2022 Chicago Real Estate Market Outlook – What to Know Before Investing
If you're deciding whether or not to invest in Chicago real estate in 2022, you have to begin with a high-level analysis of the market's dynamics. In other words, know the numbers to get a general idea of what to expect in the near term. Still, the real challenge is finding out if you want to stay in real estate for the long haul, which requires a more methodical, thoughtful analysis than you might be used to.
So, to demonstrate why it’s the right time to invest in the Chicago housing market, we put together this quick guide. Let’s dive into the essentials, and in the end, you’ll see why the Chicago real estate market is currently attracting plenty of investors.
Chicago housing market at a glance – market dynamics on par with national averages
Based on the most trustworthy data available at this time, you can get an idea of what the Chicago real estate market will look like this year. The key is relying only on professional insights rather than the latest sensational headlines that come your way. Here’s a great insider’s account of how the real market is leaning in the Chicago area.
What do the most vital statistics suggest?
Numbers-wise, you can expect home prices to keep rising throughout the remainder of the year, although experts expect the actual number of sales to decrease. Overall, the inventory of available properties will remain low, so homes across the state will continue to sell at a rapid pace despite a slowdown in median home price increases.
As of late 2021, however, it only takes homes about 30 days or less to sell statewide, an incremental improvement over the 41-day figure recorded in November 2020. Additionally, median home prices in Illinois rose 7.7 percent, making Chicago on par with the competitiveness seen in other major metropolitan areas across the country. Here’s a great tool about the Chicago market’s price index that provides vital context for investors.
Clearly, everything is trending in the right direction, but as you drill down to specific Chicago neighborhoods, you’ll notice a few surprises like the fact that homes in Lincoln Square actually lost a bit of value, according to local housing data from Redfin. However, median prices jumped a whopping 30% year-over-year in East Garfield Park.
But the starkest difference between now and 2021 is the number of available homes for sale. The percentage of homes for sale has dropped 31.3 percent in recent years, which has enormous implications from a real estate investor's perspective.
Takeaways for residential real estate investors
In late 2021, buyer demand was strong, and the supply of available homes decreased, increasing the shortage. So, will 2022 be a seller's market, or will buyers have an advantage? That's not an easy question to answer, but our team of experts can help keep you on the right track if you decide to take the leap and take advantage of current market conditions.
After all, the housing market in Illinois may be stable right now, yet history has shown that anything can happen – like a pandemic – and have an impact on the Chicago market. But that impact doesn’t have to be negative! The last few years have actually been a boon to the housing market as the inventory of available homes remained pretty low and will most likely continue to do so in 2022. There's no expectation of a sudden rush of available properties, so recently, other opportunities have come to light.
The city of Chicago has long prepared to address the housing situation, particularly the availability of affordable housing and the legalization of ADUs. Unlike other industries, the real estate industry has endured a fair amount of success despite disruptions builders face due to a shortage of supplies and certain building materials.
Is the buy-and-hold strategy worth looking into as well?
Having said that, we have to talk about the market for rentals too. In short, the Chicago rental market is steady, and the vacancy rate has risen 0.8 percent since last year. Thus, this fact suggests that rentals are a relatively stable investment if you can keep up with the maintenance and property management in general, especially the tax considerations.
A seven percent vacancy rate is average from an investment perspective. While you'd ideally want a lower figure, it's an excellent benchmark to decide whether or not you're ready to take it a step further and start asking about financing options. Yet, buying a second home or building one from the ground up isn't the only investment opportunity because ADUs are legal now in certain zones in Chicago. We'll be diving into ADUs next month.
The Bottom Line
The Chicago market is a great one to invest in 2022. The rental market is steady for the buy-and-hold investor and the residential sales market is hot for the buy-and-flip investor.
If your investment property needs renovation, do not hesitate to reach out to us. At Quality Builders, we remain committed to bringing technology and transparency to the real estate industry.
Contact our team to schedule a consultation today!