The Updated 3-Bedroom Single Family Home in Logan Square: 2745 N. Sacramento
This 3-bedroom vintage house at 2745 N. Sacramento in Logan Square hasn’t even been on the market a month yet but it was recently reduced by $5,000.
It looks like it is move-in ready as the listing says the kitchen and one of the baths are new.
The kitchen has 42 inch wood cabinets, granite counter tops and stainless steel appliances.
There is a new marble bath.
Much of the original woodwork remains, including window moldings, and there are hardwood floors and original arches.
All three bedrooms are on the second floor and there is a large family room in the finished basement.
Built on a larger than standard Chicago lot of 30×130, the house has two decks.
It also has central air and a 2.5 car garage.
Chadwick Duda at Prudential Rubloff has the listing. See the pictures here.
- Sold in September 1995 for $120,000
- Sold in June 2007 for $470,000
- Originally listed in early April 2010 for $494,900
- Reduced
- Currently listed for $489,900
- Taxes of $5288
- Central Air
- Bedroom #1: 12×13
- Bedroom #2: 10×11
- Bedroom #3: 11×13
I was in this one. It was pretty nice but
1)it was too close Diversey and Sacremento is also busy street.
2) we didn’t care for the kitchen which they only did to help sell the place.
3) still seemed expensive compare to the 2007 price even with the improvements.
Ugh – damn you lack of edit!
As far as what we liked about it:
1) The backyard is really lovely — that was probably my favorite part.
2) We liked the large lot which leads to larger sized bedrooms, etc.
3) The ceilings in the basement were nice and high
4) The upstairs bath – the remodel there was very done well
As noted, Sacramento is really a pretty busy street. A lot of people use it as a through street. I can’t see living on Sacramento even if the house were farther from Diversey. I don’t see another SFH in Logan in this price range though without going west of Kimball or south of Fullerton.
This one is nicer location but quite a bit pricier too:
http://www.redfin.com/IL/Chicago/2717-N-Mozart-St-60647/home/13450944
Its been a long while since i rocked a bus around here but dont the use sacramento for a turn around to blue line stop? (could be that there was construction detour going on during my last memory of that)
never mind i think they use kedzie
@groove
either kimble & Belmont or Kedzie & logan. Both are on top of Blue Line stops.
-I live a few blocks from here, Sacramento is quite busy just north of Logan as is Diversey.
“the large lot”
Does 30′ really merit description as “EXTRA wide”? I’d think you need to get at least to 1.5 standard lots (37.5′) to use allcaps.
Agreed, too busy of a street to consider.
The house that DZ mentions on Mozart is lovely. It’s on a nice block, but a really long walk to the El. I’d call it cozy, but very well done. I saw it just a week or two after it was listed and the agent was convinced, based on the agent open house, that he would have no problem selling it near the asking price, and quickly. I guess it’s only been a few months, but not a single price reduction. The agent admitted that he was a bit uncertain about price, given that he normally works farther east.
The people paying ~500k for a SFH in Logan Square not on the boulevard do realize they will never get their money back, right?
This neighborhood is STILL primarily Hispanic working class with SOME transient hipster types that are only using Chicago as a stopover on their way to Brooklyn or Portland. The neighborhood is still dangerous even after 10 years of gentrification and if anything has degentrified a bit over the last two years. What hurts Logan the most is that it lost a lot of its hipster cache when its residents found out they could pay the same rent and live pretty much anywhere else in town. They also found out they could pay half what they would pay to live in LS and could live in Pilsen, Roger’s Park, Ukie, and Uptown among many more up and coming hoods.
Sorry, but if you drop half a mil in Chicago to live in a neighborhood that you can’t catch a cab in you deserve to get burned.
This is right in line with what another poster said when they commented that everyone in town seems to think their place is worth $500,000 right now no matter where it’s located.
I don’t think a market exists for this house even 100K below ask.
“The neighborhood is still dangerous even after 10 years of gentrification”
Try 25. Logan’s been the “next neighborhood to turn” since the 80s.
“Sorry, but if you drop half a mil in Chicago to live in a neighborhood that you can’t catch a cab in you deserve to get burned.”
I would pay half mil to live in old norwood park, there you can barely catch a bus, should i be burned?
“I would pay half mil to live in old norwood park, there you can barely catch a bus, should i be burned?”
I should clarify, people who pay half a mil to live in a distinctly urban neighborhood and can’t catch a cab neighborhood in Chicago deserve to get burned.
No one is going to mistake LS for an uppercrust suburb within the city like Highlands in South Shore or Norwood Park.
Chicagobull,
Surprisingly people are still more than willing pay this kind of money for a SFH in Logan Square. Somebody posted a property a few weeks ago listed for $499k or something that sold higher than ask after MULTIPLE BIDS! Insane, right?
“This neighborhood is STILL primarily Hispanic working class with SOME transient hipster types that are only using Chicago as a stopover on their way to Brooklyn or Portland.”
BWAHAHAHA you hit the nail on the quite perfectly. I used to work with a hipster girl and she used to live in LogSq. She’s in Brooklyn now. Commutes like 90mins to work but the hipsters love Brooklyn and all practical considerations must be set aside to look cool and live among one’s kin.
Tired of reading these non sensical threads with no logical or reasonable endings.
Yeah, I don’t know what happened here, but as soon as the weather started getting better the quantity/quality of posts went down dramatically.
Quality of posters has gone down dramatically…don’t blame it on the weather
I think this is a cute house. But I don’t know much about the area at all. Where can a family get a SFH like this with a yard/parking/ac in the city for under $500K? If this is such a bad spot… Seriously, let me know please:)
Sabrina,
You OK? I’ve never seen you miss an early morning post.
I’ve same comments as Avondale townhouse; why bother with this neighborhood? This house’s location (busy street, another busy street, NW Logan Square location, etc) doesn’t merit a yuppie price tag despite the decent renovation and 5′ extra lot width. Too much available housing stock in safer-pick (crime and property value “safe”) areas. Everytime I see the crib/junior bed/kids room in these for-sale pictures, I think to myself – “yep, they’ve had enough of city living, and now they’re moving to the suburbs”. Chicago is changing rapidly, and unless your home purchase is within the traditionally-defined narrowly-prescribed boundaries of upscale neighborhood designations, your housing investment is not a sure purchase.
Yes that’s right, the whole neighborhood, nay, the whole city is unsafe. Especially this “NW Logan Square” (!) location.
The issue here is the busy street, and a stupidly rehabbed kitchen (that is probably much better than what it replaced).
Beyond that, is there really so much available housing stock
Yes that’s right, the whole neighborhood, nay, the whole city is unsafe. Especially this “NW Logan Square” (!) location.
The issue here is the busy street, and a stupidly rehabbed kitchen (that is probably much better than what it replaced).
Beyond that, is there really so much available housing stock under $500k and less than 10min from the EL? I think not.
P.S. Got to love the authentic Logan Square Garage Shack Porch!
P.P.S. No flipper comments? Interesting business model to buy a place for $470, rehab kitch, batch and 2 decks, and then list for . . . $489?
I can’t say I understand the price tag, but the neighborhood is fine, I live just west of here & love it.
Honestly, I bet if I could go back in time to 1985 & listen to some of you people here you’d have been howling about the idea of anyone living north of Diversey or west of Racine.
but that’s why some people set trends, and others just follow.
“Everytime I see the crib/junior bed/kids room in these for-sale pictures, I think to myself – “yep, they’ve had enough of city living, and now they’re moving to the suburbs”.”
Actually, according to the realtor, they’ve been transferred to Buffalo, NY. I know literally hundreds of middle class families with kids who have no intention of moving to the suburbs. That said, the upstairs is pretty teeny, in particular the bathroom and the kid BR. I could see it getting crowded with the addition of more children. Kitchen, not stupendous; i think the cabinets are refaced not new. Yard, super roomy.
But it’s nice to see a house where it’s not either a mcmansion-in-the-city new build or a gut rehab where any original features have been obliterated and replaced by hideous cheapo-developer finishes. (but also not a complete shack.)
There’s an enormous difference between spending $500k (with a $100k or more down payment) to buy a house and raise a family in a ‘gentrifying’ neighborhood as opposed to just living in a neighborhood.
Architect is right. there’s a reason many of these homes have cribs or young children in them and it’s not because the owners are moving into a larger house down the block.
“skeptic on April 29th, 2010 at 8:09 am
I can’t say I understand the price tag, but the neighborhood is fine, I live just west of here & love it.
Honestly, I bet if I could go back in time to 1985 & listen to some of you people here you’d have been howling about the idea of anyone living north of Diversey or west of Racine.
but that’s why some people set trends, and others just follow.”
HD, as a kid who grew up in a neighborhood that went from blue-collar to white-collar almost overnight (it felt that way, anyway) I guess I just have a different perspective.
When parents choose to stay in the City instead of leaving to raise their kids, that’s when neighborhoods really improve, as measured by local schools as opposed to just property values. No doubt, there is a substantial lag as you need a critical mass to make that happen, but it’s still just a matter of time.
Yesterday much to my shock I saw a slew of people (just as a CAPS facilitator had told me) looking at a newly-vacant lot where they are apparently planning on building a new SFH.
The times, they are a’ changing.
“as a kid who grew up in a neighborhood that went from blue-collar to white-collar almost overnight (it felt that way, anyway) I guess I just have a different perspective.”
And, even at that, the neighborhood CPS elementary didn’t become “good” (ie, acceptable to today’s yuppie parents) until the last 5-10 years, right?
depends which one, anon – it’s a pretty hot topic. my general sense is that in some neighborhood schools, a tightly-knit group of even a dozen parents can really make a huge difference. of course, my guess is this requires moms who don’t have to work (or dads) as the other spouse is extremely successful.
but in general it’s spotty at best. I don’t think my local kid-factory (Agassiz) is considered all that great, even today, a good 25 years after my block had it’s first family show up who put serious cash into a gut-rehab & stuck around.
“depends which one, anon – it’s a pretty hot topic.”
I was actually referring to your neighborhood of youth–were any of the Lakeview (or Lake View) elems “good” (by today’s standards) when you were a kid? I *know* Nettlehurst (for example) wasn’t as of the mid/late 90s. Meaning that, even with a rapid (and even complete) blue to white transition, you don’t *necessarily* get the full neighborhood transition (which I feel *requires* an acceptable neighborhood school).
This neighborhood is STILL primarily Hispanic working class with SOME transient hipster types that are only using Chicago as a stopover on their way to Brooklyn or Portland. The neighborhood is still dangerous even after 10 years of gentrification and if anything has degentrified a bit over the last two years.
You clearly know nothing about Logan Square.
It has plenty of middle-class and upper-middle-class Latinos, as well as a diverse white demographic. Many of the allegedly “transient hipsters” have been here a decade or more, growing long roots in the community. And in terms of safety, I’d take it over the absurdly priced Wrigleyville any day.
