Monthly Archives: May 2012


I guess we all get a little nervous when new people move to town.

So this is a practical shelter blog, which means that I'll be talking about affordable housing quite a bit going forward. People tend to get all up in arms about affordable housing and write me off as some kind of left wing crystal-gripping-mantra-chanting hippie when I use that term so I wanted to take a moment to talk about what it actually means.

"Affordable" does not mean low-income housing. "Affordable" does not mean Section 8 housing. It doesn't even mean "crappy low-rent vintage housing with leaking windows and creaky porches." When I talk about affordable housing - in particular, affordable rents - I am talking about housing that costs less than 30% of the average person's gross income.

So let's say that you're earning under $35k per year. That's a little above the median income for Chicago rental households. According to a 2011 survey by the Depaul Institute of Housing Studies and a recent study from early 2012 from the National Housing Conference, 75-80% of you guys are paying more than is considered affordable. 24% of you are paying more than half of your income in rent.  This does not make it cool or okay to do so. In fact, I'd go so far as to say that you guys are holding us back economically.  (more…)

10 Common First-Time Renter Mistakes

After I did first-time buyer mistakes for Monday it occurred to me that there's other real estate virgins out there who might need a few warnings. Tenants, for example, are often the newest of all to the housing market, and they do tend to make some common errors that mark them as newbies in the apartment hunt. Whether this is your first apartment or your twelfth, avoiding these missteps will save you a world of grief.

It may be pretty, but can you cook in it? (Photo:

1. Choosing the prettiest apartment. I did this back in 2003. Found a lovely vintage apartment on the lakefront with crown molding, dining room chandelier, lots of space, and a shiny new kitchen. It was cheap, the landlord would accept my pet bunny, I rented it. I failed to take into account that the only bathroom was inside the bedroom. It turned out to be a very impractical location for me as I had a lot of overnight houseguests at that point in my life. Much like when choosing a spouse, it's what's on the inside that counts more than the apartment's looks. Make sure the room layout and amenities suit your lifestyle.

Here's one quick benchmark for practicality. Each of us has a ritual that we have to do on a regular basis at home, or the rest of the day doesn't feel right. For me it's my morning coffee and breakfast - I will NOT leave the house for the first hour or so after I wake up. For others it will be going through the mail right after they get home from work, or taking a pause from gaming to refill your water glass from the fridge. Figure out what you ritual is. As you go through each apartment, play out how that ritual will work for you in the new space. If it doesn't work, nix the listing. (more…)

10 Common First-Time Buyer Mistakes

The real estate industry loves a first time buyer and will cut them a lot of slack to get them on the path to homeownership. Agents who work with first time buyers on a regular basis (like me) are accustomed to the errors that can crop up when you've never done this kind of thing before. However, there's a few mistakes that are easily avoided.

Price is only part of the puzzle.

1. Looking at only price. A recent buyer client found a sweet deal on a 3 bedroom in Skokie for $79.9k. She also looked at a 2 bedroom in Morton Grove for $100k. However, the monthly payment for the 3 bed was $1253 while the monthly payment on the 2 bed was $1021. This is with the same down payment, same mortgage rates. When looking at a condo you need to consider not just the purchase price but the property taxes and the assessments. When looking at a single family home, it's property taxes and insurance. When you're browsing online for homes, make sure you take the monthly expenses into account. (more…)

Chicago Real Estate Statistics: Cook County Evictions Part II

Possession isn't everything. Without a money judgment the eviction case is only half-won.

As the first part of a series investigating Chicago's rumored bias towards tenants in the residential rental sector, I did the general stats on eviction numbers in Chicago last week by means of a study of the First Municipal Circuit Court of Cook County's online dockets. I'm sure at least a few of you read that and are wondering what's up with the unpaid rent. Previously I only counted cases where possession was given back to the landlord. But these cases are brought to court when rent doesn't get paid for a long time. They're called Joint Action suits. The landlord wants not only possession, but the money back. If they win only possession, they've only won half of the case.

Now, Chicago judges are notorious for being tough to squeeze for rent judgments. Many landlords are encouraged to seek possession only, but if you're going to pay $237 in filing fees and take a day to head down to the Daley Center you probably want to get some cash out of it, too.

