Has The Proverbial Boom Gone Bust?
The St Charles Journal reports from Missouri. “With the full results for 2007 in, St. Charles County evaded some of the more dramatic drops seen in other parts of the country in new home sales. ‘What those numbers are indicating is a logical slowdown in permits in the last two years as we are closing and occupying a supply of homes created in ‘04 and ‘05 that was in excess,’ said Joe Zanola, who owns a St. Louis housing market research firm, adding that ‘we have a bit of oversupply.’”
“Realtors in St. Charles County have undertaken a campaign to convince the public the situation is not as dire. During a news conference last week, St. Charles County Association of Realtors CEO Mark Stallmann tried to shift attention to the 2007 housing market’s performance in comparison to 2002, which he referred to as the ‘last normal market.’”
“In the midst of public concern about the health of the housing market, the Realtors association has characterized the period of 2004 through 2006 as years of unusual growth that should not be used to gauge the present situation.”
“Missy Palitzsch, marketing manager for Continental Title in St. Peters, said foreclosures in St. Charles County rose 10 to 15 percent in from 2006 to 2007. A great part of that problem, she said, was that several people who put all their money into adjustable rate loans got into trouble when rates reset.”
“‘By the third quarter, we’re hoping the correction has run its course,’ she said.”
The Chicago Tribune from Illinois. “With the housing industry locked in a deep chill and another Chicago-area builder, Kennedy Homes, showing signs of financial duress, some builders are trying a new tactic: freezing prices. Several local builders are offering new promises that if they lower prices within a specific time frame after a buyer steps to the plate, that buyer will still get the better ‘deal.’”
“Buyers ‘are totally afraid,’ said housing consultant Steve Hovany. ‘This is a way to calm them down.’”
“Lance Ramella, principal with Meyers Builder Advisors in Downers Grove, said a number of builders tried to adjust to the downturn first by reducing staff. ‘Pretty much everybody has laid off staff, up to 50 percent in some cases,’ he said. ‘Then they discounted the price of the houses, and then they shed excess land, and they’re still doing all those things,’ Ramella said.”
“He said the number of new homes sold in the Chicago region plunged from 46,000 in 2005 to 28,000 in 2007. ‘I had one builder, a medium-to-small builder, tell me their business plan for 2008 is to sell zero houses,’ Ramella said. ‘If they sell one house they will exceed their plan.’”
“To lure buyers, companies including KB Home, Ryland Group, Belgravia Group and Kimball Hill are offering price protection guarantees. It’s an issue because desperate builders are dropping prices.”
“Benjamin Brizuela bought a house reduced by $40,000 from struggling builder Neumann Homes. He paid $266,000 for the four-bedroom home at NeuFairfield, an uncompleted development on the far east side of Joliet.”
“‘I got a tremendous deal because the developer was headed for bankruptcy,’ he said. ‘I wasn’t upset, because I knew the builder was in a lot of trouble.’”
From Medill Reports in Illinois. “While Illinois’ January housing figures are not yet available, Chicagoland homebuilders said they’re seeing a housing recession.”
“‘We haven’t seen numbers like this since the early 1990s, and that’s the last time we’ve been in a housing recession,’ said Bill Ward, director of government affairs for the Home Builders Association of Illinois. ‘Most of what has occurred has occurred in the metro suburban area.’”
“The number of building permits for single family homes dropped 67 percent in Illinois over the past two years to 20,000 permits for single family homes in 2007, from 60,000 permits in 2005. ‘Basically, what it boils down to, if you have a 40,000 drop [in single-family building permits], you lose approximately 80,000 jobs,” Ward said.”
“‘It doesn’t look good, no matter how you slice it or dice it,’ said Chris Huecksteadt, director of the Chicago region for Metrostudy. ‘In a span of two years, this market’s been cut in half.’”
“Huecksteadt said new home contracts in January for Metrostudy’s Chicago region were down 40 to 45 percent over last year’s figures, and cancellation rates on new home contracts are running between 30 to 50 percent in the Chicago region.”
“‘Builders are not even confident about a signed contract,’ Huecksteadt said, adding that there are tales of customers who signed and even put down earnest money on new homes, but failed to show up for the home closing.”
The Daily Herald from Illinois. “Another landmark builder of the Northwest suburbs is laying off workers as it struggles to survive the worst housing depression in years.”
“South Barrington-based Kennedy Homes confirmed Monday it laid off 20 of its 32 employees on Friday and said it is unsure of its ability to start new home construction on undeveloped land.”
“‘We have a financial situation but … (we) intend on building all our homes under construction,’ said Stephanie St. John, Kennedy Homes comptroller.”
“‘There are about 30 homebuilders in the area that build 100 homes or more a year,’ said analyst Tracy Cross. ‘About one-third of them are in a similar situation.’”
From Model D Media in Michigan. “It’s clear the motor is running, but definitely not chugging along like it was just two years ago. Detroit needs a tune up, badly.”
“To wit: condo projects are being scrapped (The Griswold), converted to commercial (Mid-Med Lofts) and worst of all, sitting empty (Nine on Third). That’s not even mentioning the countless developments that while complete, are just not filling up. Which begs the question: has the proverbial boom gone bust?”
