read “Millionaire Next Door”? Apparently most millionaires live a lifestyle far more modest than their wealth would permit, and most “flashy lifestyles” are not supported by deep-pocket savings. Book is worth reading.
Regarding big-law senior partners, I know a number of lawyers who fit that category, and none of them live in a house more expensive than $1.5 million at the upper-limit, and paid no more than say $.5 million for the actual property when purchased. Most of these guys are in mid 50s to late 60s. There aren’t as many young middle-aged partners as you think, much less “young” young partners in their early thirties.
This house has a large mortgage recorded against it. That says a lot about the current owner.
“I’m pretty sure the range (in Chicago) is more in line with what Dave M proposed ($350,000 – $1,000,000) although the upper end of the range is probably more like $2-4mm; I’m sure there are a handful of top partners making >$4mm, but that’s maybe 25, 50 people in the whole city? I consider those outliers.”
Being a partner in biglaw* makes you an outlier.
As I said, ~150 at $2mm+, counting about a dozen firms, and about 1000 averaging $1mm**, with the median probably around $700k. That means that it’s probably about 100 b/t 2 and 4 and ~50 over $4mm.
If you throw out the 5% at the top, you should throw out the 5% at the bottom and call it $450k-$4mm, or if you throw out the 15% at the top, you should throw out the 15% at the bottom and call it $500-$2mm. There is no reasonable formulation of “biglaw partners” in Chicago where a range of $350k–>$1mm makes sense. You’re excluding 30-40% of the partners.
*biglaw as I use it is about 12 firms plus small outposts or non-Chi firms, which don’t add much to the headcount. Expanding it to include ~200 lawyer firms (still big) does change this.
**that’s excluding (generally/approximately) the fake (non-equity) partners.
Taxes will be around 40k per year. If you owned the land here how much do you think it would cost to build a house similar to this? Land I feel is valued around 1 mil or more in this location, but does it cost 2.3 mil+ to build this structure? Wouldn’t you be better off buying land and designing your own? Really sweet place though.
“This house has a large mortgage recorded against it. That says a lot about the current owner.”
No architect, you have it all wrong. The truly wealthy according to cribchatter take out mortgages for tax deductions, asset allocation and/or other undisclosed reasons. You can’t judge or make assumptions about someone’s by the size of their mortgage. You have it all wrong 😉
/sarcasm
There is a pretty big difference between the top tier biglaw firms and the others. Amlaw has the top 20 firms for 2009 PPP – firms in the top 20 with offices in Chicago are:
Skadden – $2.065 mil
Kirkland – $2.47 mil
My guess is Latham is at $1.8, Mayer and Sidley around $1.2-1.5. Its not a ton of people, but its serious money.
That said, I really think there is a big difference between the top few firms and the rest.
“I really think there is a big difference between the top few firms and the rest”
Yes, there is.
Maybe he borrowed 2.4 million at 5% and put it all in the stock market in 2009 and made somewhere in the ballpark of a 25% return.
He works at an investment bank so it matters not what he did with the money since the taxpayers got his back.
“Maybe he borrowed 2.4 million at 5% and put it all in the stock market in 2009 and made somewhere in the ballpark of a 25% return.”
That can’t be b/c HD *knows* that anyone who borrows money thru a mortgage must NEED it to be able to pay for the house. There are no other reasons to take on that liability, no matter how much money you have nor how it may be invested. Deviation from HD’s expectations means you are a fool, charlatan, deadbeat (current or future) or some combination thereof.
Architect,
Yes have read it…. being a millionaire today doesn’t mean you are rich, granted you are better off than most Americans. If you look at most people that win the lottery in five years are broke, why because that didn’t understand that today a million dollars isn’t what it was 30 years ago, it can be gone in a flash.
Based on my experience and I know that HD won’t agree with me but most people that buy +$3 million dollars homes have assets that far exceed their homes value. You guys really need to stop speculating that a persons finanical stability in inversly proportional to the size of their mortgage.
Did anyone who reads Crib Chatter read “Millionaire Next Door”? Apparently most millionaires live a lifestyle far more modest than their wealth would permit, and most “flashy lifestyles” are not supported by deep-pocket savings. Book is worth reading.
