Reason For Optimism Regarding Chicago Home Prices?

Although my last post provided 3 different sets of data that suggest that Chicago housing prices will continue to decline the local employment numbers actually paint the opposite picture. A while back I wrote about how employment in Chicago is a primary driver of housing demand. Surprisingly, a few months later the numbers continue to look encouraging. As you can see in the chart below the trend through April (the most recent month available) is still up.

Chicago employment trend

On a year over year basis April employment is up 1.5% over April of the previous year. Although the growth rate has slowed in Chicago employment is still growing – to the tune of almost 70,000 people in the last year. All those workers need a place to live, which may explain why home prices haven’t declined more than they have. Of course, those 70,000 people are spread out over a large area that includes all the surrounding suburbs and Joliet but it’s still a large number. The question is whether or not those extra workers are going to absorb the excess inventory that is on the market right now.

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