4 ms·

Interesting observation Re. Chicago from infographic - "The only city with an “undervalued” housing market according to the survey was Chicago."

bpodgursky 6y ago
Sorta makes me think that UBS is working on pure financials and not factoring in the actual things depressing Chicago house prices: - Political and state-level financial stability risk (the entire state is a stock market hiccup away from bankruptcy) - Catastrophic and increasing murder rate, which is only getting worse (not to mention other less-fatal crime) - Deteriorating public schools driving wealthy families out, or at least to suburbs I don't think Chicago is (yet) lined up to be a new Detroit, but there are real reasons to undervalue Chicago house prices right now...
- colinmhayes 6y ago
  I grew up in Chicago and left. The areas plagued by gang violence are actually the best in terms of home value to rent ratio for the landlord. Everyone else isn't effected by the violence. Public schools in the city are better than in the suburbs. The real reason that the future isn't bright is mostly the horrible fiscal situation and the god awful weather.
nradov 6y ago
Chicago and the rest of Illinois are in a dreadful fiscal situation with underfunded pension liabilities. Anyone who buys real estate there will eventually be hit with higher taxes and lower services. Buyers are probably factoring that in.
- rhino369 6y ago
  And the high property taxes that will only get higher have a direct impact on home value.
- im3w1l 6y ago
  Are people really that savvy? Somehow I expect most people are more thinking where they feel like living, and where they can get a good job, then buying a home they can afford there.
  - lotsofpulp 6y ago
    Even un-savvy people can see price history and property tax history. I would guess most people are stuck where they are simply because they don't want to lose access to their friends/family, but for higher income/able to move workers, it's not difficult to see which way land prices/property tax are trending.
  - bilbo0s 6y ago
    Well, that, and the fact that anyone who buys a house pretty much anywhere will eventually be hit with higher taxes and fewer services. So for a lot of people, that's probably not being factored very highly because the same thing is happening everywhere. It's just the nature of the fire/teacher/police contracts that were given out all over the nation in preceding decades. So the deciding factor becomes something more like, "How much is the job I'm being offered going to pay me vs the cost of living?" They may also think about personal contacts, and the future opportunities a city is likely to provide them? I'd imagine it doesn't go too much further than that though.
    - lotsofpulp 6y ago
      > So for a lot of people, that's probably not being factored very highly because the same thing is happening everywhere. Not on the same scale everywhere, and certainly not as bad as KY/NJ/CT/IL. If you’re in the 40% to 80% income in those states, and you have 10+ working years left, it would make a measurable distance to move somewhere else where you can save $5k+ per year in taxes, if not more. Even more if you can go remote with a high salary.
- lbarrow 6y ago
  I'm not sure why you're getting downvoted. I've lived in Chicago for almost 10 years and this is exactly correct.
- eldavido 6y ago
  I think it's actually a decent time to buy (saying this as I sit in a commercial building I recently purchased in a south suburb). The tax situation can't get much worse, it's almost mathematically impossible to pay all these pensions, it can only get better from here. Whether or not the "fair tax" passes will be an important bellwether.
  - lotsofpulp 6y ago
    >The tax situation can't get much worse, it's almost mathematically impossible to pay all these pensions, it can only get better from here. What? The tax increases are just starting. This year, Illinois is voting to change from a flat % income tax to having marginal rates. Anyone earning any decent amount of money should expect to pay more and more every year in income tax, property tax, sales taxes, tolls, fees for car registration, basically anything that can help increase tax revenue since expenses aren't going anywhere but up also for the next couple decades. Unless benefit recipients die earlier than expected.
- cobookman 6y ago
  So is California. Around 80-90k of pension liabilities per household. Just California has Prop 13 protections for land owners.
reverend_gonzo 6y ago
I live in Chicago. The state has its problems and the city has its problems for sure. However, things are crime rates are definitely exaggerated by people who don’t live here. The amenities of the city in my opinion are through the roof, albeit very much limited right now due to COVID. The one thing Chicago has that many other cities don’t is space. Chicago is surrounded by land so there’s no lack of supply. My opinion is that’s what keeps prices down.

