With millions of people calling Chicago already calling Chicago home, it is easy to assume that the housing market is thriving. Is this really the case or could the Chicago real estate market be in trouble? Keep reading to learn about the top 5 trends in Chicago housing for 2017, including who will be looking to buy a home and what areas they are most likely to focus their search on.
An increasing number of residents will look to make the Loop and South Loop their home.
Thanks to the Loop and South Loop’s convenient locations that offer easy access to numerous public transportation options, as well as restaurants, shops, and entertainment opportunities, these two areas were two of the fastest growing in the city in 2016, a trend that is expected to continue well into 2017. It also helps that the location is within walking distance of Grant Park, Columbia College, the Museum Campus, Lake Michigan, and downtown.
Despite their coveted locations, prices have dropped in both areas with the South Loop falling by 4.2 percent and the Loop following by an astounding 20.5 percent. This is likely due to the fact that more people are choosing to rent instead of buy and that construction of new luxury apartment buildings provide residents with plenty of housing options, including apartments and condos. In fact, ground just broke on a 56-story luxury building in the area, which is expected to be completed in 2019.
There will be a move toward renting instead of buying.
Although foreclosure rates were down across the United States in 2016, they remained high in Chicago. In the final months of 2016, one out of every 571 properties was in some stage of foreclosure, leaving Chicago with the highest foreclosure rate of the nation’s 20 largest cities. What does this mean? It is actually quite simple. For Chicago residents who have recently lost their home, renting is essentially their only option.
Fortunately, there are plenty of rental units to choose from in the city. In fact, builders and property owners are going out of their way to attract renters by offers free rent and no safety deposits. This, in turn, attracts residents who may have previously considered buying, but are not completely sold on living long-term in the Windy City. Unfortunately, this could complicate matters for owners who are trying to sell their current homes.
Millennials will continue to be the driving force behind Chicago home purchases.
Millennials were largely responsible for Chicago area home purchases in 2016. (In 2016, 43% of mortgages for a home purchased in Cook County were made by people under the age of 35.) While this is a housing trend that is almost certain to continue throughout 2017, interest rates could affect this. Having not yet made it to their peak earning years, millennials are sensitive to rate increases.
That being said, with more and more millennials looking to become settled and possibly start families, they are likely to overlook the potential increase in interest rates in favor of the stability they just can’t get when renting a property. For example, millennials who plan to have children will be looking to purchase in a good school district that they can stay in for an extended period of time.
It’s also worth noting that quite a few millennials are being drawn to the larger properties available in the Englewood neighborhood because of the incredibly low prices. Yes, it is one of Chicago’s most dangerous and notorious neighborhoods, but it is also a place in the city potential buyers can find a 4,000 sq. ft. single-family home for less than $25,000 here. Granted the homes need a lot of work, but many millennials moving into the area are up to challenge in an effort to begin transforming the neighborhood into one that is both beautiful and safe.
There is no doubt that Chicago will be a buyer’s market.
According to experts at Realtor.com, the Chicago area housing market will be the weakest in any of the nation’s 100 largest metropolitan areas during 2017. How will this impact housing trends? Easy, despite the fact that many residents will be looking to rent, it will be a buyer’s market, which could certainly disrupt the plans of anyone trying to sell their home. (As of late December 2016, Chicago’s home prices remained about 20 percent below July 2007 levels, on average.) This could also potentially persuade some residents interested in renting to consider purchasing instead.
So, why is Chicago expected to have the weakest housing market? The city’s population is only expected to grow by 1 percent during 2017 and job growth is forecasted to be even slower. That being said, home prices are expected to increase by 1.95 percent, while nationally, home prices are expected to climb by 3.9 percent. For sellers who are truly committed to selling their home, it will be important to lower their expectations and be ready to negotiate.
More residents will choose to hold on to their homes, if at all possible.
According to several real estate agents in the Chicago area, property owners will opt to hold onto the homes they already own, provided they can wait to sell it. There are a variety of reasons for this, including the fact that it is a buyer’s market, which increases the chances that they will not be able to get what they are asking for. They are also forced to compete with the growing number of new properties offered with a number of incentives attached, both for rent and sell, in the Loop and South Loop. This not only includes brand new properties, but also a growing number of condo units that have made their way onto the market that used to be rented out by developers.
As a result, you can expect to see people choosing to remain in their own home, unless they are in the process of divorcing, moving to another city, or at risk of losing their home to foreclosure. In these cases, they will have to take what the market will give them.