“The Detroit Investment Fund studied the evolution of Greater Downtown’s housing stock between 2000 and 2006 and found 2,500 new units of housing, a significant increase in sales prices (from approximately $140 -160 per square foot in 2004 to $198 in 2006) and a young, affluent, educated group of new residents. All good things, no doubt.”
“DIF’s Dave Blaskewicz characterizes the current market conditions as ’soft.’ High unemployment, jail-tight credit, an over-supply of homes for sale and – ouch – record numbers of foreclosures are all to blame.”
“The results? The absorption of new units has decreased, sellers are having trouble doing so, projects are failing, would-be purchasers are nervous and potential developments are finding financing more difficult to come by.”
“The bottom line is yes, everyone is hurting, from developers to builders to realtors to sellers. But a lot of people are digging in their heels and riding out the storm. ‘We’re all hurting a little bit right now,’ says Elizabeth Tintinalli…the mastermind behind Illuminate Detroit.”
“For Joy Santiago of Ralph Roberts Realty, it means she is making lemonade out of lemons. ‘[Foreclosures] are our largest source of business now,’ she says. It’s a buyer’s market, she says, ‘Everything is a really good deal.’”
“Ryan Cooley of O’Connor Realty & Development, says there are two divergent markets when it comes to foreclosures. In the condo foreclosure market, units are moving fairly quickly. On the other hand, when it comes to foreclosed houses, it’s a whole ‘nother animal. ‘They are in rougher shape than the condos,’ he says.”
From WLNS TV in Michigan. “A growing number of foreclosures in Jackson County is making it hard for some homeowners to sell their houses. The latest figures show foreclosures jumped 40% in just one year.”
“‘Tim Atkins, Realtor: ‘I sold one where there were 3 or 4 foreclosed homes on the immediate block, those homes sold for about $30,000 less than the I home I listed, so I heard comments, like why would I want to buy a home and pay a higher price for it?’”
The Green Bay Press Gazette from Wisconsin. “As was typical throughout 2007, year-end statistics show Wisconsin’s real estate market, albeit down, fared better than many other areas of the country. And Northeastern Wisconsin fared well compared to other regions of the state.”
“David Clark, an economist with the association, said the first quarter of 2008 will be interesting. He wouldn’t be surprised, as a result, if the first quarter was down and some of that business bumped into the second quarter. He expects median home prices to remain flat.”
“‘The median prices are not going down by any sizable margin. … There certainly is no strong evidence that we have any housing bubble issues, because if you had a housing bubble phenomenon taking place, you’d expect prices to be dropping pretty precipitously. But that isn’t happening here,’ he said.”
“It is still a buyer’s market, Clark said, especially for first-time homebuyers. However, potential buyers who are waiting for prices to sharply drop will be waiting a while.”
“‘If people are trying to time the market so they can pick up benefits of dramatically falling prices, then I just don’t see evidence to suggest that’s going to happen. That doesn’t mean there aren’t deals out there. There certainly are. Everyone is looking for the proverbial motivated seller,’ Clark said.”
“‘Quite frankly, an awful lot of people have a majority of their wealth tied up in homes. … a lot of sellers are saying, ‘I’ll take it off the market or leave it on the market at this price for the foreseeable future rather than take a significant cut.’ Especially, if they have any idea of moving up or trading up to a bigger home,’ Clark said.”
“‘Typically, they can’t afford to make serious concessions on the value of their current home if what they’re trying to is trade up. They need to capture whatever equity they can,’ he said.”
The Duluth News Tribune from Minnesota. “The number of foreclosures in the area is increasing and it’s a slow time of year for the real estate market, so a Duluth office of a nationwide mortgage company has come up with an idea that has gotten things moving in other places: foreclosure tours.”
“Anecdotal reports from real estate agents indicate 150 or more houses currently are in some stage of foreclosure in the Duluth area, which is why Mike Locker and Gloria Allan of Countrywide Financial, a nationwide mortgage lender, decided to experiment with a ‘Parade of Foreclosures’ tour in February and March.”
“Foreclosure tours are big in areas that have large numbers of foreclosures, such as California, but this is the first time the concept has been tried in Duluth, Locker said. ‘We’re kind of piggybacking on the West Coast,’ he said.”
“Tod Venberg, president of the Duluth Area Association of Realtors will lead the second tour. He said that some foreclosed homes ‘are really nice, but I’ve seen some that the people were really mad and they trashed the place out.’”
‘The Detroit Investment Fund studied the evolution of Greater Downtown’s housing stock between 2000 and 2006 and found 2,500 new units of housing, a significant increase in sales prices (from approximately $140 -160 per square foot in 2004 to $198 in 2006) and a young, affluent, educated group of new residents.’
Maybe Professor Shiller can explain how there isn’t a bubble..in Detroit, no less. Huge increase in sf prices in just two years, massive overbuilding, new paradigm living expectations. Check, check, check.
Attn MSM, this housing bubble thing might be a little more complicated than you’ve been told.
There is a massive bubble in most of the places that haven’t seen price increases.
Minus the huge fiscal stimulus most of these places would’ve had an outright depression starting 2000.
`…a young, affluent, educated group of new residents.’
Soon to become even more educated in experience’s dear school.
Ben Franklin!
I’m not educated enough to spend $200/ sq. ft. in Detroit…and that’s fine by me.