bpodgursky 6y ago

Sorta makes me think that UBS is working on pure financials and not factoring in the actual things depressing Chicago house prices: - Political and state-level financial stability risk (the entire state is a stock market hiccup away from bankruptcy) - Catastrophic and increasing murder rate, which is only getting worse (not to mention other less-fatal crime) - Deteriorating public schools driving wealthy families out, or at least to suburbs I don't think Chicago is (yet) lined up to be a new Detroit, but there are real reasons to undervalue Chicago house prices right now...

colinmhayes 6y ago
I grew up in Chicago and left. The areas plagued by gang violence are actually the best in terms of home value to rent ratio for the landlord. Everyone else isn't effected by the violence. Public schools in the city are better than in the suburbs. The real reason that the future isn't bright is mostly the horrible fiscal situation and the god awful weather.

nradov 6y ago

Chicago and the rest of Illinois are in a dreadful fiscal situation with underfunded pension liabilities. Anyone who buys real estate there will eventually be hit with higher taxes and lower services. Buyers are probably factoring that in.

rhino369 6y ago
And the high property taxes that will only get higher have a direct impact on home value.
im3w1l 6y ago
Are people really that savvy? Somehow I expect most people are more thinking where they feel like living, and where they can get a good job, then buying a home they can afford there.
- lotsofpulp 6y ago
  Even un-savvy people can see price history and property tax history. I would guess most people are stuck where they are simply because they don't want to lose access to their friends/family, but for higher income/able to move workers, it's not difficult to see which way land prices/property tax are trending.
- bilbo0s 6y ago
  Well, that, and the fact that anyone who buys a house pretty much anywhere will eventually be hit with higher taxes and fewer services. So for a lot of people, that's probably not being factored very highly because the same thing is happening everywhere. It's just the nature of the fire/teacher/police contracts that were given out all over the nation in preceding decades. So the deciding factor becomes something more like, "How much is the job I'm being offered going to pay me vs the cost of living?" They may also think about personal contacts, and the future opportunities a city is likely to provide them? I'd imagine it doesn't go too much further than that though.
  - lotsofpulp 6y ago
    > So for a lot of people, that's probably not being factored very highly because the same thing is happening everywhere. Not on the same scale everywhere, and certainly not as bad as KY/NJ/CT/IL. If you’re in the 40% to 80% income in those states, and you have 10+ working years left, it would make a measurable distance to move somewhere else where you can save $5k+ per year in taxes, if not more. Even more if you can go remote with a high salary.
lbarrow 6y ago
I'm not sure why you're getting downvoted. I've lived in Chicago for almost 10 years and this is exactly correct.
eldavido 6y ago
I think it's actually a decent time to buy (saying this as I sit in a commercial building I recently purchased in a south suburb). The tax situation can't get much worse, it's almost mathematically impossible to pay all these pensions, it can only get better from here. Whether or not the "fair tax" passes will be an important bellwether.
- lotsofpulp 6y ago
  >The tax situation can't get much worse, it's almost mathematically impossible to pay all these pensions, it can only get better from here. What? The tax increases are just starting. This year, Illinois is voting to change from a flat % income tax to having marginal rates. Anyone earning any decent amount of money should expect to pay more and more every year in income tax, property tax, sales taxes, tolls, fees for car registration, basically anything that can help increase tax revenue since expenses aren't going anywhere but up also for the next couple decades. Unless benefit recipients die earlier than expected.
cobookman 6y ago
So is California. Around 80-90k of pension liabilities per household. Just California has Prop 13 protections for land owners.

reverend_gonzo 6y ago

I live in Chicago. The state has its problems and the city has its problems for sure. However, things are crime rates are definitely exaggerated by people who don’t live here. The amenities of the city in my opinion are through the roof, albeit very much limited right now due to COVID. The one thing Chicago has that many other cities don’t is space. Chicago is surrounded by land so there’s no lack of supply. My opinion is that’s what keeps prices down.