Re discussion on law firm salaries. Inside perspective: average profits per partner info doesn’t tell you much other than lawyers make a lot of money. The distribution within those firms varies greatly. I once worked at a big firm and saw (not on purpose) the comp chart. This is a firm with about 400 lawyers in Chicago. Rough numbers: 75 of those are equity partners, 125 are income partners, and 200 are associates. The highest equity partner was at $4m. There were probably 5 north of $2m. There were probably 25 north of $1m. The rest averaged around $700k, with the low end at $350. Income partners ranged from the low $300’s to the low $600’s. Also keep in mind that there are of counsel and sr. associates – so probably another 50 people — making in the low $300’s. This was not a “prestigious” firm, just a big firm.
In sum – at this firm alone there were about 25 people making over $1m, and about 250 making over $300k.
I’m sure at Kirkland, Skadden, etc. the numbers are higher. There are also quite a few good small firms where the attorneys make just as much if not more.
I have a net worth (net of everything) of over $5M, almost all liquid. There is no way I would ever buy such an asset as this esp while taking on debt. I would have to be pretty darn sure that the home would appreciate more than the mortgage payments (interest + principle), taxes, maintenance, etc. to even begin to take on such a worry. If I was pretty certain the home would go up 7%+ per year, then I might bite but living modestly without worries is really what having money buys. I for one certainly don’t want to be enslaved to “stuff”. I love having the money to simply not care what others think or to cowtow to others…it is my “tell them to go to hell” if I want to money. LOL
I agree with you valasko that most people who buy 3 mil plus homes have substantial assets. But today we are talking about this gaudy home with a 2.4 mil mortgage in Jan 2008.
Yes homedelete, that is what we re talking about today. And I and others have already pointed out that you have no basis to think that the owner of this house does not also have substantial assets. Your only reason for thinking this seems to be that there is a $2.4m mortgage. As explained above – rich people take mortgages for a lot of reasons. Especially when the rates are low. Not hard to imagine that a successful investment banker might know of an investment opportunity where he thinks he can make more than 6% return. Not hard to imagine that he might decide to put his $2.4m into that investment and take out the mortgage on the house. This is not living beyond your means, this is intelligent financial planning with acceptable risk.
when i look at this house i don’t see an escalade with spinners. luxurious yes, but gaudy….um not so much. more like a classy looking mercedes in my opinion
Uh huh. Why tie up money in the 3mil house; liberate your equity into the stock market and get a 25pc return. That’s what mortgage brokers told their clients as they put their clients into a toxic mortgage. And you believe this is intelligent financial planning with acceptable risk. Amazing.
And anon, I have more than enough basis. The promotion 12 months before buying the house, the resale after 24 months, the credit crunch, the 2.4 mil mortgage, middle market investment banking……
Your evidence- looks at the spinning rims, ignore the large mortgage, ie he bought the house so he must be rich.
I’m not saying I know the answer, I’m saying there’s enough red flags to be skeptical of this guys wealth. You should really be more skeptical.
serious question though — why is it listed higher than the ’08 price?
if it’s a wealthy banker who is looking to upgrade or got transferred to NY or something, he’s gotta at least know he’s not going to get more than he paid 18 months ago.
if i’m him, i put this on the market for 5% less than ’08 price and try to get this thing finished ASAP.
The guy is the manging director of a very large corp. I think he enough money.
Just google the guys name HD. Why are you so challenged?
Really rich, i’m sure.
and really smart too, b/c he listed his home higher than the ’08 purchase price.
maybe he’s a contrarian investor.
….better than contrarian chatterer. kidding
if you had a satelite with a lazer beam attached and instructed it to beam down to the nicest part of chicago, it would be close to this house.
Lincoln Park nice? Come on… it is just over priced homes with a bunch of over leveraged people. Ordinary people with ordinary jobs will soon take over Lincoln Park. After all, we should all be able to afford to live whereever we want.
“if it’s a wealthy banker who is looking to upgrade or got transferred to NY or something, he’s gotta at least know he’s not going to get more than he paid 18 months ago.”
He’s a big ol’ big swingin’ banker tay. Don’t you know that the realities of the RE market don’t apply to his tranche of society?
Afterall him and his ilk _really are different_. At least that’s what his listing agent probably confirmed for him to get the listing.
