[Eightball]

Originally Posted by Crawford

I'll never get the idea that RE is a "bargain" based on its price. RE is a "bargain" based on its relative appreciation. The price is a function of market expectations of long-term appreciation.

Chicago has relatively low housing prices for a major, first-tier city. However, Chicago has some of the worst housing appreciation of any major U.S. cities (I believe the absolute worst per the Case-Shiller index), so the reasonable prices make sense in this context.

If you buy a home for 400k, and sell it for 400k 15 years later, that isn't a "good deal" relative to buying a home for 600k and selling it for 1 million 15 years later. You also have to factor in taxes, maintenance and the like, and Chicagoland property taxes tend to be high.

Property taxes, in particular, really affect housing prices. You can see this in some NY suburbs, where a more affluent suburb will often have lower housing prices than a less affluent suburb, because the rich town votes for crazy property taxes to support gold-plated schools and services. People buy into the community because the schools are de facto private schools, and the property taxes are de facto tuition. But if you didn't have school-age kids, you would be crazy to pay 40k in annual property taxes, for a modest home.

Excellent post! Can't overstate the importance of appreciation and high property taxes!