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Chicago Real Estate Market: Trends and Insights for 2024

CEO Khai Intela
The Chicago housing market is buzzing with activity, favoring sellers with its current market conditions. With a decrease in annual closed sales and a notable increase in median home prices, sellers have the upper hand....

The Chicago housing market is buzzing with activity, favoring sellers with its current market conditions. With a decrease in annual closed sales and a notable increase in median home prices, sellers have the upper hand. Both the Chicago Metro Area and the city of Chicago itself have experienced significant increases in median home prices, indicating a robust and appreciating market. This stability in median prices and the continued demand highlight a resilient market that is adapting to inventory challenges.

Chicago Housing Market Report & Trends

According to data from Illinois REALTORS®, December year-over-year home sales and annual closed sales in Illinois dropped due to tight available housing inventory. In 2023, annual closed sales in the state reached 132,120, reflecting an 18.3 percent decrease from 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 in 2022.

In the nine-county Chicago Metro Area, December 2023 home sales for both single-family homes and condominiums totaled 6,013, marking a 6.8 percent decline from December 2022. The available housing inventory further tightened, with only 11,266 homes for sale in December 2023, representing a 27.1 percent decrease from the previous year.

The median price of a home in the Chicago Metro Area in December 2023 was $307,000, indicating a 7.0 percent increase from the previous year. Annually, home sales in the Chicago Metro Area totaled 89,482, showing a significant 20.1 percent decrease from the previous year. The annual median price of a home in the area was $324,900, up 4.6 percent from the year before.

In the city of Chicago, there was a 1.6 percent year-over-year increase in home sales in December 2023. However, the housing inventory continued to shrink, with only 4,171 homes for sale, a 27.3 percent decrease from the previous year.

The median price of a home in the city of Chicago in December 2023 was $310,000, reflecting a 7.8 percent increase from the previous year. Annually, home sales in the city totaled 22,400 in 2023, showing a 20.9 percent decrease from the previous year. The annual median price of a home in the city was $330,000, down 1.5 percent from the previous year.

Chicago Rent Price Trends

Chicago, a vibrant metropolis known for its diverse neighborhoods, offers interesting insights into rent price trends. It is crucial for both residents and investors to understand the dynamics of rent prices in the metro cities. Let's dive into the data and 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, with 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 Rental Market Trends Source: Zumper

Chicago Housing Market Forecast for 2024

The Chicago housing market is expected to continue its upward trend as one of the hottest markets in the United States. It is particularly attractive for investing in rental properties. According to Stuart Handler from the Department of Real Estate at the University of Illinois Chicago, while prices are anticipated to continue rising, sales may face challenges influenced by factors such as interest rates and inflation.

Price Trends

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.

Sales Outlook

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 adds complexity to sales projections. 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, highlighting 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. This forecasted increase 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.

Chicago Housing Market Forecast Source: Zillow

Is Chicago a Good Place for Real Estate Investment?

Population Growth and Trends

Chicago's steady population growth over the years has been driven by factors such as employment opportunities, higher education institutions, and cultural attractions. The city's diverse demographic makeup ensures 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 specific sectors.

  • 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, appealing to a wide range of renters.

  • Growth Potential: With a growing population, the demand for rental properties is likely to continue rising.

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: Effective property management is vital for success. Whether you plan to manage properties yourself or hire a management company, proper management ensures steady returns.

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, thorough research, staying informed about local regulations, and effective property management are crucial to maximizing 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, this neighborhood has seen remarkable property value appreciation due to its proximity to amenities and strong community appeal.

  • Humboldt Park Northeast: This neighborhood has experienced a steady increase in property values since 2000. Its green spaces, cultural attractions, and improving infrastructure make it an attractive destination for homebuyers and investors.

  • W Wabansia Ave / N Kimball Ave: Situated near W Wabansia Ave and N Kimball Ave, this neighborhood has experienced substantial property value appreciation. Local businesses, parks, and good public transportation options have boosted its desirability.

  • Palmer Square East: This neighborhood 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 residents and real estate investors.

  • W Wabansia Ave / N Francisco Ave: The property values in this neighborhood have been on an upward trajectory. Its location and access to amenities attract homebuyers and investors looking for long-term growth.

  • Logan Square Northwest: Known for its thriving arts and dining scene, this neighborhood has seen its property values appreciate. Cultural appeal and improved public services and transportation contribute to its growth.

  • W Cortland St / N Mozart St: This neighborhood has experienced remarkable growth in property values. Its accessibility to urban conveniences and a sense of community make it a desirable place to live and invest.

  • Palmer Square: This neighborhood has seen substantial property value appreciation. Its green spaces, historic architecture, and community activities make it a popular choice for homeowners and real estate investors.

  • Humboldt Park North: With its green expanses and recreational opportunities, this neighborhood has seen a consistent increase in property values since 2000. The combination of natural beauty and urban amenities attracts residents and investors.

  • W Cortland St / N Albany Ave: This Chicago neighborhood has experienced substantial appreciation in property values. Its accessibility to city amenities and transportation options has bolstered its appeal.

These neighborhoods not only appreciate 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.