Paper Economy - A US Real Estate Bubble Blog

Wednesday, April 21, 2010

Chicago Re-Busting!

Today another major metro housing market is inducted into the Re-Busting lineup of regions that have relented to the organic home price slide (as seen by the Radar Logic data) despite the generous efforts by the Feds.

Chicago must have appeared too many to have surely bottomed out early last spring after dropping over 30% from its 2007 peak and facing a massive dose of government stimulation.

Yet, short of a feeble spring bounce and reversion and an even more pitiful tax-credit expiration inspired blip in November, prices in Chicago have simply been sliding.

Today, Chicago home prices are setting new lows some 45% below the peak set in 2007 and 17.98% below the level seen just last year.

With the latest tax gimmick expiration expiring with nary squeak in prices for the area, this could be one metro market to keep an eye on for significant housing stress related macro spillover later this year.

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25 Comments:

  • So far you've looked at DC, Atlanta, Cleveland, Chicago, and Seattle re-busting. Are the really frothy places (Florida, Las Vegas, SF, NYC) showing any signs of doing the same thing.

    I had the impression California was mostly bottomed out for real. LV too.

    By Anonymous Dagger, at 12:16 PM  

  • It'd be interesting to see a chart of major metro regions and how far back prices had retreated. I mean something like this (I'm just making up data here):

    Atlanta: 2000
    Boston: 2004
    Columbus: 2002
    Austin: 2005
    Detroit: 1998
    ... etc ...

    How hard is that to do in Blytic?

    By Anonymous Dagger, at 12:22 PM  

  • Dagger,

    Well the best numbers we could look at are the Case-Shiller as they generally go all the way back to 1987... I wish radar logic had data back further.

    The super bubble metros looking pretty bad... ill do Miami tomorrow... but they will all be added to the lineup eventually.

    San fran is an interesting case.. its looking a lot like seattle.

    Blytic is unfortunately for the moment stuck on time as the x-axis so I would need to whip up a summary in Excel for that one... but I can get all the data from blytic... I would say that in general the super bubble metros are back to 2000 and pre-2000 in some cases... the other metros are back to 2003ish.

    By Blogger SoldAtTheTop, at 12:37 PM  

  • "Dagger said...
    So far you've looked at DC, Atlanta, Cleveland, Chicago, and Seattle re-busting. Are the really frothy places (Florida, Las Vegas, SF, NYC) showing any signs of doing the same thing."

    My guess is no, or at least not to this extent. Rationale being, since SATT is all doom all the time, he will supress info from those that do not support his thesis.

    However, since Dagger has suffient doom credentials, I expect SATT to show them.

    By Anonymous Anonymous, at 1:48 PM  

  • Anon, so far the doomsters are right. Sometimes you have to choose: be honest, or be popular.

    And if you're going for popular (I'd use my real name if I were), you have to be extra careful to at least be truthful to yourself, and to the people who trust you.

    As for me, I'm just trying to gauge bottom in the various markets. That's why I'm asking about Las Vegas.

    And as for SATT, he's not bullsh*ting us here. It's rare to find honesty. Recognize it even if you disagree.

    By Anonymous Dagger, at 3:03 PM  

  • Dagger said...
    Anon, so far the doomsters are right. Sometimes you have to choose: be honest, or be popular.


    Uhh no. The doomers were right 2005-2009. I listened to everything they had to say - a wonderful diversion from the mainstream sunshine & bunnies the MSM spews daily. Still, a funny thing happened early 2009.

    After years of confirming a message of all doom all the time, some of the metrics started turning positive. Wondering what this was, I logged onto my trusty blogs for updates. Yet it was the damndest thing.

    Some of the blogs noted this reversal in metrics and had the attitude "hey, this may or may not be something to watch, whether we like it or not". These blogs were willing to enrage their (generally) permadoomer audience and tell them whats going on.

    Others, said it was merely a blip and try to spin it negatively, or just wouldnt report the reversing metric at all. SATT fell into this camp. Thus it took him 10 months to acknowledge the govt manufactured bounce the unbiased blogs noted 8 months earlier.

