Will Chicago Be the 1st Major
U.S. Housing Market
to Take a Fall?
The growing crisis in unfunded government pensions (which is estimated to be 30-35% on a nationwide basis) may be nearing a point of spontaneous combustion in the state of Illinois.
Illinois is in the deepest unfunded government pension hole of all 50 states – and it appears this state may be headed for bankruptcy.
Chicago, for example, reportedly has a pension short-fall of 70-80% for retiring policemen and firemen – and that’s why Mayor Rahm Emanuel has been frantically raising property taxes and a host of other city taxes to try to cover the massive shortfall.
But that's only the half of it.
The 1970 Illinois Constitution states that pension benefits, once granted, "shall not be diminished or impaired." In a 5-0 ruling, the state's Supreme Court recently upheld that provision of the state constitution – and ruled that government pensions cannot be cut.
In other words, Chicago property owners and taxpayers are going to get royally screwed.
And that's why Chicago housing prices could be the first of the 19 major U.S. cities
I track to go into a real estate downturn.
Is the trend still up?
My real estate timing model says "yes" - however with only 2.2% price appreciation from Jan 2015 to Jan 2016, Chicago posted the lowest year-over-year price gains of any city in the Case-Shiller 20-City Index during that period of time.
If I was a potential buyer (or seller) in Chicago, I would watch the trends very closely. Because of the massive tax increases that are being placed on the residents (and property owners) of Chicago, the next government inspired downturn in housing prices could be rapidly approaching.