Real Estate in your city

[digitallagasse]

I can speak as someone looking to move from Sun Belt sprawl to urban Chicago at middle income as a family of 4. Yes the house values of my suburban house are increasing far faster than houses in urban Chicago but I doubt in my lifetime the area I live now will ever become a walkable mixed use area. I can afford to buy a condo in a three or six flat building in a place like Logan Square or a SFH out in a neighborhood like Jefferson Park. With Jefferson Park being suburban but great connections deeper into the city. That and I like the design of how neighborhoods such as this were built. Outside of say Philly I couldn't afford to buy into such neighborhoods in other higher tier older urban cities. Well least not into neighborhoods that are not very high crime. Yes it would be great to be able to buy into a property I could afford and that would also increase nicely in value. The problem is the places that is happening I can't afford the cost of entry in the first place.

Even if I purchased a home in Chicago and it didn't increase in value as fast elsewhere I will of still gained a lot. In the sun belt now car ownership is a must as other options or terrible or non-existent. In say Logan Square the family could get by with a single car as a luxury and could comfortably get by without even having a car. Walking, biking and transit all being very viable. I frankly rather walk and bike around than drive. That further comes with the added benefit of healthier living. So the property my not be increasing Sun belt fast but black hole of car ownership is greatly reduced or eliminated.

[the urban politician]

Originally Posted by Steely Dan

here are some of my reasons for owning:

stability: as long as i live up to my end of the bargain with the mortgage payments, no one can kick my family out of our home. as our neighborhood continues to get wealthier, no landlord can ever jack the rent on us and force us to move out of our community. the value of that peace of mind is immeasurable when you're raising a family, IMO.

predictability: unlike rent, which only ever seems to increase over time, my mortgage payments will be exactly the same in 20 years as they are today.
.

^ These two are only partly true.

Many landlords only increase rent over time to keep up with their cost increases (water bills, maintenance costs, property tax increases, insurance cost increases, etc).

So in a sense, as an owner you're simply absorbing those increases yourself, instead of seeing those higher costs passed along to you as rising rents.

[Crawford]

Originally Posted by 10023

It should be said that these two are not inherent to owning vs. renting. They are functions of the legal, tax and financial systems in a given jurisdiction.

At least in NYC, I don't see how renting is any less stable or predicable than owning, given that most rental units are rent stabilized and subject to limited annual rent increases, landlords have to offer you a lease, and it's almost impossible to be evicted. Also, most landlords here are thrilled when you make interior updates to your property, given the difficulty of getting city approval.

It could be argued that ownership has less predictable costs, since property taxes generally aren't capped, and there are often unpredictable capital costs (new roof, windows in SFH or special assessments in multifamily). A full window replacement in a newer suburban U.S. house might run 50k.

[Investing In Chicago]

Originally Posted by SIGSEGV

Sure, but you can diversify with stocks, use mutual funds and ETF's, etc. Most people can't buy houses in multiple cities/neighborhoods to diversify in a similar way.


Yeah, you don't have to sell your home to make use of its value, but my point is that unless you can afford a $1.5M home right now, you have to find the 400,000 home you think might become a $1.5M home at some point in the future. But if everyone knew it would be worth that much in the future, it probably wouldn't be a $400,000 home .

I don't understand the point you're trying to make. This isn't a zero sum game, most people should be holding stock long term, and real estate long term.

[Investing In Chicago]

Originally Posted by JManc

^ If I bought $400k worth of APPL ten years ago, it would be worth $4 million today. Plus you can unload all or a portion of it if needed fairly easily.

Someone who put $400K into APPL in 2011, certainly didn't have a budget of $400K for their primary home.

Originally Posted by JManc

That's the problem. Too many people see housing as investment opportunities first and homes a distant second. People actually want to own for reasons other than how much they can flip their house for in 10-15 years. This is why real-estate is so fucking out of control in so many areas and all but priced everyone but the upper middle class and beyond out.

I disagree with this, your primary home should be looked at as an investment opportunity. Granted, the return should be realistic, but with all of the tax advantages of owning a home, and over time paying down the loan, many people end up with a return.

Think of it this way, would you buy a house in a neighborhood that sees 5% depreciation of properties every year?