A picture is worth a thousand words.
http://www.filmreference.com/images/sjff_03_img1191.jpg
Ladyyyyyyyyy, hey, ladyyyyyyy!
So that’s how ARM’s were invented!
Experience is the best teacher! Class is currently in session for millions of people and many are learning from their mistakes of not doing their homework.
No, Mother Nature is the best teacher. Unfortunately, she kills all her pupils eventually.
Somewhat on topic: Look at the DJIA this morning. Its crazier than the EKG of a coke adict.
Got Popcorn?
Neil
very strange volatility today. Kudlow was saying last night about “people having a rosy outlook on the future”, I don’t know what kind of kool aid he was drinking, but it looks like it might be “hangover” time.
“people having a rosy outlook on the future”
And why shouldn’t they, we shot down that satellite after all . . . and it only costs us $60 mil.
Yeah, that satellite had nothing to do with the Chinese test. Nothing at all.
It was all about the toxic waste constituting a hazard.
Hoo-kay now. I’m gonna go check the Bush administration’s mercury rules now. Arsenic too.
Thank you Faster. I thought maybe my tinfoil hat was on too tight regarding the satellite shoot down. I kept thinking it had something to do with the Chinese test as well. I guess I’m not crazy.
Its crazier than the EKG of a coke adict.
I think this patient must be on meth and is ready to go into ventricular fibrilation.
Dow now down 125 at 12,305 on the DJIA.
I’ll agree, the patient is on coke and meth and the heart just cannot take it.
Got Popcorn?
Neil
“During a news conference last week, St. Charles County Association of Realtors CEO Mark Stallmann tried to shift attention to the 2007 housing market’s performance in comparison to 2002, which he referred to as the ‘last normal market.’”
SOL for my sister and hubby, who own two homes in St. Charles County, one of which they need to sell some day.
Bottom calling will get you nowhere…
Merle Schneider, co-owner of Schneider Real Estate in St. Charles, thinks the market bottomed out near the end of November.
In a recovery market, he said, beginner buyers purchasing houses for between $130,000 and $150,000 lead the charge. Schneider said he recently sold a few properties in that range.
“I think we’ve hit the bottom of the trough in 2007,” he said.
he recently sold a few properties in that range.
This realtor smuck thinks a bottom is because he sells a few properties in a certain range. The realtors are one bunch of uneducated idiots who are making an attempt to fool the public, but it’s not working.
They aren’t generally bright enough to fool the public. At least what they say comes off as convincing, as they themselves are typically fooled as well.
News of nervous and broke builders in Chicagoland… Ben, you made this lady’s morning. Thank you.
It’s how the slide really started in Florida, Arizona and California. Builders undercut the resale market (The CT says this is already happening) and then resellers have to begin serious cuts. REO’s push down on both and here we go.
That’s exactly what has been happening in Chicago - builders are leading the market down. REOs are almost always sold through agents (not any bank FSBOs to speak of & auctions a last resort after failing to sell through agent), so they are all in the MLS and become comps. Over 40% of mortgages nonconforming; still a ways to go down. Areas further out (i.e where a lot of the tract developments are) and with less desirable school systems are tanking faster. The denial and “this place is different” mentality is still very deeply entrenched there.
This is happening in Portland, OR as well… JUST starting. But then, we’re behind the curve. The builders in neighboring Clark County, WA have a PR site, buynowclarkcounty.com, where they make claims about gains, leverage, and investment that any bank or broker would have to LABEL WITH DISCLAIMERS. They’re playing the same game in Bend, the #1 most overpriced place in the country - using thinly veiled threats against the media to get “good news” stories printed. Use your economic power, they exhort their members.
And you wonder why people look at new/used house sellers as scum.
Same here in Grants Pass. Housing is dead, unfinished houses abound and developments are sitting abandoned. And yet the city still thinks that boom times are still here. A state of total denial.
I have family in Grants Pass in the construction business..They live out on Riverbanks road…
Thats exactly correct Ben and it will continue IMO….I believe you posted this before but several local builders in the Bend Or., area have teamed up and purchased a large entitled site @ a significant discount through forclosure…They intend on bringing single family starter product to the market for 180k…That will “Crush” the condo & townhouse market along with the starter home resale market IMO…
And I think as a corollary, the shakiest builders (see Neumann) go 1st because they bought the raw land in the more undesirable areas because the big boys got the better stuff 1st. Here in Chicagoland, I think it will be the booniest farmland tract housing that will plummet 1st and worst. If your house is relatively close to mass transit (rail and bus lines) or a major expressway, you might be spared some of the downdraft. Heaven help those FBs who bought in DeKalb and commute in.
I spoke with a realtor this morning. Long story short, she is selling a house for my client. She told me that houses in Palatine in one particular established neighborhood take 26 months to sell. 26 months! 2 years ago this house would have sold in a few weeks. She told me that no houses have sold in this particular area in almost a year. There are a ton of other homes for sale but nothing is selling. That’s scary.
Sellers are still clinging to 2005-2006 prices. Most people I talk to believe the current market is a temporary blip, and that “normal” double-digit annual price increases will return in a year or two. This means that prices are going to be incredibly sticky on the downside, which in turn is going to drag out the period of time it is going to take the market to reach a new equilibrium.
