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Chicago Home Affordability

The ability for a median-income family to afford a home in Chicago is being seriously challenged.  Nationwide, we’re seeing almost a 5% decrease in affordability from 2nd quarter, the biggest one in almost a decade, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI) Quarterly Report, released yesterday.  Chicago Lake Condos - Lake Point Towers - Jean Ward

The national affordability index’s current number of 64.5 means that a family earning the US median income of $64,400 can afford about 64.5% of the new and existing homes sold during the months of July, August, and September.  Chicago ranks as only the 173rd most affordable metropolitan area in the country, with an HOI of 63.7, out of 223 cities rated.    San Francisco rates as the least affordable city in the US, with median-income families able to afford only 16% of the homes sold in the last quarter.

Locally, Chicago’s affordability plummeted almost 7% from last quarter.  While the average wage earners in Chicago were able to afford close to 79% of the new and existing homes sold in the 4th quarter of 2012, which is Chicago’s highest HOI number posted over the last decade, per the Complete Listing by Metropolitan Area report, the last quarter of 2013 points toward median-income Chicago families able to afford only about 64% of homes sold.

The median family income in the Chicago area for last quarter was $73,400, while the median sales price for the same period was $210,000.  While rising home prices in our city gives us a sense of confidence about the economy, they also are forcing buyers right out of the market, as the median income is not keeping pace.  Additionally, higher mortgage rates are locking buyers out of purchases.

To find out more about the Chicago real estate market and/or your ability to afford a home, contact me today.

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