    And thats why I come here to give him grief. Fabricated or not, the metrics were changing. Some choose to acknolwedge this, and as much as I hated to hear it, I respect them much more to this day.

    Others like SATT choose to spin his message of all doom all the time. Kinda like the NAR, just in reverse.

    I will never forgive him for that.

    By Anonymous Anonymous, at 10:50 PM  

  • Hey, Anon,
    If you met a young woman with really big boobs (and you liked that sort of stuff) and one friend told you that she was swell and another told you the truth, "those things are fake" and you ignored (or even worse, argued) with that friend and then one day while out with your boobie lady her features started to go south, in a big way, and you realized your second friend was correct, would you complain to him that he noticed the fake boobs in the first place?

    You're a moron.

    !

    By Anonymous Anonymous, at 9:16 AM  

  • This comment has been removed by the author.

    By Blogger Daniel R. Levitan, at 8:47 PM  

  • (reposted to correct typos; stiff fingers late at night)

    Instead of dwelling on the negatives, how about looking at the majority of the markets around the country that either never dropped substantially (try Louisville) or are on their way back. And even Chicago appears to have hit bottom and will shortly rebound. If the press would get off the negative news bandwagon, housing would recover faster.

    By Blogger Daniel R. Levitan, at 8:57 PM  

  • D.L.,
    Sounds like a nice idea for a blog.

    Why don't you start one of your own with that POV?

    How's that go, you are entitled to your own opinion but not your own facts.

    Data is used to create the charts, they say what they say and that is what the blogger here, SATT, has found interesting enough to share with us.

    Read his archives. His predictions were right on the money.

    So I guess you have to decide if you want to read only blogs with stats that show the potential for further weakness in the market, blogs that hunt down the specific stable markets that you speak about or read them all.

    That's up to you. But this is still a free country, right?

    And were have you found the media only reporting the bad news anyway?

    None of that here in the good old U.S. of A. that I can see.

    !

    By Anonymous Anonymous, at 7:11 AM  

  • D. L.,
    Guess I should have checked out your blog before commenting on your comment here.

    Real Estate in Ft. Lauderdale, FL?

    Hum, interesting. Explains a lot.

    !

    By Anonymous Anonymous, at 7:15 AM  

  • @Anonymous - yes I have a blog in which I try to give advice to builders and developers. Some listen, some don't.

    The problem that I have with the press is that they sensationalize the bad news as it draws in readers.

    Yes, many markets plummeted from their artifical highs but that was no surprise to anyone who took the time to watch the data or listen to the experts. I had been predicting a substantial adjustment in the housing markets for several years as we were building more homes than could be supported by either employment growth or population growth and the prices were rising not due to actual "user" demand but from artificial demand from investors, speculators and flippers. Housing only has true value as derived from a user - someone who will live in the home.

    And most markets have hit bottom both on pricing and on number of sales and are working their way back slowly but surely. Detroit has fundamental structural challenges that need to be corrected prior to a housing recovery. It is a one industry state and that industry has "issues" but Ford is doing much better and even GM is showing improvement.

    South Florida will remain challenged longer than many markets due to the absolute stupidity of the condominium developers and converters who brought to market six times the number of units that had ever been been absorbed and at prices that made no sense but the single family market is on its way back. Las Vegas has similar challenges.

    But the great majority of the housing markets in the country are already stable or are on the way back and if the "shadow inventory" of potential foreclosures is not overwhelming, and, more importantly, we start to create some jobs, housing is looking much better than it has in years.

    By Blogger Daniel R. Levitan, at 7:36 AM  

  • D. L.,
    And I guess one of SATT's points is (above his charts that demo the actual data) how much of the apparent healing in some areas is a result of the gov't home-buyer incentive which is planned to end very soon.

    I find this blog 1. informative and 2. objective. If one can look at the archives going back to 2006 and find that more often than not the data and the evaluation of that data predicted the current state of the market, how can one find a sensible argument with his evaluation?

    The answer is that an objective reader can not.

