Thursday, March 16, 2006

Real Estate Values: 30 Cities to Watch published an article this week about housing price forecasts entitled Going Up, Down and Sideways: Top 30 Cities to Watch.

Here's what it had to say about Chicago, a bubble sitter where prices may have peaked:

The Midwest hasn't had the kind of dramatic price increases as cities on the two coasts and those in the Sun Belt. As such, Chicago isn't as susceptible to a pricing bubble as some of the other major urban areas of the country, the real estate pros say. However, the ratio of housing costs to income in the market far exceeds that of other markets in the state and job growth has been sluggish. "The big challenge in Chicago is work-force housing," Gollis says. "We're always looking at likely income growth and affordability growth or lack thereof."

Surprisingly, San Francisco is in the same category:

With a median home price of nearly $720,000 at the end of 2005, according to the NAR, San Francisco remains one of the country's most expensive cities to live in, outpacing even Honolulu and New York City. Housing prices are unlikely to decline because of short supply -- surrounded by hills and its famed bay -- there's just nowhere else to build anything less expensive in the city. But realistically, there aren't that many people who can afford to buy at those prices, which should keep prices from going much higher.

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