April Home Sales Up 28% YOY (Chicago, Elgin: renting, condo, transfer)

[Lookout Kid]

Originally Posted by trailblazer33

First of all, not everyone has a fixed rate mortgage. So mortgage costs do increase over time. Even if you do have a fixed rate mortgage, insurance and taxes increase all the time. I see clients on a daily basis that are facing foreclosure because they cannot afford the increase in taxes and insurance.

Secondly, you NEVER ever fully own your property. Miss two years of property tax payments and see if you own your property after that.

If you don't get a fixed rate mortgage, you are pretty foolish. Sure, insurance, taxes, and cost of maintenance will go up over time, but usually not at a rate that they outpace rent increases.

The second point about property taxes is kind of ridiculous. With that logic, you don't really own anything, since the government can basically seize all of your assets if you fail to pay taxes.

My point is that there will always be inherent value in owning real estate, as it provides a place to live--unlike a stock portfolio, which is purely an investment.

[jdiddy]

Originally Posted by Lookout Kid

The second point about property taxes is kind of ridiculous. With that logic, you don't really own anything, since the government can basically seize all of your assets if you fail to pay taxes.

The revolution must begin.

[trailblazer33]

Originally Posted by Lookout Kid

My point is that there will always be inherent value in owning real estate, as it provides a place to live--unlike a stock portfolio, which is purely an investment.

And I totally agree with you - you just can no longer rely on your home to be an investment - as equity is no longer a "given." That's why I take issue with the cheerleaders who want to forget everything that has happened in the last 5+ years, and what will potentially happen all over again.

[jdiddy]

Originally Posted by trailblazer33

And I totally agree with you - you just can no longer rely on your home to be an investment - as equity is no longer a "given." That's why I take issue with the cheerleaders who want to forget everything that has happened in the last 5+ years, and what will potentially happen all over again.

I don't really see anyone cheerleading on this thread. In fact I think we'll see prices stabilize and see little appreciation in the next few years as soon as inventory returns back to normal levels. I was one of those advising friends not to buy 2007-2009, but the fundamentals today are much different than back then. Its okay to point out things are good sometimes.

[trailblazer33]

Originally Posted by jdiddy

I don't really see anyone cheerleading on this thread. In fact I think we'll see prices stabilize and see little appreciation in the next few years as soon as inventory returns back to normal levels. I was one of those advising friends not to buy 2007-2009, but the fundamentals today are much different than back then. Its okay to point out things are good sometimes.

Things are NOT good in a majority of Chicago neighborhoods. I continually encounter borrowers who are still 200+% LTV. The fact that the persistent problems in the market largely affect brown and black communities is maybe why people on this forum think we've turned a corner.

[jdiddy]

Originally Posted by trailblazer33

Things are NOT good in a majority of Chicago neighborhoods. I continually encounter borrowers who are still 200+% LTV. The fact that the persistent problems in the market largely affect brown and black communities is maybe why people on this forum think we've turned a corner.

We have turned a corner in the city/metropolitan area overall, and this is still a good thing, even for those neighborhoods who haven't yet felt it.

[Attrill]

Originally Posted by trailblazer33

And I totally agree with you - you just can no longer rely on your home to be an investment - as equity is no longer a "given." That's why I take issue with the cheerleaders who want to forget everything that has happened in the last 5+ years, and what will potentially happen all over again.

I am most definitely not cheerleading - just noting that the worst of the real estate downturn has passed, and we're back to market fundamentals that are in line with pre-2000 norms. You seem to think that another imminent crash is right around the corner and you have yet to show any signs or causes of that happening.

Any investment of any type is always a risk, and the returns of real estate investment generally rise the longer you hold onto a place. As others have noted, you always have to pay for a place to live and you're paying property taxes through your landlord, so what you need to cover when you buy is interest payments, transfer fees, and maintenance. Even if the price of your house doesn't increase you'll start saving money compared to renting in about 10 years.

If you finance your house in a reasonable manner and follow basic financial common sense (i.e. put as much down as you can, lock into mortgage rate, pay off some principal every month, etc.) you will most definitely have equity in 5-10 years - even if prices drop. Now, if you buy more house than you can afford, don't get a home thoroughly inspected, sell a house a few years after buying it, don't pay your taxes or make other stupid decisions - that has nothing to do with the real estate market. It has to do with someone being an idiot.

[trailblazer33]

Originally Posted by jdiddy

We have turned a corner in the city/metropolitan area overall, and this is still a good thing, even for those neighborhoods who haven't yet felt it.

Maybe Lincoln Park has turned a corner. A neighborhood a city does not make. I work in this field in these neighborhoods. Trust me - we have not turned a corner.

[Lookout Kid]

Originally Posted by trailblazer33

Things are NOT good in a majority of Chicago neighborhoods. I continually encounter borrowers who are still 200+% LTV. The fact that the persistent problems in the market largely affect brown and black communities is maybe why people on this forum think we've turned a corner.

Hopefully a recovery in the more well-off parts of Chicago will eventually spread to the more disadvantaged areas. From what I've read, the recession hit the brown/black communities harder, and it's effects will probably be felt longer there.

But I'm still happy that my North Side friends are able to sell their condos again after years of hopelessness. A unit similar to ours in our old building just sold in two weeks with multiple offers, and at the highest price seen in the building since 2007. I'm thrilled for them and all of my old neighbors.

[Attrill]

Originally Posted by trailblazer33

Things are NOT good in a majority of Chicago neighborhoods. I continually encounter borrowers who are still 200+% LTV. The fact that the persistent problems in the market largely affect brown and black communities is maybe why people on this forum think we've turned a corner.

Loads of minority communities in Chicago were hit hard, but that has a lot to do with banks targeting inexperienced buyers with horrendous mortgage offers - not with anything related to the market. Banks never should have offered many of the mortgages they did.

People also know that we've turned a corner since the average and median prices are increasing. That is the definition of turning the corner. There will always be some areas that perform better than others, but viewed as a whole the Chicago market has turned a corner. No one can say with certainty how long that will last, but right now there are no signs of prices dropping anytime soon.