Real Estate Market Trends in the U.S. and Chicago 2019
by Chris Scheall
on Tuesday, February 5th, 2019 at 2:20pm.
Home buyers should keep an eye on the ebb and flow of the 2019 real estate market and trends. The housing market of 2019 may be one of changing tides. Predicting them is almost impossible. Before starting a search for your next apartment, loft, co-op, penthouse, townhouse, or condominium in Chicago, it’s a good idea to get a sense of the forces that sway the market.
Realtor.com compiled some data about housing market predictions and determined that both buyers and sellers may face challenges in 2019. You can see the full Realtor.com Housing 2019 Forecast here.
Below, is a collection of highlights from the report and other sources about 2019 trends and forecasts for the U.S. real estate market, with special emphasis on Chicago properties.
More Homes on the Market and Prices Continue to Rise
Builders will build more homes in 2019 and some developers are targeting the millennial middle-class who have come to a point where renting is no longer an option. These buyers postponed home ownership because of the recession, and now they’re ready to buy. There will also be plenty of new construction for the luxury market, too.
The tight inventory of homes for sale, however, will continue to tighten, but at least there will be some relief when the new homes hit the market. So, yes, demand is still high and the supply too low. In fact, nationwide, housing inventory hit its lowest level ever in 2018, but it’s starting to recover. According to Realtor.com, inventory growth is expected to continue but at a rate of only 7% or less.
This may be good news for home buyers, but not so much for sellers. While 2019 will continue to be a seller’s market, it will not be as easy to sell a home as it has been in the past. As inventory goes up, sellers will need to think about the competition and consider the needs of the buyer more. This means sellers may need to adjust their expectations.
Rising Mortgage Rates
Market forecasters predict a slow rise in mortgage interest rates for 2019. Freddie Mac expects mortgage rates to rise half a percentage point in 2019, and the National Association of Realtors thinks rates will rise 0.4 of a percentage point. Fannie Mae predicts the increase to be 0.1 percent. Obviously, predictions vary, so keep an open mind that these numbers are not final.
Chicago Real Estate Market
Chicago’s high-end neighborhoods will remain in strong demand, and supply will continue to tighten. Rents are expected to slowly climb upward as well as condominium/co-op prices, so it looks like the seller’s market will continue in Chicago. However, the rental market is showing stabilization in top North Side neighborhoods according to a data analysis by Domu.
According to Domu’s analysis of apartment listings between the first and third quarters of 2017 and 2018, the average rent in neighborhoods such as Lincoln Square, Humboldt, and Logan Square changed very little if any. However, in Kenwood, West Loop, Hyde Park, and River West neighborhoods, there was an uptick in rental prices.
Home buyers will have more options because new builds will enter the market, but with mortgage rates and home prices rising, buyers can expect to feel a pinch as far as affordability. Salaries still don’t align with home prices in the current market, and this is causing some potential buyers to stay on the sidelines until the tide changes.
However, in Chicago, there is always a line of potential buyers eager to put in an offer on a luxury condominium in River North and other popular Chicago neighborhoods. In fact, high-end inventory seems to be increasing in metro areas like Chicago and Boston. This is good news for those buyers who ran into an extremely tight market in 2018.
Recent demolitions have led to stronger demand in the rental market and an uptick in rental prices. According to data analyzed by RentCafé, Chicago rents were 4.2 percent higher in August 2018 compared to the previous year, and the average rent was $1,904 per month.
This is good news for rent developers, but not so much for tenants. With that being said, we may see an increase in millennials and other first-time buyers entering the market for a condominium or co-op.
Chicago Neighborhoods Will Remain Hot in 2019
These Chicago neighborhoods are showing strong growth in 2019:
If you’re looking for your next home in Chicago and have questions about these neighborhoods and others, please call Reside360 at (312) 360-1060.