“Chicago’s Home Prices, Taxes Spark an Exodus From Cook County”

Bloomberg reports that rising home prices and taxes in Cook County are causing residents to flee:

“Cook County is losing people from its inner suburbs for the first time as residents leave for bigger houses and more land at lower prices at the edge of the metropolitan area, demographers say. The county had the biggest population drop among U.S. counties last year: a decline of 73,000 from 2000, or 1.4 percent, to 5.3 million, federal Census Bureau estimates show.”

Some additional factoids from the article:

• The 956-square-mile (2,476-square-kilometer) county, the second most populous in the U.S., was the only county among the nation’s 10 largest to lose residents from 2000 to 2005.

• The drop is a reversal from the county’s 5.3 percent population gain during the 1990s.

• The average price of a single residential property in Cook County rose 37 percent to $285,870 in 2005 from $208,100 in 2000, county data show.

• The county’s median residential property tax climbed 22 percent to $2,833 in 2004 from $2,323 in 2000, according to the most recent county assessor’s data.

• Cook County houses are more expensive than the national average. Across the U.S., the median house price increased 53 percent to $208,300 last year from $136,000 in 2000.

• The population of the metropolitan area outside Cook increased 11 percent to 4.36 million in 2005 from 2000, with the greatest gains on the outer edges.

• Kendall County, located on the southwest metropolitan fringe and separated by one county from Cook, was the third- fastest growing county in the U.S. from 2000 to 2005, expanding 46 percent, census estimates show.

I’m not exactly sure how, but somehow, some way, illegal immigrants are responsible for this.

In all seriousness though, this must be terrifying for some recent home buyers as well as long-term homeowners. Why? Because this trend implies a future deflection in the Chicago housing market- why would prices, and thus, property values, remain high, particularly when demand is decreasing? Simple economics indicates that when supply holds steady (or increases as people flee) and demand decreases, prices decrease as well. Which is great if you’re a buyer in the market- but not so great if you’re a seller.

Considering that recent statistics show that the average American has negative savings, and that any equity they do have is tied up in their homes, you begin to see how the bursting of the housing bubble would be (will be?) a drastic shock to the American system.

Articles like this make me glad I rent right now, and fill my head with dreams of buying property after the bubble bursts for a song.

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