The Chicago real estate market has been on the upswing in 2015, and small suburban homes are leading the way. While high-end homes in the area’s more upscale suburban neighborhoods have been struggling to sell, homes under $400,000 have been flying off the shelves, so to speak, driving the housing market’s strong first and second quarters.
In particular, ranch-style and split-level homes built in the 1960s have seen a huge resurgence. Suburban communities like Morton Grove, Niles and Skokie, which were converted from orchard and farm land in the 50s and 60s, have become popular with young, first-time home buyers because of their convenient locations and well-priced single family homes.
According to Chicago magazine, part of this suburban resurgence is due to buyers moving past the idea of a “starter home.” In decades past, young families would often start with small (1,100 to 1,500 square feet) two- to three-bedroom homes before transitioning to more square footage after five years or so. Now, buyers are more likely to start with a condo before transitioning to a single-family home, and to remain in that home for the next 15-20 years as they raise families. This trend toward embracing smaller family homes for the long term has helped to place affordable suburban properties in high demand.
Many home buyers are finding just what they want in the form of mid-century split-levels and ranches, particularly if the homes have been well-maintained and updated over the years. As the Chicago Tribune reported in August of 2015, homes that have upgraded features and finishings are selling more quickly and for more money than homes that have not been updated since they were built. Furthermore, the price difference between updated and non-updated homes is more significant than the cost of the upgrades, suggesting that new home buyers are placing a premium on move-in ready properties that will not require the time and energy that significant upgrades demand.
Increasingly popular as first properties, condos in Chicago have also been selling at a fairly rapid rate. Compared to 2014, the number of condos sold in the Chicago area has risen by 11.9 percent. However, the median condo price has not been keeping pace with the price of single family homes: the former has risen 11.9 percent since last year, while the latter has grown by only 0.8 percent.
Rising median home values is one of the signs of healthy competition and a strong housing market. However, Chicago-area prices are not yet rising so rapidly that younger individuals and families are being priced out of the market. In June of 2015, Chicago Agent Magazine reported that many Chicago homes still fall in the price range of the average Millennial. This sets Chicago apart from most other U.S. cities that have a strong job market for Millennials. In cities like San Francisco, San Jose, Los Angeles, New York and Boston, most Millennials cannot afford to buy homes on their salaries.
Affordability is a big part of the reason why half of the United States’ most densely Millennial-populated areas are in Chicago. Millennials here benefit from the elusive combination of urban accessibility and moderate home prices, while the Chicago real estate market is benefiting from an influx of young home buyers.