Chicago real estate prices too high?

Question

All,

I wanted to get peoples opinion on real estate values in Chicago being to high and it might not be the best time to enter the market to purchase my first investment property.

I see prices close to pre real estate bubble values  from 2007 (IMO. unless someone can prove me wrong).

I wanted to hear what your opinions on this. Should i wait for another decline in the market before i buy my first property?

Brie Schmidt · Answer

It totally depends on the area you are looking in.  Albany Park and Lincoln Park are 7 miles apart, yet they are totally different markets.

Since we are such a big city, and a city of neighborhoods, I am against any generalization of it because it varies so much from neighborhood to neighborhood, and in some areas from block to block.

Have prices gone up, oh yea.  I have looked at every single MF listing on the North side for almost 5 years, so I have been watching it happen.  The numbers I saw when I bought my properties in 2011-2013 are no longer an option, but I don't think we are in a bubble, I think the prices for MFH will continue to increase.

I think it is because of our unique housing stock.  Look at the makeup on the North side, there are not many condo buildings once you get away from downtown or the lake, and there are not many bigger lots to develop them on.  The new trend is taking 2-4 unit properties and converting them to massive SFH.  This is reducing the number of rental units available, and since there is less condos, it is making the rental market more competitive.

Syed Lateef · Answer

Would like to hear the opinion of:

@Brie Schmidt

@Crystal Smith

Account Closed

Vincent Crane · Answer

@Syed Lateef

Just google cities with highest appreciation over the last 3 or 5 years and you'll find plenty of charts

John Casmon · Answer

@Syed Lateef Target NW neighborhoods such as Albany Park, Irving Park, Portage Park, Avondale, and Logan Square. We've expanded to Belmont Cragin and Hermosa, but the dynamics of those neighborhoods are a bit different.

Syed Lateef · Answer

@Vincent Crane thanks for the info. what is the source of your claim? what data or report did you read the cities you have mentioned have had larger appreciation then Chicago?

@John Casmon What target area are you looking in?

Justin Ericsson · Answer

syed I buy houses every week with lots of equity that cash flow well. I have To rehab them to get the value add but I can tell you chicago is awesome right now for deal flow. I will say if you are buying in Irving park for example it's super competitive.

What areas are you buying in right now?

John Casmon · Answer

Think it depends on what parts of Chicago your referencing. I'd imagine the key investing metrics (cashflow, cost per unit, GRM, etc.) have increased in areas such as Wicker Park, Lincoln Park, Gold Coast, etc., but I think there are desirable parts of the city to still find deals. Now, they are getting harder and harder to find and I've had to push out beyond my core target area. With that said, I wasn't investing pre-2008, so certainly want to be mindful of changes in the market. Curious to hear takes from others.

Vincent Crane · Answer

It's interesting that you say this because chicago actually hasn't been as crazy as many other cities have been. It's still far behind SF, LA, Dallas. Houston, Denver, and even Atlanta as far as appreciation over the last 3 years. The recovery is certainly over and most markets are in the expansion phase, which then leads to hyper supply, and then the next drop or recession. Each cycle is normally 4 years or so. I've been wondering the same thing here. 99% of deals won't cashflow and it's frustrating.

Chicago real estate prices too high?

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