Tag Archives: opinions

Safety and the Illusion Thereof

One of the most common questions among renters and buyers moving to new areas is whether or not those areas are “safe.” In fact, the majority of moves, be it between apartments, condos or houses, are within a very short distance. Safety and comfort levels are definitely a factor in this particular statistic – people stay within the area that they know. However, with rising prices in both the rental and purchase housing markets, many Chicagoans are faced with moving to new sections of the city where safety is an unknown factor. As for the folks moving from outside the city, it’s tough enough to understand the hundreds of distinct neighborhoods within the city limits, let alone to compare crime statistics to a reasonable extent.

Antique maps show monsters and dragons beyond the edges of known lands. This is coincidentally also the worldview of people who are moving to a new neighborhood.

Antique maps show monsters and dragons beyond the edges of known lands. This is coincidentally also the worldview of people who are moving to a new neighborhood.

As much as I’d like to reach every renter and buyer and explain to them how to statistically analyze crime risk in a given neighborhood, I can’t do so. Even if I did, my own rational explanations would be massively overwhelmed by the media hype surrounding Chicago’s high crime rates. Those crimes may be consolidated in areas far removed from your neighborhoods of choice. They may have little to no bearing on your daily life. However, they are prominent in the minds of any home seeker, and it’s tough to combat emotional conviction with reason. What you must fight against is not the idea that your particular area is a bad neighborhood, but that the entire city is a homogeneous, crime-ridden hole.

If you’re a landlord or home seller, it’s therefore far more critical to be aware of how safe your neighborhood feels. You can rattle off all the stats in the world, but if a potential buyer or renter feels wrong in your immediate vicinity they will not be interested in making an offer on your property. This is even more critical if you’re expecting to get an above-average price for your listing, since those tend to be taken only by folks from out of town who don’t know any better. Curb appeal in Chicago is not just about the visual appeal of your yard and building. It is also majorly affected by the aura of safety or danger projected by your block.

Familiarity Breeds Contentment

I’ve been living in Chicago for 15 years now, but I grew up in the suburbs of Connecticut and spent several summers mucking about in small New England towns. The last town where I worked before moving here was so small, the residents got offended if they saw you locking your car doors. Now, this doesn’t mean that I was a wide-eyed hick when I moved out here in the late 90′s, but it did take a bit before I found my “city legs.”

Lincoln, NH. My last "home" before moving to Chicago.

Lincoln, NH. My last temporary “home” before moving to Chicago.

Before I moved out here the worst sort of crime I encountered was a prank phone call or two. Since then I’ve had my car windows smashed in three times. Now, for Chicago these crimes are pretty benign, but the first time it happened to me it was still pretty shocking. The third time? I’d gotten used to it. I rolled my eyes, called up my mechanic (Speed Dial 6) and hauled out the vacuum.

As owners in Chicago we become inured to the level of criminal activity that surrounds us. The longer we stay here, the more difficult it becomes to see our neighborhoods through the eyes of a newcomer. Unfortunately, if you’re trying to market your home to a new resident that is exactly what you have to do.

Zeroing Out the Scales

For me, getting into a buyer or renter’s head often involves a day trip to the suburbs. I encourage prospective home sellers and landlords to do the same before they put their property on the market. There is not enough difference between Chicago neighborhoods to truly serve as a “control” in our safety experiment. You need to get out of the city completely – maybe even out of the county – and go spend a day walking in the shoes of someone from the outside. I don’t just mean a quick jaunt to Evanston, either. Get out beyond the reach of the El and walk around a residential neighborhood that has absolutely nothing in common with the city. The best time to do it is a weekday afternoon.

Observe everything while you’re out there. Notice how far the houses sit back from the street. Pay attention to the people walking around, the cars and where they park, the separation of commercial and residential areas. Observe what happens when a school lets out for the day. Spend some time walking around after the shops close.

"Honey, look! They still have front-in parking here! That's so cute!"

“Honey, look! They still have front-in parking here! That’s so cute!”

Once you’ve zeroed out your mental scales for what clean, wholesome livin’ is all about, it’s time to head back into the city and reassess your home turf.

I Spy With My Little Eye…

Upon returning from the city outskirts, it should become far more apparent what factors contribute to and detract from the feeling of safety in your own neighborhood. We’ve probably all had our moments in the city of turning down the wrong block and instantly knowing that we were unwelcome. However, if you’ve paid attention to the details in the suburbs you should be more able to pinpoint exactly what contributes to an illusion of safety.