I am starting to think that listings like these might not even be delusional sellers but rather a tactic. By listing at an artificially high price, when they actually have to cut the price maybe some guillable buyer will think they are getting a deal. Afterall who doesn’t like a deal that is _20 PERCENT OFF!_.
Start at least 5% higher than what you paid for the place at the peak, then when you have to cut it 10% the buyers think they are getting such a killer deal.
Yeah Bob – The people who can afford the $2.5 million house are dubm enough to think they are gettihg a great deal because the house was once listed at $3.5 million. You are a genious!
Seriously, are you guys real?
Look at 1922 N Hudson. Closed Jan 19th 2010 for $3.4 million. Listed at $3.8 million. Same house, same startegy.
Let’s see, is the listing agent right, or is Bob and the other chatterers right?
or 1927 N cleveland that old for 3,950,000 on 8/31/09 listed at 4,175,000. bit nicer house, same strategy.
i figured someone buying a 3.5 million dollar house would either
1) know something about real estate and not pay more or nearly the same as someone did in 2008.
or
2) have a somewhat competent agent that would inform them of this fact.
I figured that someone selling a house like this would know all of the above and wouldn’t bother playing games and would rather just list it at close to a fair price, let a buyer come in, bid 5% lower, and sell it there.
I guess I shouldn’t assume those things. Obviously, steve, the strategy makes sense, I’m just shocked it actually works. What you are basically saying is that that the only reason these houses are closing at the prices they are is because many buyers are naive, which is actually the point most chatterers are trying to make.
Why would you assume they are naive? The are buying the best properties int he best area of the city. Maybe you are the naive one??? perhaps?
Help everyone… the list price is tricking people. Call the rich police as there is a rich crime in process 🙂
I f’n hate dumb people!
i know a lot of rich people that are naive when it comes to areas outside their core competencies.
there’s absolutely nothing wrong with this “clever” listing strategy. all i’m saying is that i’m surprised that it works.
and btw, steve, the primary reason i read this blog is so that one day i am not one of the people who pays 3.7m for a 3m home. perhaps i will not be the naive one after all.
In my experience, i-bankers aren’t particularly good investors – most i-bankers (even sales & trading) just sit back and collect fat commissions… often well-disguised commissions.
“Not hard to imagine that a successful investment banker might know of an investment opportunity where he thinks he can make more than 6% return. “
One thing I’ve learned over the last 20 years is that financial services pays far higher than any other industry. By a long shot. I’d say that for every senior/top person in a regular industry making $XXX, there are 20 people in finance making that same amount, with a high probability that 18 of those 20 have lower IQs.
I know a guy, from Iowa, nice guy (good for him), no IL or Chicago connections, who happened to end up as a MBS (mortgage-backed securities) salesman in the 1990’s who makes tons of money and owns a huge house off Sunset Ridge Rd. This person is no different than your average worker, in IQ or talent, because I’ve drank countless beers with him and his typical Chicago buddies (earning far less, no less smart) but he happens to work, and ended up, in this high-paying field.
I think it’s a sign of the US downfall, where truly productive people like engineers, etc. are paid so pitifully as compared to a mortgage bond salesman.
Oh yeah…my real question:
If this is a “standard Chicago lot”, then what FAR did they have to get 6,200 square feet?
25×125 = 3,125 sf
which would make the subject FAR equal to 2.0.
This is a 3 story building, and if I remember correctly the old R-4 was only an FAR of 1.2.
Why is it that these LP mansions seem so much BIGGER than say a house in Lakeview or Roscoe Village?
How do they get the sq. ft. on the lot???? and still have a yard?
How do they do it?
Zoned R5 which equates for differance in square footage
“I think it’s a sign of the US downfall, where truly productive people like engineers, etc. are paid so pitifully as compared to a mortgage bond salesman.”
Tell me about it 🙁
I certainly don’t value my contribution to society (well, at least when I’m not spending downtime commenting on the internet) based wholly on my salary, but god damn it would be nice if the job market did!
