I don’t really spend much time talking about the home buying market. There’s plenty of folks who write well about that side of the business. I feel that renters and landlords are somewhat under-served, so I focus on them. However, the changes occurring in the Chicago residential market are going to affect everyone this year. It’s time that we have a little talk about what to expect if you are moving from renting to buying.
You’ve probably heard a lot over the past several years about the depressed housing market. If you’re renting, you may have thought you still had some time to take advantage of the lowest home prices and mortgage rates seen in decades. Guys, you’re running out of time. Prices are climbing, inventory is short, and rates are starting to move up again. While the prices aren’t likely to spike back up to 2006 levels any time soon, the bottom of the market has passed you by. (more…)
In keeping with the spirit of normal Chicago apartments, this will be the only color in the whole article.
"I thought my landlord had to repaint every X number of years?" I get this question all the time. Usually from tenants who are either a) looking for a reason to move, b) looking for a reason to sue their landlord, c) looking for a fight, d) looking for permission to repaint their apartment in a different color of their choice, or e) originally from other states where such things actually are required. The short answer for Chicago apartments is NO. Your landlord is not required to repaint.
It's an urban legend, guys. In fact, they're not allowed to enter your apartment for any reason unless you tell them something is broken, something is obviously broken like water overflowing into another apartment, or they're showing the apartment. However, like all urban legends it has its roots in the truth. (more…)
PC Operating System Market Share, March 2012
The Core of the Matter
With 31% of the smartphone market, 66% of the tablet market and 6.7% share of the very splintered and entrenched desktop market, 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. 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…)
This is not the time to be learning about your insurance limits.
I serve as property manager for my condo association. Lately our insurance for the property has gotten pretty expensive so I have been shopping for a new policy. I had the following interesting exchange with one of the insurance agents:
Me: Yes, I'm also a real estate blogger.
Agent: Oh wow! [Company name] doesn't let its sales agents have blogs, so could you please please do me a favor?
Agent: Can you tell your readers about actual cash value vs full replacement cost? Please?
So hey, here we go. (more…)
This is my new favorite entry EVER.
I've spent the past week explaining why it's so important to do serious comparison shopping and saving up before you apply for a loan. On Monday we investigated how you could save up to 35% over the life of your loan by working with discount points and down payments. On Wednesday I used a salad dressing analogy to explain APR and how it affects your bottom line. For today I've gone back to my nerdy coding roots and have made a pretty hefty calculator so you can play with the numbers yourself. (more…)
(This is the fourth and final part of a series that started with Part I: Carefully Taught, Part II: The Bad Guys are Winning, and Part III: The Long Road Back.)
Let's Get Ready to Rumble! (Or at least have a polite chat.)
If you've been following the Agoraphobia series you may be ready to start shopping actively. However, if you're the average American shopper you're going to be pushing back against a lot of training and momentum trying to convince you that negotiation is difficult, scary, futile, or a waste of time.
Negotiation is, at worst, a conversation with a stranger. But the American consumer has been treated for 150 years like a submissive partner in an abusive relationship. As is the case in many of these situations, learning to speak up for yourself can be difficult at first. So let's assemble a guidebook to help you get started.
Level One Negotiation - learning to talk & think for yourself:
Once you've been at level one for at least 3 months, you're ready to move on to level two.
(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. Roughly 10% of them are incarcerated. 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, or, sadly, just 1.7% of the national debt at this moment.)
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.
This is part II of a series that started with Confronting Agoraphobia, Part I: Carefully Taught.
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…)
Fear of the marketplace
"Let us never negotiate out of fear. But let us never fear to negotiate."
-- John F Kennedy
"In North America and Europe bargaining is restricted to expensive or one-of-a-kind items (automobiles, jewellery, art, real estate, trade sales of businesses) and informal sales settings such as flea markets and garage sales. In other regions of the world bargaining may be the norm even for small commercial transactions. In Indonesia and elsewhere in Asia where locals haggle for goods and services everywhere from street markets to hotels, haggling is a strong cultural tradition that even children learn from a young age."
-- Wikipedia, "Bargaining"
There are some places in the world where to get a bargain means that you've used your market savvy to nick some of the vendors' profit back for yourself. It's a win in the game. In America, getting a bargain generally means the vendor had decided to lower her list price on a certain item for a short period of time. There is a "win" involved, but it's more like winning at slots than winning at chess. You'd not believe it from looking at the crazed shoppers waiting out front of Wal-Mart on Christmas Eve, but American-style bargain hunting is a far more passive experience than it is elsewhere.
I have a hypothesis that Americans are afraid of haggling. It's a carefully taught agoraphobia - in the true translation of the term, "fear of the marketplace." It has a twofold basis. On one side, the dogma that only the most clever can successfully negotiate a deal. On the other, the forced separation between buyers and sellers. Transactions are automated and anonymized. The pace is quickened to limit a consumer's ability to research actual value.
This is a pretty major topic, so I'll be doing this as a multiple article series over the next couple of weeks. To give you an idea of where we're headed, I've provided this handy timeline.