This article has been updated to reflect recent changes in the Chicago real estate market due to the coronavirus pandemic. We’ll be discussing the latest Chicago housing market trends to find out how they can affect the investors and homebuyers in this crisis. Realtor.com’s Housing Market Recovery Index for the week ending June 13 increased 1.2 points over the previous week, moving up to 90.0, indicating that the housing market has recovered nearly half of its January 2020 levels. Chicago’s housing market Recovery Index score grew 6% compared to the previous week but remained significantly below the January 2020 baseline with a Recovery Index score of 87.3.
In May, there was a sharp decline in closed sales and inventory due to stay at home order. Prices, however, remained steady from last year – a good indicator. The city of Chicago saw year-over-year home sales decrease 43.6 percent with 1,666 sales in May, compared to 2,952 a year ago. The median price of a home in the city of Chicago in May was $315,000, unchanged from May 2019. The Chicago metro area housing market is slowly improving as more homes went into the contract in June as compared to March when the crisis began. Chicago home prices are on the rise due to a very tight supply from the coronavirus crisis and a recent rise in showings. More homebuyers are entering the bidding wars to scoop up their favorite deals.
The latest “CHICAGO HOUSING MARKET REPORT” is given below.
Let’s talk a bit about Chicago and the surrounding metro area before we discuss what lies ahead for investors and homebuyers. Chicago metropolitan area or Chicagoland is an area that includes the city of Chicago and its suburbs. Although the most expensive home in the Chicago housing market in 2020 is a $45 million single-family home, located in the North Side neighborhood, there are many properties available around the median price of $247,000. In 2018, the Chicago real estate appreciation rate was running at about half the national rate; at a 3 percent range when the nation was at 6 percent. After cooling off, Chicago became the weakest housing market of 2019. The home prices grew by a mere 1.5 percent, lagging behind the nation. The market is now expected to heat up in the coming months.
Chicago is still a strong renter’s market. Over 50% of the population rents in this city. So if you buy a Chicago real estate investment to use as a rental property, you could benefit in this market. Although the recent population loss has been a concern for real estate investors, Chicago is still the most populous city in the Midwestern United States. About three million people live in Chicago and another ten million in the surrounding metro area. Chicago MSA is the third-largest metropolitan area in the U.S. It has a large population, a diverse economy, and a stable market. It is home to 32 Fortune 500 companies, with a very high private sector employment. Chicago’s 58 million domestic and international visitors in 2018 made it the second most visited city in the nation, as compared with New York City’s 65 million visitors in 2018.
How is the robust housing market in Chicago shaping up in 2020 for real estate investors as well as homebuyers? Well, the home prices are expected to flatten nationwide, increasing by just 0.8%, and buyers will continue to move to affordability, benefiting mid-sized markets. The real estate appreciation rate in Chicago in the latest quarter was around 0.92% which equates to an annual appreciation forecast of 3.75%. For sellers in Chicago, a nice profit could be on the horizon. Even small changes in the appreciation rate can change the long-term value of buying considerably. Let’s learn more about the factors that make Chicago a nice place to invest in real estate.
These are just some of the highlights that make Chicago a great place to live and invest in real estate. The list can go on and on. Chicago is also a major world financial center, having the second-largest central business district in the United States. Let’s continue to explore the city’s housing market to understand what it will look like in 2020.
Chicago Housing Market Trends & Statistics 2020
We shall now discuss some of the most recent housing trends in the metro Chicago area and compare it with the past couple of years. We shall mainly discuss median home prices, inventory, economy, growth, and neighborhoods, which will help you understand the way the local real estate market moves in this region. Chicago is the 6th most walkable city in the nation. Chicago metro area has a population of approximately 8,865,000, a 0.03% increase from 2019. It is the most populous city in the U.S. state of Illinois, and the third-most-populous city in the United States.
