Real Estate in your city

[iheartthed]

Originally Posted by Gantz

Holy sh*t. One of these houses sold for $10K more.... in 2005!
I actually never seen that before on Zillow, but I mostly browse NYC/NJ, Texas, FL, and CA.
In 2005, you could've bought a maybe slightly worse off house in Brooklyn for the same price in a good neighborhood, but you could've sold it now for well over $1 million, and you'd pay about half as much in property tax every year to boot.

I wonder if these homes will be selling for $450K in 2035...

Yeah, and if you factor in inflation, the property actually lost a ton of value. $485K in 2005 is $668K in 2021 dollars. Not to mention maintenance costs.

[DCReid]

Originally Posted by IrishIllini

I'm sure there were articles, but had buyers widely felt the market was as overheated as it was, people wouldn't have been buying property in 2005-07.

The Chicago market today is more like the mid-south/central markets of TX 2006 than the Chicago market of the same year. Like anything, prices could certainly go lower or completely stagnate, but it's not a market out of sync with local economic conditions.

People get swept up in 'bubble markets' of all kinds as well as cower in fear in 'bear markets' of all kinds. I have a coworker who is relocating to DFW, and despite never ever visiting there, he is tempted to buy a home because he thinks prices for homes will continue to go up and interest rates may rise. I had a friend in Palm Springs who bought in the 2005-7 bubble - he said he kept looking at prices go up and up, and he had to buy - well, he lost the house when the bubble burst and his house declined in value - if he had held on, he would be fine. Remember that the early 2000s were a time of loose lending and no-interest balloon loans, just the thing to encourage people to go out and buy a house, and the biggest house possible.

[Steely Dan]

Originally Posted by IrishIllini

^ Chicago RE market was one of the hotter markets during the frenzy that preceded the crash. It took a long while for it to recover.

Man, did it ever!

I bought a small condo in 2007 for $165K.

2 years later it was worth $125K.

Today, a full 14 years later, I'm finally above purchase price on it with its current estimated value of ~$200K.


Buying high is always a bad idea, but I was 30 years old and single and surrounded by an entire hemisphere of boomer relatives telling me "you know, you gotta stop renting one of these years and start building equity in a home". WHOOPS!

I wish I would have placed more faith in myself and done my own research, instead of blindly following their misguided advice.

That said, at least I still own 1/1,000th of of one of the coolest mid-century skyscrapers of all time..... which is nice





My wife bought her first condo in 2009 for $240k and sold it 5 years later for $300K.

Sometimes, timing really is everything.

[Crawford]

Originally Posted by iheartthed

Yeah, and if you factor in inflation, the property actually lost a ton of value. $485K in 2005 is $668K in 2021 dollars. Not to mention maintenance costs.

People need to get over their fear of renting. It's absolute madness to buy a depreciating asset like this. Renting can give you the same stability and control over costs and interior improvements. Renting is now cheaper than buying, essentially everywhere. Buyer beware.

Renting Is Cheaper Than Buying, Almost Everywhere
According to a new study, renting costs less per month in the 50 largest metropolitan areas in the United States.

https://www.nytimes.com/2021/06/10/r...an-buying.html

[Steely Dan]

Originally Posted by Crawford

People need to get over their fear of renting. It's absolute madness to buy a depreciating asset like this. Renting can give you the same stability and control over costs and interior improvements.

Depreciating asset or not, I will never go back to renting, especially now that I have kids.

That said, if I didn't already own a home and was looking for housing right now, no way would I buy in the current kooky housing market (not after what I went through with my Marina City purchase back in 2007 and the ensuing collapse that followed).

[iheartthed]

Originally Posted by Crawford

Renting Is Cheaper Than Buying, Almost Everywhere
According to a new study, renting costs less per month in the 50 largest metropolitan areas in the United States.

https://www.nytimes.com/2021/06/10/r...an-buying.html

Yeah, that's quite an imbalance. If you want to live in New York City, this is probably a once in a generation opportunity to lock in a good rent. No way that lasts.

[SIGSEGV]

Originally Posted by Crawford

People need to get over their fear of renting. It's absolute madness to buy a depreciating asset like this. Renting can give you the same stability and control over costs and interior improvements. Renting is now cheaper than buying, essentially everywhere. Buyer beware.

Renting Is Cheaper Than Buying, Almost Everywhere
According to a new study, renting costs less per month in the 50 largest metropolitan areas in the United States.

https://www.nytimes.com/2021/06/10/r...an-buying.html

That study, if I'm understanding correctly, seems fatally flawed to me because it's at the metro level, and in most markets I'm aware of renting is predominantly in (on average smaller/cheaper) multifamily homes and homeowning is predominantly within (on average larger/more expensive single-family homes. They need to consider costs within the same compact area to make this at all sensible or at least consider cost / square foot or something like that.

