The latest data suggests that the Chicago housing market is currently favoring sellers. With a decrease in annual closed sales and a notable increase in median home prices, sellers have an advantage in the market. Both the Chicago Metro Area and the city of Chicago have experienced significant increases in median home prices, indicating a robust and appreciating market. The stability in median prices and the continued demand suggest a resilient market that is adjusting to inventory challenges.
Chicago Housing Market Report & Trends
December year-over-year home sales and annual closed sales dropped in Illinois after another month of tight available housing inventory, according to data from Illinois REALTORS®.
In 2023, annual closed sales in the state reached 132,120, reflecting an 18.3 percent decrease from the 161,695 homes sold in the previous year. However, the annual median price showed an upward trend, reaching $269,000 in 2023, a 3.5 percent increase from the median price of $260,000 in 2022. The median price represents a typical market value, where half of the homes sold for more and half for less.
Chicago Metro Area's Housing Market Performance
In the nine-county Chicago Metro Area, December 2023 home sales for both single-family and condominiums totaled 6,013, marking a 6.8 percent decline from December 2022 sales of 6,455 homes. The available housing inventory further tightened, with only 11,266 homes for sale in December 2023, representing a 27.1 percent decrease from the 15,462 homes on the market in December 2022.
The median price of a home in the Chicago Metro Area in December 2023 was $307,000, indicating a 7.0 percent increase from $287,000 in December 2022. Annually, home sales in the Chicago Metro Area totaled 89,482, showing a significant 20.1 percent decrease from 112,055 homes sold in 2022. The 2023 annual median price of a home in the area was $324,900, up 4.6 percent from $310,500 in 2022.
City of Chicago's Housing Market Dynamics
The city of Chicago experienced a 1.6 percent year-over-year home sales increase in December 2023, with 1,470 sales, up from 1,447 in December 2022. However, the housing inventory continued to shrink, as there were only 4,171 homes for sale in December 2023, a 27.3 percent decrease from the 5,739 homes available in December 2022.
The median price of a home in the city of Chicago in December 2023 was $310,000, reflecting a 7.8 percent increase from December 2022 when it was $287,500. Annually, home sales in the city of Chicago totaled 22,400 in 2023, showing a 20.9 percent decrease from 28,306 in 2022. The 2023 annual median price of a home in the city was $330,000, down 1.5 percent from $335,000 in 2022.
ALSO READ: Illinois Housing Market Forecast
Chicago Rent Price Trends
Chicago, a vibrant metropolis known for its diverse neighborhoods, has been a focal point for the Zumper Chicago Metro Area Report, which delves into the nuances of rent price trends across the metro cities. Understanding the dynamics of rent prices is crucial for both residents and investors. Let's navigate through the data to uncover the most and least expensive cities, as well as those experiencing the fastest-growing rents.
The Most Expensive Cities
When it comes to one-bedroom median rent, Chicago takes the lead as the most expensive city, boasting a price tag of $2,100. Oak Park follows closely behind, securing the second spot with rents reaching $2,090, while Lombard takes the third position with a median rent of $2,070. These figures paint a picture of the premium real estate landscape in certain areas of the Chicago metro area.
The Least Expensive Cities
On the flip side, affordability shines in certain pockets of the metro area. Gary emerges as the most budget-friendly city, offering one-bedroom rentals at an attractive $780. Waukegan claims the second spot with rents standing at $1,000, and Valparaiso takes the third position with a median rent of $1,080. These cities provide more accessible housing options for individuals looking for budget-friendly living arrangements.
The Fastest Growing Rents (Year-over-Year Percentage)
Understanding the trajectory of rent growth is essential for anticipating future trends. Joliet leads the pack with an impressive 20.4% year-over-year increase in rent. Chicago secures the second spot, experiencing a 16.7% surge in rents since the previous year. Oak Park follows closely behind, claiming the third position with a 14.8% increase in rent prices. These statistics underscore the dynamic nature of the real estate market in the Chicago metro area.
The Fastest Growing Rents (Month-over-Month Percentage)
For those closely monitoring the month-to-month fluctuations in rent prices, Oak Park emerges as the leader with an impressive 6.1% increase in rents. Joliet secures the second spot with a 5.7% growth rate, while Chicago claims the third position with a 3.4% increase in rents. These month-over-month changes indicate the agility of the rental market, influenced by various factors such as demand, supply, and economic conditions.
Chicago Housing Market Forecast for 2024
The Chicago housing market is shaping up to continue the trend of the last few years as one of the hottest markets in the United States. It is also one of the hottest real estate markets for investing in rental properties. What are the Chicago real estate market predictions for 2024?