I don’t believe they are going to be sticky at all. Before the bubble, you didn’t have to sell unless you got sick, got divorced, lost your job, or relocated. Now, there are people who HAVE to sell because of ARM reset and the subsequent foreclosure. Those are the comps that are driving the market, not a few wishing prices.
The “not giving it away” crowd can stare out at their for-sale sign forever. The market will reach a new equilibrium without them.
I agree. Im living in MD, near DC. Everyone says DC is different. I agre, to a certan degree, what with all the fed contracting and gvt jobs. However, that is a double edged sword. Ive heard it said that noone lives in DC, theyre all here for a while. What happens to staffers, white house, congress, et all, who bought in 200-2005, who now have to leave due to changes in administration? THose million dollar townhomes in NW may take a bigger beating than expected. Also, with a major change in administration, wanna bet a lot of the higher ups are gonna be gone?
I’ve seen a couple houses in Arlington Heights (neighboring town) that have been on the market over 3 years. One was recently taken off the market. I checked the tax records to see if it sold. It didn’t. So either the builder is going to live there, or they’re doing the obligatory 90-day off-market in order to reset their DOM.
Interviewers have to start raising the Bull Sh*t flag on these realtor statements. I could sell the house tomorrow, just not at a price that would be acceptable to the seller. Obviously these realtors are not trying to discover the price point for these houses, or more likely the sellers aren’t. Having a house listed for 26 months and then blaming the “market” is not acceptable. LOWER THE FRIGGING PRICES!!!
“LOWER THE FRIGGING PRICES!!!”
Truer words were never spoken.
Many of us have said for awhile that the best strategy is to find the closest comparable sale, and then undercut it 5% to get it sold while you still can. If you are underwater, and thus cant, try to get a short-sale approved or consider if your economically best option is to walk under state law. Anything less is not even a serious attempt.
One thing have noticed this week in the Denver metro is that ppl are starting to realize that they have to compete, and their house is not really that special. I have seen several instances very recently where multiple houses on the same street of for sale. One lowers the price by $5k, the others drop their price by $10k almost immediately to undercut them. Still not a huge change, but the mindset has changed to recognizing that your house has to be the best deal out there or it will not sell. This shift just starting appearing in my data this month, so I find it exciting.
The houses were never that special. It was all speculation, IMHO, even when people wanted a “home”.
It’s tough to sell your house as “special” when the 50 houses in your neighborhood are identical. REALLY. identical.
legal, are you seeing any teardowns in Paletine? It’s a pretty nice town, but if mcmansions are going up on some of those lots, I can understand some of the lag in movement.
leagle eagle i need some law advice…I believe you are located somewhere in NW subs if I am not mistaken…please contact me : o f f e r s _ 1 1 4 at h o t m a i l d o t c o m
Reporting from Oak Park….I think the townhouse market already collapsed last summer. There is a new complex getting put in (condos/townhouses). I noticed the developers panicked last summer and tried to crank up the granite/”Italian tile”/”live in a refined place” schtick in their advertising while dropping prices slightly. The townhouses (originally sold at $650K, which everyone, including the banks, thought was nuts) seem to be mainly occupied, with one unit on the end still not being completed. Think most townhouses now are going for $399K+. SFH holding pretty steady at $700K-$2.1M, partly because it’s hard to find a place here that isn’t in some historical district or other. Older condos slipping down in prices ($130K-$200K or so), usually $10K at a shot, still not being snapped up due to lack of parking.
FYI, there is also an area named Oak Park in So Ca. Evidently, you mean IL.
Yah, should have included the IL bit. (Oak Park, IL, where you go 10 feet and trip over yet another building designed by Frank Lloyd Wright or one of his devotees.) Other pricing info: last summer someone was trying to flip a 2-bed condo in the building kitty-corner from mine, was asking $385K, no takers. The last set of 1-bedrooms in my present condo they’re trying to shed at $185K-$190K and are selling….slowly. (I like this place because of its spectacular view, great location, can walk everywhere, easily jump on the train, and can still easily get to O’Hare and on the interstates when necessary. Until I can get back to Tokyo, this will do…)
Oak Park is the poster child of Chicago excess. They are going to get taken out back, and shot in the head with extreme vengeance.
I’d put as “poster child of Chicago excess” all those lofts going up in or near the Loop. Splendid crashing sounds to be heard shortly. And let’s not forget Trump’s recent meglomanical excess.
Oak Park is nowhere near the poster child for Chicago excess, I’m afraid. Development there has been downright staid and well-paced compared to a dozen other relatively high-profile towns and neighborhoods.
Yes, but everyone knows Oak Park, IL. No one has heard of Oak Park, CA.
From ABC News/Nightline:
Buyer Beware: Unsold Homes Are Often ‘Re-listed’
http://abcnews.go.com/Business/Economy/story?id=4316775&page=1
old trick. i think..think…that buyers are asking way more questions now and realistically thinking about what they can afford. at least i hope so. so relisting a home may not be a big deal. just to keep them on edge always ask…did someone die in this house…let them answer that one.
Where has the MSM been? Re-listing has been going on for years!
I keep telling you they don’t hire people like me, who reads blogs like this!
that buyers are asking way more questions now and realistically thinking about what they can afford
Well, when buyers suddenly have to pony up 10% down payment, they are not just “thinking” about what they can afford. They KNOW what they can afford, almost to the dollar. (Even J6P can stick a 0 on the end of his checking account balance.) And at the moment, they know can afford nothing.
