WHEN: Thursday, September 27 at 7:00 PM
WHERE: Mundelein Center Auditorium- Loyola University
1020 W. Sheridan Road
Many thanks to Craig at The Broken Heart of Rogers Park for sharing this with us, since there is no mention of this important meeting on Alderman Joe Moore's official site today.
With Craig's permission, I'm taking the lazy road tonight, and cutting and pasting the announcement from his blog, as follows:
Dear Readers:
As local elected officials, we have an obligation to our constituents to provide them with a voice in Springfield. This year, we spoke with many local groups and organizations about their needs and concerns to help deliver improved services.
When crafted a new state budget, we worked to pass a responsible spending plan that serves those most in need, including persons with disabilities, immigrant and refugee families, the homeless and individuals suffering from AIDS. Further, we worked to provide needed funding for local schools, park districts, fire stations, municipalities, economic development and to assist our senior citizens.
This funding was secured in order to provide our most needy residents with the services they rely on. However, Gov. Rod Blagojevich disagreed. He not only cut these crucial local projects from the budget, but in doing so he insulted the integrity of many worthy community groups by labeling the funding as 'pork'. Now the ability of these organizations to provide needed programs to the families they serve has been severely damaged.We are hosting a community forum at 7pm on Thursday, Sept. 27, at the Mundelein Center Auditorium of Loyola University, 1020 W. Sheridan Road to hear from area community organizations and local governments about how the governor's harmful budget cuts may affect their operations and ability to provide services.
We encourage anyone who is concerned about the loss of these needed projects to attend this hearing. It is important that we build the necessary support for an override of the governor's vetoes, and your attendance at this forum can help build the necessary momentum. We look forward to seeing you there.
STATE REPS:
GREG HARRIS (13TH)
TONI BERRIOS (39TH)
RICH BRADLEY (40TH)
JOHN DaMAMICO (15TH)
JOHN FRITCHEY (11TH)
SARA FEIGENHOLTZ (12TH)
LOU LANG (16TH)
JOSEPH LYONS (19TH)&
HARRY OSTERMAN (14TH)
Now, this is what I call Transparancy in Government. Here we are, two days in front of the most important community meeting of the year, and none of our elected officials, least of all our 49th Ward AlderBeast, sees fit to put an announcement on his or her official site, or send e-mail notices, or in any other manner inform citizens of this event so that they can mark their calendars and make plans. No doubt notice of this meeting will appear tomorrow or the day of the event itself, on Moore's site and those of other officials, so they can claimed they served notice of the event while making sure that short enough notice was given that many busy citizens have made other plans that cannot be postponed, and that attendance at the meeting will therefore be very minimal.
I unfortunately cannot attend, as I have a business event I must attend and had already arranged, so I hope another blogger attends and reports on the event. I also hope many citizens attend and make themselves heard at this event.
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Tuesday, September 25, 2007
Monday, September 24, 2007
Edgewater Beach Neighbors Association Meeting
The Edgewater Beach Neighbors Association will meet tomorrow, Tuesday, at 7:00 PM, at the Edgewater Presbysterian Church, 1020 W. Bryn Mawr.
Matters to be discussed include:
* Proposal for development at St. Andrew's Greek Orthodox Church, at Sheridan &
Hollywood
* Nomination of Officers
* Foster Avenue Beautification
Renters and homeowners are welcome to join in all monthly meetings.
More information is available at: http://groups.yahoo.com/group/Edgewater_Beach_Neighbors
Matters to be discussed include:
* Proposal for development at St. Andrew's Greek Orthodox Church, at Sheridan &
Hollywood
* Nomination of Officers
* Foster Avenue Beautification
Renters and homeowners are welcome to join in all monthly meetings.
More information is available at: http://groups.yahoo.com/group/Edgewater_Beach_Neighbors
Friday, September 21, 2007
Housing Horror of the Week: Lakeview Highrise Evacuated Because of Asbestos
This week, I'm starting a new feature called Housing Horror of the Week, to cover egregious abuses of homebuyers and renters by sleazy, unscrupulous developers and landlords; and insensitive, ham-fisted government officials.
This week's horror is yet another recent condo conversion, at 2930 N. Sheridan Road in Lakeview. The mostly-vacated building was still being renovated when a worker disturbed some asbestos pipe insulation, necessitating the immediate evacuation of the building's remaining residents, including new condo buyers who had just recently moved in.
