Which cities have the best real estate bargains? Which are overvalued?

[Leo the Dog]

Originally Posted by CaliNative

What are the latest pop. estimates for Houston & Dallas & San Ant.? Houston must be zeroing in on 2.5 mil. Could catch L.A. in a few decades..or not. L.A. must be close to 4 mil. now.

Well I was going off of MSA estimates and their current rankings and not city propers. DFW and Houston are experiencing rapid growth with few physical barriers that would slow growth and if these trends continue (who knows what's to come, but 30 years ago, DFW only had a pop sub 3 million) they could come close to or even surpass Chicagoland in 25-30 years, which isn't that far off.

DFW MSA 2010 - 2015 grew at 10.5% with a nominal increase of 650,000 and is currently standing at 7.1 million. By 2020 DFW could be pushing 8 million, while Chicagoland will probably be around 9.6 million.

Not that this matters, but the city of Houston 2015 pop 2.3M is projected to surpass the city of Chicago pop 2.7M in about 10 years assuming Houston remains a high growth city and Chicago remains slow growth. Chicago could rebound and start growing again which would push this back by many years.

[the urban politician]

I don't see Chicago ever going high growth again unless the coasts sink underwater or we have some other kind of world changing event.

If anything, the only thing that could keep Chicagoland in 3rd place longer (if you assume this even matters) is changes that dramatically slow Houston's or DFW's growth. I can't imagine they will grow at this speed forever, but perhaps infrastructure costs could eventually catch up to these regions, as well as economic factors that couldn't have foreseen.

In the late 19th to early 20th century Chicago was growing so damn fast and was an industry man's town. Laborers had no power whatsoever and there were very few regulations as well as no zoning. Sound familiar?

Who would have thought at that time that Chicago would be one of the most regulated, pro-union places in America decades later? Who would have predicted such population stagnation?

[Leo the Dog]

Originally Posted by the urban politician

I don't see Chicago ever going high growth again unless the coasts sink underwater or we have some other kind of world changing event.

If anything, the only thing that could keep Chicagoland in 3rd place longer (if you assume this even matters) is changes that dramatically slow Houston's or DFW's growth. I can't imagine they will grow at this speed forever, but perhaps infrastructure costs could eventually catch up to these regions, as well as economic factors that couldn't have foreseen.

In the late 19th to early 20th century Chicago was growing so damn fast and was an industry man's town. Laborers had no power whatsoever and there were very few regulations as well as no zoning. Sound familiar?

Who would have thought at that time that Chicago would be one of the most regulated, pro-union places in America decades later? Who would have predicted such population stagnation?

If Chicago one day can pull a NYC by really attacking the crime/violence problems that plague the Southside, then there would be great potential for urban infill and development within the city limits. Chicago is still the regional magnet and perhaps the high cost cities in BosWash will price out the next generation of college grads and they'll flock to Chicago.

Or, current trends could continue.

[the urban politician]

Originally Posted by 10023

Crawford is right that you're probably not going to see big price appreciation in Chicago. But if it's stable, and more affordable for a place you'd actually want to live in, then you could still generate decent returns with leverage.

Not sure why you're going by Crawford's quoting of the Case Schiller index instead of those of us who are actually looking at listings and buying property in Chicago all the time.

As I said for reasons stated elsewhere, condos are generally not a great investment property in Chicago. But there has been major price appreciation in other property types, particularly in many areas of the city. Suburban home prices, to the contrary, have stagnated since the recession.

Real estate cannot be generalized like that. It's like saying you can't make money off of stocks just because the S & P 500 isn't growing.

[10023]

Originally Posted by the urban politician

Not sure why you're going by Crawford's quoting of the Case Schiller index instead of those of us who are actually looking at listings and buying property in Chicago all the time.

As I said for reasons stated elsewhere, condos are generally not a great investment property in Chicago. But there has been major price appreciation in other property types, particularly in many areas of the city. Suburban home prices, to the contrary, have stagnated since the recession.

Real estate cannot be generalized like that. It's like saying you can't make money off of stocks just because the S & P 500 isn't growing.

But the S&P does grow over time, and the index is data whereas your experience is anecdotal.

Of course there will be opportunities for better capital appreciation, but will you choose them correctly, and will they also be places where you want to live?

The overall direction of the market is important.

[Eightball]

Originally Posted by 10023

Crawford is right that you're probably not going to see big price appreciation in Chicago. But if it's stable, and more affordable for a place you'd actually want to live in, then you could still generate decent returns with leverage.

Exactly

[the urban politician]

Originally Posted by 10023

But the S&P does grow over time, and the index is data whereas your experience is anecdotal.

Of course there will be opportunities for better capital appreciation, but will you choose them correctly, and will they also be places where you want to live?