Wow, reading those comments was certainly an eye-opener. I know you guys trash RE agents all the time - but you are all WAYYYYY too lenient on them. They are shameless, hustling, stupid, unprofessional . . . !!! ugh! I especially love the agent from Philly who posted the perennial favorite “it’s different here!” that was precious.
The MSM is like a loud, slow child. Eventually they’ll understand the main story is not about innocent folks avoiding foreclosure of “their” homes; it’s about Wall Street’s excesses that made homes unaffordable for all of us. Then we’ll hear the message loud and clear.
Yes, especially when they realize it takes the attention off people’s own greed and stupidity.
Had personal experience with this. We’re purchasing a property in mundelein that had been foreclosed for over a year. Listing said it’d been on the market for 217 days, but the contract came with the original listing - $270k for a tri-level put on the market in July of 2006. We’re getting it near $180k after a foreclosure and repossession. Thanks to this blog, though, we’re going in it viewing it as a place to live - it’d be very easy to try and view it as an investment and end up in the same hole as everyone else.
Illegal or not, I fail to see how this is not seen as a big deal - is it not fraudulent and/or a misrepresentation of a material fact?
Why would I care how long a house has been on the market, especially in a downturn? Sorry, just curious.
well, they often “sell” listings to you by implying that it “won’t last long” - and show you DOM of 1 or even 0 - “new listing! get it while it’s hot!” - when in reality it’s been relisted at least once - wouldn’t it make a difference to you if you were told a house had just listed, vs. it had been sitting for months, or even years? It would to me. It would tell me something was up if it sat for a while - and some digging on properties like that usually finds one or more deals having fallen through on stuff found on inspection - like a crack in the foundation!
If you “fell in love” with the house and didn’t want to risk losing it by offering less than asking price and insulting the owner, who presumably also is “in love” with the thing. The best defense is not to “fall in love” with houses or other consumption units. Which is good general practice anyway because it means you won’t be featured in a human interest blab piece talking about how you became emotionally involved with your house and listing all its special qualities in order to make everyone not living in your jewelbox feel lesser than you. Nesting blab needs to stop right now, and that means legit nesters and nester wannabes alike need to shut the hell up. So your house has unique craftsman mullions and periwinkle tile on the pool deck and a forsythia arbor blabaaaablablabla. Keep it to yourself, please: I don’t want you shoving your private business in my face. How is that nonsense supposed to make anyone feel anything but loathing? It’s interesting from a mental health perspective that some people are capable of feeling the most exalted of human emotions for a house, but not really from any other perspective. “I fell in love with the Ford Expedition.” “I fell in love with the Wii.” “I fell in love with Scott double-ply quilted toilet paper.” “I fell in love with Birdseye Frozen Peas.” “I fell in love with this pancake turner I spent $45 for at the Sharper Image; it is my dream spatula.” The media must stop catering to crazy people and cease to print their revolting, self-aggrandizing pap.
“It is my dream spatula”
LMFAO
The National Association of Realtors says it hasn’t seen a need for regulation on re-listing because it is not aware of a problem.
The NAR is good at playing the denial game due to it’s own lack of ethics. Let’s see how well the NAR does playing the denial game in the Department of Justice tort that was brought against the NAR!
“Let’s see how well the NAR does playing the denial game in the Department of Justice tort that was brought against the NAR!”
You mean the same DOJ headed by the guy who says that waterboarding isn’t torture? I wouldn’t hold my breath. (Sorry.)
David Clark, an economist with the association, said the first quarter of 2008 will be interesting. He wouldn’t be surprised, as a result, if the first quarter was down and some of that business bumped into the second quarter. He expects median home prices to remain flat.”…
“It is still a buyer’s market, Clark said, especially for first-time homebuyers. However, potential buyers who are waiting for prices to sharply drop will be waiting a while…
Yup David, It’s REALLY different in up there in Green Bay now that your used RE Housing Hell has quite literally frozen over:)
California in a Freefall —properties were offered at discounts of 30 to 50% from their original value, and they still didn’t sell
Last Friday, information service ForeclosureRadar reported that foreclosures in California soared 454% in January compared to foreclosure volume just one year earlier. A total of 19,821 properties sold at foreclosure auction, with a combined loan value of $8.06 billion.
The fact that 98% of auction sales went back to the lender in January is not the surprising part. What should be sending off alarm bells are the deep discounts being offered by lenders at auction. Of the 19,821 homes that went to auction, 13,950 were discounted, roughly 70%. The opening bid for this group saw an average discount of 16%. Of that total, 4,624 had discounts of 30% or more, according to ForeclosureRadar.
most of these discounts are from the amount owed on an 80% first lien that was made in the last few years. Do the math and you’ll figure out that many of the properties were offered at discounts of 30 to 50% from their original value, and they still didn’t sell.
“…the Realtors association has characterized the period of 2004 through 2006 as years of unusual growth that should not be used to gauge the present situation.”
They are now disowning their salad days, the permanently high plateau has become a red-headed step child.
Oak Park is a great town but still way overpriced. 400k for a townhome anywhere is insane. I wouldn’t pay 400k a ‘home’ with a piece of drywall seperating me from my neighbors. 400k in the whole scheme of things is a lot of money
$400K will keep you comfortably ensconced in Manhattan for 5-8 years. More if you are frugal.