My problem with the evacuation at this building was not the fact that it was done, which was only appropriate and necessary, but with the way it was conducted. Residents were given very short notice, apparantly less than 24 hours, to gather what personal effects they could and clear out. No assistance, such as help locating a place to sleep on such short notice, was offered, and the residents were evicted so quickly most of them did not have time to gather clothing and toiletries sufficient for an overnight stay elsewhere, let alone a month.
I'll be bringing more Housing Horror stories as they emerge and I can verify the story. This one appeared in the Chicago Tribune (title link)
This week's horror is yet another recent condo conversion, at 2930 N. Sheridan Road in Lakeview. The mostly-vacated building was still being renovated when a worker disturbed some asbestos pipe insulation, necessitating the immediate evacuation of the building's remaining residents, including new condo buyers who had just recently moved in.
My problem with the evacuation at this building was not the fact that it was done, which was only appropriate and necessary, but with the way it was conducted. Residents were given very short notice, apparantly less than 24 hours, to gather what personal effects they could and clear out. No assistance, such as help locating a place to sleep on such short notice, was offered, and the residents were evicted so quickly most of them did not have time to gather clothing and toiletries sufficient for an overnight stay elsewhere, let alone a month.
I'll be bringing more Housing Horror stories as they emerge and I can verify the story. This one appeared in the Chicago Tribune (title link)
Thursday, August 23, 2007
Proposed Bailout for Mortgagees-Will Middle Class Welfare Program Collapse Us Financially?
The homewner bailout proposed by Senators Dodd and Clinton, and seconded by Sen. Obama and other pols eager to pander to the middle-class homeowner vote, got an additional boost from PIMPCO founder Bill Gross today, who appeared on CNBC to appeal for a bailout for beleagured home-debtors confronting foreclosure.
Additionally, here in Chicago, Mayor Daley is seeking ways to people who are upside-down on their mortgages stay in homes they obviously couldn't afford to begin with.
The bailout advocates are using emotionally loaded language to sell the public on the idea, usually referring to the poor homeowners who will be rendered "homeless" by foreclosure.
Aside from the dubious morality of creating an entitlement program for people who were greedy, deluded, or careless enough to borrow money they knew or should have known they couldn't repay, there is the even more doubtful quest to rescue the enterprises all the way up the chain of greed, delusion, and dishonesty that made it possible for so many underqualified borrowers to assume so many over-written loans. The links in the chain are the developers who are now seeing their construction loans foreclosed, the lenders who approved loans to people they knew were borrowing way beyond their means to pay, the hedgefunds and bond funds who bought the bundles of loans, the rating agencies such as Moody's and Fitches who assigned AAA rating to paper they knew or should have known was junk, and the quasi-government agencies such as Fannie Mae and Freddie Mac, who stood ready to absorb the crappy loans as fast as the mortgage boiler rooms could generate them.
Many people made massive fortunes from the speculative hysteria of the past five years. It paid for $40 MM mansions with 3 swimming pools and heated 10-car garages, paid for by the $100MM bonuses paid to top hedge fund managers and CEOs like Angelo Mozilo at Countrywide, as well as enabling a few million severely math-challenged consumers to live far beyond their means for a few heady years.
If a bailout is engineered, will people like Mozilo be required to fund it? Seems only fair, given that these guys and a few hundred other head honchos of mortgage providers, banks, debt traders, and fund managers were the chief beneficiaries of financial lunacy of the past few years, and the trillions of dollars of imaginary money that the Fed sent sloshing through the economy to fund it.
However, we know that will not happen. What we know is that this is one more situation where the profits are privatized while the costs are socialized, as the taxpayers are once more required to step in, because of the danger the bursting credit bubble presents to the economy.
The people who will help keep homedebtors whole and bail them out of the situations they created for themselves, and will keep people like Mozilo in their mega-mansions, will be the rest of us who did not borrow over our heads, including homeowners who live within their means and neither bought more house than they could afford nor used their houses as ATM machines to fund their expensive cars and foreign travel and outdoor kitchens. Another group who will help the poor, defenseless "homeowners" stay in their overpriced homes will be renters who sat on the curb and didn't chase the car , but waited patiently until they could either afford to buy on decent terms or until prices adjusted back to their proper level. These people will wait that much longer for a chance at membership in the "Ownership Society", while their taxes are jacked to rescue the feckless, the dishonest, and the delusional.
