What follows are opinions originally expressed to the listserve group and repeated here to share with a wider audience.

Irrational Exuberance
Thomas Pickel

That's the term that Alan Greenspan used to describe the run-up in the stock market during the dot-com boom. It comes to mind as I read some of the recent posts about flipping, investment schemes and from my own observation of the real estate market.

While a general rise in prices is a natural outcome of a strong city housing market over the last several years, in my opinion, much of the more recent price inflation, especially of “as is” property, is the product of investor-driven speculation and flipping fueled by easy money and fraudulent appraising.

For example, I was recently on the losing end of a bidding war for a south side four-family, a trashed-out bank foreclosure in poor condition on a rough block. This is an area I think I know pretty well. I dropped out at $60,000 and it went for over $80,000. This is a building that would have gone begging two or three years ago and it will be very hard for that buyer to make money (unless of course he finds a greater fool to flip it to).

A lot of money that was pulled out of the stock market is out there chasing real estate these days. This is where the "ugly houses" people and various investment schemes come from. When more money comes into a market and supply (in this case, of buildings) stays the same, prices go up. What will happen? Ironically, the same thing that happened to the stock market when the dot-com bubble burst. When prices are not supported by underlying value, they eventually fall.

From those of us who have witnessed past real estate cycles in the city, this caveat; the escalator does not always go up. What has been happening in the city over the last 6 years or so has been great, better than we ever could have hoped, and we all want it to continue. I don't think people who are putting out a good quality rehab product that is priced right, need to be overly concerned. But it is certainly true that by driving up prices this speculation makes it harder to do that. All I'm saying is, “Be careful out there.” Buy 'em right and don't let yourself get carried away.

EDITOR’S NOTE: In a recent listserve exchange, an interesting subject was raised -- what counts as “impressive architectural” or “historic value?” Here's how one member sees it:

Sure, there are some especially impressive and important structures that we really need to work to save. However, if that were our only criterion, we'd lose the complete historic fabric that places those buildings in context.. What good is one great house if we tear down all the nearby “ordinary” houses, the “ordinary” commercial blocks in walkable distance, etc.? Sometimes the “impressiveness” and “history” come from the complete package, not just one specimen. The Lindenwood Park, Southampton, and Northampton neighborhoods are impressive AS NEIGHBORHOODS, because they are largely intact. They are gems of early, pre-WWII subdivision development. These are the neighborhoods the “new urbanism” is doing an absolutely pitiful job of emulating.

As for architectural importance of the neighborhoods--it just can't be over-estimated. No, these are not grand Victorians, but they are the historic treasures of the future. And, more people are already starting to appreciate that. The Bungalow and Romantic Revival homes of these neighborhoods are based on the ideas of the Arts & Crafts Movement, applied to affordable, modest homes for ordinary people (Yeah, the Gamble House is amazing, but not everyone could live there and, ironically, the Arts & Crafts Movement was--in large part--supposed to be about making a beautiful living environment for ordinary people.) In fact, I argue that the concentration of Romantic Revival homes in St. Louis is unique in the nation, and that the impetus for this architectural trend can even be traced right back to St. Louis and August Busch--but that's another story, and one I want to tell in an application for historic designation.

Love your bungalows! Take a look at what Minneapolis and Chicago are doing to preserve these wonderful homes and neighborhoods! (And, please, quit afflicting these homes with vinyl windows and steel Home Depot doors.)