Chicago has been one of the hottest real estate markets in the country for many years. In the past ten years, the annual Chicago real estate appreciation rate has amounted to 4.40%, according to NeighborhoodScout.com. The median home price in Chicago rose 9.2% year-over-year to $338,500 in April. The rolling 12-month median, which considers the whole year of sales up until April 30th, was $299,900, up 4.3 percent. The City of Chicago saw 2,039 homes sell in April – a steep 21.4% drop since last April.
Impact of COVID-19 on The Chicago Housing Market
The impact of the COVID-19 pandemic was evident in April and May, driving Chicago home sales and inventory lower even though median prices remained pretty much stable. Data from the Chicago Association of Realtors showed fewer buyers were willing to purchase a home from late March through mid-April. Roughly 330 residential properties went into contract in each of the three weeks before April 18 compared to 674 homes that went into contract for the week ending March 7, before the falloff.
New listings also declined by almost 50 percent. 588 homes hit the market in each of the three weeks before April 18. That compared to 1,313 new listings that went on the market in the first week of March. COVID-19 and a stay-at-home order continued to have a significant effect on the Chicago housing market in May, disrupting spring home sales and driving down available inventory for buyers. Home sales in May declined at a steeper rate than in April. However, the median price of homes sold was higher than the corresponding period in 2019.
Data from Illinois REALTORS® shows that in the nine-county Chicago Metro Area, home sales (single-family and condominiums) in May totaled 7,710, down 37.3 percent from May 2019 sales of 12,291 homes. The median price in May was $260,000 in the Chicago Metro Area, an increase of 0.2 percent from $259,500 in May 2019.
According to the Chicago Association of REALTORS, 1,679 properties were sold in the City of Chicago in May 2020. This was a 43.1% decrease from May 2019. The median sales price in the City of Chicago for May 2020 was $312,500, down 0.8% from this time last year. The City of Chicago saw listings average 83 days on the market until contract, a 13.7% increase from May 2019. The City of Chicago’s housing inventory was down 22.1%, from 10,022 homes in May 2019 to 7,811 homes in May 2020. The month’s supply of inventory declined 15.2%, from 4.6 in May 2019 to 3.9 in May 2020.
Below is the latest report of the “Metro Chicago Housing Market.” The source of this report is the Illinois REALTORS® and the counties included are Cook, DeKalb, DuPage, Grundy, Kane, Kendall, Lake, McHenry, and Will.
The report compares the Chicago metro area’s housing metrics from May 2020 with May 2019.
Closed Sales in the Chicago Metro Area were down by 37.3% to 7,710.
Median Sales Price in the Chicago Metro Area increased by + 0.2% to $260,000.
Inventory of Homes for Sale dropped by 24.8% to 30,270.
Days on Market Until Sale increased by 7.9% to 41.
In April, Closed Sales were down by 15.2%.
Screenshot Courtesy of Illinois REALTORS®
Below is the latest report of the “City of Chicago’s Housing Market” from Illinois REALTORS®.
Closed Sales in the City of Chicago were down by 43.6% to 1,666.
Median Sales Price remained stable at $315,000.
Inventory of Homes for Sale dropped by 22.4% to 7,831.
Days on Market Until Sale increased by 11.4% to 39.
In April, Closed Sales were down by 20.9%.
Screenshot Courtesy of Illinois REALTORS®
Chicago Real Estate Market Forecast 2020 – 2021
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 2020? Let us look at the price trends recorded by Zillow over the past few years. Since 2015, the median home prices in Chicago have appreciated by roughly 21.5% from $205,000 to $249,152, according to Zillow’s data. As you can see in the graph, the Chicago housing market was weak in 2019, essentially flat. In fact, November was the third straight month that home values grew by less than 1 percent, according to the S&P CoreLogic Case-Shiller Indices. In the November report, Chicago’s home price growth was the weakest among the 20 major U.S. cities that the index tracks.