Oak Park is no Manhattan. Hell, it’s not the Gold Coast or Hyde Park either. It’s like the outer reach of suburbia hell.
Somehow spending so much to be on the opposite side of K-Town from the Loop and having to depend on the Green Line and the Eisenhower always struck me as a bad move. Of course I also don’t particularly think the world is kinder and gentler place than it was forty years ago either so maybe that’s why?
I-290, to put it mildly, is a fuckin’ mess at the best of times.
What Oak Park’s charms are is best left for minds greater than mine to ponder.
There are worse places to live than Oak Park; for example, Englewood, Roseland, Austin, Back of the Yards, Pilsen, Hanover Park, Schaumburg, Glendale Heights, Carol Stream, Little Village, etc. Oak Park at least has a quaint yet walkable downtown, nice homes, safe neighborhoods, good restaurants, near the El. I can think of a thousand worse places to live.
Pilsen was much improved when I saw it last (two years ago.)
OK, the others get the booby prize. However, still! Oak Park? For that price? C’mon!
Yes, but no one that I know of is asking $400k to live in townhome in any of those places. Although there have been attempts to gentrify portions of Pilsen and Little Village.
Faster,
Pilsen - are you kidding me? it’s still a rathole, i have no idea what you’re referring to being much improved.
and oak park, the outer reaches of suburban hell? it’s adjacent to Chicago - i don’t know what you mean by outer reaches. Oak Park is part of the Chicago’s street grid and urban fabric.
People moving to Oak Park basically would have considered two other options - north side of Chicago or Evanston, and both are more expensive than Oak Park.
Oak Park and River Forest are 17-19 minutes from downtown by metra. Tree lined streets, excellent schools, nice older homes (if you’re into that), and a million good restaurants in the area.
Are the prices too high? Well, yes, just like everywhere else, but it’s far from hell.
How about $1 million for a townhome?
An interesting comparison between metro Chicago and Metro Boston. The regions are the same shape, if you think about it, smack up against a large body of water and thus arranged in a semi-circle from the historic center. But whereas in Chicago the wealthly areas are located north of the center along the water, in Boston they are located west of the center inland (toward the equivalent of Oak Park). Even within the city, the more affluent areas are locate north in Chicago along the water, but inland in Boston.
Any local comments on why this might be?
Chicago actually has an economy. Boston is one-fifth students now.
The comparison is ludicrous. There is land as far as the eye can see in Chicago. Just the city even. Not “Chicagoland”.
Prices are way out of whack with rents, incomes, etc. Not to mention a serious pension crisis unfolding.
It dates back to the railroads, really. The tracks of the heavy freight railroads came in through the south side and left out through the west side. The factories located accordingly, while the north side remained comparatively residential. The rest is history - as manufacturing collapsed and the neighborhoods suffered according to their dependence on it.
not sure your analogy holds. Check out the ave. prices on homes in western suburbs. ie. Hinsdale, Oak Brook, Western Springs and LaGrange, etc… All of those towns are equal or nicer than your average northern suburb.
With the exception of Oak Brook, all of those towns listed are on the Burlington Northern tracks. I think a better correlation is with access to rail mass transit. Hinsdale to the Loop is less than 20 minutes on the train.
western suburbs don’t really compare imo:
Sale history, avg. price per mls, since 1/1/07
western burbs:
hinsdale $1,219,266
Oak Brook $1,135,726
Lagrange $649,556
Western Springs $667,153
versus north shore
Kenilworth $2,003,760
Winnetka $1,691,951
Lake Forest $1,522,315
Glencoe $1,468,492
Wilmette $965,396
not to mention mention numerous others highland park, glenview, bannockburn, mettawa, lake bluff, etc etc etc.
The equivalent of Oak Park in the Boston area is Cambridge. The wealthy have lived here for centuries because Harvard is here. Now, MIT is here, too. Plus, all the biotech companies are here. Technically inland, true, but still on (or near) the river.
“But whereas in Chicago the wealthly areas are located north of the center along the water, in Boston they are located west of the center inland (toward the equivalent of Oak Park). Even within the city, the more affluent areas are locate north in Chicago along the water, but inland in Boston.”
I would if it was on the upper east side of Manhattan, or Georgetown/Foggy Bottom, DC, and many other similar places. But then again those units are separted by more than just drywall.
A building named The Griswold? hehehe. Sorry, but I dont see how anyone can mention it or buy there without thinking of Clark Griswold bumbling his way through family vacations. hahahaha.
“Yeah, but daddy says I’m the best”
hahaha.
“In the midst of public concern about the health of the housing market, the Realtors association has characterized the period of 2004 through 2006 as years of unusual growth that should not be used to gauge the present situation.”
The realtor associations are up to their same old tricks trying to fool the public into believing the 2003-2006 period should not be used as a gauge of the present situation. The realtors are the ones who participated and helped create this mess and now the are flat out lying again to the public. This period was not unusual growth, it was a period of fraud and deception fueled by the hype of the realtors association and a majority of it’s members. Send a message back, BOYCOTT REALTORS!