Worse, our national deficit will balloon to unsupportable levels. Given that the misguided and failing war effort has already brought us to the brink of insolvancy, what will four or five trillion dollars worth of bad mortgages accomplish?
It's a choice between bad and catostraphic. If we let a couple of million more homeowners go to foreclosure, the economic consequences will be bad, face it. 40,000 jobs related to the mortgage industry have been lost so far, with many thousands more in related financial to follow, in addition to those in other industries dependent upon the housing market. Consumers will no longer be able to tap house equity because they will no longer have any. House prices will trend steeply lower. There could be a deep recession while the bad debt works itself out and the housing and financial markets regain traction.
However, a federal bailout could collapse the entire country. As it is, we cannot afford to maintain and replace critical infrastructure, or properly fund Social Security. At this time, there is an estimated gap of $63 Trillion* between projected tax receipts and future expenditures; a recipe for financial collapse with everything that follows it: loss of credibility in world financial markets with attendant inability to attract foreign investment; inability to fund day to day operations of the government necessary to maintain national security, let alone critical infrastructure and services; and the bankrupting of an increasingly impoverished population.
If our legislators and policymakers can't grasp the economic implications of a bailout, they should take the temperature of the electorate. Most people are vehemently opposed to the bailout because of the raw injustice of it, which is something the Democratic candidates Clinton and Obama should think about, since notions of fairness and justice don't seem to weigh with them.
A petition against the bailout,Tax Payers Against a Wall Street and Mortgage Bailout, was generated by a man named Thomas Roach. If you are opposed to this new welfare entitlement, you are invited to sign.
* "Drifting Towards Bankruptcy", by Laurance J. Kotlikoff, The Phladelphia Inquirer, October 22, 2006. (Link would not install.)
Additionally, here in Chicago, Mayor Daley is seeking ways to people who are upside-down on their mortgages stay in homes they obviously couldn't afford to begin with.
The bailout advocates are using emotionally loaded language to sell the public on the idea, usually referring to the poor homeowners who will be rendered "homeless" by foreclosure.
Aside from the dubious morality of creating an entitlement program for people who were greedy, deluded, or careless enough to borrow money they knew or should have known they couldn't repay, there is the even more doubtful quest to rescue the enterprises all the way up the chain of greed, delusion, and dishonesty that made it possible for so many underqualified borrowers to assume so many over-written loans. The links in the chain are the developers who are now seeing their construction loans foreclosed, the lenders who approved loans to people they knew were borrowing way beyond their means to pay, the hedgefunds and bond funds who bought the bundles of loans, the rating agencies such as Moody's and Fitches who assigned AAA rating to paper they knew or should have known was junk, and the quasi-government agencies such as Fannie Mae and Freddie Mac, who stood ready to absorb the crappy loans as fast as the mortgage boiler rooms could generate them.
Many people made massive fortunes from the speculative hysteria of the past five years. It paid for $40 MM mansions with 3 swimming pools and heated 10-car garages, paid for by the $100MM bonuses paid to top hedge fund managers and CEOs like Angelo Mozilo at Countrywide, as well as enabling a few million severely math-challenged consumers to live far beyond their means for a few heady years.
If a bailout is engineered, will people like Mozilo be required to fund it? Seems only fair, given that these guys and a few hundred other head honchos of mortgage providers, banks, debt traders, and fund managers were the chief beneficiaries of financial lunacy of the past few years, and the trillions of dollars of imaginary money that the Fed sent sloshing through the economy to fund it.
However, we know that will not happen. What we know is that this is one more situation where the profits are privatized while the costs are socialized, as the taxpayers are once more required to step in, because of the danger the bursting credit bubble presents to the economy.
The people who will help keep homedebtors whole and bail them out of the situations they created for themselves, and will keep people like Mozilo in their mega-mansions, will be the rest of us who did not borrow over our heads, including homeowners who live within their means and neither bought more house than they could afford nor used their houses as ATM machines to fund their expensive cars and foreign travel and outdoor kitchens. Another group who will help the poor, defenseless "homeowners" stay in their overpriced homes will be renters who sat on the curb and didn't chase the car , but waited patiently until they could either afford to buy on decent terms or until prices adjusted back to their proper level. These people will wait that much longer for a chance at membership in the "Ownership Society", while their taxes are jacked to rescue the feckless, the dishonest, and the delusional.