The Zillow Buyer-Seller Index (BSI) currently lists the current market temperature as “warm” in Chicago – which is a sign of a seller’s real estate market. This is computed monthly. According to their index, there exists a limited supply of homes in Chicago, and buyers are forced to compete often resulting in higher prices and/or quicker sales that tend to benefit sellers. In other words, based on the last month’s key housing market indicators, the demand is exceeding the supply, giving sellers an advantage over buyers in price negotiations. There are fewer homes for sale than there are active buyers in the marketplace.
In the last twelve months, the Chicago real estate has appreciated by 0.3%. Chicago is expected to see home prices gains in 2020, albeit at a softer pace compared to the nation’s largest markets. The latest Chicago real estate market forecast is that the home prices will rise by 3.2% – in the next twelve months.
Chicago home values have gone up by 0.6% over the past year and Zillow predicts they will fall within the next year. The latest Chicago real estate market forecast is that the home prices may decrease by 2.3% – in the next twelve months. It may be perhaps due to COVID-10 that has led to a situation in which supply exceeds demand, giving purchasers an advantage over sellers in price negotiations. That’s how the prices remain flat or drop.
Here is the visual representation of historical Chicago home prices and the latest forecast until March 2021.
Graph Credits: Zillow.com
Here is a short and crisp Chicago housing market forecast for the 3 years ending with the 3rd Quarter of 2021. The accuracy of this forecast for Chicago is 84% and it is predicting a positive trend. LittleBigHomes.com estimates that the probability of rising home prices in Chicago is 84% during this period. If this price forecast is correct, the Chicago home values will be higher in the 3rd Quarter of 2021 than they were in the 3rd Quarter of 2018.
The change in home prices for Chicago-Naperville-Arlington Heights, IL are shown below for the three-time periods by LittleBigHomes.com. The highest annual change in the value of houses in the Chicago Real Estate The market was 21% in the twelve months ended with the 2nd Quarter of 1977. The worst annual change in home values in the Chicago Market was -11% in the twelve months ended with the 1st Quarter of 2010.
Chicago Metropolitan Area Real Estate Appreciation
Last 5 Years
Last 10 Years
Last 20 Years
The question now is what happens moving forward. Is Chicago is going to remain a seller’s real estate market amid the ongoing Coronavirus pandemic, which no one knows when it is going to end? These numbers can be positive or negative depending on which side of the fence you are — Buyer or Seller? While many have lost jobs, making them ineligible for a home mortgage, some sellers have taken their homes off the market. The decrease in the number of active listings indicates that new sellers are still not willing to put their homes on the market until the pandemic or its threat is completely over.
At the same time, the industry is adapting to the current environment by conducting business using technologies such as virtual showings and e-signing to help buyers and sellers with their housing needs in the face of these challenges. While some economic activity will resume as the state gradually reopens, the housing market is expected to remain sluggish for the next couple of months until the economy opens up completely. Sellers, brokers, and homebuyers seem to be adjusting to restrictions imposed on the real estate industry because of the coronavirus pandemic.
As Chicago progresses through reopening, the housing market will respond accordingly. Real estate activity is beginning to recover across much of the country and buyers have been quicker to return to the Chicago housing market in force than sellers. As expected by many analysts, prices have declined much less than sales, and forecasts point to slightly positive price increases over the next few months in Chicago.
In a balanced real estate market, it would take about five to six months for the supply to dwindle to zero. In terms of months of supply, Chicago can become a buyer’s real estate market if the supply increases to more than five months of inventory. And that’s not going to happen. This housing market is skewed to sellers due to persistent imbalance in supply and demand.
We think Chicago would be a balanced real estate market for the remainder of this year. Sales would decline over the coming months as well, especially if the metro areas continue to struggle with a sharp rise in coronavirus cases. Home prices, however, would remain steady from last year with no sharp rise or decline. That’s a good indicator for Chicago homebuyers who cannot afford a home in the median price. This means you can probably buy a home for less than list price, and the seller might be willing to pay some or all of your closing costs.
