The global real estate market reached a size of $3.69 trillion in 2021.
Real estate markets vary a lot depending on location. Anyone who’s considering buying or selling property should be up to date with the state of things in their area. This is because buying or selling at the wrong time could be a mistake financially.
For people living in Illinois, the Chicago housing market is one to keep an eye on. It can present a good place to invest, and knowing when to sell can help ensure you get the best price for your home.
Some things to consider are historical data, the situation in different neighborhoods, and investment factors. Having a good understanding of what you’re doing and what’s happening with the market will help you make the best decisions.
Various outlets provide information on the Chicago real estate market. Keeping up with the latest overview will give you an idea of what’s happening so that you can stay up-to-date and informed.
In this guide, we’re going to take a look at three reports that cover Chicago housing trends in 2023. This will allow you to determine what to do in terms of real estate investments over the next year.
To buy or not to buy? Looking toward Chicago’s housing market in 2023
Acacia Hernandez provided this report from WTTW, and one of the first things to note is that interest rates have more than doubled over the last year. There was a bit of a housing boom before the pandemic, but this has had a sizable impact on that.
Higher interest rates make it more expensive for people to buy homes. Depending on a person’s situation, it can be a better choice to try to wait things out. The issue here is that it’s hard to be certain when interest rates will drop again.
Some experts think that interest rates could even continue to go up. In this case, that would make now a better time to buy for Chicago residents that don’t want to wait too long to move.
Dennis Rodkin, a residential real estate reporter for Crain’s Chicago Business has made it clear that people don’t know what will happen with interest rates moving forward. While they’ve lowered slightly, the Federal Reserve thinks they might have gone down a bit too much. A continued increase in interest rates will most likely lead to a deeper freeze on the Chicago market.
What to expect
When the Chicago real estate market is doing well, there can be a lot of very quick sales (2 weeks or less on the market). Sales like this have almost completely disappeared. The reduced demand means that buyers have more control, so they can look at various properties without having to make immediate offers.
If you do decide to put your home on the market, you shouldn’t expect offers to flood in. While there are still people looking to buy Chicago homes, the process is a lot slower than usual.
Chicago home prices did rise during the pre-pandemic boom, although not as much as some other locations such as San Francisco and Phoenix. As such, the drop in demand is also not as significant as in these areas. They’re already seeing house prices fall, while they’re still on the rise in Chicago – though only by very small amounts.
Chicago remains one of the most affordable big cities in the country for housing. While things may not be too good going into 2023, it’s better here than in most of the rest of the US. It’s important to remember, however, that things can still change.
Chicago real estate market prices, trends, forecast
Home sales in the nine-county Chicago Metro Area reached 4,420 in January 2023. This is a 38.8% drop compared to the same time last year. The median house price, however, has had a slight increase of 0.7% over the same time frame.
There has been a slowdown in the market, but that’s typical of winter. Forecasts suggest that house sales and prices will likely increase over the next 3 months.
A buyer’s or seller’s market
This report written by Marco Santarelli of Norada Real Estate Investments is based only on single-family, condo, and townhome properties, and things are generally fairly balanced (supply and demand are very similar). In January 2023, the market favored buyers over sellers as there was a higher supply of homes, but the median price hasn’t changed much at all. This indicates that the housing boom is slowing down.
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Rent prices vary across the state, with East Chicago being one of the most affordable areas. Even so, the average price of rent has increased by 17% over the last year.
Forecast for 2023-2024
The Chicago housing market will likely continue to be one of the best-performing markets in the country. The 1-year forecast suggests a slight decline (-0.8%) for the next year primarily due to less demand and higher interest rates. Demand is still quite strong, resulting in 28.7% of homes selling above the listing price.
As a place to invest, Chicago can still be a good choice. There’s a strong renter’s market, so if you want to buy a rental property you may find some good opportunities.
Over the past 10 years, Chicago has had an annual real estate appreciation rate of 4.88%. As such, it has consistently been one of the most successful real estate markets in the country. One thing to note is that the population has decreased recently, which could have a negative effect on the housing market.
House prices remain reasonable throughout the city. There’s also a good balance between renters as well as a reasonable spread of income levels. This can make it a good place to invest for anyone looking to get on the property ladder at any level.
Chicago real estate market trends to know
This report (published in April 2021) covers 7 specific trends in the Chicago real estate market. Devon Thorsby of U.S. News & World Report gives a good indicator of where things might be going.
Prices on the rise, but not unsteadily
In general, house prices went up from 2020 to 2021 (like most of the country) but not as much as in smaller metro areas. Chicago experienced a median price increase of 12.5% from February 2020 to February 2021. Even with the price increase, however, the number of homes sold over the same period was smaller.
Outside of downtown, buyer competition is fierce
The Covid-19 pandemic slowed things down for the market, especially in the Chicago metro area. Residential neighborhoods, however, experienced more competition.
This shows how much things can differ based on the neighborhood. When buying and selling, make sure you look into specific areas to see current market conditions.
High-rise buildings are seeing more vacancies
Another impact of the pandemic was the style of living people wanted. High-rise condo buildings often involve more interaction with neighbors, which is something many people began trying to avoid. As a result, people started moving out of these properties and into areas with a bit more space and freedom.
Square footage and outdoor space are driving sales
With the effects of the pandemic, a lot of people started to live differently. Many buyers were placing more value on outdoor space and a more home-centric environment. This is especially true among younger buyers.
Renewed interest in dense city living hinges on entertainment
With many people working from home, the need to find a property close to one’s work fell significantly. For those who do want to live in densely populated metropolitan areas, work isn’t as much of a concern. Things like restaurants, activities, nightlife, etc. are now the driving factor.
If you’re considering the suburbs, look for small downtowns
If you want to move to the suburbs, locating a small downtown can be very beneficial. It will ensure you’re close to all the amenities you need without the crowds and chaos of the city center.
People from pricier metros see Chicago as ideal for investment
Many Chicago real estate investors come from outside the city. It presents a good place for people to enter the real estate market as there’s a lot of potential and it’s generally more affordable than other big cities like New York or Los Angeles.
The Chicago housing market in 2023
While there’s still a lot of uncertainty in the Chicago housing market, it can still be a great place to invest. It has consistently performed better than markets in other areas of the country, and will likely continue to do so.
If you’re planning on investing, make sure you take the time to research different neighborhoods and types of properties. Your decision should also be based on if you’re wanting to move, or if you’re buying as an investment.
You may also be interested in selling your home, which can be a lengthy process, especially with the current state of the market. You can make things much easier for yourself by selling with iBuyer. We provide instant cash offers on properties, speeding up the process significantly.