    I, for one, choose to read blogs that may help me navigate the actual circumstance of the current R.E. environment.

    I own a lot of Real Estate and want the raw facts. Sugar coating reality will do me no good.

    !

    By Anonymous Anonymous, at 8:47 AM  

  • "Read his archives. His predictions were right on the money."

    You mean like the one on Case Shiller where he said we were going to see a "more momentous decline" right before prices started going up?

    By Anonymous Anonymous, at 9:33 AM  

  • Annoying gnat,
    You seem to have a hard time with the concept of time. Maybe you really don't understand how things work.

    It aint' done yet. That's the point. So ignore the POV of this blog, do it!

    Go ahead and buy, buy, buy!

    Then when the other shoe drops, the S* hits the fan, the bell dings, the loaf is fully baked, WHATEVER, see who had the better analysis of the actual data.

    Go ahead big guy, DO IT!

    Buy, buy, BUY!

    !

    By Anonymous Anonymous, at 3:43 PM  

  • Go ahead and buy, buy, buy!

    Thats it baby, dont answer the substance of my charge (just like SATT wont - notice how silent he remains), just keep spinning and flailing away!

    By Anonymous Anonymous, at 7:57 AM  

  • "Anon said...

    Go ahead and buy, buy, buy!

    Then when the other shoe drops, the S* hits the fan, the bell dings, the loaf is fully baked, WHATEVER, see who had the better analysis of the actual data."

    Anon, did you see where your hero, SATT bought the other day? If its ok for him to buy, why isnt it ok for others?

    Or perhaps you think SATT's area is "immune" to whatever other shoe to drop which you claim is still in the pipeline?

    By Anonymous Anonymous, at 11:09 AM  

  • Agreed - SATT wouldnt buy if he really thought a "more momentous decline" was in store.

    By Anonymous Anonymous, at 1:57 PM  

  • Twin annoying gnats,
    Here's an idea. Learn to think for yourself so that no matter what another thinks, predicts or hypothesizes you make the decision that is best for you.

    Obviously, since SATT spends much of his free time studying the economy in general and R.E. specifically, even with his opinion that the R.E. market is probably going to continue to decline, he made a quality of life decision and bought.

    Are you actually trying to buy on the last moment of the last day of current R.E. market decline?

    Good luck, looser. Because if so, that is almost certainly what you will be.

    A big fat loser.

    !

    By Anonymous Anonymous, at 8:50 PM  

  • Twin annoying gnats,
    Here's an idea. Learn to think for yourself so that no matter what another thinks, predicts or hypothesizes you make the decision that is best for you.

    Obviously, since SATT spends much of his free time studying the economy in general and R.E. specifically, even with his opinion that the R.E. market is probably going to continue to decline, he made a quality of life decision and bought.

    Are you actually trying to buy on the last moment of the last day of current R.E. market decline?

    Good luck, looser. Because if so, that is almost certainly what you will be.

    A big fat loser.

    !

    By Anonymous Anonymous, at 8:51 PM  

  • Twin annoying gnats,
    Here's an idea. Learn to think for yourself so that no matter what another thinks, predicts or hypothesizes you make the decision that is best for you.

    Obviously, since SATT spends much of his free time studying the economy in general and R.E. specifically, even with his opinion that the R.E. market is probably going to continue to decline, he made a quality of life decision and bought.

    Are you actually trying to buy on the last moment of the last day of current R.E. market decline?

    Good luck, looser. Because if so, that is almost certainly what you will be.

    A big fat loser.

    !

    By Anonymous Anonymous, at 8:52 PM  

  • "Are you actually trying to buy on the last moment of the last day of current R.E. market decline?

    Good luck, looser. Because if so, that is almost certainly what you will be."

    You are right. I guess I should be like SATT and buy Buy BUY!!!

    By Anonymous Anonymous, at 7:56 AM  

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    By Anonymous NC Houses For Sale, at 9:42 AM  

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    By Anonymous Real Estate Note, at 8:43 AM  

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    By Anonymous Charlotte, Ballantyne area, NC Homes For Sale, at 9:48 AM  

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