According to the market forecast presented by Stuart Handler from the Department of Real Estate at the University of Illinois Chicago, while prices are anticipated to continue their upward trajectory, sales are expected to face challenges, influenced by factors like interest rates and inflation.
Median Price Projections: In 2023, the market experienced low sales coupled with rising prices. Looking ahead to 2024, the forecast suggests a continuation of this trend. Median prices are expected to grow within a more constrained range compared to the previous year, with year-over-year gains ranging from 3.8% to 9.6% for Illinois and 2.0% to 8.3% for the Chicago PMSA.
December 2024 Projections: By December 2024, the median home price is forecasted to reach $272,800 in Illinois and $324,200 in the Chicago PMSA. This represents an increase of 8.4% and 12.0%, respectively, from December 2023. The real estate market is poised for continued growth, albeit with variations in different regions.
Negative Growth Trends: Contrary to the positive trajectory in prices, sales are anticipated to face challenges in 2024. The annual growth in monthly sales is forecasted to exhibit negative trends, with projections ranging from -19.8% to 6.2% for Illinois and from -24.6% to 3.1% for the Chicago PMSA. Most months are expected to witness negative growth, reflecting a potential slowdown in the housing market.
Market Uncertainties: The uncertainty surrounding interest rates and inflation contributes to the complexity of predicting sales trends. This unpredictable environment adds an element of caution for both buyers and sellers, influencing their decisions in the real estate market.
Chicago Housing Market Forecast by Zillow
Current Market Snapshot: As of December 31, 2023, the average home value in the Chicago-Naperville-Elgin area stands at $300,549, reflecting a notable increase of 5.5% over the past year. Homes, on average, go pending within approximately 16 days, underscoring the brisk pace of the real estate market.
- 1-Year Forecast: Zillow predicts a moderate 1.6% increase in the housing market by December 31, 2023, offering a glimpse into the expected trajectory for the upcoming year. The 1.6% forecasted increase by December 31, 2023, implies a cautiously optimistic outlook. While uncertainties exist, a crash is not predicted based on the current data and market projections.
- For Sale Inventory: The market boasts a substantial inventory, with 21,115 homes available for sale as of December 31, 2023.
- New Listings: In December 2023, 6,181 new listings entered the market, contributing to the diversity of options for potential buyers.
- Median Sale to List Ratio: As of November 30, 2023, the median sale to list ratio is 1.000, indicating a balanced relationship between listing prices and actual sale prices.
- Median Sale Price: The median sale price, reported on November 30, 2023, stands at $293,000, providing insight into the current value of homes in the region.
- Median List Price: Sellers are pricing their homes competitively, with the median list price recorded at $324,967 as of December 31, 2023.
- Sales Dynamics: The market reflects diverse sales trends, with 39.8% of sales occurring over the list price and 45.5% under the list price as of November 30, 2023.
Are Home Prices Dropping?
Pricing Stability: The data indicates a 5.5% increase in average home values over the past year. As of now, there is no evidence of a drop in home prices, emphasizing the market's stability and resilience.
Opportunities for Buyers: With a balanced market, diverse inventory, and a 1.6% forecasted increase, now presents a reasonable opportunity for buyers. However, individual circumstances and preferences should always guide such decisions.
Is Chicago a Good Place for Real Estate Investment?
Population Growth and Trends
Chicago, known for its diverse neighborhoods and rich history, has been experiencing steady population growth over the years. The city's population growth is driven by factors such as employment opportunities, higher education institutions, and cultural attractions. The diverse demographic makeup of Chicago provides a broad tenant pool for real estate investors, making it an attractive market.
- Diverse Demographics: Chicago's diverse population ensures a wide range of tenant preferences and needs, reducing the risk of high vacancy rates.
- Steady Growth: The city's population growth indicates a consistent demand for housing, especially in well-located neighborhoods.
Rehabbed Homes Fix and Flip Opportunities
Chicago's real estate market offers lucrative opportunities for fix and flip investors. Many older properties in desirable neighborhoods are prime candidates for rehabilitation and resale. This segment of the market can yield significant profits for investors with the right skills and resources.
- Older Properties: Chicago has a substantial inventory of older homes that can be acquired at competitive prices and then renovated for profit.
- Increasing Demand: Renovated homes in sought-after neighborhoods are in high demand, allowing for premium pricing.
Economy and Jobs
The strength of the local economy plays a crucial role in real estate market stability. Chicago's diverse economy is bolstered by various industries, including finance, technology, manufacturing, and healthcare. The city offers a robust job market, which is attractive to both renters and potential buyers.
