My wife and I will be moving to Chicago soon and we intend on buying a house when we get there. How screwed are we by the current housing situation and interest rates?
Anecdata - I have friends that lived there for 8+ years, then moved to the south in the last 2 years and their property value barely budged.
E.g, if buying costs $x, you pay $y a year for loan, insurance, maintenance, etc, and sell for $x later, and $y per year was less than the cost of renting, you win.
But most people would call that a "good deal" vs a "good investment".
Note - there is a reason housing prices in Chicago are stagnant...people are leaving.
I would not classify Chicago as anything close to an "affordable" housing market. Probably a toss up whether the least affordable area in the midwest to median income earners is Chicago or Minneapolis? Either area, you will be paying through the nose compared to, say, here in Wisconsin.
Overall, the city’s population grew nearly 2% from 2010 to 2020 — from 2.6 million residents to 2.7 million, according to data released from the 2020 census. That’s a change from the population decline the city had experienced from 2000 to 2010, when the city lost nearly 7% of its population.
https://chicago.suntimes.com/2021/8/12/22622062/chicago-cens...
But I think its fair to say that growth is generally pretty stagnant especially when you consider there are places across the country that aren't name NY or LA, that are absolutely booming (Denver, Dallas, Houston, Austin, Portland, Miami, Seattle, etc.)
> Probably a toss up whether the least affordable area in the midwest to median income earners is Chicago or Minneapolis? Either area, you will be paying through the nose compared to, say, here in Wisconsin.
This is true, but purchasing property in Chicago is relatively affordable if you compare against other major metros.
The point is this - housing prices in Chicago are somewhat stagnant by simple supply and demand laws, where the demand is not nearly what other major metros are experiencing in the country. This is good for buyers and bad for sellers. If chi/IL gov't stays the same, I don't expect anyone buying now will be in a sellers market anytime soon.
Buying and selling real estate involves high transaction costs - there are closing costs and transfer taxes on the buy side, and 6% commissions and transfer taxes on the sell side - which means in order to break even, you need to have some amount of appreciation.
Then there's the opportunity cost of living in a home that doesn't appreciate while literally everyone else in the country is getting rich merely by owning homes in states that have increasing populations.
And to top it all off, Chicago homes are not cheap and the property taxes are astronomical, so it's not like you're getting an amazing deal to make up for it.
Secondly, only the people who can afford to live in those high cost of living areas would get rich off of these increasing property values you're talking about. The worst thing a person can do is move somewhere to live beyond their means because "when I sell I'll be making a killing!" Out here in flyover country, unless you live in Chicago or Minneapolis, you're probably not seeing 30% per annum increases in your property values.
Finally, yeah, we in the midwest already know Chicago is not cheap. You buy there because you're well off, and you're going to make those ridiculous returns you were talking about. But the rest of us just deal with the areas we can afford. Which is probably not Tribune Tower.
Not necessarily a bad policy, imo, but doesn't make buying cheaper.
The wealthiest suburbs are on the north shore, the towns directly north of the city starting with evanston going to lake forest. Oak park area is basically the Berkeley of chicago, lots of highly educated, high earning left leaners. Naperville and hinsdale have a lot of money too, never been myself though.
You've got to be ready to overbid (our first SFH got overbid by 70k), "best and last", and deal with 5+ bids per house.
You can find stuff away from public transit/no walkability but then why move to Chicago at that point?
If trends continue, prices will start falling. You might be able to offer under asking, too.
I bought 15% under asking in October of last year.
Chicago didn't really go crazy like Phoenix or Palm Springs...
That is a wild revelation to someone comparing greater Denver housing market, where adding 30% is required just to be considered....
I've been watching Zillow pretty consistently over the past few weeks, and have noticed price drops as well as longer days on the market in the Chicago area.
Knowing values don't increase much isn't really a deterrent considering the desirability of the location.
And other places consistently go for "less than asking" - but the end result is the same, really.
1) I used their seller's agent, and he gave me ~3% to get the deal done. So really only 12% under asking.
2) The asking price was too high to begin with.
3) The market had started to cool, and they wanted to sell since Winter was coming and Winter isn't a great time to sell a $1M+ condo in Chicago.
Of course, I've also heard that a significant fraction of those moving in are single men, to the point where the city has gotten the nickname "Menver".
[0] https://www.metrodenver.org/regional-data/data-central?categ...
Someone else had mentioned that the meme started at least 10-15 years ago.
Some areas around it had a very "Portland" or "Seattle" feel a few decades ago, and for a time they were a "well-kept secret". Not so much now, so the next big city may be somewhere else soon.
Getting an accepted offer? Getting better by the day, in many areas.