That said, it's very likely that for leases signed within the last year, people are temporarily getting great deals on rent, but that's unlikely to last. But interest rates are also stupidly low right now and most places have homeowners exemptions in property taxes so...

[Steely Dan]

^ if there really is no control for size, then it is a pretty silly study (I don't have a NYTimes subscription, so can't read the article).

"Did you know that renting a 1,000 SF apartment is, on average, less expensive than owning a 3,000 SF house?"

OMG, no way! Really?

[SIGSEGV]

Originally Posted by Steely Dan

^ if there really is no control for size, then it is a pretty silly study (I don't have a NYTimes subscription, so can't read the article).

"Did you know that renting a 1,000 SF apartment is, on average, less expensive than owning a 3,000 SF house?"

OMG, no way! Really?

The numbers come from here:
https://www.lendingtree.com/home/mor...argest-metros/

It may be that the methodology is expounded on somewhere, but I didn't see it.

Sad that the NYT is publishing this clickbait...

[Kngkyle]

Originally Posted by Crawford

People need to get over their fear of renting. It's absolute madness to buy a depreciating asset like this. Renting can give you the same stability and control over costs and interior improvements. Renting is now cheaper than buying, essentially everywhere. Buyer beware.

As a landlord I'll just say that the more people who believe this lunacy the better.

[Crawford]

Originally Posted by Kngkyle

As a landlord I'll just say that the more people who believe this lunacy the better.

Unfortunately, many don't. So many Americans would rather flush their money down the toilet, worshipping at the altar of homeownership.

I know transient, single people with no idea where they'll be or what they'll be making two years from now, who bought homes. If the market is hot, the justification is "we had to buy now or be priced out forever". The the market is weak, the justification is "these low prices won't last'; must buy now". Madness.

I'm not anti-homeownership, BTW. I'm a homeowner with no regrets. But I think there are tons of homeowners who made a fool's bet. Makes no sense unless you're stable in your life's path. Homeownership is almost always more expensive, returns in most markets are poor, and buyers are usually underestimating the work.

[The North One]

Originally Posted by Kngkyle

As a landlord I'll just say that the more people who believe this lunacy the better.

Lol for real, capitalism is all about ownership and if you have no ownership you have nothing. Not to mention our whole damn system in this country is designed to benefit home owners. If home ownership was such a disadvantage then landlords wouldn't exist, hedge funds wouldn't be scrambling for residential property right now.

Not totally sure why some hypocrites here are desperate to convince us otherwise.

[SIGSEGV]

Originally Posted by Crawford

Unfortunately, many don't. So many Americans would rather flush their money down the toilet, worshipping at the altar of homeownership.

I know transient, single people with no idea where they'll be or what they'll be making two years from now, who bought homes. If the market is hot, the justification is "we had to buy now or be priced out forever". The the market is weak, the justification is "these low prices won't last'; must buy now". Madness.

Yes of course those people are crazy, but once you think there's a reasonable chance you'll be somewhere for >5 years, then the math starts to work out. At least as far as multifamily housing is concerned, there is also a bit of a difference in environment between renter buildings and owner-occupied buildings (and even rentals in condo building seem to have less of the bacchanalian crowd).

[jmecklenborg]

Originally Posted by SIGSEGV

Yes of course those people are crazy, but once you think there's a reasonable chance you'll be somewhere for >5 years, then the math starts to work out. At least as far as multifamily housing is concerned, there is also a bit of a difference in environment between renter buildings and owner-occupied buildings (and even rentals in condo building seem to have less of the bacchanalian crowd).

I have owned my house for 6 years. I have rented at least one spare bedroom, if not both of them, for all but a bout 12 months out of that span. So there is opportunity to make a fair amount of income off a single-family house, if you're willing to live with other people.

I charge super-cheap rent but still have brought in maybe $30,000 since buying the house.

[jmecklenborg]

Originally Posted by The North One

Lol for real, capitalism is all about ownership and if you have no ownership you have nothing. Not to mention our whole damn system in this country is designed to benefit home owners. If home ownership was such a disadvantage then landlords wouldn't exist, hedge funds wouldn't be scrambling for residential property right now.

Not totally sure why some hypocrites here are desperate to convince us otherwise.

You exchange one set of freedoms for another when you transition from renting to owning. There might be an economic payoff at the end of the rainbow, or you might simply think there's a payoff since you didn't keep close track of the numbers.

In my previous post I mentioned that I have rented spare bedrooms. This is one way to get decisively ahead in the equation, especially if you largely invest that income rather than spend it on decorative improvements or vacations or beer.