Here are a few that I wrote down on my last trip back in from the hinterlands:

  • Claustrophobia. The distance from the sidewalk to the buildings (the “setback”) gets very shallow in some parts of Chicago. This can lead to a feeling of claustrophobia that can be off-putting for newcomers. The areas of the city that tend to feel “safer” also have deeper front lawns. Do buildings in your area crowd in close to pedestrians?
  • Gates and Grates. There are entire blocks where black iron fences line the street in front of the homes, and shops are secured with accordion grating. It’s a common enough sight in Chicago that locals tend to ignore it. To a newcomer, it can imply security problems and fear of trespassers.
This is probably not the "gated community" your prospective buyers and tenants have in mind.

This is probably not the “gated community” your prospective buyers and tenants have in mind. (Photo by therodabides on Flickr.)

  • Sounds. Listen to what’s going on, both during the day and at night. Do you hear lots of shouting? Traffic? Car alarms? How about friendly sounds, like the ice cream truck or the bus announcing streets as it drives along? Is it deathly quiet?
  • Interactions. Do the people walking past seem comfortable with your presence? Do they make eye contact or hurry past? Are there people just sitting around in their yards doing nothing? How about the local kids – what do they do after school? Are there parents and caretakers around? What about pets? Do you see a lot of people with small companion animals? Are there lots of strays? Do you see a lot of dogs that could be mistaken for guard dogs or fighting dogs?
  • Cars. What types of cars park near your house? Are they in good condition? Are there lots of cabs? How about old beater scrap metal trucks? Is there visible broken glass in the street left behind from break-ins? Any cars with the Denver boot, or piles of parking tickets?
  • Cameras. It isn’t tough to figure out that security cameras cameras in Chicago are a sure sign of a troubled neighborhood. Even without the obvious flashing blue lights, security cameras are a tipoff to newcomers that something has probably occurred to merit their installation.
  • Alleys. Newcomers won’t check, but Chicago residents know that our streets are like mullets – business up front, party in the back. Take a walk down your local alleys. Are they clean? Well-lit? Are the garages in good condition or are they covered in graffiti? How about the porches – are they well-maintained, or decrepit and covered in junk? Are the dumpsters tidy, or overflowing?
  • The Commute. The neighborhood around your house extends as far as the closest El station. Many newcomers will test the safety vibe of an area by making the walk from the train to their new prospective home. Alone. After dark. You should definitely do the same and make sure there’s nothing untoward to scare off a potential buyer or renter. Are the sidewalks in good condition? Are there panhandlers or large groups of loiterers hanging out anywhere along the way? Are there large stretches of empty stores or vacant lots?

These are only a few factors that contribute to my personal sense of safety in any given section of Chicago. I’m sure there are many others. Safety is a very relative thing, and I’ve lived here for a while now, so even with trips to the suburbs to freshen up my outsider eyes I know I’ve grown pretty blasé about the things that make Chicago feel like a city.

Assemble your own list of criteria and test it out by visiting a new section of the city. Do you feel safe there? Why? If not, why not? Which of your criteria are within your control to fix? Which ones do you just have to accept? Would you adjust your asking price accordingly because of them?

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Cook Eviction Stats Part 7: What does this mean for tenants?

I’ve spent the past 6 sections of this study focusing mostly on what the Cook County/Chicago eviction statistics mean for landlords. It’s time to focus a little on what they mean for renters. I’m not a lawyer, and I’m not going to tell you how to win your eviction case. There are far better resources than me out there for saving your bacon. This article is focusing on the numbers.

A lot of you have been involved in eviction cases.

7 out of every 100 apartments in Chicago will be the subjects of eviction cases each year. Given that apartments often house more than one person, this means if you’re a renter in Chicago, you’ve got quite a bit more than a 7% chance of winding up involved in an eviction suit.

This is what we're talking about here. It's undignified, it's obvious, and it's humiliating. And a lot of you have been through it before.

This is what we’re talking about here. It’s undignified, it’s obvious, and it’s humiliating. And a lot of you have been through it before.

By comparison, 8% of married Illinois residents wind up in divorce each year, according to the census bureau.[1] You probably know several people who have gotten divorced last year. This means that you may well know even more people who’ve been involved in an eviction case, although they’re probably not going to admit it to your face.

It costs a landlord quite a bit of time and money to file an eviction case. They’re not usually going to do it if a tenant hasn’t given them good reason to do so, and they’ve exhausted every other possible means of solving the problem. Eviction means they wind up with a vacancy on their hands, and usually one in worse condition than one where a tenant moves out of their own free will. However, if they’re gaining no income from a deadbeat tenant, it eventually becomes more cost effective for them to incur a short term vacancy.

