How the Chicago Residential Market Has Changed in 2024

The Chicago residential real estate market in 2024 has seen dynamic shifts compared to last year, largely influenced by economic factors, fluctuating mortgage rates, and political uncertainty surrounding the upcoming election. Here’s a deep dive into how the market has changed this year in terms of home prices, sales volume, inventory, and overall market stability.

1. Price Growth

Chicago’s residential market experienced significant price growth in 2024, with median home prices rising by approximately 7.1% compared to 2023. The city's core neighborhoods, such as Lincoln Park, Logan Square, and West Loop, have continued to see appreciation as demand for homes in these prime locations remains high. 

The increase in home prices can be attributed to ongoing inventory shortages, as well as inflationary pressures that have pushed up the costs of materials and construction. This makes housing more expensive, both in terms of resale and new construction homes. However, some analysts argue that if interest rates increase, this price growth could slow down as affordability becomes a greater issue for buyers.

2. Sales Volume Decline

Despite rising prices, overall sales volume has dropped in 2024. Chicago’s home sales have seen a 7% decline year-over-year, a reflection of higher borrowing costs due to mortgage rate hikes. Many buyers have been sidelined as mortgage rates hover between 6.5% and 7%, making monthly payments unaffordable for some, especially first-time buyers. 

In comparison to last year’s more robust sales activity, this year’s slowdown highlights how sensitive the housing market is to broader economic conditions. Experts predict that unless mortgage rates continue to decline, this decrease in sales activity may persist into next year.

3. Inventory Shortages

A key challenge facing Chicago's market in 2024 has been the persistent shortage of available homes for sale. Inventory levels have dropped by almost 10%, compared to the same period in 2023, further exacerbating the supply-demand imbalance. 

This scarcity is particularly pronounced in certain highly desirable neighborhoods near the North side of the city like Lakeview and Lincoln Park, where demand far exceeds the number of listings. The inventory constraints have kept the market competitive, with homes in popular areas often receiving multiple offers and selling quickly.

4. Market Stability in Uncertain Times

In 2024, the Chicago market remains relatively stable despite the headwinds of rising interest rates and limited inventory. However, the approaching presidential election has introduced a level of uncertainty. Historically, real estate markets tend to cool in election years as buyers and sellers wait to see how policies may shift post-election.

Concerns about potential changes to tax laws, housing regulations, or economic policies have created a sense of cautious optimism. Buyers and investors are closely watching the election outcome to gauge future economic conditions, but for now, Chicago remains a solid and competitive market for real estate. 

A Resilient Market

While Chicago’s residential real estate market faces challenges like rising home prices and shrinking inventory, it remains resilient in 2024. As political and economic uncertainties continue to shape the landscape, both buyers and sellers will need to stay informed and adaptable. For anyone considering entering the market, it’s crucial to work with professionals who understand the nuances of these changing conditions.