If you’re a Chicagoan and haven’t seen this wonderful little film yet, you need to. It makes Chicago feel so romantic. I for one let these scenes pass before me everyday and don’t acknowledge how beautiful and special the city, its landscapes, and its people are.

12 January 2010 –After a meeting of the Chicago City Council, Walmart’s dreams of coming to Chicago have been thwarted yet again. The City Council turned down another proposal by Walmart and Alderman Ed Burke from the 14th Ward. The “Living Wage” proposal was an ordinance that would require large businesses of 50 or more employees to be required to pay a minimum of $11.03 per hour to its employees. In the face of evidence that the first Chicago Wal-Mart did not create any jobs, unions, retailers, and Aldermen could not agree.

Walmart has been trying to open stores within the city of Chicago for years. I am sure this will not be the last time Chicago will have to decide to Walmart or Not to Walmart.

The Good News

Chicago's Air and Water Show will also be going up and down all weekend

As we reported two days ago, Chicago and Illinois are on a roll; we’ve had five consecutive months of increased month-on-month home sales. It turns out that we are not alone. Many news outlets are reporting that home sales grew in the second quarter in the majority of the country: 39 states saw housing sales increasing a combined total of 3.8% over the first quarter of this year. However, these numbers are about 3 percent below last year’s numbers. Idaho, Hawaii, New York, Wisconsin and Nebraska are doing quite well with 20 percent or more increases in sales. On the other end of the scale, Alaska, Wyoming, California, Colorado and Michigan have all dropped by at least 6 percent.

Bad News #1: Housing Prices are Down

Nationally 129 out of 155 metro areas have seen price drops with the median sales prices down almost 16 percent when compared to last year. Fort Myers, Florida was hit the hardest with prices down 53 percent. Other big price losers are Phoenix and Las Vegas. However, there are cities that are seeing price increases: Davenport, Iowa saw 31 percent increases and Cumberland, Maryland saw 22 percent.

Bad News #2: Housing Foreclosures are Up

More than one third of all sales in the second quarter were of foreclosures or distressed properties. Foreclosure tracking company RealtyTrac Inc. is reporting that one out of every 355 homes (a total of 360,149) received a default or auction notice or were seized last month. That is the highest the company has seen since it began keeping record in January 2005. This is the third record-breaking month they have seen in the last five months.

Economists Upbeat

National Association of Realtors® chief economist, Lawrence Yun is quoted as saying that the sales increases are, “a hopeful sign for the economy.” More and more economists are saying that the worst of the real estate recession is behind us even though foreclosures will likely continue to rise for the next year.

We’d like to thank cikaga jamie for sharing today’s photo via the Creative Commons License.

22 July 2009 ? Walmart is trying another route to gain access to the city of Chicago. Walmart has plans to run a Farmers Market this Saturday from 10 am to 2 pm in the vacant lot that was slated to be a Walmart. This is a publicity opportunity for Walmart after its five year battle to serve Chicago’s Chatham neighborhood. Walmart claims it will bring 400 jobs to the South Side. Opponents argue that Walmart destroys jobs by putting local merchants out of business. Opponents also claim that the Walmart jobs are lower-paying and mostly part-time.  A Lowe’s home-improvement store already is open at Chatham Market. Discount grocer Aldi plans to open a store there next year. This has become a very public battle between Ald. Howard Brookins, 21st Ward, and the city. Some say this public battle could harm the city’s chance at the Olympic Bid.

While attending the recent SPARKt conference I had the pleasure of listening to Adrian Holovaty, the founder of EveryBlock.com explain his unique service. If you haven’t heard of it, I suggest you head over their right away and sign up. It’s amazing.

What is EveryBlock?

EveryBlock.com is an amazing service.

EveryBlock.com is a service that goes out onto the web and looks for information about your block and the surrounding area?up to four blocks around your block. It looks for lots of stuff:

• Homes for sale
• Closings
• Crimes
• Pictures people are taking in the area
• News
• Building permits
• Liquor license applications
• Reviews of local businesses
• Street closures
• Restaurant inspections (do you really want to know?)
• Lost and Found
• And more…

I get a daily email from EveryBlock.com telling me all the comings and goings in my neighborhood.

Now, given the city we live in…what is most amazing about this is that Adrian was able to get this data out of the notoriously tight-lipped City of Chicago. The city didn’t want to give up the crime data, but Adrian persisted and got it for all of us. The problem is that it’s delayed by over a week and is often very, very vague. They have an online petition for you to sign asking the city to give more details on the crimes so we know what is really going on. Please sign it!

It’s a great service and I highly recommend it…except for the restaurant inspections. Those just make me sad.

17 June 2009 – Walmart has been stymied again. Aldi Market recently signed a lease on the Walmart coveted Chatham Market at 83rd street and Stewart. The Aldi store is set to open in 2010. The location had been scouted by Walmart since 2004. Walmart has been desperately trying to open a Super Walmart within the city of Chicago for years. Now, Wal-Mart has even bigger problems. The unions are threatening to resurrect the big-box ordinance if the City Council OKs a Walmart for Chatham, a fight that could taint the city’s bid to host the 2016 Summer Olympics. A decision on the Games is due Oct. 2. The closest Wal-Mart is in Austin and was built in 2006.