There are a few basic things that a human being needs to survive. Food, water, air and shelter are the big ones. If you’re not earning enough money to remain in your apartment, there are plenty of steps you can take to get out of your lease before the court has to mandate that you do so. If a renter has allowed their shelter-related problems to spiral downward to the point of eviction, what does that say about their ability to prioritize?

This exists. It was mentioned in the New York Times. I don't even.

This exists. It was mentioned in the New York Times. What is this I don’t even….

Chances are good that you will get involved in partnerships with strangers at some point in the near future. It may be a business relationship, a roommate situation, or a dating scenario. Cook County makes it relatively easy for you to check if a person has been evicted before. Perhaps you should take a few minutes to for fact checking before you saddle yourself with a scrub.

You have slightly less than 40% chance of not getting evicted.

62.7% of filed eviction cases in Cook County wind up with the landlord getting the tenant thrown out of the apartment, with many of those cases tacking on an order to pay the back rent. It’s easy when looking at that percentage to envision the other 37.3% of cases involving renters proudly facing their landlords in court, delivering the smackdown of righteousness, and maybe getting their landlords slapped with fines for daring to drag everybody down to the 1st District courthouse.

This is not a picture of you in eviction court. Sorry.

This is not a picture of you in eviction court. Sorry.

I’m not saying that doesn’t happen sometimes.

However, those other cases could have had any of the following, less exciting conclusions:

  • The landlord and tenant settled out of court.
  • The tenant’s lease expired and/or they moved out before the court date.
  • The landlord accepted a partial payment of the balance due, and had their case thrown out.
  • The landlord forgot to show up for court.

Half of those causes are clerical errors, and will probably wind up in a re-filing of the same case at a later date. As for the other half? Well, the point of filing an eviction case is to get a tenant out of an apartment before the lease ends, and sometimes to force them to pay back rent. If those goals are accomplished in any other way, then the case doesn’t need to go all the way to its conclusion. I’d say less than 10% of the tenants who are taken to eviction court wind up “winning” their case at the point that they’re standing in front of the judge.

Even if you win your case, there are repercussions.

There’s been a recent trend with the weak economy where people just stop paying their rent or mortgage and wait for the axe to fall. Renters who are reading this series may be doing so with an eye towards this kind of strategic delinquency, hoping that the eviction proceedings will take long enough that things will turn around for them before the sheriff comes to call. Here’s the thing: your credit will recover in time from everything else you can do to it, but an eviction filing will follow you forever regardless of the verdict.

In all of this analysis, I’ve not really addressed one glaring issue: the fact that I could pull eviction statistics going back to 2004. In fact, if you visit the website of the Cook County Clerk of Court, you’ll find that you can search through online case records going back to at least 1991. In other words, some of those records are old enough to drink.

In order to find out about a low credit score, someone would need your permission and a lot of your personal data to pull your credit report. By contrast, if the state of public records access remains consistent, anyone and their brother can dig up that information without you knowing. That includes future potential roommates, landlords, business partners and employers. Yes, it’s possible for a researcher to see that your case was dismissed. But that’s because it’s possible for them to casually breeze through all of the details of your case.

Now, some of you will react to this with outrage at the courts for making the data public. However, the public records are available because the courts are paid for by the taxpayers, and we have a right to know how our money is being spent. If you want to avoid having the details of your eviction lawsuit made public, don’t get involved with one in the first place.

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  1. [1] US Census Bureau: Marital Events of Americans: 2009

Lingua Franca: Thinking About the Language of Apartment Leases

Do you remember the first time you read Shakespeare in school? For me it was in seventh grade. I’d heard a lot of hype about him up until that point, but nobody had warned me about the strange, antique form of English he used and how difficult it was to understand. I hacked through it, but for a kid who was used to whipping through a couple of novels a day it was a pretty chastening experience. To paraphrase “Star Trek,” it was English, but not as I knew it.

So here’s an interesting bit of trivia. If you threaten to sue someone in the process of working on a Wikipedia article, you’ll lose your editing privileges. The reasoning behind it stems from the “chilling effect” that legal threats have on other writers. Most folks are pretty scared of getting dragged into a courtroom, even if it’s just as a witness. It’s time consuming and the threat of going to jail or racking up massive fines is always present. TV shows like “Law and Order” have contributed to this idea that court is definitely a place to avoid.