On the discussion I started above re what you would do with the money if you didn’t put into the house:
People at this level don’t rely on the stock market for their investments. Homedelete, you are delusional if you think the owner of this place isn’t rich. Your equation of this owner to a guy with a spinning rims just shows how little you grasp the difference in wealth distribution in this country. Yes this country is filled with guys with spinning rims who aren’t rich but act like they are. But there is also a small section of the population that actually has money. A lot of it. Enough that you would probably grab your pitchfork and run into the street to start a revolution if you really understood how much. The owner of this house is likely one of those people. He can afford the house and he doesn’t invest his money in mutual funds.
“you are delusional if you think the owner of this place isn’t rich.”
And, again, everyone is focusing solely on the dude. Women have controlled their own assets for over a century, so it shouldn’t be a surprise that his wife (likely) has substantial assets, too. No one here *knows* their full financial picture.
HD thought it was risky to have a school loan at 2.5%. So of course he thinks a home loan at 6.0% is beyond reckless.
6 mos. later- crib chatter hasn’t changed a bit.
Anon, let’s analyze your logic:
Dude has a big house, ergo, he must be rich.
Wow. I’m impressed, tough to argue with that logic.
OTOH, my research has discovered:
Wow, this guy really jumped the gun with his $3.3 million dollar purchase. He used to live in a $890k LP row house on Mohawk in 2005 and he upgraded to this 3.3 mil home in 2008, about 11 months after his ‘big promotion’ at his middle market investment bank. He buys the big house in LP and 6 months later the stock market crashes, the credit crunch happens and he’s paying a $2.4 million dollar a month mortgage….. Now it’s up for sale 24 months later.
Like I said, maybe this couple is just SOOOOOO wealthy and they’re moving to a $10 million dollar estate in Lake Forest, but I doubt it.
This is what I’m talking about, the story is a year old but it’s on point:
http://marketplace.publicradio.org/display/web/2009/02/17/pm_greenwich_recession/
““you are delusional if you think the owner of this place isn’t rich.””
“And, again, everyone is focusing solely on the dude. Women have controlled their own assets for over a century, so it shouldn’t be a surprise that his wife (likely) has substantial assets, too. No one here *knows* their full financial picture.”
Very good point. I should know better.
http://www.bloomberg.com/apps/news?pid=20601109&sid=arOzIUvhbr1o&refer=home
Here’s another story about the “truly wealthy” hedge fund investment banker types
So much kool-aid to drink, so little time.
From HD’s second link:
““The hedge fund people that lost $200 million still have $200 million,” said Adam Zeiberg, a real estate broker with FirstService Williams who leases retail space on Greenwich Avenue. “They have tremendous amounts of money.” “
Oh yes, the truly wealthy, I forgot:
(slow load!)
http://www.vanityfair.com/magazine/2009/01/wall_street200901?currentPage=1
The rich truly are different
Wow if Mr. Hedgie’s market timing in securities is anything like his RE market timing as an investor I’d keep my cash and my 2 and 20!
I’m big swingin’ hedgefund guy! Past returns and remuneration are an indicator of future ones as sure as February snow.
Uh, come anon(tfo), seriously….
“a real estate broker with FirstService Williams who leases retail space”
“Uh, come anon(tfo), seriously….”
Dude, you’re the one who cited it, for the specific purpose of discussing wealty hedgies. The article talks about how many hedge funds are in Greenwich (100+), expected job cuts (about 14%) and that quote. Tell your clerk to do a better research job next time.
Bob–owner is in mid-market M&A, and is not a hedgie.
having a 2nd anon is confusing.
The story is about the stores all shutting down and nobody buying anything. Then the article cites, as a counter-point, some broke-ass realtor saying that hedge fund mangers may have lost $200 mil but they still have $200 mil. So, you can either look at the evidence of the destruction all around, or, you can believe the realtor who says that everybody is still rich but just aren’t spending money.
All I’m trying to do is open people’s eyes; a lot of wealth has been a facade; people commonly think someone is wealthy when in fact they just have a lot of debt. Always be skeptical, don’t fool yourself. Of course some people have lots of money, the pritzkers, old money on the north shore, etc, but there used to be a lot of people, many many people, who were just playas, and the bust is showing the truly wealthy from the people who only acted like it.
“The story is about the stores all shutting down and nobody buying anything.”
Yeah, cuz Hedgies are known for shopping at Banana Republic, Ann Taylor and Borders Express.
