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Hoping for a dip in Chicago property prices in 2025? You might want to think again.
Despite various market changes, Chicago's real estate scene is set to see a rise, driven by strong demand and limited housing options.
Let's dive into why property prices in this vibrant city are expected to climb in 2025.
We don't base our insights on mere speculation. Our analysis is grounded in reliable, up-to-date data from multiple credible sources, ensuring a comprehensive understanding of the market.
We meticulously examine this data and present our own conclusions at the end of this blog post. Enjoy the read!
How this content was produced 🔎📝
This article offers thoughtful insights and analysis based on reliable sources, but it should not be considered financial advice. We work hard to research, compile, and analyze data to give you a well-informed perspective. However, as you can guess, our analysis involves subjective choices, such as source selection and methods, and it cannot fully capture the market's complexity. Please, always do your own research, consult professionals, and make decisions based on your own judgment. Any financial risks or losses are your responsibility. Additionally, you should know that we have no affiliation with the sources mentioned, ensuring our analysis is completely impartial.
1) In Chicago, there are only about 0.46 homes for each person, which is quite limited
Signal strength: strong
The fact that there is around 0.46 home per inhabitant in Chicago indicates a relatively tight housing market. This ratio suggests that housing supply is limited compared to the number of people who might need a home.
In Chicago, a factor that locals know is the ongoing urban development and revitalization in neighborhoods like the West Loop. This development attracts more residents, which can further increase demand for housing in the area.
With demand rising and supply being limited, it's reasonable to expect that housing prices could go up as more people compete for fewer available homes. This situation creates a favorable environment for real estate investment opportunities in the city.
If the ratio were to increase to 0.6 home per inhabitant, it might suggest a more balanced market, potentially stabilizing prices.
Source: USCensus
2) Chicago home values have already risen by 6.5% since last year, and this trend may persist
Signal strength: strong
The fact that home values in Chicago have already changed by 6.5% since last year is a strong indicator that the housing market is on an upward trend. This change suggests that demand is increasing, which often leads to higher prices.
Currently, the median home price in Chicago is around $298,325, and this figure is crucial for potential investors to consider. Additionally, the median sales price per square foot is around $250, which provides insight into the cost of space in the city.
These numbers, combined with the recent increase, suggest that housing prices might continue to rise in 2025. For investors, this could mean a good opportunity to enter the market before prices climb even higher.
However, if the home value change were to drop below 2%, it might indicate a stabilization or decline, challenging the assumption of rising prices.
Source: Redfin
We created this infographic to show how property prices in Chicago compare to other big cities in Illinois. It shows the median price as well as the price per sqft, making it easy to see which places might offer the best value. We hope you find it helpful.
3) Three major websites predict that home prices in Chicago will rise in 2025
Signal strength: strong
There are currently three major websites forecasting a positive growth for home prices in Chicago in 2025, which is a promising signal for potential investors.
Among these forecasts, Realtor is the most optimistic with a prediction of a 4.50% increase in home prices, followed by Redfin at 4%, and finally, Zillow with a 2.60% forecast. This range of predictions indicates a general consensus towards growth, although there is a significant gap between the highest and lowest forecasts.
While these forecasts are encouraging, it's important to remember that predictions should be taken with caution as they are based on current trends and assumptions. We will also rely on strong, reliable, and actual data to make a more informed and professional judgment about the market.
If these forecasts were to predict a negative growth or a decline in home prices, it would suggest a different outlook for the Chicago housing market in 2025.
Sources: ZillowForecasts, RedfinForecasts, RealtorForecasts
4) Chicago's "Livability" score of 78 indicates a good quality of life
Signal strength: moderate
The livability score of 78 in Chicago is considered good because it reflects a balance of amenities, safety, and quality of life that attracts residents.
One reason for this high score is Chicago's extensive public transportation system, which makes commuting convenient and reduces the need for personal vehicles. Additionally, the city boasts a rich cultural scene with numerous museums, theaters, and music venues that enhance the quality of life for its residents.
Moreover, Chicago is known for its diverse culinary offerings, ranging from world-class restaurants to local eateries, which contribute to its appeal. These factors make Chicago an attractive place to live, suggesting that housing demand is likely to increase as more people seek to move to the area.
If the livability score were to drop below 70, indicating a decline in these key areas, it might suggest that housing prices could stagnate or even decrease.
Source: AreaVibes
Our team designed this infographic to show how competitive the real estate market in Chicago is vs. other major cities in Illinois. It shows the percentage of sales above the list price, a key indicator of market competition.
