Potential home buyers in Chicago’s urban core are facing both an onslaught of uncertainty and price increases.Lack of affordable housing options in downtown chicago could be a major issue for urban Illinois employers. Homebuyers are troubled by potential increases in state and local property taxes. Additionally, analysists further suggest buyers are worried that the Chicago mayoral election could negatively impact home values. Moreover, broader questions regarding the fate of the nation’s economy, mortgage rate increases, and unknown risks stemming from trade disputes further complicate the real estate marketplace.
Chicago Homebuyers Priced Out of the Market
Even with uncertainty in the market, the median home value in Chicago continued to rise by 3.0% in 2018. Forecasts by Zillow predict median home prices in Chicago will increase 5.2% within the next year. Moreover, Chicago’s delinquent mortgage rate is almost 25% higher than the national average. Therefore, for middle and lower-income homebuyers, homes in Chicago’s urban core are becoming both risky and increasingly unaffordable.
Enthusiasm for Millennial Home Ownership on the Rise
Despite uncertainty and price increases, enthusiasm for homeownership continues to rise. Millennials are motivated buyers. Nationally, more than a third of all home purchases since last July were millennials. National data shows that a large portion of the millennial population is getting married, starting families, and now has the financial stability to pursue homeownership.
Builders Struggling to Meet Demand
However, nationally builders are struggling to meet enthusiasm for home ownership with available housing stock. Only 900,000 single family homes are expected to be built in 2018, significantly below a demanded 1.3 million. Therefore, with a supply gap in available homes, many millennials are stuck in a bind. Consequently, regardless of demand, a shortage of affordable housing may be causing a slowdown of the housing market.
Affordable Homes in Suburban Midwest Markets
Still, this analysis may be an oversimplification of the real estate market. According to research at the Brookings Institute, the lower and middle-income housing market is more complex. Brookings researchers argue that affordable housing exists in many markets. Further analysis shows that people are paying a premium for oceanside and urban property. Therefore, Brookings suggestsavailable housing is plentiful in suburban areas in the great lakes region.
What This Means for Illinois Employers
For millennials looking for affordable real estate, the Illinois suburbs likely offer plenty of options for first-time home buyers. Moreover, for employers seeking cheap labor, urban areas may no longer provide a large pool of inexpensive labor. If we see an increased movement of families to suburban Chicago, expect to see businesses adjust. Illinois employers are mobile, and expect companies to shift into suburban markets.