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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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October 2015 Market Update

I had a 50/50 chance of being right last month when I predicted that the Fed would err on the side of caution at their September FOMC meeting and keep rates at current near-zero levels. I was right and, let me be the first to admit – it was pure dumb luck! They could just as easily have moved rates up a notch. Lots of people who know a heck of a lot more about all of this than I do believed very strongly that they would do just that. They were wrong this time – but they won’t be wrong forever.

Now we get to play this game again. There are two more FOMC meetings this year – Oct. 27-28 and Dec. 15-16. Once again, opinions are divided as to what the Fed will do. Fed Chair Janet Yellen has been dropping hints for some time that the Fed needs to begin to raise rates in the face of an improving economy and lower unemployment. But recent economic trends, both here and abroad, have made that argument less compelling, and seemingly less pressing. China’s stock market swoon in August derailed any rate increase at last month’s FOMC meeting. And now the September jobs report data released last Friday (October 2) looks like it might have the same effect when the FOMC meets again later this month.

Despite predictions of another 200,000 +/- new jobs last month, the actual September report came in at a much weaker (but still positive) 142,000. The report also revised downward the job totals for July and August, with 22,000 fewer jobs in July and 37,000 fewer jobs in August than previously estimated.

About the only good news in the report was that the unemployment rate held steady at 5.1%. But even here, there were some unsettling undercurrents, including yet another decline in the percentage of the total adult population participating in the workforce. The labor force participation rate has fallen steadily since the recession hit, and has continued to fall even as the overall economy seems to have rebounded in recent years. Last month’s participation rate fell again, to 62.4%, down 0.2% from the month before, the lowest it has been since October 1977.

Let’s remember – the reason the Fed would increase interest rates would be to keep inflation in check and prevent the economy from overheating. Despite years of near zero percent short-term interest rates, it is still difficult for the Fed to convincingly demonstrate that the economy is at risk of overheating, or that inflation is showing signs of flaring up. If anything, the sharp declines in commodity prices over the past few years (crude oil is the poster-child, but lower prices are the norm across a broad range of commodities) suggest that deflation might actually be a bigger concern.

Anyway, all of this means that we are once again looking at a nail-biter in October. Most of the analysts are saying no rate increase is likely in October. I’m going to go out on a limb and predict that the Fed will change course and raise rates by some very nominal amount, just to get something done before the end of the calendar year. But if we see another big drop in the stock market, or some other major disruption at home or abroad, all bets are off.

So, what does this mean for the RPBG apartment investor? Well, it means that the refinance bonanza continues. If you have refinanced your properties anytime over the past several years, you are doubtless happier than not with the interest rates you were able to obtain. Right now, it looks like that party is not yet over. There’s always a silver lining to every dark cloud. Right now, the low rate environment is it. Enjoy it while it lasts; although it’s been going on for a long time, remember – it won’t last forever!

 

Sullivan Project

The Rogers Park community faces some particular challenges when it comes to educating its children. To start with, many of the kids in Rogers Park are from low or moderate-income families whose only real option for their education is the Chicago Public Schools. In addition, Rogers Park is a “gateway” community, housing children from a wide array of backgrounds, including immigrant and refugee families who have settled in Rogers Park from across the globe.

 

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September 2015 Market Update

After a tumultuous month in the markets, all eyes are now on the Fed and what they will, or will not, do at the next FOMC meeting scheduled for September 16-17. It’s an interesting question, and one that has no obvious answer.

If you’d asked the same question a month ago, there would have been widespread consensus that a rate hike was coming, if not in September, then surely sometime before the end of the year. But then China happened. The Chinese economy had been showing signs of distress for a while, with over-capacity in many state-sponsored industries, and a general slow-down in growth and industrial output. China’s problems were a concern, but one that seemed a minor distraction against a recovering American economy.

But that all changed when the Chinese stock market went into a free-fall in August, dragging the rest of the world equities markets with it. The plunging Shanghai stock market also opened a previously hidden window into the workings of the Chinese Communist Party. Until the stock market started to crash, the economic miracle that had been the hallmark of China for more than three decades had always been attributed in large part to the economic acumen of the autocratic Central Government. The plunging stock market seemed to reveal their ineptitude and the limits of any government – autocratic or not – to direct a large and complex economy, as China’s has surely become.

The distress in China, and the reverberations that rippled across the globe in its aftermath, had many analysts convinced that the Fed would keep rates unchanged until the economic turbulence abated. And this was the consensus until the latest jobs report came out, showing that the US economy added another 173,000 jobs in August, and that unemployment had fallen to 5.1%, a seven-year low.