The current low interest rate environment discourages extra mortgage payments, but putting rental income toward the principal is one way to assure there is a real payoff from the rental income. Another is to put the money toward sensible stocks. My sense is that most people don't do either of these and instead throw a party with the money.

[JManc]

Originally Posted by Crawford

People need to get over their fear of renting. It's absolute madness to buy a depreciating asset like this. Renting can give you the same stability and control over costs and interior improvements. Renting is now cheaper than buying, essentially everywhere. Buyer beware.

There's a lot of markets where values are flat but homeownership is still a more compelling option; you still get equity, it's yours to do with what you want and often, the mortgage/ taxes are still cheaper than rent. My family all live in Upstate NY where values have been stagnant for years but they all still chose to own and wouldn't have it any other way. When you rent, you're making someone else richer and you really get nothing out of the deal. Hence why pension funds are snapping up entire neighborhoods all over the country so they can turn around and rent these houses out to the same people who they outbid.

[jmecklenborg]

Originally Posted by JManc

When you rent, you're making someone else richer and you really get nothing out of the deal.

No, most landlords break even and many lose money. Relatively few match or beat the stock market. With stocks you don't have to do anything but with real estate of any type there are at least a few episodic things to handle.

Originally Posted by JManc

Hence why pension funds are snapping up entire neighborhoods all over the country so they can turn around and rent these houses out to the same people who they outbid.

Big money has bought up single-family homes since the recession because they're seeking a substitution for bonds in our ongoing ultra-low interest rate environment. Bonds were as easy to own as stocks but real estate of any type requires active management.

Everyday investors have access to many REITs. Many people (including myself) own REITS in their retirement fund in place of bond funds.

A portfolio of single-family homes is much more expensive to manage than the equivalent number of apartment unites, which is why big money avoided doing so until 2009. Imagine how much full and part-time staff it takes to maintain 1,000 homes as opposed to 1,000 apartment units. No comparison.

[Crawford]

Originally Posted by JManc

TWhen you rent, you're making someone else richer and you really get nothing out of the deal.

Of course you're getting something out of the deal. You're getting a place to live.

When you buy, you're making a lot of other people richer too, and not getting much unless you're in a market with strong appreciation. And lots of landlord aren't getting rich; many are barely treading water.

[iheartthed]

Originally Posted by Gantz

Holy sh*t. One of these houses sold for $10K more.... in 2005!
I actually never seen that before on Zillow, but I mostly browse NYC/NJ, Texas, FL, and CA.
In 2005, you could've bought a maybe slightly worse off house in Brooklyn for the same price in a good neighborhood, but you could've sold it now for well over $1 million, and you'd pay about half as much in property tax every year to boot.

I wonder if these homes will be selling for $450K in 2035...

I can't get over the fact that more people don't see this as extremely problematic, lol. If you had taken the 20% downpayment for that home in Chicago and put that money into a boring S&P 500 index fund you'd be much, much, MUCH better off than buying that house. Doing some back of the napkin calculations, the $97,000 in an index fund (20% of $485K) would be worth about $340,000 today in an index fund.

On the other hand, that $97,000 put into the house is now worth about $70,000. This even worse than it looks, because $97,000 in 2005 is worth $133,000 today. So basically, they lost $60,000 2021 dollars in that downpayment.

[Steely Dan]

Originally Posted by iheartthed

I can't get over the fact that more people don't see this as extremely problematic, lol.

as was noted earlier, chicagoland housing was clearly very overvalued in the great big bubble leading up to the great recession, and the local market did not have the underlying fundamentals to rebound as quickly as other places, and it was (and continues to be) further hobbled by chicagoland's extremely high property taxes.

i should know, i was one of those people greatly affected by it. it took over a decade for my condo to get back up to its 2007 purchase price. hell, my sister has owned her exburban house for nearly 2 decades, and it took the recent pandemic-induced suburban home buying frenzy to finally bring it above its 2002 purchase price. two! fucking! decades!

these experiences still haven't soured me on home-owning in chicago. as i said before, as long as i have any say in the matter, i will never rent again. the peace of mind of owning is absolutely priceless to me.



FWIW, since purchasing our home nearly 4 years ago, and taking the current median estimated value from zillow, redfin, & homesnap, its value is up 18%. i can live with that.

it certainly ain't gonna make me rich, but at least i get to actually own a kick-ass home in a kick-ass neighborhood to raise my kids in.



as my broken record continuously spins: lower barriers/lower ceilings or higher barriers/higher ceilings. pick your poison.

if you're only capable of seeing the value of home ownership as a potential investment vehicle, then the chicagoland market is NOT for you.

but if you're looking to own a home in an awesome US city for not a lot of money, then.........