Is Naperville, Illinois a good place to invest in real estate? The city is overshadowed by neighboring Chicago, and many have never heard of it unless they saw it in various magazine lists of the wealthiest suburbs or best places to live, raise children and retire in the country. Let’s learn more about Naperville before learning about the Naperville real estate market.
Naperville is the fifth-largest city in Illinois. As of the 2010 census, the city had a population of 141,853, which was estimated to have increased to 147,682 by 2017. However, that is not the entirety of the Naperville real estate market. Naperville is located about 30 miles west of Chicago, making it a suburb of one of the largest cities in the Midwest.
In fact, Chicago is the third largest city in the United States, putting Naperville in one of the largest metropolitan areas in the country. However, size isn’t reason enough to consider Naperville real estate investment. Instead, let’s look at the pros and cons of the Naperville housing market so you can determine whether or not Naperville real estate investment is right for you. In the latest quarter, real estate appreciation rate in Naperville has been around 1.3%.
If it remains steady, the annualized appreciation rate would be around 5.2%, which could trigger good amount of interest in the Naperville real estate investment opportunities. In this article, we shall discuss some more important reasons why you may want to consider buying Naperville investment properties in 2020. Please note that there are many variables that can potentially impact the value of a home in Naperville (or any other market) and some of these variables are impossible to predict in advance.
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Naperville Real Estate Market Forecast 2020
What are the Naperville real estate market predictions for 2020? Naperville housing market 2020 is shaping up to continue the trend of the last few years as one of the hottest markets in the state of Illinois. The latest real estate data from Zillow shows that the current median home value in Naperville is $390,914. Naperville is currently a balanced real estate market – which means there is enough demand from buyers to equal the supply from sellers.
The home prices have risen by 0.2% over the last year. Looking forward in this year, the Naperville real estate market forecast is that home prices will continue to increase by 1.3%. Since 2015, the median home price in Naperville has increased from $360,000 to $396,000.
Here is the Naperville, IL real estate price appreciation graph by Zillow. It shows us the current home price appreciation forecast of 1.3% till Dec 2020.
The median list price per square foot in Naperville is $181, which is higher than the Chicago-Naperville-Elgin Metro average of $164. Zillow reports that 12.3% of the listings in Naperville had a price cut in Dec 2019, which is a good thing for buyers. The median price of current listings in Naperville is $432,450. Homes are selling below their asking prices as the median price of homes that have been sold out is $403,900. It shows sellers were willing to negotiate on prices as they were finding it more and more difficult to sell homes at asking prices.
Here is a snapshot that shows the median home values in the cities which are nearby Naperville.
Naperville Real Estate Market Trends
We shall now discuss some of the most recent housing trends in the Naperville area and compare it with past couple of years. We shall mainly discuss about median home prices, inventory, economy, growth and neighborhoods, which will help you understand the way the local real estate market moves in this region. Trulia has currently 707 resale and new homes for sale in Naperville, IL including open houses, and homes in the pre-foreclosure, auction, or bank-owned stages of the foreclosure process. The median price of sold homes in Naperville is $382,500 and homes are selling for about $179/sqft.
As per the real estate company called Neigborhoodscout.com, the median house price in Naperville is $441,859, which indicates that home prices in Naperville are well above the national average for all cities and towns in the United States. Three and four bedroom single-family detached homes are the most common housing units in Naperville. Other types of housing that are prevalent in Naperville include duplexes, row houses and homes converted to apartments.
Following the housing market decline in 2007, single family rental properties became favorable options for investors, saving in construction or refurbishment prices. The quick turnaround for an owner to rent out their property means cash flow is almost immediate. Single family rental homes have grown up to 30% within the last three years. Almost all the housing demand in the US in recent years has been filled by single family rental units.
There are currently 535 single family homes for sale in Naperville, IL on Zillow. Additionally, there are 54 single family homes for rent in Naperville, IL. Under potential listings, there are about 5 Foreclosed and 112 Pre-Foreclosure homes. These are the delinquent properties that may be coming to the market soon but are not yet found on a multiple listing service (MLS).
In the past month, 122 homes have been sold in Naperville, IL on Redfin.com. In addition to houses in Naperville, there were also 72 condos, 104 townhouses, and 1 multi-family unit for sale in Naperville last month. The median listing price is around $470,000. According their statistics, the Naperville housing market is somewhat competitive. Homes in Naperville receive 1 offers on average and sell in around 63.5 days.
The average sale price of a home in Naperville was $379K last month, up 2.4% since last year. The average sale price per square foot in Naperville is $161, up 5.6% since last year. A hot listing in Naperville can sell for about 2% below list price and go pending in around 24 days.
