Home Unaffordability Reaches 15-year High In Chicagoland

The Chicago area’s housing affordability problem is the worst it’s been since at least the Great Recession.

The combination of rising mortgage rates and home prices has created a challenging environment for prospective homebuyers, with 99 percent of U.S. counties experiencing affordability levels below historical norms, Crain’s reported, citing a report from property data firm Attom.

Affordability levels were determined by Attom through calculating the income needed to cover monthly homeownership costs, based on an area’s median-priced single-family home. In Cook County, monthly expenses consumed 28.1 percent of the average wage in the third quarter, marking a nearly 5 percent increase year-over-year, the outlet reported.

The last time Cook County homes were this hard to afford was in the fourth quarter of 2008. The situation is even more dire in DuPage and Lake counties, where affordability hasn’t been this low since the third quarter of 2007. In Kane, McHenry and Will counties, no previous quarter in Attom’s data, which dates back to 2005, recorded such high levels of unaffordability.

Increased mortgage rates, driven by the Federal Reserve’s efforts to combat inflation, has caused many would-be sellers to hold onto their homes with low interest rates of around 3 percent, rather than buying a new home with a rate in the ballpark of 6 percent. This trend has led to scarce housing inventory, thus driving up prices.

Affordability issues have been especially tough on working-class buyers who struggle to obtain additional funds, whereas affluent buyers can reallocate cash and pay more than the asking price, Starting Point Realty broker Ryan Gable told the publication. Many families are having to lower expectations on what they can get for their money, instead opting for townhouses or compromising on the quality of amenities.

“The dynamics influencing the U.S. housing market appear to continuously work against everyday Americans,” Attom CEO Rob Barber told the outlet.

These challenges facing homeowners and prospective buyers are present throughout the country. Nationwide, homes haven’t been this unaffordable since the second quarter of 2007, coinciding with the housing bubble that eventually burst during the global financial crisis.

— Quinn Donoghue