Why is Chicago so cheap? (Manhattan, Atlanta: condo, crime, home sales)

[Chicago60614]

Originally Posted by Davis Street

This is a very good point.

Chicago also had a massive building boom, at the same time the economy wasn't really growing and population was declining.

The obvious result is a gigantic glut of virtually worthless condo units, especially in the South Loop and West Loop. It will take decades for these areas to recover. There are many buildings that are half-empty, and the unlucky owners are renting out units to college students for $800/month, which is ridiculously cheap for a "luxury" apartment.

Have you actually studied up on the market here?? You're looking at it backwards. The population loss was almost all on the west and south sides of the city - which never saw the boom anyway. The boom happened in areas that are now some of the most desirable in the city with tens of thousands of new housing units. The South Loop/West Loop and River North areas gained over 50,000 new residents during the past 10 years. They had nothing to do with the areas that lost population.

The downtown condo market actually has one of the lowest levels of available inventory in its history. Construction stopped about 4 years ago, and those condos have slowly been sold off one by one. The rental market is red hot right now, and there are actually around 4,000 apartment units coming online downtown this year via new construction. Hence you can see multiple construction cranes one again popping up all over the central area.

I've worked in commercial and residential real estate covering cities all over the country for 11 years now. Chicago's downtown and north side markets are looking pretty good right now. Maybe not 3 years ago....but obviously things have changed.

[Dport7674]

Originally Posted by botticelli

My guess is that Chicago is cheap because Americans have other options when it comes to career. New York, Boston, LA, San Fran, Seattle, Houston for all sorts of jobs. Canadians have very few options, and Toronto basically has no real competitor.

This sounds about right.

[A2DAC1985]

Originally Posted by Davis Street

Chicago is cheap because it's in the Midwest. The Midwest is the least desirable part of the U.S., and Chicago is smack-dab in the middle. The Rust Belt isn't exactly glamorous...

I believe that is a fairly significant factor in this discussion. Also the fact that it isn't next to one of the 4 oldest "Interstates" in the world, i.e. the Oceans.

For the record (and not in a smarty pants kind of way, more of a answer to final Jeopardy kind of way), Lebanon, Kansas is in the "middle" of America. Its about 15 miles south of the Nebraska border. So, if you're in the middle of nowhere, you at least know you're in Kansas or Nebraska.


I looked at Toronto's area and it's surprisingly similar to Chicago's (Toronto 243... Chicago 234) and both share a border with a Great Lake. Chicago does have a river that runs through it, but it isn't as much of a trek to cross as other famous rivers... the same can also be said about Toronto. So both don't really have any geographic features that are preventing development away from the city center.

Buuuutttt..... I know people want to blame this on Obama, but the first (and only) time I was in Toronto (and subsequently Canada), the Canadian "Loonie" and "Toonie" ( lols for those of us who watched those cartoons ... ) were worth more than a dollar or a two dollar bill... in January of 2008.

The official currency exchange offered (in our time there) something like 1 USD for 0.87 Loonies (Charlie Sheens) or 2 USD for 1.74 Toonies (Olsen twins). You could go to any business in Toronto (at least the places we went to) and they would take an American dollar, but only give you credit for 0.75 Loonies.

I think that has something to do with the price difference in residences as well as the other things people have mentioned.


But I could be wrong. I am mathematically deficient, and if we can keep it between us , I barely know how to read.

WHEN WILL CITY-DATA OFFER A PICTURES ONLY FORUM?!?!?!?

It's called the ADA, City-Data. Get with it.

[Chicagoist123]

Originally Posted by Chicago60614

Actually taxes are roughly middle of the pack for large cities. You might just be thinking sales taxes, which are pretty high among large cities, but it's somewhat offset by lower income taxes and real estate taxes than many large cities. Overall Chicago isn't really high or low.

I really don't know how much parking comes into play for people. The downtown garage rates make sense given the status of the city, and free street parking can be found in most areas that aren't super dense (where many like me haven't had a car in years).

Groceries are actually average to below average for most large cities if you look up a comparison. Chicago is in the middle of the "bread basket" and livestock areas of the country and is a massive distribution hub. I've noticed the difference between buying food here and many other areas. We're quite a steal.