“It has plenty of middle-class and upper-middle-class Latinos, as well as a diverse white demographic.”
Agreed. On my block, which is more SFH heavy than the average in Logan, my best guess is maybe 5-10 percent of households are poor or working poor. And maybe 25-40 percent of households make $75K plus, which I would put at upper middle class (the 25 percent is a pretty hard number based households I can specifically identify and count). Not many hipsters at all.
Did I miss a holiday announcement or something? Where’s Sabrina today?
On a general real estate market note…offers are flying fast and furious in these last days of the tax credit. Multiple offers. It’s crazy. I’ll do an analysis when it’s all over but I think we’re going to see huge volume this month. Then it will die.
‘Honestly, I bet if I could go back in time to 1985 & listen to some of you people here you’d have been howling about the idea of anyone living north of Diversey or west of Racine.
but that’s why some people set trends, and others just follow.’
Skeptic nailed that one.
One of the major differences between then and now, is that today the 20/30 something crowd (the majority of posters here too I’m guessing) want a completely gentrified neighborhood, garage parking, big house, great schools… but don’t really want to pay for it; all of the comforts of their familiar suburban upbringings with none of the efforts that city living demands, but will eventually suck out of you anyway. So they move on (back to the burbs), leaving the neighborhood one less family short of the critical mass needed to really make an area desirable. Nope, no tend makers there, and certainly nothing like the previous generations of neighborhood ‘pioneers’.
“today the 20/30 something crowd (the majority of posters here too I’m guessing) want a completely gentrified neighborhood, garage parking, big house, great schools…”
I blame MTV Cribs
I agree with SquareD and skeptic. Sacramento and Diversey is not where I’d buy (too busy/noisy), but I think people who knock LS haven’t been there in a while. Businesses endorse with their dollars – just look at the number of new restaurants/bars between California and Kedzie on Milwaukee. They clearly see strong positive trends in the neighborhood.
Take a stroll down Logan Blvd. Its a good area. Or check the CPD GIS crime app if you want to see stats.
The bad parts of LS are west of Central Park a well south of Fullerton. There is nothing wrong with an area having hispanics (is that supposed to be corollary for crime?). Crime is more tied to poverty. At least people aren’t getting wacked with baseball bats walking home from bars (Bucktown), having their lawns peed on all summer (Wrigleyville) and there isn’t graffiti every 5 ft. (Wicker Park).
@anon
too many asterixes and quotations and paragraphs can be a bad thing!
Also, is Sabrina dead?
paragraphs = parenthesis
need edit button!
“too many asterixes and quotations and paragraphs can be a bad thing!”
yeah, that was notsogood. But I hate allcaps for emphasis, and endnoting it would have been worse.
“And maybe 25-40 percent of households make $75K plus, which I would put at upper middle class (the 25 percent is a pretty hard number based households I can specifically identify and count).”
$75k plus household is “upper middle class” in Chicago? HA
Architect: Too much available housing stock in safer-pick (crime and property value “safe”) areas. Everytime I see the crib/junior bed/kids room in these for-sale pictures, I think to myself – “yep, they’ve had enough of city living, and now they’re moving to the suburbs”.
I think Logan Square will prove to be as “safe” a choice as most (not all) Chicago neighborhoods by your definition.
As far as the kid-laden sellers go, the dismal outlook for the Chicago public school system has many parents considering a move, more so (anecdotally, at least) than crime/safety/space, etc. issues.
Finally, I agree that it’s too busy an intersection for most folks. The same house a block or two into a residential street would be much more gratifying.
“You clearly know nothing about Logan Square.
It has plenty of middle-class and upper-middle-class Latinos, as well as a diverse white demographic. Many of the allegedly “transient hipsters” have been here a decade or more, growing long roots in the community. And in terms of safety, I’d take it over the absurdly priced Wrigleyville any day.”
Right. How does LS having a few (less than 5%) upper middle class residents change the fact that it’s primarily working class Hispanic?
You’re also not fooling anyone with your 10 year residents hipster claim. I lived in LS during the first golden age (I went to the Lula opening party, let’s put it that way). Not a single one of the people I knew when I lived there are still there. Not one. That was only seven years ago. The working class Hispanic families, still there.
Sure, there are probably a few missery-loves-company balding hipster types that wish they could have split for Berlin or Seattle when their friends did 5 years ago, but don’t make the neighborhood out to be stable for any group other than working class Hispanics. No one is going to buy that.
A $500,000 home not in danger of being foreclosed on requires one person to make $160,000 a year or two people to be making $80,000 per year. Do those sound like the kind of people who are anxious to raise their kids in LS? I know they aren’t. You know why? Because you don’t see upper class school aged kids in Logan. You don’t even see middle class school aged kids in Logan. You see them in Wrigleyville though, but of course those places are marginally more expensive.
Looks like ET tried to talk a big talk and got PWNED by someone really in the know.
Yeah transient hipsters put up roots in Logan Square? LOL!
Transient hipsters wind up in the burbs with brats just like the Wrigleyville fratboys and sorority girls.
ET is trying to extrapolate his cliques well into adulthood and it just doesn’t hold out. Logan Square is 95% working class. The upper crust of it are not the 500k homes posted on here, but rather former working class homes that were rehabbed and sold to leveraged idiots for 5-10x the value of only 15 years ago.
chicagobull: I used to actually play at Lula Cafe long before it reinvented itself.
sorry, there was no “golden age” that disappeared when you left.
are there are a lot of slacker hipster types? seems like it, but it’s possible/likely a lot of them are actually pretty well-off middle class students. many have very unrealistic options of what a dollar will get you in Chicago going from renting to owning, but LS has been transforming slowly but surely for at least 15 years.
“I was actually referring to your neighborhood of youth–were any of the Lakeview (or Lake View) elems “good” (by today’s standards) when you were a kid?”
That’s an easy one: No.
err the 500k Logan Square homes on this site are the former working class homes..
Bob, transient hipsters are just who you see – folks like my neighbors are just quietly going about life, but many are solidly middle class (including architects, urban planners, teachers, editors, managerial types of all sorts, etc.).
I totally agree housing prices can seem insane, but that’s a separate issue from who is actually in the neighborhood – I can tell you from sitting outside giving away candy on Halloween that the serious riff-raff is decreasing rapidly.
You can call that the “Skeptic’s Corollary” – when the number of jackass teenager without costumes demanding candy decreases and is replaced by actual families trick-or-treating, a neighborhood is improving.
and my kingdom for an edit button!!!
skeptic,
I don’t doubt that Logan Square has been improving lately. What I am skeptical of is white people seeing this improvement and paying 500k for a SFH that was worth 50-150k only 15 years ago. I am skeptical that these white people can keep up with the mortgage. Especially those that are putting less than 20% down on the mortgage.
“hat I am skeptical of is white people seeing this improvement and paying 500k for a SFH ”
that’s a fair enough point, definitely.
we bought our place at a hair over $300K, and to be honest it’s not the mortgage which is a concern, it’s the damned property taxes, which are now at well over 1/4 of my mortgage and only going up.
You’re also not fooling anyone with your 10 year residents hipster claim. I lived in LS during the first golden age (I went to the Lula opening party, let’s put it that way). Not a single one of the people I knew when I lived there are still there. Not one. That was only seven years ago.
If you really attended Lula’s opening party, as you claim, then you know that the owners and many of their longtime patrons still live within easy walking distance — but, surprise, they’ve transitioned from young adulthood to professional class.
Looks like ET tried to talk a big talk and got PWNED by someone really in the know.
Laugh. Hardly.
It doesn’t sound like Chicagobull has been to Logan Square since he single-handedly launched and extinguished the neighborhood’s last Golden Age (now THAT’s some big talk). Now hiding out in one of those gated communities, no doubt.
(Having said that, I agree that the home is overpriced and too close to a busy intersection.)
^ET with the post of the day. I do await further info on this Golden Age.
General comment, not just directed towards Bob —
A single family home, in good repair, in a decent neighborhood, in one of the wealthiest cities in the world, for $489k . . . And people think it’s crazy? Recent events have definitely shown that buying a home isn’t for everyone . . . but c’mon. The fact is $500k is not a lot of money for a single family home in a major metro area. The the other fact is that there are a lot of people in this city — white, black, hispanic, whatever — that can afford it if that’s where they decide to put their money.
“I don’t doubt that Logan Square has been improving lately. What I am skeptical of is white people seeing this improvement and paying 500k for a SFH that was worth 50-150k only 15 years ago. I am skeptical that these white people can keep up with the mortgage. Especially those that are putting less than 20% down on the mortgage.”
“You can call that the “Skeptic’s Corollary” – when the number of jackass teenager without costumes demanding candy decreases and is replaced by actual families trick-or-treating, a neighborhood is improving.”
I’ve heard the sign as “white women walking pure-bread dogs”, but that’s probably just an earlier stage.
Also important to note that ability to keep up with the mortgage is often completely unrelated to ability to put 20% down. There are a lot of people — especially young professionals — that have good steady incomes but haven’t been working for long enough to save the down payment.
“I don’t doubt that Logan Square has been improving lately. What I am skeptical of is white people seeing this improvement and paying 500k for a SFH that was worth 50-150k only 15 years ago. I am skeptical that these white people can keep up with the mortgage. Especially those that are putting less than 20% down on the mortgage.”
“$75k plus household is “upper middle class” in Chicago? HA”
I think of upper middle class as top two quintiles of income. I think that number is somewhere in the high $50K range nationally. I just took a guess and bumped it up to $75K for Chicago (and I’m not sure if I mean Chicago or Chicagoland). No real idea if $75K is right, I’m sure there are data somewhere, I doubt it’s as high as $85K.
I say it’s when you get a bakery specializing cupcakes in your neighborhood.
——-
“You can call that the “Skeptic’s Corollary” – when the number of jackass teenager without costumes demanding candy decreases and is replaced by actual families trick-or-treating, a neighborhood is improving.”
I’ve heard the sign as “white women walking pure-bread dogs”, but that’s probably just an earlier stage.
“I lived in LS during the first golden age (I went to the Lula opening party, let’s put it that way).”
really ChicagoBull? i like ya and the cut of your jib, but LS has had many “golden ages” and will be a hood that will jump back and forth on the line of bad and good over decades. My grandparents where in logan as were my parents in the 40’s/50’s/60’s i was there for a while in the 80’s and back again in the late 90’s in my life time i seen it go from okay to bad and to better than okay. I dont think i will see it get “better than ok” but it has had more than one “golden age” and will cycle again and again
will i ever go back to live? Heck no!!!!!!!!!! even if it gets better than today.
“I say it’s when you get a bakery specializing cupcakes in your neighborhood”
sweet mandy b’s beeeetches!
I always tell my wife when you see a young white person going for a jog at night is a sign, and will never forget the day i saw a white girl taking a jog past clemente HS at 10pm, freaked me out.
