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Old 04-21-2015, 11:36 AM
 
3,496 posts, read 2,186,798 times
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Quote:
Originally Posted by Rae4732 View Post
Well, I think that home appreciation from an appraisal and what it will actually sell for are different. I follow hundreds of listings and almost all end up selling for less than they were purchased for. I'm referring to anything that previously sold after 2007 and listing above 500k. I could post 20 of them right now, especially anything that sold over 1 million. We know that renting right now is the right thing to do, while we watch the market tank and get a super deal in the next few years. Buying a home now would be completely insane.
Can you post these listings? I have seen many homes in Hinsdale sell for more in the past two years then when they were previously sold in 2008-2010. The gains haven't been drastic but they have appreciated.

What kind of market tanking are you anticipating? The current market is neither overvalued or undervalued within the desirable Chicagoland suburbs IMO. This area has not seen prices sky rocket like many parts of California or NYC or Seattle have in the past 4-5 years. It sounds to me like you are trying to convince yourself that there is a bubble to justify renting. Why go to open houses if you are waiting a couple years for the market to tank? What's the point? Or is this dramatic drop going to happen within the next 6 months?

Last edited by My Kind Of Town; 04-21-2015 at 11:54 AM..
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Old 04-21-2015, 11:51 AM
 
1,517 posts, read 2,343,862 times
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Quote:
Originally Posted by My Kind Of Town View Post
Can you post these listings? I have seen many homes in Hinsdale sell for more in the past two years then when they were previously sold in 2008-2010. The gains haven't been drastic but they have appreciated.

What kind of market tanking are you anticipating? The current market is neither overvalued or undervalued within the desirable Chicagoland suburbs IMO. This area has not seen prices sky rocket like many parts of California or NYC or Seattle have in the past 4-5 years.
I agree with this.

Look, there'll always be outliers, and if you're zoomed far enough out, you can gather together plenty of them. The point is in the averages. And bottom line is the average schmo who bought after '08 is at or in the money on their purchase. Those who bought '11-'13 are likely well into the money.

There are many sophisticated algorithms that track home prices at all levels and largely do a better job at aggregating data than a couple of Joe's like you or I surfing Redfin with our spare time. Case-Shiller and the Zillow Home Price Index are two good examples, and they largely reflect what MKOT and I have said.
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Old 04-21-2015, 11:57 AM
 
3,496 posts, read 2,186,798 times
Reputation: 1950
Yes, I guess my point is I wouldn't be "waiting for a bubble to burst" because you will be waiting awhile. I too expect modest gains over the next few years based on everything I am reading. Maybe 1-3% annual increases. I'm fine with that. Still come ahead when compared to renting once you account for home equity and tax benefits.
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Old 04-21-2015, 12:34 PM
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I meant to say- except in towns like Hinsdale and LaGrange. Again- homes over 500k, purchased during bubble of 2006 forward (unless they did a massive rehab on it). Anyhow, I guess we'll just disagree. I think we are all in for a big surprise over the next few years. Many people are pretty blind to it, and of course we still see homes selling for high prices, but I think will be changing soon. We'll see!

https://www.redfin.com/IL/Glen-Ellyn.../home/16885959

https://www.redfin.com/IL/Glen-Ellyn.../home/18122206

https://www.redfin.com/IL/Wheaton/53.../home/17297076

http://www.realtor.com/realestateand...7_M80375-62626

197 Merton Ave, Glen Ellyn, IL 60137 is Recently Sold | Zillow

Recently Sold Homes - 3 Transactions | Zillow

Recently Sold Homes - 6 Transactions | Zillow
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Old 04-21-2015, 12:50 PM
 
11,975 posts, read 31,786,761 times
Reputation: 4644
Quote:
Originally Posted by Rae4732 View Post
I meant to say- except in towns like Hinsdale and LaGrange. Again- homes over 500k, purchased during bubble of 2006 forward (unless they did a massive rehab on it). Anyhow, I guess we'll just disagree. I think we are all in for a big surprise over the next few years. Many people are pretty blind to it, and of course we still see homes selling for high prices, but I think will be changing soon. We'll see!
What you're trying to do is called "Market Timing", and it's almost impossible to do in real estate. At some point you just have to settle down somewhere and get on with your life. I remember people predicting a bubble back in 2001. They were right, of course, but it didn't happen for another six years after the fastest run-up in prices in the history of the country. And if they had bought in 2001, they would have still come out way ahead, even after the Great Recession.

We bought our first house in 2005. It appreciated a little, and then tanked. We figure we lost about $50,000 on that deal, yet the house we bought in Glen Ellyn a couple of years ago was probably discounted by more than that... So it all evens out in the end. And we don't plan on moving any time soon. We may even see the end of our 30 year mortgage.

The key is to view a house as a long-term residence, not a short-term investment. Some say you should plan to be there for five years, seven years, or some other arbitrary amount... I'm more comfortable with a ten year horizon in an uncertain appreciation situation.
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Old 04-21-2015, 12:57 PM
 
11,975 posts, read 31,786,761 times
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Quote:
Originally Posted by Rae4732 View Post
...and how unattractive some of the other homes are on the blocks where they build these 800k+ homes. I see so many tear downs that are built on blocks surrounded by houses that look abandoned. That seems really risky.
Easy answer to that: Don't buy the most expensive house on any block. Buy the least expensive house on the most expensive block. And don't pick an unattractive block. There are plenty of gorgeous blocks in Wheaton and Glen Ellyn.