Your comment was “Here’s another story about the “truly wealthy” hedge fund investment banker types.” There are two things in the article that definitely fits the “truly wealthy” storyline–one is the idiot broker’s quote, the otehr is about a $200k watch.
There are plenty of good stories to back-up your “eye opening”, but then you cite crap like that story and damage your point.
“having a 2nd anon is confusing.”
It was much more confusing before I adopted the (tfo).
HD, you are making way too many assumptions although I do agree with you that there are a lot of wannabees out there. However, you cannot simply say that is the case in this situation simply by looking at the mortgage on this place as it often does not tell the whole story which is what I think others are trying to get you to recognize. Particularly in this price bracket.
As I pointed out earlier, I have a client which looks very similar, but I assure you this guy can pay his mortgage off many times over. Smaller mortgage, promotion, sold place, and bought a ginormous place in this price bracket. All within 2.5 years or so.
I have seen quite a few folks who have pretty substantial assets for their age, but on the surface you would not know it. Putting 5% down on a property in LP, but actually has a trust fund with a $500k in it. You would be blown away how many of your peers get down payments and gifts from Mommy & Daddy or have trust funds. I know I was…
Simply looking at the CCRD, you would rail about them without knowing the real picture. I have also seen the flip side where people have two Bimmers and are one paycheck from disaster.
Generally speaking, if I made that kind of money I wouldn’t waste it on these giant mega mansions as hardly anyone really needs that much space. Probably buy a $800k place somewhere in Oak Park or whatever and be completely mortgage free and ready to retire with enough “F U” money in the bank. But that is just me.
I disagree that they damage my point. Those stories have showed that the recession has affected everyone, including the rich. Everyone says “oh the rich do this, the rich do that” and that might be true in some respects but not all that glitters is gold…
I’d get a 500-550kish place in a non-prime but still safe ‘hood and have enough cash leftover to send the kiddos to private school (Latin or British). But to each their own I suppose.
I don’t think the amenity of being near the Lincoln Park or Lakeview bars justifies a roughly 2x cost in real estate vs. other neighborhoods.
Homedelete – you don’t know what you are talking about and your powers of deduction aren’t very impressive. I’m not wasting any more of my life to explain the obvious point that you can’t seem to grasp: these people are rich, you are not, get over it.
err should’ve read: Lincoln Park, Lakeview, Bucktown, Wicker Park, Old Town, West & South Loop bars. IE: where the white species flocks to find mates after college.
Russ, I agree with you but I”m not holding out my assumptions as definitive assertions of fact, i’m merely pointing out some pertinent information. I freely admit I could be totally wrong, but, i’m not going to make the assertion like many others have that this guy MUST be wealthy and/or rich merely because he has a big house
anon,
I don’t think HD’s point has anything to do with jealousy. I think you’re grasping at straws there, man. I think he’s trying to point out that the “rich” are fundamentally different in that they tend to have more money. But they can get themselves into the same money problems the rest of us can–the scale is just bigger is all.
“the assertion like many others have that this guy MUST be wealthy and/or rich merely because he has a big house”
Who has said that, other than you, as a strawman?
“It was much more confusing before I adopted the (tfo).”
true. still would be cool if plain anon would do something to distinguish himself as well (maybe adding a first name, like “al”). i often think it is tfo posting until tfo shows up with a post. really not a big deal i guess.
wonder what ever happened to Ze. it’s like he lost internet access in his favela.
“wonder what ever happened to Ze. it’s like he lost internet access in his favela.”
His house is probably finished and so he’s enjoying it instead of hanging around here. That or someone figured out he owns 10000 cattle and kidnapped him.
“People at this level don’t rely on the stock market for their investments. ”
What do they rely on? If he has tens or hundreds of millions, then he has access to some decent hedge funds and PE funds. Otherwise, almost all of the minimum $1-5 million funds are actually the worst of both worlds – pay for active management for a fund/wealth manager with no edge.
Usually when people (with more than enough money to pay off a mortgage) decide to lever up instead, it has a lot more to do with risk appetite that any actual edge in investing.
“Usually when people (with more than enough money to pay off a mortgage) decide to lever up instead, it has a lot more to do with risk appetite that any actual edge in investing.”