“but that’s probably just an earlier stage.”
no, that’s definitely near the end, unless the pure-bred dogs in question are Dobermans or German Shepherds.
“I always tell my wife when you see a young white person going for a jog at night is a sign, and will never forget the day i saw a white girl taking a jog past clemente HS at 10pm, freaked me out.”
How long ago was that? I live around the corner from there now having just moved in a year ago, and I wondered when the neighborhood turned from “bad” to “okay”.
see, I’d be wondering when said girl would be willing to take a job past Clemente shortly after classes let out – that would be a truer litmus test, IMO.
see, I’d be wondering when said girl would be willing to take a jog past Clemente shortly after classes let out – that would be a truer litmus test, IMO.
(where’s that edit button when ya need it?!)
“You can call that the “Skeptic’s Corollary” – when the number of jackass teenager without costumes demanding candy decreases and is replaced by actual families trick-or-treating, a neighborhood is improving.”
Trick or treating on Logan blvd was pretty nice this year.
“I’ve heard the sign as “white women walking pure-bread dogs”, but that’s probably just an earlier stage.”
That we have aplenty.
“I say it’s when you get a bakery specializing cupcakes in your neighborhood.”
Nope. We do have Provenance, a store that can only stay in business by catering to the foolishness of the relatively well off, which I think of as kinda the same thing.
Despite my wife’s concerns about safety, we bought a very nice propety on a boulevard in 2002 (well over twice the asking price of this property). The area was still a little scary (gangs, etc.) but it has improved a lot since. We really love the area for its energy, diversity, space, proximity, history, etc. The comments about LS being a transitional hipster area or wholly working class is a load of horse droppings. Most of our neighbors have been in the area for decades, are well educated, are well-off by any definition and they will have to be carried out of the area in a box. Rising taxes are a cause of concern in the neighborhood but that is true all over the city.
Seriously!?!? I’ve been living two blocks west of clemente since 2003 (and took over an apartment my best friend had lived in since 1999). I walk everywhere in my neighborhood at all times of day and night. Never had the slightest problem. Would way rather live there than wp these days (plus bonus of no douches).
^^^
to be fair, both of you seem to be describing the immediate vicinity off of the Boulevard. It’s definitely true that getting a few blocks away from it north or south can result in a seriously different environment.
Quick edit – “significantly fewer douches.”
“The fact is $500k is not a lot of money for a single family home in a major metro area. The the other fact is that there are a lot of people in this city — white, black, hispanic, whatever — that can afford it if that’s where they decide to put their money. ”
Actually I think half a million dollars absolutely is a lot of money for a SFH in this major metro area. Thats where we disagree.
And to prove that it is you’ll find the vast majority of these transactions the owners can’t come up with 20% down. Frequently they come up with the bare minimum of 10% and stomach the PMI. Also I stereotyped white people because you’ll find in the vast majority of instances that’s the ethnicity dropping 500k for these homes, even though white people are less than half the Chicago population.
These idiot white people aren’t buying the Logan Square stately homes on the boulevard. They’re buying former crapshacks the rehabber bought for 50-150k, sunk 100k into, and are giving the flipper a 100% return using massive amounts of financial leverage.
“You can call that the “Skeptic’s Corollary” – when the number of jackass teenager without costumes demanding candy decreases and is replaced by actual families trick-or-treating, a neighborhood is improving.”
“I’ve heard the sign as “white women walking pure-bread dogs”, but that’s probably just an earlier stage.”
“I say it’s when you get a bakery specializing cupcakes in your neighborhood.”
I think the “integrative” veterinarian on Armitage (west of Milwaukee) has to be a sign of *something*. It’s been there for a couple of years, so clearly there is a demand for pet message and pet aqua-therapy.
Skeptic. Thanks for pushing back against a lot of the knee jerk nonsense that passes for wisdom around here.
Bob, I think you are making the mistake that a lot of people on this board make. You are taking your own values / ideas about what’s proper to do with one’s money and assuming everyone else shares them. My guess is that you too have something you like to spend money on. Maybe your car, your stereo, going out to bars or restaurants, going on vacations? Whatever it is, there is surely someone out there that thinks what you spend money on is foolish too. There’s no reason to be judgmental because some people prefer to spend their money on their house. There’s a lot of reasons people choose to do so, and it often has nothing to do with whether it’s a good investment or makes “sense” financially.
I stand by my statement that $500k for decent house in a decent neighborhood in this city is not a lot of money. I just did a quick check on a few online calculators — “how much house can I afford?.” For this house the income requirement came back between $120k and $130k. Not a rare sum for a young professional to make in this city. And not rare at all to have a two income household — young professional or not — where each party makes $65k.
“There’s no reason to be judgmental because some people prefer to spend their money on their house. ”
There is if they don’t have a 20% downpayment, which was the norm in prior times.
“I stand by my statement that $500k for decent house in a decent neighborhood in this city is not a lot of money.”
And I’ll disagree with you every day all day. It is a lot of money for 99.5% of the Chicago population. The problem is only 95% of the Chicago population seems to believe so given the number of purchasers of these placse.
If 500k is not a lot of money, alanon, how do you explain that the vast majority of people buying these places for 500k have trouble coming up with the 20% downpayment? I’d love to hear your take on that.
^that’s a fair enough point when I stop to think of how many land-poor people I know who don’t hesitate to drop thousands of dollars a year on Cubs/Sox/Bulls/Bears/Hawks tickets (and the overpriced beer at the park), or rock concerts, etc.
I don’t think a 10% down payment is what screwed up the housing market nearly so much as what Wall Street did by slicing, dicing and trundling the mortgages until they were unrecognizable and couldn’t be properly assessed by parties further down the financial food chain.
“And not rare at all to have a two income household — young professional or not — where each party makes $65k.”
Right. Because a couple earning 65k apiece would be wise to borrow the maximum amount on the affordability calculator. Which likely excludes things like student loan debt, credit card debt, car debt, private school tuition, daycare costs, etc.
Do most of the 130k couples you are referring to have none of this debt and if you put zeros into that calculator is that representative of reality? Because that’s the only conceivable way I could see a 130k/year couple affording a place like this.
Also again curious–why can’t they come up with the 100k downpayment on places like this? It happens maybe 20% of the time on properties I’ve seen featured on this site. Coincidence?
I’m really getting killed by the lack of an edit button today. I was obviously trying to respond to alanon.
“Do most of the 130k couples you are referring to have none of this debt ”
That would reflect my wife and I when we were looking. No debt, no kids, etc. Of course, now we do have a kid, so I’m glad we bought before the bubble really blew up.
“I don’t think a 10% down payment is what screwed up the housing market”
It absolutely was. Removing the 20% down payment opened up the playing field to an entirely new class of purchasers: the income rich but budget (or money knowledge) poor.
If it is really difficult to save 100k, which it should not be given alanon’s statement that 500k is not a lot of money, then there should still be ample demand for these properties from people with 100k willing to put as a downpayment towards places like this.
I’m so tired of the same old money debate.
All I have to say is that don’t let a big house or a fancy car or an expensive purse ever fool you into thinking who has money and who doesn’t.
The typical most common millionaire is a 50’s white guy in the suburbs driving an older model used American car. And he didn’t get that way by purchasing a $500k home in a gentrifying urban area with 5% down.
“If 500k is not a lot of money, alanon, how do you explain that the vast majority of people buying these places for 500k have trouble coming up with the 20% downpayment? I’d love to hear your take on that.”
I stated my take in this above. I think for a lot of people the income to make the mortgage payment and the ability to put 20% down are not related.
Easy example: my first job out of law school I made over six figures. I wanted to buy a condo. I had worked before law school so I had enough for 5% down but that was it. It would have taken me several years to save the 20% down. But I could clearly “afford” the condo then, and I wanted it, so I bought it. I didn’t default. I kept working and saved more money. Now I have I house for which I put 20% down.
I know I’m fortunate, but there are many people in variations on my situation. I.e., they make a good secure living but for whatever reasons they haven’t had the opportunity to save $100k. If you go by your rule then most people shouldn’t be buying homes until they’re in their 30’s or 40’s. I don’t think that makes any sense.
“I think for a lot of people the income to make the mortgage payment and the ability to put 20% down are not related.”
I agree.
Which isn’t to say there aren’t loads of idiots like Bob and HD are describing.
But the problem there lies/lied in bad/loose appraisals that were the norm (ie, well, if it isn’t really worth the asking price it will be soon as everything is going up, up, up!), and shaky auditing of people who either had high incomes in very tenuous fields, or were flat out lying if they were self-employed. I knew plenty of overnight rich people with “tech” jobs who quickly saw college kids and Indian call centers knock down their wages.
When should I expect a seller to have a seller’s disclosure ready?
“How long ago was that? I live around the corner from there now having just moved in a year ago, and I wondered when the neighborhood turned from “bad” to “okay”.”
i really dont have first hand knowledge but from my boriquens that started to complain about whitey it was around 2002 and they got the full on hatred around 2005/2006, so i would say 2006 is the year.
JD, if you travel a few blocks west of western, stop in a old business there and ask a old timer they will be able to tell you. (be ready for an insanely long winded rant, Old people cant TALK).
““I don’t think a 10% down payment is what screwed up the housing market”
It absolutely was. Removing the 20% down payment ”
Oh, be serious. If there had been a strictly enforced 10% dp requirement, with real documentation of income and “traditional” total DTI ratios, there wouldn’t have been any major problem. Same with the MBS end of things skeptic is blaming.
It was the -10% dps (ie 110% loans) and the NINJa loans and the appraisals detached from reality and 50%+ backend dti and have 10 “primary residences” and and and. All of that was facilitated by the ease with which issuers disposed of their absolute crap mortgages and the amount of $$ flowing in as a result and the non-existent underwriting that resulted, but “slicing and dicing” does not require an absence of loan UW standards in any way, it just means that poor UW doesn’t lead to direct, on the books, losses.
Housing stability is based on more than just income; it’s the three C’s as they call it (credit score, capacity to repay and collateral). included in the collateral is a down payment which by definition is as limiting as a factor as credit score and capacity to repay.
By removing the down payment, the only factors that mattered were credit score and capacity to repay … and like the domino theory, if one of the three c’s slips, the rest do too. And then after a few years of very lax standards (also inviting fraud) you get damn near global meltdown like we had in 2008.
The higher down payment also caps the price of the collateral. If I have a $50k down payment (which can take years to save) then I can afford a down payment on a $250k home with 20% down.
Yet you all want to throw the third C out the window and let somebody with only the first 2 c’s use the $50k as a 10% or even 5% down payment on a $500k or a million dollar home. yes they have credit and capacity but it severely damages the last c – collateral.
