Chicago Housing (Washington: 2013, lease, condo)

[KC_Sleuth]

We are not looking to move to Chicago, but I did have a question about how Chicago housing works. It seems most of the housing is in the $300k - $500k range in the city and the suburbs. Considering the financial advice that the "sticker price" of a house shouldn't be more than 3x your income, it would be safe to assume that most households in Chicago are grossing anywhere from $150 - $166k. This seems a bit on the high side to me as an estimate - I am a CPA who does well in KC but I know lots of people who have the right education but can't get anywhere near a gross income $166k. I am sure wages are adjusted up for Chicago's COL, but considering only 25-30% of the population holds a Bachelor's degree or higher and the high unemployment rate for people without degrees, how does the population sustain such high salaries?

Can someone walk me through the math on this?

[chet everett]

I suspect that very few single earning households are able to afford $300k "first time" home purchases. Double the earning power, add a "step up the propety ladder" by making a bit of profit on a starter house (or condo) as well as the nit uncommon practice of getting some financial help from relatives and the prices don't seem quite so daunting.

For folks without a spouse and hoping to go right from renting to ownership the Chicago region is among the nation's least affordable...

[Larry Siegel]

A person buying his or her first home is probably looking around $300K which implies an income around $100K or a little less, not $166K. You move up over time. Also, many people buying their first SFH are also selling a condo, possibly at a profit (no guarantee of that these days).

The median family income in the Chicago area is $51,046.

[andrew61]

You also have to remember that even if most housing is in the 300-500K range, that doesn't necessarily mean that people who already live in those properties paid that much. In many cases the current residents might have bought their homes many years ago when the price was much less, and so they can afford to live in them even with a household income quite a bit under 100K. That at least partly explains any disparity in housing prices vs. average incomes.

[Attrill]

Originally Posted by KC_Sleuth

We are not looking to move to Chicago, but I did have a question about how Chicago housing works. It seems most of the housing is in the $300k - $500k range in the city and the suburbs.

Your $300,000 - $500,000 estimate is definitely too high.

As of January 2013 the median prices for the city or Chicago are:

SFH - $159,000
Condo - $202,500

For the Chicago Metro the median price is $141,000.

There are neighborhoods that have median prices over $300K, but the median incomes in those areas will also be much higher than the city median.

[Jandur]

Most housing is 300-500k in the nice areas maybe. Even at that, you can get a pretty decent place for 150k-200k. Nothing big, but a decent 1 or maybe even 2 bedroom.

And plenty of people here make 150k. The ones that don't, don't buy, or they buy cheaper places. Heck a former co-worker of mine just bought a place in Wicker Park and she doesn't make more than 40k a year. It's small, but pretty nice.

Beyond that if you are married it's really not that difficult to get to 150k with two incomes.

[Vlajos]

Originally Posted by Jandur

Most housing is 300-500k in the nice areas maybe. Even at that, you can get a pretty decent place for 150k-200k. Nothing big, but a decent 1 or maybe even 2 bedroom.

And plenty of people here make 150k. The ones that don't, don't buy, or they buy cheaper places. Heck a former co-worker of mine just bought a place in Wicker Park and she doesn't make more than 40k a year. It's small, but pretty nice.

Beyond that if you are married it's really not that difficult to get to 150k with two incomes.

Right, two people making $150K is not anything special around here.

[chicago103]

Originally Posted by Attrill

Your $300,000 - $500,000 estimate is definitely too high.

As of January 2013 the median prices for the city or Chicago are:

SFH - $159,000
Condo - $202,500

For the Chicago Metro the median price is $141,000.

There are neighborhoods that have median prices over $300K, but the median incomes in those areas will also be much higher than the city median.

Ditto, $300-$500K is more on the semi-luxury upper middle class end of Chicago housing. Truly "average" Chicagoans are people who live in $150-$250K housing and make less than six figures as a family income. This site skews a bit on the wealthy side in terms of mentality from what I have observed and that is why some have the perception that things are a bit more expensive than they truly are in the city.

[Tiger Beer]

Originally Posted by chet everett

For folks without a spouse and hoping to go right from renting to ownership the Chicago region is among the nation's least affordable...

If that's your belief, you definitely aren't familiar with either the West Coast or the East Coast.

I just spent the last few hours on realtor.com and zillow.com, and absolutely amazed at how much more someone can get in Chicago than they could in New York, Boston, Washington DC, San Francisco, Los Angeles, etc.

[Chicago60614]

Originally Posted by chet everett

I suspect that very few single earning households are able to afford $300k "first time" home purchases. Double the earning power, add a "step up the propety ladder" by making a bit of profit on a starter house (or condo) as well as the nit uncommon practice of getting some financial help from relatives and the prices don't seem quite so daunting.

For folks without a spouse and hoping to go right from renting to ownership the Chicago region is among the nation's least affordable...

Seriously? Almost all of my friends had bought their first place in their mid 20's and almost all of them were single with a regular white collar job. Chicago is HARDLY the nation's lease affordable. The average housing price is well below $200K. Not many people are going out and buying a $300K to $500K first house. That's pretty pricey overall for Chicago, and it's the exactly same nationwide. First time homebuyers aren't buying the upper half of the price range.