So, what’s a Fed to do? Should they keep rates steady as the world seems to be falling apart all around it? Or should they increase rates now as our own economy keeps chugging along, adding jobs and absorbing sidelined workers at a steady clip?

Good arguments can be made on both sides. The “keep rates the same” camp says that this is a volatile time, and that any increase in rates now could further destabilize the world economy and, ultimately, derail the American recovery. The “start moving rates up now” camp says that the time to increase rates is before there is any real sign of inflation. The steady decline in unemployment, and the consistent hiring that has been occurring virtually uninterrupted since the beginning of 2010, will inevitably translate to inflationary pressures on wages and a spiraling of inflation across the American economy.

For the answer to this puzzle, my friends, we will all have to wait until September 17. My own guess is that the Fed will wait to raise rates until later this year. There are two more FOMC meetings scheduled, so they will have other opportunities before the end of 2015. The Chinese scare is still fresh in everyone’s mind and the panic was real. I’m guessing that the Fed will wait another month before they take any action on rates. But that’s what it is – a guess – no better than yours or anyone else’s. So, just wait two more weeks – we’ll have the real answer by then. Keeps life interesting, doesn’t it?

 

August 2015 Market Update

You would think that the trauma in Greece, collapse of the Chinese equities markets, and serious prospects of a rate increase from the Fed would be enough to throw a wrench into the US economy. But, apparently, you would be wrong. Despite all of these things, and any number of other global concerns, the US economy and domestic equities markets seem to be taking it all in stride.

This is not to say that none of these events has had any impact on the economy or the markets. After peaking above 18,300 in mid-May, the Dow Jones is now down to under 17,700 with a few peaks and valleys along the way. The turmoil in Greece and the volatility in the Chinese equities markets have both had an impact on a global economy that is ever more inter-connected.

Ironically, some of the problems abroad have proven to be beneficial domestically. Perhaps the most obvious example of others’ pain translating to our gain is commodity prices. They are almost uniformly down, due to slowing economic growth in Asia and the turmoil in the Eurozone. Crude oil is once again trading for less than $50 per barrel which has resulted in lower gas prices for the American consumer and additional buying power elsewhere. Slowing industrial production in China has pushed down prices for basic commodities everywhere, hurting such commodity-dependent countries as Brazil, Australia and even Canada. But in the United States, at least outside of the Oil Patch and Mountain West, lower commodity prices mean lower costs for manufacturers and higher profit margins on manufactured goods.

A strengthening dollar has been more of a mixed blessing. Imported goods have become less expensive as the dollar has strengthened relative to other major currencies, particularly the Euro and the Chinese Yuan. While cheaper imports are clearly beneficial to the American consumer, the same cannot be said for American manufacturers whose products are now more expensive on world markets.

But unlike many countries with large export sectors, the US is also a huge domestic market, still by far the largest on the planet. So, those US manufactured goods may now cost more in Germany and China, but they don’t cost any more within the confines of the 50-states. The simple truth is that the US has more built-in economic resilience than any other economy.

So, what’s next? One thing that seems pretty close to a sure bet is an increase in short-term borrowing rates. The Fed has held these rates near zero since the onset of the Great Recession. But that amazing run appears to be about to end. There are three more FOMC (Federal Open Market Committee) meetings this year, in September, October and December. There is almost universal agreement that the Fed will use one of these meetings to hike rates. The continued growth of the American economy, and the prospects that this growth will finally start to create inflationary pressures as labor markets finally begins to return to some semblance of full employment, can no longer be ignored. Barring some new economic shock, you can pretty much count on the beginning of a higher rate environment.

So, what does all this mean for our RPBG members? One obvious conclusion seems to be – if you’ve been thinking about refinancing your property, now would probably be a very good time to get going. No one anticipates rates jumping up, but the trend seems clear. It’s hard to imagine that the current low rates are going to persist very far into 2016. One final piece of advice – enjoy the rest of the summer. We never get enough in these parts, so take advantage of it while it lasts.

 

July 2015 Market Update

Things are suddenly looking a lot more interesting, and not necessarily in a good way. The long-simmering showdown between Greece and the Eurozone came to a head last week as negotiations between the two parties broke down and tensions rose to a breaking point. The Greek government essentially shut down the national banking system, freezing assets and only allowing small cash withdrawals. These measures were intended to prevent what had been shaping up as a Depression-style run on the banks as desperate Greeks tried to withdraw their euros before they got converted back into nearly worthless drachmas, a possibility that suddenly looked more likely than it had just a week or two ago.

