By Jeff
When I first met Joey Wozniak I was working as the bartender at Hinkey Dink Kenna’s, the bar in the basement of Marshall Fields, and he was working in the furniture department. Joey and several other salesmen would come for lunch every day. I needed furniture so it was a good relationship from the start. The only thing missing from my apartment was artwork. I had fallen out of love with traditional oil paintings. The reason for this was the starving artist sales usually held at the Holiday Inns. These paintings are normally painted in a factory setting with airbrushes. One artist does the sky, the next one does the trees etc… I’ve always liked modern art and my taste became more sophisticated after moving to Chicago.
An architect friend of mine called me. It seemed that Joey had gotten tired of the art world so he was selling off his old inventory. “You would like Joey's art it's very architectural" I was told. When I got to Joey's house there were about ten furniture salesmen fighting over Joey's work. I bought one of the few paintings left, a 48"x36" cityscape of a bolt of lightning striking a penthouse and reflecting off the surrounding buildings. Mostly done in dark blue with bright yellow it was very dramatic. I knew this was a bargain when I took it to the framer and he offered to purchase it from me. It fit perfectly above my buffet and commanded the space like a WPA mural. Ironically I would move to Junior Terrace the scene of this lightning storm. I wanted to buy another painting from him but he had sold out. Luckily this prompted him to resume painting.
About a year later I was at one of Tony Izzo’s gallery opening and I was able to trade for another painting. A cubist styled one depicting a man running away from a shadow. It was mostly yellow with blue shadows and the figure pained orange. I also bought two smaller paintings that night both seascapes in blue and yellow. The last painting of his that I collected was a gift, a small abstract.
Over the years I have seen his work become more refined and developed. He has become more popular with each passing year. The best part about his work is that it stays interesting. Every time I look at one of his paintings I see something new. We've also become great friends. I go to most of his openings and through him have met other prominent Chicago artists. His work can be seen at http://www.joeywozniak.com/.
Friday, January 11, 2008
Saturday, December 1, 2007
On The Real Estate Market
By Jeff
Dear friends, every time I turn on the news these days all I hear about are the “mortgage meltdown” and the declining real estate market. I think that the media is painting a very incomplete picture of what is going on, and it has left many of you confused. Hopefully I can paint a clearer picture. First of all, real estate is a market that rises and falls like any other market. It is a much localized one. The markets in California, Florida and Las Vegas have little effect on the Chicago market. The media statistics are national. Chicago is faring better than most cities. We have an expanding job market and are making the transition from an American City to an international one. The market is also segmented by price range and neighborhood. The market in the $5,000,000+ has been very good lately, while the entry level market (-$180,000) has been stagnant. Some neighborhoods are still “hot” like the south Loop and others are just dead on the vine.
To help you understand what’s going on let’s use Charles Dickens analogy of real estate past, present and future. So why was the market so “hot” to begin with? I attribute this to population and “easy money”. The US population in 1990 was 248,000,000. In 2005 it was estimated at just over 300,000,000, an increase of over 20% in fifteen years, one of the largest increases ever. One reason for this is that people are living longer healthier lives than ever before. This has allowed many elderly to maintain their place of residence. Another population factor is generation X. Born between 1966 and 1980 these are the children of the baby boomers. While not as big as their parent’s generation, they are still a huge generation none the less. They entered the housing market in the 1990s and early 2000s en masse. One of the reasons for the recent slowdown is that this generation is now marrying and combining households. Immigration has also been a contributing factor to population growth. 16% of the US population in now foreign born.
The other factor that I mentioned earlier is “easy money”. I saw this first hand ten years ago while working in the car business. In 1997 the car market was “on fire” the reason for this was a new concept known as automobile leasing. For as little as $190 a month one could lease a car for three years instead of having a $400 car payment over five years. The leases where based on the estimated depreciated value of the car after three years, this known as the residual. In 2000-2001 these cars came off lease and the used car market was flooded with cars. Many leasing companies lost $2000-$3000 per car when these cars did not meet their residual value at auction. The same has been happening in real estate. In 1990 a relative bought her first condo, she had to put 10% down, and pay prepaid interest known as points. In 1999 when I bought my first condo, I had to put 5% down. Two years ago I worked several deals with 100% financing with 3% back at closing, or a 103% loan to value. Now I have a theory about “easy money” as it applies to college tuition. In 1970 a friend of the family was able to putting himself through the University of Chicago flipping burgers. One could not do this today. The easy availability of student loans has caused tuition to skyrocket. I feel for these kids now getting out of school with $100,000+ in student loans. Not a very good way to start life. “Easy money” has stimulated demand and contributed to the rising cost of real estate.
