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Thinking about investing in Chicago real estate in 2025? You're on the right track.
Despite economic shifts, the Chicago market shows promising stability, with consistent demand and strategic developments driving growth.
In this blog post, we’ll explore why investing in Chicago real estate remains a wise choice.
We rely on solid, up-to-date data and statistics from reputable sources to guide our analysis.
By the end, we’ll share our own conclusions based on a comprehensive review of the information. Enjoy the read!
This article gives you valuable insights, but remember, it’s not and will never be investment advice. We pull data from a range of sources to provide you with the most accurate picture possible, yet we can’t guarantee complete accuracy. Markets are difficult to predict. Make sure to do your own research and consult a professional before making any financial moves. Any risks or losses are your own responsibility.
Related analyses:
1) Chicago's "livability score" of 78 indicates a good quality of life
Signal strength: moderate
Investing in real estate in Chicago is promising because the city boasts a livability score of 78, which is considered good. This score reflects the city's vibrant culture, diverse neighborhoods, and strong community ties.
One key factor contributing to this score is Chicago's extensive public transportation system, which makes commuting convenient and accessible. Additionally, the city is home to world-class educational institutions, attracting students and professionals alike, which boosts demand for housing.
Moreover, Chicago offers a rich array of cultural and recreational activities, enhancing the quality of life for its residents. These factors collectively make the city an attractive place to live, thereby supporting the assumption that buying property here is a sound investment.
However, if the livability score were to drop below 65, indicating significant issues, it might suggest potential challenges for real estate investments.
Source: AreaVibes
2) Chicago's 2025 infrastructure projects, like the "Red and Purple Modernization," are set to boost real estate values throughout the city
Signal strength: moderate
Chicago's 2025 infrastructure projects, including the Red and Purple Modernization, are strategic initiatives aimed at enhancing the city's real estate market. These projects are expected to significantly improve the quality of life and economic prospects in various neighborhoods.
The Red and Purple Modernization (RPM) Phase One, set for completion in 2025, involves the reconstruction of key Red Line stations and adjacent track structures. This will provide more efficient and reliable transportation options, making the surrounding neighborhoods more attractive to potential homebuyers and investors. Improved transit access often leads to increased demand for housing, which can drive up property values.
Additionally, the Rebuild Illinois Road and Bridge Projects, with completion dates ranging from 2025 to 2030, will enhance road conditions and accessibility across Chicago. By improving major thoroughfares and intersections, these projects are likely to stimulate the local economy and create jobs, further boosting real estate values by making these areas more desirable places to live and work.
The Chicago Works Program, ongoing through 2026, focuses on modernizing transportation and utility infrastructure city-wide. By ensuring that residents and businesses remain connected and resilient, this program is expected to positively impact real estate values by enhancing the overall infrastructure and services available in the city.
Sources: Illinois Government, American Auto Insurance, Transit Chicago, City of Chicago
3) Chicago's population is expected to increase by 1.2%
Signal strength: moderate
The population growth in Chicago, projected at 1.2%, is a positive indicator for real estate investment in the city.
When a city's population is expected to grow, it often leads to an increased demand for housing. This demand can drive up property values and rental prices, making real estate a potentially lucrative investment. In Chicago's case, despite recent population declines due to urban challenges, the forecasted growth suggests a reversal of negative trends and a renewed interest in the city.
Moreover, the growth in the metropolitan area, albeit modest, indicates a broader regional appeal. As more people move to the area, the demand for housing in the city itself may rise, further supporting property value appreciation. This growth can also lead to economic revitalization, attracting businesses and improving infrastructure, which in turn enhances the attractiveness of investing in property.
Investors might also consider the potential for long-term gains as the city addresses its demographic challenges. Efforts to improve affordable housing, job opportunities, and public services could make Chicago a more desirable place to live, thereby increasing property demand and value over time.
Sources: Macrotrends, NCHStats, World Population Review, NBC Chicago, Illinois Department of Public Health
4) Airbnb or "short-term rental" in Chicago offers a fairly appealing profitability rate of 4.0%
Signal strength: moderate
The cash-on-cash return on Airbnb in Chicago is 4.0%, which is considered moderately attractive for investors looking at short-term rental markets.
This percentage indicates that the income generated from renting out a property can provide a reasonable return on the initial cash investment. Chicago attracts a diverse range of short-term tenants, including business travelers attending conferences and events, as well as tourists exploring the city's rich cultural and historical sites.
Additionally, the city hosts numerous festivals and sporting events, drawing visitors who prefer the comfort and convenience of Airbnb accommodations. These factors contribute to a steady demand for short-term rentals, making it a potentially profitable market for property investors.
However, if the cash-on-cash return were to drop below 2.0%, it might indicate a less favorable investment opportunity in the Chicago market.
Source: Mashvisor
5) Chicago's median home price is 31% lower than the national average
Signal strength: minimal
The fact that Chicago has a median home price 31% below the national average suggests that there is room for growth in property values. This means that investing in real estate here could potentially yield higher returns as the market catches up with the national average.
In Chicago, the most expensive properties are likely to be luxury condos in areas like the Gold Coast, where demand is high and amenities are abundant. On the other hand, the cheapest properties might be small single-family homes in neighborhoods that are still developing, such as Englewood.
These areas offer opportunities for investors to capitalize on future appreciation as the city continues to grow and develop. By investing in these lower-priced areas, you can potentially benefit from significant value increases over time.
If the median home price in Chicago were to rise above the national average, it might indicate a saturated market with less potential for growth, making it a less attractive investment opportunity.
Source: Zillow
6) A local could afford to buy a house in Chicago in about 4 years, which is reasonable
Signal strength: minimal
Investing in real estate in Chicago seems promising because it would take around 4.0 years for a local to buy a house based on current income and home prices. This timeframe is considered reasonable, indicating that the market is accessible for potential homeowners.
The median household income in Chicago is approximately $74,474, which allows residents to save and invest in property over a few years. With a median home price of about $298,325, the affordability ratio is favorable for both buyers and investors.
This balance between income and home prices suggests that real estate in Chicago is a stable investment opportunity. It indicates that the market is not overly inflated, making it a safer choice for investors.
If the time required to buy a house were to increase to over 6 years, it might signal that the market is becoming less accessible and potentially overvalued.
Source: USCensus
So, is it a good time to buy in Chicago? Yes, it is.
Investing in real estate in Chicago in 2025 is a solid option.
First, the city's livability score of 78 highlights a good quality of life, supported by excellent public transportation and world-class educational institutions. These factors make Chicago an attractive place to live, boosting housing demand. Additionally, the city's ongoing infrastructure projects, like the Red and Purple Modernization, are set to enhance transportation and accessibility, further increasing property values.
Moreover, Chicago's population is expected to grow by 1.2%, indicating a reversal of negative trends and a renewed interest in the city. This growth is likely to drive up housing demand and property values. The cash-on-cash return of 4.0% for Airbnb properties also suggests a promising short-term rental market, appealing to investors.
Finally, with a median home price 31% below the national average, there is significant potential for property value appreciation. The affordability of the market, where a local could buy a house in about 4 years, further underscores the stability and accessibility of investing in Chicago real estate.