Chicago Property Values

Will prices in Chicago continue to appreciate or level off? That is the question many investors and first-time buyers have as they consider whether to purchase in the City of Chicago. Although no one has been able to perfectly predict the direction of any market, the history of real estate as an investment has been quite solid.

I remember visiting New York City in the 1980's when the city was having many financial crises and there was concern that certain areas of the city would never improve (Times Square was a mess, Chelsea was nasty, Brooklyn was dangerous, etc.). Some "pioneers" were moving to Brooklyn, Hells Kitchen, Chelsea, and many other "marginal areas".

They were moving into these areas because they were affordable - and people saw the potential for improvement. These pioneers were hoping things would improve and they facilitated the improvement of these areas by caring about their own places, by patronizing businesses in their communities, by opening innovative businesses, by being part of the solution instead of the problem.

A friend tells me she moved to Brooklyn and bought her 2400 square foot townhouse for $90,000 in 1987. She said she had a rock thrown through her front window about once a month and she felt scared to venture outside after dark. When I visited her last year (20 years after she moved into the area) she said the place next door just sold for 2.1 million! She has experienced an increase of about $2,010,000. She had no idea it would prove to be such a great investment - now the neighborhood is full of book stores, coffee houses, restaurants, and people on the street walking with their kids. She lives in the Boerum Hill neighborhood of Brooklyn.

Chicago, like New York, is one of the great cities of the world! The world-class cultural amenities, fun nightlife, multicultural population, beautiful parks, gorgeous lakefront, fantastic architecture, stable economy, and welcoming atmosphere assure that Chicago will continue to be a first-tier city. Although the city is less well-known outside the US, it is poised to be known world-wide by hosting the Olympics. This exposure will further strengthen knowledge of Chicago as a city with amazing amenities and relatively low housing prices.

Tourism is a huge industry in Chicago because we have so much to offer. Surveys of visitors to Chicago (for conventions and tourists) indicate that we have one of the highest rates of positive evaluations in the country. In particular, surveys indicate the fun nightlife and friendliness of our citizens are the main positive elements mentioned. Many business travelers who come to the city for business trips, return for many future visits as tourists. This is an exciting city and we make people happy when they visit.

Some areas of Chicago remain very affordable. It is still possible to get a condo in many areas of the city for around $200,000. If your budget is up to $300,000., then you have many choices in some of the most interesting, exciting, and convenient areas of the city. In some up and coming areas, you can still buy a single family home for under $200,000.

One of the key factors that will affect the direction of real estate values is the quality of educational resources. In those areas where elementary and high schools are considered good or excellent, property values are strong and getting even stronger. Although the mayor is making this issue a priority, I think it is under-appreciated as a factor in property values. When comments about schools are mostly favorable, it creates a sense of safety and hopefulness that supports confidence. Confidence in the future is what supports the value of all markets, especially stocks and real estate.

Development in Chicago is continuing despite the economic slowdown in many areas of the country. New projects are still planned in every area, new high rises are going up in the suburbs, investment in the city continues at a furious pace and we see the latest mega-high rise (that looks like a drill bit) planned for the loop area. Areas such as Lincoln Square are seeing many new condos (with commercial space on the ground floor) going up on all major streets. Lawrence Ave., Lincoln Ave., and Western Ave. are continuing to see redevelopment - and property values are holding steady even in a slower market