Worse, our national deficit will balloon to unsupportable levels. Given that the misguided and failing war effort has already brought us to the brink of insolvancy, what will four or five trillion dollars worth of bad mortgages accomplish?
It's a choice between bad and catostraphic. If we let a couple of million more homeowners go to foreclosure, the economic consequences will be bad, face it. 40,000 jobs related to the mortgage industry have been lost so far, with many thousands more in related financial to follow, in addition to those in other industries dependent upon the housing market. Consumers will no longer be able to tap house equity because they will no longer have any. House prices will trend steeply lower. There could be a deep recession while the bad debt works itself out and the housing and financial markets regain traction.
However, a federal bailout could collapse the entire country. As it is, we cannot afford to maintain and replace critical infrastructure, or properly fund Social Security. At this time, there is an estimated gap of $63 Trillion* between projected tax receipts and future expenditures; a recipe for financial collapse with everything that follows it: loss of credibility in world financial markets with attendant inability to attract foreign investment; inability to fund day to day operations of the government necessary to maintain national security, let alone critical infrastructure and services; and the bankrupting of an increasingly impoverished population.
If our legislators and policymakers can't grasp the economic implications of a bailout, they should take the temperature of the electorate. Most people are vehemently opposed to the bailout because of the raw injustice of it, which is something the Democratic candidates Clinton and Obama should think about, since notions of fairness and justice don't seem to weigh with them.
A petition against the bailout,Tax Payers Against a Wall Street and Mortgage Bailout, was generated by a man named Thomas Roach. If you are opposed to this new welfare entitlement, you are invited to sign.
* "Drifting Towards Bankruptcy", by Laurance J. Kotlikoff, The Phladelphia Inquirer, October 22, 2006. (Link would not install.)
Saturday, August 18, 2007
Border's May Close Uptown and Lakeview Stores
Those hoping for a Border's store for Howard St. or any other Rogers Park location may now put that dream to rest, possibly for good.
I don't know how I missed the announcement in a March, 2007 issue of Crain's Chicago Business that the company is seeking to sublet four locations along the lakefront, but just read it in a recent post in Hyde Park Progress. Searching a little further, I found a few more articles, stating that the stores to be closed will be North & Clybourn; Diversey & Broadway; Broadway in Uptown; and Hyde Park.
Could it be that the failure to attract chains like Border's to Rogers Park may have a cause extraneous to the neighborhood and its well-publicized problems? My personal take is that there is a vast oversupply of redundant retail already, thanks to massive public subsidies for large-scale retail development, in combination with the growth of internet commerce. I have always wondered who supported all the repetitive shopping centers and strip malls, and it looks increasingly like the local taxpayers have been footing the bill for about 60% of the shopping malls and big-box power centers that have proliferated over the past 30 years.
I personally plead guilty to contributing to the internet shopping trend, as I buy books from Amazon.com when I can't get them from the public library. I feel guilty about this, because I enjoy loitering in the Uptown Border's store and so buy as many gifts there as I can, along with day planners and art books. However, browsers who buy the occasional art book or latte don't support a lavish space like this, and Border's is understandably not interested in functioning as a public library.
I have a feeling that we will witness massive consolidation and shrinkage of large-scale retail over the next twenty years, since there is so much more of it than is justified by consumer spending alone. Now that local political leaders are beginning to realize that throwing taxpayers money at unprofitable businesses, such as shopping malls to replace others a mile down the road, perhaps the frantic race to the bottom - that of seeing who can throw the most taxpayer's money at the largest number of big corporations who then move on in three years in search of their next $100MM "gimme"- will cease, and small entrepreneurs will find it rewarding to open small, specialized stores that form the fine-grained retail districts that give a neighborhood character and charm, and also give it a committed entrepreneurial class whose members are motivated by the desire to build homes and businesses in a neighborhood they love and care about, and to participate in a business that interests them, rather than a class of Corporate Welfare recipients who will move out and leave behind a vacant, useless building when some other community dangles a bigger carrot in front of their noses.
So maybe, down the road, we might get an Unabridged Books or Transitions instead, or a place founded and operated with love and commitment by a local citizen.