And if one or more of the first two C’s becomes impaired, well then, the bank is the party to eat the loss on the third C, the collateral. Which leads to high losses, which leads to low interest rates for savers, which again makes it more difficult to save for a down payment, which again leads to low payment loans…..which leads to more losses, …. lather, rinse, repeat.
“All I have to say is that don’t let a big house or a fancy car or an expensive purse ever fool you into thinking who has money and who doesn’t.”
This sounds like really good advice.
“The typical most common millionaire is a 50’s white guy in the suburbs driving an older model used American car. And he didn’t get that way by purchasing a $500k home in a gentrifying urban area with 5% down.”
This sounds like a sentence filled with unsubstantiated assumptions. It also sounds like bad advice. I’d say that if your main goal is to get rich (a pretty boring way to live life in my opinion), then you should always buy your house — whether it’s in Logan Square or Kennilworth — with only 5% down.
Both sides are right. Down payments have nothing to do with people’s ability to service debt. With a young and highly compensated workforce in Chicago, many have not been working long enough to be able to put up the large down payments relative to the cost of living here.
On the other hand, expecting that borrowers put some skin in the game is not unreasonable. However, I don’t think 20% makes a lot of sense given the higher cost of living. It is one thing to save up for 20% down out in bumblefuck with $150k-$200k houses, but entirely different in major urban areas.
Many of the posters here are out of touch with what it cost to live in a major city that people actually want to live in versus an armpit like Columbus, OH for instance. Every major city generally cost roughly the same to live in the urban core/greenzones and it is highly correlated with the type of professional jobs available.
The issue with Down payments is that mortgage investors kept loosening up the guidelines so that borrowers who weren’t really worthy could also get low down payment loans. If you have two BigLaw attorneys with a low down payment, the odds are pretty good that loan will perform. If you have two 7-11 works with a loan down payment loan, the odds are pretty good that the loan will not perform at some point. Both have low down payments, but are entirely different in terms of credit risk.
homedelete, the problem with your analysis/preference is it actually favors old money types, and not younger go-getters.
I don’t want goofballs in my neighborhood just because mom and dad float their downpayment – I’ll take the guys who weren’t born into money but actually have worked hard in life and are professionally successful.
“By removing the down payment, the only factors that mattered were credit score and capacity to repay”
Not true. It’s a secured loan, so the house is still the collateral. The down payment was just cushion. A fourth “c.”
As anon(tfo) points out, the problem is the appraisal. If you get an honest appraisal, and actually limit the loan accordingly, then you don’t need 20% of cushion.
and, what russ said.
alanon:
Very interesting stuff.
http://www.washingtonpost.com/wp-srv/style/longterm/books/chap1/millionairenextdoor.htm
“Who is the prototypical American millionaire? What would he tell you about himself?(*)
* I am a fifty-seven-year-old male, married with three children. About 70 percent of us earn 80 percent or more of our household’s income.
* About one in five of us is retired. About two-thirds of us who are working are self-employed. Interestingly, self-employed people make up less than 20 percent of the workers in America but account for two-thirds of the millionaires. Also, three out of four of us who are self-employed consider ourselves to be entrepreneurs. Most of the others are self-employed professionals, such as doctors and accountants.
* Many of the types of businesses we are in could be classified as dull/normal. We are welding contractors, auctioneers, rice farmers, owners of mobile-home parks, pest controllers, coin and stamp dealers, and paving contractors.
* About half of our wives do not work outside the home. The number-one occupation for those wives who do work is teacher. ”
More in the link.
LOL, I think this came up in the Avondale listing, but good god-a mighty, look at the prices of this stuff – this is just south of the Logan monument:
http://www.thebakedescape.com/
Homedelete — Agree it’s interesting. I’m particularly surprised that 80% of millionairs are first generation wealthy. I would have guessed much lower. But it doesn’t tell us anything about how buying a house in a gentrifying neighborhood now will correlate to wealth down the road. But the first generation thing does suggest to me that many future millionaires are now buying homes with less than 20% down.
Some of you have no concept of what this part of LS is like. I have been here for 37 years. My neighbor has been here since 1980 is the head of Oncology at a large teaching hospital. His son was raised here. When to CPS schools, and graduated from MIT. The guy next to him a salesman and drives a big new Mercedes. His wife stays home and drives the 3 kids, all born in the building, around in a Volvo wagon. The old guy next to him owned his own company. The couple next to him who have lived here since 1980 an raised 2 kids here have moved downtown and thier home is for sale for 1,600,000.
This is a great middle class neighborhood with a lot of people who make enough money to live anywhere, but have chosen to live here and raise their kids.
And another place for that LS cupcake
http://chicagoist.com/2010/02/12/do_this_pastry_market_at_logan_squa.php
Interesting DBA. Combine this with the article that homedelete attached and I think we have the answer: buy this house, live in it for 20 years (the average time a millionaire has lived in his home according to the article), and you will do just fine.
One piece of the puzzle is to buy at lower prices. $500k is not a lower price.
Do you really think this home will appreciate to a million in 20 years time?
“One piece of the puzzle is to buy at lower prices. $500k is not a lower price.”
Relative to what? Lower than what it will be in 20 years, 10 years, 5 years, 1 year?
“Do you really think this home will appreciate to a million in 20 years time?”
Yes, probably. And if you can do it at 5% down with a 5% interest rate with all of that interest tax deductible . . . Then I think it’s as good a place as any to put your money for 20 years.
Read Elizabeth Warren’s book “The Middle Class Trap”. Housing market collapse also reflects the relatively new circumstance of the dual-income w/kids couple who over leveraged their two salaries to buy the nice overpriced house for good schools and safe neighborhoods, with little subsequent savings and significant household debt, and job insecurity (or now unemployment). Highly recommend this book, which came out several years ago, and brought Warren significant publicity.
Once you have school-age children as a yuppie parent, your housing choice priorities shift to “school, neighborhood, and bedroom count”, not “gentrifying” urban neighborhood with economic diversity and poorly-performing (test scores AND discipline) schools, and nearby crime concerns.
Ten years ago friends moved from Bucktown to Deerfield, their childhood hometown, with their two kindergarten-age kids. Why? Small townhouse, despite two professional salaries (nanny and preschool costs already), frequent night-time street crime, neighborhood noise, lack of outdoor playspace, and congestion. The mom also noted that she “always ran from her car to her door with her keys laced in her fingers” after being mugged. Some life. It doesn’t have to be Deerfield, but once you have kids, your neighborhood expectations shift and you can’t always fulfill those requirements by moving to LV/LP and paying for private school. (Not everyone wins the school lottery; our friends didn’t.)
I agree. And is painful to see people who can’t see that. Another neighbor on Richmond bought a similar house in 1995 for 170 got blurry vision in the bubble. Decided they needed a bigger house. Sold for 525K in 2006. Bought a big Victorian in Oak Park for 850K that turned out to need 100K of repair and they are now living hand to mouth. The wife says she cries every month when the mortage comes due.
I admit the “Logan Square Golden Age” thing was tongue-in-cheek.
I was referring to the Lula opening as the point where the hood went from thinking it was trendy to actually having something that backed it up.
The people bragging about how nice LS is and how rich their neighbors are, are talking exclusively about the area directly on or off the Boulevard which is absolutely nothing like the rest of this relatively large neighborhood. Middle class people don’t drive a Benz and live in a $500,000 house. Not for long anyway.
Alanon,
In this environment, RE doesn’t make for very good secured collateral. 90% of the homes currently in foreclosure aren’t worth anywhere near the loan balance. The down payment isn’t just a cushion that guards against fraud and default, it also makes the payment more affordable should the borrowers face financial stress.
I would also like to know what kind of 100K jobs you classify as “secure”. Because I can’t think of any off the top of my head. My friends that actually do work for big law would not describe their job as secure. Neither would my friends in finance. My friends that work in the medical field are suicidal right now.
Like Groove said, I would love to see these people that think 500K is nothing out in front of Clemente when school gets out. I’d most like to see you do it though.
This is just so weird. I’ve lived two blocks west of Clemente for 7 years (and took over an apartment from a friend who lived there for several years before). I walk alone past Clemente all the time, including when school is getting out and late at night. I seriously have no idea what you think the big deal is. Neighborhood’s fine – way safer than WP or BT in my opinion. I’m also female, white, early 30s and about to buy a $500k house in LS. So go figure.
“On the other hand, expecting that borrowers put some skin in the game is not unreasonable. However, I don’t think 20% makes a lot of sense given the higher cost of living. It is one thing to save up for 20% down out in bumblefuck with $150k-$200k houses, but entirely different in major urban areas.”
I disagree russ. You say 20% down payments aren’t necessary because of the affect that would have on the housing market here. I say 20% down payments were and should’ve always been necessary because of the effect they HAD on housing prices here.
Would valuations fall if 20% down was the norm? Surely. Would we be better off in the long run and have a more stable financial system? I think so.
Err..
“I say 20% down payments were and should’ve always been necessary because of the effect of them being removed HAD on housing prices here.”
But small mortgage balances mean lower interest payments to the banks. Like pigs at the trough the banks would never give up the interest they could charge on a larger principal balance. So they allow the lower down payments.
Chicagobull, the down payment is solely to protect the lender in case of default. It has nothing to do with affordability. Historically, 20% down is enough cushion for the bank to dump the property as a foreclosure and not lose too much of the remaining principal balance.
Downpayments are about protecting the lender. Nothing more.
Payment on a $400k loan at 5% = 2147. $320,000 loan at 5% = 1718. Basically $429/month. If this is the difference between affording a home and not affording a home… YOU COULD NEVER AFFORD THE HOME. $400 bucks is a good chunk of change monthly, but it shouldn’t be the difference between being happy in your home and on the brink of foreclosure. If it is, you are buying too much house for your income/lifestyle.
Most would rather have the $80k in cash versus the $429 cheaper payment.
Who is in the better position if they lose a job? The guy that put 20% down and loses his job but has no cash savings left and the $1718 monthly nut or the guy that did 100% or 95% financing and loses his job but still has his $80k in the bank he can access for emergencies?
The dumbest thing you can do is sink all your liquid savings into a house. Houses are not liquid, so if you ever need the money you are toast.
Those with skin in the game have lower default rates, so no, it’s not just about the bank using the 20% equity cushion to recover their money in a foreclosure. In fact during the boom, it was common for banks to foreclose, sell at judicial auction and make every penny bank plus some.
“The results indicate that borrowers who provide down payments from their own resources have significantly lower default propensities than do borrowers whose down payments come from relatives, government agencies, or non-profits. Borrowers with down payments from seller-funded non-profits, who make no down payment at all, have the highest default rates.”
http://ideas.repec.org/p/pra/mprapa/4318.html
“Downpayments are about protecting the lender. Nothing more. “
Bob:
I don’t disagree that down payments affect home prices. As I have pointed out on numerous occasions, this is the sole reasons the higher end $600k plus market is dead right now. However, I believe requiring 20% down is not realistic. People have been able to buy without 20% down for a long time. It isn’t like FHA recently only started allowing 3.5% down.