Today I'm following the money. If you're starting here, you may want to go back and read last week's entry (linked above) as I'm using the same methodology here. (more…)

Dear Piggy: How long have I got to live in my house if I stop paying my mortgage?

A squirrel recently beaned me in the head with a chocolate chip cookie. He was sitting on a run of conduit that runs above my back deck. It was about a 15 foot drop from the squirrel to the deck, and my head just happened to be in the middle. I shall believe this as it's more comfortable than believing that the little bugger was aiming for me. Regardless, he had led the way in developing a little squirrel/pigeon commune in the rafters. It was time to either invest in helmets or call pest control.

Once the pest control fellow was finished with evicting the local fauna, the conversation turned (as it often does in my line of work) to evictions of another type.

"My girlfriend just divorced from her former husband," went the story, "and she's currently still living in one of the four houses that the owned together. She's on the mortgage. He has opted to file for bankruptcy, stop paying his mortgages and wait for the lenders to foreclose on the homes. I'm worried for her - how long does she have before the sheriff puts her out on the street? Her court date with the bank is this week."

I naturally figured this question is probably in the minds of many people, so I figured I'd take it on in public.

First of all, this is called "strategic default" - deliberately choosing to lose your home through non-payment when you could actually afford to keep it - and it really pisses me off. (more…)

Why a Renter’s Realtor Might be Your Best Guide to the New Buyer’s Market

People bidding on a house at auction

Everybody loves a bargain, but not everyone can handle the pace.

So in case you hadn't heard, we're in the best Buyer's Market that's come along for the past generation. Rarely are mortgage rates and home prices so low at the same time. is currently showing 3.78% on a 30 year fixed mortgage. Just 5 years ago I paid 6.125% on my own loan, and that was with good credit and 40% down.

Residential homebuyers are starting to pick up on what investors have already known for a couple of years. Prices are about as low as they can go. Foreclosures, which list on average at about 60-70% of full market price, are hitting the market at a faster pace now that judicial roadblocks have been cleared up. Investors have been snapping up these cheap properties wherever they can, and then turning around and renting them out to take advantage of the best Landlord's market in a decade. Rumor has it that you can walk out and pick up entire floors worth of lakefront condominiums for under $100k each.

The pace is definitely picking up, but it's having an odd effect. I recently got into a bidding war on a foreclosure in Skokie with a couple of buyer clients. Even 12 months ago this would have been unthinkable. (more…)

Chicago Real Estate Statistics: Cook County Evictions

Photo of the Daley Center, Chicago Illinois

The Daley Center. Where Chicago landlords and tenants go to fight.

One of the most common complaints I hear from would-be investors is that Chicago is biased in favor of the tenant when it comes to evictions and enforcement of the laws.

Today we're starting what will probably be a very lengthy process of analyzing whether or not this myth has any teeth. Using the Cook County Clerk of Court's public dockets, I've (somewhat painstakingly) gone through case after case to give you an idea of the eviction stats. Cook County (and most jurisdictions) refer to these cases as "forcible entry and detainer" or "joint complaint" suits. They are handled at the civil level and can be filed either with an attorney's help or without, also known as pro se.

Total Eviction cases opened at the 1st Municipal (Chicago) Cook County Circuit Courthouse

In 2010: 30609 (122.4 per non-holiday weekday)
In 2011: 31074 (124.3 per non-holiday weekday)
From Jan 1 through May 10, 2012: 10422 (115.8 per non-holiday weekday)

Estimated total rental units in Chicago, 2011: 549328 (Source: [1])
Approximate Eviction rate: 5.6% per year

So those are some pretty impressive numbers, but let's look at the story of a couple of individual days. I've chosen the first days of February, March and April 2012 as decent snapshots. (more…)

What the !%@#$ are closing costs?

Confused stick figure and humorous breakdown of closing costs

It's only scary because it's vague.

Closing costs. The term can strike terror into the hearts of most first time buyers. Leave it to the real estate industry to come up with a special snowflake term for something the rest of the world understands as "sales tax." Admittedly there's more components involved than your standard skimmed bit off the top taken by the government every time you make a purchase. (Unless you live in New Hampshire, Delaware, Montana, Oregon or Alaska.) Legally we can't call it "sales tax." But for homeowners who are already making a big plunge here, it's probably easier to think of closing costs in the same manner as sales tax and plan accordingly.

