CHICAGO | General Discussions

[marothisu]

Personal income choices always factor into these things. My wife and I can afford a $1.3M place but we don't want to. We make good income but we aren't pulling in $1M/yr. We want to be able to provide for our children especially education and we want to retire at a reasonable age. You could say we could do that even more in some suburbs, and maybe it'll happen, but we like cities.

The 2 bedroom condos in buildings here in nyc next to us start at $1.7M. By contrast, I've seen some pretty decent new or newish 3 bedroom condos in even Lakeview or Lincoln Park for under $800K.

At this point it's a no brainer to move back to Chicago. At the same time though, Chicago in these areas might be cheaper than NYC by a lot but still not TOTALLY cheap.

[marothisu]

Originally Posted by galleyfox

Funny you should say that.

I just bought a $230K house by Eckersall Park for my family. No children yet, but my father and grandmother are moving in from South FL. These are the only neighborhoods in the city where you can find nice renovated large single family homes for an affordable price with reasonably safe streets.

The Obama Presidential Library, the large brick houses, and lakeshore and CTA access were the main factors that tipped the scales in favor of taking a gamble on the neighborhood.

Very interesting and good to know. What are the factors that led you to that area? I'm really interested in general regarding crimes gentrification, etc of various South side areas. I know crime for example can be block or blocks by blocks. I have a friend who moved from Hyde Park to Chatham for example and it's interesting hearing some things.

Some of the SFH in the whole area though have been remodeled pretty nicely for real. Like not going to win awards buy still pretty nice inside. I appreciate people are doing this, especially not tearing down. Ultimately that keeps things a little more affordable too. AG is set to get a few sizable commercial corridor projects on 79th soon. I think one even scored a permit lately. Will be interesting to watch... I'd love to hear your thoughts.

Also I saw an article about a few groups on the west side making some affordable SFH in areas like North Lawndale. They want to build 1000 of them. There are some income requirements for it, something like no more than $50K combined household income. My guess is it has to be a range between say $35K and $50K. They just broke ground on their first few in the 1600 block of S Avers in North Lawndale on vacant land.

[Steely Dan]

Originally Posted by Handro

I dunno, maybe it's down to personal budget priorities, but I'd feel pretty house-poor based on the math we've done together paying more than 350, with a major stretch up to 400. We (currently) would have about 20k to put down based on a moderate estimate of the potential sale price of our current (tiny) North Center condo.

Of course you're free to decide your own housing budget, but prior to me losing my job, my wife and I had a very similar AGI to you and your GF, and we pre-qualified for a $675K mortgage.

When we did the math, I said "no effing way" to being that house-poor, so we went roughly $250K below that to give us a nice, wide, and comfortable margin. and boy am I ever glad we did since our AGI was slashed in half last year (my wife quit her job to start her own business a month prior to the pandemic). It allowed us to save a lot of our money to help us weather this covid storm.

So unless you and/or your GF have some other massive debt hanging over your heads (student loans or otherwise), buying a $400K home is a pretty safe play on an AGI of $175K.

You most likely could easily afford to own a family-size home in an urban chicago nabe with good schools, but if you still choose not to, that's your choice, not really a "the city is unaffordable" issue.

[moorhosj1]

Originally Posted by Handro

I dunno, maybe it's down to personal budget priorities, but I'd feel pretty house-poor based on the math we've done together paying more than 350, with a major stretch up to 400. We (currently) would have about 20k to put down based on a moderate estimate of the potential sale price of our current (tiny) North Center condo.

Getting a little off-topic here, but remember that if you commit to a $3,000 mortgage today, it will still be a $3,000 mortgage in 30 years. That means you will have 30 years of (likely) increased pay while your monthly payment stays mostly the same. That said, the property tax portion of your monthly payment will likely increase. If you are below 20% down, you will have the PMI on top of your mortgage and it sounds like that is actually your biggest hurdle to a reasonable monthly payment.

My wife and I were similar to you before we bought in Irving Park. At the time, it was a tight fit, but she got a raise and now we have much more breathing room. Mortgage is still below $3,000 after we re-financed a year ago.