Scuttlebutt here in Oak Park (IL) is that a lot of DINKs and yuppies who have been priced out of the Gold Coast/Evanston area have been migrating out here. We have great schools, sufficient stores like Whole Foods, enough “refined” architecture to choke a horse, and it looks like certain groups are pushing for even more gentrification. (One reason why I like the hot dog place across the way–some developers were supposedly going to get the Village to kick them out in order to put up yet another brick-faced condo, the hot dog place owners decided to hold firm, and the hot dog owners won.)
Oh that’s rich, because those very same DINKs and yuppies are expected to buy everywhere from Andersonville to Bronzeville and all points in between. Just a local variation of a national myth - busloads of buyers eternally circling for the best deal.
Every neighborhood and suburb is now locked in intense competition for the same supposed buyers. Now it gets interesting locally.
Oh yeah, and those DINK gay and lesbians will save Andersonville too. They’re everywhere I tell you, they’re everywhere.
Yeah, OK, pull the other one.
But I liked Hopleaf when I lived in Chicago. Good times, good times.
Yes, good frittes!
My favorite place in Chicago (if I ever get there) would be A Taste of Heaven. You may recall that was the restaurant that posted the sign telling patrons to keep their children under control. And, boy, did that stir up a hornet’s nest among certain parents. Details at:
http://www.chicagoreader.com/hottype/2005/051118_1.html
However, other patrons appreciated the new policy so much that A Taste of Heaven tripled its business.
Love it!!!
It’s like Park Slope out here.
Here’s a great blog on the subject of the sprogs. (Generally I add a four-letter word as a prefix to that!)
I’m a dink. Double Income No Kids. I’ve been renting in Chicago since 1995 up to the present day. The fiancee has no intention of allowing me to purchase! Both of us have professional degrees and with that comes extensive student loans. Our loans are so big that it’s like we already have a mortgage payment. Fortunately we graduated law school in the early 2000’s when student loan interest rates were at an all time low. There are plenty of couples just like us out there. They also have massive student loans. I know plenty of people who took on a mortgage despite already having a mortgage sized student loans. They all bought in 2004-2006 and I imagine they’re feeling the pain. One lawyer I know told me that he made a huge mistake buying a condo with his ex-girlfriend ‘at the top of the bubble’ he said.
Anyway, I’ve got these private student loans with a variable interest rates. Thank goodness the LIBOR is very low right now. I make a decent income (albeit half of the traditional biglaw ‘market’ rate which just increased to $160k a year) but the student loans are still burdensome. The minimum payment is slightly less than a thousand. Moreover, I’m paying extra on the principal like a madman. You would be shocked, absolutely shocked, if you saw the size of the check I send to Citibank every month. I could buy a new Audi every year in cash. But I want to be student loan debt free ASAP. I hate paying them with a passion.
Which brings me to the point, where am I going to find the money to buy a condo? I don’t have any extra money, I’m already paying interest to another lender. My situation is repeated over and over again by all the DINKs that I know. These DINKS simply don’t have enough income to comfortably service more debt. The myth is that the DINKS are all looking to buy but they aren’t. There are three or four more DINK household attorneys under 30 in my firm and none of them have any intention of buying either. They take what could be a mortgage payment, and instead use 1/3 to 1/2 of it for rent and the rest for student loans. There isn’t any money left over. These people I’m talking about professional DINKS with household incomes in excess of $100,000 or $120,000 a year.
I can’t repeat myself enough, the student loans for professionals nowadays IS their mortgage except its called student loans. There simply isn’t enough money most DINK’s budgets to afford a mortgage on a $399,999 condo in addition to the minimum payments on student loans. And if one of them decides to become a stay at home mom and have kids, there’s there is simply not enough income to afford the mortgage, kids, student loans and the SAHM.
Yeah, my last post was hastily written and has some grammatical and spelling errors. Don’t worry, I didn’t bill any cilents during the time I wrote that post! If I had more time I would do some proofreading but I don’t have time; I’ll be working though lunch today trying to piece together the aftermath of five court appearances this morning!
Surely you have time though to email homelessbubbleboy with free legal advice! lol
You’re not kidding about the student loans. The girlfriend has them from getting her law degree too and her finances are moribound. In contrast my path took me through trade school first, and so I avoided taking loans on by working through school the rest of the way. End result, she makes double what I do but our spending power is equal.
Needless to say, there is much financial “tough love” in our relationship.
If by tough love you mean sharing rent of $850 a month, minimizing expenses and externalizing every possible cost I can have, then yes, paying off student loans is all about tough love.
hey there legal E
how long are yer student loans … and how much time left to payoff? just curious about the typical financial loans needed - if you dont mind the question. thanks
A private law school and a private undergrad plus a bar loan plus unsubsidized interest added up to about $180k after graduation. The private undergrad was $14k when I started and $19k a year when I finished. Law school was $26k a year when I started and over $30k when I finished. Even with grants and scholarships it adds up fast. I’ve done the math a million times and believe me there wasn’t any cheaper way to get my education of my caliber and pedigree (which is suprisingly important in the legal world). The fact that an unemployed 25 year old was able to borrow $180k for an education tells you volumes about the educational finance bubble over the last 10 years. (as a side note, now that securitization and other auction is practically dead, you can expect student loans to dry up…and Bloomberg and WSJ confirms this).