Here is the latest Naperville housing market data for the month of Jan 2020 from Redfin.com. The sale to list price ratio shows us that it was a trending more like a seller's real estate market in the past month.
Naperville Housing Market Trends |
|
| Median List Price | $470,000 |
| Avg. Sale / List | 96.7% |
| Median List $/Sq Ft | $172 |
| Median Sale Price | $379,000 |
| Median Sale $/Sq Ft | $122 |
Analyzing real estate data from multiple sources gives us a much broader perspective of the direction in which a market is moving. There are currently 957 homes for sale in Naperville on Realtor.com. The asking price of single family homes can start from $229,000 and can go up to $7.2M for a luxury property located in the neighborhood with zip code 60540. In this neighborhood home values have risen by 0.2% over the past 12 months. Zillow predicts the home values in zip code 60540 will increase by 0.3% in the next year.
Naperville is also a rental property market. However, Naperville has more owner-occupied housing units as compared to renter-occupied ones. There are currently 127 rental properties in Naperville and their rent prices range from $1,000 to $5,500 per month. The median rent price in Naperville is $2,080. There are only 60 new construction homes for sale in Naperville within a price range of $385,000 to $3.2M. The most affordable new construction homes can be found in the neighborhood with zip code 60564.
According to Realtor.com, in December 2019, the Naperville housing market was a seller’s market, which means there were roughly more buyers than there were active homes for sale. Ideally a buyer would prefer a sale to asking price ratio that’s closer to 90%. In Naperville, the sellers have held good leverage in these negotiations in the past month. On an average, they could sell homes for 96.91% of the asking price. A seller would always prefer scenarios which can yield a ratio of 100% or higher.
In December 2019, the median list price of homes in Naperville, IL was $438.7K, flat year-over-year. The median listing price per square foot was $170. The median sale price was $370K.
The median list price in Naperville, IL is $524,990 on Movoto.com. The median list price in Naperville was less than 1% change from January to February. Naperville's home resale inventories is 209, which increased 9 percent since January 2020. The median list price per square foot in Naperville is $164.
As you can see in the graph, the median price per sq ft in Naperville rose to its peak value in Dec 2019, when it was $168. In January 2020 it was $166. Distressed properties such as foreclosures and short sales remained the same as a percentage of the total market in February.
Naperville is a minimally walkable city in DuPage County with a population of approximately 139,972 people. If you are looking to invest in the Naperville real estate, you should that three most important factors when buying a real estate anywhere are location, location, and location. Location creates desirability. Desirability brings demand. There should be a natural and upcoming high demand for rental properties. Demand would raise the price of your Naperville investment real estate and you should be able flip it for a lump sum profit.
The neighborhoods in Naperville must be safe to live in and should have a low crime rate. The neighborhoods should be close to basic amenities, public services, schools and shopping malls. East Highlands has a median listing price of $1M, making it the most expensive neighborhood of Naperville. Country Lakes is the most affordable neighborhood, with a median listing price of $220,000.
Some of the most popular neighborhoods in Naperville are Saybrook, Hobson West, Winding Creek Estates, Breckenridge Estates, Tall Grass, Cress Creek, River Run, Country Side, Downtown Naperville, Four Lakes, Fox Valley, White Eagle, Ashbury, Eola Yards and Naperville Heights.
Naperville, IL Foreclosures And Bank Owned Homes Statistics
As per the Naperville foreclosure data given by Zillow, the percent of delinquent mortgages in Naperville is 0.6%, which is lower than the national value of 1.1%. With U.S. home values having fallen by more than 20% nationally from their peak in 2007 until their trough in late 2011, many homeowners are now underwater on their mortgages, meaning they owe more than their home is worth. The percent of Naperville homeowners underwater on their mortgage is 6.5%, which is lower than Chicago-Naperville-Elgin Metro at 13.5%.
| Total No. of Foreclosures in Naperville | 167 (RealtyTrac) |
| Homes for Sale in Naperville | 652 |
| Recently Sold | 1306 |
| Median List Price | $445,000 (1% drop vs Nov 2018) |
There are currently 167 properties in Naperville, IL that are in some stage of foreclosure (default, auction or bank owned) while the number of homes listed for sale on RealtyTrac is 652. In December 2019, the number of properties that received a foreclosure filing in Naperville, IL was 8% higher than the previous month and 125% higher than the same time last year.
In Naperville, the zip code with the highest foreclosure rate is 60565, where 1 in every 2027 housing units is foreclosed. 60540 zip code has the lowest foreclosure rate, where 1 in every 3291 housing units becomes delinquent.
Is Naperville a Good Place For Real Estate Investment?
