Did you know that in the United States, the average home price was about $375,000 in 2021?
It is no secret that there has been a considerable spike in demand for houses since the pandemic began in 2020. Chicago real estate prices have been no exception to this, with there being a lot of issues with supply sparking up Chicago real estate demand.
So, what has changed in that area over the last two years? What should the Chicago real estate market expect to look like in 2022?
This is an overview of what the current market looks like.
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One factor that homeowners have to consider is how much the mortgage rate is going to be. During the pandemic, there were historic lows, with weeks having averages around 2.8%.
Since the beginning of 2022, the mortgage rates have been rising back up again. As of March, it is now around 3.85%, with some reports of it being over 4% recently.
The average mortgage rate has been rising the entire first quarter of 2022, so with that in mind, homeowners are going to have to prepare to pay a little more money in interest.
However, as long as the supply of homes remains low, there may be enough buyers out there where the rising mortgage rates do not matter.
Chicago is a large and diverse metropolis that is divided into many neighborhoods. Some look different than others when it comes to how they were affected by the housing market, but the most glaring note is how much the lower-priced neighborhoods went up.
The city has three neighborhoods that have houses with an average value of $140,000 or less. Two of those neighborhoods are in the top four of the city for the biggest year-over-year increase when it comes to percentage.
The Englewood/Greater Grand Crossing area is currently valued at around $124,000 for a home but saw nearly a 26% increase in home value. Auburn Gresham/Chatham saw an increase of 24.5% year-over-year with a current value of around $140,000.
With that in mind, the result is proving that it is getting tougher for those who want to buy an affordable home to live in the Chicago area. The bar is rising, and if these changes keep up their current pace, these neighborhoods could have an average home price of over $170,000 by next year.
On the contrary, the more expensive Chicago neighborhoods are still seeing an increase in value themselves.
The most expensive neighborhood in Chicago is Lincoln Park/Lake View, with an average home price value of $1.15 million. Despite the high price tag, even that area is seeing an increase in value with 6% year-over-year at this time.
In fact, there is not a single Chicago neighborhood that has seen a negative year-over-year percentage change when it comes to average home value. This should tell you that the prices for homes in this city could potentially stay up and that homeowners won’t exactly have a neighborhood where they can find a steal.
In the past, homeowners may have had an issue selling homes that needed a lot of fixing and renovations. Or even homes that were simply in an undesirable neighborhood.
The statistics above should tell you that that is no longer the case, with every Chicago neighborhood seeing a year-over-year increase.
However, some people may still need a clean and simple sale that will not take up much time or paperwork. You have the option to sell a house now, and thanks to developers wanting to take advantage of this market, Chicago homeowners could get more than they would have ever expected in a normal housing market.
Something to note in the Chicago real estate market is that at one point, some of these neighborhoods were valued a lot higher than they are right now.
In Chicago, the three lowest-priced neighborhoods in the city are all still well below their peak. The Englewood area, for example, is still a good 23.2% lower than its peak despite the steady increase it has seen over the last year.
The other two lower-priced neighborhoods are still over 10% lower than their peak pricing. It should tell you that despite the significant increases stated above over the past year, some neighborhoods still have a long way to go before they see their full potential again.
The question is, what is the best Chicago neighborhood to sell in? Of course, part of that answer depends on how much you bought it for in the first place.
However, looking at how many gains certain neighborhoods have seen over the last year, the best neighborhoods in the city to sell right now appear to be the ones that have the lowest value.
Those are places like Auburn Gresham, South Chicago, and Englewood. With those locations, sellers have the option to buy for an affordable price and sell for a significant profit.
While other neighborhoods may allow you to see a greater total profit as a seller, the three above are undoubtedly the ones that could get you the most percentage of profit for the money that you put in.
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This only gives you an idea of what Chicago real estate prices will be in 2022. If the current pace keeps up, then you should have an idea of what neighborhoods you should aim to buy and sell.
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