The apartment “was worth a lot less than what I paid for quite quickly,” English remembers now. He estimates it was worth around $ 200,000 at the bottom of the housing market.
Over the years, the English neighborhood has improved dramatically, with the warm areas around Logan Square to the north and Bucktown to the east extending into the 2010s and the opening of 606 in 2015. One entrance the popular recreation trail is one block south of the English condo.
Thanks to improvements all around his house, English’s condo is now worth around $ 385,000, he said, about 30% more than he paid 15 years ago.
But the vast majority of Chicago area homeowners don’t live near 606, or in the West Loop or a few other places on the map where home values have skyrocketed in the 2010s. the past decade, including the era of the pandemic, Chicago has seen one of the slowest increases in house prices among major cities, as Case-Shiller has tracked.
A few weeks ago, just before the 15th anniversary of this month’s peak prices, Case-Shiller reported that Chicago prices were about 1.2% lower than their former high in June, while Nationally, prices were 41.3% above their previous peak.
The Case-Shiller Primary Index tracks prices for single-family homes. Condominiums, tracked separately, in Chicago are at about the same point as single-family homes: their value was about 1% lower than the old high in the last report.
That old peak and the valley that followed doesn’t mean much to people who weren’t in the housing market at the time, but English remembers the anxiety. With the mortgage deeply underwater, “it’s a bad feeling, to know that you can’t move for years because you will take a financial hit,” said English, who works for a research institute.
Slow home values can make Chicago homeowners feel like they’ve invested the wrong time in a vehicle that has long been considered one of the most reliable household wealth generators in the U.S. economy. This is especially true if they are discussing home values with friends and relatives in high growth markets like Seattle, where, according to Case-Shiller, home values have risen nearly 75% since their old. peak in July 2007. (Not all cities peaked at at the same time, and none of these figures reflect changes in the property tax burden.)
Yet two housing economists tell Crain that the 15th anniversary of maximum pricing is an occasion Chicagoans can mark with contentment, if not outright smugness.
“One question you may ask yourself is how much house a person moving to Seattle can afford, and how much house a person moving to Chicago can afford,” said Gabriel Chodorow-Reich, associate professor of economics at Harvard University and one of three authors of an August article that explored the growth in house prices in American cities over the past two decades.
In the city of Seattle, the median price of homes sold over the past year is just under $ 800,000, according to Redfin, the online real estate marketplace. In the city of Chicago, it’s $ 340,000.
Geoffrey JD Hewings echoes Chodorow-Reich. Professor of Economics and Geography at the University of Illinois at Urbana-Champaign, Hewings is Director Emeritus of the Regional Economics Applications Laboratory, which tracks house prices in Illinois and its major cities for the trade association. Illinois Realtors.
Hewings gave the example of a recent graduate student from his program who moved to San Francisco and “told me how much of his income he spends on a really poor apartment. He lives in San Francisco; it’s a wonderful place, but he doesn’t have enough money to enjoy it.
Home prices in San Francisco have risen nearly 50% since their May 2006 peak, according to Case-Shiller. The increases have dramatically increased the household wealth of long-time homeowners, but they have also sparked a housing affordability crisis. The same is true of Seattle, San Diego, Portland, Oregon, and other cities whose home values have exceeded Chicago’s. We have our gentrification hotspots, but compared to cities that are being remade by rampant gentrification, it’s sweet here.
When World Business Chicago advertised in Texas last week claiming that recent conservative state measures on abortion, voting rights and COVID have made it harder to attract and retain employers, Hewings thought there was a better idea: “Advertise how much easier the housing market is.” home buyers. “
The idea of touting Chicago’s relatively cheap housing market as a way to increase its job base has been gaining ground for several years, but no one at a leadership level has taken on this task yet.
The findings of the recent Chodorow-Reich article suggest that someone better tackle it. Looking at two decades of house price movement during the 21st century, the authors of the article saw a pattern: two chapters. The third chapter is revealing: the cities that exploded and exploded the most bounced back most vigorously in the late 2010s.
The recent slow growth in house prices in Chicago is just an extension of its long-term trend, the document suggests. The pattern persists in the COVID era, when even our overheated prices seem lukewarm compared to other cities.
“These are fundamentals,” Chodorow-Reich said. Demand for housing drives up housing prices, and job growth is a fundamental component of housing demand. In the years leading up to the COVID crisis, job growth in the Chicago area lagging behind many major cities.
Expanding the employment base is a comprehensive effort that is closely linked to limiting the growth of pension debt and property taxes.
In the meantime, Chodorow-Reich recommends Chicago homeowners focus on some of the other fundamentals of living here: “It’s a great place to live,” says the Bostonian. “There are good restaurants, lots of things to do on the lake in summer and affordable accommodation. These are very good things to have for a city.