Lower down payments were fine when they were limited to the highest quality borrowers – just like state income, interest-only, POA, and all the other so called toxic loan products. It wasn’t until Countrywide has the brilliant idea to market these products to Joe Sixpack that everything went to hell.
Bob’s right about 20% down payments…. also this should not reprsent your entire networth……. +8 months min. living expenses in the bank…. +investments….. +401k and IRA…… + plus you should plan on living there for a least 10 years.
This is the problem with the typical american and why long term this country is fk’d. There needs to be an shift in mindset in the way people and the government allociate funds…..
“In this environment, RE doesn’t make for very good secured collateral. 90% of the homes currently in foreclosure aren’t worth anywhere near the loan balance.”
This is obviously true . . . but, as anon(tfo) pointed out, it’s a function of the bad appraisals and lending practices. It doesn’t mean that for a properly underwritten loan the bank needs 20% of cushion.
“The down payment isn’t just a cushion that guards against fraud and default, it also makes the payment more affordable should the borrowers face financial stress.”
This is also obviously true, but not to an extent that I think it matters. The amount your monthly payment changes if you put down 10% and 20% is not that significant. I doubt it’s often made the difference between someone keeping up with payments or going into default.
“I would also like to know what kind of 100K jobs you classify as “secure”. Because I can’t think of any off the top of my head. My friends that actually do work for big law would not describe their job as secure. Neither would my friends in finance. My friends that work in the medical field are suicidal right now.”
I agree that things are unstable right now and it may be foolish to think of anything as “secure.” I also understand that my perspective may be skewed. But I can speak to the legal profession: I know a lot of people who have done very well in the last few yeas and I know a lot of people that have lost very high paying jobs. But even those who lost their jobs have ended up ok. They’ve all found work in the six figure bracket. It may not be work they’re excited about. In fact, it may not be work they would do if they didn’t have to pay the mortgage. But, fair or not (considering what’s going on with the rest of the world), they’re not having problems finding six figures.
HD, again, you have to control for the other factors. As the bubble grew and underwriting guidelines loosened, low down payments became much more common among already marginal buyers. It wasn’t the down payment that was the problem, it was they buyers were already not very qualified to begin with.
It used to be you needed 720+ FICOs, Large reserves, and disposable net income to qualify for the zero down loans. By 2006, the banks started lending zero down to basically deadbeats. High DTIs, No reserves, piss poor credit, etc. Down payment or not, these people would not be able to pay the loans back.
Well Russ, you’ve just done a better job than I could ever do of explaining why so much financial leverage in the hands of Joe Sixer is bad news.
Would I rather have 80K or a $450 per month lower payment? The better question is: Would I rather have my neighbor have a $450 lower monthly payment or 80K of equity in his house so he at least has something to ponder as he’s FedExing his keys to bank and selling the stove for scrap.
The attitudes on this site all but confirms how far we are from getting out of the woods in the current meltdown.
“Would I rather have 80K or a $450 per month lower payment? The better question is: Would I rather have my neighbor have a $450 lower monthly payment or 80K of equity in his house so he at least has something to ponder as he’s FedExing his keys to bank and selling the stove for scrap.”
Interesting point . . . But anybody with 80k in cash also has something to ponder when they send the keys to the bank. The bank isn’t exactly going to let them walk away and keep that 80k. The person likely knows they’ll face a collection action. BUT, if they have the 80k in cash, instead of equity, at least they can use the reserves to avoid default. So I think the person with 80k in cash is less likely to mail the keys.
It’s rare that a first mortgage will try to collect a deficiency on a foreclosure for a primary residence. There’s only a 50/50 chance that the 2nd mortgage will come after you to collected a defaulted second and you can usually settle for a fraction of what you owe.
Most people who are pondering walking away from their mortgage aren’t sitting on a liquid 80k, I assure you that, and the ones who are usually have it tied up in a protected retirement account.
“The bank isn’t exactly going to let them walk away and keep that 80k. “
“Most people who are pondering walking away from their mortgage aren’t sitting on a liquid 80k, I assure you that, and the ones who are usually have it tied up in a protected retirement account.”
This is probably true. But I was responding to the hypothetical question of someone who does have the $80k liquid. Do you let them keep it liquid or do you make them put into the house? I was only suggesting that if you let them keep it liquid they still have something to think about before the mail the keys.
“It’s rare that a first mortgage will try to collect a deficiency on a foreclosure for a primary residence.”
I know if this is true. I don’t have loads of experience in the area, so maybe I’m wrong. But my understanding is that this right will at least get sold off to a collection firm. And if a collection firm figures out there’s 80k in cash sitting out there, they will pursue it.
Sorry, meant to say “I *don’t* know if this is true.”
As the bubble grew and underwriting guidelines loosened, low down payments became much more common among already marginal buyers. It wasn’t the down payment that was the problem, it was they buyers were already not very qualified to begin with.
While you’re absolutely right about the degradation in lending standards, your reasoning seems amiss here. The low downpayment was certainly part of the problem, as A.) skin in the game helps keep a “homeowner” in a building and attempting to make payments even under less-than-ideal circumstances; and B.) the 20% downpayment previously served as a simple litmus test — “FICO? Who gives a rat’s ass about FICO, this palooka can’t even even make the minimum downpayment.”
In fact, now that we’re talking about FICO, there’s been over-reliance on FICO scores in the past decade or so — the assumption being that a good base income and a good FICO are a good barometer, regardless of cash reserves, relative job security, percentage of downpayment, etc. In general, that’s more true than not, but that over-reliance on a few data points (e.g., the malleable, gameable FICO score) has led to similar default problems in non-subprime loan categories above the reach of Joe Sixpack. Fannie Mae and Freddie Mac recommended the FICO score for use in mortgage lending in 1995, by the way.
There really aren’t deficiency judgments on first mortgages in cook county.
it’s 50/50 whether a second will come after you. Citi and HSBC and some smaller regional banks are pursing collection of seconds where as some of that subprime second junk like countrywide, etc, and other various securitized loans don’t want to spend the money on costs and attorneys fees with the probability that they’ll recover less than zero when the debtor inevitably goes BK.
What does this mean? walk away from the 1st mortgage no prob. Hire a lawyer and try to settle with the second mortgage, plead poverty – BK , etc, if and when the second comes a knockin’
“know if this is true. I don’t have loads of experience in the area, so maybe I’m wrong. But my understanding is that this right will at least get sold off to a collection firm. And if a collection firm figures out there’s 80k in cash sitting out there, they will pursue it.”
Here’s an article on target:
How Texas bucked the real estate bust
http://articles.chicagotribune.com/2010-04-25/classified/ct-mre-0425-umberger-20100425_1_home-equity-borrowers-with-spotty-credit-loan-to-value
and
about two weeks ago in the WSJ there was an article about how Hong Kong despite having frequent housing bubbles has avoided bank failures by requiring 20% down. Right now they require 40% because they are worried about a bubble.
We on the other hand have the government handing out 3.5 down loans like candy.
“Hire a lawyer and try to settle with the second mortgage, plead poverty – BK , etc, if and when the second comes a knockin’”
Or just laugh at them and say “Why did you give me a second mortgage?, I wouldn’t give me a second mortgage you dipsh** banker”.
Hong Kong is less than 10m people. Heck its smaller than Chicago.
Governance in Hong Kong is going to be VERY different than governance here in the USA.
Not very apples to apples
Russ,
When did Columbus, OH become an arm pit city? It is actually the most liberal (GLTB) diverse and liveable city in Ohio. Now Cleveland, that is a different story.
D
The funny thing is, all of the people I know who own have less money in savings that those who rent. The renters are all out banking their checks and investing and saving up, while the owners are all complaining about how their place is underwater and wished they hadn’t bought at all. I think down payments should be at least 10%. The 3.5% FHA requirement is another ticking time bomb….
Things are really hot right now. A number of homes I’ve been keeping my eye on have gone under K in the last few days at prices that just a few months ago were considered ridiculous. Sort of scary how hot things are right now when you consider that 1st time home buyers with funny money is much of what is keeping prices propped up.
ummm sorry to go off topic as a i usually do but ummm…..
should we be worried about sabrina? its two days now.
Thanks for being concerned Groove. I’m okay! I really must get a netbook so I have a backup in case of computer failure.
Regular posts will resume on Monday.
fwwwwww,
had me worried sabrina, (all this talk about crime, nation guard, shootings in the city and watching to many re-runs of law and order.)
So we have until Monday to beat this horse, all righty~
HD:
“Do you really think this home will appreciate to a million in 20 years time?”
This is possibly the most absurd statement in this entire conversation. I GUARANTEE you this house will appreciate to a million in less than that – the catch being, not necessarily after adjusting for inflation.
There’s a big difference between the renters I know (I know a very successful fella making 6 digits who is about to go and lease a car at $500 a month) who piss away cash on all sorts of luxuries and land & to a lesser extent buildings, which always have intrinsic value (hold the Detroit jokes, please).
my taxes keep going up, but my mortgage is locked. that provides long term planning security that renters will never, ever have.
this is all maybe econ 301 – stability. most homeowners (who don’t overextend/are get-rich-quick flippers) appreciate this more good reason – large industry does too. go and read about why the USA is falling way behind in renewable energy development compared to countries like Germany, Japan and Spain (among others), and it’s because those countries have locked down utility rates that renewable energy providers will get from the govt or local utility.
this is the same concept.
renting is fabulous for many, many people – but they still require *somebody* to own a building and take care of it.
owning is great for people happy with their station who want to work to improve their immediate surroundings – and I know a LOT of people like that, from all over the City and state, and many of ’em are attracted to Logan Square.
“I’m okay! I really must get a netbook so I have a backup in case of computer failure.”
Macs are darn good computers, I would use one but cause of work i need a PC laptop. i bought the mac two years ago, but MS Office is just not the same on it, and 85% of my computer use is MS Office and MS Access.
Use a Virtual Machine like Parallels for the Mac. Its like $40 bucks. There are other geek free versions too. Then run your Windows within the Mac for your 10% crazy excel gook and 90% of the rest of the time just run Mac
“What does this mean? walk away from the 1st mortgage no prob. Hire a lawyer and try to settle with the second mortgage, plead poverty – BK , etc, if and when the second comes a knockin’”
But the point is that this doesn’t work if you have $80k liquid, which was the hypothetical. If you have $80k liquid, and I file a collection action against you in Cook County, it’s not hard for me to figure it out. Unless it’s actually in paper cash stuffed under your floor board I can file a motion to discover assets and find it fairly easily. So you won’t be “pleading poverty” and you won’t get past a bankruptcy judge without paying up. It’s true that you may end up settling for less than 100 cents on the dollar, but by the time you hire attorneys and pay me that $80k will be gone.
