Does anyone think we're entering another real estate bubble? (Chicago: house, buyer)

[destination-unknown]

Originally Posted by knitgirl

It isn't so much an issue of supply and demand as it is an issue of economic inequality getting way more extreme than it was in the 50's and 60's. Those were really the golden years for the average American family. The income disparity in the US is now as bad as it was in 1928 - right before the Great Depression. If you haven't seen it, watch "Inequality for All" on demand. The VAST majority of new income since the Recession has gone to the top 1%.

True but I think it's a little of both. Supply and demand is at play here. More people means more buyers which means more expensive real estate within the desirable areas.

[Lookout Kid]

I've mentioned on this site before that a large number of the affordable houses in my neighborhood in Glen Ellyn (north of Roosevelt Road, close to downtown and the train station) are getting torn down and replaced with $800k+ houses. If I see a house go up for under $350k, I just assume it's a teardown candidate.

There are socioeconomic effects to this. For instance, we just had a retired couple move out of a tidy little 1950's ranch house that was a bit dated, and it sold below asking. A builder swooped in, tore the house down, and the new family that moves in will have a very different income profile, and the affordable ranch house is lost forever. It's probably good for MY real estate value, but the incremental changes are noticeable even to me, who has been here just short of two years. While the average detached single-family house in Glen Ellyn is sold for about $540k last year, the new houses getting built are universally much more expensive than that.

[destination-unknown]

Originally Posted by Lookout Kid

I've mentioned on this site before that a large number of the affordable houses in my neighborhood in Glen Ellyn (north of Roosevelt Road, close to downtown and the train station) are getting torn down and replaced with $800k+ houses. If I see a house go up for under $350k, I just assume it's a teardown candidate.

There are socioeconomic effects to this. For instance, we just had a retired couple move out of a tidy little 1950's ranch house that was a bit dated, and it sold below asking. A builder swooped in, tore the house down, and the new family that moves in will have a very different income profile, and the affordable ranch house is lost forever. It's probably good for MY real estate value, but the incremental changes are noticeable even to me, who has been here just short of two years. While the average detached single-family house in Glen Ellyn is sold for about $540k last year, the new houses getting built are universally much more expensive than that.

That's interesting about Glen Ellyn. Didn't realize that was the case there. It actually surprises me because I don't see the big draw to Glen Ellyn. The schools are good but not great and the location isn't great either being pretty far west. I have driven through a few times before and it has some nice areas but the downtown area seemed kind of dead to me.

[moderngnome]

Originally Posted by Lookout Kid

I've mentioned on this site before that a large number of the affordable houses in my neighborhood in Glen Ellyn (north of Roosevelt Road, close to downtown and the train station) are getting torn down and replaced with $800k+ houses. If I see a house go up for under $350k, I just assume it's a teardown candidate.

There are socioeconomic effects to this. For instance, we just had a retired couple move out of a tidy little 1950's ranch house that was a bit dated, and it sold below asking. A builder swooped in, tore the house down, and the new family that moves in will have a very different income profile, and the affordable ranch house is lost forever. It's probably good for MY real estate value, but the incremental changes are noticeable even to me, who has been here just short of two years. While the average detached single-family house in Glen Ellyn is sold for about $540k last year, the new houses getting built are universally much more expensive than that.

Yes, thank you. That is exactly what is happening in Elmhurst, too.

[Lookout Kid]

Originally Posted by destination-unknown

That's interesting about Glen Ellyn. Didn't realize that was the case there. It actually surprises me because I don't see the big draw to Glen Ellyn. The schools are good but not great and the location isn't great either being pretty far west. I have driven through a few times before and it has some nice areas but the downtown area seemed kind of dead to me.