Two reports yesterday seem to cast a shadow over recent good news in closings.

Home Builders Not Predicting Increased Business

Hanging on

The National Association of Home Builders (NAHB) reported yesterday that it’s nation-wide monthly sentiment index dropped by a point to 15. This is down from a score of 18 one year ago and an all-time high posted four years ago of 72. NAHB doesn’t slice its data very thinly, so the only numbers we have for Chicago are the Midwest area, which actually increased from 14 to 15.

It’s important to note exactly what this survey is. According to NAHB’s web site, the survey is,

Derived from a monthly survey that NAHB has been conducting for more than 20 years, the NAHB/Wells Fargo HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as ?good,? ?fair? or ?poor.? The survey also asks builders to rate traffic of prospective buyers as ?high to very high,? ?average? or ?low to very low.? Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

Chicago’s Vacancy Rates at Historic Highs

The Census Bureau is reporting that vacancies are on the rise in Chicago and are actually the highest ever since they began collecting this data in 1996. In the quarterly analysis released yesterday, the vacancy rate in Chicago is now at 3.8%, which is a 41% increase over a year ago, when the rate was 2.7%. It is also up 3% from 3.7% in the fourth quarter of 2008.

Crain’s is reporting that Neighborhood Housing Services of Chicago (NHS) has data that shows South Side neighborhoods are being hit the hardest. Examples cited are Englewood has the highest vacancy rate in Chicago of 16.1% and North Lawndale is standing at 11.8% vacant.

There are many factors leading to this increase, among them are all the foreclosures due to people using sub-prime loans they could not afford, foreclosures due to more and more people losing their jobs as unemployment continues to rise throughout the country, and the huge numbers of newly developed homes that have come on the market in the past two years not selling.

I just read a fantastic article on Forbes about a topic that I have been wondering a lot about: continued gentrification of Chicago as the recession drags on. I have been pessimistic about the chances that neighborhoods like Uptown would continue to renew and rebuild…be a magnet for the middle class. However, after reading this interview with Pat Lashinsky of Zipreality.com, Michael Feder of Radar Logic, Spencer Rascoff of Zillow.com, and Peter Slatin of Real Capital Analytics, I’m beginning to think my pessimism may have been misplaced. At least I hope it was and their optimism is correct.

People Want to Live Close to Work

Will Uptown's revival continue or falter?

The first point for optimism is, as Mr. Lashinsky pointed out, that people want to live as close to work as is possible. It seems to me that two facts are going to keep this trend going: First, is the cost of energy: with gas going up to over $3.00 a gallon in the past couple of weeks, and very little long-term chance that the 30 mile commutes will ever be as economically feasible as they were when gas was $1.00 a gallon, this trend is likely to not reverse any time soon. The second fact is that Chicago is a gorgeous place to live now. The gentrification that has happened in Chicago has made it not only possible, but down right attractive to live in the city for nearly everyone.

Of course, the Loop is not the only area in Chicagoland with jobs. The suburbs lay claim to some of the area’s largest employers; some of my friends actually reverse commute from the central part of the city to the far flung suburbs. However, when young people move to Chicago looking for work, they aren’t dreaming of living in a generic box behind another generic box off a cul-de-sac in a faceless suburban sprawl. They are dreaming of brownstones, high rises, and walking down bustling sidewalks to meet friends at sidewalk cafes. This is going to mean that much of the young talent is going to be located in the city. Hopefully this means that new upstart companies, as well as the Fortune 500, will continue to want to call Chicago home and the upward spiral will continue. But, if the job losses continue and young people continue to give up on their dreams of big-city life (as the rental data is hinting at) in order to return to live with their parents outside of the city, this force for renewal and growth will be gone.

Price Is Relative

As someone who grew up in Montana and South Dakota and then having spent ten years living in Tokyo, I have experienced both ends of the price-per-square-foot continuum. While living in Tokyo I didn’t think twice about spending $2,500 a month for our tiny one-bedroom apartment?a price that could have allowed me a five bed, five bath, four-car garage with a pool in my hometown. But I wanted to live in Tokyo and my income allowed us to live very comfortably even with that rent. Actually, I’ve never had more disposable income than when I was paying the most for a home I ever have.

People understand this. They know that relatively speaking, right now is an amazing time to buy. Mortgage rates are at historic lows and prices are bottoming out at RELATIVELY amazing prices. As Mr. Slatin put it in the article, “The concept of a ‘great’ deal remains relative, and isn’t that what pricing is all about?”

The bottom line is for many people, the cost-to-performance of living in central Chicago is still very low. This is going to mean that the demand for homes is going to remain and gentrification of neighborhoods is likely going to continue, but undoubtedly at a slower pace.