[Investing In Chicago]

Originally Posted by 10023

See above. If you bought a house for $400k, it wouldn’t have been $400k of actual money. It might have been $80k of actual money and a $320k mortgage. Then when you sell for $1.5m, less the $320k mortgage (let’s assume interest-only for simplicity), less some debt service (let’s say 5% for 10 years or $160k), you’ve got equity worth $1.02m.

That’s an almost 13x return, which is better than if you’d put your entire down payment into Apple shares.

Oh, and you didn’t have to pay rent. Let’s say there’s a 6% rental yield on that $400k house, so the same living arrangement would have cost you $24k/yr. That goes up by a few per cent per annum so it’s $32k by year 10. Add the c.$280k you would have spent on rent, and deduct the tax shield on the interest payments (let’s say $50k), and your $80k investment has provided you with $1.35m of wealth in 10 years. That’s almost 17x cash on cash.

Some of that gets eaten up by property taxes and maintenance/repairs that the landlord would have been responsible for if you were renting, but still, in a scenario where the value of the house does go up by threefold in 10 years, you are talking a low- to mid-teens cash on cash return.

This.

[Investing In Chicago]

To the point of COL in different cities, how many people actually significantly adjust their housing budget based on the market they are looking at buying?
If you can comfortably afford a $1M home, I don't think most people are adjusting their budget, they just need to reset their expectations of what their money can buy.
$1M will buy you a 1 bedroom apt in Manhattan, a townhome in trendy North Side Chicago neighborhoods, or a small ranch house in San Mateo. If that's your budget, those are your options. If you don't like the housing option at your price point move further out. At the Micro level, it's the same thing, can't afford to live in Lincoln Park, Chicago - move to a different neighborhood or the suburbs.

[JManc]

Originally Posted by iheartthed

So... speaking from a New York perspective, high-prices have definitely stabilized the city's population. I think this is a different problem from what fast growing Sun Belt cities encounter.

Older, well developed cities like New York need to be expensive to encourage productive uses of land. When the Bloomberg administration rezoned north Brooklyn to allow taller buildings, it suddenly made economic sense to repurpose a lot of the empty lots and abandoned buildings that were left over from the post-industrial collapse. Constraining land use patterns allowed the market to take care of de-industrialization on its own. I grew up in the Rust Belt and I've watched my own hometown struggle with top-down government solutions to the same problems that the market is handling on its own here in NYC.

It's stabilized because there's only so many people 'well off' enough who can (or want) to live there. Very few options for anyone else which more or less results in economic darwinism. I grew up in the rust belt as well and the biggest reasons why my hometown deteriorated where largely due to market forces; jobs then people moved out.

And the problem isn't limited to New York (that's just an extreme example) but all over the place. Even here in Houston, which everyone thinks its affordable and it is compared to the coasts but the parts of town most people would rather live in are no longer really that affordable.

[iheartthed]

Originally Posted by Investing In Chicago

To the point of COL in different cities, how many people actually significantly adjust their housing budget based on the market they are looking at buying?
If you can comfortably afford a $1M home, I don't think most people are adjusting their budget, they just need to reset their expectations of what their money can buy.
$1M will buy you a 1 bedroom apt in Manhattan, a townhome in trendy North Side Chicago neighborhoods, or a small ranch house in San Mateo. If that's your budget, those are your options. If you don't like the housing option at your price point move further out. At the Micro level, it's the same thing, can't afford to live in Lincoln Park, Chicago - move to a different neighborhood or the suburbs.

IAWTC. You can find a $300k home to buy in NYC, but it's not going to be in prime Manhattan.

[Steely Dan]

Originally Posted by digitallagasse

I can speak as someone looking to move from Sun Belt sprawl to urban Chicago at middle income as a family of 4. Yes the house values of my suburban house are increasing far faster than houses in urban Chicago but I doubt in my lifetime the area I live now will ever become a walkable mixed use area. I can afford to buy a condo in a three or six flat building in a place like Logan Square or a SFH out in a neighborhood like Jefferson Park. With Jefferson Park being suburban but great connections deeper into the city. That and I like the design of how neighborhoods such as this were built. Outside of say Philly I couldn't afford to buy into such neighborhoods in other higher tier older urban cities. Well least not into neighborhoods that are not very high crime. Yes it would be great to be able to buy into a property I could afford and that would also increase nicely in value. The problem is the places that is happening I can't afford the cost of entry in the first place.

