Short sales the order of the day in Chicago

Housing markets undermined as residents, jobs bleed to suburbs

Is it time to start worrying about Chicago?

Personally, it’s one of my favorite cities to visit, but on an objective level, the trend lines aren’t good and the state government isn’t helping.

Earlier this year, to ease a budget crisis, the state passed a tax bill that increased state income tax from 3 percent to 5 percent and the corporate tax rate from 4.8 percent to 7 percent. Immediately, other states such as Indiana and New Jersey cranked up efforts to lure away Illinois businesses. But, even before the tax increases, there were concerns about job growth in the state.

"I don’t think there has been very good job creation in the state of Illinois nor in the city of Chicago," said Mabel Guzman, president of the Chicago Association of Realtors. "And now the tax base has become an issue."

Unlike other Midwest cities, Chicago has done a good job of recreating itself as a vibrant metropolitan area, thus maintaining its position as one of America’s largest cities. Yet, total population has still been melting away. In 1950, the city’s population peaked at 3.6 million and except for a period in the 1990s when the city stabilized, the slow drip of emigration continues. In 2006, Chicago’s population stood at 2.83 million, but in 2010 it had fallen to 2.67 million.