So You Want to Buy a House?

By Lloyd Graff

I heard a National Public Radio piece recently on the shortage of homes on the market. The reporter, Ben Marcus, was reporting from Denver on his local market, which is seeing prices skyrocket. He focused on the rehab boom. Rehabs on bathrooms, kitchens and basements, along with home additions are going nuts in the Mile-High City. The parallel phenomenon is that very few new or used homes are coming on the market despite ferocious demand. A partial explanation Marcus honed in on was the large number of homes bought during the recession which were converted to rentals. The fat and happy owners are now unwilling to sell units because they are making such a sweet return renting them out. If they sold them they would owe capital gains taxes and be faced with a difficult task of replacing their rising investment with a comparable or better one.

*****

I look over my own front yard and see several lovely suburban homes that my neighbors can’t give away. I see well-manicured single-family dwellings mostly built in the 1970s and 1980s—some ranch style, some two story—on 12,000 to 20,000-square-foot lots.

Kitchen renovation

The area is quiet, well policed and modestly taxed by Chicago (Cook County) standards. Average family income is over $100,000. So why is this a housing desert? The easy answer, and everyone knows it, is RACE. The neighborhood is 70% African American and 30% White with a smattering of Asians, Latinos and maybe a stray Inuit or Apache.

In my day job, I am a used machinery dealer who spends his days assessing the values of machine tools, looking for mispriced lathes and mills.

I’m also a huge baseball fan and I love to analyze Major League Baseball trades, looking for the next Justin Verlander deal that locks up a pennant for Houston while leaving Detroit with three very young prospects, a jockstrap and a pair of used socks.

If a house sells for $800,000 in a fairly White suburb 28 miles north or west of downtown Chicago but sells for $200,000 next door to me in the south, when if ever, will the price disparity begin to narrow?

I am an “expert,” I think, in pricing anomalies, but this emotional one defies my reasoning. I do not know the algorithm of race. I have spent many years trying to nail it down in an analytical way, but I cannot get my arms around it.

What I observe in my area is that the older White people are dying or moving to sterile institutions that cater to their needs. The wealthiest ones are moving to downtown Chicago, Florida or Arizona, or where their kids live if they like one another.

Some African Americans from Chicago or other cities do buy into my neighborhood, but lenders may not see the area as particularly attractive for appreciation. Young Whites seemingly are afraid to be pioneers. So, the enormous price differential continues, even in good economic times despite rising home prices all over.

Racial fear, animosity, naiveté and stereotyping are all at play, yet racial intermarriage is on the rise and Barack Obama was a two term President not long ago.

Things are “a changing”? Well, maybe. But when the spread narrows $100,000 between my home and a comparable one in the the North or West Chicago suburbs I will begin to believe it’s happening

Question: Is it stupid to buy a home?

SHARE THIS

Share this post

7 thoughts on “So You Want to Buy a House?

  1. Nick

    Crime? Schools? These play a bigger factor in real estate value than most other attributes, and while race and these figures are often related, they’re not synonymous.

     
  2. Gordy

    Nick hits it with schools. We moved from Oak Part to Roselle (Lake Park) to St Charles chasing schools that didn’t have the major drug issues and prepared the kids for college with solid education. They were ready for college with what they got, whether it was as good as what we got as kids or not and graduated with BA’s in 4 years. Both got jobs in their field of choice, and life is good.
    Crime was an issue in Oak Park (Austin and Chicago) but not in Roselle. We have been fortunate to only have a few “teepees” over our trees, but that’s as close to crime as we have had since 1999.
    Then you have the prices and taxes in Cook. I go occasionally for a show, and afterward, drink a few $15 martinis and eat a 65 dollar ribeye steak and rejoice that I don’t do that very often. A table of 4 people rarely exceeds 500 in St. Charles, where it always does in Chicago.
    Ok place to visit, but I wouldn’t want to live there

     
  3. Just another Canuck

    You say things are “a changing”.
    Here is something I see that is not “a changing”. And this includes the author of this article:
    * The American obsession with quantifying, evaluating and making note of issues based on the colour (yes that is the way it is properly spelled in English) of everyone’s skin.

    I think if Americans want to see things change, then spent less time worrying about the colour of someone’s skin, their religious beliefs or where they are moving from, and get back to the spirit of “Give me your tired, your poor, your huddled masses ….”. It is then you will find that things may change more rapidly and in a more humane direction.

     
  4. Geno DeVandry

    Mr Cauck,
    I agree with you about colour, however I would like immigrants who want to assimilate to our culture and not abuse it. So I guess I would accept your tired, poor and huddled masses under those expectations.

     
  5. Lloyd GraffLloyd Graff

    My guess is that for White people, especially those who grew up in segregated primarily White neighborhoods, the idea of moving to an area that has more Blacks than Whites probably does not even occur to them. The thought of sending their kids to a school that has a majority of Blacks probably is scary to them. This is the legacy of racism and segregation.
    My children went to schools in my neighborhood, though they were not as heavily weighted in African American kids as they are today. They had good teachers and got into top colleges, though their peer group was not as stellar academically perhaps as an “elite” North Shore high school, but they did get a multicultural education which was valuable.
    Parents generally seem to want their kids to go to schools with people”like them”. They evidently will pay heavily for this comfort level of homogeneity.
    One 0f my points in the piece was to consider the cost of fear of the “different” . It is a hard concept to discuss and quantify but I would love others to address it.

     
  6. Emily

    This must be a topic on your mind often, Lloyd, because you’ve written about it a lot. Fear of people who are different is a real thing, but sometimes there are good reasons for it. There are facts we can’t deny. In Chicagoland, where you and I live, most Black neighborhoods have higher violence and much worse performing schools than White areas. The Black neighborhoods in Chicagoland are generally also not as aesthetically pleasing — there are shuttered homes, stores and strip malls, trash on the streets, unkept homes and yards, and homeless looking people walking around in strange places at strange times. I live 11 miles from Gary, IN, where I could buy a nice brick bungalow for $25,000, but you couldn’t pay me to live there. You, however, live in a unique area of Chicago, an area with many high income Black families. But even so, the business areas are somewhat run down and it has a feeling of not thriving. No one wants to talk about this because they’ll be called racist, and maybe it is, I’m not sure. I’m not surprised at all that people aren’t racing to live in Olympia Fields, to me the south suburbs are generally depressing. Munster, IN (also basically a south suburb) where I live, is fighting like hell to maintain a viable community despite being surrounded by decaying towns. I’ll let you guess what’s White and what’s Black.

     
  7. Just a Smuck, But

    Somehow the topic got from housing price comparisons to ethnic, Colour, and the inevitable never ending human comparison debate ????
    – A women is a women anatomically with or without skin
    – A man is a man anatomically with or without skin
    When pointing someone out to another say the guy with the hat or blue pants or curly hair … STOP using Skin as an identifier.

    – humans do stupid things and not so stupid things, genetics, environment, by need is not an excuse to violate another human or their belongings. Reaction to this from john Q public is to punish, isolate, degrade culture which is territorial, geographical and financial stereotyping.

    Whether we like it or not and from the beginning of time there has to be the poorest of poor, the middlemost of the middle and the ultimate wealthy with the gaps in between filled in respectively for the survival of mankind. When the balance is altered it’s only the most wealthy who come out ahead and, they are the first to tip the balance … it’s been done for centuries.

    All are required to follow law which is to keep direction, organization and security. again regardless of anatomy break the law there are repercussions. If money doesn’t alter the outcome.

    Now what was the discussion about houses ???

     

Comments are closed.