Chicago is a dynamic, growing housing market. An influx of young professionals and expanding suburban properties support rising property prices. As Chicago’s population continues to grow (the city’s current population is up 0.27% from last year), the percentage of residents searching for available homes will likely increase proportionately. However, recent fluctuation in the average price of Chicago homes has left many investors with uncertainty regarding the future of Chicago real estate.
While the real estate market is ever-changing, the following forecast analyzes market trends. This way, we can help investors make the right decisions as well as provide real estate agents with current information. Our predictions include data regarding interest rates, housing demand, population growth, and overall economic trends. These issues affect the city of Chicago and its surrounding suburbs. It seems that, in 2022, Chicago will again prove to be one of the hottest markets in the United States.
Feel free to use this information in your marketing materials to Chicago-area real estate leads!
Housing Market Changes from 2021
The growth of the 2021 housing market was unprecedented. As a result, bidding wars on properties throughout the city and surrounding suburbs went on for months. Evidence suggests the 2022 housing market may not be as cutthroat as that of 2020-2021. In 2021, more often than not, multiple offers were immediately placed as properties went up for sale. However, that may mean that buyers interested priced out of a bidding war may now be looking for available properties. Overall, real estate investors should prepare for a competitive housing market in 2022.
How Are Housing Prices Affected?
Real estate investors interested in the Chicago area must know the rising median home price. In November of last year, the median price of the average home in both Chicago and the state of Illinois at large increased by 7.8 percent. In a report by Illinois Realtors, researchers found:
- The median price of a home in the Chicago Metro Area in November 2021 was $290,000.
- In Chicago, the 2021 median home price was $327,000.
- Available homes for sale in the Chicago Metro Area decreased from 25,847 to 17,761 total properties by the end of 2021.
- The median price of Illinois homes is predicted to rise by 8.4% in February of 2022.
- The median price of homes in Chicago is expected to increase by 7.2% in February of 2022.
Chicago Is a Competitive Market
The above evidence demonstrating the rise of median listing prices in Chicago suggests that the city’s market will be even more competitive in 2022. The total number of available properties in Chicago has decreased from 2021. This evidence indicates that buyer demand is as high or (in some cases) even higher than last year.
However, it might be the case that the rising cost of homes will become prohibitive for some buyers. One potential factor in this rising cost is that, as the number of available properties decreases, the median starting bids for these homes will similarly increase. First-time buyers may be priced out of bidding wars. Then, they may seek other options such as luxury rental properties.
Supply Chain Shortages
The construction and real estate industries have continued to face challenges due to the coronavirus pandemic. One of these issues is the nationwide disruption in supply change due to continually delayed shipments nationwide. Limited supply nationwide has caused delays in deliveries of building materials. This shortage perhaps discourages potential buyers from investing in building new properties.
While the overall trends seem to demonstrate that Chicago’s real estate market is booming, investors should consider these delays and the possible rise in inflation.
Rental Properties in Chicago
Up to this point, this forecast has focused on the upcoming changes in Chicago’s housing market, but how will the city’s rental properties be affected? In a study analyzing the rental market in Chicago, the Zumper Chicago Metro Area Report found that, by the end of 2021, the average rent for a one-bedroom in Illinois was $1,173. In the state metropolitan areas, the prices are considerably higher: in Chicago, the median rent for a one-bedroom was $1,560.
Advice for Real Estate Investors
Should investors focus on rental properties in Chicago? While the housing market is undeniably competitive, the reality is that approximately 50% of Chicago residents are renters. With continued economic growth and an expanding work-from-home population, the demand for rental properties in Chicago and its less expensive suburbs will only continue to grow in 2022.
This 2022 forecast explored the rising median house costs, demand for housing, and population growth in the Chicago Metro Area. Real estate investors should prepare for another year of unprecedented demand and competition for housing citywide.
