Predictions for Chicago's Real Estate Market in 2022
Many friends and clients have recently reached out asking about the real estate market -- wondering about Spring Rentals, Chicago's current Housing Inventory and Market Trends. As such, I'm sharing my personal predictions for Chicago's Real Estate Market this year! And, while I don't like making predictions during this uncertain time of COVID and during the city's post-pandemic recovery, there are several trends I'm seeing that should not be ignored...
Many of the trends that created advantages in 2020 and 2021 are beginning to change. Last year when mortgage rates started to rise in the summer, the Delta variant emerged and rates soon dropped. It wasn't long until we witnessed a similar trend again, in the Fall, with the Omicron variant. Currently, mortgage rates appear attractive and enticing, but they're slowly rising and they aren't the only numbers on the rise.
The Median Sales Price rose 6.8% to $298,500 for single family homes, and 4.4% to $344,500 for condos. Single family homes under contract this year increased already by 5.2%, but condo sales have remained relatively flat. Monthly inventory supply decreased 9.7% for single family homes, and supply decreased by 55.2% for condos. It seems safe to say that homeowners choosing to sell now, and in these coming months, will meet plenty of interested buyers.
Speaking of Buyers, the heart of the city is still a buyer’s market - we can still negotiate great deals downtown! Those curious about investment opportunities downtown would be wise to watch the high-rises and condominium buildings within the Landmark Theater District of the Loop, the Gold Coast, Streeterville, River North, Printer's Row and South Loop neighborhoods.
The Spring Rental Cycle will likely bring about a whole new wave of First Time Home Buyers. And, fingers crossed, First Time Buyers will be a BIG driving force in the market this year!! Largely in response to rising rents — The average Chicago rent rose 9% in December year-over-year to $2,351. While the average mortgage payment grew 14.3% to $1,168, according to a report published by Redfin.
Home sales are projected to remain strong but will be slowed by the limited supply of homes, higher sales prices, and rising interest rates (with the Federal Reserve planning rate increases later this year). Price growth is expected to slow somewhat as a result, but affordability will likely remain a top constraint for some homebuyers.
On the commercial forefront, the retail and office sector continue to recover from the multitude of setbacks caused by the pandemic. Independently owned brick-and-mortar businesses continue struggling to compete with the convenience of online retailers. This pandemic driven rise of e-commerce shopping is also driving new demand for logistics-related properties, positioning Chicago’s industrial market to be one of the hottest this year! (That reminds me! Ask me about my warehouse space for sale)
And ironically, or maybe not so ironically, most of the commercial tours I give these days are with major online retailers. The trend is called clicks to bricks — businesses that start online and then need to open shop in person (Think Warby Parker, the Tie Bar, Bonobos, Amazon Bookstore, etc.) So make no mistake, brick-and-mortar isn't dead! The internet has not replaced our need for the built environment. Consider this a gentle reminder from me, to you, to please support the small and family-owned businesses in your neighborhood! They are the heartbeat of our unique city and they need our support now more than ever!!