I don't know how I missed the announcement in a March, 2007 issue of Crain's Chicago Business that the company is seeking to sublet four locations along the lakefront, but just read it in a recent post in Hyde Park Progress. Searching a little further, I found a few more articles, stating that the stores to be closed will be North & Clybourn; Diversey & Broadway; Broadway in Uptown; and Hyde Park.
Could it be that the failure to attract chains like Border's to Rogers Park may have a cause extraneous to the neighborhood and its well-publicized problems? My personal take is that there is a vast oversupply of redundant retail already, thanks to massive public subsidies for large-scale retail development, in combination with the growth of internet commerce. I have always wondered who supported all the repetitive shopping centers and strip malls, and it looks increasingly like the local taxpayers have been footing the bill for about 60% of the shopping malls and big-box power centers that have proliferated over the past 30 years.
I personally plead guilty to contributing to the internet shopping trend, as I buy books from Amazon.com when I can't get them from the public library. I feel guilty about this, because I enjoy loitering in the Uptown Border's store and so buy as many gifts there as I can, along with day planners and art books. However, browsers who buy the occasional art book or latte don't support a lavish space like this, and Border's is understandably not interested in functioning as a public library.
I have a feeling that we will witness massive consolidation and shrinkage of large-scale retail over the next twenty years, since there is so much more of it than is justified by consumer spending alone. Now that local political leaders are beginning to realize that throwing taxpayers money at unprofitable businesses, such as shopping malls to replace others a mile down the road, perhaps the frantic race to the bottom - that of seeing who can throw the most taxpayer's money at the largest number of big corporations who then move on in three years in search of their next $100MM "gimme"- will cease, and small entrepreneurs will find it rewarding to open small, specialized stores that form the fine-grained retail districts that give a neighborhood character and charm, and also give it a committed entrepreneurial class whose members are motivated by the desire to build homes and businesses in a neighborhood they love and care about, and to participate in a business that interests them, rather than a class of Corporate Welfare recipients who will move out and leave behind a vacant, useless building when some other community dangles a bigger carrot in front of their noses.
So maybe, down the road, we might get an Unabridged Books or Transitions instead, or a place founded and operated with love and commitment by a local citizen.
Thursday, August 16, 2007
An Atrocity Exhibition
Pictured above are some recently developed condo projects in North Coast neighborhoods, selected for their rampant ugliness and complete disrespect for their neighborhood context, for historical correctness, and most of all, for the contempt their designers seem to have for any concept of beauty or grace. Pretty has become almost a pejorative among academic architects. It's almost as though the architects wanted to make these developments as ugly and offensive as possible, and their motives are the same as any graffitti "artist" defacing the city with gang scrawls and wild-style block letters: they are offended by beauty and style because they are incapable of producing it, and can only "make a statement" by producing eyesores.
These, along with thousands of cookie-cutter 6- or- 8 unit Urban Generic condos, sadly botched rehabs,and new buildings of extraordinarily shoddy construction, are the visual, tangible remains of the rampage of greed, and imprudent borrowing and lending,that was the housing bubble of the early 21st Century. They, along with the collapsed hedge funds and the millions of foreclosures and ruined credit ratings, are the legacy of the greatest binge of financial lunacy in the history of the world, and one that our heirs and assigns will be stuck with for many long years after we've recovered financially and gone on to other obsessions.
In the first photo, is an Uptown townhouse development, a block of boxy, featureless, common-wall townhouses on Ainslee that have the air of a military barracks. The windows are small, ugly , and cheap, and the wall facing Winthrop is nearly blank. The best thing you could do with these places is to plant vines that will, in time, cover the places in their entirity.
Next is of a gut-rehab condo at the corner of Winthrop and Thorndale. The building, while never beautiful, was at least a respectable, though stodgy, vaguely Prairie-styled structure, that the developer rendered hideous by the addition of historically incorrect modern windows, in glaring white frames no less, along with "mod" pipe railings on the inset terraces on the Thorndale side, and new, glaringly inappropriate balconies and sliding glass doors on the Winthrop elevation. What is it with the sliding glass doors, anyway? Why are these ugly, graceless renmants of the 60s being slapped onto classically-styled buildings all over town? Wouldn't French doors be more in keeping with traditional styles of architecture? Why is it so difficult to respect the architecture of the structure, and to select fittings and appointments that are in keeping with it?
