When talking to Korean individuals looking to buy a home in Chicago, there's a common sentiment that comes up.

"The home prices are better than expected, but why do people say it's such a burden?" I was curious about this too at first. However, as I calculated the numbers, the reason became clear. Chicago is a city where property taxes create a significant burden beyond home prices.

As of recent data, the median home price in the city of Chicago is around $330,000. Compared to New York or California, this seems quite affordable. However, this figure includes everything from luxury condos in downtown to affordable homes on the South Side, as well as the North Side areas where many Koreans reside. In reality, areas like Glenview, Niles, Morton Grove, Skokie, Northbrook, and the northern parts of Chicago, which are popular among Koreans, typically have higher price ranges.

For example, let's assume you're buying a home priced at the median of $330,000. If you make a 20% down payment of $66,000, the loan amount would be $264,000. Calculating this with a 30-year fixed rate of 6.75%, the monthly payment for principal and interest would be about $1,712.

The issue doesn't end there. Illinois is one of the states with the highest property taxes in the U.S. If we calculate the effective property tax rate in Chicago at about 2.1%, the annual property tax would be approximately $6,930, which translates to about $578 per month. Adding in homeowners insurance at around $150 to $160 a month, the basic housing maintenance cost would be about $2,448 per month. For condos, it's common for HOA fees to add an additional $300 to $700 or more each month.

So, what level of income is necessary to manage this comfortably? Applying the generally recommended DTI (Debt-to-Income) ratio of 28%, a monthly income of about $8,743 would be required. This translates to an annual income of around $105,000.

However, the median household income in the city of Chicago is about $72,000.

Just looking at the numbers, there's a gap of over $30,000. Ultimately, this means that a household earning the median income faces a significant burden even when trying to purchase a home at the median price.

For Korean families, there's a slightly different reality. Many prefer the northern areas considering Korean markets, churches, restaurants, and school districts, but these areas often have higher home prices than the city average. Regions like Niles, Glenview (not Glencoe), Morton Grove, and Skokie are popular for their good living conditions, but home prices naturally rise as a result. Therefore, the actual income needed could be significantly higher than the calculated $105,000.

For dual-income households, a more realistic picture emerges. If both partners earn around $53,000 each, they can meet the calculated criteria. However, when considering expenses for children's education, car payments, health insurance, and retirement savings, many believe an annual income of $120,000 to $150,000 is necessary for a relatively stable lifestyle.

Another important factor to remember is property taxes. In Chicago, property taxes can vary significantly depending on the area, even for homes of the same price. Some areas have seen substantial tax increases following recent property tax reassessments, and suburban areas with good school districts often have higher property tax burdens despite higher home prices. Therefore, when looking at homes, it's crucial not just to check the sale price but also to review property tax bills from the last three years.

In my opinion, Chicago has relatively reasonable home prices compared to other major cities in the U.S. However, the actual burden is determined by property taxes and maintenance costs. Especially in areas favored by Koreans, both prices and taxes are often above average, so rather than simply thinking, "$330,000 seems manageable," it's important to calculate the actual taxes and living costs in the neighborhoods of interest as the first step to a regret-free home purchase.