The Chicago housing market continues its climb with median home prices hitting a high, all while sales volume dives. According to recent data from The Real Deal, the Chicago-area home prices increased by 5.5 percent in May, surpassing the national average by more than four times. Chicago's median home price reached $379,900 across the nine-county metro, a record-setting figure, while the city itself saw median prices at $390,000, slightly below the April peak but still marking the highest for May on record.
Despite these growing figures, sales in Chicago have not kept pace, registering the lowest for May since 2012, excluding pandemic-affected 2020. An inventory shortage contributes to this unusual scene, with homeowners who have mortgages with interest rates below 5 percent holding off from listing their properties, suppressing much-needed supply in what should be peak selling season. As reported by The Chicago Sun-Times, the inventory of homes for sale in May plummeted 13.7 percent year over year.
Meanwhile, the decline in new home construction isn't helping. The Illinois Economic Policy Institute released a report indicating that the state is short approximately 142,000 homes. To meet the demand, builders would need to construct 227,000 units over the next five years, a figure that more than doubles the current construction rate. This bottleneck situation has contributed to the property prices, as the emerging disparity between supply and demand intensifies.
The situation is giving prospective buyers in Chicago a hard time. With an uptick of 8.3 percent in median prices compared to the previous year, options in line with the median $390,000 price tag range from a historic five-bedroom home in Austin to a contemporary two-bedroom condo in River North. Yet, finding and securing these properties has become a more competitive and expensive ordeal for homebuyers, as choices narrow and prices inch upwards. Listings collected by The Chicago Sun-Times echo the tight inventory narrative with recently rehabbed homes and swanky downtown condos enticing, yet increasingly elusive for the average buyer.
This confluence of factors positions Chicago's housing market in a unique state of flux – prices continue rising sharply, opposed by a stark decline in home sales. With the rest of the country seeing a more dramatic cooling off, Chicago's real estate rhythm dances to a different beat, one defined by a détente between eager buyers and reticent sellers. However, unless inventory pressures ease and construction accelerates, the Windy City's market may find its affordability advantage, which was previously a salient feature, further diminishing as we move deeper into 2025.
