Chicago Real Estate Market in 2022
The real estate market has been a roller coaster over the last two years. The pandemic made it more competitive, lucrative, fast-paced, and difficult to navigate. As the market begins to level off, the Chicago real estate forecast for 2022 has many bright opportunities.
What’s the score with Chicago real estate?
The faltering economy generated lower interest rates near the start of the pandemic, especially for mortgages. So housing prices soared as there was more demand with low-interest mortgages. But of course, this boom rattled many. There were concerns of a bust or disaster. This, thankfully, is not the case. Chicago real estate in 2022 looks to be more stable, reliable, and predictable than in prior years.
To show you the real score about Chicago real estate, I have collated expert insights from reputable institutions such as Fannie Mae, the National Association of Realtors, Mortgage Bankers Association, and Forbes.
First things first, home prices would appreciate. Fannie Mae predicts a 7.4% home appreciation for 2022 and the National Association of Realtors projected 2.8% appreciation for existing homes and 4.4% appreciation for new homes. Due to low inventory, real estate is a very competitive market through 2022, with multiple offers on properties. It won’t go as insane as most of 2020 and the start of 2021. But it’s still much more competitive than before COVID started.
People will still sell or buy homes, especially in the backdrop of the resumption of foreclosures and evictions at the end of 2021. And the market will eventually stabilize as mortgage rates and real estate taxes would rise incrementally in Cook County.
Migration
Buying and selling homes are rampant since time immemorial. The main factor for this is people want somewhere new to live, a new lease on life. There is a transition in their life that precludes the move.
The movers in this market are first-time buyers, move-up buyers, and move-down buyers. In essence, people are rethinking their lifestyle, and where they live. It is mostly a personal decision led by either work, study, or lifestyle changes.
The work from home revolution is one of the most crucial factors of migration within Chicago. People have moved from the hectic metropolitan area to downtown and suburban towns. City neighborhoods also gained attention as they offered people the amenities of metropolitan life and the safety that is often lacking in Chicago.
There is also the growing trend of city dwellers who intend to stay long-term. They purchase newly-built upscale single-family houses in many Chicago areas.
And you should also expect migrants as the world opens up. As travel limitations are lifted, there will be eager international buyers looking to acquire real estate properties in Chicago. So both local and foreign homebuyers will compete here.
With regards to sports
Arlington Heights is set to the new center for football fans as the Bears will move here. The move offers a lot of exciting opportunities for the neighborhood. Like how other national teams sustained a booming commercial district with residential development.
Experts expect northwest suburbs to have an improved microbrewery game. But there is also the consensus that migration would be moderate since Bears fans can simply travel across Chicago for games. Nevertheless, it would help the economy of Arlington Heights.
On Mortgages
Interest rates will most certainly rise from the historic lows seen over the last two years but will stay relatively low, around the high threes or low fours. People have also taken advantage of refinancing to low-interest rates.
Government-sponsored enterprises (GSEs, including Fannie and Freddie) would focus heavily on affordable housing. So mortgages would expand homeownership opportunities to communities traditionally underserved by the market.
While the 30-year fixed-rate mortgage will remain the most popular loan type, adjustable-rate mortgages appeal more to a greater percentage of homebuyers in an interest-rate-rising scenario.
And as the market shifts to a more purchase-oriented market in 2022, FHA and VA loans are projected to rise.
One way to look at all these things together is migration plus affordable mortgages lead to a booming real estate market. And it is my fiduciary duty to explore the different challenges and opportunities you will face if you choose to invest in Chicago real estate in 2022.
Challenges and Opportunities in 2022
Low inventory is still the biggest challenge. People nowadays want more room, and in many cases, an additional property for short-term rental income. Buyers are looking for properties with rooms for offices, home gyms, open kitchens, and outdoor entertainment. Demand for second homes increased by 27% in 2021 and will increase in 2022. Especially now that owners have additional options such as lake properties, cabins, and downtown condos. However, there are still not enough new homes to fill the gap so the prices are still going to be fiercely competitive.
Another challenge that you will encounter whether you are a seller, buyer, or realtor is the phenomenon of buyer weariness. Because of the highly competitive market where homes are sold faster than usual, potential and eventual buyers often get disillusioned with the process. My best tip is to establish a relationship with a buyer, seller, and agent as you prepare to invest in Chicago real estate. To make a successful real estate experience, you need trust, connection, and personal care.
As for the opportunities you can get from the booming housing market? There are two: flexible lifestyle and home appreciation.
People are seeing the benefits of flexible lifestyles, especially with the work from home orders. Not needing to live near public transportation allows them to think about the beauty of the rest of Chicago’s amazing neighborhoods. And imagine the freedom from the congestion and traffic of the city. Beyond the Metro Area, the suburbs and small towns are ripe for the taking.
People cherish their homes more than ever. So whether you’re selling, buying, or facilitating the investment, you will see the appreciation people have for their homes. This is true, regardless of the size of the home. Whatever we do in and out of the house, we now relish the opportunity to return to a place that makes us feel happy, comfortable, and secure. And this is also a great opportunity for interior designers, landscape architects, and home improvement companies to capitalize on.
Now I get to what people are really concerned about. Given the booming home prices and low mortgage rates, will there be a crash akin to the 2008 crisis?
Is there going to be a housing market crash?
No. What we predict to happen is a more consistent, steady, and modest return to normalcy. Prices will still rise, but at a slower rate, and will be more balanced by 2022. This is due to a concerted pushback against surging prices and mortgage rates rising back to normal levels.
Chicago real estate is still very hot with high demand and competition from the relatively low supply. So buyers should act decisively and fast to get the home they want.
How do you invest in Chicago real estate in 2022?
Research with due diligence
Before putting up any funds, research the neighborhood you plan to get into. What schools does it have? How about shop and food choices? Recreation opportunities? How safe is it to live there? Beyond the home prices, find communities that are holistic in meeting your needs.
Seek Expert Help
The real estate market is difficult to comprehend and master. So you really need the help of realty experts. We at Nex-Gen Real Estate with our all-in-one team of real estate agents, brokers, property managers, lawyers, and inspectors can advise and support you as you navigate the housing market.
Evaluate Your Finances Beforehand
Whether you plan to buy or sell in 2022, it is critical to first assess your financial status. Getting preapproved for a mortgage is a wonderful indicator of your readiness if you're buying. If you're selling, you can find out what your home's current value is and whether you'd be prepared to sell for that amount.
What can agents do to succeed in 2022?
The real estate market is still ripe, and with the right mindset and action plan, you can succeed as a realtor here.
- Start planning your marketing strategy. Evaluate the performance of your 2021 marketing efforts and develop marketing goals for the new year.
- Adapt as the market evolves. Two ways on this are database marketing and relationship management. Watch for pain points and keep in touch with clients to address their concerns.
- Stay focused, eliminate distractions, and learn from the market’s volatility.
Conclusion
The Chicago real estate market is full of exciting opportunities. Contrary to common concerns, there won’t be a bust or crash. Instead, prices would eventually stabilize as mortgage rates go back to normal. And there will be more home appreciation, both in monetary and sentimental aspects. Just make sure that you engage in real estate with due diligence and financial control.
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