While Chicago's rising rents, slowly recovering condo market, and record foreign investment are good omens for the city's real estate market, a recent report pegged Chicago dead last among the 20 largest cities in the US when it came to average home price growth. Chicago's economic recovery may be alive and well around the city's downtown core and a select number of trendy, rapidly-gentrifying neighborhoods, but the post-recession economic landscape of many Chicago communities remains quite bleak. The data from the S&P/Case-Shiller Home Price Index shows the price of Chicago homes grew at a rate of just 1.3% in 2015 — a figure lagging well behind the national average of 4-5% during the same period.
Speaking recently on WTTW's Chicago Tonight, Crain's reporter Dennis Rodkin discussed current trends in Chicago home prices and the reasons behind the Windy City's slow recovery. While Rodkin highlighted high prices in affluent neighborhoods such as Bucktown and Wicker Park pushing values higher northward along Milwaukee Avenue as well as a westward price boom occurring along the recently-opened 606 trail, he pointed to an oversupply of distressed properties, such as short-sales and foreclosures, on the city's south and west sides as main a contributor of Chicago's poor performance. Chicago ranks fifth in the nation when it comes to distressed properties and second highest in underwater mortgages — where more money is owed on a home than the property is ultimately worth.
While the depressed market may be good for young homebuyers willing to take a risk, poor job growth, violence, and stagnant city services have all but stymied demand for properties in many neighborhoods. According to Rodkin, these factors, coupled with the continued outward migration of residents leaving the state, have further decreased demand and dragged down home prices. It also remains to be seen how Chicago's latest property tax increases will affect demand. Though 2015 saw the Chicago real estate market produce many positive stories, the surplus of distressed homes, stagnant demand, and shrinking populations will be a continuing concern in 2016 and most likely beyond.
·Chicago Home Price Growth Lowest Among 20 Major Cities [Chicago Tonight]
·City Center Homes Are on the Rise, But Why Have They Risen? [Curbed Chicago]
·Market Reports archives [Curbed Chicago]