Good point. But doesn’t it prove the point i was making before? That just because someone has $2m mortgage it doesn’t mean they don’t also have more than $2m in assets. It could mean it’s invested in stocks, PE, the person’s own business, gold, whatever. Or it could be parked in cash or treasuries, waiting for more lucrative opportunity.
“Good point. But doesn’t it prove the point i was making before? ”
It sort of underlies HD’s position–that HD thinks the guy is a taker of dumb risks to have a $2mm+ mortgage–either b/c he’s stretching to live in a house he can’t really afford, or because he’s borrowing to invest. That’s HD’s worldview, and is far from invalid. He’s just a little too strident about it sometimes and gets off on ranting against the risk taker.
didnt this guy put down a million? which is more than 20%…. hard to say the guys a poser if he put down a mil.
much appreciated alanon!
“and be completely mortgage free and ready to retire with enough “F U” money in the bank”
Doode thats exactly what i wanted to do when i bought in thee hood. and set myself pretty good to get to that point. Until i realized the hood isnt that fun and gets to you after a while. now my mortgage free early retirement FU money is going to be retooled (read regular retirement not early).
HD thinks anyone investing in anything riskier than CD’s (like his parents) is stupid. That is his opinion, and he is welcome to it. Doesn’t mean he’s right or wrong.
So guys, what do you think about this article?
http://finance.yahoo.com/news/Report-Fewer-people-falling-apf-4164907724.html?x=0&sec=topStories&pos=main&asset=&ccode=
“So guys, what do you think about this article?”
Had to happen sometime–else you end up with 150% of homeowners in f/c.
Oh sonies, you’re so wrong again. It’s my in-law’s parents. And as time has shown, over the last decade or two IIRC CD laddering had gotten a better return than almost any other investment class. And since my in-laws parents are old, they shouldn’t have been investing too much in equities anyways.
Mortgage DQs have dropped a but we’re sort of in the lull before the wave of foreclosures, which will longer and more sustained although with monthly numbers not as high as the previous wave.
“Sonies on February 19th, 2010 at 2:04 pm
HD thinks anyone investing in anything riskier than CD’s (like his parents) is stupid. That is his opinion, and he is welcome to it. Doesn’t mean he’s right or wrong.”
“Oh sonies, you’re so wrong again. It’s my in-law’s parents.”
So parents v. in-laws is “so wrong”? OKay.
But he’s right about the rest, no?
“And as time has shown, over the last decade or two IIRC CD laddering had gotten a better return than almost any other investment class”
ummmmm no you ‘IIRC’ wrong, especially if that’s a decade “or two”
All I was pointing out was that this guy leveraged up from an $800k house to a $3.3mil house 6 months before the start of the great recession and I get berated and belittled.
Take what you want from but this guy stands to lose a healthy chunk of his million dollar down payment. Pretty terrible timing for a guy who is supposedly so rich and involved in high finance.
“CH on February 19th, 2010 at 1:59 pm
didnt this guy put down a million? which is more than 20%…. hard to say the guys a poser if he put down a mil.
much appreciated alanon!”
“Take what you want from but this guy stands to lose a healthy chunk of his million dollar down payment. Pretty terrible timing for a guy who is supposedly so rich and involved in high finance.”
HD — What if it is a relo?
“So guys, what do you think about this article?”
Well its certainly a good sign. However we’ll have to wait and see. It could just be like saying that the patient’s blood pressure has stabilized at a criticially low point and ebola isn’t forcing it any lower.
The following enrages me though:
“Timing is key. If banks unload them suddenly, “it will be much more detrimental to the housing recovery than if it’s a slow, gradual bleed,” said Michelle Meyer, a Barclays economist”
Makes the case that there should be continued and massive inventory management in an effort to prop up property values. How are banks able and willing to do this? Not only government efforts like HAMP but lets not forget all the other subsidies and handouts via the Federal Reserve. In other words the continued “extend and pretend” is being advocated to stop falling RE values. Its inter-generational theft paid for by taxpayers and the Federal Reserve System.
“Its inter-generational theft paid for by taxpayers and the Federal Reserve System.”
Oh, please. It’s only slightly more than a rounding error compared to all of the other intergenerational theft that goes on. First in sight, first in right. Complain about something that *might* change–like stupid-rich public pensions.