A third factor that I haven’t mentioned earlier is the “bandwagon”. I have a friend who bought a two bedroom two bathroom condo pre-construction in Lakeview for $250,000. When the unit was completed it was worth $400,000. A lot of other people jumped on the bandwagon and thought they could make money this way. This also stimulated demand and caused prices to rise.
Now the market is in an adjustment period, so prices are declining. From everything read and heard it should continue to do so for the next couple of years. After that prices should stabilize. About 2020 the market should begin to heat up again. At this time generation Z, the children of generation X, will enter the market. Generation Z is a big one, because parents are now choosing to have three and four children instead of one or two, like the boomers did. Recent advances in fertility have also contributed to this boom.
Dear friends, every time I turn on the news these days all I hear about are the “mortgage meltdown” and the declining real estate market. I think that the media is painting a very incomplete picture of what is going on, and it has left many of you confused. Hopefully I can paint a clearer picture. First of all, real estate is a market that rises and falls like any other market. It is a much localized one. The markets in California, Florida and Las Vegas have little effect on the Chicago market. The media statistics are national. Chicago is faring better than most cities. We have an expanding job market and are making the transition from an American City to an international one. The market is also segmented by price range and neighborhood. The market in the $5,000,000+ has been very good lately, while the entry level market (-$180,000) has been stagnant. Some neighborhoods are still “hot” like the south Loop and others are just dead on the vine.
To help you understand what’s going on let’s use Charles Dickens analogy of real estate past, present and future. So why was the market so “hot” to begin with? I attribute this to population and “easy money”. The US population in 1990 was 248,000,000. In 2005 it was estimated at just over 300,000,000, an increase of over 20% in fifteen years, one of the largest increases ever. One reason for this is that people are living longer healthier lives than ever before. This has allowed many elderly to maintain their place of residence. Another population factor is generation X. Born between 1966 and 1980 these are the children of the baby boomers. While not as big as their parent’s generation, they are still a huge generation none the less. They entered the housing market in the 1990s and early 2000s en masse. One of the reasons for the recent slowdown is that this generation is now marrying and combining households. Immigration has also been a contributing factor to population growth. 16% of the US population in now foreign born.
The other factor that I mentioned earlier is “easy money”. I saw this first hand ten years ago while working in the car business. In 1997 the car market was “on fire” the reason for this was a new concept known as automobile leasing. For as little as $190 a month one could lease a car for three years instead of having a $400 car payment over five years. The leases where based on the estimated depreciated value of the car after three years, this known as the residual. In 2000-2001 these cars came off lease and the used car market was flooded with cars. Many leasing companies lost $2000-$3000 per car when these cars did not meet their residual value at auction. The same has been happening in real estate. In 1990 a relative bought her first condo, she had to put 10% down, and pay prepaid interest known as points. In 1999 when I bought my first condo, I had to put 5% down. Two years ago I worked several deals with 100% financing with 3% back at closing, or a 103% loan to value. Now I have a theory about “easy money” as it applies to college tuition. In 1970 a friend of the family was able to putting himself through the University of Chicago flipping burgers. One could not do this today. The easy availability of student loans has caused tuition to skyrocket. I feel for these kids now getting out of school with $100,000+ in student loans. Not a very good way to start life. “Easy money” has stimulated demand and contributed to the rising cost of real estate.
A third factor that I haven’t mentioned earlier is the “bandwagon”. I have a friend who bought a two bedroom two bathroom condo pre-construction in Lakeview for $250,000. When the unit was completed it was worth $400,000. A lot of other people jumped on the bandwagon and thought they could make money this way. This also stimulated demand and caused prices to rise.
Now the market is in an adjustment period, so prices are declining. From everything read and heard it should continue to do so for the next couple of years. After that prices should stabilize. About 2020 the market should begin to heat up again. At this time generation Z, the children of generation X, will enter the market. Generation Z is a big one, because parents are now choosing to have three and four children instead of one or two, like the boomers did. Recent advances in fertility have also contributed to this boom.
Thursday, November 29, 2007
On Wealth Inequality
Dear friends,
As many of you know I have a Bachelor of Science degree in Sociology from Ball State University. For those of you that don't know what what Sociology is it's the science of applying mathematical calculations to society. Birth rates, death rates marriage stats.etc... Kind of boring right, a lot like Actuarial science. I've always kept up with the field because I find it fascinating.
But enough on my qualification to write this, I was watching World News Tonight with Charles Gibson and I heard an interesting statistic. The top 1% ofthe American population has 25% of the wealth, while the lowest 50% of the American population shares 12.5%of the wealth. The median American household income in 2006 was$38,000. Up $2000 from 2005, but with the devaluing dollar was that really a gain?? Now if you don't know how the median income is calculated, they (the statisticians) throw out the top and bottom five or ten percent and calculate the median. Now let's pretend that the theory of communism works, and tomorrow all of us were equal. In theory we should all be at that 50% mark. That would meanthat the average household income would be $152,000. Four times the median! Please do the math yourself and always question authority. I find this very disturbing and would invite you to prove me wrong.
