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If you wait to buy until prices go up 10% in a certain market, then you already missed the "true" bottom, technically speaking. Let me re-iterate, I'm not interested in playing the "guess the bottom" game. Prices have fallen to 2003 levels in many Chicago-area markets, rates are under 5%, that's good enough for me. I accept there's some risk in any asset purchase, and I could lose money. I still want to buy a house.
Allen mentioned Bolingbrook and Plainfield on a post about close-in suburbs, really? Those are an hour out, Plainfield's practically in Joliet. Do you think low prices in those markets may partially reflect their distance from the city? Allen, you mention that some N/NW suburbs are very underpriced now. Which ones, any of them close-in and in my price range? How about Des Plaines?
Despite many posters questioning my sanity, I'm still looking for a decent close-in suburb in the $200K range. Any suggestions? Chet and Allen aren't keen on towns that fit my description, and continue to recommend far-out burbs with more expensive houses. I appreciate you sharing your expertise, but your comments are not very helpful to my situation. They are probably better suited for a post about Hinsdale or Naperville--and a poster with a bigger price range.
I actually think you're being pretty realistic about the whole thing.
I also think the whole "waiting for the market to bottom out" scenario is foolish. Prices are pretty low & I really don't see them getting much lower ... coupled with pretty damn good current interest rates, I say congratuations on becoming a homeowner.
As for certain markets being undervalued. Eh, whatever. Those magical mystical markets aren't going to recover by leaps & bounds anytime soon. Not to mention, what prices are those experts comparing those "undervalued gems" to? Height of the bubble prices? Puh-lease.
And the truly great deals are like finding a needle in a haystack - or winning the lottery. The best houses that truly are REAL values are sold before they even hit the open market.
Allen mentioned Bolingbrook and Plainfield on a post about close-in suburbs, really? Those are an hour out, Plainfield's practically in Joliet. Do you think low prices in those markets may partially reflect their distance from the city? Allen, you mention that some N/NW suburbs are very underpriced now. Which ones, any of them close-in and in my price range? How about Des Plaines?
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I don't really advocate one area over another. Under market value properties can be found all over the place. Close in western suburbs, there are definitely some if that is where you want to look. When I say under market value I mean drastically under what the cook county assessor has the property assessed for along with comparable homes in the area or what a current professional appraisal has recently appraised the property at. There are usually is two scenarios at play where you will locate and purchase a property for way under CURRENT market value. Buying in an area where everyone is not flocking to at the moment. Or buying a property in a price range high enough and with higher property taxes that is currently having a tough time selling in a particular area. Or both scenarios combined. It isn't very difficult to locate a property listed at under market value in this market.
Last edited by allen2323; 02-02-2011 at 04:00 PM..
Buying into an area based upon assessed values is not a good idea. Values have plummeted in certain area but the city still needs its taxes.
I can find plenty of properties in Humboldt Park (especially as you approach Austin and Garfield Park) that sold for 300k in 2005 that are now selling for 25k. Are these a great deal? Maybe for a professional investor who has no intention of living in the area who has secured HUD contracts (I know several people like this personally). They buy for cashflow with guaranteed payments from the govt (complete with cash kickbacks to secure the contracts). For the rest of us the best we can do is sect 8 or risk renting at market rates.
As others have said to the OP looking to buy in Elmwood Park. I say rent for another year and then buy unless the perfect property comes up. There will be lots of deals to be had for the next few years as a buyer.
I don't really advocate one area over another. Under market value properties can be found all over the place in near western suburbs if that is where you want to look. When I say under market value I mean drastically under what what the cook county assessor has the property assessed for or what a current professional appraisal has recently appraised the property at. There are usually two ways to purchase a property for way under market value. Buying in an area where everyone is not flocking to at the moment. Or buy a property in a price range high enough that is currently having a tough time selling in a particular area.
The assessed value has absolutely no bearing on market value.
And as soon as you close sale on your "under market value" property - it then becomes the market. And is worth exactly what you paid for it.
The assessed value has absolutely no bearing on market value.
And as soon as you close sale on your "under market value" property - it then becomes the market. And is worth exactly what you paid for it.
Not quite, I recently flipped several properties over the past year or so. In order to immediately flip for close to current market value in this tuff market, you are usually talking about returning everything in the property back to new or upgraded move in condition. And most importantly a much longer period of time on the market than the distressed seller was willing to have the property on the market for. It has more to do with it being a slower moving market in areas that have some homes selling at way under there current market value. New assessments recently came out from the cook county assessor, and I find them to be fairly accurate and very helpful, for determining accurate pricing for a property in the proper condition. Basically just subtract the recent percent of price decline in the neighborhood, since the date that the home was last assessed. Of course comparing the assessed values of comparable properties in the immediate neighborhood is also important. The cook county assessor just doesn't pull those numbers out of thin air.
