Chicago Real Estate Market Analysis

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Chicago, located in Northeastern Illinois, is the most populous city in the State of Illinois and the third largest city in the United States. With a population currently sitting at over 2.7 million, The Windy City comes in third only to New York and Los Angeles. However, while most other major cities in the nation are enjoying population growth, Chicago’s population has actually been in decline for a few consecutive years. In fact, between 2016 and 2017, the metro area saw a loss of about 13,000 people. Nevertheless, with a population of over 9.5 million, the Chicago metro area is not suffering from this loss.

While a current or future Chicago real estate investor might take this as a bad sign of the market’s health, it’s important to look at the demographic makeup of the existing population in the city. Chicago, along with the Midwestern cities of Columbus, Indianapolis, and Madison, beats the entire nation when it comes to having a population in the age range of 25-44, which is considered the “prime worker” years. So the current loss of population is not hurting the economy nor the Chicago housing market as the residents staying behind make up a key part of the workforce in the city. And it’s important to note that buying a rental property in Chicago will mean having an abundant tenant pool as about 57% of the population rents a home rather than own one according to NeighborhoodScout.

Beyond the large workforce in the city, Chicago also has an emerging economy owing to the steady job growth. At the end of 2018, the Chicago-Naperville-Elgin metro area saw a growth rate of 1%, which was only slightly below the national rate of 1.6%. The Chicago real estate market also enjoys the environment of a diversified economy thanks to the city’s central location, making it more accessible than other major metro areas in the US. One of the leading industries in Chicago is manufacturing, specifically of food. Chicago is known as the “Candy Capital” of the nation as a large concentration of candy manufacturing companies call Chicago home. Other major industries include transportation, information technology, health services and technology, printing and publishing, finance, and insurance.

The Chicago housing market is one of the top five markets in the Midwest real estate market according to the annual PWC real estate report. Property investors from all over the nation are showing interest in buying Chicago investment properties as it’s one of the more affordable gateway markets in the US.

Chicago  Real Estate Investment Performance

Facts and Market Trends in Chicago
Homes For Sale5,471
Airbnb Properties4,044
Rental Properties11,440
Traditional Vacancy rate6.40%
Airbnb Occupancy Rate65.39%
Mashmeter40.82%
Median Price$350,000
Median Rent Price$2,437
Price/sqft$422
Median Days on Market63
Price to Rent Ratio16.4
Average Cap Rate
Airbnb6.82%
Traditional4.48%
Average Rental Income
Airbnb$3,886
Traditional$2,282
 
Median Household Income$65,781
Population2,697,000
Transportation in Chicago
77 / 100
Very Walkable
65 / 100
Good Transit
72 / 100
Very Bikeable
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Chicago  Rent Prices

RENTAL STRATEGY STUDIOS 1 BEDROOM 2 BEDROOMS 3 BEDROOMS 4 BEDROOMS
Airbnb$2,410$2,208$3,006$3,733$5,198
Traditional$1,162$1,288$1,656$2,220$2,814

Chicago, IL - Homes for Sale - Newly Listed

505 N Lake Shore Dr #506
Chicago, IL 60611
Streeterville
Condo/Coop
2 beds1 baths1,100 sq.ft.
CAP RATE
Trad. 1.39%Airbnb 7.28%
3534 N Kolmar Ave
Chicago, IL 60641
Kilbourn Park
Single Family Residential
4 beds3 baths0 sq.ft.
CAP RATE
Trad. 1.46%Airbnb 1.30%
2520 N Sheffield Ave #T
Chicago, IL 60614
Wrightwood Neighbors
Townhouse
3 beds2 baths0 sq.ft.
CAP RATE
Trad. 0.69%Airbnb 2.04%
650 E 101st St
Chicago, IL 60628
Rosemoor
Single Family Residential
4 beds3 baths1,800 sq.ft.
CAP RATE
Trad. 4.72%Airbnb 4.60%

