As one of the nation’s largest metropolitan areas, the Chicago real estate market is complex and diverse. The fluctuations we saw in 2018 alone show you how tough it can be. Experts in the real estate industry have predicted that Chicago will have the worst housing market in the US in 2019. This can make any real estate investor hesitant about buying an investment property in The Windy City. However, local experts and observers say the situation is much more complicated than that.
Chicago is not the only housing market in the US that is expected to experience pains this year. Nationally, home prices are expected to grow modestly, but sales figures will fall. According to the Chicago Association of Realtors “Illinois and Chicago fall right in line with the national trends.” Besides, the situation differs the more locally you look. Even if the Chicago housing market as a whole is forecast to have a down year, not every submarket will be affected the same. In fact, after taking a look at Mashvisor’s data for the Chicago real estate market, we’ve found 8 good neighborhoods to invest in!
Before we get into that, however, let’s dig deeper into local trends that real estate investors should know to see what the housing market holds for 2019. So, if you want to invest in Chicago, keep reading to learn up-to-date information and relevant stats on the Chicago housing market and find out the best places to buy a rental property.
Related: 10 Best Places to Invest in Real Estate in 2019
Chicago Real Estate Market 2019 Trends
#1. Chicago Home Prices
Chicago is one of America’s largest cities. According to Mashvisor’s data, the current price of homes for sale in Chicago is $454,977. Compare that price with the median price in other large cities like New York ($1,157,950), Boston ($972,669), and Los Angeles ($981,487) and you’ll see that Chicago properties for sale are actually very affordable for a real estate investor. “Looking at a broad historical perspective, homes will be more relatively affordable” according to the Chicago Association of Realtors. This encourages real estate investors to seek investment opportunities in Chicago this year.
While home prices in the Chicago real estate market leveled off during 2018, modest gains are predicted through 2019 and into 2020. Zillow predicts that Chicago home prices will rise 1.6% within 2019. According to experts, the reason why prices are not skyrocketing is largely due to inventory growth in the housing market (more details on this below). For a real estate investor looking to buy at an affordable price, you might want to make your purchase sooner rather than later, to avoid higher prices down the road.
Wondering how to find affordable investment properties for sale in Chicago? Here are 2 New Ways to Find Cheap Investment Property for Sale in 2019.
#2 Rent Prices in Chicago
Throughout the past year, rent increases have been occurring not just in the city of Chicago, but across the entire metro area. According to AparmentList.com, the current median rent in Chicago is $1,080 for a one-bedroom apartment and $1,270 for a two-bedroom. The year-over-year rent growth in Chicago is 0.9% which trails the national average of 1.5% but still ranks number 10 for the highest rents in the US housing market. Cities such as Nashville, Minneapolis, and Atlanta have lower rents.
Nonetheless, renters will find more reasonable prices in Chicago than most comparable large cities. For example, San Francisco has a median two-bedroom rent of $3,100, nearly two-and-a-half times the price in Chicago! In addition, with the current rental prices being high given the cost of living in the city and the job situation, homeownership is becoming difficult. With 44% of residents owning their home according to the US Census Bureau, Chicago is definitely a renter city.
Between buying vs renting a home, most Chicagoans will choose to rent, reducing the demand for homes for sale which is slowing the rise in home prices. This opens great investment opportunities for investors in the Chicago real estate market 2019 looking to tap into the multi-family market. If that’s something you’re interested in, use Mashvisor to find and analyze multi-family homes for sale now!
#3 Supply and Demand
As mentioned in the first trend, the main reason why home prices remain affordable in the Chicago real estate market is the growing inventory. Although Chicago is the 3rd largest city in the US, it’s still growing. Inventory for both attached and detached single-family homes in the city hovers within the 3-month range, which is considered tight by industry analysts. However, most experts agree that inventory will rebound in 2019 following years of historic lows as new units under construction right now are helping to ease inventory constraints.
According to the recent Housing Health Report from BuildFax, Chicago experienced the country’s biggest annual jump in new construction. According to the Chicago Association of Realtors, inventory has been slowly increasing in most of the city since the end of summer 2018. While supply is coming back, it seems that inventory increase is concentrated in high-cost markets like the Downtown area. Also, many construction projects are multi-family homes and condos. So, experts expect to see a booming supply of high-end rentals and luxury apartments in the Chicago real estate market.
While this may be an issue for homebuyers, it presents great opportunities for real estate investors who can afford such investments. The combination of strong rental demand and more supply puts pressure on sellers to cut their asking price. Therefore, while Chicago is currently a seller’s market, we can expect to see the housing market shifting in favor of buyers by the end of 2019 and into 2020. This should make it easier for you to find good deals and be picky as they’ll be more options for investment properties.
Do you have a free Mashvisor account? Use our Property Finder to browse through the most lucrative investment properties that match your criteria in a Chicago!
Top Neighborhoods to Invest in Chicago
The Windy City is a diverse community, which makes it more interesting to explore. There are plenty of promising neighborhoods in the Chicago real estate market where investors can find great opportunities. According to data provided by Mashvisor’s Investment Property Calculator, investors will find that these neighborhoods are the best places to buy a new property in Chicago.
Pill Hill
- Median Property Price: $124,462
- Price/Square Foot: $115
- Monthly Rental Income: $1,275
- Price-to-Rent Ratio: 8
- Walk Score: 61
- Cash on Cash Return: 6%
South Austin
- Median Property Price: $181,566
- Price/Square Foot: $116
- Monthly Rental Income: $1,369
- Price-to-Rent Ratio: 11
- Walk Score: 80
- Cash on Cash Return: 5%
Park Manor
- Median Property Price: $138,337
- Price/Square Foot: $92
- Monthly Rental Income: $1,187
- Price-to-Rent Ratio: 10
- Walk Score: 75
- Cash on Cash Return: 5%
North Austin
- Median Property Price: $221,622
- Price/Square Foot: $133
- Monthly Rental Income: $1,793
- Price-to-Rent Ratio: 10
- Walk Score: 83
- Cash on Cash Return: 4%
Hermosa
- Median Property Price: $190,925
- Price/Square Foot: $141
- Monthly Rental Income: $1,505
- Price-to-Rent Ratio: 10
- Walk Score: 82
- Cash on Cash Return: 3%
Stony Island Park
- Median Property Price: $141,607
- Price/Square Foot: $92
- Monthly Rental Income: $1,125
- Price-to-Rent Ratio: 10
- Walk Score: 67
- Cash on Cash Return: 3%
Back of the Yards
- Median Property Price: $152,542
- Price/Square Foot: $93
- Monthly Rental Income: $1,124
- Price-to-Rent Ratio: 11
- Walk Score: 81
- Cash on Cash Return: 3%
Garfield Ridge
- Median Property Price: $265,978
- Price/Square Foot: $189
- Monthly Rental Income: $1,565
- Price-to-Rent Ratio: 14
- Walk Score: 56
- Cash on Cash Return: 2%
To look for and analyze the best rental properties in your neighborhood of choice in the Chicago real estate market, click here.
The Bottom Line
The Chicago real estate market 2019, like a few other housing markets, is still recovering from the last recession. While no one is predicting a boom, buying a rental property in Chicago can still make for a good investment – if you’re in the right area. When you’re ready to invest, make sure to check out Mashvisor to find and analyze the best investment properties in a matter of minutes. Start out your 14-day free trial with Mashvisor now to begin and end your search for a profitable rental property for sale in Chicago!