By: Mary Ellen Podmolik
July 31, 2011
The Chicago area's ranking in a new study of home affordability looks promising, until you start to look at paychecks.
According to the Center for Housing Policy, metropolitan Chicago is the 72nd most expensive housing market in the nation, with a median home price of $172,000. That makes the local housing market quite a bit more affordable than in 2010, when the area's median price of $203,000 made it the nation's 48th most expensive housing market, based on first-quarter home price numbers for both years.
Low mortgage rates have helped make homeownership more affordable, but what's really helped affordability here is the high number of foreclosures.
At the end of 2010, 7.5 percent of Chicago-area properties were in foreclosure, compared with a historical norm of 1 percent, according to data the center compiled for the report. That has put downward pressure on home prices.
Despite the price declines, buying a home remains a struggle for many employed consumers in the Chicago area, according to the group's local findings in its annual "Paycheck to Paycheck" study.
To be able to afford that home with a median price of $172,000, a consumer would need an annual income of $50,930, assuming a 10 percent down payment and mortgage insurance. That's 16 percent less than last year, according to the Washington, D.C.-based center, which is the research arm of the National Housing Conference.
Still, of the five professions that the center tagged as being in hiring mode, only accountants, with an annual income of $55,759, would have income sufficient to qualify for that purchase. Other professions that are hiring, jobs like groundskeepers, janitors, office clerks and security guards, which pay an average annual salary of between $25,000 and $33,000, would be priced out of the market.
The story doesn't get much better for renters, who face a rental market similar to what it was last year. After estimating fair market rents in the Chicago area of $904 a month for a one-bedroom apartment and $1,016 for a two-bedroom unit, the study found the annual incomes needed to be able to afford those apartments are $36,160 and $40,640, respectively. Fast-food cooks, janitors, bank tellers, retail salespeople and cashiers all would have trouble making that rent.
The catch is that consumers who are struggling to cover their rent have little extra income to be able to set aside in savings for an eventual home down payment, noted Maya Brennan, the report's co-author.
"We've seen year after year that wages in that low to moderate range are not enough to be able to rent a typical two-bedroom apartment or buy a home in most U.S. metro areas," Brennan said. "Is there a silver lining for some workers? In a lot of metro areas, homeownership has gotten a lot less expensive, but in the Chicago area it's still unaffordable for more than half the workers we looked at."
Altogether, the center's database looked at home purchase and rental affordability for people employed in 72 occupations in 200 metropolitan areas. Challenges remain in many of those areas, like Chicago, where unemployment remains stubbornly high.
"One of the things we've seen is you can't always rely on a two-income household remaining a two-income household," Brennan said.
Happy feet: Chicago has held onto its title of being the fourth-most walkable city in the nation, according to Walk Score, the Seattle-based company that's been measuring this sort of thing for the past few years.
Coming in ahead of Chicago were, in order, New York City, San Francisco and Boston.
Last time the company ranked cities, in 2008, it listed the Loop, the Near North Side and Lincoln Park as Chicago's most walkable neighborhoods. This time around, the top three were Printer's Row, the Near North Side and Sheridan Park.
Which neighborhood gets the nod as the most unfriendly to walkers? That would be Harbour Point Estates, a car-dependent area east of Hegewisch and nestled against the Illinois-Indiana border.
To determine how walkable an area is, the company's calculations incorporated 2010 census data and more than 10 million individual addresses in 2,500 cities and 10,017 neighborhoods, whose boundaries were determined by realty website Zillow.