If buyer demand eases, we could see a positive influence on the low inventory of Chicago while at the same time seeing a negative impact on sales. Also, if listings linger on the market for longer, buyers have a special edge in negotiating sales prices. As a result, buyers who enter the market at this should have more options than usual when it comes to choosing a property. So they should take advantage of scooping up their favorite deals which otherwise are taken away by seasoned investors in the bidding wars. Whether you’re looking to buy or sell, timing your local market is an important part of real estate investment.
For buyers in Chicago, the inventory is relatively increasing & mortgage rates are at their lowest. Currently, the inventory remains relatively higher in Chicago due to COVID-19. There are more homes for sale than there are buyers and homeowners are becoming more and more eager to sell their property. There could be a slump in the Chicago real estate market in 2020. However, with a strong economy and an increasing inventory of homes for sale, it could be a great time for home buyers.
Nationally, the real estate market is heating up with an increase in home buying despite the COVID-19 pandemic. The real estate sector has been one of the most resilient areas of the economy during the severe economic shutdown. The latest housing market trend to be seen is that the lack of supply is leading to a decline in existing home sales even though new home sales have jumped nearly 13% year over year.
Please do not make any real estate or financial decisions based solely on the information found within this article. Real estate market forecasts given in this article are just an educated guess and should not be considered financial advice. Many variables could potentially impact the value of a home in Chicago in 2020 (or any other market) and some of these variables are impossible to predict in advance. Real estate prices are deeply cyclical and much of it is dependent on factors you can’t control.
Chicago Real Estate Market: Where Can You Find Homes For Sale?
Chicago has a mixture of owner-occupied and renter-occupied housing units. According to Neighborhoodscout.com, a real estate data provider, one and two-bedroom large apartment complexes are the most common housing units in Chicago. Other types of housing that are prevalent in Chicago include single-family detached homes, duplexes, rowhouses, and homes converted to apartments.
Single-family detached homes account for roughly 25.98% of Chicago’s housing units. At the national level, the 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. With 2020 being, theoretically, in the middle of a boom, there are still 4 years for residential construction to surge. Most likely, a housing shortage will remain in 2020, keeping home prices high.
Currently, there are 2301 homes for sale in Chicago on Zillow, an online real estate database company. Additionally, there are 322 homes for rent. Under potential listings, there are about 236 Foreclosed and 2685 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).
The median list price per square foot in Chicago is $243, which is higher than the Chicago-Naperville-Elgin Metro average of $165.
The median price of current listings is $329,000.
The median price of homes that are sold out is $309,200, which indicates that homes are selling way below their asking prices.
The median rent price in Chicago is $1,761, which is higher than the Chicago-Naperville-Elgin Metro median of $1,685.
There are currently 16,675 homes for sale and 21,660 homes for rent in Chicago, IL on Realtor.com, a real estate listings website. As we write this, the newly listed homes on Realtor.com are 1653. According to their statistics, in June 2020, Chicago was a balanced real estate market, which means there was a healthy balance of buyers and sellers in the market. The median list price of homes in Chicago, IL was $362.9K, trending up 4% year-over-year. The median listing price per square foot was $253. The median sale price was $324K.
Ideally, a buyer would prefer a sale to asking price ratio that’s closer to 90%. The sellers in Chicago have managed to hold good leverage in these negotiations in the past month. On average, they could sell homes for 98.33% of the asking price. A seller would always prefer scenarios that can yield a ratio of 100% or higher.
Graph Credits: Realtor.com
Chicago Housing Market: Foreclosure Statistics 2020
Here are some foreclosure statistics of the Chicago real estate market. As per the Chicago foreclosure data by Zillow, the percent of delinquent mortgages in Chicago is 1.3%, which is higher than the national value of 1.1%. The percent of Chicago homeowners underwater on their mortgage is 21.4%, which is higher than Chicago-Naperville-Elgin Metro at 13.5%.
