Homes in Chicago are still easier to afford than they have been historically, even with rising prices and interest rates.
That’s because wages continue to increase faster than housing prices in the Chicago area, according to a report by Crain’s that looked at two recent studies of the market.
The situation in Chicago is the opposite of what’s been happening in most markets across the country, where workers are struggling to afford homes as wages have failed to keep up with home price growth.
Attom, a nationwide property data source, reviewed 586 counties for an April report and 81 percent of those counties had wage growth that was slower than home price growth. The three main counties in the Chicago area — Cook, DuPage and Lake — were counties where homes were easier to afford in the first quarter of the year than historical averages based on 2005 to now. Neighboring McHenry and Will counties have become less affordable than historical averages, however.
Home price growth in Chicago has also been slower than in other major U.S. markets.
Another report reinforces the data. Chicago is one of the top three metros for improved home affordability since the market peaked in 2006 before the recession, according to First American Financial, a California title insurance company.
The good news may not last long. Both reports cited low mortgage rates as a substantial reason for the affordability of the market. Now rates are rising, and in the last month the increase has already been dramatic.
From their historic lows at the beginning of the year, mortgage rates have now climbed by nearly 1.5 percentage points, the most rapid increase since 1994. More than half of that rise was in March, as rates shot up from 4.09 percent to 4.8 percent.
[Crain’s] — Miranda Davis
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