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5 Cities Where Home Prices Hit New Lows

Chicago

  • Home prices compared to September 2006 peak: -37%

Home prices in the windy city are the lowest they’ve been since 2000. Prices have dropped 37% since 2006, and a chunk of those losses is very recent. Between September and February, home prices in Chicago fell 11%, compared to the 5.4% average loss for all of the 20 metro areas tracked by S&P/Case-Shiller.

High unemployment is a big part of the problem, says Jeff Ristine, broker owner at Weichert Realtors Kingsland Properties in Chicago. The city’s unemployment rate was 9% in February, according to the BLS, compared to the 8.3% national unemployment rate at the time. Chicago’s unemployment has outpaced the national average for some time: In February 2011, the city had an unemployment rate of 9.7% compared to a 9% national figure. And more job losses could come, experts say. Illinois raised its state income tax last year, and experts say more companies could move their operations to other states as a result. Job losses have pushed up foreclosure rates in the city, says Ristine, which in turn has lowered values of nearby homes.

Fast home price appreciation during the boom is also to blame: Historically, home prices rose 3% to 5% a year but between 2001 and 2006 that spiked to 10% to 15% growth a year, says Ristine. Meanwhile, many new properties on the outskirts of the city sit uncompleted or vacant since the housing boom ended. Experts say it’s unclear what’s next for this city, but first quarter data seems relatively promising: the median sales price rose 4.7%, says Ristine, marking the first quarterly increase in roughly four years.

Getty Images
Townhouses on Prairie Avenue, Chicago
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