Chicago housing market among nation’s most vulnerable to possible recession

New Jersey, California also in weakest positions

Chicago /
Jun.June 22, 2022 03:25 PM
Attom executive vice president Rick Sharga (LinkedIn, iStock)

Attom executive vice president Rick Sharga (LinkedIn, iStock)

As recessions headwinds build, Chicago is shaping up to be among the nation’s most vulnerable housing markets.

Seven Chicago-area counties ranked among the 20 weakest markets, which also include New Jersey and California, according to Attom, a real estate data firm. DeCab, Will, Lake, Kane, Kankakee and Cook Counties in Illinois, and Lake county in Indiana all ranked in the top 20.

“A lot depends on the nature of the recession,” Attom’s Rick Sharga said in an interview. “What it means is that a market like Chicago is much more vulnerable to a housing downturn.”

Attom ranked counties by four areas of concern: The jobless rate, the percentage of underwater loans, the percentage of a median monthly income that it would take to make a monthly mortgage payment and the number of properties that are in some state of foreclosure.

Granted, a recession wouldn’t have nearly the impact on the market similar to what happened in 2008, mostly because there are few signs that unemployment is on the rise. That means it would have a more muted effect on housing.

“If we do enter a recession it’s going to be almost entirely because of the Federal Reserve’s activity,” he said. “The economy isn’t doing too badly, but the Fed may need to slow it down because of inflation. Normally you go into a recession because you have some sort of weakness in the underlying economy.”

Population attrition, the high cost of living and taxes, plus an increase in working from home all contributed to Chicago’s weakness, Sharga said. The Chicago area also elected to restart in-process foreclosures from before the pandemic sooner than other cities, causing additional strain.

“Chicago real estate trends have not been as strong as a lot of places in the country, even prior to the pandemic,” Sharga said.





    Related Articles

    arrow_forward_ios
    Ken Griffin and No. 9 Walton (Getty Images, Gold Coast Realty Chicago, iStock/Photo Illustration by Steven Dilakian for The Real Deal)
    What’s next for Ken Griffin’s unfinished $58M Gold Coast penthouse?
    What’s next for Ken Griffin’s unfinished $58M Gold Coast penthouse?
    The late Jack Sandner with 1 Moffett Road (Getty, Compass)
    Home of late Chicago Mercantile Exchange leader hits the market
    Home of late Chicago Mercantile Exchange leader hits the market
    (L-R)1258 Lake Shore Drive in Chicago and the Palace Contarini Fasan in Venice (Google Maps, Wikipedia)
    Replica of Venetian palace on Chicago’s Gold Coast lists for $4.5M
    Replica of Venetian palace on Chicago’s Gold Coast lists for $4.5M
    Downtown Chicago
    Downtown Chicago rents spike on supply shortage
    Downtown Chicago rents spike on supply shortage
    (iStock)
    Chicago home prices rise, sell faster as mortgage rates climbed
    Chicago home prices rise, sell faster as mortgage rates climbed
    The dome-shaped house (Special Finds)
    Spaceship-style home of late radio psychic comes to market
    Spaceship-style home of late radio psychic comes to market
    Shore Capital Partner's Justin Ishbia and Lake Michigan beach (iStock, Shore Capital Partner)
    Winnetka shelves plan for billionaire’s private beach wall
    Winnetka shelves plan for billionaire’s private beach wall
    Row of houses in Chicago
    Real estate industry braces to fight transfer tax hike
    Real estate industry braces to fight transfer tax hike
    arrow_forward_ios

    The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

    Loading...