In Chicago these days, provided you're taking out a loan of less than $417,000, for closing costs you'll want to plan on needing about 3-4% of purchase price, in addition to your down payment and your loan, in order to buy a piece of property. If your lender chooses, they may require you to pay "points" to decrease your mortgage interest rate - in this case, add one percentage point for each "point." Some lenders will charge less, some more, but on the average it will be between 3-4%. If you have reasonable credit and it looks like your lender is charging more than 4% on the good faith estimate, go find a new lender!

Despite the government requirement of reasonably accurate Good Faith Estimates from lenders, the actual cost to close will not be revealed to you until the day before you actually close, on a form called the HUD-1. Therefore, for the majority of the purchase process you will need to be carrying that number in your head.  Don't forget about it and add the amount to your down payment. Don't leave it tied up in non-liquid accounts until the last minute, either. Bits of it will be dribbling out from the day you get a signed contract to the day you receive the keys. (more…)

Hype Dodger: You Do Not Live in Chicago

Book cover of "How to Lie with Statistics" by Darrell Huff

It's down! It's up! It's down! It doesn't matter!

Any statistics that claim to speak for the entirety of Chicago are full of crap.

Any statistics that look at only the downtown area of Chicago are full of crap.

Any statistics stating that the Chicago real estate market is collectively going up, down, sideways or falling into the lake should be collectively and summarily ignored.

Big City, Itty Bitty Pieces

To paraphrase Douglas Adams for a moment, Chicago is big. You just won't believe how vastly, hugely, mind-bogglingly big it is. I mean, you may think it's a long commute to work in your current city, but that's just peanuts to Chicago.

As the wonderful "Manhattan Elsewhere" map shows, most of Manhattan would fit between Armitage and I-55. Chicago has three "sides," 77 community areas, 85 zip codes, and over 200 neighborhoods. Each neighborhood has its own downtown area, cultural identity, school districts, parking demands, peak traffic times, dominant gangs and rent/own ratios.

The rent vs buy scenario immediately surrounding North Park University will be very different from what you'll find right next to the top-rated Edison School for the Gifted just a few blocks away. Distressed properties will appear at higher rates in communities where language barriers made first-time buyers more susceptible to predatory lending practices. Or where dominant cultural traditions left families with single wage-earners more vulnerable to job loss. Or where aging populations forced estate sales in a down market. Areas full of Class B investment properties will not turn into areas full of Class A properties in any foreseeable future.

Besides, you're going to be living in your home for over 5 years, and look at what happened to Wicker Park condos from 1998 to 2002 (pre-bubble) - sales volume increased 2.7x over and the average sale price increased 60%. As a famous fictional local once said, "Life moves pretty fast." You, on the other hand, won't need to move for quite a while if you buy well.

If you were looking to buy property in any small town, suburb or even a smaller city, you'd probably be looking within an area with a population of about 6500 people, and maybe one or two zip codes. It stands to reason, then, that when shopping for property in Chicago that you focus your search and stats on areas of comparable size.

You keep using that word. I do not think it means what you think it means.

I recently had a conversation with a landlord who was despondent about the length of time it was taking him to rent his condo in West Rogers Park. "I thought this was the peak market!" he said. "Why is it taking so long?" I had to explain to him that yes, rents are up, market times are down, and number of units rented is way up. However, a "peak market" is a very subjective thing.

In West Rogers Park, average market times for rentals have gone from 82 days in 2009 to about 60 days in 2012. Just 2 miles away from my landlord friend in chic Andersonville, the average market time for an apartment has gone from 86 days in 2009 to 26 days in recent months. In both areas the rents have gone up, and in both areas the volume of rented units has more than doubled over the past 3 years. It's indeed a "peak market" in both places, but the term means something very different depending on whether you're north or south of Devon Avenue.

Looking at the buyers' side, let's tell the story of 3 condo buildings within 2 blocks of each other in Edgewater, in a buyer's market.

6166 Sheridan is a Class B high rise with 154 units. 7 of them, all 1 beds and 2 beds, have sold for an average price of $46,857 in the past year. The top dollar achieved was about $55k. Prices in the past 3 months have been the lowest of the year. Almost every sale was a short or a foreclosure.

