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Should You Invest In Chicago Real Estate?

Thinking about investing in Chicago real estate?

Quick Hits: If you’re planning to buy a home, take your time; prices will go higher but slowly. Investments in single-family rental properties have good potential in the next few years, as do investments in housing developments, especially apartments . Mortgages written now have low risk because home prices will go higher, but the risk of job losses is increasing in some manufacturing industries. Investments in the slowly growing retail sector have the best chance in Kendall County and should be avoided in DuPage.

The local economy is a mix of low growth but high wage manufacturing jobs (chemicals, metals, machinery) and higher growth but lower wage jobs in wholesale and retail trade, business services, and healthcare. The slowly shifting income of the workforce will have long-term effects on the real estate market, with less demand for single-family homes and more demand for apartments. Like many other former manufacturing cities, Chicago is becoming a regional hub of services to a large but slowly-growing population.

The population has grown at half the national rate for years, pulling home prices down well below local income levels. Prices were up in the past year but have lots of room on the upside. You can expect increases of 4 percent or so for the next few years. Home prices are a bargain right now but they will stay a bargain, so don’t be pushed into buy too quickly. Prices have been strongest in Lake County.


Because home prices are so low compared to income – and to rents, single-family rentals can be a good investment, especially as more workers are unable to buy a house themselves. The returns are probably best in Will and Kendall Counties, where home prices are lowest compared to rents – but not many people rent there. On the other hand, renters are 45 percent of the population in Cook County, and returns can also be good there.

New mortgages have below-average risk because home prices will slowly but steadily increase for a good number of years. Prices right now are 25 percent below their normal level. Job prospects are a different story, with cutbacks in a number of manufacturing industries.


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