Is Naperville a Good Place to Invest In Real Estate? Investing in real estate is touted as a great way to become wealthy. Is buying an apartment in Naperville a good investment? Many real estate investors have asked themselves if buying a property in Naperville is good investment? You need to drill deeper into local trends if you want to know what the market holds for the real estate investors and buyers in 2020. If you are looking to make a profit, you don’t want to buy the most expensive property on the Naperville real estate market and expect to make a good profit on rents.
Perhaps you are looking for a slightly different hold-over, an investment property in Naperville that you might move into or sell at retirement in the future. Either way, knowing your profit potential and purpose is the first thing to consider. Let’s now discuss state of the Naperville real estate market, which can help investors who are keen to buy an investment property in this city.
The Naperville Real Estate Market
The average home in the Naperville real estate market costs around 400,000 dollars. This is not only much higher than the average home price in the United States, but it makes a Naperville real estate investment property much more expensive than the average home in Chicago proper. The average Chicago home is 240,000 dollars. The Naperville housing market is also seeing slow, steady appreciation at roughly 1 percent, while the average home price in the Chicago area is flat.
Demand for properties in the Naperville housing market is neutral, with demand matching supply. In contrast, Chicago has recently seen property prices dip a fraction of a percent due to people leaving the area or selling to get out from under the skyrocketing tax burden. The higher prices in the Naperville housing market are seen in rental rates, as well. The median rent in Chicago is 1,750 a month.
Median rents in the Naperville real estate market are around 2,200 dollars a month. There are several colleges in the Naperville area, but they are not large enough to have an effect on rental rates. It will take a fair bit of research to get a deal on a Naperville real estate investment property, since there are relatively few homes in foreclosure and even fewer properties that could be fixed and flipped.
Job Growth in Naperville
The Naperville real estate market is buoyed by the presence of many high-paying jobs. These employers include BP, Nicor, ConAgra, Bell Labs, and numerous high tech companies in the Illinois Technology and Research Corridor. For example, people renting a Naperville real estate investment property are in easy reach of jobs at Fermilab and Argonne National Laboratory as well as Kraft Foods and Dukane Precast, a concrete manufacturer. The diverse job market has an unemployment rate of 4 percent, just below the national average. The high paying job market is one reason why the Naperville housing market has seen growth while the Chicago metro area as a whole has been flat.
Taxes
The state of Illinois has the second highest tax burden in the United States. The average property tax bill approaches 3 percent. Making matters worse, tax rates are increasing, while tax re-assessments occur frequently. This is driving up the property tax bill for people in the Naperville housing market and beyond. That is why Kiplinger ranked Illinois the least tax friendly state in the U.S. for homeowners.
Conversely, it drives up demand for Naperville real estate investment properties, because many potential home buyers are afraid to buy homes because of the tax rate. The growing tax burden and stifling legal climate are pushing people out of Illinois, guaranteeing a tax rate hike on those who remain.
The average property tax bill in Naperville real estate market is going to be steep, because the Naperville housing market costs nearly twice as much as downtown Chicago. However, it may be worth it because you can charge market rates and the city isn’t as hostile to property owners as Chicago.
Legal Climate
Illinois is tenant friendly. Furthermore, it has been becoming more so over the past few years. For example, in 2013, they made it much harder to evict someone from a foreclosed home whether they owned it or rented it. If you choose to rent to them, you have to offer similar rental rates to what they were already paying. If you don’t want to rent to them, the judge could force you to pay them ten thousand dollars or more to move.
This is why you need to be careful about buying a foreclosed home as a Naperville real estate investment property. The state has limits on late fees, notice before you enter and extensive disclosure requirements. Yet the state doesn’t have strict rules regarding abandoned property and doesn’t limit security deposits. And it is unlikely Illinois will implement state-wide rent control.
A rental license may be required to rent out a property in Illinois. However, as of this writing, Naperville does not require landlords to have a license. This is partially due to the fact that three quarters of locals own their homes, lessening public pressure for laws that favor renters over property owners.
Quality of Life in Naperville
Naperville has ranked among the wealthiest cities in the Midwest. That is one reason why it has such a lovely Riverwalk. However, people don’t move to an area because of the tourist attractions or parks. It is one of the safest cities in Illinois. It has excellent schools and amenities like a children’s museum. This is why Naperville was ranked the best city in America to raise a family. All of this results in demand for property in the Naperville housing market by people fleeing Chicago. It will also continue to drive up property values and rental rates in the Naperville real estate market in a region experiencing no growth with the risk of declines.