Top Performing Chicago Properties

33 E Cedar Street #11A
Chicago, IL 60611
Gold Coast
Single Family Residential
1 beds1 baths750 sq.ft.
CAP RATE
Trad. 2.08%Airbnb 7.98%
5941 N Odell Avenue #GW
Chicago, IL 60631
Norwood Park West
Single Family Residential
2 beds1 baths0 sq.ft.
CAP RATE
Trad. 5.60%Airbnb 7.97%
21 W Goethe Street #8DE
Chicago, IL 60610
Gold Coast
Single Family Residential
2 beds2 baths0 sq.ft.
CAP RATE
Trad. 3.49%Airbnb 7.97%
1406 N Lavergne Ave
Chicago, IL 60651
North Austin
Single Family Residential
3 beds2 baths1,150 sq.ft.
CAP RATE
Trad. 4.11%Airbnb 7.96%

Recently Sold Homes in Chicago, IL

7641 S Luella Avenue
Chicago, IL 60649
South Shore
Multi Family
6 beds0 baths3,140 sq.ft.
CAP RATE
Trad. 8.80%Airbnb N/A
9120 South Justine Street
Chicago, IL 60620
Brainerd
Multi Family
9 beds0 baths5,925 sq.ft.
CAP RATE
Trad. 9.93%Airbnb N/A
3430 West Flournoy Street
Chicago, IL 60624
Homan Square
Multi Family
4 beds0 baths1,746 sq.ft.
CAP RATE
Trad. 9.72%Airbnb N/A
533 N Lawler Avenue
Chicago, IL 60644
South Austin
Multi Family
4 beds0 baths2,120 sq.ft.
CAP RATE
Trad. 10.02%Airbnb N/A

Property Value Changes and Real Estate Appreciation in the Chicago Housing Market

The Chicago real estate market has not historically experienced major property appreciation when compared to other large metro areas but beats most other cities in Illinois. Since Q1 of 2000, Chicago properties have experienced a total appreciation of 51.53%, at an annual average growth rate of 2.24% (according to NeighborhoodScout). Although real estate appreciation was minor in 2018 (Zillow reports 0.7% in 2018), it is on the rise in 2019 with a forecasted increase of 1.6%. This positive appreciation still makes the Chicago housing market a good place to buy investment property.

Currently, however, the city comprises a hot seller’s market. This is mostly due to the housing inventory shortage which most markets across the US are experiencing.

Chicago, IL Top Multi Family Homes

832 W Oakdale Avenue #1I
Chicago, IL 60657
Wrightwood Neighbors
Multi Family
2 beds1 baths0 sq.ft.
CAP RATE
Trad. 3.78%Airbnb 7.52%
5302 W Foster Avenue
Chicago, IL 60630
Jefferson Park
Multi Family
2 beds2 baths1,100 sq.ft.
CAP RATE
Trad. 6.05%Airbnb 7.46%
3041 S MICHIGAN Avenue #506
Chicago, IL 60616
South Commons
Multi Family
3 beds3 baths1,906 sq.ft.
CAP RATE
Trad. 0.57%Airbnb 6.70%
222 S Racine Avenue #606
Chicago, IL 60607
Greektown
Multi Family
2 beds2 baths0 sq.ft.
CAP RATE
Trad. 1.98%Airbnb 5.85%

Homes Below Median Price in the Chicago, IL Real Estate Market

33 E Cedar Street #11A
Chicago, IL 60611
Gold Coast
Single Family Residential
1 beds1 baths750 sq.ft.
CAP RATE
Trad. 2.08%Airbnb 7.98%
5941 N Odell Avenue #GW
Chicago, IL 60631
Norwood Park West
Single Family Residential
2 beds1 baths0 sq.ft.
CAP RATE
Trad. 5.60%Airbnb 7.97%
21 W Goethe Street #8DE
Chicago, IL 60610
Gold Coast
Single Family Residential
2 beds2 baths0 sq.ft.
CAP RATE
Trad. 3.49%Airbnb 7.97%
1406 N Lavergne Ave
Chicago, IL 60651
North Austin
Single Family Residential
3 beds2 baths1,150 sq.ft.
CAP RATE
Trad. 4.11%Airbnb 7.96%

Chicago Airbnb Growth and Regulations

In early 2016, the Chicago real estate market was one of the most popular Airbnb destinations and the fifth largest market for the vacation rental industry. The short-term rental market was set for serious growth. Nonetheless, in the last two years, Airbnb growth has slowed down with only a 3.9% increase in listings. This is because of the introduction of strict and costly Airbnb regulations in 2017, forcing the Airbnb Chicago market down to twelfth place for largest markets.