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Beyond the CRLTO: Other Chicago Rental Laws

In the Chicago rental housing market the CRLTO (Chicago Residential Landlord-Tenant Ordinance) gets all the glory when it comes to laws. More and more landlords and tenants are aware of it, and this is probably for the best as the penalties for violations are quite steep. However, there are other laws that also pertain to rental housing in Chicago that should not be ignored. Here are some that you may not know about. There are certainly more laws that apply, but these are some of the most crucial.

Artistic interpretation of the Chicago code of laws governing rentals

Federal Laws

Lead Based Paint Disclosure. The law requiring the disclosure of lead based paint hazards to anyone buying or renting a home has been on the books for twenty years. If a property was built before 1978 the landlord must tell the tenant about any lead-based paint hazards that they know of before renting it out. They also must provide a copy of the EPA’s “Protect Your Family From Lead In Your Home” pamphlet. Read more about the law.

State Laws (more…)

Magic Words

Humans have a strange habit. They attempt to avoid the negative effects of powers that they do not understand by using words and symbols that they also do not understand.

Some are fictional.

 

Others are harmless gestures.

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Chicago Luxury Apartments Explained for the Rest of Us

Will we soon be seeing articles like this about Chicago?

A Peculiar Answer to a Housing Shortage

The apartment rental pundit blogs are buzzing lately about the future of the Chicago market. In 2011 the Depaul Institute of Housing Studies announced that Chicago would be short on affordable rentals for the next 20 years if we were to start building more stock right at that moment. This year ground has been broken and/or plans announced for the construction of thousands of new apartments in downtown Chicago . However, most of these are luxury skyscrapers. To the outside observer one would surmise that these developers have missed the point. Why would they build a rash of $2000/month 2 bedroom apartments when “affordable” is somewhere around half of that amount?

The answer lies in the availability of funds for projects of this nature. Banks have become far more stringent in lending to any potential homebuyer. For those looking to use borrowed funds to build large scale apartments the available funds are even scarcer. A construction loan large enough to fund the construction of affordable apartments would be due back in full after 5-7 years. While this would be theoretically possible if the units were sold off as condominiums, the “get rich slowly” model of business that accompanies a rental-oriented business model is focused on steady, ongoing cash flow, not immediate gains. A landlord renting out the units at $1000 per month would take far longer to pay off the construction loan than a developer who sold off the units at $200k each.

Unless a landlord has a standing line of credit or large amounts of cash on hand, building affordable apartments remains a pipe dream. The only major source of money to build apartments is coming from REITs, and they’re only interested in one thing – getting big cash flow coming in as quickly as possible. (more…)

If Homes were Marketed Like Apple Products

PC Operating System Market Share, March 2012

The Core of the Matter

With 31% of the smartphone market,[1] 66% of the tablet market[2] and 6.7% share of the very splintered and entrenched desktop market[3], Apple is a company that cannot be ignored. Among Generation Y, the Millennials and their younger followers the share is even higher. If you’re talking about real estate buyers, typically the more financially stable segment of the population, I’d posit that you’d see an even higher market share given to Apple.

Younger generations have avoided buying cars.[4]  The first major purchase they make will instead be a computer or smartphone. Technology is now their first introduction to installment payments for big ticket items. A computer is often the first item where a young consumer must buy with an eye towards maintenance costs and longevity. They may have to choose between a style leader something that’s less fashionable but more affordable. Basically, buying a computer is now the average Chicago consumer’s training for buying a house.

Apple has succeeded where the real estate industry has failed. They’ve convinced those cash-strapped younger consumers to pay a premium for equipment. (more…)

  1. [1] Zach Epstein, NPD: Apple was best-selling U.S. smartphone vendor by wide margin in Q2, August 23, 2012, BGR.com
  2. [2] AP, Worldwide market share for tablet systems a market dominated by Apple’s iPad, Sept 5 2012, Washingtonpost.com
  3. [3] Market share for browsers, operating systems and search engines, August 2012, Netmarketshare.com.
  4. [4] Brad Tuttle, Car Ownership Not Popular With Generation Y, May 2, 2012, Time.com

Stat check: Real Estate & The Sex Offense Registries

Megan’s Law means sex offender registry information is available to the public, but is anyone using it?

Do Sex Offenders Affect Home Values?

I may get in a lot of trouble for this entry. Gonna do it anyway. This has become crimes & misdemeanors week here at StrawStickStone so I might as well finish in the same vein.

So most of us know that there are websites that US Residents can use to look up whether or not a registered sex offender is living in the immediate vicinity. California’s “Megan’s Law” and similar legislation in the other 49 states require the information to be freely available to the public. The registries are maintained by the FBI, Department of Justice and local police forces. They’re pretty darn accurate.

