In May, the real estate market in Chicago saw home prices increase, despite the stay-at-home order due to the coronavirus. There’s been an increase of showings and the short supply of listings, real estate agents in Chicago, IL are seeing houses receive multiple offers. This is definitely a seller’s market — or is it?
Supply and demand
Spring and early summer tend to be the best time of year for buying and selling real estate, but the coronavirus seems to have pushed the selling season back a bit. At the beginning of the stay-at-home order, many sellers pulled their listings off the market because they just didn’t know what was going on. However, since there is still a great demand for housing in the Chicago area, it’s likely those sellers will relist their homes in the summer.
Truth be told, this very well may be the perfect time for both buyers and sellers! On one hand, mortgage rates are at an all-time low, which is awesome for folks looking to buy. The more people who have been approved for a mortgage, the higher the demand will be. In turn, if sellers price their houses competitively, they’re likely to receive multiple offers to choose from. It’s a win-win for everyone involved.
With that said, the pandemic has caused substantial job loss, leaving 17.6% of Chicago’s residents unemployed! On top of that, lenders are tightening the requirements for loan approvals, making it harder for some people to even qualify. So even if a buyer was approved for a mortgage but they lost their job due to the pandemic, there’s a chance the lender would take another look at the loan application and change its mind. That could lead to more contracts falling through, houses would be on the market longer, and sellers may even get discouraged and pull their properties all-together, thus causing the inventory to dwindle even further!
Although the coronavirus may have made real estate trickier for the Average Joe, real estate investors are the ones who can win big. Over 50% of Chicago residents rent their homes and with there being a lack of affordable housing in the area, investors can take advantage of those low mortgage rates and invest in affordable rental properties, therefore bringing much-needed housing to those on a limited income. Of course, investors can also look into luxury rental properties in downtown Chicago, too. It’s not uncommon to find Chicago residents who make over $75,000 per year rent rather than own.
Many businesses have headquarters in Chicago and more companies plan to move their headquarters to the area, too. This means that there’ll be an influx of people looking for housing, whether it be to buy or rent. If you’re a real estate investor but have no interest in being a landlord, you could always flip properties for a profit — especially if you’re in the suburban areas on Chicago’s south side. Calumet Heights, for example, is a perfect area to invest because the prices are relatively low in comparison to other areas in the metropolitan area.
The future of Chicago’s real estate market
The pandemic has disrupted many aspects of our lives, that is to be sure. Landlords haven’t been able to pay their mortgages due to tenants not paying rent because they’re unemployed. Homeowners may have fallen behind in mortgage payments for the same reason — they lost their jobs.
In all honesty, we can’t really predict what the real estate market will look like in the upcoming months because everything is so uncertain. However, we will say that if you’re financially stable and want to buy (or invest) in a house, now is the best time to do it because interest rates are so low. If you’ve been thinking about selling your house, you may want to do so now for the same reasons. But before you put that ‘For Sale’ sign up on the front lawn, talk to a knowledgable agent with a good reputation to determine your best course of action.