[Via Chicago]

Originally Posted by moorhosj1

Getting a little off-topic here, but remember that if you commit to a $3,000 mortgage today, it will still be a $3,000 mortgage in 30 years. That means you will have 30 years of (likely) increased pay while your monthly payment stays mostly the same.

i mean you could very very easily reverse this statement and it would equally as possible/true. future earnings are no guarantee and being underwater en masse on real estate is a thing this country, like, JUST went through a decade ago. we had people with masters degrees and PHDs out of work competing for jobs at coffee shops. how does everyone just operate with this kind of collective amnesia? is zero breathing room really the place you want to be when this inevitably happens again?

biting off less than you can chew will literally never hurt you. the inverse is risky for reasons that should be blatantly obvious. and people wonder how we wind up in bubbles...

[moorhosj1]

Originally Posted by Via Chicago

i mean you could very very easily reverse this statement and it would equally as possible/true. future earnings are no guarantee and being underwater en masse on real estate is a thing this country, like, JUST went through a decade ago. we had people with masters degrees and PHDs out of work competing for jobs at coffee shops. how does everyone just operate with this kind of collective amnesia? is zero breathing room really the place you want to be when this inevitably happens again?

biting off less than you can chew will literally never hurt you. the inverse is risky for reasons that should be blatantly obvious. and people wonder how we wind up in bubbles...

This isn’t really how inflation or wages work, but yes purchasing a house is risky. For the average college-educated person, wages increase from 20s to 30s to 40s and peak in your 50s. Combine that with the fact that mortgages don’t increase with inflation and you have the world we live in.

Your scenario leaves out so much of reality, like opportunity costs or the fact that if you have to take a job at a coffee shop it will be tough to carry ANY size mortgage. If I bought a smaller house, my mother-in-law wouldn’t have been able to move in during COVID, my family wouldn’t be able to grow, and my home value wouldn’t increase as much.

Nobody is saying to take on a payment you can’t afford, but if you are in the first 15 years of your career, it’s likely your wages will increase over time. Ignoring this is as silly as ignoring past recessions.

[Via Chicago]

Originally Posted by moorhosj1

This isn’t really how inflation or wages work, but yes purchasing a house is risky. For the average college-educated person, wages increase from 20s to 30s to 40s and peak in your 50s. Combine that with the fact that mortgages don’t increase with inflation and you have the world we live in.

right, so why make it even more risky? lets also not forget that wages have remained stagnant for the vast majority of americans over the past several decades and purchasing power is far less than what it used to be...inflation has hit big ticket items like equities, cars, college education, healthcare, and housing orders of magnitude higher. incomes have nowhere near kept up with these things, hence the extreme wealth inequality we are dealing with today.

Your scenario leaves out so much of reality, like opportunity costs or the fact that if you have to take a job at a coffee shop it will be tough to carry ANY size mortgage. If I bought a smaller house, my mother-in-law wouldn’t have been able to move in during COVID, my family wouldn’t be able to grow, and my home value wouldn’t increase as much.

the opportunity cost to buying less house than i can afford is i can save more of my paycheck on something other than housing (i.e. retirement, which americans are woefully underprepared for). it may even allow someone to stop working early, in turn buying freedom from work obligations as opposed to have a big house to clean and pay off for another 15 years. if you need the space, than by all means take it. but encouraging people to buy at the extreme end of their budget when they dont need to is reckless.

Nobody is saying to take on a payment you can’t afford, but if you are in the first 15 years of your career, it’s likely your wages will increase over time. Ignoring this is as silly as ignoring past recessions.

final note, but ageism is a real thing in the workplace and there are more than a few 50-somethings forced into unwanted early retirements who find themselves locked out of careers going to younger people who are willing to work for a fraction of the cost. or who cant get their careers back after untimely late career recessions at the peak of earning power. lots of people plan to work for a certain number of years, and that is not always fully in your control. as automation and AI takes increasingly outsize roles in our workplaces (the numbers are readily available for how many good paying white collar jobs this is likely to impact), ill personally create the financial cushion while i can as opposed to the extra 2 bedrooms and whatever on-trend finishes i dont really need.

back to regular scheduling.

