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14th Annual Trends Workshop

If it’s January, it must be time for the Annual Trends Workshop. With 105 people in attendance, this year’s event was bigger than ever. So it’s a good thing that we were able to host it in our beautiful new venue on the Loyola University Campus – McCormick Lounge. The space is large and airy with unimpeded views across Lake Michigan. It will be especially nice in the warmer months when the days are longer.

The Trends Workshop would not have been possible without our sponsors. This year, we had fifteen, as follows:

Gold Sponsors:

  • Cagan Management Group, Inc.
  • CIC
  • Loyola University

Silver Sponsors:

  • Independent Recycling Services
  • Three Corners Development
  • Bank Financial
  • Meridian Capital Group

Bronze Sponsors:

  • Apartment Investment Advisors
  • BAO Joint Ventures
  • CheckMate Realty & Development, Inc.
  • Guaranteed Rate
  • Marcus & Millichap
  • MLC Properties and Management
  • Xfinity Communities
  • Winnemac Properties

For the main event, attendees divided into fifteen tables. Each table was asked to predict what the world would look like two years down the road, responding to seven questions that all dealt with the economy and the Rogers Park real estate market:

  • The closing value of the Dow Jones index.
  • The unemployment rate for the State of Illinois.
  • The average interest rate on an apartment building in Rogers Park.
  • The average price/SF of a condo unit in Rogers Park.
  • Typical marketing time for a condo unit in Rogers Park.
  • The average apartment rent in Rogers Park.
  • The average price per unit for an apartment building in Rogers Park.

As always, we had two “tie-breaker” questions. The first was to predict the split between Democrats and Republicans in the House of Representatives after the 2018 elections. The second was to come up with how many more (or fewer) wins the Cubs would have during their 2018-2019 season than the combined total of White Sox/Bears wins.

Approximately 6-7 minutes was given for discussion of each of the seven questions at the end of which results were collected and displayed on an overhead projector. When all of the questions had been discussed and all the results tabulated, Team Leaders from each table came to the front of the room to go over the results. As usual, there were a variety of opinions, reflecting the level of optimism or pessimism about the state of the market among the attendees.

Generally speaking, most of the Team Leaders were optimistic about the future of Rogers Park. But opinions on the future of the national economy were more divided. There was widespread agreement that the recent election of Donald Trump as US President would be consequential for the US economy. Not everyone agreed what impact his new administration would have.

Another big concern of many attendees was the “state of the State.” Gridlock in Springfield – with two consecutive years of no state budget and more of the same ahead – was widely viewed as harmful to Illinois and Chicago. Most attendees felt that the state would be performing better were it not for the impass between Governor Bruce Rauner and State Representative Michael Madigan. There was little optimism that this situation would change anytime soon.

Despite these challenges, attendees still felt bullish on Rogers Park which was widely seen as being “on a roll” and likely to see more appreciation in property values and further increases in rent. Most people believed that Rogers Park will continue to do well as the Lakefront neighborhoods to the south get ever more expensive. Rogers Park will continue to offer the best value for renters who want to live on the North Side Lakefront, but who have been priced out of every other neighborhood between downtown and Devon.

To wrap up, event MC – Mike Glasser – announced the winner of the Trends Workshop from two years earlier. Steve Cain’s team was declared this year’s winner, but only because Jay Fahn edged him out in the bonus question, was not there to collect the prize. Steve was happy to be declared winner and walk off with the honor.

Whether you’re an economic optimist or pessimist, there’s plenty to like about the Trends Workshop. What’s not to like about being part of a great group of people while enjoying outstanding food and drink in a first-rate venue? The Annual Trends Workshop continues to be our signature event, and just keeps getting better year by year.

 

 

Annual Trends in the Industry Workshop

This year's Rogers Park Builders Group's Trends in the Industry Workshop,,scheduled for Tuesday night, January 24th, at our new location, Coffey Hall - McCormick Lounge at Loyola University Chicago, will be one of our most anticipated Trends workshops.

The Rogers Park Builders Group's Trends in the Industry Workshop, our 14th annual, is our organization's premier (and, with the exception of Friday Happy Hour, most enjoyed) meetings of the year, where 80 - 100 real estate and community folks gather to discuss and debate a range of questions concerning local, regional and national real estate trends, projecting outcomes in two years' time.  We assign one moderator to each table who guides the discussion and gathers consensus on seven separate questions. Following the group discussion, each of the table's moderators will participate in a panel discussion where we learn each table's consensus on each of seven questions - issues like Dow Jones, unemployment figures, interest rates, rental rates, the condo market, value of multifamily properties...