Your best option — morals and ethics aside — is to mail the keys and move as far away from Illinois as possible. I think your scenario is right, that a second mortgage holder may not bother you over $80k if you moved to North Dakota.
But as long as you plan on staying in Illinois your better choice is to pay the mortgage. You may still lose the $80k, but at least this way you have a place to live.
“Use a Virtual Machine like Parallels for the Mac. Its like $40 bucks. There are other geek free versions too. Then run your Windows within the Mac for your 10% crazy excel gook and 90% of the rest of the time just run Mac”
good looking out! I may try that next upgrade, which may be a while (i get a new laptop from work every two years and bought my wife a new HP for xmas)
“Things are really hot right now. A number of homes I’ve been keeping my eye on have gone under K in the last few days at prices that just a few months ago were considered ridiculous. Sort of scary how hot things are right now when you consider that 1st time home buyers with funny money is much of what is keeping prices propped up.”
Yeah, or the improved economy + free $8k for first timers is whats making things hot.
Summer + V shaped recovery + free money = hot stuff on the last day of the credit…
it will be very interesting to see what happens the rest of this summer as most reports have been showing that the tax credit hasn’t been a factor in a large majority of purchases
So OT and gentrification. I’m taking the long way home since the Eisenhower is @$*@#($#@. Driving Eastbound on Division.
The neighborhood keeps getting better and better and the good parts are being pushed further and further West.
When I am in Damen and Division, there are the Restaurants, Boutiques, and Yogurt shops.
When I am further West with the Boriquens, its still decent but uneven.
When I am even further West near Kedzie, its starts getting scary. But how do I know the neighborhood is getting better?
The crack addict (you know the lady who’s kinda of shaky, skin colour doesn’t quite look right, and that skinniness is the wrong kinda of skinny?).
Well she’s roller-blading to her next destination.
I know this guy that rents out his 1 bdrm in Museum park for 1600/month including parking.
His renter just bailed and isn’t renewing. Buying a 2 bdrm in the same building.
Just another data point for the buying craze going on now
Grove77:
post a throw away email address here if you want and I’ll help you with Mac / Windows. I use both for work and personal.
and heck now that the weather is nicer maybe we’ll all do a OT walk.
chichow,
kewl i am do for the update september/october of this year. IT dept is kind of anti mac, and i was on my own for some stuff on it. the No MS Access was the deal breaker for me back then.
I will get a generic email, unless my house gets posted on here and my identity is revealed (no land trust) then i will just give you my work email.
Hi Russ –
About your quote: “The dumbest thing you can do is sink all your liquid savings into a house. Houses are not liquid, so if you ever need the money you are toast.”
I’m pretty old-skool and conservative with my risk and I actually prefer to make as large a down payment as possible because I just don’t like having debt hanging over my head. I also like having lower monthly mortgage payments. And I try to pay off the mortgage as quickly as possible till the property is owned free and clear.
If I needed a large amount of cash, I would do a “cash-out-refi”. Essentially a 30 year fixed rate mortgage. I would be very reluctant to do a home equity line of credit because I don’t like interest rate unpredictability and variability. But you have those options. It’s not like your cash is tied up and inaccessible.
Milkster;
I agree with you. My point is that you shouldn’t sink all your liquid savings into the house just so you can make a down payment. The issue is having liquid reserves available at all times in case of an emergency. I see too many people essentially putting all their eggs in one basket.
Once you lose your job, no bank is going to let you do a cash out refinance since you have no income. In addition, cash out refinances are pretty limited with loan to values these days, so you may be limited in how much you can access anyway, not to mention the cost associated with refinancing. HELOCs are no better because they can be closed at anytime by the bank. I have seen a couple of people payoff a HELOC with savings thinking they will just draw on it if they need the money and then the bank arbitrarily closes the credit line.
Getting rid of the mortgage is a good thing as long as you don’t put yourself in a worse position financially trying to do so.
not to mention transaction costs involved with cash out refi’s and helocs
Skeptic:
If you pay 500k for a house now how realistically can you expect appreciation? That’s my point – if you pay too much on the buy then its difficult to make money when you try to sell down the road. 500k is the some of the highest real or nominal prices anyone has paid to live in Logan in 80 years.
HD, it’s all relative. People were saying the same thing about buying in Lincoln Park in 1983 – “You paid FIFTY THOUSAND? It’s not worth a dime over $35!”
but the point is that 20 years allows for a lot of bubbles to both grow and pop, population growth isn’t going to stop, housing is a real need (not a luxury good), and we are sitting on the largest freshwater system in the world.
gentrification/speculation has definitely slowed in some areas, and stopped in others – but it isn’t reversing. there will be no new Cabrini Green towers being built in Lincoln Park/Old Town ever again, you know? and the suburban dream has turned to be unsustainable, people are sick of spending half of their day stuck in traffic, it’s just no way to live… the City’s core will always have appeal, always.
sorry, didn’t finish my first thought –
getting back to that house in LP, let’s say that that $50K house is now conservatively worth $750K. Even if the buyer overpaid, if he hung on to it (this is key), he ends up doing very well, and the amount overpaid gets knocked down by inflation as the years go on.
this is why I harp on the property taxes being the only thing that can really kill the City’s progress, as the mortgage stays flat, but those damned taxes will end up being far more than your mortgage payment in the long run if the City spending continues like they are now.
“500k is the some of the highest real or nominal prices anyone has paid to live in Logan in 80 years.”
OF COURSE, it the highest nominal price. That’s unnecessary to say.
Anyone have any idea what these sorts of houses sold for in, say, 1928? Or 1913? bc, $489k today is ~$38k in ’28 and ~$22k in ’13. Seems too high (like double) but I dunno. And, of course, the house in 1928 or 1913 would have included fewer appliances, etc., so would be worth less, but not 50% less.
you can’t just take the price 80 years ago and adjust for inflation. You have to consider supply/demand, location, etc. Areas can go from slums to high-end neightborhoods over that type of time frame (or from vice-versa).
I bet if you go to detriot and run the inflation analysis, you will find housing deflation.
“you can’t just take the price 80 years ago and adjust for inflation.”
If you are saying “this is the highest (real $) price anyone has paid for this property” that’s exactly what you must do.
It doesn’t illuminate much, bc of everything you say and much more, but it is one data point that can be established. And it would be interesting, especially if you could gather the data for most/all of an area.
“I bet if you go to detriot and run the inflation analysis, you will find housing deflation.”
Unless I’m very, very, extremely, very mistaken, one needn’t use real dollars to show housing price/value deflation in Detroit. Nominal prices are *way* down.
Remember that much of Chicago’s gentrification was pushed by a demographic bubble of baby-boomer white-collar buyers, starting in the late 60s, interested in living in urban neighborhoods (versus prior suburban pastoral ideal). Then in 90s came an additional demographic bubble of older baby-boomer buyers moving from suburbs back to Chicago downtown areas as empty-nesters, with windfall profits from single-family home-sales. Recent unfettered lending criteria allowed yuppies to buy rather than rent and wait (all those crib shots in MLS listings!).
Baby-boomers’ “bubble” is over, youngest boomers are worried about retirement and college expenses, not buying a home downtown: much harder to sell suburban house, many “upside-down”, facing relative job insecurity and wage reductions, and stricter lending criteria. There are far fewer households capable of buying the $500,000+ house, much less the seeming $750,000 threshold to buy a house in LP/LV (dumpy rehabber-needed houses aside).
CHA demolished much CHA-owned housing stock and those residents move to market-rate rental housing. Many ex-CHA tenants do not make good neighbors. CHA’s relocation program has de-stabilized many formerly quiet, stable, working-class neighborhoods, including some north and northwest-side areas promoted as “gentrifying”. When regularly confronted by neighbors’ bad behavior and transitional areas’ short-comings, yuppie families inevitably reconsider their choice (and economic gamble) of a “gentrifying neighborhood”. Certain formerly quiet northwest side neighborhoods have seen a significant increase in gang activity, muggings, mass-fighting, car break-ins, tagging, and drug-dealing in past few years. Daytime make look calm; night-time is a different story. A drive-by shooting is often a wake-up call, particularly if you have small kids and the financial ability to move elsewhere. School choice is often the yuppie family’s trigger for a move to suburbs.
A significant majority of Chicago residents can’t afford single-family home ownership in a “middle-class” city neighborhood. Even $300,000 is a significant cost. For some, the extended family buys a house and three generations live under one roof. Look at the population, household income, and unemployment statistics for black and hispanic households in Chicago. The predominant population in Chicago is lower middle-class, not “urban professional”. Less than half of CPS students actually graduate from HS; a drop-out rate of 50%+. Speculators may still view certain working-class neighborhoods as “gentrifying neighborhood”, but there aren’t enough $500,000+ homebuyers, leaving many speculators with over-priced unsold leveraged housing stock.
“the City’s core will always have appeal, always.”
Skeptic love the above rant! well thought out and i agree with everything BUT…i dont think over the next 20 or 30 years your going to see the changes and the amount of changes in the short of a period. (unless extreme circumstances come into play)
“gentrification/speculation has definitely slowed in some areas, and stopped in others – but it isn’t reversing”
It will be reversing in areas like Pilsen, Humbolt, avondale, Albany Park and i hate to say maybe SL/Brownsville.
*i put pilsen and humbolt first for a reason
anon(TFO): River Forest Library has bound sets of local weekly newspaper, dating back to Depression, with many house listings with prices, addresses, descriptions, and photos. (Oak Park River Forest Historical Society keeps some home-sale record data too.) Many large newish “executive” houses had valuations of $35,000 to $40,000 range in early to mid-1930s, for bank foreclosure sale at mortgage amounts of $15,000 to $20,000, typically half of purchase valuation. Same houses were sold 30 years later for same $35,000 to $40,000 range, with little appreciation in value. Those houses subsequently skyrocketed in value, but we have little assurance that such a trend will resume. Home prices are back to 2002 prices here.
I have my doubts on the buy and hold strategy for the upcoming decade.
Skeptic wrote:
“gentrification/speculation has definitely slowed in some areas, and stopped in others – but it isn’t reversing. there will be no new Cabrini Green towers being built in Lincoln Park/Old Town ever again, you know? and the suburban dream has turned to be unsustainable, people are sick of spending half of their day stuck in traffic, it’s just no way to live… the City’s core will always have appeal, always.”
You really think white flight (or in our case upper middle class flight) can’t happen again? What do you think the city is going to do with all the high rises that are going to inevitably default? You realize they going to turn them straight into section 8 housing right? Let’s see how long the 60K millionaires in the South Loop stick around when that happens.
You realize that the old mansions in Wicker, Bucktown, and Logan Square essentially were what LP is now, right? Things don’t stay the same for ever and real estate most certainly doesn’t always go up.
Have you been in LP lately? Lots more lower class types than I haven’t seen around since I’ve been here. You gotta rent your investment properties out to someone though. And that’s Lincoln Park.