Even if I purchased a home in Chicago and it didn't increase in value as fast elsewhere I will of still gained a lot. In the sun belt now car ownership is a must as other options or terrible or non-existent. In say Logan Square the family could get by with a single car as a luxury and could comfortably get by without even having a car. Walking, biking and transit all being very viable. I frankly rather walk and bike around than drive. That further comes with the added benefit of healthier living. So the property my not be increasing Sun belt fast but black hole of car ownership is greatly reduced or eliminated.

replace logan square with lincoln square, and that's my life.

a family of 4 can easily get by with one car in urban chicago (unless mom and dad both have jobs out in the burbs), we've been doing it for years now.

and yes, you could forgo it altogether, but for a family of four, a car is a very nice luxury to have, and most families in chicago with young children who can afford to own a car do so.

when are you looking to make the move?

Originally Posted by iheartthed

Older, well developed cities like New York need to be expensive to encourage productive uses of land. When the Bloomberg administration rezoned north Brooklyn to allow taller buildings, it suddenly made economic sense to repurpose a lot of the empty lots and abandoned buildings that were left over from the post-industrial collapse. Constraining land use patterns allowed the market to take care of de-industrialization on its own. I grew up in the Rust Belt and I've watched my own hometown struggle with top-down government solutions to the same problems that the market is handling on its own here in NYC.

well, chicago has recently been on fire building new tall buildings, without new york's sky high real estate prices, so.........

[Boisebro]

Originally Posted by Steely Dan

well, chicago has recently been on fire

speaking of which, isn't this the 150 year anniversary of the great chicago fire?

<checks google>

why yes. yes it is.

to commemorate the event, i shall have a pizza.

[Steely Dan]

^yep, its the sesquicentennial of the great fire this october. i don;t know if there are any official plans to mark the occasion.

Originally Posted by Investing In Chicago

To the point of COL in different cities, how many people actually significantly adjust their housing budget based on the market they are looking at buying?
If you can comfortably afford a $1M home, I don't think most people are adjusting their budget, they just need to reset their expectations of what their money can buy.
$1M will buy you a 1 bedroom apt in Manhattan, a townhome in trendy North Side Chicago neighborhoods, or a small ranch house in San Mateo. If that's your budget, those are your options. If you don't like the housing option at your price point move further out. At the Micro level, it's the same thing, can't afford to live in Lincoln Park, Chicago - move to a different neighborhood or the suburbs.

yes, of course this is how it works.

the only point the "chicago is cheap" crowd is making is that the options available to own an urban home for someone on a tight housing budget are simply greater in chicago than they are in most of its peers.

that has both pluses and minuses: a lower barrier to entry, but also a lower ceiling on the returns. if you're a regular old middle class guy with an affinity for urban life just trying to put a roof over your family, it's a pretty good city for doing that in. but no, your $400K duplex-down in avondale is not going to be worth 1.5 million dollars 7 years from now. or ever.

If you're looking for real estate in Chicago where you might actually be able to see some decent equity gains, you gotta take a gamble on the leading edge of gentrification and wait/hope. Most middle class families with young children don't wanna play that game for their family home.

[mhays]

Appreciation might be pretty limited in the expensive cities too. Housing prices can be somewhat self-limiting.

[jtown,man]

I often complain about the politics in Illinois and Chicago, but costs aren't a huge issue.

To put this into perspective:

I moved to Chicago from SE Virginia (Norfolk). I am paying roughly 20% more for rent and 150 more for parking (one car) than I did in Norfolk. However, I sold my car when I moved, so me and my gf now only have one car. That saved us 280 a month for the note, around 100 for insurance, and 55 for parking (what we paid in Norfolk). Just in monthly cost, I am actually saving money living in Chicago. Now, my gf's equation wasn't as kind, but still not horrible.

Groceries are more expensive here, but not by much. Gas is bad, but I work in the burbs now, so I fill up out there. The pizza place I like near my building has 3 dollar beers every day, not just for happy hour. It's not bad.