[ardecila]

Originally Posted by bcp

It's an infrastructure issue - swaths of vacant land, dilapidated main streets, few businesses / jobs, busted sidewalks, and more that make (unfortunately) some of the areas close to transit, near the lake, with parks, and with old housing stock are probably the very slowest to improve. You've got to be a serious urban adventurist to move to 63rd and Vernon:
https://www.google.com/maps/place/S+...!4d-87.6144212

Woodlawn actually isn't that bad once you ignore 63rd St. Close to lots of parks and the lakefront, easy access to all the amenities of Hyde Park. People down there are hating on the Obama Center but it has no impact on the day-to-day life of people in the community - the driver of gentrification is more likely the Trader Joe's/Whole Foods on Lake Park Ave and all the other development on 53rd. Kenwood was like this in the 90s but now it's out of reach for most people.

63rd St is a weird twilight zone because there's sharp disagreement in the community on how to develop it. Will the L be extended back to Dorchester or Stony Island, etc. with a TOD development strategy, or should the L remain as-is and 63rd developed with townhouses and SFH? Fortunately there's now some attention around development at the existing stations at King Drive and Cottage Grove, and the general planning trend in the city is toward TOD/multifamily and away from townhouse/SFH. But Rev Brazier Jr is still there with his thousands of church members. I hope the city will revisit this L extension once the Obama Center is completed, I think they were hesitant to even raise the issue if it would jeopardize the Obama project. Supposedly the steel beams are still in storage to put the L back up, but I imagine if they built it again it would be shifted to the alleys north or south of 63rd with a concrete structure and better soundproofing.

[marothisu]

Originally Posted by bcp

IF these areas want to attract private investment - and big dollars, they need to abandon the idea that SFH is the way to transform the neighborhood. That will most likely be the last and final housing type built there.

They need to support (and push) for upzoning of everything within 1/2 mile of every single transit station and along the major bus routes. Quadruple the density and you will attract retail, create jobs, and it's booming from there - density also will keep prices in check, and move way faster than any gov't support SFH program...for all their scheming and funding, it's slow and barely transformational compared to the free market (granted, free market needs the gov't to upzone to kick this off!)

Triple the density for these areas basically means actually some downtown and Lakeview East at its densest levels, just for the record.

There are some tracts in Woodlawn that are a bit denser than maybe people are giving credit for. The tract between Woodlawn, Ellis, 60th and 63rd is about 30,000 ppsm. That's actually a little denser than the area of Lakeview between Diversey, Halsted, Sheffield, and Belmont. It's almost identical in density to the area in River North between the river, Dearborn, LaSalle, and Chicago. Not saying it can't be denser, but let's not act as if this is 5000 ppsm or something.

Right south of there between 63rd and 67th is about 20,000 ppsm. A few more in the 15K-20K ppsm range around there. Yeah it could be denser, but considering how many vacant lots there are in some of these areas, even more room to grow. There's also vacant multi unit buildings that can be (and have been) rehabbed. But some of these areas are anything but just SFH and are already dense or dense-ish for US standards.

[west-town-brad]

Originally Posted by Via Chicago

right, so why make it even more risky? lets also not forget that wages have remained stagnant for the vast majority of americans over the past several decades and purchasing power is far less than what it used to be...inflation has hit big ticket items like equities, cars, college education, healthcare, and housing orders of magnitude higher. incomes have nowhere near kept up with these things, hence the extreme wealth inequality we are dealing with today.



the opportunity cost to buying less house than i can afford is i can save more of my paycheck on something other than housing (i.e. retirement, which americans are woefully underprepared for). it may even allow someone to stop working early, in turn buying freedom from work obligations as opposed to have a big house to clean and pay off for another 15 years. if you need the space, than by all means take it. but encouraging people to buy at the extreme end of their budget when they dont need to is reckless.