No matter what you LSers think, Logan still has WAY more in common with Humbolt Park than it does with Bucktown or Wicker. If the city does start to degentrify, Logan will be the first neighborhood to go after the South Loop. Just gone.
chicago bull: “…lower class types…”
I’m not so sure if my appearance and demeanor would meet your class criteria.
LOL. Given that there aren’t a whole lot of gentrifiers on my block right now, I’m not gonna run for the hills just yet.
The South Loop was *never* a neighborhood, that was a glut of ridiculously overpriced condos dumped on a market that was invented from scratch – my neighborhood is quite different.
Logan Square, Avondale, etc. are all block-by-block. But I stand on my belief that it will continue to improve, which I measure by graffiti, and other various non-scientific measures which have served me well.
Chicagobull: I grew up just north of Lincoln Park, I’m in it all the time for various reasons.
If that’s your idea of a ghetto-in-the-making, I just have to chuckle. I remember what north side ghettoed-out neighborhoods looked like, gang fights in Lake View in the middle of the street where there would be literally dozens of participants – Logan or Avondale aren’t even close by way of comparison, even at their worst today.
We’ll never see white flight again the way it happened pre-1980, ain’t gonna happen. There’s too many kids today who grew up raised to not be fearful of brown-skinned people as the coming of Armageddeon.
“Logan still has WAY more in common with Humbolt Park than it does with Bucktown or Wicker”
This is probably the most easily dismissed part of your post. No, Logan Square has the Blue Line & Milwaukee Ave cutting right through it. These routes means that thousands of people every day go through Logan.
Humboldt otoh is for all practical purposes completely ignorable by the public at large. You can grow up your whole life in Chicago and never really go through it. Or are you simply using racial codes and saying that Mexicans and Puerto Ricans are bad? I’ll take my Mexican and PR neighbors over yuppie flippers every day of the week.
“Anyone have any idea what these sorts of houses sold for in, say, 1928? Or 1913? bc, $489k today is ~$38k in ‘28 and ~$22k in ‘13. Seems too high (like double) but I dunno. And, of course, the house in 1928 or 1913 would have included fewer appliances, etc., so would be worth less, but not 50% less.”
My parent’s bought a frame 2 flat in 1969 for $21k in LS, about half a block S of Logan Blvd, between California and Western. We put grandma in upstairs; we lived downstairs. In ~1990, the house appraised out for estate purposes at ~55k, and we basically finished out their 20 year mortgage, and the house was ours free and clear. ($126/month payments!) We borrowed ~$100k, and did a full gut-rehab, the 2nd one that block at the time. I had a gut feeling that things would get better there, not worse, so we hung on to the property, and I was a live-in landlord for many years, and now it’s fully rental. There’s a frame 2 flat for sale up the block with a $398k list, which I think is very optimistic, and yet it’s PENDING! So…
If someone could do the math, that would be great, but very generally speaking, the property value doubled the first 20 years, we borrowed double the value, and the property has at least tripled in the next 20 years.
Exactly…
How much longer can this pozni scheme continue?
“If someone could do the math, that would be great, but very generally speaking, the property value doubled the first 20 years, we borrowed double the value, and the property has at least tripled in the next 20 years.”
that’s how it works (when its good)
“If someone could do the math, that would be great, but very generally speaking, the property value doubled the first 20 years, we borrowed double the value, and the property has at least tripled in the next 20 years.”
till the end of time; population growth helps
“How much longer can this pozni scheme continue”
Hell, we would have been *very* happy with just a doubling in value. We are actually thinking of maybe getting out in the next 1-5 years though, because we’re getting older and the place is starting to show it’s age, and major mechanicals will start failing (we’re replacing a GFA furnace and AC system right now, ouch).
Being old-school financially, we’re not counting on selling the rental property to fund our retirements, although we’d rather sell high, if we can. We clearly missed the boat by not selling it in ’06…
Thread jack-
For those of you who like Cirque du Soleil and didn’t see it the first or second time around, Hephaestus at the Goodman is awesome.
Because it seems like people are reading WAY too into my posts, I’ll clarify. I consider gentrification to be a class thing, not a race thing.
When a neighborhood or town degentrifies the people with the means to do so move out, not the people with a certain skin color.
And by “lower class types” in LP I mean grown men wearing Insane Clown Posse shirts. Groups of kids too old to be in high school and way too poor looking to be DePaul students and look like they have a painkiller addiction. Those types. And not hanging out at The Store at 2:00am, I’m talking chillaxing in front of what I though were relatively expensive apartments. There also was a rash of straight up NYC/SF style crazy homeless people. The other Lincoln Snarkers will back me up on this. Sure it may just be a symptom of the wider economic slowdown. At one point this winter half the businesses on Halsted and Armitage were vacant. I suspect the bums were squatting there. I can’t imagine they were sleeping in the park. It’s turning around, but it isn’t over.
From what I can tell the Gold Coast is just as nice as ever though.
“till the end of time; population growth helps
“How much longer can this pozni scheme continue””
Hasn’t the population of Chicago decreased substantially in the last 50 years?
“Logan Square is 95% working class.”
As many people who actually live there have commented, not even close. See: http://www.zillow.com/local-info/IL-Chicago/Logan-Square-people/r_269592/ and/or http://homes.point2.com/Neighborhood/US/Illinois/Cook-County/Chicago/Logan-Square-Demographics.aspx.
“Hasn’t the population of Chicago decreased substantially in the last 50 years?”
No, it has increased. See: http://www.censusscope.org/us/m1600/chart_popl.html (and I agree population growth guarantees *some* r.e. growth).
“$500k is not a lower price.”
Maybe not in your opinion, but it is a few percent below the average listing for a 3BR Home in Chicago, and has some positive attributes. See: http://www.trulia.com/real_estate/Chicago-Illinois/market-trends/.
“When a neighborhood or town degentrifies the people with the means to do so move out, not the people with a certain skin color.”
Don’t kid yourself. The people that remain in a neighborhood after it “degentrifies” as you put it, aren’t people without the means to move. They’re people that love the new environment as it supports the lifestyle where they can be successful.
If you’re an aspiring criminal you’re damn right you’re going to like to live in a bad ‘hood more than an uppity gentrified hood–you don’t stand out nearly as much and the attitudes of the neighbors (ie: don’t snitch) provide cover for your activities.
“We’ll never see white flight again the way it happened pre-1980, ain’t gonna happen. There’s too many kids today who grew up raised to not be fearful of brown-skinned people as the coming of Armageddeon.”
You won’t see white flight again because they’ve mostly already left. There are a lot of kids who grew up indoctrinated in their comfortable suburban schools to “not judge” but these kids soon realize racial composition of a neighborhood is the largest statistical indicator of crime.
White flight continues to this day, although it is replaced by new whites from Iowa or the burbs so its not noticeable statistically. Chad & Trixie typically move to the burbs once they have progeny and its time for them to goto school.
Go Bob go! Tell the facts and truth.
people still self-segregate despite years of indoctrination. For example, Jewish-Americans in Chicago congregate in very few suburbs and around very few suburban HS’s, and very few of Chicago’s neighborhoods. Something like 90% of people who attend church or synagogue do so at a place where the congregation is 80% or more of the same race. This is 2010.
Interesting class anxieties exposed in this thread.
Architect: you are one of my favorite posters here. Your comment is on the mark. What is lost in the discussion, is that for every Bucktown or Lincoln Sq. that “gentrifies” (which attracts the attention of the tastemakers, that tiny fraction of scoiety known as DINCs, homosexuals, ultra-liberal types that dominate the media of all types), there are probably 2-4 times as many areas of Chicagoland that are declining and rapidly. Yes, let’s focus on Bucktown selling $1 million homes, but places like Schaumburg & fill-in-blank-other-place are on a decline of massive scale compared to what it once was, including many NW side neighborhoods.
I thought the 70’s was bad (I’m too young), you know, Taxi Driver, Death Wish (Chas. Bronson), Ft. Apache, Warriors, etc. but from what I am told, even in the depths of the 1970’s stagflation/Carter era, it was nowhere nearly as bad as it is today.
“Certain formerly quiet northwest side neighborhoods have seen a significant increase in gang activity, muggings, mass-fighting, car break-ins, tagging, and drug-dealing in past few years. Daytime make look calm; night-time is a different story. A drive-by shooting is often a wake-up call, particularly if you have small kids and the financial ability to move elsewhere. School choice is often the yuppie family’s trigger for a move to suburbs.”
Skeptic, you wrote: “If that’s your idea of a ghetto-in-the-making, I just have to chuckle. I remember what north side ghettoed-out neighborhoods looked like, gang fights in Lake View in the middle of the street where there would be literally dozens of participants – Logan or Avondale aren’t even close by way of comparison, even at their worst today.”
So, were the Seventies worse or not???? I’ve heard it’s worse today (outside the greenzone today vs. then).
“people still self-segregate despite years of indoctrination. For example, Jewish-Americans in Chicago congregate in very few suburbs and around very few suburban HS’s, and very few of Chicago’s neighborhoods. Something like 90% of people who attend church or synagogue do so at a place where the congregation is 80% or more of the same race. This is 2010.”
Could it be because some Jewish-Americans walk to services?
No, most suburban Jews only attend synagogue 2 times per year. The vast majority don’t attend regularly at all, nor to they walk. Anyway, if you study the history of “white flight” you’ll see that Jewish-Americans were always the first to bail-out when blacks came in. In Chicago, Lawndale experienced a massive white flight of ethnic Jews when Blacks started encroaching. It is usually the Pole, Italians that stick it out and appreciate the diveristy, Jewish ethnics shunned it and still do to this day, their level of deliberate self-segregation statistically far outstrips any other white ethnic group.
I don’t think it is worse today compared to the 70s, especially with regards to crime, violence, urban decay, etc.
Chicago has always had an issue with organized crime. And there has always been ethnic violence, labor unrest, political f*ckery, and rioting in this city. The worst race riot in the history of this city was in 1919.
I truly believe that things are better in the city now for sure. The physical appearance of the city has greatly improved. The dining and drinking options are orders of magnitude better than they were in the 70s. And race relations have improved, especially among the younger generation. (old fart racists and homophobes will slowly die off)
Yeah, Danny but what about the racists in the CPS, where the blacks and Latinos don’t sit at the same lunch counters and tables? Are they old farts? No, they are the new fart racists. This is the typical DINC, metrosexual, homosexual (no kids), yuppie, hipster types response though:
“The dining and drinking options are orders of magnitude better than they were in the 70s.”
Who cares about ethnic restaurants when more areas in Chicago, like vast stretches of the NW and SW sides are in decline as compared to the 1970’s? For every North and Damen, how many intersections in the city have turned to crap? Do you get outside the green zone much? Plus the inner ring suburbs are turning to hell, the schools all suck. Did the CPS have metal detectors and rampant black/Latino racism in the 1970’s?