I graduated in ‘03 around $180k and as of today I owe slightly more than $150k. By the end of next year I’ll owe less than $100k but the interest rate only 2.5%.
$110k is federal loans at 2.5% and the remaining $70k is variable rates, currently at 6.96%. The federal loans are $495 per month and the private loans are currently at $458 and it resets every three (3) months.
Why do I share this information? Because I think it is very relevant what sort of financial messes could get themselves into with the flow of easy money over the last 10 years, b/c interest rates have been low for a long time now.
However, in the end, I think it was worth it. I’d rather spend $180k to get a high-caliber education than spend $180k on a POS crapbox. My education is something I will never walk away from unlike a McCrapmansion.
Salary wise I’m hoping this all pans out. While in law school I was making less than 20k a year, my salary doubled when I got a job as a lawyer, and it doubled again in the last three years. I got a 33% raise last year. I hear of people in industries getting 2.5% raises, if any at all, and I feel very fortunate for my position. My salary has gone up expontentially and probably will continue, at least for the next few years. My firm does a lot of foreclosures and other litigation type stuff and those are great areas to be in during a recession. I don’t do a tremendous amount of foreclosures but I do get to work on them often enough.
Anyway, private loans will be paid off by the end of next year and then I’ll only have the federal loans at $500 a month. That’s nothing, $6,000 a year. At 2.5% interest while currently CPI inflation is over 4.0% So basically I’ll have an extra $2,500 a month after-tax in my pocket every month to invest and save (or maybe take on a mortgage near the very bottom of this real estate cycle).
Wow, someone with a plan
I was never so happy as when I paid off all my credit cards and student loans. Debt is slavery.
Good luck with the student loans. Sounds like you’ve got a lot of sense. Another problem with those condos is that even after you pay your mortgage, you’ve still got to deal with lot rent, er, I mean condo association fees.
Two years ago my fiance and I were dinks with about 130,000 household income, living in a singlewide trailer between DC and Baltimore for about $500 a month in lot rent (owned the trailer). If I had bought a condo in the same neighborhood I would have paid 250-300K, and my property taxes + association dues would alone be as much as my lot rent. For what gain? No more square footage, nothing nicer on the inside of the house, you’d have to share walls with neighbors, and no land to plant flowers or have barbeques.
Some people have an irrational prejudice against trailers, but in the right neighborhood you don’t gain anything quality wise if you choose a TH or condo. It was my salvation from overpriced housing.
But what about the bragging rights, dude, the bragging rights?
Surely that is worth mortgaging your future for!
Legal Eagle, while I appreciate your desire, at those rates and with the rate of inflation, I would not be trying to pay off the balances too quickly. And, just wait until you start making more money, Uncle Sam will start taking more in taxes and then you will lose the student loan interest deductions.
I make too much money that I no longer get the student loan deduction.
We went through the same thing (different profession, but similar loan issues). trust me, pay off the student debt, and then get on with your life. It’ll take longer than you want, you’ll have to scrimp for a while whilst all your friends whoop it up, but once you’re debt free it’s like having an enormous stuffed pizza (you know, one with sausage) removed from on top of your head.
Well, I wouldn’t mind if the housing prices dropped a bit–I’m just reporting what I’ve heard through the grapevine. The Village is pushing for more gentrification and the locals are looking at all of this with a dubious eye.
(I got the place I did because it really was a case of renting-next-door == mortgage + assoc. fees + most-of-the-property-taxes. Weird, that.)
“‘Tim Atkins, Realtor: ‘I sold one where there were 3 or 4 foreclosed homes on the immediate block, those homes sold for about $30,000 less than the I home I listed, so I heard comments, like why would I want to buy a home and pay a higher price for it?’”
So…..Tim….what didja tell em??
Why would anybody buy a house from a builder they knew was going into bankrupcy? This is the biggest purchase most of us ever make. It is not uncommon to have problems in new homes that need to be fixed by developer’s - and it’s not uncommon for developer’s who are in financial straits to cut corners. A friend of mine bought a house a decade ago that had a wrench in one of the downstair’s pipes. Their entire basement flooded. It costs a fortune, but the developer covered it. Buying a house from a developer who is going out of business seems a bit ridiculous to me.
Was bored last night and reviewed some homes in communities in my old stomping ground.
Basically found 3 types of sellers in SFL..
1)Foreclosure/Pre
2)Short Sale
3)Desperate
Found communities that you could not even look at below 700K are now selling at $499K(talk about some FB there!!)
Those $1.2 McMansions that are selling are being picked up at $700K or less…
Had to laugh…always like to refer to the FB who bought my home..decided to RENOVATE the bathrooms and pool area..in a home were he is $200K underwater…I guess he thinks that is going to bring up the value!
More bad news for the Chicago housing bubble (but good news for renters) - Rental rates were down 4.3% in the 4th quarter of 2007.
http://www.chicagorealestatedaily.com/cgi-bin/news.pl?id=28237
“He said the number of new homes sold in the Chicago region plunged from 46,000 in 2005 to 28,000 in 2007. ‘I had one builder, a medium-to-small builder, tell me their business plan for 2008 is to sell zero houses,’ Ramella said. ‘If they sell one house they will exceed their plan.’”
Goal! Goal! Goal! Goaaaaaal!
Always set goals that are somewhat attainable, even if it’s only one better…