final note, but ageism is a real thing in the workplace and there are more than a few 50-somethings forced into unwanted early retirements who find themselves locked out of careers going to younger people who are willing to work for a fraction of the cost. or who cant get their careers back after untimely late career recessions at the peak of earning power. lots of people plan to work for a certain number of years, and that is not always fully in your control. as automation and AI takes increasingly outsize roles in our workplaces (the numbers are readily available for how many good paying white collar jobs this is likely to impact), ill personally create the financial cushion while i can as opposed to the extra 2 bedrooms and whatever on-trend finishes i dont really need.

back to regular scheduling.

I have a different view:

the leveraged principle residence is the single best investment available today

benefiting from the power of government subsidized leverage, and the power of inflation, amazing tax write offs, the benefits of gentrification, the power of the protected "homeowner class" via government regulation/building codes and policy, protected by highly restrictive zoning and NIBYism all around the US which caps supply, and paid for by ever inflating wages for almost all working people (not mythical average stagnant wages)

dont finance more than you can pay for - obviously - but even if you cant make the payments at some point in time, you likely will have years to figure it out with lots of handouts and help and free money before anything really bad happens

and if the house value temporarily goes down - who cares - you still get to live in the house until values recover

[Via Chicago]

as always, real estate is local, and gentrification is rarer than you imply. typically, at best, housing barely keeps up with inflation which makes it more or less a forced savings account. and making sweeping generalizations about highly leveraged mortgages being "good" because the government will just bail you out when things go south just kinda confirms every suspicion i had about this bubble

(not mythical average stagnant wages)

yeah just one big imaginary myth









if youre a white person in the upper 10% percentile of earnings and wealth than yeah i imagine it all just seems like a myth to you. if you happen to be anyone else, not so much.

[ardecila]

Originally Posted by bcp

IF these areas want to attract private investment - and big dollars, they need to abandon the idea that SFH is the way to transform the neighborhood. That will most likely be the last and final housing type built there.

They need to support (and push) for upzoning of everything within 1/2 mile of every single transit station and along the major bus routes. Quadruple the density and you will attract retail, create jobs, and it's booming from there - density also will keep prices in check, and move way faster than any gov't support SFH program...for all their scheming and funding, it's slow and barely transformational compared to the free market (granted, free market needs the gov't to upzone to kick this off!)

LOL. As marothisu already noted, this was and still is on the high end of density for Chicago neighborhoods even with 63rd in its bombed out state and a population decline of 2/3rds from its peak. Right or wrong, the leaders in the community (mostly oldtimers) associate multifamily housing with neglect and absentee landlords. Hell, there was a 4 year period in the 1960s when 362 buildings burned down, many of them likely arsons by landlords.

So, the answer is that they don't want private investment. But they have tolerated new SFH because practically there is no good legal tool to stop SFH construction, and because the end result is ideally a Black middle-class household staying in the neighborhood and gaining control over the land. This bias seems to be pretty widespread in the Black community, not just in Woodlawn, which is why the only private investment in Bronzeville is SFH and townhomes and the only apartment construction is led by nonprofits or CHA.

The new alderman Jeannette Taylor seems a little more open to TOD and density next to train stations/reduced parking, but if she's gonna demand any new apartments be social housing then the neighborhood will be stuck with only a trickle of investment for the foreseeable future.

[VKChaz]

Originally Posted by ardecila

...

So, the answer is that they don't want private investment. But they have tolerated new SFH because practically there is no good legal tool to stop SFH construction, and because the end result is ideally a Black middle-class household staying in the neighborhood and gaining control over the land. This bias seems to be pretty widespread in the Black community, not just in Woodlawn, which is why the only private investment in Bronzeville is SFH and townhomes and the only apartment construction is led by nonprofits or CHA.

..