I give up and retract everything I’ve said.
These owners are wealthy, and the $2.4 mil mortgage is really just something that rich people do for tax purposes. They’re so finally savvy that all their other money is safely invested in other higher yielding assets. These owners are selling their home after 24 months because they’re probably moving either out of state for a relo, or, they’re selling to move to an even larger estate Lake Forest. This home will probably sell for more than the 2008 purchase price because this is LP and LP has held its value more than any other neighborhood, rich neighborhoods are practically immune from the economic recessions that effect the rest of the country.
Its been a long long week, 60 hours plus, and I have to work this weekend.
Take care.
/End of thread.
LOCKED.
“Complain about something that *might* change–like stupid-rich public pensions.”
I will complain about every and anything. Because its free.
However I don’t just complain about this solely for selfish reasons. There are currently 18.7MM vacant houses in America. There are 3.5MM homeless people. Its an abject failure of our society to have over five times the number of vacant houses than homeless people–all for the bankers benefit.
I hope banks fail like wildfire over the next few years so more bankers can become part of this population and on the other end of the stick.
“There are currently 18.7MM vacant houses in America.”
There are aeveral thinks stinky about that number:
1. That includes something like 5,000,000 vacation, seasonal and 2d homes
2. It inlcudes all vacant apartment units (ie, it’s not just SFHs)
3. From a USA Today article from last year, touting “1 in 9 homes” as empty: “More than 9% of homes built since 2000 are vacant compared with about 2% for older homes.” 1/9=11+%. 9% of x + 2% of y *cannot* *possibly* = 11% of x+y.
thank you anon!
4. some have mold, are decaying, and/or other problems (at least 5%)
““There are currently 18.7MM vacant houses in America.”
There are several thinks stinky about that number:”
Here is a good article showing that there is indeed populist outrage at bankers. And for you legal beagles, the poll shows the bankers are going to have an extremely hard time getting a successful criminal prosecution from any vandalism:
Frustrated Owner Bulldozes Home Ahead Of Foreclosure
Man Says Actions Intended To Send Message To Banks
http://www.wlwt.com/news/22600154/detail.html
What do you think about what Terry Hoskins did?
Choice Votes Percentage of 9051 Votes
Good for him 6973 77%
Not a good idea 844 9%
He should be prosecuted 1234 14%
Those look like some pretty good odds!
“Its an abject failure of our society to have over five times the number of vacant houses than homeless people–all for the bankers benefit.”
Bob — The first part of this sentence is probably the most sensible thing I’ve ever seen you post. But the second part I think is way off. In either direct or indirect fashion most people in this country benefitted from the bubble. It may be true that certain people benefitted more, and it may be true that those are the very people that are now paying a disproportionately small share of the collective “price.” BUT, when times were good most of us got at least a little piece of that pie that we now know was too good to be true.
“4. some have mold, are decaying, and/or other problems (at least 5%)”
Does that include vacant houses in Detroit? Or is that a separate category?
Bob: “Those look like some pretty good odds!”
Any idea how many times Terry Hoskins (and his family) voted? What major site linked to the story?
CalculatedRisk linked to it. No way to know whether its a representative poll or not although I believe it to be. In small town America there is little sympathy for large banks or CDO holders in far off places. If it were a local community bank that might be a different sentiment.
http://www.calculatedriskblog.com/2010/02/man-in-foreclosure-bulldozes-home-more.html
Another great CR post is on the mortgage delinquency stabilization.
http://www.calculatedriskblog.com/2010/02/mortgage-delinquencies-by-period.html
I’m really surprised this didn’t cause a rally today–its the proverbial tourniquet on the wound. Sure stabilized at a god awful level but still appears to quantify the extent of the problem (if it doesn’t rise again).
“there is little sympathy for large banks or CDO holders in far off places”
RiverHills Bank is a large bank or CDO holder in a far off place?
They appear to have 5 branches all in Clermont County Ohio. They have ~$111mm in total assets (12/31/08), ’08 pre-tax NOI of $902,000 and 43 employees.
Methinks you misjudged the audience.
Look 2110 N Kenmore.
Listed at $3,000,000 and under contract in 11 days. Purchase in 2008 for $2,900,000 in January of 2008. Guess the igh end still has a market 🙂