Then, we have another barracks-like townhouse complex on Ainslee. It's hard to believe that this is middle-class housing costing nearly $400,000 a unit. All the mature trees were cut down to facilitate construction, and it will take many more years for the young trees now growing there to veil the naked, scabid ugliness of the barren complex with its tiny, badly-placed windows and the gaping garage doors that lend the street the look of a storage facility.The screaming yellow Hummer in one drive highlights the military ambiance, in addition to making it painfully obvious that the driveways are too short, and so, possibly, is the garage. Could the driveways and garage entries have been placed in the back of the complex instead of in front? Somehow the streetscape looks just as blighted as it did in the days when this area was truly a slum. Note to owners: get the vines started.
On to Sheridan and Broadway, we consider one of the area's great lost opportunities. A beautiful and dignified old church used to occupy this triangular site, and it is one of the greatest building sites in the neighborhood. However, instead of a beautiful, well-proportioned building of striking design, what we got here was a hodgepodge of modern with a few traditional doodads pasted to it, built with cheap, ugly bricks and punctuated by small, ugly windows and large balconies cluttered with owner's possessions. The contrast between this stupid, graceless building and the otherwise beautiful Sheridan Road streetscape is ugly-it's like seeing a trash dumpster standing in a lush garden.
Next, we have Catalpa Gardens, a double-tower high rise complex sheathed completely in cinderblock painted in garish primary colors. Why do places have the word "Gardens" in their name when the place is more reminiscent of a warehouse or parking garage than a place of living, growing things? I thought that the city was not permitting cinderblock to be used on the facades of new buildings any more, but I guess the architects were able to sell the local zoning and planning board on them as long as they painted them in "playful" colors, to look like a couple of gigantic children's building blocks. This building should have been a legal impossibility, but here it is, and it's going to be blighting the Edgewater skyline for at least a century to come.
Lastly, we have a formerly lovely 20s vintage courtyard in the 1600 block of W. Lunt,that has been destroyed by an atrociously tasteless rehab. This building was a beauty, with beautiful brickwork and a terra cotta roof, and the fine proportions and air of elegance typical of courtyards of this vintage. Rogers Park has always been famous for the beauty of its courtyard buildings; no other neighborhood or city has such a collection of really beautiful, well-built, or varied buildings of this type. However, the hyper-development of the past few years has resulted in the degradation of some of the neighborhood's most beautiful buildings. Here, the facade has been defaced by ugly modern windows in the same glare white used on the developer's other de-habilitated developments, and by the addition of balconies and sliding glass doors.
This is only a small sampling of the ugly, inappropriate, misconceived developments that went up all over Chicago during the Great Real Estate Bezzle. Additionally, thousands of merely humdrum structures were built, and a few truly excellent buildings, happily.
Why has most of the stuff built since World War II been so overwhelmingly ugly and graceless? And why can't a rehab of a beautiful old building be done without destroying the beauty of the place and turning large, comfortable old apartments with exquisite millwork and beautiful, classicly proportioned rooms into ugly, stacked tract houses?
I would ascribe it to the cult of the Bauhaus, with its utilitarian, machine aesthetic that dovetailed so well with the desire of builders to cut costs and deliver the cheapest, mingiest construction they can get by with, who are further enabled in the endeavor by acquiescent buyers who long ago resigned themselves to the commonplace ugliness of most modern architecture, figuring that it's just how things are done these days and what can you do about it? There is also the idea that anything "new" or "cutting edge" is intrinsically superior, which is a very commonplace notion in an era of constant innovation and instant obsolescence.
There is nothing that dates faster that newness for the sake of newness, and the trendier and more "cutting edge" something is now, the more sadly outdated it will be just a few years down the road. You can't help but think of all the short-lived design fads of the twentieth century and of all the landfills stuffed with Bakelight and avacodo appliances, and every whacky youth fad of the past 80 years, when you look at much modern architecture. But a bad building is going to be with us a lot longer than last year's hot cellphone, and cost a lot more to replace, so you can't help but wonder what the landscape will look like 50 years hence, when we might well be a much poorer society than we are now, and will no longer have the money to replace the ugly, rapidly deteriorating garbage we've spent 50 years filling it with.
Saturday, July 28, 2007
The Revenge of the Bitter Renters
.....and the return of affordable housing.