In order to live my urban lifestyle in Austin, Dallas, or Nashville...Well, first it wouldn't be possible. But if we are trying to replicate it, I would be paying MUCH more in those cities. The supply of nice buildings in "urban" areas in those cities are so limited that you *will* pay a premium. Not the case here in Chicago.

[DCReid]

Originally Posted by jtown,man

I often complain about the politics in Illinois and Chicago, but costs aren't a huge issue.

To put this into perspective:

I moved to Chicago from SE Virginia (Norfolk). I am paying roughly 20% more for rent and 150 more for parking (one car) than I did in Norfolk. However, I sold my car when I moved, so me and my gf now only have one car. That saved us 280 a month for the note, around 100 for insurance, and 55 for parking (what we paid in Norfolk). Just in monthly cost, I am actually saving money living in Chicago. Now, my gf's equation wasn't as kind, but still not horrible.

Groceries are more expensive here, but not by much. Gas is bad, but I work in the burbs now, so I fill up out there. The pizza place I like near my building has 3 dollar beers every day, not just for happy hour. It's not bad.

In order to live my urban lifestyle in Austin, Dallas, or Nashville...Well, first it wouldn't be possible. But if we are trying to replicate it, I would be paying MUCH more in those cities. The supply of nice buildings in "urban" areas in those cities are so limited that you *will* pay a premium. Not the case here in Chicago.

I would guess that the advantage of moving to Chicago, besides cheaper real estate in general, is that you probably have more options of where to live in the city because prices have not run up dramatically.

[twister244]

Originally Posted by jtown,man

In order to live my urban lifestyle in Austin, Dallas, or Nashville...Well, first it wouldn't be possible. But if we are trying to replicate it, I would be paying MUCH more in those cities. The supply of nice buildings in "urban" areas in those cities are so limited that you *will* pay a premium. Not the case here in Chicago.

THIS.

I just came across this article about the continued escalation of Denver housing prices - https://www.westword.com/news/denver...pdate-11986852

I'm looking on Redfin right now at Lakeview - Andersonville.... and continue to just be amazed at the affordability.

And, after being out in the city this past weekend with the "Chicago Summer" energy in full force.... There's a part of my brain egging me on to just put some money down on a cheap condo here so I have a place to crash during the Summer, then AirBnB it the rest of the year when I might be elsewhere.

It's just insane to me.

[Crawford]

A SFH in Lakeview costs seven figures, easily. Probably $2 million+ for anything in move-in condition, well-located and family-sized. How is that insanely cheap?

And if you're talking cheap condos/coops in vintage buildings (but with high monthlies), those don't exist in cities like Denver and Dallas. So what are people comparing?

[Steely Dan]

^ twister clearly mentioned buying a condo, so the SFH world isn't terribly relevant to his plan.

And only 8.4% of lakeview's housing units are detached SFH's, so there's a pretty steep supply/demand curve imbalance for that particular housing type, as one would expect in any vibrant urban neighborhood.

It's hard to be urban and vibrant if you pretty much only have detached SFH's. Even at bungalow belt densities, the best you can hope for is ~7,500 - 10,000 ppsm. Lakeview is 3 to 4 times that.

[pip]

Originally Posted by Crawford

A SFH in Lakeview costs seven figures, easily. Probably $2 million+ for anything in move-in condition, well-located and family-sized. How is that insanely cheap?

And if you're talking cheap condos/coops in vintage buildings (but with high monthlies), those don't exist in cities like Denver and Dallas. So what are people comparing?

I can't believe you posted this. It makes no sense. Compare Apples to Apples.

[SIGSEGV]

Originally Posted by Crawford

A SFH in Lakeview costs seven figures, easily. Probably $2 million+ for anything in move-in condition, well-located and family-sized. How is that insanely cheap?

And if you're talking cheap condos/coops in vintage buildings (but with high monthlies), those don't exist in cities like Denver and Dallas. So what are people comparing?

A SFH in Lakeview is probably a converted MFH .

You probably want to look at Townhomes. Like this one: https://www.redfin.com/IL/Chicago/12.../home/13365313