Chicago Housing Market Update
The winds of change are blowing in favor of Illinois and the City of Chicago. Similar to most US housing markets, the Illnois and Chicago metro housing market performed very well in 2020, despite the pandemic recession.
The experts predict more demand and higher prices as 2020’s real estate market heated up a the end of the year.
Geoffrey J.D. Hewings, emeritus director of the Regional Economics Applications Laboratory at the University of Illinois offers a rosy forecast for the markets, “Housing sales and prices are expected to continue their positive trends into the first quarter of 2021… continuing demand is likely to come from those seeking to relocate to accommodate opportunities to sustain the percentage of time spent working from home.”
December was a particularly strong market with huge year over year gains. The city of Chicago, had house and condo sales grow 17.3% during December 2020 (2,220 homes sold compared to 1892 sold the previous December Total 2020 home sales totaled 25,999, was actually down 0.8% compared to 26,217 homes sold in 2019.
However, the median price of a home in the city rose 11.4% in December 2020 to $307,500, up from December 2019’s price of $276,000. And the median home price rose 7.1% to $316,000 (up 7.1% over 2019’s median price of $295,000).
Refin reports out of town buyers are bidding up the price of houses and competing with first time Illinois local home buyers. Some Illinois buyers are looking at homes in Indiana.
The number of days on market in Chicago fell to 76 days until contract, which is a year over year drop of 21.6%. Home inventory dropped 2.9%, from 3.5 in December 2019 to 3.4 in December 2020. The City of Chicago’s current total inventory for December rose 1.5%, 7692 homes from last month’s total of 7,575 homes.
Inventories are falling, prices rising, and it’s at a time when the economy is recovering, employment and wages for workers may be rising overall, and Federal stimulus money is nearing.
Metro Chicago’s low home prices could be an attractive prospect for a growing hoard of work from home workers who are looking for more space. The pandemic created an outdraft of residents from downtown Chicago, but as vaccinations and herd immunity grow, that exodus will likely stop. Even with a first time homebuyer credit, homebuyers will find it difficult to compete in Chicago’s housing market this year and next.
Chicago’s real estate market will reflect strong growth in other housing markets.
Zillow sees overall home prices in Chicago/Naperville will rise 7.4% so house prices could conceivably rise 10%.
Metro Chicago Stats Reveal Strong Ending to 2020
Hottest Neighborhoods in Chicago
This chart from Trulia’s heatmaps show the highest listing prices in the coastal communities.
The graph below shows middle tier home prices were on the rise until recently.
Contrast with Other Housing Markets
Compare the price of homes and cost of living in Chicago to other US cities, and you’ll understand why Illinois might become a desired destination again. The work from home and small business growth trend changes the landscape. See the New York real estate, Boston Real estate, Philadelphia real estate, Atlanta real estate, Denver real estate and Dallas real estate scene for comparison. The spring housing market forecast is an exciting one for home owners.
Illinois Realtors: Foreclosed Home Sales Dropping
According to an Illinois Realtor Association report, in June 2018, for the Chicago metro market, the percentage of foreclosed sales was 8.2% of total sales. The 12,306 sales that happened was 6.2% less than the previous month and 7.1% lower than last year. 947 foreclosed properties were sold, 18.2% less than last year.
Their housing forecast for the Chicago PMSA, the 4.5% price growth in July, 6.1% in August and 5.4% in September 2018.
Up till now, the Chicago housing market has underperformed. Yet these graphs from BLS suggest wages are rising in the Chicago metro area, employment growing, and a lack of construction should push prices upward.
Longer Term Outlook Chicago Realtors
This long term projection of house prices by Realtors shows strong optimism about the housing market. In this chart, Realtors predict strong growth, with even the most pessimistic rosy about 2021 and beyond. And since Chicago is playing catch up economically and with manufacturing returning from China, Chicago has huge potential for growth.
New Home Construction in Chicago
Crain’s Chicago Business magazine reports that there are fewer new subdivision development projects underway in Chicago than in the past 20 years. Not welcome news for a city that desperately needs new housing. New home sales dropped in the first half of 2018, although recently an uptick has happened. New homes introduced are competitively priced, yet lack of reasonably priced land is thwarting new home construction.
Chicago Rental Market
According to Curbed, the average Chicago renter of a 2 bedroom unit would need an average wage of $90,000. Rent for a 2 bedroom apartment is now $2,254 per month.
More Insightful Posts: Housing Market | Housing Market Downturn | Stock Market Downturn | 5 Year Real Estate Forecast | California Real Estate Outlook | Florida Real Estate Outlook | Home Price Forecast | Buy a House | Self-Directed Stock Trading | Spring Housing Market | Home Prices Homes for Sale | Stock Market Projections | Stock Prediction | Stock Price Forecast | Oil Price Forecast | Housing Market Crash | Illinois Housing Crash? | Stock Market News | Top Trending Stocks | Are Home Prices Dropping? | Market Forecasts