Increase in Buyers Drive Up Housing Prices in Chicago

According to recent analyses by CoreLogic, a real estate data company, it has been determined that the city of Chicago is currently experiencing housing affordability issues, representing a crisis within the local real estate market.

When remote work emerged as a consequence of the COVID pandemic, many Chicago residents decided to sell their homes and move to the outskirts of the city where they could have more space and not have to face changes in small spaces.

However, when daily life resumed and they had to return to the city to resume their office jobs, many people were overwhelmed by the long commutes from the suburbs to work in the city, and as a result, they decided to move back to Chicago.

As remote work decreased in the state of Illinois, average home sale prices began to see significant increases, causing the current real estate market to undergo major changes due to the high demand for housing.

The head of CoreLogic noted that while other markets are seeing home price growth stabilize, Chicago and other cities in Illinois are experiencing price increases in properties as many people return to their jobs and move back to urban areas.

The problem with this large return of people to Chicago is that the city’s real estate market does not have many house listings or a large inventory of affordable homes, so housing prices continue to rise permanently.

With more buyers than sellers and due to inventory shortages, housing affordability issues remain a challenge in the city’s property market. And although this situation is also reflected in much of the state of Illinois, it especially affects Chicago and the Midwest.

The shortage of inventory or lack of affordable housing locally and nationally is partly due to many sellers being reluctant to change their mortgage rates from 2% to 3% during the pandemic to rates more than double that.

Another major limitation for the market to function normally, besides the lack of housing, is that people with limited incomes and without abundant wealth still struggle to acquire a property that fits their budget and are being excluded from the market.

In Chicago and throughout the state, according to consulted figures, during the first months of the year, there was greater activity for real estate transactions, and some monthly increases in sales and inventories were observed. However, home sales in June were down 15% compared to last year. Given the investigated movement figures, it can be concluded that total sales from January to June were 4.8% lower than last year.

According to the National Association of Realtors, the median national sale price of existing homes in the city of Chicago, excluding new constructions, reached a record for the second consecutive month.

Available foreclosures:

Chicago: 150 homes available.

Frankfort: 20 homes available.

Norwood Park: 10 homes available.

By Elias DaSilva | October 1, 2024