There are currently 3,624 properties in Chicago, IL that are in some stage of foreclosure (default, auction or bank-owned) while the number of homes listed for sale on RealtyTrac is 6,269. In June, the number of properties that received a foreclosure filing in Chicago, IL was 4% lower than the previous month and 89% lower than the same time last year.
Potential Foreclosures in Chicago
Homes for Sale in Chicago
Median List Price
$329,000 (1% rise vs May 2019)
According to RealtyTrac, in Chicago, the zip code with the highest foreclosure rate is 60636, where 1 in every 3688 housing units is foreclosed. So, you’d find a lot of distressed sellers in this area and get some discounted off-market deals. 60633 zip code has the lowest foreclosure rate, where 1 in every 5310 housing units becomes delinquent.
Chicago Real Estate Market: Is It A Good Place For Investment?
Now that you know where Chicago is, you probably want to know why we’re recommending it to real estate investors. Is Chicago a Good Place Real Estate Investment? Investing in real estate is touted as a great way to become wealthy. Many real estate investors have asked themselves if buying rental property in Chicago is a good investment? You need to drill deeper into local trends if you want to know what the market holds for the year ahead. We have already discussed the Chicago housing market 2020 forecast for answers on why to put resources into this market.
Top Reasons To Invest In The Chicago Real Estate Market?
Chicago was ranked first in the 2018 Time Out City Life Index (Time Out Group).
On the UBS list of the world’s richest cities.
Often rated as having the most balanced economy in the United States.
Ranked seventh in the entire world in the 2017 Global Cities Index.
Home to 12 Fortune Global 500 companies and 17 Financial Times 500 companies.
Third-largest gross metropolitan product in the United States.
Strong Rental Market – Over 50% of the population rents.
Fully renovated single-family homes with great ROI.
Solid blue-collar areas with high rents.
High private sector employment.
Major transportation hub in the United States.
It has the largest number of federal highways & railroads in the nation.
Strong economic and job growth.
Chicago tourism recorded 55 million visitors in 2017.
The tourism and hospitality industries have added thousands of jobs, generating billions of dollars in direct spending by visitors.
An international hub for finance, culture, commerce, industry, education, technology, telecommunications, and transportation.
2% increase in Chicago’s government employment between November 2018 to November 2019 (Bls.gov).
Purchasing an investment property in Chicago real estate is a little different from shopping for your car or primary residence. While you still want to get the most for your money, if you are looking to make a profit, you don’t want to buy the most expensive property on the Chicago real estate market and expect to make a good profit on rents. Perhaps you are looking for a slightly different hold-over, a turnkey investment property in Chicago 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 take a look at the number of positive things going on in the Chicago real estate market which can help investors who are keen to buy an investment property in this city.
Chicago Rental Market Is Very Strong
What makes Chicago such a hot market for rental real estate? Over 50% of the population rents. The large population of renters means that rental income for properties is far better than you’d see if you invested elsewhere in the country. Schaumberg reported slowing sales simply due to tight supply according to due to data from the Chicago Association of Realtors; this drives many people to form new households or moving into the area to rent at whatever the market will bear.
Luxury Rentals Are a Profitable Niche in Chicago. Many people know that there are solid blue-collar areas with high rents, but it isn’t just the working class that rents townhomes and condos. According to Crain’s, the number of upper-income households in Cook County that rent has nearly doubled over the past ten years. The Institute for Housing Studies at DePaul University found that the number of rental households among those earning at least $132,000 a year nearly doubled, while those earning $80,000 to $132,000 saw the number of renting households increase by just over 50%. Chicago has a booming supply of high-end rentals, especially luxury apartments in downtown.
Home prices in the Chicago area are low compared to regional income. Yet economic uncertainty and shifts in the employment market are leaving many who want to live in a single-family home unable to afford to buy one. This is causing many to rent single-family homes instead. Crain’s last year’s April report found that the hottest areas for detached single-family homes were in Calumet Heights, Gage Park, and West Ridge. However, home prices are low compared to rents almost everywhere in the Chicago metropolitan area.
