The Chicago real estate market has seen a steady recovery, attracting local investors with its unique combination of relatively low prices and high demand. Despite the challenges brought about by the pandemic, the Windy City has weathered the storm and is poised for even stronger growth.
Should I Invest in Real Estate in Chicago?
The answer is a resounding yes. The current market conditions in Chicago present a favorable opportunity for investors. While rehabbing and flipping properties remain viable options, the trend is shifting towards long-term rental properties. The market indicators and trends suggest that this strategy will continue to yield positive results in the foreseeable future.
Chicago Real Estate Market 2021 Overview
- Median Home Value: $299,790
- Median List Price: $348,233
- 1-Year Appreciation Rate: 10.4%
- Median Home Value (1-Year Forecast): 8.9%
- Weeks of Supply: 9.9 (-1.3 year over year)
- New Listings: 2,408 (-18.4% year over year)
- Active Listings: 22,713 (-14.4% year over year)
- Homes Sold: 2,469 (+0.6% year over year)
- Median Days on Market: 13 (-5.5 year over year)
- Median Rent: $1,746 (+3.5% year over year)
- Rental Vacancy Rate: 8.4% (+0.0% year over year)
- Price-To-Rent Ratio: 14.30
- Delinquency Rate: 4.9% (-2.8% year over year)
- Chicago-Naperville-Arlington Heights Unemployment Rate: 7.5%
- Metro Population: 2,693,976
- Metro Median Household Income: $58,247
Why Invest in Chicago Real Estate in 2021?
Flipping properties remains a viable strategy in the Chicago real estate market, but there is a growing trend towards long-term rental properties. Here's why building a rental property portfolio is becoming increasingly attractive:
- Historically Low Interest Rates: Low interest rates help offset higher acquisition costs and increase cash flow from rental properties.
- Lower Borrowing Costs: Lower interest rates save investors thousands of dollars on interest over the life of a loan used to secure a rental property.
- Price-to-Rent Ratio: With a price-to-rent ratio of 14.30, it is more affordable to buy a home than to rent one in Chicago. The demand for rental properties is expected to increase due to limited housing inventory.
- Potential for Appreciation: High demand and limited inventory suggest that home prices will continue to rise in the future.
Foreclosure Statistics in Chicago in 2021
Foreclosure rates have decreased significantly in the past year, but Illinois still has one of the highest foreclosure rates in the country. As government foreclosure moratoriums expire, there is a possibility of an increase in foreclosures in the Chicago housing market.
Median Home Prices in Chicago
The median home value in Chicago is $299,790, in line with the national average. Home values have steadily appreciated for nearly a decade, and the current market conditions make it a great time to buy a home in Chicago. Interest rates are attractive, but they are expected to rise, which could drive prices up further.
Chicago Real Estate Market: 2020 Summary
- Median Home Value: $249,152
- 1-Year Appreciation Rate: +0.6%
- Median Home Value (1-Year Forecast): -2.3%
- Median Rent Price: $1,761
- Price-To-Rent Ratio: 11.79
- Chicago-Naperville-Arlington Heights Unemployment Rate: 17.6%
- City Population: 2,693,976
- City Median Household Income: $55,198
- Percentage Of Vacant Homes: 13.75%
- Foreclosure Rate: 1 in every 7,493 (1.3%)
Chicago Real Estate Investing in 2020
The pandemic created a new marketplace for real estate in Chicago. Buyers took advantage of historically low interest rates, leading to increased activity and competition. High demand and a lack of housing inventory favored long-term strategies, such as building a rental property portfolio.
Chicago Real Estate Market: 2018 Summary
In 2018, the Chicago housing market was balanced, benefiting both buyers and sellers. With a relatively low cost of living and a growing economy, real estate in Chicago was an attractive option for investors.
Chicago Real Estate Investing in 2018
The median home value in 2018 was $221,000, slightly higher than the national average. The presence of distressed properties provided investment opportunities, with distressed homes selling at a significant discount compared to non-distressed homes.
Chicago Real Estate Market: 2016 Summary
- Median Home Price: $208,600
- 1-Year Appreciation Rate: 8.4%
- 3-Year Appreciation Rate: 30.9%
- Unemployment Rate: 6.6%
- 1-Year Job Growth Rate: 1.8%
- Population: 9,500,000
- Median Household Income: $61,598
Chicago Real Estate Investing in 2016
With a growing economy and increasing home values, the Chicago real estate market rebounded after the housing recession. Home prices experienced steady appreciation, making it an opportune time for investors.
Chicago Real Estate Market: 2014 Summary
- Median Home Price: $208,600
- 1-Year Appreciation Rate: 8.4%
- 3-Year Appreciation Rate: 30.9%
- Unemployment Rate: 6.6%
- 1-Year Job Growth Rate: 1.8%
- Population: 9,500,000
- Median Household Income: $61,598
Chicago Real Estate Investing in 2014
Despite facing challenges during the recession, the Chicago real estate market showed significant improvement in 2014. Home prices increased steadily, and the city's improving economy contributed to its real estate market's positive trajectory.
In conclusion, the Chicago real estate market presents a promising opportunity for investors. With a recovery that has outpaced the national average, the city offers attractive options for both flippers and rental property owners. By considering the market indicators and adapting to the current landscape, investors can capitalize on the potential for long-term growth and profitability in Chicago's real estate market.
Sources:
- Zillow: https://www.zillow.com/chicago-il/home-values/
- Redfin: https://www.redfin.com/news/data-center/
- Bureau of Labor Statistics: https://www.bls.gov/eag/eag.il_chicago_md.htm
- Census Bureau: https://www.census.gov/quickfacts/chicagocityillinois
- ATTOM Data Solutions: https://www.attomdata.com/news/market-trends/foreclosures/attom-mid-year-2021-u-s-foreclosure-market-report/