Not sure how this would work, but I wonder if some kind of co-op type structure could be leveraged. Something that would give a kind of ownership and a stake in a building without fear of rising rents. Because I imagine part of the problem local leaders face is fear that new multi-family will be in the hands of outsiders and if successful will lead to rising rents that price people out. With no solution for this, they opt to do nothing. This kind of thing wouldn't be for everyone, but maybe with some outside the box thinking, trying a mix of models could help move things along.

[Mimol742]

Originally Posted by Via Chicago

as always, real estate is local, and gentrification is rarer than you imply. typically, at best, housing barely keeps up with inflation which makes it more or less a forced savings account. and making sweeping generalizations about highly leveraged mortgages being "good" because the government will just bail you out when things go south just kinda confirms every suspicion i had about this bubble



yeah just one big imaginary myth









if youre a white person in the upper 10% percentile of earnings and wealth than yeah i imagine it all just seems like a myth to you. if you happen to be anyone else, not so much.

No Asians data on those charts?

[The Lurker]

Originally Posted by Mimol742

No Asians data on those charts?

Look closely. Something interesting happens in 1983. Pre 1983 there were only two races. White and non-white (which presumably included Asians) and then post 1983 there are 3 races. White, Black and Hispanic. Asians and even Middle Eastern people (who have also done well in the last few decades) are omitted for some odd reason. Seems blatantly.........curious, doesn't it? But this is from Urban Institute. Outside of big cities in middle income areas, the lines trend a bit closer, and the average white family makes significantly less than a million annually. This graph only shows the baffling wealth inequality prevalent in big.......Non-Red cities.

This thread went off the rails days ago, but something tells me it will get cleaned up now.

[the urban politician]

Priced out of Pilsen?

Wow, my rents there are still pretty damn low compared to north side hoods, and I’m sure that buying a home there can’t be too difficult. I’m trying to make sense of this....

[glowrock]

Originally Posted by the urban politician

Priced out of Pilsen?

Wow, my rents there are still pretty damn low compared to north side hoods, and I’m sure that buying a home there can’t be too difficult. I’m trying to make sense of this....

Prices might be lower, but square footage tends to be much lower as well. What passes for a bedroom in many Pilsen apartments might as well be a closet in many north side units.

Aaron (Glowrock)

[west-town-brad]

Originally Posted by Via Chicago

as always, real estate is local, and gentrification is rarer than you imply. typically, at best, housing barely keeps up with inflation which makes it more or less a forced savings account. and making sweeping generalizations about highly leveraged mortgages being "good" because the government will just bail you out when things go south just kinda confirms every suspicion i had about this bubble



yeah just one big imaginary myth









if youre a white person in the upper 10% percentile of earnings and wealth than yeah i imagine it all just seems like a myth to you. if you happen to be anyone else, not so much.

don't confuse averages of 100 million working adults with an individual person's experience.

Since I was talking about a person investing in a home - would you be able to show me one individual person who has stagnant wages since 1964?

I will wait patiently.

I have a degree in economics thank you

[SteelMonkey]

Originally Posted by west-town-brad

don't confuse averages of 100 million working adults with an individual person's experience.

Since I was talking about a person investing in a home - would you be able to show me one individual person who has stagnant wages since 1964?

I will wait patiently.

I have a degree in economics thank you

Congrats on your degree but judging by your question the only thing you received was the diploma

[LouisVanDerWright]

Sorry Y'all, I've been checked out and you had a long conversation about all sorts of stuff that interests me. I'm going to try to break this into a couple posts, but please actually read what I'm saying and respond!

Originally Posted by marothisu

Pretty much - at least this hits home. We're planning on having children and also moving back to Chicago (one of the main reasons - affordability with children). Definitely been looking at properties and the rankings of schools in the areas. We don't want to live in the suburbs, but holy crap is moving to somewhere like Naperville in an area with schools with all 8-10 ratings going to be attractive at some point.

The "rankings" are often garbage though. For example, the coveted Belding School district in OIP is ranked 2/10 across the board. Not sure why everyone is falling over themselves to buy a $1.5 million house in OIP so they can send their kids to a shit school.

