It is no secret that the housing market has seen a major boom since the pandemic began. Of course, the Windy City of Chicago is no exception to this, with the median home price there being $248,400 in 2021.
With the Chicago housing market seeing a steady increase in value, some homeowners may want to cash out while first-time buyers may wonder if they can realistically afford the new cost of living in Chicago.
Well, this is what you should know about the real estate market in Chicago.
South Side Is Most Affordable
Any local in Chicago is aware of the fact that the south side of the city is the area that is known to have the more available housing.
This house price index shows that the six most affordable neighborhoods in the city are all located on the south side. Some of the cheapest median house prices are for around $125,000. None of the nine neighborhoods referenced here have median house prices over $235,000.
Some houses in this area are occupied by past owners or tenants that struggle to pay their bills and end up being foreclosed upon. It leads to real estate groups buying foreclosed houses and buying directly from them. You can click here for more information about that.
There are cases where houses may need more work or it may not be the most desirable area but generally, the south side is the part of Chicago you go to if you just want to have a roof over your head.
North Side Is a Lot More Expensive
In contrast to the above, the northern part of Chicago is where you go once you have some money in your bank account. The five most expensive neighborhoods in Chicago are all either in the center or the northern half of the city and it is not a cheap price tag to get in.
The cheapest neighborhood of these five is Logan Square, which has a median home price value of $620,000. Then, you can go all the way up to $1.15 million median home price if you want to live in Lincoln Park.
Doing the math above, you are paying $385,000 more to live in the cheapest neighborhood on the northern side versus the most expensive referenced on the south side. Even more drastic of a difference is the fact that Lincoln Park costs almost $1 million more on median home price to buy a house than in South Chicago or Englewood, the cheapest south side neighborhoods.
Cheaper Neighborhoods, Bigger Year Change
Since the pandemic saw much higher demand in the housing market, it started with the houses that were the most affordable to buy. The four neighborhoods in Chicago that saw over a 20% year-over-year change do not have a current median home price higher than $216,000.
The one that saw the biggest change was Humboldt, and that was as high as 27.4%. The next three were Englewood (25.9%), Auburn Gresham (24.5%), and Chicago Heights (22.5%).
Based on the direction that 2021 is going in real estate, you can see that the floor to buy a house will only continue to increase. Before the year-over-year change, you could find a house on the south side for under $100,000.
Minimal Change in Expensive Neighborhoods
With the above in mind, some may wonder if the more expensive neighborhoods are showing that kind of return? Well, the answer is no and it is not even close.
While every neighborhood has seen a gain in median home value, the percentage of the gain in the more expensive neighborhoods is much more minimal than the cheaper neighborhoods.
Let’s go back to Lincoln Park, which mentioned above has a median home value of $1.15 million. Year-over-year, that neighborhood only saw an increase in value of 6%.
The neighborhood that saw the smallest year-over-year change overall was West Town, with that going up by just 3.2%. That is also one of the highest valued neighborhoods in Chicago, with a median home price of $700,000.
This suggests that the upper tier houses around the area are not going to go up quite as rapidly, most likely because not as many people can afford those houses in the first place as the ones available in south side neighborhoods.
Staying in Control?
Despite all of this, Chicago is not looked at as expensive of a city as ones on either coast like San Francisco or New York. Despite the demand for housing growing across the nation, there are still enough people in the area that are looking to move out of the state that will perhaps keep the local housing market under control.
The state of Illinois lost people at the fourth-fastest rate of any state in the country last year. It suggests that the city may not keep enough people in it to have housing prices be too outrageous for some first-time buyers.
Not Near the Peak
Just before the recession, Chicago saw its peak in the housing market in the last 20 years. For some areas, even with this recent boom in the median home price, it is still not close to the peak yet.
One of the most notable examples is the Englewood neighborhood. Compared to its highest price in the last 20 years, the current median of $124,000 is down 23.2%. The city can keep its housing prices in some control because of the people who move, but it shows how far it can still climb to get to the old record of the past millennium.
Follow the Chicago Housing Market
These are some of the latest trends of the Chicago housing market. If the current trends continue, expect to see more growth on the south side with more gradual growth on the north side.
For more relevant information, check out our Home section.