The workforce in Chicago is shifting from high paying but slow-to-no growth manufacturing jobs to lower-paying and less stable retail, business services, and healthcare jobs. This is causing many who would have been able to afford a middle-class home to rent apartments instead. Crain’s last year’s April report stated that the hottest Chicago markets for condos and townhomes were Grand Boulevard, Kenwood, and Lincoln Square.
Chicago Apartments Statistics: According to RENTCafé, the average rent for an apartment in Chicago is $1,943, a 2% increase compared to the previous year. The average size for a Chicago, IL apartment is 749 square feet, but this number varies greatly depending on unit type, with cheap and luxury alternatives for houses and apartments alike. Studio apartments are the smallest and most affordable, 1-bedroom apartments are closer to the average, while 2-bedroom apartments and 3-bedroom apartments offer more generous square footage. 490,497 or 46% of the households in Chicago, IL are renter-occupied while 565,621 or 53% are owner-occupied.
The most affordable neighborhoods in Chicago are Austin, where the average rent goes for $562/month, The Island, where renters pay $562/mo on average, and Cottage Grove Heights, where the average rent goes for $612/mo. If you’re looking for other great deals, check out the listings from Fernwood ($612), Longwood Manor ($612), and Princeton Park ($612), where the asking prices are below the average Chicago rent of $1,943/mo. The most expensive neighborhoods in Chicago are River West ($2,557), Streeterville ($2,566), and River North ($2,600).
Screenshot Courtesy of RENTCafé.com
Chicago Real Estate Prices Are Reasonable
Because households at all income levels choose to rent instead of buy, they are reducing demand for houses for sale, slowing the rise in home prices. This also explains why housing prices haven’t skyrocketed despite limited supply. Chicago’s inventory of homes for sale is very tight. Both attached and detached single-family home inventory has been declining since 2012. At the end of 2017, potential buyers in Chicago had about five thousand fewer properties on the market to select from than if they’d been shopping at the end of 2016.
This contributed to homes closing five days faster than the year before. If you start shopping for rental real estate, you could find something and rent it out. Chicago’s real estate market has been one of the slowest to recover since the housing bubble burst at the start of the Great Recession. Home prices were 19% below their pre-crash levels in 2017, and they aren’t expected to hit peak values yet. This means that the Chicago real estate market is likely going to continue its slow, upward market trend.
Chicago Rehabbed Homes Are Readily Available
Chicago is seeing a surge in fully renovated single-family homes. The Chicago Association of Realtors’ data found that most of the strong suburbs are on the south side of Chicago, and this is where many homes are being rehabbed and sold. Calumet Heights is in this category; a quarter of properties sold were either rehabbed or candidates for rehabilitation. These properties are ideal for investors who want to buy a property to rent out.
Chicago’s Job Growth Keeps People Coming
Chicago is not only home to a number of corporate headquarters; there has been a recent trend of companies moving their headquarters to Chicago as well. The steady increase in jobs has contributed to a slow but steady increase in rents. Many businesses are attracted by Chicago’s labor pool, the largest in the nation. As these businesses move into the area and attract relocating professionals, many are forced to rent because they can’t find houses fast enough in the areas they want to live or simply choose to rent upon relocation in one of the luxury apartments downtown. The Chicago metropolitan area is made up of four metropolitan divisions—separately identifiable employment centers within the larger metropolitan area.
In the greater Chicago metropolitan area, education and health services had the largest employment gain from November 2018 to November 2019, adding 15,600 jobs. The Chicago area’s 2.1-percent rate of job growth in education and health services was lower than the nationwide advance of 2.9 percent. Chicago’s government supersector added 10,800 jobs from November 2018 to November 2019. Local job growth was concentrated in educational services, which added 10,600 jobs. The 2.0-percent increase in Chicago’s government employment compared to a gain of 0.7 percent nationally.