Here’s one.

Here’s another.

If you’re in Illinois, here’s a third.

When the laws were first enacted, there was some pushback from homeowners who feared that publication of registered sex offenders’ addresses would have a severely negative effect on home values. I’ve been wondering for years if this has actually been the case. (more…)

Sometimes You Can’t Tell

A great investment! Instant cash flow! Buy it today! (Strong constitution required.)

Paris is for … Landlords?

1690 Paris Street is a 129 unit apartment complex on 111,115 square feet of land. It has 11 buildings containing roughly 12 units each. It has a sweet 3.9% vacancy rate, convenient location, and the units have, according to the sales flyer I have here, been maintained well over the years by a “hands on” owner.

It was listed on the market for two months the autumn of 2010 for $6.4 million. They tried again in early 2011 at the same price. It nets about $519k per year for an 8.06% CAP rate. I can’t tell if it changed hands or not.

It’s also probably it’s current owner’s worst nightmare come true.

1690 Paris Street, Aurora, Colorado. Home of James Holmes, who filled his apartment with so many booby traps and explosives that it took the bomb squad two days to clear it out with robots. An apartment building full of medical students who all made it their first choice in a rental search at some point over the past few years, thinking “I want to call this place home.” Now it’s a poster child for “worst case investment property scenario” making landlords across the country reach for the Xanax and hope that nobody in their buildings has done the same thing. (more…)

Confronting our Agoraphobia, Part III: The Long Road Back

(This is part 3 of a series that started with Confronting Agoraphobia, Part I: Carefully Taught and Confronting our Agoraphobia Part II: The Bad Guys are Winning.)

Where We’ve Been

Over the past two entries in this series we’ve reviewed how bargaining has gone from common to rare, and how shopping in America has become a passive experience. We’ve discussed how the evolution of marketing and discounting have consolidated the power of pricing entirely in the hands of the manufacturers. We’ve discussed the potential gain from choosing to haggle – a peak negotiator saved $2500 in a year. That means an average negotiator could save about $1500. What we haven’t discussed is how to work our way back to an even distribution of power.

Let me expand on that number a bit. $1500 saved per person, per year. 206 million adults in the United States, give or take a hundred thousand or so.[1] Roughly 10% of them are incarcerated.[2] If the rest of them saved $1500 per year, that would total $278.2 Billion saved. Annually. (That’s about 2x the annual revenue of Wal-Mart as reported to the NYSE,[3] or, sadly, just 1.7% of the national debt at this moment.[4])

Let’s have one more quote to get things moving forward:

“A recent Consumer Reports survey showed only 28 percent of Americans haggle over prices. A separate report from market research firm BIGresearch found 45.1 percent of adults haggle for things other than cars and homes.

However, the Consumer Reports survey found that consumers who haggle succeed as often as 83 percent of the time in landing a better bargain.”

– Yuki Noguchi, “Haggling picks up steam during recession,” NPR.org, August 2009.

 

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  1. [1] Wolfram alpha: What is the adult population of North America, July 2012.
  2. [2] NY Times: Adam Liptak, “1 in 100 U.S. Adults Behind Bars, New Study Says,” Feb 2008.
  3. [3] Ycharts: Wal-Mart Stores Revenue (WMT) as of July, 2012
  4. [4] US National Debt Clock, July 2012

Confronting our Agoraphobia, Part II: the Bad Guys are Winning

This is part II of a series that started with Confronting Agoraphobia, Part I: Carefully Taught.

Rollback Further

My folks have a good friend – we’ll call him Doug – who’s learned a thing or two about saving money. A wunderkind who made an early fortune in the evolution of microloans, he knows that small amounts add up. He’s also learned that to most businesses any sale is better than no sale. Doug haggles for everything. He will walk to the counter at Wal-mart with a $25 pack of t-shirts, toss it on the belt, and tell the clerk “I’ll give you $15.” He renovates kitchens for a living. He will go to furniture stores and open with a bid at 50% of list price.

You’d be amazed at how often he gets the discounts he requests.

Did you think you couldn’t haggle at Wal-mart? Have you ever tried? If you haven’t, you’re probably not alone, and you aren’t entirely to blame. It sounds like a fairy tale because you’ve been on the receiving end of a lengthy, multifaceted agenda to make you think bargaining is scary, difficult, time consuming and futile. Let’s take a look at how outside forces, both intentionally and accidentally, have contributed to the decline of negotiation in commerce. (more…)