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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.

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Chicago  Real Estate Investment Performance
Facts and Market Trends in Chicago
Homes For Sale
5,542
Airbnb Properties
3,088
Rental Properties
12,091
Traditional Vacancy rate
5.90%
Airbnb Occupancy Rate
55.92%
Mashmeter
61.21%
Median Price
$422,630
Median Rent Price
$1,880
Price/sqft
$250
Median Days on Market
59
Price to Rent Ratio
18.3
Average Cap Rate
Airbnb
1.25%
Traditional
1.03%
Average Rental Income
Airbnb
$2,741
Traditional
$1,901
 
Median Household Income
$55,295
Population
2,716,450
Transportation in Chicago
78 / 100
Very Walkable
65 / 100
Good Transit
72 / 100
Very Bikeable
Chicago  Rent Prices
RENTAL STRATEGY STUDIOS 1 ROOM 2 ROOMS 3 ROOMS 4 ROOMS
Airbnb$1,645$1,662$2,017$2,369$3,387
Traditional$943$1,039$1,338$1,793$2,104
Chicago, IL - Homes for Sale - Newly Listed
$239,000
MLS
3701 W CULLOM AVE 2B
Chicago, IL 60618
Albany Park
Condo/Coop
beds baths0 sq.ft.
CAP RATE
Trad. -1.08%Airbnb 1.33%
$215,000
MLS 10417446
4557 North Springfield Avenue
Chicago, IL 60625
Albany Park
Single Family Residential
3 beds2 baths0 sq.ft.
CAP RATE
Trad. 1.95%Airbnb 2.64%
$399,000
MLS 10414762
2610 West LELAND Avenue #1
Chicago, IL 60625
Ravenswood Gardens
Condo/Coop
3 beds2 baths0 sq.ft.
CAP RATE
Trad. -0.33%Airbnb 0.54%
$399,000
MLS 10414762
2610 West LELAND Avenue #1
Chicago, IL 60625
Ravenswood Gardens
Condo/Coop
3 beds2 baths0 sq.ft.
CAP RATE
Trad. -0.33%Airbnb 0.54%
Top Performing Chicago Properties
$95,000
MLS 10406572
9638 South Jeffery Avenue
Chicago, IL 60617
Pill Hill
Townhouse
2 beds1 baths1,000 sq.ft.
CAP RATE
Trad. 2.90%Airbnb 7.91%
$67,060
MLS
1001 W MARQUETTE RD
Chicago, IL 60621
Englewood
Townhouse
3 beds1 baths1,340 sq.ft.
CAP RATE
Trad. 6.55%Airbnb 7.91%
$75,905
MLS
1404 W 110TH ST
Chicago, IL 60643
Morgan Park
Single Family Residential
3 beds1 baths1,060 sq.ft.
CAP RATE
Trad. 7.95%Airbnb 7.83%
$114,500
MLS 10271246
2107 North Pulaski Road #2N
Chicago, IL 60639
Hermosa
Condo/Coop
2 beds1 baths900 sq.ft.
CAP RATE
Trad. 4.62%Airbnb 7.83%
Recently Sold Homes in Chicago, IL
$377,028
MLS
4254 N Monticello Ave
Chicago, IL 60618
Albany Park
Multi Family
6 beds3 baths2,687 sq.ft.
CAP RATE
Trad. N/AAirbnb N/A
$289,000
MLS 10345926
2625 South Kedvale Avenue
Chicago, IL 60623
Archer Heights
Multi Family
6 beds0 baths0 sq.ft.
CAP RATE
Trad. N/AAirbnb N/A
$260,000
MLS 10260161
3325 West 79th Street
Chicago, IL 60652
Ashburn
Multi Family
8 beds0 baths4,338 sq.ft.
CAP RATE
Trad. N/AAirbnb N/A
$299,000
MLS 10327752
3316 West 79th Street
Chicago, IL 60652
Ashburn
Multi Family
8 beds0 baths0 sq.ft.
CAP RATE
Trad. N/AAirbnb 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
$89,900
MLS 10367337
8307 South South Shore Drive
Chicago, IL 60617
The Bush
Multi Family
3 beds0 baths0 sq.ft.
CAP RATE
Trad. 7.73%Airbnb N/A
$143,000
MLS 10377018
7159 South Normal Boulevard
Chicago, IL 60621
Winneconna Parkway
Multi Family
6 beds0 baths0 sq.ft.
CAP RATE
Trad. 7.41%Airbnb N/A
$89,900
MLS 10077800
8559 South BUFFALO Avenue
Chicago, IL 60617
The Bush
Multi Family
5 beds0 baths0 sq.ft.