The churn also keeps people renting in Chicago. Chicago’s unemployment rate has gone up while dropping in other cities as jobs shift from Chicago to the suburbs. This economic uncertainty keeps many who can afford to buy a home renting. It also keeps the rental market itself strong, since many want to remain free to follow their jobs as required.
Trump’s Tax Plan Makes Many Reluctant to Buy – Unless It Is a Rental
Uncertainty about the deductibility of hefty property tax bills is making many reluctant to buy a home, though this is less of an issue for a real estate investor who will rent out the property. Chicago and its suburbs have some of the highest property taxes in the nations. Around 12% of Chicago area homes have a tax bill of more than $10,000 a year. Yet that’s better than some of the most expensive real estate markets in the country. For example, in New York, more than 20% of homes have a property tax bill that high. In Orange County, California, more than half would. This means that limits or the loss of property tax deductions won’t hurt Chicago as badly as it would California or New York, and if it does have an impact, it will mostly be at the higher end of the Chicago real estate market.
Chicago Investment Properties
Maybe, you have done a bit of real estate investing in Chicago, 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 Chicago’s real estate investment? In Chicago, arts and culture abound at top institutions like The Art Institute. Although the winters can test anyone’s resolve, Chicago summers are among the best in the world, with things to do every weekend, outdoor festivals, and Lake Michigan at your doorstep.
Chicago has an incredibly deep pool of potential renters at all levels of the market. A number of factors guarantee that they’re not going to turn into new home buyers any time soon. Chicago real estate market is a prime destination for investors who would like to buy where the ROI is going to be high and likely to improve over time. It won’t be long before Chicago makes you feel right at home. Good cash flow from Chicago rental property 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 the best investment property in Chicago in a growing neighborhood would be key to your success.
When looking for real estate investment opportunities in Chicago or anywhere in the country, the generally accepted standard is to purchase a property that will give you a modest but minimum of 1% profit on your investment. An example would be: at $120,000 mortgage or investment cost, $1200 per month rental. That would be the ideal equation for example. Even with rent increases, buying a $500,000 investment property in Chicago is not going to get you $5000 per month on rent.
When looking for the best real estate investments in Chicago, you should focus on neighborhoods with relatively high population density and employment growth. Both of them translate into high demand for housing. If housing supply meets housing demand, real estate investors should not miss the opportunity since entry prices of homes remain affordable.
The neighborhoods should be close to basic amenities, public services, schools, and shopping malls. A cheaper neighborhood in Chicago might not be the best place to live in. A cheaper neighborhood should be determined by these factors – Overall Cost Of Living, Rent To Income Ratio, and Median Home Value To Income Ratio. It depends on how much you are looking to spend and if you are wanting smaller investment properties or larger deals in Class A neighborhoods.
Some of the popular neighborhoods in Chicago, Illinois are Near North Side, Lakeview, West Town, Andersonville, South Loop, Bronzeville, Norridge, Logan Square, Old Town, Wicker Park, Bridgeport, Irving Park, Norwood Park, Bucktown, West Loop, and Hyde Park. Chicago’s North Side is the city’s most densely populated residential section. In the $200,000 price, you can purchase properties with one or two bedrooms and one or two baths. Chicago’s West Side is home to the University of Illinois at Chicago. With a $200,000 budget, you can buy condos that typically offer one to two bedrooms and one or two baths.
You can buy Chicago investment properties in the Pilsen neighborhood. Pilsen is a great area for those who want a diverse portfolio of investment properties without having to run all over the city. Pilsen is located on Chicago’s Lower West Side. It features a mix of condos, apartment buildings, and single-family homes. The area is suburban enough to attract families. Its schools are a C+, which is close to the Chicago average. Parks and other amenities explain why Niche.com gave the area a B- for families.
