Chicago is a popular hometown of choice for many buyers who hail from both near and far. Arts and culture are thriving in this Midwest city, as are professional sports. Winters can be on the challenging side at times, but Chicago summers are among the best in the world, with no lack of things to do, festivals to attend, and Lake Michigan there for the taking. But before you decide to buy a home or invest in real estate in “the windy city,” it’s important to find out more about what the Chicago real estate forecast for 2018 looks like.
The market is warm, simply: Chicago real estate forecast for 2018
Moving into 2018, Chicago homebuyers and sellers have to deal with both local and national factors that might make for a lukewarm housing market. Nationally, the huge US tax code overhaul is changing the financial implications of homeownership, and it’s still anyone’s guess how things will develop as time goes on. Locally, a sluggish economy—particularly in the upper price range—and a diminishing population are affecting both home prices and availability. According to Zillow’s 2018 Chicago real estate forecast, it’s only getting more challenging to buy a new home this year; they predict homeowners will be more likely to renovate their homes than buy new ones in 2018 as the countrywide supply shortage persists.
“In most markets around the country, housing has become a game of musical chairs, and nobody wants to be the last one without a seat,” Zillow’s Chief Economist Dr. Svenja Gudell said in a statement.
“Homeowners who are looking for a change will turn to remodeling and redecorating instead of selling their home and facing the challenges of being a buyer in a sellers’ market.”
Chicago’s suburban sprawl poised to grow
Zillow’s 2018 real estate forecast for the US at large points to the return of the “suburban sprawl,” nationwide, and Chicago is no exception.
“The suburbs will expand as the cost of land and construction reaches a tipping point in urban areas,” says the report.
“Urban living is popular among those looking for close access to job centers and cultural amenities, but building costs and regulations will lead to increased development in the suburbs.”
Chicago: current median home values and prices compared to the national average
The median home value in Chicago is $221,000, slightly higher than the national average of $207,600. Chicago home values have gone up 1.8% over the past year, and Zillow predicts they will rise 2.5% within a year. The median price of homes currently listed in Chicago is $285,000 while the median price of homes that sold is $267,700. The median price of a rental in Chicago is $1700, which is higher than the Chicago Metro median of $1650—slightly higher than the national average of $1595.
Slower price growth than last year: Chicago real estate forecast in 2018
Lawrence Yun, chief economist for the National Association of Realtors (NAR), forecast a 10% rise in volume of homes in 2018, based on growth in both the number of homes sold and the prices of those homes. But after a hot start to 2017, Chicago-area home prices rose more slowly starting in the fall. In Chicago, they dipped slightly in November, for the very first time since 2012, breaking a 5-year positive streak. Trulia’s real estate forecast for Chicago in 2018 is for prices in the city to grow by about 2.5% in the course of the year, compared to 2017’s 5%. This slow-down is in part due to Chicago’s unemployment rate going up at the same time as it drops in other cities, as well as on the loss of population. Crain’s Greg Hinz reported that Illinois lost about as many people as there are in Woodridge in the year ending June 30, 2017.
Among the many reasons Chicago prices may be growing more slowly at the moment are reticent buyers. More would-be Chicago buyers are currently holding back due to uncertainty about the impact of the republicans’ infamous tax bill, in addition to Springfield’s ongoing and unresolved budgetary difficulties. Multi-offer battles aren’t escalating the way once did. According to Steve Baird, president and CEO of the Chicago-based Baird & Warner real estate firm, “In the parts of the market where bidding wars flare up, we’re seeing more people drop out of the bidding. They’re cautious. They’re not going to pay more and risk over-paying.”