At the end of the meeting, we will learn which table moderator from our meeting two years ago came closest to projecting this year's outcomes.

Agenda:

  • 6:15: Registration
  • 6:30: Networking, dinner, open bar
  • 7:15: Opening remarks; introduction of Sponsors
  • 7:30: Table Discussions lead by moderators
  • 8:20: Panel Discussion
  • 8:55: Results from 2015 Trends Workshop
  • 9:00: Adjourn meeting; additional networking
  • 9:30: Leave the building

To assure a space, purchase your tickets ($30/person) on or before 1/20/17. If space remains available on the day of the event, you may pay $45 at the door. Tickets are complementary for all RPBG Members (Associate and Directors) who are fully paid up on their 2017 dues by 1/20/17.

Click to Register

Gold Sponsors:

  • Cagan Management Group, Inc.
  • Community Investment Corporation
  • Loyola University Chicago\

Silver Sponsors:

  • Bank Financial
  • Independent Recycling Services
  • Three Corners Development
  • Meridian Capital

Bronze Sponsors:

  • Apartment Investment Advisers
  • Bao Joint Ventures
  • Checkmate Realty
  • Guaranteed Rate
  • Marcus & Millichap
  • MLC Properties and Management
  • Winnemac Properties
  • Xfinity Communities

 

January 2017 Market Update

It was a year of surprises. Who would have thought at the beginning of 2016 that the Cubs would win the World Series; that Donald Trump would be elected President; or that the Dow Jones would be flirting with 20,000 within the span of twelve months?

The Cubs started the season with a strong line-up and a lot of buzz. But how many people really believed they could go the distance and win a championship that had eluded them for more than a century? Donald Trump was regarded by most serious observers of the political scene as little more than a joke, a vanity candidate who was more interested in boosting his visibility than being leader of the Free World. Few people thought he had any real chance of winning, a belief that persisted right up to the moment his victory could no longer be denied. As for the stock market, it started the year in a funk. After a dismal January, it recovered only gradually through the spring, and then staying in a relatively narrow band until after Trump’s victory.

So, what do we make of the events of the past year, and what do they portend for 2017 and beyond? Presidential transitions are always accompanied by some degree of uncertainty and risk, particularly when control of the White House shifts from one party to the other. But this transition seems particularly fraught with uncertainty, due in part to the unpredictability of the President-elect and in part to the sea change a Trump presidency represents after eight years of Obama.

For now, the markets are clearly enthusiastic about the changes that may be coming. These include tax cuts, reduced regulation, infrastructure investment and the end of divided government that has long characterized Washington.

But there remains a lot that is unknown, and of potential concern. Trump remains more opaque than any recent past president, preferring to Tweet than talk. When he does talk, it is to adoring crowds in his “thank-you” tours. He both avoids and vilifies the press, restricting access to just a few friendly journalists. His positions on Russian interference in the November elections is baffling, as is his admiration for Russian President Vladimir Putin. He has already managed to rankle China over his phone call with the Taiwanese President. All this before he has even taken the oath of office.

This political landscape makes predicting the course of next year nearly impossible. A best-case scenario assumes he will boost the economy by lowering corporate taxes, cutting regulations and implementing a well-executed infrastructure investment program. A worst-case scenario could be a diplomatic conflict that turns into a trade war or even a military confrontation. China and the Middle East would seem to be the most likely spheres where such a scenario plays out. But smooth sailing with our European and Latin American allies cannot be taken for granted. As for Russia, the Trump-Putin relationship may be good now, but will it remain so? Russia has rarely been more openly hostile to the West than it is today. What Putin chooses to do once Trump is in the White House may be the greatest uncertainty of them all.

One thing is certain. There will be a new normal, and it will not resemble what we have become accustomed to over the past eight years. This may prove to be a good thing, or it may not. While we are waiting to find out, I wish everyone a very Happy New Year and hopes of a Cubs repeat in 2017. If it can happen once, it can happen again!

 

RPBG Helps Sullivan HS Band Program

Sullivan High School music teacher, Andrew McGuire learned that many high-quality instruments, in need of repair, were sitting, unused, in the school’s basement.

