Property owners and new potential buyers are both likely wondering about the outlook for the Chicago real estate market in 2016. Thankfully, after a great 2015, there is more good news for Chicago’s real estate market over the next 12 months.
The real estate listing website Zillow characterizes the current Chicago real estate market as “Very Hot” and decidedly puts it in the “Seller’s Market” category. Prices rose by an average of 7.5% across the city in 2015, which is one of the sharpest increases Chicago has seen since the days before the recession.
In 2016, prices are expected to rise again, though more moderately, by about 3.5%. As the number of foreclosed properties in the city shrinks and demand outstrips supply, home prices will continue to move upward.
New construction of homes, which has so far remained slower than in other major urban centers (Chicago currently ranks 46th for new construction in the U.S.) may pick up, making up for the shortage in inventory.
A couple of factors could have a slight cooling effect on the Chicago market. One such factor is the recent decision of the City to increase property taxes for all residents by roughly 13% over the next 4 years, with an average household cost increase of $500. Property taxes in Chicago are still significantly lower than those in the surrounding suburbs, but the recent decision has created some negative publicity surrounding real estate in Chicago.
Another potential influencing factor is the upcoming Federal Reserve meeting, which economists widely believe will finally raise interest rates. This, in turn, will affect mortgage rates, and may have a cooling effect on home sales nationwide, though probably not as much as many pundits would have you believe.
In all, Chicago’s real estate market is slated for steady growth in 2016, with the above factors ameliorating the current “Seller’s Market” conditions slightly and setting the city’s real estate prices for a less drastic but ultimately more sustainable rate of growth.