CHICAGO (CBS) — University of Chicago economist Eric Hurst says Chicago housing prices have hit bottom, but adds no one should expect a big upward bounce in years to come.
As WBBM Newsradio’s John Cody reports, Illinois realtors say housing prices dropped 4.9 percent last year, and Hurst, of the Booth School of business, says it shouldn’t get any worse.
LISTEN: WBBM Newsradio’s John Cody reports
“We have hit the bottom,” he said.
But Hurst says over time, houses don’t appreciate more than about 1 percent per year in constant dollars. Sometimes, they don’t appreciate at all.
Hurst says the $500,000 house you buy in Chicago this year should be worth about $500,000 next year, and the year after that.
Hurst says the Case-Shiller housing price index shows housing prices are just about where they should be, given historical trends.
There was, indeed, a tremendous bump up in the average housing price in 2006, but Hurst points that the spike didn’t reflect common sense.
“That was not based upon any fundamental that can be sustainable over long periods of time. When house prices go up that much, they’ve got to come down,” Hurst said. “That’s exactly what we saw. They went up, and they’ve come down.”
In 2006, a house that should have been worth 175-thousand dollars was going for 275-thousand on average across the entire United States. .
Chicago housing statistics break down the 4.9 percent drop in city home prices through December 2011. That month, the following neighborhoods saw the following average home prices:
Lincoln Park: $496,000