I remember seeing this in Downers Grove over by the Fairview Metra station, which is not the most attractive part of town. There were several new houses going up on blocks that were barely nicer looking than trailer parks. That seemed like a really bad investment, unless you could be sure that ALL of the old houses were going to be torn down and replaced.
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Old 04-21-2015, 01:00 PM
 
3,496 posts, read 2,186,798 times
Reputation: 1950
Quote:
Originally Posted by Rae4732 View Post
I meant to say- except in towns like Hinsdale and LaGrange. Again- homes over 500k, purchased during bubble of 2006 forward (unless they did a massive rehab on it). Anyhow, I guess we'll just disagree. I think we are all in for a big surprise over the next few years. Many people are pretty blind to it, and of course we still see homes selling for high prices, but I think will be changing soon. We'll see!

https://www.redfin.com/IL/Glen-Ellyn.../home/16885959

https://www.redfin.com/IL/Glen-Ellyn.../home/18122206

https://www.redfin.com/IL/Wheaton/53.../home/17297076

http://www.realtor.com/realestateand...7_M80375-62626

197 Merton Ave, Glen Ellyn, IL 60137 is Recently Sold | Zillow

Recently Sold Homes - 3 Transactions | Zillow

Recently Sold Homes - 6 Transactions | Zillow
I guess I am confused by your position. Do you think we are in a real estate bubble or are homes selling for less than what they were purchased for previously? If homes are selling for less than bubble prices from 2006-2007 then wouldn't that mean that current prices aren't in a bubble?
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Old 04-21-2015, 01:03 PM
 
1,517 posts, read 2,343,862 times
Reputation: 573
Quote:
Originally Posted by Rae4732 View Post
I meant to say- except in towns like Hinsdale and LaGrange. Again- homes over 500k, purchased during bubble of 2006 forward (unless they did a massive rehab on it). Anyhow, I guess we'll just disagree. I think we are all in for a big surprise over the next few years. Many people are pretty blind to it, and of course we still see homes selling for high prices, but I think will be changing soon. We'll see!

https://www.redfin.com/IL/Wheaton/53.../home/17297076
This Wheaton home was built and purchased NEW at the PEAK. To be clear, 2007 was the PEAK. So you have a premium the buyer paid for new construction, PLUS they did the deal at the worst time in the history of the world, ever. Add to that the fact that the distressed owners were forced to sell just 6 short years after purchasing, and you have a recipe for disaster. It's not a surprise they took a bath. And what is this supposed to tell me about the future?

I'm also not clear how such an example should tell me not to buy now. If you think homes are so grossly discounted compared to where they were previously trading AND we know values are trending upward, I'd call that a clear buy signal.

Here are some easy-to-look-at statistics on the issue of Hinsdale being a safer play:


Last edited by holl1ngsworth; 04-21-2015 at 01:12 PM..
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Old 04-21-2015, 01:13 PM
 
3,496 posts, read 2,186,798 times
Reputation: 1950
Quote:
Originally Posted by holl1ngsworth View Post
This Wheaton home was built and purchased NEW at the PEAK. To be clear, 2007 was the PEAK. So you have a premium the buyer paid for new construction, PLUS they did the deal at the worst time in the history of the world, ever. Add to that the fact that the distressed owners were forced to sell just 6 short years after purchasing, and you have a recipe for disaster. It's not a surprise they took a bath. And what is this supposed to tell me about the future?

I'm also not clear how such an example should tell me not to buy now. If you think homes are so grossly discounted compared to where they were previously trading AND values are trending upward, I'd call that a clear buy signal.

Here are some easy-to-look-at statistics on the issue of Hinsdale being a safer play:
I would agree that Hinsdale is a safer play for high end buyers ($800k +). I think it attracts more high end buyers than a town like Wheaton. It's not to say it is completely isolated from the general market trends (ie. downturns) though because the entire metro is tied in some way or another.
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Old 04-21-2015, 01:23 PM
 
1,517 posts, read 2,343,862 times
Reputation: 573
Quote:
Originally Posted by My Kind Of Town View Post
I would agree that Hinsdale is a safer play for high end buyers ($800k +). I think it attracts more high end buyers than a town like Wheaton. It's not to say it is completely isolated from the general market trends (ie. downturns) though because the entire metro is tied in some way or another.
If you had bought a nicely equipped 4-bed in Wheaton in mid-2007, the averages say you likely paid around $525k. The averages also say that home is now worth about $485k. That's a dollar loss of $40k and a percentage loss of 7.5%.
If you had bought a nicely equipped 4-bed in Hinsdale in mid-2007, the averages say you likely paid around $975k. The averages also say that home is now worth about $850k. That's a dollar loss of $125k and a percentage loss of 13%.

I would argue a home in Wheaton asking $500k is roughly equivalent to a Hinsdale home asking $850k. That said, if we do have another downturn, where do you want your money? These are facts, not feelings. Maybe I'm just a stickler. But there must be others out there who can see this for what it is...

Last edited by holl1ngsworth; 04-21-2015 at 01:37 PM..
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