Investing in Naperville Real Estate or Not: The Conclusion
Maybe, you have done a bit of real estate investing in Naperville, IL but want to take things further and make it into more than a hobby on the side. It’s only wise to think about how you can and should be investing your money. In any property investment, cash flow is gold. Should you consider Naperville real estate investment? The Naperville real estate market is one of the best options should you choose to invest in the state of Illinois. On the other hand, we advise against investing in Chicago real estate on the whole, with the Naperville housing market being the only exception.
A good cash flow from Naperville investment properties means the investment is, needless to say, profitable. A bad cash flow, on the other hand, means you won’t have money on hand to repay your debt. Therefore, finding a good Naperville real estate investment opportunity would be a key to your success. If you invest wisely in the Naperville real estate, you could secure your future. As with any real estate purchase, act wisely. Evaluate the specifics of the Naperville housing market at the time you intend to purchase.
Hiring a local property management company can help in finding tenants for your investment property in Naperville. If it is your first time to invest in Naperville real estate, then you would have to be aware of common beginner’s mistakes. Beginners would usually follow the media, buy a property and wait for its value to increase. This could be risky. Real estate investing requires research. We recommend doing your own research or hiring a real estate investment specialist for guidance.
Buying or selling real estate, for a majority of investors, is one of the most important decisions they will make. If housing supply meets housing demand, real estate investors should not miss the opportunity since entry prices of homes remain affordable. Choosing a real estate professional/counselor continues to be a vital part of this process. They are well-informed about critical factors that affect your specific market area, such as changes in market conditions, market forecasts, consumer attitudes, best locations, timing and interest rates.
NORADA REAL ESTATE INVESTMENTS strives to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities in the U.S. growth markets. We can help you succeed by minimizing risk and maximizing profitability.
The aim of this article was to educate investors who are keen to invest in Naperville real estate in 2020. Purchasing an investment property requires a lot of studies, planning, and budgeting. Not all deals are solid investments. We always recommend to do your own research and take help of a real estate investment counselor.
Other Good Markets To Invest in Real Estate in 2020
The other good place for real estate investment is Kissimmee in Florida. The Kissimmee housing market is reasonably priced with a massive rental market. The legal and tax climate is so amenable that the area is attracting investors from California and New York. As long as you understand the rules and restrictions, it is a good opportunity for investors.
Another good market to invest in real estate in 2020 is Chapel Hill in North Carolina. The Chapel Hill area is an excellent place for real estate investment if you can afford the entry costs. It offers high rental rates, a property-owner friendly legal climate, low taxes and good long term prospects. One point in favor of Chapel Hill real estate investment is the relatively young population. The large student population here has resulted in nearly a third of the population being between 18 and 24. And it is why the job market is expected to see job growth about one percent higher than the national average over the next ten years.
Remember, caveat emptor still applies when buying a property anywhere. Some of the information contained in this article was pulled from third party sites mentioned under references. Although the information is believed to be reliable, Norada Real Estate Investments makes no representations, warranties, or guarantees, either express or implied, as to whether the information presented is accurate, reliable, or current. All information presented should be independently verified through the references given below. As a general policy, the Norada Real Estate Investments makes no claims or assertions about the future housing market conditions across the US.
References:
Latest Market Prices, Trends & Forecasts
https://www.zillow.com/naperville-il/home-values/
https://www.redfin.com/city/29501/IL/Naperville/housing-market
https://www.movoto.com/naperville-il/market-trends/
https://www.realtor.com/realestateandhomes-search/Naperville_IL/overview
Map
https://www.google.com/maps/place/naperville
Foreclosures
https://www.realtytrac.com/statsandtrends/il/du-page-county/naperville/
Taxes
https://smartasset.com/taxes/illinois-property-tax-calculator
https://chicago.curbed.com/2019/10/3/20896060/illinois-chicago-property-taxes-report
https://www.dailyherald.com/news/20191130/a-drop-in-people-a-1-billion-rise-in-property-taxes
About Naperville
https://en.wikipedia.org/wiki/Naperville,_Illinois https://www.naperville.net/relocating-to-the-region.html
Quality of life
https://www.niche.com/places-to-live/naperville-dupage-il/
Job market
https://www.areavibes.com/naperville-il/employment/
https://www.realwealthnetwork.com/markets/chicago-illinois/
Legal climate
https://www.avail.co/education/laws/illinois-landlord-tenant-law
https://chicago.curbed.com/2015/6/4/9953194/chicago-renters-rights-misconceptions
http://rudolphkaplan.com/blog/2013/12/3/tenant-friendly-laws-in-illinois-and-chicago-just-got-a-whole-lot-friendlier
https://www.chicagotribune.com/suburbs/naperville-sun/ct-nvs-rental-property-rules-st-0610-20150609-story.html