The overall direction of the market is important.

I agree, although my experience is far from just anecdotal.

Real estate is hyperlocal, and there is much more data out there than just metropolitan indices, which are really just weighted averages.

Using metropolitan data is the lazy man's way to invest in property, in the same fashion that buying a large blended fund is the lazy man's way to invest in equities. The details are where the real money is made, and with gentrification and central city revitalization running on all cylinders, Chicago is a wonderful place to invest if you know where to put your chips.

In fact, it's one of the most approachable places to invest among the tier 1 cities. You've got inventory for the big multinational corporations all the way down to a 2 flat for a guy who paints for a living to get ROI on. I don't think you can say that about NYC today, perhaps 25 years ago but not now. I don't know if you can say that about San Francisco. Although the good deals have slowly been disappearing, Chicago still has the inventory that runs the full gamut, and that is something wonderful, believe me.

[the urban politician]

This nicely summarizes recent trends in Chicago, a much more nuanced and informed pile of information than a giant index that lazily lumps an entire region together:

http://www.chicagotribune.com/busine...518-story.html

Who'd of thought that Austin, a majority black neighborhood on the west side, saw the highest percentage home price gains?

[10023]

Originally Posted by the urban politician

I agree, although my experience is far from just anecdotal.

Real estate is hyperlocal, and there is much more data out there than just metropolitan indices, which are really just weighted averages.

Using metropolitan data is the lazy man's way to invest in property, in the same fashion that buying a large blended fund is the lazy man's way to invest in equities. The details are where the real money is made, and with gentrification and central city revitalization running on all cylinders, Chicago is a wonderful place to invest if you know where to put your chips.

In fact, it's one of the most approachable places to invest among the tier 1 cities. You've got inventory for the big multinational corporations all the way down to a 2 flat for a guy who paints for a living to get ROI on. I don't think you can say that about NYC today, perhaps 25 years ago but not now. I don't know if you can say that about San Francisco. Although the good deals have slowly been disappearing, Chicago still has the inventory that runs the full gamut, and that is something wonderful, believe me.

I agree that real estate is hyperlocal, and that metro areas are too broad. If there is Case-Schiller data by zip code that would be great. But I still don't think Chicago home values increase much even if you confine it to the Gold Coast, Old Town and Lincoln Park.

[10023]

Originally Posted by the urban politician

This nicely summarizes recent trends in Chicago, a much more nuanced and informed pile of information than a giant index that lazily lumps an entire region together:

http://www.chicagotribune.com/busine...518-story.html

Who'd of thought that Austin, a majority black neighborhood on the west side, saw the highest percentage home price gains?

It wouldn't surprise me at all. But it's a big percentage gain off of next to nothing. Would you live in Austin?

[the urban politician]

^ I think we are having two different conversations. I'm talking about investment property. And again, Chicago might be one of the best places for this, at least among big cities.

Whether or not you'd live there isn't even a question we ask ourselves.

Having said that, I would live in any of the properties that I own. I love the city, but circumstances have made living in the city far too problematic for me.

[the urban politician]

Originally Posted by 10023

But I still don't think Chicago home values increase much even if you confine it to the Gold Coast, Old Town and Lincoln Park.

Why would they? Those areas never fell that hard after the recession to begin with.

If you're investing in Lincoln Park in 2016 you're late to the show, the money is already made. Unless you can still squeeze out a value add, something I'm working on right now...

[Kenmore]

Long-term price appreciation (generational) will be driven by rapid climate change - both in the form of coastal displacement refugees and a dramatic boost in climate quality (warmer, longer growing seasons, plenty of water).

But that's not how most people purchase real estate so I'd have to take Crawford's side

[10023]

Originally Posted by the urban politician

Why would they? Those areas never fell that hard after the recession to begin with.

If you're investing in Lincoln Park in 2016 you're late to the show, the money is already made. Unless you can still squeeze out a value add, something I'm working on right now...

Right, but in prime neighborhoods elsewhere you can make money. Home prices in the West Village or Kensington still go up, despite these areas having been expensive for a long time.

[the urban politician]

Originally Posted by 10023

Right, but in prime neighborhoods elsewhere you can make money. Home prices in the West Village or Kensington still go up, despite these areas having been expensive for a long time.

What makes you think compatible neighborhoods in Chicago aren't doing well?

I'm the first to admit that Chicago has a lot of negative forces keeping things stagnant. Part of the problem is that housing prices were overinflated during the early 2000s boom and there was a lot of lousy debt out there. But up until 2015 housing appreciation matched the national average.

In the past decade Gold Coast prices rose about 17%. And again, we are only talking about residential real estate, not commercial or multi unit housing:

http://www.chicagobusiness.com/reale...-a-lost-decade