 

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November 2016 Market Update

It is November 9 – the morning after. The election is over, and we all now know – Donald Trump will be the 45th President of the United States.

There are any number of things to say about what happened last night. Since we are a business organization, I’d like to focus on the implications of this election on the economy. From the moment the equities markets first realized that Trump would possibly, and then probably, win the election, stocks have sold off. Dow futures were down as much as 800 points overnight, and are currently down about 200 points as I write this article. Minute-by-minute price changes are not as interesting as the underlying reasons why the markets are reacting as they are.

There are probably two aspects of the Trump election that are most concerning to the markets. Both have to do with Trump’s strong “Fortress America” stance. 

The first is immigration. Trump has been very clear that he would like to see the eleven million or so illegal immigrants in this country sent home. He has also suggested that he would make future immigration to the country much more difficult, particularly for groups he views as undesirable or even dangerous. On the first score, Trump will face many obstacles, both legal and logistic, in any effort to remove undocumented people from this country. But on the second score, he can and probably will make immigration more difficult.

Many Trump voters believe this is a good thing, and believe that immigrants take more from this country than they give back. But most experts (I know, no one likes experts anymore) believe just the opposite. On the low end of the wage-scale, immigrants often do work that native-born Americans just won’t do. On the high end of the wage-scale, immigrants bring skills that not enough native-born Americans possess. On both fronts, the contribution these immigrants make is important. Losing these sources of labor could hurt economic growth and is of concern to the markets.

The second is trade. Trump has made it clear that he wants to rip up existing trade agreements and make future agreements much more favorable to this country. Trump’s voters believe that trade has hurt this country, pushing good-paying manufacturing jobs to other countries where labor is cheap, and flooding this country with low-cost goods that unfairly compete with US-made products.

Again, the discredited experts would tell you that many of the lost manufacturing jobs disappeared, not because of cheap labor abroad, but because of technological changes that lessened the need for labor in the first place. Regarding trade agreements, it is probably naïve to believe that we can impose stricter controls on imported goods without facing the same restrictions on our exports. More restrictions on trade could also be expected to hurt the economy and are therefore also of concern to the markets.

We will soon find out. Trump will take office in January. Both houses of Congress and, inevitably, the Supreme Court will all be in Republican hands. As long as the Republicans stay united, Trump will be in a strong position to make good on his promises. How this plays out in the economy remains to be seen. But the facts suggest that the promises might be harder to deliver than the rhetoric. Only time will tell. Meanwhile, keep an eye on the stock markets. They operate on democratic principles as well – one dollar, one vote.

 

January 2016 Market Update

Bet you’re wondering what I’m going to talk about this time… OK, I won’t keep you in suspense – or surprise you with anything you aren’t all completely expecting.

Yes, it’s true, you might have heard. The Federal Reserve finally made good on their promise to raise short-term interest rates to something greater than zero. The 0.25% increase was not a lot, and will likely go up further only in very slow and cautious increments. But the increase was nevertheless historic, coming after the longest period of rock-bottom rates the country has ever seen. This seven-year period is completely without precedent or parallel and is a testament to how severe the recession of 2008-2009 really was. The climb back out of the hole we had dug for ourselves was incredibly slow, painful and full of setbacks at every turn.

But climb back out of that hole we did. The sickening hemorrhage of jobs that the country endured during those dark days of 2008 and 2009 are finally behind us. So is the vanishing equity that seemed to evaporate overnight from stock markets and real estate assets alike. It was the double-whammy of spiking unemployment and plunging values that left many of us feeling suddenly poor and extremely vulnerable. It has literally taken this long to recover from the shock, both financially and psychologically. For more than a few of us, that recovery is ongoing and not fully in the past.

But let’s look at what has gone right since those dark days. The economy has added jobs every month since October 2010. Unemployment peaked at 10.0% in October 2009 and stayed stubbornly above 9.0% until October 2011. Today, it is half what it was at its peak – just 5.0% in October and November of 2015. Non-farm employment is actually higher today than it was at its peak before the recession hit. The labor market registered approximately 138.4 million jobs in January 2008, only to see more than 8.7 million of those jobs disappear by February 2010. Today, the non-farm labor force is pegged at 142.9 million (November 2015 estimate), an increase of more than 4.5 million jobs over the previous peak, and 13 million jobs from the 2010 low. Finally, the Dow Jones bottomed out at 6,507 on March 9, 2009, but has since more than doubled to its to its current level in the mid-17,000 range. 