The main reasons Chicago has cheaper housing isn't just a non-growing population. Look at places like Dallas, Houston and Kansas City. They're all cheaper and growing. The factor is having room to build, which all of the cities have quite a bit of and not having severe pressure of many people trying to get into a compact area. Chicago doesn't have the space pressure in many areas of the city compared to other more compact cities on the coasts.

Great point! Just making the troll look dumber and dumber.

[andrew61]

Originally Posted by MassVt

Minneapolis has winters that can get a bit colder than Chicago, BTW...

Yes, and that is the only major American city (that I can think of) in which that is true.

[andrew61]

Originally Posted by emathias

This simply isn't true for the downtown area. Owners are not renting units for $800 unless you mean a studio in the edges of what could be considered the central area with very poor transit service. And in that example, it would be the owners stupidity if they overpaid for it.

I know the rent prices for two condos in my association. One is a 2-bedroom on the second floor of a walk-up, with no view but great transit access and proximity to things. It's renting for $2,200 per month. The other is a small 3-bedroom (it should really be a 2-bedroom place) that's on the 3rd floor of walk-up with equally good transit and proximity, and it's renting for about $2,700 per month.

I'm sure there are at least a few good deals here and there, but for the most part rent prices in the good parts of the central area are as high as they've ever been. Prices are softer in the South Loop, but rental places are still getting good money for their units.

Dang... And here I was getting ready to rush right over to the South and West Loop areas and find myself an $800 apartment!

[Attrill]

Chicago's population loss is due to a number of factors. There are neighborhoods that have experienced straight up population loss/abandonment. This has mostly occurred in sections of the South, Southwest, and West sides. The fact that the federal government ordered over 20,000 units of public housing destroyed played a large role in this.

Other parts of the city are experiencing gentrification that also results in population loss. Between 1990-2000 I lived in Ukrainian Village and saw the buildings around me lose a lot of residents. On one side of us an apartment building full of recent Eastern European immigrants went from 10 apartments with about 40 residents to 4 condos with 7 residents. For the last 9 years I've been in Logan Square and have seen 2 buildings on my block go from being full of illegal day laborers and large families (14 people in one building and 15-25 in another) to having single families and a couple of apartments (6 people and 8 people). While this has resulted in a population loss, in both instances I saw the number of businesses in both neighborhoods increase dramatically during the population loss. Why? Because the new residents have disposable income to spend.

Chicago is seeing a growth in average income and education levels that outpaces national and regional averages. While there are fewer people, those people are earning more money and driving a growth in new businesses (along with housing costs). While Chicago is currently cheaper than Toronto, much of the city is closer in cost to Toronto than it was 20 years ago. This has pluses and minuses, but it is not an overall abandonment of the city. Much of the North, Northwest, Central, and near South and West sections of the city are comparable to Toronto now. More of it will be so in 20 years. Chicago does not have the raw land that many sunbelt cities have, but it also has a lot of industrial land that coastal cities lack. There is room to grow in Chicago, but it's being slowly eaten up.

[MassVt]

Originally Posted by andrew61

Yes, and that is the only major American city (that I can think of) in which that is true.

Well, I think that Milwaukee ( still major) would also be slightly colder in winter, for those of you scoring at home, but the point is well taken; Chicago is the smart shoppers' bargain among major American cities, and a a little of that "coastal" feeling in the middle of America...

[urbanlife78]

I have a question, what would help the areas that have lost residents and turn around the abandonment of those areas? That would make an interesting urban planning/architecture thesis with having something involve such a large area. Curious if it would have to happen in smaller areas and expand beyond those areas or just have to be a massive project to tackle overall.

[Larry Siegel]

Chicago is also a relative bargain because the (second) Daley administration adopted a deliberately pro-growth strategy, knowing that if Chicago had anti-growth policies like those at work in NY, SF, and LA it would become uncompetitive with those cities. The Chicago housing supply expanded tremendously in the 1990s and 2000s, keeping prices down. You can see the result - you can buy a bungalow in excellent condition in a good neighborhood for $300,000 in Chicago, while the equivalent in SF and LA is over $1 million. New York doesn't have directly comparable housing but the prices are even higher than in California. For more details of these policies see Edward Glaeser's book "Triumph of the City."