Look at this URL: http://www.housingtracker.net/affordability/illinois/chicago Realized I made a post on the Chicago market earlier. I did some research, was looking around for cheap properties, etc. What I don't understand is how the price to income ratio can stay so high for so long when the job market here is truly a disaster. Right now, for software engineers, there are barely any jobs. Friends on the market are finding that entry-level jobs have odds (for obtaining employment) of 1 in 800 or 1 in 4000. If median home price is 3x the median income, then a middle class family with two 40k/year earners has 80k, so the home should be around 240k. But what we're seeing is that the price is 320k (according to the plot.) That's an extra 80k, or 25% room to move if we revert back to historical levels. Then, where I live, there is so much inventory. These 300-400k+ condos don't make any sense at all, and the 600-800k ones are even more suspect. How is it that this crash hasn't happened already? Banks controlling the flow of inventory, by slowly letting the stuff go out for sale? Even if they control the flow, how long can they go? Where is the breaking point in all of this? It seems like recovering from such a terrible situation, we should overshoot the 3x multiplier to compensate for lack of employment and go below 3x median income. But it gets worse, because we have a situation where the state is broke with all kinds of unfunded pension liabilities. This state is truly a disaster, but things are going along as if nothing happened. But, either taxes have to go way up, or services have to come way down. Politically, there is a disaster in the making for some unlucky candidate. What are we waiting for to happen here? People to exhaust their savings? Further job market deterioration?
Oops, realized the data was 2007 numbers. I'm still assuming the ratio hasn't fallen too far from 4, though -- although, I am looking for better numbers.
http://www.housingtracker.net/asking-prices/chicago-illinois/ Go figure, the market did drop to 229k. Now the question is how far we do overshoot what is expected.