CAP RATE
Trad. 6.56%Airbnb N/A
$102,600
MLS 10324839
1156 North Kedvale Street
Chicago, IL 60651
West Humboldt Park
Multi Family
4 beds0 baths0 sq.ft.
CAP RATE
Trad. 6.25%Airbnb N/A
Homes Below Median Price in the Chicago, IL Real Estate Market
$95,000
MLS 10406572
9638 South Jeffery Avenue
Chicago, IL 60617
Pill Hill
Townhouse
2 beds1 baths1,000 sq.ft.
CAP RATE
Trad. 2.90%Airbnb 7.91%
$67,060
MLS
1001 W MARQUETTE RD
Chicago, IL 60621
Englewood
Townhouse
3 beds1 baths1,340 sq.ft.
CAP RATE
Trad. 6.55%Airbnb 7.91%
$75,905
MLS
1404 W 110TH ST
Chicago, IL 60643
Morgan Park
Single Family Residential
3 beds1 baths1,060 sq.ft.
CAP RATE
Trad. 7.95%Airbnb 7.83%
$114,500
MLS 10271246
2107 North Pulaski Road #2N
Chicago, IL 60639
Hermosa
Condo/Coop
2 beds1 baths900 sq.ft.
CAP RATE
Trad. 4.62%Airbnb 7.83%
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
$100 per night
Entire home/apt · 1 bed
Spacious Studio, Amazing Location!
573
$89 per night
Entire home/apt · 2 beds
Large, Private Logan Square Studio
552
$100 per night
Entire home/apt · 1 bed
Lincoln Park Studio, Great Value!
481
$46 per night
Chicago, IL Homes for Rent
$2,550
MLS 10418390
2035 North KEDZIE Avenue #3
CHICAGO, IL
Logan Square
Single Family
2 beds2 baths1,700 sq.ft.
$1,600
MLS 10417673
9416 South Wabash Avenue
CHICAGO, IL
Princeton Park
Single Family
4 beds3 baths0 sq.ft.
$2,200
MLS 10418102
$1,150
MLS 10418429
Chicago, IL Open Houses
Open 1 PM to 3 PM
$399,000
MLS 10414762
2610 West LELAND Avenue #1
Chicago, IL 60625
Ravenswood Gardens
Condo/Coop
3 beds2 baths0 sq.ft.
CAP RATE
Trad. -0.33%Airbnb 0.54%
Open 1 PM to 3 PM
$399,000
MLS 10414762
2610 West LELAND Avenue #1
Chicago, IL 60625
Ravenswood Gardens
Condo/Coop
3 beds2 baths0 sq.ft.
CAP RATE
Trad. -0.33%Airbnb 0.54%
Open 12 PM to 2 PM
$250,000
MLS 10415689
630 North FRANKLIN Street #613
Chicago, IL 60654
River North
Condo/Coop
1 beds1 baths656 sq.ft.
CAP RATE
Trad. 2.41%Airbnb 2.93%
Open 2 PM to 3:30 PM
$485,000
MLS 10410496
195 North HARBOR Drive #5201
Chicago, IL 60601
Near East Side
Condo/Coop
2 beds2 baths0 sq.ft.
CAP RATE
Trad. -0.82%Airbnb 1.67%
Best Chicago Neighborhoods for Buying Investment Property
69%
Mashmeter
property price
$499,000
Median
cap rate
6.64%
Traditional
12.09%
Airbnb
rental income
$2,759
Traditional
$5,028
Airbnb
homes for sale
206
occupancy rate
62%
Airbnb
56%
Mashmeter
property price
$499,900
Median
cap rate
6.97%
Traditional
11.54%
Airbnb
rental income
$2,904
Traditional
$4,807
Airbnb
homes for sale
31
occupancy rate
60%
Airbnb
71%
Mashmeter
property price
$474,900
Median
cap rate
8.67%
Traditional
11.74%
Airbnb
rental income
$3,431
Traditional
$4,647
Airbnb
homes for sale
25
occupancy rate
62%
Airbnb
82%
Mashmeter
property price
$334,700
Median
cap rate
9.60%
Traditional
16.46%
Airbnb
rental income
$2,676
Traditional
$4,591
Airbnb
homes for sale
26
occupancy rate
60%
Airbnb
68%
Mashmeter
property price
$452,450
Median
cap rate
7.52%
Traditional
15.23%
Airbnb
rental income
$2,836
Traditional
$5,743
Airbnb
homes for sale
42
occupancy rate
60%
Airbnb
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