Oh, Real Estate Market, Why Have You Forsaken Me?

By Olivia Leigh in News on Oct 3, 2006 6:36PM

That’s the question many people in the city -- and around the country -- are asking themselves as the real estate market continues its dramatic cooldown.

If you’re anything like Chicagoist, you were pretty darn close to falling prey to the allure of flipping a house. Watching people on HGTV turning tens of thousands of dollars in profit became a bit of a sad addiction. Like us, you probably thought, “Hey! I can flip a house, and go to Acapulco and drink Mai Tais on the beach for an entire year!”

But with the median price for single-family homes decreasing 1.7 percent from August 2005 to August 2006 and houses staying on the market for much longer than in recent months, we are thankful we didn’t try to convince ourselves that we could master the Venetian plaster technique.

And while the Chicago region has managed to avoid price depreciation, with condo prices even increasing 3.4 percent in August, effects are definitely being felt in the area. Home sales in August were down nearly 21 percent from last year, as condo sales fell 11 percent.

Along with the lull in the market have come dramatic increases in the percentage of income Chicagoans pay for housing. According to a new Census Bureau report, the number of homeowners in the area spending more than 35 percent of their household income on housing costs jumped from 17 percent in 2000 to 28 percent in 2005. And for renters, things are even worse, with a whopping 40 percent of us spending more than a third of our monthly gross income on housing in 2005, up from 29 percent in 2000. This follows a nationwide pattern of increases, as incomes have remained disproportionately stagnant in the wake of rising housing costs.

At $1,678, Chicago’s monthly median housing cost (a 22 percent increase from ’00) ranked us 2nd behind Detroit among major cities that have seen a spike in median monthly housing costs for people with mortgages, even beating out the notoriously crazy market of San Francisco.

So, Chicagoist readers, are you feeling the squeeze? What percentage of your income is devoted to that grossly overpriced studio of yours?

"This Property, For Sale, Very Cheap" by Flickr user Zachary Korb