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Chicago, IL Real Estate Market Trends & Analysis

Key Takeaways

  • Chicago real estate market trends suggest The Windy City is a great place for investors to set up shop.
  • At the moment, real estate in Chicago appears to be undervalued with plenty of growth potential.
  • Not unlike the rest of the country, Chicago is facing an inventory shortage that will continue to influence prices for the foreseeable future.

For all intents and purposes, the Chicago real estate market is about as healthy as they come. Unlike most other metropolitan areas of a similar size, the city of Chicago seems to have stumbled across a balanced market — one that favors both buyers and sellers. If for nothing else, the Chicago real estate market is firing on all cylinders, while still boasting a relatively low cost of living. In other words, people are willing and able to buy homes in The Windy City. That spells great news for those interested in Chicago real estate investing.

According to the UBS Global Real Estate Bubble Index, via Forbes, “real house prices have risen nearly 50%, on average, since 2011 in a number of major markets. In contrast, housing is affordable in Chicago, which the UBS report classifies as an undervalued market.” In other words, Chicago represents a unique opportunity for investors that aren’t interested in the overpriced markets in coastal cities like San Diego or New York.

Median Home Price Chicago

Chicago currently has a median home value of $221,000, according to Zillow. Despite being one of the largest metro areas in the country and the only primary market in the Midwest, however, Chicago home values are only slightly higher than the U.S. average. The median home value in the United States, also according to Zillow, is $207,600.

Chicago homes appear to be undervalued, and could represent a good deal for savvy investors, as prices are expected to increase. In the last year alone, median home prices in Chicago have gone up 1.8%, and experts are convinced the ascent won’t stop anytime soon. In fact, over the course of the next 12 months, we shouldn’t be surprised to see Chicago home values increase an additional 2.5%, or at least that’s what the experts over at Zillow think. That said, don’t be surprised if the median home value in Chicago eclipses $220,000 by the first part of next year. Of course, those are just home values. In today’s competitive landscape, homes are selling for more than they are worth. And in Chicago, homes are selling for an average of $267,700. Due to increased demand, homes are commonly selling for more they are valued at, which is great news for investors.


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Chicago real estate investing

Chicago Foreclosure Trends & Statistics

As an investor looking to invest in Chicago real estate, it may be in your best interest to look past non-distressed properties and focus on, well, those of a more distressed nature. If for nothing else, the Chicago real estate market has its share of distressed properties. In fact, RealtyTrac has identified some 9,275 in some state of foreclosure. That means there are close to 1,000 properties in the city of Chicago that are either in pre-foreclosure, up for auction, or have already been repossessed by the loan originator. More specifically, however, there are nearly 1,000 opportunities for investing in Chicago real estate.

Foreclosures, as it turns out, award investors an opportunity to acquire properties at a discount if they play their cards right. Distressed properties in Chicago, for example, carry a median sales price of $98,000, or 44% below the average sales price of non-distressed homes. On average, investors could potentially save an average of $77,000 if they choose to buy distressed homes over those that are in good standing.

Investors interested in acquiring distressed properties will probably have better luck looking at those homes in the pre-foreclosure stage. That is to say, they aren’t in foreclosure yet, but are at risk of it. The majority of Chicago’s foreclosures are considered pre-foreclosures. In fact 44.8% of the entire distressed market are what we would consider to be pre-foreclosure properties. The remaining distressed properties are split between bank-owned homes and those placed up for auction, 28% and 27.2% respectively.

Real estate in Chicago

Chicago Real Estate Market Predictions

Approximately six years ago in March 2012, the median home value in Chicago rested somewhere in the neighborhood of $165,000, according to Zillow. However, Chicago real estate, not unlike the rest of the country, made incredible strides following the depths of the latest recession. For the better part of those six years, median home values have been on the rise, and there’s no sign of things slowing down. In the next year, expect median home values to continue rising, even faster than they have in the last year. It shouldn’t surprise anyone to see the median value of Chicago homes reach $226,000 by the start of 2019, up 2.5% from where they are at now.

It is worth noting, however, that Chicago has not found itself immune to the same inventory shortage the rest of the country is experiencing. The Windy City simply doesn’t have enough available housing to keep up with demand, which would explain why prices are expected to continue rising. You see, a lack of available options favors sellers, allowing them to raise prices to account for competition. Real estate investors considering Chicago as their next destination may want to consider buying sooner rather than later, as prices should only go up for the foreseeable future.

Chicago Real Estate Market Summary

The Chicago real estate market, much like the rest of the country, has been the beneficiary of several years of appreciation. Median home values have increased year over year since 2012, and experts are convinced the trend will continue for at least another year. However, despite their appreciation rate, Chicago homes are still a bit undervalued. And while their prices will certainly draw more attention from homebuyers, Chicago real estate is at a bit of a crossroads: there is plenty of interest in Chicago real estate, but very little inventory to accommodate it.

*The information contained herein was pulled from third party sites. Although this information was found from sources believed to be reliable, FortuneBuilders Inc. makes no representations, warranties, or guarantees, either express or implied, as to whether the information presented is accurate, reliable, or current. Any reliance on this information is at your own risk. All information presented should be independently verified. FortuneBuilders Inc. assumes no liability for any damages whatsoever, including any direct, indirect, punitive, exemplary, incidental, special, or consequential damages arising out of or in any way connected with your use of the information presented.

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