Meanwhile, the markets, which do not like uncertainty, reacted strongly to all the turmoil with big sell-offs in equities markets on Wall Street and around the globe. The Dow Jones fell almost 350 points on Monday, June 29 as it became apparent that the two sides were headed for divorce and that a sovereign debt default seemed unavoidable.

And that was just Monday! The week continued in similar fashion. Greece did indeed fail to pay a $1.6 billion euro ($1.8 billion dollar) installment to the International Monetary Fund (IMF) that was due on Tuesday; it also announced that a national referendum would be held to determine if the Greeks would accept Europe’s distasteful offer to remain in the Eurozone. The referendum itself was seen as a ploy on the part of the Greek government to push off responsibility for negotiations on the voters and away from the government. It also complicated negotiations, particularly given that the referendum was scheduled for Sunday, July 5, several days after the IMF payment was due, and missed.

Despite the drama and increasing hostility between the two sides, it is still not inevitable that Greece will exit the Eurozone. A “yes” vote in Sunday’s referendum would give the government cover to accept a compromise that they have strongly resisted until now. But a “no” vote would be widely seen as Greece’s acquiescence to a complete economic dissolution with Europe. Polls indicate that public opinion is divided. As much as many Greeks feel mistreated and misunderstood by their European partners, many do not want to leave the economic union. In any event, it is certainly true that all eyes will be on Greece this Sunday. The results will be momentous, whatever the outcome.

Greece was not the only interesting bit of news this week. Another jobs report was released, and once again, the US economy is showing continued growth. The economy added 223,000 new jobs in June, close to analysts’ expectations. The unemployment rate also fell from 5.5% to 5.3%. This news, which most people would view as positive, was viewed less favorably by the markets. Investors took the jobs report as another sign that a rate increase is coming. The Dow Jones closed at 17,730 on Thursday, July 2, ending the week a day early for the 4th of July holiday almost 500 points lower than it had been not much more than a week before.

The Greek situation will bear watching closely in the days ahead, but the consequences of a Grexit is still probably not a serious today as it would have been two or three years ago. And rate increases will only come if the economy is strong enough to tolerate them – like a dose of castor oil, something we will all find distasteful, but know is going to make us stronger in the long run!

 

June 2015 Market Update

 
Another month, another yawn. I feel like a broken record, but here goes anyway. The economy is good, but not great. The markets are neither soaring nor are they plunging. Job growth continues to crawl higher, and unemployment continues to notch lower even while the labor force participation rate remains well below average for the past several decades. 
In short, there’s nothing to get too excited about. But, then again, there’s not much to make us want to hide under our beds either. 
One trend that is making people a little nervous is the ever so slight upward tick in rates. A couple of Market Reports ago, I talked about how the Fed seemed to be moving closer to raising rates as the economy strengthened. Of course, right after I said that, some of the factors that seemed likely to push the Fed to increase rates shifted directions just enough to give them cover for not doing so. 
But lately, rates have started to drift upward again as continued, albeit slow, economic improvement once again puts pressure on the Fed to increase rates. Not that this is going to happen tomorrow. But the day is coming, or at least that’s what people are starting to believe. And perception quickly becomes reality in the financial markets. 
For evidence of this trend, consider the 10-Year Treasury. It had been as low as 1.73% in late January and remained mostly below 2% until late April, but then pushed past this threshold and appears to be staying there. Since April 28, the 10-year rate has been above 2%, and it is currently right around 2.25%.  Many analysts fear that it will rise further. 
But will it? Who really knows? This certainly would not be the first time rates were predicted to start rising and then fail to do so. And even if they do, we’re starting from such a low base that any increase will take a while to start hurting.
Since we can’t predict the future, and since I don’t seem to have much of anything else worthwhile to say, I’m going to just hang it up for the month and see if there’s anything more interesting that happens between now and July. And, speaking of July, it’s summer, so this is as good a time as any to cut it short and get outside for some fresh air. After all, we only get a few months of nice weather around here. We might as well take advantage of it and leave off such unpleasant thoughts as rising rates, international discord, the prospects of yet another painful presidential election cycle, or another dismal Cubs season… well, maybe not – as I write this article, they’re in second place behind the Cardinals in the Central Division – GO CUBBIES!!
So, take a break, get out of the office, go have a barbecue. We can worry about the economy and/or interest rates again in October when the snow starts to fly. GO HAWKS!!

 

RPBG Makes Commitment to Sullivan High School

Serving the Rogers Park community has always been a central plank of RPBG’s mission. We have demonstrated this commitment repeatedly, most recently with the approval of a $5,000 gift to Artspace, a non-profit developer that has expressed an interest in creating a live-work space for artists within the Rogers Park community.

 

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