More than the stock markets, it was the decline in home values that hit most Americans closest to home. For many of us, our homes are our primary investment and most important asset. Home values crashed during the recession, and were one of the main reasons the recession was so severe and lasted for so long. Since then, home values have rebounded and, in some areas, surpassed former highs. But this recovery has been uneven. In many areas, values have yet to recover to their pre-recession highs. Generally speaking, the Coasts have done better than the interior; central cities have outperformed suburbs; and just about everywhere has recovered better than the Chicago region.

But all is not lost, even in our struggling city. Don’t look now, but Chicago actually has a thriving tech sector that is adding jobs at a rapid pace. We remain a center for advanced services, particularly in the fields of law, accounting, finance and business consulting. And the city remains a strong magnet for the young and educated, drawing recent college graduates from across the Midwest and beyond to its glitzy and vibrant center. If the rest of the region still lags, there is hope that sustained economic growth can finally spread across a larger swath of our region, benefitting more than just the CBD and neighborhoods within close commuting distance.

So don’t be too depressed about that rate increase. It happened because the Fed decided we could withstand it, and are finally back to something approaching a healthy, balanced economy. It’s been a long time coming. Take it as a good sign for the New Year!

 

Eastlake Terrace Condo Proposal

Lux Development Proposes New Nine Unit Condo

The owner of a century-old rental six-flat in a relatively secluded portion of Rogers Park is teaming up with a developer to replace it with a nine-unit condo building that echoes the original's design.

If built, it would be the first new residential construction since 1988 in the six-square-block Eastlake Terrace neighborhood, said Rich Aronson of Lux Development, who is partnering with owner Denis Detzel to replace the building.

The proposed four-story building at 7522 N. Eastlake Terrace "is supposed to be a modern homage to what's there now, with the green tile roof and the brick piers," Aronson said. Eight of the building's nine units would look across the street at Howard Park Beach, one of three small public beaches in the neighborhood.

Detzel, a management consultant and declared Republican candidate for the U.S. House in 2016, has owned and lived in the building since the mid-1970s, Aronson said.

The proposed building, designed by k2 studio, would have an elevator, seven indoor parking spaces and five outdoor, and folding glass walls that would allow residents to open up the indoor space to include their lake-facing terraces on temperate days, Aronson said.

Prices will range from $280,000 to about $600,000, Aronson said. The lowest-priced is a one-bedroom, the only unit that faces west, away from the lake into the building's back yard and parking lot. The other eight would be three-bedroom, two-bath units of 1,600 to 1,700 square feet.

Detzel and Aronson sent their proposal to 49th Ward Alderman Joe Moore's zoning committee yesterday for review at its Nov. 10 meeting.

 

November 2015 Market Update

The Federal Reserve Open Market Committee (FOMC) held their second-to-last meeting of 2015 last month on the 27th and 28th of October. As every one predicted (except me), they did not raise interest rates. Once again, however, they dropped hints that they might decide to do so soon. No specific date for such an increase was specified, but analysts are again speculating that an increase could occur at their last 2015 meeting, scheduled for Dec. 15-16, or at their second 2016 meeting, schedule for March 15-16. Both of those meetings will be followed by news conferences with Janet Yellen, Chair of the Fed, providing her with an appropriate forum for such an announcement.

What’s really interesting about this speculation is that it is still occurring. Six months ago, most analysts were confident that a rate increase would already have occurred. A strong economic recovery, combined with a soaring stock market, made for almost overwhelming odds that such an increase would have already happened. 

The reasons it did not are, by now, familiar:  a slowing Chinese economy that, briefly, sent US and world stock markets into a panic; sluggish recent job creation numbers in the US; and falling oil prices indicating a global economic slowdown. All of these conditions persist and have given the Fed sufficient reason to delay any change in the longstanding low interest-rate environment that we have enjoyed since the onset of the recession. In fact, short-term rates have been set at zero to 0.25% continuously since January 2009 and have been 2% or lower since May 2008. By Fed standards, that’s an eternity; this run of low rates is unprecedented in Federal Reserve history.