Slow Gentrification is Still Progress…Gains Will Hold

Mr. Slatin had a wonderful quote in this article in response to discussion about Bucktown and The Westloop,

While there will surely be regression in some newly gentrified neighborhoods, for the most part, gains will hold. Residents, investors, retailers, etc. will fight to keep areas moving up or at least flat. Where holes do develop–and they will–investors will buy up REO. There’s still plenty of life and enticement in most of these neighborhoods, and emptied out tracts are far less alluring.

The other panelists agreed with him, but made sure to say that the progress we have seen in the past years will slow. The coffee shops, restaurants, and boutiques going into the new areas of town may not survive, but eventually they will find the dollars they need to help transform the neighborhoods.

Chicago City Gov’t Has to Continue to Support the Growth of the Middle Class

Again, Mr. Slatin pointed out a large potential danger to the whole upward, albeit slow, spiral, “One danger to these neighborhoods remains the inability of local governments to support their growth through schools, green space, transit, etc.”

As I talk to my circle of friends, this is completely true. One of the main reasons we are all still in the city is that there are fantastic public elementary schools for our children to attend. But ask these people who have eschewed the suburbs for the convenience and vibrancy of the city what they are worried about and they all reply that there are not enough good high schools to accept all the fantastic kids coming out of the elementary schools. Their parents stayed and took a chance on CPS, and under Arnie Duncan they by-and-large have delivered. However, can we count on a Dailey insider who has never run a school let along a school system to continue this and deliver high schools that will prepare our children for college? I hope my concern is unfounded.

But of course it’s not only about schools: potholes that gobble up trucks, the crumbling supports for the Metra and I-90 we all pass by every day hoping the whole thing doen’t come down on us like it did in Minneapolis, and reductions in police to protect the city area all trends that have to somehow be reversed.

As Always, It’s All About Supply and Demand

The Forbes interviewer for the story was the prolific Chicagoan Stephane Fitch, who is apparently my not-so-far-away neighbor. He talked about his neighborhood of Uptown.

…I live in Chicago’s Uptown neighborhood. Still, lots of gentrification needed in Uptown, I think it’s fair to say. It’s the classic gentrification play. But none of my neighbors thinks the gentrification will continue where I live. Not with the nicer neighborhood just to my south, called Lakeview, looking more nearly affordable for modestly well-off professionals.

That sums it up…if the jobs stay, people will want to live in this beautiful, livable city and that will mean more jobs and continued renewal of amazing swaths of this amazing city we call home. If the spiral doesn’t continue up or at least stay flat, Lakeview will prevent Uptown from improving, and eventually Lincoln Park will begin to nibble away at Lakeview, and on down we will go.

I’m optimistic and think (hope) we will continue to improve upon what is already here.

We would like to thank Supafly for sharing today’s photo of Uptown via the Creative Commons License.

The Up

Home Sales are Up and Down

We are seeing the continuation of a trend that seems hopeful. According the Illinois Association of Realtors® home sales in Chicago for April 2009 were up when compared to March 2009 by 16.7 percent. There were 1,378 home sold in April as compared to 1,181 in March. This seems to reflect the time of year (sales are usually strongest in the spring of the year). Hopefully this also represent some evidence that, at a minimum, the downward spiral of real estate sales is declining. It would be nice if it signaled even more?that the bottom has been reached. However, it’s difficult to find any credible analyst willing to say that.

Most analysts attribute the three month to price drops (see below) and purchasing of foreclosures. First-time buyers are figuring heavily in this as well because of the $8,000 tax credit being extended to them.

The Down

The 16.7 percent month-on-month increase is only part of the story. When we compare to 2008, sales are down a whopping 26.9 percent. This means in April of 2008, 1,886 homes were sold in Chicago.

The Price

Median home prices in Chicago did not change month-on-month; prices held steady at $220,000 in April. This is down 26.7 percent from $300,000 in April 2008.

The Illinois Association of Realtors® web site quotes David Hanna, president of the Chicago Association of REALTORS® saying,

?We continue to see homes in foreclosure and short sales driving prices lower in many areas of the city. Policy changes such as allowing first-time homebuyers to use the $8,000 tax credit at closing and a streamlined process for short sales will help, but the critical issues are the rising numbers of foreclosures and restrictive lending guidelines not crafted for our urban market. The federal loan modification program has not yet slowed the pace of foreclosures, a must for turning housing around in the Chicago metropolitan area. Regulators and lenders need guidance and latitude in creating a lending environment that addresses regional and in particular urban housing differences. That is not happening right now, and our numbers reflect the result.?

We would like to thank TheTruthAbout once again sharing today’s photo via the Creative Common’s License.

18 May 2009 – Mortgage rates are down again Monday morning, after the stock markets were slumping Friday. But Monday morning the stock markets are rallying, so I?d expect interest rates to likely be up a bit Tuesday. Rates are way down right now; some people are getting 5% or even less, so if you?ve been waiting to refinance, or waiting to lock your rate, now is the time. When rates dip really low like this, the window of opportunity has typically been very, very narrow, so timing is everything.

In other financial news, gasoline is up, European stocks are up, and gold, the US Dollar, and the Japanese yen are all down.