The concept of trying to predict what lies ahead for the year can be slightly trauma-inducing considering this time last year you may have been thinking about all of the great plans you had for 2020 which may have included things like international trips, music festivals, or other fun events that were never able to come to fruition. The last year may have made many of us weary to make predictions or get hopes too high, but through all of the lows and obstacles there were many positives - particularly in the world of Chicago Real Estate. Now, in the spirit of optimism, in this blog post we are going to share the forecast for what looks to lie ahead for 2021 which is already showing promising evidence of brighter days.
To start by putting a bow on 2020 and leaving it behind us, the Chicago real estate market had a strong finish. According to data released last week by Illinois Realtors, a statewide industry group, the number of homes sold in the metro area of Chicago was 8.8% higher than 2019 reaching 120,256 - the highest since 2012. Perhaps as a result of the pandemic though, home sales in the city ended with a 0.8% decrease from the year prior totaling at 25,999 total sales - the lowest since 2014. According to the National Association of Realtors, nationwide real estate soared in 2020 with a little over a 22% increase - the highest level since 2006.
Entering this new year, will the positive growth continue or will we see a dip? And what factors will have the greatest effect on the successes and setbacks of Chicago real estate in 2021? If recent trends continue then there is plenty to be excited about for what lies in terms of home values. Chicago home values increased 4.1% in 2020 and according to predictions from Zillow, that should rise this year up to 6.7%. Breaking those stats down a bit, Cook County looks to have an increase in home value from 2.9% in 2020 to 6.5% in 2021 and Chicago-Naperville-Elgin Metro is projected to increase from 3.1% to 5.3% over the next 12 months. The average home value in Chicago is $278,816 (which is seasonally adjusted and includes only middle price tier homes).
(Provided by Zillow)
These value increases sound like great news if you are a potential seller, but what about buyers? There is good news for you as well. The increase in home values leads to an increase in listings which provides a buyer with more options to choose from, increasing the odds of finding a property that fits within your wants and needs. Not only that, but buyers are snatching up homes because mortgage rates are at record lows. While the pandemic has negatively impacted so many both personally and financially, those that are still able to are eager to spend money on properties because they can save in the long run on their mortgages.
Also, while nobody truly knows when the COVID-19 pandemic will end, people have found new innovative ways to safely adjust to the times. Safety is always the top priority for us throughout this process and some of the ways that The OSC Team has implements extra measures is switching meetings that used to take place in person over to digital, hosting virtual property showings, enforcing masks and sanitizer in all in-person showings, and limiting the amount of people in small spaces like elevators. For tighter spaces we have limited the number of people inside by only having buyers parties inside while listing agents stay outside and for closings, only the buyer and title company attend which is particularly hard because that is always one of the most enjoyable highlights of the process. With vaccines starting to roll out, construction on new properties are expected to increase - as well as the ability to shop more properties in person, a preference to many over the virtual showings that have had to take place.
While it appears to be all sunshine and rainbows in the predictions we've discussed, there are also a few factors that are not so exciting. The record-low mortgage rates that have taken place over that last year are not expected to stick around forever as it may gradually increase back to pre-covid rates. Depending on where you hope to buy or sell, the trend of suburban migration looks to also continue into 2021 as well as city-dwellers seek more space for less cost in less densely populated areas - a trend that had already been taking place but was accelerated by the pandemic.
Overall, with all of the bad news that can feel overshadowing, it is truly a time that we are excited to be in as real estate agents. As with just about every occupation, COVID brought on new obstacles that we had to learn to overcome and work around and while it is certainly not over there is at least an end somewhere in sight and despite the added challenges, trends have mostly been positive and appear to continue that way. The OSC Team is very excited for what lies ahead this year and as always look forward to working with all of our amazing clients, old and new.
Note: The above are predictions and while they are based in data, they should not be taken as fact. The decision to buy or sell a property and the outcome are based on many different factors.