Originally Posted by Handro

My GF and I have a combined income of ~$175K and there is no way in hell we can afford a place large enough to have kids in Lincoln Park, North Center, Lakeview, etc. The type of dense, walkable neighborhood that we both want are basically off limits to us unless we take some big financial risks in the next few years and they all pay off. If my options were a place like Gladstone Park, I'd rather just live in a pre-war suburb with a dense downtown and a Metra stop. As such, we have no plans for kids right now and there are no children in our medium term plans. People like us certainly aren't helping the city grow, I know that.

Don't despair, that's what Mayfair/Portage/Old Irving Park are for. If you can't find a reasonable house for under $500k in these areas, you ain't trying.

My wife and I are finishing up a gut rehab of a 4,000 SF house on a 50x155' lot in Mayfair, we paid like $305k for it and are putting $200k into it. Once we refi out of the construction loan in a few weeks our payment will be $2k total. The house has 4 beds, 3.5 baths, a huge office that can be another bed, and a sunroom that could also be another bedroom:

Originally Posted by OrdoSeclorum

One thing I've observed is that people in Chicago tend to underestimate how much house they can "afford". There are many folks in California earning $175,000 who buy houses that are over a million dollars and don't think twice. I'm not saying that's the way it should be, but some of this is cultural.

This whole market has gone insane due to ultra low rates. The bottom will drop out again, this time on the "giant overpriced house that you can't actually afford" market. You are very right to put "afford" in quotes because people are making housing decisions off all time low interest rates and assuming they will do nothing but sit at home like they did the last 12 months. As soon as people realize they would like to travel or go out to eat again before they die, there's gonna be a bum rush back to more reasonable housing.

Originally Posted by Via Chicago

i mean you could very very easily reverse this statement and it would equally as possible/true. future earnings are no guarantee and being underwater en masse on real estate is a thing this country, like, JUST went through a decade ago. we had people with masters degrees and PHDs out of work competing for jobs at coffee shops. how does everyone just operate with this kind of collective amnesia? is zero breathing room really the place you want to be when this inevitably happens again?

biting off less than you can chew will literally never hurt you. the inverse is risky for reasons that should be blatantly obvious. and people wonder how we wind up in bubbles...

Yes Yes Yes!

Originally Posted by ardecila

Supposedly the steel beams are still in storage to put the L back up, but I imagine if they built it again it would be shifted to the alleys north or south of 63rd with a concrete structure and better soundproofing.

Wow, that's... Bizzare... I don't think I've ever seen anyone dismantle a steel structure and then NOT scrap it? Maybe the first time they took apart the Ferris Wheel?

Originally Posted by west-town-brad

I have a different view:

the leveraged principle residence is the single best investment available today

This is categorically false. Single Family Housing has historically had a nominal return in the 2-3% range. Once you account for inflation, the return is essentially zero. It might be your "view", but your view is factually incorrect. You would be much wealthier renting your entire life and piling money into the stock market at 6-8%.

The reason SFH's have a poor return is that people don't actually buy them because they want to invest. They buy them for the freedom to do as they please with their property and for personal enjoyment. This is why the return is so low because people tend to overpay for SFH's like they are doing now.

Originally Posted by ardecila

27 units, 23 parking spaces is not ideal for TOD. And they NIMBY'd it from 5 floors down to 4. Sounds like they still have a ways to go. They're not building mini-towers like the one at 43rd or Damen Green Line stops.



One building is up. They have solid fencing so I can't tell if the foundations are in for the others.

The Starbucks site is outside the 1/4 mile radius around the Orange Line stop but Western itself is also a TOD corridor. There's housing just across the tracks and the park across the street, it's not even an industrial site. Suburban retail here is such a waste. And the Starbucks will face Oil Express instead of facing the park...

My girlfriend and I are planning to buy a house in a few years, we'd love to stay in Pilsen or Bridgeport but the prices might push us to McKinley. The park access and Orange Line is a huge plus.

I'm actually looking at an 8 unit right by the Western Orange Line now. There is definately development starting to jump Western from McKinnley into Brighton. There's even some new construction on like 35th just West of Western.