The Next Big Thing in Chicago Real Estate
The Chicago real estate market is experiencing a major shift in 2019: home prices have leveled off, and listed properties are starting to take longer to sell.
In other words, it is becoming more of a buyers’ market. Great news for you if you are looking to buy!
Tens of thousands of people are looking to buy, and they have the cash and the credit to shop aggressively. A recent Brookings Institution study showed that 90 percent of the increase in post-2005 U.S. job density occurred in just four metro areas: Chicago, New York City, San Francisco, and Seattle.
In other words, the Windy City keeps company with the Big Apple and two of the nation’s most notable concentrations of high tech. The city tilts towards the creation of good-paying tech- and knowledge-based jobs. Thanks to its diversified economy, Chicago is shielded from the kinds of downturns that cities like Detroit, too dependent on specific industries, have faced.
Millennials, however, have to be wooed when it comes to buying homes. They didn’t reach adulthood assuming, as did their parents, that owning a home was automatically superior to renting one. True, for those stable in their careers and ready to set down roots, homeownership is a key to wealth later in life. However, never underestimate the emotional impact of the demon unleashed by the 2008 Crash: “mortgages under water.”
Nor are Millennials unaware of the rising Chicago real estate taxes needed to plug budget holes created by unfunded public pensions. These could hit real estate investors both directly (property taxes are a major expense) and indirectly (they dampen the business climate).
To give up that trendy Lincoln Park or Roscoe Village apartment, and settle down in a place with a garage and a garden, they must be convinced that a better lifestyle beckons. Home-buying may no longer be universally viewed as the “default” financial investment most appropriate to young couples, but it does offer unique advantages.
Aside from someday wanting kids and needing the extra bedrooms, young couples can live larger in a home: invite more people over, play the music louder, not worry about neighbors banging on the walls. Being buffered from neighbors by a yard, plus having some trees and the opportunity to grow tomatoes and daffodils, is a big draw. There’s something soothing about being surrounded by green.
But the price has to be right. Just right.
Declining interest rates help. Home Equity Line of Credit (HELOC) loans are linked to the prime rate, so when the Fed lowers its target rate the HELOC rates follow. Long-term mortgage rates key off the 10-year Treasury bond rate, which the Fed does not control; however, 15- and 30-year mortgage rates are at three-year lows according to Freddie Mac.
Anyway, Chicago is definitely one of those cities that people brag about living in. World-class sports teams? It was named “the Best Sports City” by Sporting News. First-class music, theater, and entertainment? Oh, yeah. Beaches where beautiful bodies and volleyball skills are on display? Yes, indeed.
And if you are going to live here, you can certainly live well. The most expensive U.S. houses—those priced at $500,000 and higher—made up a quarter of total new-home sales in August, the biggest-ever share according to Census Bureau figures that date back to 2002. It looks like lower mortgage rates are helping lure Americans who are buying the priciest properties.
Provided, as we said , the price is right …
However, Chicago, the third most populous city in the United States, is a hub city, with its O’Hare airport the second busiest airport in the world. Chicago is one of the most visited cities in the United States as well, and it features an impressive skyline, a rich musical heritage, and News making it attractive to businesses.
Are you bullish on the Chicago market? Yes. Bullish for buyers! Chicago’s marker is buyer-friendly. Home buyers have plenty of inventory to choose from, and where the competition has eased.
Sufficient inventory and price plateaus — suggest that Chicago could become a full-fledged buyer’s market in the near future. Whether that happens
With higher inventory and median sale price slips over the past year, the market is finally shifting to buyers’ favor.