Before the late, great real estate boom occurred, I had always believed that the unfettered operation of free markets was the solution to supplying a large and diverse population with its needs and that it would always make the fine-tuned adjustments necessary for buyers and sellers of goods, services, whatever they happened to be, to come together in a way that would satisfy most reasonable needs and desires.
However, my simple faith was sorely tested by the fantastic inflation in housing prices since 2001, never mind that the Fed- driven speculative rampage of the past few years was not the result of "free enterprise", but was the creation of Dr. Greedscam and his accomplices at Fannie Mae and Freddie Mac, the quasi-government agencies that buy home loans in the secondary market, and that kept E-Z money sloshing through the housing market by purchasing millions of high-risk home loans made to unqualified buyers for amounts of money they could not possibly pay back on their incomes.
Well, the market works in strange ways but the Law of Supply and Demand never rests. No amount of Fed finagling and manipulation and industry happy talk will suffice to prop up this massively over-inflated housing market in the face of rapidly tightening credit, cratering sales, record foreclosures, and massive unsold inventory.
The summer selling season is almost over, and it looks it never really ever happened. The buyers are not coming. They either bought at or close to the peak of prices, and are too far underwater on their 80/20 I.O. teaser loans that are now resetting, or they were sidelined by the rapidly escalating prices, and are now confronting a very high bar for first-time home buyers and rapidly tightening credit. Looks like credit is getting so tight that once again, as in the distant past, borrowers will have to prove that they have the ability to pay their mortgages and they might even have to have a down payment.
Imagine that.
It just plain looks as though the supply of Greater Fools has quite dried up, and there aren’t any left to soak up the substantial glut of condos and houses now languishing on the local market. The greedy, the gullible, and the deluded have all bought, using "creative" financing like that referenced above, and are now sitting several feet underwater and confronting the reset of their mortgages, for over one trillion dollars’ worth of mortgages will be resetting in the coming year, half of it by the end of 2007. A trillion dollars’ more in adjustable-rate notes will reset in 2008-2009, which is why many analysts are now calling the bottom of the tanking market in 2009, instead of this year or 2008 as originally projected.
Meanwhile, sales for June dropped 19%* in the Chicago area, as median prices have risen slightly, indicating that the first-time buyers have been blasted out of the water by the prices of modest dwellings and only more affluent buyers remain. Other signs of distress are appearing, such as an elevated rate of suspicious fires in unsold houses in newly-built suburban subdivisions, and most of all, the highest number of foreclosures ever recorded.
And at last the prices are beginning to drop. A couple of weeks ago, I went to view a "soft" condo conversion in the Edgewater neighborhood, and the prices for beautiful, spacious vintage units seemed like a gift compared to the prices of 2005. New mid-rise buildings in Uptown, on Sheridan Road, are 75% vacant after a year on the market. The Sheridan Grande, at 4848 N. Sheridan, appears mostly unoccupied. 4701 N. Sheridan, another newly-constructed mid-rise condo building, is, for some strange reason, no longer decorated with a sign proclaiming 80% SOLD. Or was it 70%? I forget exactly, but the sign disappeared a few months ago.
So at last the "bitter renters", as we who were sidelined by the stratospheric prices, were called, might have a shot at buying nice places at prices reasonably related to their incomes and to local rentals, with sensible, honest fixed-rate mortgages. Maybe I’m feeling a touch of schadenfreude, , but it really, really feels good to see so many attractive condos suddenly within my reach that seemed hopelessly lost to me just two years ago. In fact, the challenge now is check your impulse to leap at the first substantial price drop, because current trends and conditions indicate that you may not be getting a bargain at all but catching a falling knife, as the prices look to trend still lower in the coming months.
Most of all, we will at last have an assured supply of reasonable rentals. The conversion stampede is just about exhausted. Most of all, many recent conversions were of units too small to be considered eligible for sale as condos in any normal market, and as this market reverts to normalcy, many of these units will revert to rental status. This is a warning for prospective buyers of tiny, inadequate condos, but it augers a return to a normal, affordable rental market.
Trust the markets. They may not give you just what you want exactly when you want it and how you want it just because you want it, but left to operate unhindered, they deal out justice, and never more so than in the unraveling of the most absurd manifestation of financial hysteria in human history.
* Chicago Bubble Blog, July 26, 2007 posting, link supplied at right. I tried to link it to this post but it wouldn't work.
