Chicago Market Update | January 2025

As of January 2025, the Chicago real estate market is showing a combination of trends that reflect both national influences and local conditions. Nationally, home prices have been on the rise, with projections suggesting a continued increase of around 3.8% from November 2024 to November 2025. In Chicago, the median sale price of homes reached $370,000 in December 2024, marking a 12.1% year-over-year increase, indicating a competitive market with ongoing appreciation in property values. This upward trend in prices, coupled with a potential modest increase in housing inventory, could provide more options for buyers, easing some market pressures as more homes become available. It is predicted that spring market is going to start earlier than in past years.

Interest rates are expected to experience a series of cuts in 2025, which may make home financing more accessible and stimulate activity in the housing market. These rate changes could lead to an uptick in both buying and selling activity, though affordability will still be a concern for many.

In the luxury market, however, Chicago is facing challenges. The high-end segment has experienced a downturn, with sales of homes priced over $4 million declining by 28% from Q3 2021 to Q3 2024. Factors such as high crime rates, elevated interest rates, and rising taxes have contributed to this slowdown, with even high-profile figures like billionaire Ken Griffin facing significant losses on property sales.

The commercial real estate sector is also encountering difficulties, particularly in downtown Chicago, where office vacancy rates have risen to 16.2%, up from 11.9% in early 2020. The high vacancy rate is partly due to the city's crime rates and high tax burdens, which have led some businesses to relocate. In response, efforts are being made to revitalize the area, including converting vacant office spaces into residential apartments.

Despite these challenges, the overall outlook for Chicago's real estate market remains relatively stable. With potential improvements in inventory and interest rates, the market offers opportunities for both buyers and sellers. Although the luxury and commercial sectors may continue to face obstacles, stay tuned on future evolvements with Wright at Home Chicago.