- Diverse Economy: A mix of industries reduces the risk associated with economic downturns in a specific sector.
- Job Opportunities: A strong job market ensures a constant influx of renters and potential homebuyers.
Livability and Other Factors
Chicago's livability is a key factor for real estate investors. The city's vibrant cultural scene, excellent public transportation, and diverse dining options contribute to its appeal. Additionally, the city's commitment to infrastructure and public services further enhances its livability.
- Cultural Attractions: Chicago offers world-class cultural experiences, attracting residents and tourists alike.
- Public Transportation: An extensive public transit system makes it convenient for residents to commute, reducing the importance of owning a car.
Chicago Rental Property Market Size and Growth
The size and growth of the Chicago rental property market are promising for investors. The city's diverse neighborhoods and housing options cater to a wide range of tenant preferences. This, coupled with population growth, ensures a robust and expanding rental market.
- Diverse Neighborhoods: Chicago's neighborhoods offer various housing options, from apartments to single-family homes, appealing to a wide range of renters.
- Growth Potential: With a growing population, the demand for rental properties is likely to continue to rise.
Other Factors Related to Real Estate Investing
When considering real estate investment in Chicago, it's essential to account for various other factors:
- Local Regulations: Familiarize yourself with Chicago's property regulations and tax laws to ensure compliance and maximize returns.
- Market Research: Thoroughly research neighborhoods and property types to identify areas with growth potential.
- Property Management: Whether you plan to manage properties yourself or hire a management company, effective property management is vital for success.
Investing in the Chicago real estate market offers numerous advantages. The city's population growth, diverse demographics, job opportunities, and livability make it an attractive destination for real estate investors. Additionally, the fix and flip opportunities, the size and growth of the rental market, and other related factors provide a solid foundation for potential returns on investment. However, it's crucial to conduct thorough research, stay informed about local regulations, and manage properties effectively to maximize the benefits of investing in Chicago's real estate market.
Highest Appreciating Chicago Neighborhoods
Chicago has witnessed significant changes in its neighborhoods since the year 2000. Here are the neighborhoods that have experienced the highest appreciation in terms of property values, according to Neighborhoodscout.
W Wabansia Ave / N Whipple St
Located in the heart of Chicago, the W Wabansia Ave / N Whipple St neighborhood has seen remarkable property value appreciation. This area's proximity to various amenities and its strong community appeal have contributed to its growth.
Humboldt Park Northeast
The Humboldt Park Northeast neighborhood has seen a steady increase in property values since 2000. The neighborhood's green spaces, cultural attractions, and improving infrastructure have made it an attractive destination for homebuyers and investors.
W Wabansia Ave / N Kimball Ave
This neighborhood, situated near W Wabansia Ave and N Kimball Ave, has experienced substantial property value appreciation. The presence of local businesses, parks, and good public transportation options has boosted its desirability among residents and investors.
Palmer Square East
Palmer Square East is another neighborhood that has seen significant appreciation in property values. Its charming streets, proximity to parks, and vibrant local scene have made it a sought-after area for both residents and real estate investors.
W Wabansia Ave / N Francisco Ave
The W Wabansia Ave / N Francisco Ave neighborhood has been on an upward trajectory in terms of property values. Its location and access to various amenities have attracted homebuyers and investors looking for long-term growth.
Logan Square Northwest
Logan Square Northwest is known for its thriving arts and dining scene. The neighborhood's cultural appeal, coupled with improved public services and transportation, has contributed to its property value appreciation.
W Cortland St / N Mozart St
W Cortland St / N Mozart St is a neighborhood that has experienced remarkable growth in property values. Its accessibility to urban conveniences and a sense of community have made it a desirable place to live and invest.
Palmer Square, located in Chicago, has seen substantial property value appreciation. The neighborhood's green spaces, historic architecture, and community activities have made it a popular choice for homeowners and real estate investors.
Humboldt Park North
Humboldt Park North, with its green expanses and recreational opportunities, has seen a consistent increase in property values since 2000. The neighborhood's combination of natural beauty and urban amenities has attracted both residents and investors.
W Cortland St / N Albany Ave
W Cortland St / N Albany Ave is another Chicago neighborhood that has experienced substantial appreciation in property values. Its accessibility to city amenities and transportation options have bolstered its appeal to homebuyers and real estate investors.
These neighborhoods have not only appreciated in property values but also offer various amenities, community vibes, and urban conveniences, making them attractive options for both residents and real estate investors seeking long-term growth and value appreciation in Chicago.