Chicago Real Estate Investing

Chicago is the 3rd largest city in the country and an important center of culture and industry. With nearly 3 million residents (and an additional 7 million in the surrounding metropolitan area), Chicago is a commercial powerhouse with a strong tourism industry. 

Several major financial institutions are based in the city, such as the Chicago Board Options Exchange (CBOE), JPMorgan Chase and the Chicago Mercantile Exchange. Additionally, McDonald’s, Boeing, Abbott Labs and Walgreens call Chicago home.

Another appealing feature of Chicago is the expanding real estate market. With mortgage rates near historic lows, the Chicago housing market is trending up and both buyers and sellers can find reasonable deals. 

Thinking about a real estate investment in Chicago? Start with Benzinga’s guide to everything you need to know.

Why Invest in Chicago?

Chicago has some drawbacks like thick traffic, severe winter weather and Mitch Trubisky playing quarterback, but the city has a deep cultural history and a strong, up-and-coming real estate market. Here are a few reasons to consider real estate in Chicago. 

Market dynamics. Competition is beginning to get fierce in the Windy City. Chicago ranks as a 70 on the Redfin market trends calculator with multiple offers coming in on some homes and an average sale price 2% below list price.

The average home sale price on Redfin was $320,000 in June 2020 — a 1.6% increase from the previous year. 

Transportation. While the traffic may be a struggle, Chicago rates well in public transportation and walkability. Downtown areas are very accessible by foot or bike, and the city’s tourism industry benefits from the ease of getting around.

Tourism. Chicago is 1 of the premier destination cities in the United States. Over 58 million tourists visited Chicago in 2018, 2nd only to New York City. Chicago has 2 of the most famous sports stadiums in the country: the Cubs’ Wrigley Field and the Bears’ Soldier Field. Other sites include the Lincoln Park Zoo, River North Gallery District and Navy Pier. “The Loop”, Chicago’s downtown business district, is the 2nd largest of its kind in all of North America.

Timing. According to Zillow’s Home Value Index, the Chicago real estate market is currently controlled by the sellers, but the next 12 months could be difficult. Zillow predicts a 2.3% decline in home prices over the next year, which could put buyers back in command.

Buyers are also beginning to get more bang for their buck as the price per square foot of housing in Chicago has declined from $262 per square foot  in April 2019 to $243 in June 2020. Economists aren’t predicting much growth, but opportunities could await in Chicago over the next few months.

Chicago Real Estate Market Forecast

Before the coronavirus pandemic threw the economy out of whack, forecasters predicted a middling year for Chicago real estate. While uncertainty still reigns supreme over all things economic, it’s worth remembering the predictions economists made back when society was functioning normally.

Realtor.com predicted a 0.9% decline in Chicago home sales growth for 2020, along with a 0.3% decline in home prices. For comparison, Realtor.com predicted a 1.8% in overall U.S. home sales growth in 2020, but a 0.8% increase in price growth. 

Zillow was even more pessimistic about the Chicago real estate market, predicting a 2.3% decline in median home prices over the next 12 months. About 1.3% of Chicago homeowners are underwater on their mortgage, which is a tick higher than the national average of 1.1%.

Investing Passively in Chicago

Passive real estate investing has opened the door for many investors to own property. With passive investing platforms, potential investors no longer have to worry about massive down payments, facilities maintenance or tracking down troublesome tenants for rent.

DiversyFund allows investors to access a professional real estate portfolio composed of multi-family housing and student living facilities in California, Texas and North Carolina. Unlike most real estate investing platforms, DiversyFund clients don’t need to be accredited investors or even have access to 4-digit sums of capital. 

For as little as $500, investors can buy into the DiversyFund Growth REIT and supplement their investment portfolios with commercial real estate assets. An REIT is a real estate investment trust. Unlike real estate stocks, REITs invest directly in real estate and own, operate or finance income-producing properties.

Best Passive Real Estate Investing Platforms

The real estate market is more accessible than ever thanks to platforms like DiversyFund. Passive real estate investments allows you to reap the benefits of cash flow from rental payments and the long-term capital appreciation of the property. Plus, you won’t need to perform maintenance or collect rent. Here are a few of the most popular passive real estate investing platforms.

Improving Market Trends Make Chicago Real Estate Attractive

Home prices remain affordable in the Chicago area, and record low mortgage rates have caused buyers to flock to open deals. Despite the current increase in demand, sellers see homes go for prices below the asking list price. Many experts project a slight decline in housing prices through the remainder of 2020.

But crisis often creates opportunity. The coronavirus pandemic has created a market where many people feel it's time to buy real estate. In Chicago, housing that’s currently going below market value may not be below market value much longer. 

Patient investors who can buy now while prices are on the downslope may be rewarded when the pandemic fades and market forces return to equilibrium. Cities like Chicago may suffer in the short term as the work-from-home trend takes hold, but the opportunities created now could be too good to pass up.