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What's Happened In The Chicago Real Estate Market (Part 2/5)

Updated: May 3, 2022

The past two years have been interesting for real estate in the Chicago metro. There is a lot to cover so we are doing a 5-part post. We will publish these reports on a weekly basis. If you wish to receive the full report right away, please reach out to a Soloma team member or click here if you have not been in contact with a team member. This is not meant to be investment advice; this is our interpretation of what has happened in the Chicago real estate market based on data and our team’s experience.

City-wide Single Family Homes

Many people believe that 2020 was a year when a material amount of people moved out of the city. This is only partially true as many people stayed in the city but opted for a single-family home. The data we reviewed and compiled shows that transaction volume for single-family homes located within the city increased 3.1% yr/yr to 10,640 and average prices increased 7.5% yr/yr to $414,965. Additionally, days on market decreased 6% yr/yr from 84 to 79 days in 2020.

We need to remember that Chicago has many less dense neighborhoods with single-family homes and they became more desirable during 2020. To belabor the point, sharing an elevator in a high-rise condo building became a hazard in 2020.

In 2021, this trend further improved for Chicago as transaction volume grew a strong 9.2% yr/yr to 11,624 and average home prices increased a solid 13.5% yr/yr to $471,063. The dramatic 34% yr/yr decline in days on market to 52 indicates there were significantly more buyers than there were sellers for single family homes in the city. We believe the primary drivers were pent up demand leftover from 2020 which was pushed into 2021 as well as low interest rates on mortgages. Another strong driver is the lack of inventory of standalone single-family homes.

City-wide Condos & Townhomes

In 2020, city-wide condos took a big hit as most demand for this product was shifted towards single family homes within the city and suburbs. Specifically, in 2020 transaction volume declined 4% yr/yr to 15,242 and average sales price declined 1.6% yr/yr to $406,224, a 9.0% difference from the city-wide single family home trend of up 7.5%.

This is not a surprise as buyer preference moved from condo purchases to standalone single family home purchases as people looked to distance themselves from others. We note that the city-wide data is not as bad as the high-density neighborhoods with many high-rise condo buildings. We touch on that data later in this piece. Days on market remained relatively flat at 77 days.

In 2021, there was a complete reversal of trends in city-wide condos as transaction volume skyrocketed 41.6% yr/yr to 21,587 and average price increased 8% yr/yr to $438,623. Days on market remained relatively flat at 79 days. We believe this was driven by pent up demand from 2020 being pushed into 2021, stimulus from the federal government, more information / certainty on population health issues, and a reversal of people moving back into the city.

We will be posting part 3 next week in which we discuss what happened to single family homes and condos and townhomes within the high-density neighborhoods in Chicago. If you don’t want to wait, reach out to a team member via the contact form or click here if you want it emailed directly to you automatically.

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