This week Ben Joravsky recounted his most recent adventures with his property tax bill, in which he notes that his assessment went up while housing prices in Chicago haven't. The Case/Schiller housing price index was released today, and it's worse than that: Chicago had the worst year-over-year decline of the 20 metropolitan areas they track.
What happened? There were a lot of foreclosures, which means there are a lot of cheap existing houses on the market, and as Calculated Risk points out, it caused a massive break in the historical relationship between new and existing home sales. With some help from Uncle Sam, existing home sales have sort of rebounded; new home sales continue to plunge. There's still a lot of inventory, which will depress housing prices for awhile—but probably not, as Joravsky points out, property taxes.