Across the street, against the lake, is 6171 Sheridan, also a Class B high rise, with 312 units. 9 of these units, (studios, 1 beds and 2 beds) have sold in the past year. The average was $76,827 and the top dollar was about $126k. Prices have stayed pretty consistent throughout the entire year, but again, nearly everything was a short or a foreclosure.

Two blocks inland stands the new building at 1134 Granville, which I would also define as a Class B property due to its lack of amenities. It is also technically a high rise and of comparable density to 6166 Sheridan at 160 units, all 2 beds. 21 of these have sold in the past 12 months, at an average price of $185261. The lowest price in these units, all selling at full market prices, was $150k.

Two blocks, three buildings, three entirely different worlds. Sometimes you need to slice and dice your stats into bite-size pieces before they become useful.

The President and the Professors

Certain sections of Chicago have weathered the downturn quite well. I frequently need to explain to my renter clients that the high end condos for rent aren't to be found in the immediate vicinity of the Ravenswood Metra station, as the station has kept sale prices high enough that the owners have still been able to sell at decent prices instead of turning into landlords.

On the south side, President Obama and his neighbors in Kenwood have seen a 42% drop in average sales prices for single family homes, from $904,639 in 2006 to $523,602 over the past year. Neighboring Hyde Park, stabilized by the presence of the University of Chicago, has seen only a 19% price drop in the same span of time, from $841,746 to $680,737.

NorthCenter, packed with excellent schools, has seen the average sale price on a single family home dip only 5% since the market peak in 2006, from $851,159 to $808,023. Market times have increased by 18% but that equates to just 19 more days. Meanwhile, in the Irving Park neighborhood immediately to the west, sale prices on single family homes fallen off by 40%, from $494046 to $296916, and market times have increased by 70%, or 63 days, in the same timeframe.

The takeaway from today should be a small amount of awareness of how generic stats about Chicago and the real estate industry in general can be incredibly misleading. Between the news and the real estate media wonks, the public is besieged by marketers with known conflicts of interest trying to alternately push them towards panic or purchases by clever use of statistics. While stats have their place, extremely fine-grain knowledge of the city's neighborhoods is required before they can be successfully interpreted.

So, please: do not base your decision to buy a home on the citywide stats, and certainly don't base them on any national stats. Even my divisions of Downtown, Name Brand Neighborhoods and Generic Neighborhoods are meant only as surface benchmarks. After all, you're not buying in Chicago. You're buying in a very small section of Chicago with a cultural identity all its own. Please treat your new community with the respect it deserves.

Oh, and by the way, if you want me to get you more fine-grain stats for any piece I write, feel free to request them in the comments!

Cover image by Darrell Huff, courtesy of

Rent Bacon: March 2012

Chicago overall could not sustain the lofty year-over-year rent gains of February. Note that most of the gains shown here were in market time, not rent. (Corrected July 2012)

Details for March 2012

 Average RentAverage Market TimeTotal Rented
Zone 1
March 2011 $221356 days187
March 2012 $237536 days185
Zone 2
March 2011 $186254 days84
March 2012 $194238 days115
Zone 3
March 2011 $133454 days27
March 2012 $136162 days36

Stats reflect pricing and activity for 2 bedroom, 2 bathroom apartments rented by Realtors and listed in ConnectMLS.

What is Rent Bacon?

Rent Bacon is a quick visual summary of what’s happening in the rental market this month compared with this time last year. It breaks the city down into three zones. For each zone, it takes the change in average rent rates and the change in average market times as percentages, and then averages the two percentages together.

Zone 1 covers central Chicago from South Loop through Lincoln Park. (Actual coordinates: 2000 South to 2000 North, from Western Ave to the Lake).

Zone 2 covers the near North side of Chicago, including Lakeview, Bucktown, Uptown, Lincoln Square, Roscoe Village and NorthCenter. (Actual coordinates: 2000 North to 5200 North, from Western Ave to the Lake.)

Zone 3 covers the Far North and Near South side of Chicago, including Edgewater, Andersonville, Rogers Park, West Ridge, Chinatown, Bridgeport and Douglas. (Actual coordinates: 5200-7600 North plus 2000-4500 South, from Western Ave to the Lake.)

Want more Bacon? Here's last month's update.