Before the late, great real estate boom occurred, I had always believed that the unfettered operation of free markets was the solution to supplying a large and diverse population with its needs and that it would always make the fine-tuned adjustments necessary for buyers and sellers of goods, services, whatever they happened to be, to come together in a way that would satisfy most reasonable needs and desires.
However, my simple faith was sorely tested by the fantastic inflation in housing prices since 2001, never mind that the Fed- driven speculative rampage of the past few years was not the result of "free enterprise", but was the creation of Dr. Greedscam and his accomplices at Fannie Mae and Freddie Mac, the quasi-government agencies that buy home loans in the secondary market, and that kept E-Z money sloshing through the housing market by purchasing millions of high-risk home loans made to unqualified buyers for amounts of money they could not possibly pay back on their incomes.
Well, the market works in strange ways but the Law of Supply and Demand never rests. No amount of Fed finagling and manipulation and industry happy talk will suffice to prop up this massively over-inflated housing market in the face of rapidly tightening credit, cratering sales, record foreclosures, and massive unsold inventory.
The summer selling season is almost over, and it looks it never really ever happened. The buyers are not coming. They either bought at or close to the peak of prices, and are too far underwater on their 80/20 I.O. teaser loans that are now resetting, or they were sidelined by the rapidly escalating prices, and are now confronting a very high bar for first-time home buyers and rapidly tightening credit. Looks like credit is getting so tight that once again, as in the distant past, borrowers will have to prove that they have the ability to pay their mortgages and they might even have to have a down payment.
Imagine that.
It just plain looks as though the supply of Greater Fools has quite dried up, and there aren’t any left to soak up the substantial glut of condos and houses now languishing on the local market. The greedy, the gullible, and the deluded have all bought, using "creative" financing like that referenced above, and are now sitting several feet underwater and confronting the reset of their mortgages, for over one trillion dollars’ worth of mortgages will be resetting in the coming year, half of it by the end of 2007. A trillion dollars’ more in adjustable-rate notes will reset in 2008-2009, which is why many analysts are now calling the bottom of the tanking market in 2009, instead of this year or 2008 as originally projected.
Meanwhile, sales for June dropped 19%* in the Chicago area, as median prices have risen slightly, indicating that the first-time buyers have been blasted out of the water by the prices of modest dwellings and only more affluent buyers remain. Other signs of distress are appearing, such as an elevated rate of suspicious fires in unsold houses in newly-built suburban subdivisions, and most of all, the highest number of foreclosures ever recorded.
And at last the prices are beginning to drop. A couple of weeks ago, I went to view a "soft" condo conversion in the Edgewater neighborhood, and the prices for beautiful, spacious vintage units seemed like a gift compared to the prices of 2005. New mid-rise buildings in Uptown, on Sheridan Road, are 75% vacant after a year on the market. The Sheridan Grande, at 4848 N. Sheridan, appears mostly unoccupied. 4701 N. Sheridan, another newly-constructed mid-rise condo building, is, for some strange reason, no longer decorated with a sign proclaiming 80% SOLD. Or was it 70%? I forget exactly, but the sign disappeared a few months ago.
So at last the "bitter renters", as we who were sidelined by the stratospheric prices, were called, might have a shot at buying nice places at prices reasonably related to their incomes and to local rentals, with sensible, honest fixed-rate mortgages. Maybe I’m feeling a touch of schadenfreude, , but it really, really feels good to see so many attractive condos suddenly within my reach that seemed hopelessly lost to me just two years ago. In fact, the challenge now is check your impulse to leap at the first substantial price drop, because current trends and conditions indicate that you may not be getting a bargain at all but catching a falling knife, as the prices look to trend still lower in the coming months.
Most of all, we will at last have an assured supply of reasonable rentals. The conversion stampede is just about exhausted. Most of all, many recent conversions were of units too small to be considered eligible for sale as condos in any normal market, and as this market reverts to normalcy, many of these units will revert to rental status. This is a warning for prospective buyers of tiny, inadequate condos, but it augers a return to a normal, affordable rental market.
Trust the markets. They may not give you just what you want exactly when you want it and how you want it just because you want it, but left to operate unhindered, they deal out justice, and never more so than in the unraveling of the most absurd manifestation of financial hysteria in human history.
* Chicago Bubble Blog, July 26, 2007 posting, link supplied at right. I tried to link it to this post but it wouldn't work.
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