Last edited by allen2323; 02-02-2011 at 04:40 PM..
I can find plenty of properties in Humboldt Park (especially as you approach Austin and Garfield Park) that sold for 300k in 2005 that are now selling for 25k. Are these a great deal? Maybe for a professional investor who has no intention of living in the area who has secured HUD contracts (I know several people like this personally). They buy for cashflow with guaranteed payments from the govt (complete with cash kickbacks to secure the contracts). For the rest of us the best we can do is sect 8 or risk renting at market rates.
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In alot of cases, yes. I know a rehabber who is currently making a fortune flipping in chicago's distressed markets like humboldt park, south shore, woodlawn, etc. He does amazing work with run down bungalows. Granite counter tops, hard wood floors throughout, finished basements, master baths, etc. Of course he is buying at distressed prices like 25k, and flipping at or over current market value. I personally prefer to flip in middle class southern suburbs, but have looked in the city recently. I haven't flipped anything in chicago lately.
Well, in alot of areas where you have a fair amount of bank foreclosers you have recent comps selling for 25k or whatever, such as the area that humboldt mentioned. You also have recent comps of similar properties that were not sold by highly motivated sellers such as bank foreclosures and in upgraded condition that sell for what is the "current market value". Whatever that may be.
Allen, a REO would never appear as a comparable for a non-distressed property - the very word "comparable" IS the defintion and a REO is not typically used as a comp. Unless of course foreclosures BECOME the market and then an appraiser would have no choice but to include it. I questioned your understanding of what it is because "market value comp" is redundant.
And most real investors I know would never spend their valuable time combing through assessors websites as they understand that assessed values don't equal market values AND they trust in their real estate agents knowledge of the marketplace and listen to them when it comes to pricing & values issues.
Allen, a REO would never appear as a comparable for a non-distressed property - the very word "comparable" IS the defintion and a REO is not typically used as a comp. Unless of course foreclosures BECOME the market and then an appraiser would have no choice but to include it. I questioned your understanding of what it is because "market value comp" is redundant.
And most real investors I know would never spend their valuable time combing through assessors websites as they understand that assessed values don't equal market values AND they trust in their real estate agents knowledge of the marketplace and listen to them when it comes to pricing & values issues.
OMG, while most realtors are well informed. I don't think that they know everthing most of the time. And if you are too lazy to look for valuable information on your own to make a well informed decision, then that is not the realtor's fault. I happen to know several well informed realtors and I always value someone elses OPINION. But, it is not a realtor's job to find you deals. If it's your money, then you better do your own homework. It's not going to be the realtor who loses money if you miscalculate. Most realtors that I know don't want that responsibility. And rightfully so, don't accept the blame for you making a bad decision.
Last edited by allen2323; 02-02-2011 at 06:05 PM..
OMG, while most realtors are well informed. I don't think that they know everthing most of the time. And if you a too lazy to look for valuable information on your own to make a well informed decision, then that is not the realtor's fault. I happen to know several well informed realtors and I always value someone elses OPINION. But, it is not a realtor's job to find you deals. If, it's your money, then you better do your own homework. It's not going to be the realtor who loses money if you miscalculate. Most realtors that I know don't want that responsibility. And rightfully so, don't accept the blame for you making a bad decision.
Allen, first of all, it's an agent's job to know the market.
And second, yes, it IS an agent's job to find their clients the best properties for their particular needs.
And third, real investors have close relationships with their real estate professionals. Real investors expect their agents to do the groundwork in finding them properties that suit their needs at that particular time - whatever those needs are.
Allen, first of all, it's an agent's job to know the market.
And second, yes, it IS an agent's job to find their clients the best properties for their particular needs.
And third, real investors have close relationships with their real estate professionals. Real investors expect their agents to do the groundwork in finding them properties that suit their needs at that particular time - whatever those needs are.
No offense to realtors. The same goes for stock brokers. Great advice, and certainly great opinions and investment ideas. Bottom line is, it's your money. Do your own homework always. If you do your own homework and are well informed, and the realtor is also an informed realtor. Then your realtor will probably appreciate you as a client and enjoy your repeat business. Maybe earlier on when purchasing my fist property or two, but now I do more of the identifying properties that I want to be shown, along with any other properties that the realtor might have in mind. Usually, we end up coming to the same conclusions after seeing the properties in person anyway. And, I normally end up choosing the properties that I originally identified on my own as being the best deal. When I am in the market for a property, I spend alot of time comparing and going over everything. Very few realtors would be as picky and thorough selecting a particular property for a client as I am with my own money. And when it comes to realtors, everyone likes a different personality. The realtor that I use is not pushy or trying to sell me on a property. I like to be presented with information, but always make my own decisions.
Last edited by allen2323; 02-02-2011 at 07:31 PM..
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