5) In Chicago, about 38% of homes sell for more than their listing price
Signal strength: moderate
In Chicago, around 38% of sales close at a price higher than the listing price, which is a strong indicator of a competitive market. This suggests that buyers are willing to pay more than the asking price, often due to high demand and limited supply.
When more buyers are competing for the same properties, it typically drives prices up, indicating that housing prices are likely to increase in the future. This trend is a clear sign that investors might see potential gains if they enter the market now.
Moreover, such a high percentage of over-listing sales reflects confidence in the market's growth from both buyers and sellers. This confidence can be a compelling reason for investors to consider investing in Chicago real estate as a promising opportunity.
If this percentage were to drop significantly, say below 20%, it might suggest a cooling market where prices could stabilize or even decrease.
Source: Zillow
6) Chicago's median home price is 31% lower than the national average
Signal strength: minimal
The fact that Chicago's median home price is 31% below the national average suggests that there is room for growth in the housing market. When a city's home prices are significantly lower than the national average, it often indicates potential for price increases as demand catches up with supply.
In Chicago, the most expensive properties are typically luxury condos in areas like the Gold Coast, where high-end amenities and prime locations drive up prices. On the other hand, the cheapest properties are often small single-family homes in neighborhoods like Englewood, where economic challenges and lower demand keep prices down.
Investors might find opportunities in these lower-priced areas, anticipating that as the city develops and demand increases, prices will rise. However, if Chicago's median home price were to remain stagnant or decrease further, it could signal a lack of growth potential in the market.
Source: Zillow
This infographic we have made will show you how market values have changed during the last decade in Chicago vs other major places in Illinois. Here, the percentage increase or decrease in market value will help you see long-term trends.
7) A local could buy a house in Chicago in about 4 years, which is reasonable
Signal strength: minimal
In Chicago, it currently takes around 4.0 years for a local to afford a house, which is considered a reasonable timeframe. This suggests that the housing market is relatively accessible, but it also indicates that housing demand is likely to increase as more people find it feasible to buy homes.
The median household income in Chicago is approximately $74,474, which allows many residents to consider purchasing a home. With the median home price being around $298,325, this affordability ratio is attractive to potential buyers and investors.
As more people are able to buy homes, the demand for housing is expected to rise, potentially driving up prices in the future. This scenario is a strong signal that housing prices could increase in 2025 as the market becomes more competitive.
If the time it takes for a local to buy a house were to increase to 6 years or more, it might indicate that housing prices are stabilizing or even decreasing, as fewer people would be able to afford homes.
Source: USCensus
8) In the past decade, Chicago's home prices have consistently risen by an average of 5.7% each year
Signal strength: minimal
The fact that home prices in Chicago have appreciated at an average rate of 5.7% over the last decade is a noteworthy signal for potential investors. This consistent growth suggests that there has been a steady demand for housing in the area.
When we see a positive 10-year average home value appreciation, it often indicates a history of both demand and price growth. This can suggest that the market conditions might be favorable for future increases, making it an attractive prospect for investment.
However, it's important to remember that past performance doesn’t guarantee future results. While historical data can be a good indicator, it should be considered alongside other factors when making investment decisions.
If the average appreciation rate were to drop significantly below 5.7%, it might signal a change in market dynamics, potentially indicating less favorable conditions for future price increases.
Source: NeighborhoodScout
This infographic designed by our team breaks down the latest livability score in Chicago but also in other big cities in Illinois. It provides a clear view of which locations offer the best overall living conditions, which is a good thing to know if you want to buy real estate.
So, are Chicago's home prices going to rise in 2025? Yes, they are!
Chicago's housing market is poised for a price increase in 2025, driven by several compelling factors.
Firstly, the city has a limited housing supply with only 0.46 homes per person, which naturally leads to increased competition and higher prices. The ongoing urban development in areas like the West Loop is attracting more residents, further boosting demand. With demand rising and supply constrained, it's a classic recipe for price hikes.
Moreover, home values have already risen by 6.5% since last year, and major forecasts predict continued growth, with estimates ranging from 2.6% to 4.5%. This upward trend is supported by Chicago's attractive livability score of 78, which draws more people to the city, increasing housing demand.
Additionally, 38% of homes selling above their listing price indicates a competitive market where buyers are willing to pay more, further driving prices up. With Chicago's median home price being 31% lower than the national average, there's ample room for growth as the market catches up.
In summary, all signs point to a rise in Chicago's home prices in 2025, making it a promising time for investors to enter the market.
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