For Airbnb investors in Chicago, renting out a non-owner occupied single family home or multi family home with 2-4 units is illegal as these types of short-term rental properties are limited to primary residences only by law. However, an Airbnb investment property that has 5 units or more can operate legally as long as no more than 1 quarter of the units or up to 6 units (whichever applies) are rented out on a vacation rental website.

In order to operate within the bounds of the Airbnb Chicago laws, you must first identify which category of short-term rental your unit falls under - a shared housing unit (if it’s listed on sites deemed as “intermediaries” by law like Airbnb) or a vacation rental (if it’s listed on sites deemed as “advertising platforms” like HomeAway). Shared housing units are required to register with the city, while vacation rentals are required to obtain a licence.

Besides this, there are also large taxes in place for Airbnb rental owners as well as fees for the appropriate licences and registrations. Any listing found illegally operating will suffer heavy fines of up to $1,500-$3,000 a day.

Chicago, IL Top Airbnb Homes

Entire home/apt · 1 bed
Spacious Studio, Amazing Location!
774
Entire home/apt · 4 beds
Kasa | Walk to Lincoln Park Zoo | Chicago
765
Entire home/apt · 2 beds
Kasa | Spectacular City Views | Chicago
746

Chicago, IL Homes for Rent

Chicago, IL Open Houses

5624 W Henderson
Chicago, IL 60634
Portage Park
Single Family Residential
4 beds2 baths800 sq.ft.
CAP RATE
Trad. 3.01%Airbnb 3.35%
333 S Desplaines Street #614
Chicago, IL 60661
Greektown
Single Family Residential
1 beds1 baths1,100 sq.ft.
CAP RATE
Trad. 3.66%Airbnb 5.37%
6922 S Jeffery Boulevard #7N
Chicago, IL 60649
Jackson Park Highlands
Single Family Residential
3 beds3 baths3,000 sq.ft.
CAP RATE
Trad. 5.69%Airbnb 5.41%
3126 S Benson Street #6
Chicago, IL 60608
Bridgeport
Townhouse
3 beds4 baths0 sq.ft.
CAP RATE
Trad. 0.93%Airbnb 1.77%

Best Chicago Neighborhoods for Buying Investment Property

Englewood
Chicago, IL
102%
Mashmeter
property price
161150
Median
cap rate
8.99%
Traditional
18.68%
Airbnb
rental income
$1,208
Traditional
$2,509
Airbnb
homes for sale
1
occupancy rate
59%
Airbnb
Fuller Park
Chicago, IL
89%
Mashmeter
property price
129900
Median
cap rate
10.47%
Traditional
27.49%
Airbnb
rental income
$1,133
Traditional
$2,976
Airbnb
homes for sale
0
occupancy rate
58%
Airbnb
The Island
Chicago, IL
86%
Mashmeter
property price
258000
Median
cap rate
5.78%
Traditional
13.82%
Airbnb
rental income
$1,243
Traditional
$2,972
Airbnb
homes for sale
0
occupancy rate
67%
Airbnb
Winneconna Parkway
Chicago, IL
83%
Mashmeter
property price
162500
Median
cap rate
8.74%
Traditional
16.31%
Airbnb
rental income
$1,184
Traditional
$2,209
Airbnb
homes for sale
1
occupancy rate
54%
Airbnb
South Austin
Chicago, IL
81%
Mashmeter
property price
324900
Median
cap rate
4.69%
Traditional
11.00%
Airbnb
rental income
$1,270
Traditional
$2,978
Airbnb
homes for sale
0
occupancy rate
67%
Airbnb
Other Housing Market Reports

All Chicago Neighborhoods