The difference between the average income and themedian income is measured by an index known as the Gini co-efficient. Wikipedia has a great article on this http://en.wikipedia.org/wiki/Gini_coefficient. I am also told that the CIA website has a great article about this.
Recently billionaire Warren Buffett posed a challenge to his fellow billionaires, including Ted Turner and Mark Cuban. "Why am I paying 22% in taxeswhile my secretary is paying 33%???" He has yet to receive a response.
Now those of you that know me know that there are three subjects that I never speak of, politics, religion and my sex life. So this is really going out on a limb for me. Please take this information with you when you vote next November.
Thanks,
Jeff
As many of you know I have a Bachelor of Science degree in Sociology from Ball State University. For those of you that don't know what what Sociology is it's the science of applying mathematical calculations to society. Birth rates, death rates marriage stats.etc... Kind of boring right, a lot like Actuarial science. I've always kept up with the field because I find it fascinating.
But enough on my qualification to write this, I was watching World News Tonight with Charles Gibson and I heard an interesting statistic. The top 1% ofthe American population has 25% of the wealth, while the lowest 50% of the American population shares 12.5%of the wealth. The median American household income in 2006 was$38,000. Up $2000 from 2005, but with the devaluing dollar was that really a gain?? Now if you don't know how the median income is calculated, they (the statisticians) throw out the top and bottom five or ten percent and calculate the median. Now let's pretend that the theory of communism works, and tomorrow all of us were equal. In theory we should all be at that 50% mark. That would meanthat the average household income would be $152,000. Four times the median! Please do the math yourself and always question authority. I find this very disturbing and would invite you to prove me wrong.
The difference between the average income and themedian income is measured by an index known as the Gini co-efficient. Wikipedia has a great article on this http://en.wikipedia.org/wiki/Gini_coefficient. I am also told that the CIA website has a great article about this.
Recently billionaire Warren Buffett posed a challenge to his fellow billionaires, including Ted Turner and Mark Cuban. "Why am I paying 22% in taxeswhile my secretary is paying 33%???" He has yet to receive a response.
Now those of you that know me know that there are three subjects that I never speak of, politics, religion and my sex life. So this is really going out on a limb for me. Please take this information with you when you vote next November.
Thanks,
Jeff
In A Former Life
I don't know if I believe in reincarnation or not. If I did have a former life I probably lived in the 1930's. I have always loved old movies and still stay up to watch them. As a child I liked art from the "social commentary school" IE. Edward Hopper, Grant Wood, Thomas Hart Benton. Most kids like Renaissance paintings. I love automotive design of that period. I have lots of car books and spend time on the Internet looking at old cars. Of course I have the Asta dog. I like Industrial design of that period as well. Spend lots of time on the Internet looking at old radios, trains, streetcars, blimps etc.. My favorite architect is Richard Neutra.
When my Grandmother died in 1993 she left me her dining room set, which she had had refinished several years earlier. So taking advantage of my Marshall Fields discount and my friends who worked in bruised and reduced. I began to furnish my apartment with furniture that matched the dining room set (18th century reproduction pieces sorry not art decco). I was pretty satisfied with the way my apartment looked until I went to a party at my friend Doug's house. Doug is an architect and has exquisite taste. I remember coming home and thinking" damn I live in an old ladies house". So a couple of years ago later when it came time to replace some pieces. I decided to go a little more modern for a fresher look. I bought a couch a chair and a couple of lamps. I thought I had done well. Nice clean lines, plain, simple modern but not so much as to have been dropped from a space ship. So I'm watching this 1938 movie Blondie when I notice that she has my couch and chairs. So much for modernization.
Thanks, (from 1938)
Jeff
When my Grandmother died in 1993 she left me her dining room set, which she had had refinished several years earlier. So taking advantage of my Marshall Fields discount and my friends who worked in bruised and reduced. I began to furnish my apartment with furniture that matched the dining room set (18th century reproduction pieces sorry not art decco). I was pretty satisfied with the way my apartment looked until I went to a party at my friend Doug's house. Doug is an architect and has exquisite taste. I remember coming home and thinking" damn I live in an old ladies house". So a couple of years ago later when it came time to replace some pieces. I decided to go a little more modern for a fresher look. I bought a couch a chair and a couple of lamps. I thought I had done well. Nice clean lines, plain, simple modern but not so much as to have been dropped from a space ship. So I'm watching this 1938 movie Blondie when I notice that she has my couch and chairs. So much for modernization.
Thanks, (from 1938)
Jeff
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