It could be a time to mourn the household wealth that didn’t materialize here as other cities outpaced Chicago in the post-housing-bust period. Then again, two economists tell Crain’s they see things differently.
When Ned English bought a $297,000 condo on Humboldt Boulevard in 2006, the
neighborhood was slightly scruffy but within a mile of the hip core of Logan Square.
“There were tough guys on the corner, and when I had guests I had to drive them to the
el at night,” English recalls.
Like most people, English didn’t know then that a massive housing crash lay just ahead.
Chicago-area home prices peaked in September 2006, the month he bought his three-bedroom
condo, according to a yardstick now known as the S&P CoreLogic Case-Shiller Indices. Prices slid ever-downward through March 2012, with a few small and short-lived
upticks along the way.
But the great majority of Chicago-area homeowners don’t live near the 606, or in the West Loop or a few other spots on the map whose home values soared in the 2010s. For much of the past decade, including the pandemic era, Chicago has had some of the slowest rising home prices among major cities, as tracked by Case-Shiller.
A few weeks ago, just ahead of this month’s 15th anniversary of peak pricing, Case-Shiller reported Chicago prices were about 1.2% below their old peak as of June, while nationwide, prices were 41.3% above their old peak. Case-Shiller’s primary index tracks the prices of single-family homes. Condominiums, tracked separately, in Chicago are at roughly the same point as single-family homes: Their value was about 1% below the old peak in the latest report.
That old peak and the valley that followed mean little to people who weren’t in the housing market back then, but English remembers the anxiety. With the mortgage deeply underwater, “it’s a bad feeling, knowing you can’t move for years because you’ll take a financial hit,” said English, who works for a research institution.
Slow-rising home values can make Chicago homeowners feel they’ve invested poorly in a vehicle that has long been considered one of the U.S. economy’s most reliable generators of household wealth. That’s particularly true if they’re chatting about home values with friends and relatives in high-rising markets like Seattle, where according to Case-Shiller home values are up almost 75% since their old peak in July 2007. (Not all cities peaked at the same time, and none of these figures account for changes in the property tax burden.)
Yet two housing economists tell Crain’s the 15th anniversary of peak pricing is an occasion Chicagoans can mark with contentment, if not outright smugness. “One question you can ask yourself is how much home a person who moves to Seattle can afford, and how much home a person who moves to Chicago can afford,” said Gabriel
Chodorow-Reich, an associate professor of economics at Harvard University and one of three authors of an August paper that explored home price growth in U.S. cities over the past two decades.
In the city of Seattle, the median price of homes sold in 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 J.D. Hewings echoes Chodorow-Reich. A professor of economics and geography at the University of Illinois at Urbana-Champaign, Hewings is the emeritus director of the Regional Economics Applications Laboratory, which tracks home prices in Illinois and its major cities for the Illinois Realtors professional association.
Source: Chicago Tribune