Real estate bubble? Not in Chicago
Here’s a classic good news, bad news situation. First the good news, according to a recent story in Crain’s Chicago Business the Chicago housing market is the least likely to be a bubble that could burst in the next several years.
And the bad news? A big reason why we don’t have to fear a real estate bubble in Chicago is because home prices here remain undervalued.
That’s the takeaway from the UBS Global Real Estate Bubble Index 2019. According to the Crain’s story covering the report, in some cities — such as Munich and Toronto — home values are so high that they risk falling significantly in the next few years.
But in Chicago, as Crain’s reports, there’s no risk of a real estate bubble at all.
This shouldn’t be surprising to Chicago homeowners, especially those who bought in 2006 or 2007. Back then, Chicago home values hit their peak. After the Great Recession hit, home values here fell significantly. Many homes are still worth less today than what they were worth 12 years ago.
There’s little chance of a bubble popping here, then, because home values simply haven’t risen enough since 2008.
This isn’t bad news for buyers who have purchased condos or single-family homes in Chicago during the last several years. It means that it isn’t likely that the homes they bought will suddenly plummet in value. That’s the positive part of a housing market in which home values are rising but are increasing at a far slower pace than they are in other parts of the country.
For those who did purchase their Chicago homes in the years immediately before the Great Recession? The odds are high that your homes are still worth less than what you paid for them. If you want to sell such a home, be prepared to accept an offer that’s lower than what you paid in 2006 or 2007. And work closely with a REALTOR® who can help you set the right asking price for this market.