How do people afford to buy $1M houses in Chicago? Surely not everyone buying them is rich (which is somewhat of a subjective term). My wife and I are 30 and have a combined income of almost $300k and trying to buy something that expensive seems asinine yet people do it. Am I missing something?

Think I disagree with the premise here.
1) Chicago area is a massive metro (3rd largest in the country) in the wealthiest country in the world. Wouldn’t you suspect there to be a lot of $1M+ homes?
2) Though there are many $1M+ homes, they make up a pretty small fraction of homes.

It’s said above, but I suspect you’re framing this a bit differently now than you will in 5-10 years. If you’re making $300k now and saving $100k+ (and growing) for the next 5-10 years, You’ll have a lot to invest (with a mortgage) in a nice home that provides a very comfortable life in an asset you expect to slightly increase in value over time.

Lots of people live beyond their means

My father in law is going to give us 300k that’s how I’m doing it.

That’s quite a hefty monthly expense. Agree with B1. Lots of people living beyond their means, also might have wealthier parents willing to help

Folks could’ve locked in at low interest rates 1M two-five years ago was very different than today’s environment

Plus generational wealth

Wealthy parents. I have a 25 year old friend who owns a 3B3B condo in the west loop that’s pretty much paid for.

The other answer beside rich parents:

Foreign investors buying houses and pied-a-terres as a legal form of money laundering.

That’s a big reason why NYC real estate is so expensive.

Bought at $920k on combined income of $325k - being a veteran was a big deal: 0% down with no PMI for VA loans. Also having a disability rating over 70% means no property tax in IL, so that cut my mortgage payment by almost a third

Through long term savings strategy. Bought a small condo late 20s with 3.5% down, stayed 8 years and used equity from sale for downpayment on $900k multi-unit I moved into. Other tenants paid good percentage of mortgage so saved for down payment on SFH. Multi-unit pays for itself and part of SFH. Never did “big law” so income more in-line with other 4 year degrees. If you’re willing to live in a multi-unit for a few years it’s a quick way to build equity with other peoples money.

It’s not always about the parents.

A $1M property isn’t always a first time home purchase. We’re sitting on equity in our current home now. Still won’t purchase a $1M house, especially in the city, but it’s there.

Someone could have money from a business or made good investments. DINKs both with high incomes could do it as well.

A lot of Big Law attorneys, consultants, bankers, C-suites, etc that can easily afford a $1 million house. Most people I know that have purchased have two high-earners. I bought a house at $800k in 2021 and that was as much as I could stretch with one income. If my wife had a $100k/year job, we could easily have bought more house. But it works for us and our kids.

Agree with comment above! Most folks with the $1M home aren’t first time buyers. We bought our first home in burbs of Chicago for $365k. For the equity we have in it, I could easily afford an $800k home with our total combined income of $300k. Would I do that in Illinois? Eh… not sure I want to pay the $25k in taxes.

Also, I think it’s true that a lot of people live outside their means.

Our HH is $350K and our condo is worth $320K.
We pour $100K into the stock market every year.
Can't imagine investing that much money in a $1M home but I can see the appeal.

I bought a 675k place in Chicago 2 years into my career. Multi unit so I rent one of the units out to cut costs but put 135k down which was literally almost all I had saved to my name from living at home for a little while traveling so much. My mortgage is less than 3300 including all additional costs and escrowed property taxes. After the rental unit I pay less than 1800 a month each month to accrue equity on a place that I’ve now fixed up to the point where it’s easily close to 800k 5 years later. It’s not rocket science, it’s sweat equity. Buying a love in ready, 700k SFH would have been absolutely ridiculously stupid.

Well not everyone does. There’s millions of houses in Chicago that cost 50-900k. You only see all the 1-5mil houses because that’s what your focused on. And yes there just happen to be that many wealthy people in Chicago. They certainly aren’t the majority but it can feel that way. I’m guilty of this perspective myself until recently. Honestly the people buying those expensive single family homes are simply rich from work, received windfall, or have wealthy families. Really no other explanation to it. Some are young and lucky and others may be older buyers and just have accumulated lots of $. For every 1.5mil house you see bought, think of all the other neighborhoods in this city where homes are 150-400k and that’s all many people can afford.

Don't know about $1M but I know someone who bought an $800k house on ~$200-250k salary. The house has multiple rooms and she has 2 roomates who basically pay her mortgage.

We have a combined income of ~$275K and we bought a ~$900k home in the burbs. We also locked in a 2.5% interest rate last year. I know it’s a lot of money for most people, but we value having a nicer home more than other things so we prioritize housing in our budget versus nice cars, etc. We’re also paying about the same as we were for a 2b/br in the city after considering parking spots, etc.

Why buy a house that expensive? My partner & I are @ $260k combined salary; bought a $295k condo with good note rate. It's more than enough, and very sustainable for us.

Invest the difference in something without a cost of debt associated with it.

You’re underestimating folks with wealth. But also you’re relatively very young. Those homeowners skew older.