Whether the Fed raises rates in December, or March, or possibly even later in 2016, one positive outcome of all of this “on again/off again” drama is the dawning realization that rates are unlikely to go zooming up, even when the Fed does finally start to move them higher. The Fed’s current hesitancy to do anything dramatic is an indication of the economic headwinds the global economy still faces. And these headwinds seem pretty entrenched. When rates finally do start to rise, they are unlikely to do so rapidly, giving everyone time to adjust to the change.

If this is, indeed, what the future holds, it bodes well for property owners. It means low to moderate interest rates will be around for a while, removing some of the pressure to refinance right away. Of course, like anything, today’s economic status quo can give way quickly to new realities. No one should bank on the current low-rate environment lasting forever. That said, it does not seem unreasonable to assume that rates are unlikely to jump quickly, at least for another year or two and possibly longer.

Meanwhile, the US economy does seem to have recovered from the China shock of last summer, at least if the stock market is any indication. After dropping well below 16,000 in late August, the Dow Jones has climbed all the way back up to 17,663 as of Friday’s (Oct. 30) close and has been on a pretty steady upward trajectory since late September.

Speaking for all property owners, I think it’s fair to say that we like the Goldilocks economy – just enough positive economic news to keep things moving in the right direction, but not so much that the Fed feels compelled to take dramatic action. For right now at least, the porridge seems to be neither too hot nor too cold but, as our heroine likes it – just right!

 

December 2015 Market Update

What springs to mind when you think of Paris? Words like beautiful, cosmopolitan, sophisticated and romantic are often used to describe this amazing city. 

Sadly, we must now add “terrorized” to that list. Since the horrific attacks that occurred there last month, I’ve thought a lot about Paris and what it all means. The 130 people who were killed and the hundreds more who were injured represent a far smaller number of casualties and injured than were sustained in the 9/11 attacks on New York and Washington. Yet the random nature of what occurred; the fact that these attacks were aimed at ordinary citizens on a beautiful, unusually warm late-fall evening, just minding their own business in the many cafés and concert halls for which the city is justly renown; and the shear brutality of how these attacks were perpetrated make what happened there almost more unsettling than what transpired on American soil 14 years earlier.

In the wake of the Paris attacks, we are faced with a “new normal” that will be with us for the foreseeable future. The ISIS extremists are not content terrorizing their own population. They want to spread this terror across the globe, and throughout the West in particular.

As much as I deplore these inhuman acts of random cruelty, I worry that we risk losing more than just our sense of security and personal safety. We in the West pride ourselves on our adherence to the rule of law, our openness to diverse cultures and ways of life, and our ability to live as free people. In reacting to ISIS and the threat of more terror attacks, will we also see attacks on the very values we claim to want to protect? 

While it is normal to be fearful after witnessing such violent acts, fear does not excuse lashing out at every perceived threat, real or imagined. We forget too easily that terrorism comes from many places, and not all from outside of our borders – think of the bombing of the Federal building in Oklahoma City, or the awful gang assassination of a nine-year-old boy that just happened in our own city.

The events in Paris last month will have many economic ramifications. For starters, the shock of what happened may be enough to keep the Fed from raising interest rates in December (about the only silver-lining I can think of). But low interest rates is not much of a prize compared to the near-certainty of more terrorist attacks. The chaos in Syria and, to a lesser degree, across the Middle East; the throngs of refugees fleeing across national borders; and a paranoid and trigger-happy Russia, create a degree of volatility that we have not experienced in recent years. 

In a worst-case scenario, this combustible mix threatens not just our economy but our very way of life. This is why the Paris attacks seem like more than just another act of terrorism. After Paris, something more profound has changed. 

There is widespread agreement that we must fight against those who would spread terror, threatening the democratic institutions and freedoms we have worked so hard to create. There is less agreement about how to do so. If we truly believe in democracy and freedom, then we must be careful not to let these values be eroded in the name of national safety. Above all, we must resist the temptation to blame entire ethnic and religious groups for the actions of a few. If we fail to do so, then the terrorists have truly won. 

 

 

Sullivan Project Ribbon Cutting

RPBG Inaugurates Low Incidence Classroom for Sullivan High School

Members of the Rogers Park Builders Group were a happy and proud bunch last Tuesday evening (Sept. 29) when we met for our monthly meeting at Sullivan High School.  The meeting marked the culmination of the extraordinary collaboration that took place between RPBG, Sullivan High School, and many other groups and individuals across Rogers Park and beyond.

 

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