Oh snap! Glen Ellyn is probably one of the most physically beautiful Chicago suburbs, with rolling hills, tree-lined streets, gorgeous older houses, and a small lake surrounding by trails, a public park, and a 1920's high school building that looks like castle. It has a nice little downtown area with a Metra station with a couple of the best restaurants in the Western Burbs. District 41 is a top performer every year for K-8. And I would argue that the high schools are great too, though they are certainly more diverse than some of the others championed on this forum and the test scores reflect that. "Pretty far west" is totally subjective... Naperville is further west, as are Geneva and St. Charles, yet they remain very desirable places to live. Access to I-355 and I-88 make the location good for a lot of commuters, and of course the Metra service.

I would definitely put Glen Ellyn, Wheaton, Naperville, and Downers Grove (at least the northern part) in the category of suburbs that are becoming "unaffordable" for middle class residents. Or at for least families that aren't "upper middle class".

[JJski]

Originally Posted by moderngnome

Yes, thank you. That is exactly what is happening in Elmhurst, too.

Ditto for La Grange (close to downtown and the train station) are getting torn down and replaced with $800k+ houses. $350k, assume it's a teardown candidate. ~ stealing LKs words.

[Lookout Kid]

Here's an interesting calculator to see where you fell on the household income chain in 2008 (note that the national average was only $43,000):

What Percent Are You? - Real Time Economics - WSJ

But this is only part of the story... A household that earns $200,000 a year will fall on the 94th percentile nationally. But if there are two earners and young children, then childcare costs could take up nearly a third of the take-home income. So a household with a single-earner and stay-at-home parent will actually be able to afford a lot more house than the dual income family... At least until the kids are old enough to age out of childcare.

[agallan]

Yeah...but the purchasing power of a dollar for someone with that mean national figure of $43,000 in Chicago (say a construction worker) is probably much less than the purchasing power of someone making $43,000 in the middle of North Dakota (say an IT analyst). Only bring it up since it is a national figure and people are probably going to put it into a Chicago income perspective.

[destination-unknown]

Originally Posted by Lookout Kid

Oh snap! Glen Ellyn is probably one of the most physically beautiful Chicago suburbs, with rolling hills, tree-lined streets, gorgeous older houses, and a small lake surrounding by trails, a public park, and a 1920's high school building that looks like castle. It has a nice little downtown area with a Metra station with a couple of the best restaurants in the Western Burbs. District 41 is a top performer every year for K-8. And I would argue that the high schools are great too, though they are certainly more diverse than some of the others championed on this forum and the test scores reflect that. "Pretty far west" is totally subjective... Naperville is further west, as are Geneva and St. Charles, yet they remain very desirable places to live. Access to I-355 and I-88 make the location good for a lot of commuters, and of course the Metra service.

I would definitely put Glen Ellyn, Wheaton, Naperville, and Downers Grove (at least the northern part) in the category of suburbs that are becoming "unaffordable" for middle class residents. Or at for least families that aren't "upper middle class".

Not trying to start a Glen Ellyn debate, just noting my observations from an outsider's perspective. Pretty far west in terms of its proximity/relationship to Chicago. Isn't Chicago typically used as the baseline when discussing the general location of a Chicagoland suburb? In terms of schools, all the rankings I have seen have Glen Ellyn well below suburbs in the North Shore, Hinsdale, Western Springs, etc. It also looks like the property taxes are well above average compared to many of the affluent suburbs to the east of it, which would be a big turnoff for me if I were considering a teardown. So again, I am surprised that so many people would be considering it for teardowns.

[4122]

Originally Posted by destination-unknown

Not trying to start a Glen Ellyn debate, just noting my observations from an outsider's perspective. Pretty far west in terms of its proximity/relationship to Chicago. Isn't Chicago typically used as the baseline when discussing the general location of a Chicagoland suburb? In terms of schools, all the rankings I have seen have Glen Ellyn well below suburbs in the North Shore, Hinsdale, Western Springs, etc. It also looks like the property taxes are well above average compared to many of the affluent suburbs to the east of it, which would be a big turnoff for me if I were considering a teardown. So again, I am surprised that so many people would be considering it for teardowns.

The North Shore, Hinsdale, Western Springs, etc. are top notch schools and Glen Ellyn schools are hard to compare them too. Compared ti the rest of the chicago suburbs. Glen ellyn schools are pretty good.