Humboldt Park is another good neighborhood to buy investment properties in Chicago. The home prices in Humboldt Park peaked in 2006 but fell dramatically during the Great Recession. Home prices here hit a record low in 2012. Humboldt’s housing prices are on the rise again, though they remain below their 2006 peak. The average home price is around 300,000 dollars, while rents are around 1700 dollars a month. The area is notable for the number of foreclosed and distressed properties available to investors, and this helps pull the average rental rate down.
Here is a snapshot that shows the median home values in some of the popular neighborhoods in or around Chicago.
NORADA REAL ESTATE INVESTMENTS has extensive experience investing in turnkey real estate and cash-flow properties. We strive to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities in many other growth markets in the United States. We can help you succeed by minimizing risk and maximizing the profitability of your investment property in Chicago.
Consult with one of the investment counselors who can help build you a custom portfolio of Chicago turnkey properties. These are “Cash-Flow Rental Properties” located in some of the best neighborhoods of Chicago.
Not just limited to Chicago or Illinois but you can also invest in some of the best real estate markets in the United States. All you have to do is fill up this form and schedule a consultation at your convenience. We’re standing by to help you take the guesswork out of real estate investing. By researching and structuring complete Chicago turnkey real estate investments, we help you succeed by minimizing risk and maximizing profitability.
Buying or selling real estate, for a majority of investors, is one of the most important decisions they will make. 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 areas, such as changes in market conditions, market forecasts, consumer attitudes, best locations, timing, and interest rates.
Is It The Right Time To Invest In Real Estate? – The national homeownership rate is on the decline for the first time since 2017. As demographics change and baby boomers retire, you’re seeing Millennials who may not be ready to buy houses. In 2018, Millennials made up about 22 percent of the population in the United States. They’re choosing to rent over buying a single-family home or an apartment. Rising home prices and shortage of starter homes have not left Millennials many choices but to delay homeownership. Moreover, it’s even harder to take out a mortgage for those who have student loan debt.
Chicago | Illinois Real Estate Investment Opportunities
Illinois is in the midwestern United States. Surrounding states are Wisconsin to the north, Iowa and Missouri to the west, Kentucky to the south, and Indiana to the east. Illinois also borders Michigan, but only via a northeastern water boundary in Lake Michigan. Apart from the Chicago real estate market, you can also invest in the housing market of Indianapolis. The median sales price in Indiana saw a year-over-year increase of 9.7 percent to $170,000. Not surprising is the fact that Indianapolis house prices are also on the rise in the year 2020. Demand is still outpacing the supply, the new construction is slow, and competition for quality homes remains tough.
Like most cities nationwide, Indianapolis has experienced real estate appreciation over the last couple of years. The real estate appreciation rate in Indianapolis in the last quarter was around 0.81%, which amounts to an annual rate of 3.3%. However, it is quite unclear whether the rate of appreciation would remain steady or not due to the short term effects of the ongoing pandemic. Economic uncertainty might hold back sales volume for a short period in 2020. Most housing analysts expect Indianapolis house prices to remain flat or drop by a small fraction for the remainder of the year 2020.
If you head towards the west of Illinois, you should consider investing in Kansas City, MO. There is probably no hotter market right now than Kansas City, Missouri. A large, prosperous, self-sufficient, and culturally-rich city, it is no wonder why it has seen a continuous rise in its employment, directly impacting the local real estate. The Kansas City real estate market is very hot and in many ways the envy of housing pundits on both coasts. It is the largest city in the U.S. state of Missouri, famous for its distinct barbeque cuisine and jazz heritage. Also nicknamed the City of Fountains, Kansas City is now emerging as a growing market for real estate investments. High demand and low inventory are driving up both home prices and speed of home sales in the Kansas City Housing Market.
Let us know which real estate markets in the United States you consider best for real estate investing!
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.
Market Prices, Trends & Forecasts
Upper household rental rates
Housing inventory numbers
2016 to 2017 housing inventory decline data
Labor pool stats
Trump’s Tax Plan Makes Many Reluctant to Buy
Crain’s April real estate report
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