There was some discussion on this long thread about second mortgages. I know someone short selling who has a $50k second mortgage that is being wiped out. The bank tried to get them to pay $5k (initially) but they’re completely broke so they laughed at the bank.
The bank then kept going down from there until it said it would agree to NO payback on the second.
But, under the law, that second loan is now considered “income” so the bank told them they would issue a 1099 for the $50k. That would mean a huge tax bill next year- obviously.
So they have no choice but to declare bankruptcy and let the house go into foreclosure. Both banks will lose- but there is no other alternative when the “owners” have absolutely no money.
This will be going on more than people know during the rest of this year.
“I don’t think it is worse today compared to the 70s, especially with regards to crime, violence, urban decay, etc.”
Nonsense. The city’s population has declined since then and thousands of good paying jobs have left since then. Like Zenith, South Works, Wisconsin Steel, Florsheim shoes, Stewart-Warner, Brachs, Hart, Schaffner and Marx…..need I go on? Many neighborhoods that were vibrant and full of dough are now dumps.
With industry gone who is gonna make up the money to keep the schools, CTA, police and other services going? You think cupcake stores and cute restaurants are gonna make up the difference for the dough US Steel, Com Ed and Armour used to pour into city coffers?
This city is buggered and I’d never buy here; it looks to be a trap. Good place to rent though for the time being.
Been in LS for 7+ years, 5 of those have been west of Central Park. Things are improving, but things have also never been all that bad.
this price seems a bit inflated, but anecdotally I’ve seen a lot more established professional types moving in the past few years. So the demand *might* be there.
Dan. How old were you in the 70s?
I was just a child (born in 69), but I vividly remember the general malaise of that time period. Chicago was just plain decrepit. The air quality, the lakefront, the streets and buildings… just everything had a demeanor of “suck”.
Large swaths of the west side and south side burned down in the hot summer of 1968. The ruins of that summer just remained in place throughout the 1970s. Burned out structures that no one bothered to demolish. Steel mills closed down in spurts throughout the 70s and into the 80s. This was a rough damn city.
Yes, we’re in another recession today, and there is a discernible rise in gang activity and violence. But there is no comparison between today and the 70s. We are all so much better off… in terms of technology, opportunity, enterprise, etc. The rise in world tourism to Chicago has been considerable. Conventions and tourism are now the #1 industry in the City.
And Yes, the food and drink really are much better today. The availability of good restaurants and bars is not something that only matters to white, yuppie, green-zone, metro- blah blah blahs. Everyone of my acquaintance (pretty diverse racially and geographically) loves to dine and drink. And seeking out restaurants in other neighborhoods has always been part of that experience.
Seriously, if you really lived through the 1970’s and think that its worse today, then I feel sorry for your current living arrangement.
Old man… I don’t think that we’re really disagreeing here.
Those factory closings that you mentioned were largely in the 1970s and 1980s. The fallout from those job losses were immediate and brutal. I remember those days and the palpable sense of dread.
But those days have passed. Are some neighborhoods the worse for it? For sure. South Deering used have theaters, bars, restaurants, and department stores that catered to three shifts of workers. Today that’s all gone. But the new construction downtown and other neighborhoods in the past decade is truly reflective of the vibrancy of Chicago — a city that could have gone the way of Cleveland or Detroit.
Will tourism and conventions be able to generate the same tax revenues as steel mills and candy factories? I doubt it. The burden will definitely be on the middle-class home-owning chump.
Old Man… I assume that you remember the 1970s. Truly, in your honest opinion, is your sense of crime and violence worse today than it was in the 1970s? Everyone else can chime in too.
SquareD,
Your census figures obviously don’t come from the city of Chicago. Chicago doesn’t have anywhere near 8 or 9 million people living here. Chicago has around 2.7 million down from 3.5 in the early 60’s.
You figures come from the Chi metro. If you think the people living outside the city in Chicagoland who earn enough to afford a 500k house would be even remotely interested in a 500k 3bd home in LS, well, I’ve got a $500k house in LS to sell you.
According to your figures, the median HOUSEHOLD income of LS is only $37,800. That sounds pretty darn working class to me. A household income of $37,800 isn’t going to support a neighborhood with 500K homes. You need at minimum a $130K household income to even consider a 500K home.
Think about it, for the median to be that low with all the big earners you LS people claim, there must be lots of incomes in the 0-20K range. Incomes aren’t going up either. They just aren’t. Incomes are going down in pretty much every industry in the world.
LS is way ahead of itself and if there was a way, I would bet on it failing spectacularly within the next five years. Way too much bleedthrough with Humbolt and the really bad westside hoods. Way too many less hassle hoods closer to downtown and the lake.
500k is only 3000 a month PITI with a conforming loan, expensive but well within the range of affordability for the 130k a year household. What needs to changve is the 130k a year household mindset that is so eagar and willing to pay 3000 a month for housing regardless of the neighborhood or the surrounding demographics. Just because 2 professionals can spend 3000 a month doesn’t mean they must or should.
Logan Square isn’t that bad for folks who don’t have kids. I agree if you’re a family and looking to have a kid I would stick with a more “established” neighborhood because of the schools. BTW Logan Square has a great farmer’s market in the old Congress Theater. It’s indoors during the winter months. Definitely worth checking out.
danny: I don’t really remember the 1970’s that much, I’m your age too. Sure, the green zone is MUCH better, but my point is similar to Old Man’s where for all the improvements in the green zone, there are probably 2-4 times more areas that have declined in Chicago, including large areas of the NW and SW sides. I do recall when all “hip” Chicago really seemed to be was Lincoln and Clark streets, but what about those other areas that have gone from being all-American to hellholes?? Old Man is the only person so far that has really chimed in with a real opinion, since one would have to be over 50 to really comment on it. Also, we didn’t need 1 million Mexicans here for Rick Bayless to create Topolobambo now did we? Today there are vast stretches of Chicago devoid of culture and middle class, because today they are only full of taquerias and cell phone stores. Despite the Taxi Driver-hell that appeared on film, did the high schools have metal detectors? This also doesn’t even being to analyze the decay and decline of massive parts of suburbia. For every restaurant row in Wheeling or Schaumburg there are many more areas like Dolton or Crestview etc. that have seriously declined.
The idiot Americans thought the middle class would continue on in perpetuity. In fact the sheep were quite asleep with the wool pulled over their eyes the past 20 years when real wages barely budged and credit was ratcheted up to give the appearance of a continuation of a similar lifestyle.
Now the sheep are maaaaaddd baaaaaahhhhh! So they’ll vote Democrat in one election and Republican in the next. Not seeing for one second this mess and the decline of the American middle-class lifestyle was orchestrated by both parties.
Look at the cost of a college education (which is also given away as free to those deemed ‘deserving’ or ‘in need’). Look at the cost of property taxes (which old people are exempted from or pay substantially less).
Baaaaahhhh! Baaaaaaaahhhhh!
D_ck Riding Obamanites, enjoy your barista job at Starbucks with your four-year degree:
http://www.youtube.com/watch?v=08S4poMGvwA
Chicagobull, 1960 was 50 freaking years ago. Show me a stat that shows the city has not grown in the last 30 years.
Likewise, you dismiss the household income of $37,800 as working class. . . but it’s within 2% of the Chicago norm and 21% off the stat for LV. Based on these, would love to know your definition of “middle class.” Followup question: if a LS’s average income is 21% less than LV, how much less should houses cost?
Johnny Q (Public)– nice to see you back and once again representing W LS. Lord knows somebody needs to around this joint.
Danny (lower case D) I completely agree. 90% of the people who walk down armitage ave in LP today would’ve be mortified to do so in the late 70s. Or they just would’ve gotten their asses kicked (prior to mortification).
From Russ:
“I agree with you. My point is that you shouldn’t sink all your liquid savings into the house just so you can make a down payment. The issue is having liquid reserves available at all times in case of an emergency. I see too many people essentially putting all their eggs in one basket.”
Thank you Russ. Yes, you are right. It is really important to have liquid reserves available at all times, and I agree that real estate is not exactly liquid. I will listen to you and heed your advice.
I would VERY reluctantly use a cash-out refi in the case of a dire emergency and I would probably do it in tears.
I have a colleague. She’s a Wall Street secretary and her husband is a commodities trader. They’ve been making good money for years, but his salary has been declining because commodities are almost completely traded electronically now. They sold a brownstone in Park Slope, Brooklyn at a large profit and bought a vintage co-op in Jackson Heights, Queens back in 2000 when no one from Manhattan had even heard of Jackson Heights, there was major Colombian drug activity in the neighborhood and things were CHEAP.
Lately the husband has made the wife cut back on EVERYTHING. Her gym membership, going out for dinner, financial support of her wheelchair-bound sister. Meanwhile they just refi’d their co-op with an origination fee of 7K to re-do their kitchen. I pleaded with her not to do it. I told her she was only making the bank rich and to save their money for a year to re-do the kitchen or even pay off their mortgage. (I don’t understand how it was not paid off long ago unless they have been using it as an ATM all along.)
I ran into her on Friday and she was on her way to get a cashier’s check so her husband could get a SECOND, bigger, better Harley. It’s so distressing to me, but she did not absorb one word of what I said and their values are all out of whack. I told my dad about it and he said she was obviously paying for her husband’s Harley, otherwise why was she the one getting the cashier’s check?
Majorly disturbing.
Square D: but for every Armitage Ave. there are probably 3 public parks in Chicago that were safe in 1970’s but today are unsafe, so the net is still a loss. This is a huge problem in America, it’s in rapid decline, demographically as well, but the opinion/taste makers never leave the green zones and only bother with “restaurants and shops”.
I completely agree. 90% of the people who walk down armitage ave in LP today would’ve be mortified to do so in the late 70s. Or they just would’ve gotten their asses kicked (prior to mortification).
SquareD,
Yes, the population of Chicagoland has increased, but that’s not what we’re talking about.
http://www.infoplease.com/ipa/A0922422.html
The city’s population has decreased by 500,000 to 700,000 people since the 60’s in every published census figure I have ever seen. I know this seems counterintuitive, but populations just like RE prices, don’t always go up. All those people either fled to the suburbs or moved to Colorado, Florida, Texas or one of the other states that had a massive population boom since then.
As far as Lakeview median incomes compared to LS go, well, all I know is that people in LV generally have much more cake than people in LS. Given the choice between a 500K 3/2 SFH in LS and a 500K 3/2 condo in LV most people with the means are going to go with Lakeview. That’s why houses cost so much there.
i really do think illegals plus undercount affects those numbers; i can imagine the number of people being lower; but that doesn’t mean its reduces the numbers of buyers of properties; nor the total absolute wealth/financing being tosses at the market
Sold for $455k!
There is no undercount much of the south and west sides have been abandoned like detroit.