Is Chicago a Good Place to Invest in Real Estate?
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2020 and 2021 have been explosive at times for the real estate industry. In Chicago, the market is full of potential for investors and residents alike. This windy city has a one-of-a-kind culture that brings visitors and transplants from all over the world. Is Chicago a good place to invest in real estate? The affordable housing prices and steady real estate growth make Chicago a great place to invest. Here are five details to know.
1. Housing Inventory Is Low
When looking at the rates of home sales in Chicago in the past few months, as well as comparisons from this time last year, inventory is reducing. A recent report explains real estate market trends in Chicago.
It notes that the number of houses sold in October 2021 was down about 6% from September and more than 11% from October 2020. The share of homes in the $100,000 to $200,000 range dropped significantly, showing higher demand and lower inventory for properties at the lowest price points.
Despite fewer homes being sold in 2021 than in 2020, the average inventory is also lower. Housing availability is often measured as an amount of inventory listed in months, based on the average rate of pending sales. At present, Chicago only has about 1.7 months of inventory, compared to 2.6 months of inventory last year.
2. Demand Continues to Rise
- Fewer homes are for sale
- Prices are going up, but not unsustainably
- Mortgage interest rates are increasing, prompting buyers to take action
- Buyers are less desperate, more focused
With a steady market and a smaller inventory, investors may be poised to take advantage of Chicago’s need for housing, whether for fix-and-flip or rental properties. Renovo’s loan programs are designed to meet the needs of investors.
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3. Real Estate Prices Remain Steady
Investors should consider two points about Chicago real estate trends: First, the average sale prices have recovered their pre-bubble highs in 2008, adjusted for inflation. Second, those prices appear to be holding relatively steady, even decreasing slightly over the past year. It’s not uncommon to worry about a housing bubble, where prices skyrocket out of control and then deflate.
At the close of 2021, prices seem to be steady. The dramatic changes to the market in 2020 appear to be leveling, which is good news for investors. While housing inventory remains relatively low, sale prices are balancing. Sales records for October 2021 show that list prices are about 6% lower than they were a year prior, and that homes are selling for a bit more than 1% lower than the list price. Despite these figures, real estate experts estimate that numbers will continue to rise year over year. Investors looking for a deal with growth potential might be in a great position to do so in 2022.
4. Rent Is Going Up
The rental market for investors is another key indicator for a good investment, and Chicago shows promise. The average price of a rental unit in the city is about $2,100 per month, a 4.4% growth since last year. Although that increase is significantly lower than the national average of almost 14% since last year, it indicates that Chicago rent prices are competitive to meet demand.
Demand for housing in Chicago remains strong, as shown through a rebound in population growth since the beginning of 2020. Investors who intend to purchase and rent may be able to take advantage of steady housing prices to buy low and keep their investments growing profitably.
5. 2022 Could Be an Excellent Time to Buy
All of these factors show that Chicago has tons of potential for investors to buy and earn a good return on their investment. The average sale price of a home in Chicago is about $300,000, which is significantly lower than other popular metropolitan areas such as Los Angeles or New York City. The unique culture and the many communities within the city make Chicago an attractive place to live, as well as an affordable place to buy.
At Renovo Financial, we call Chicago our home because this city is where we started in 2011. How is the real estate market in Chicago? You should know that it represents such an opportunity for anyone who finds themselves in the city. Contact us to learn more about how you can take advantage of this opportunity.
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