Buoyed by an increase in Chicago's Millennial population (20-to-34-year-olds) and a trend towards "re-urbanization," the housing market in the city's downtown area and surrounding neighborhoods is rebounding. Innovative businesses such as Motorola Mobility (recently sold by Google Inc. to Lenovo Group Ltd), and Gogo Inc. are moving downtown from the suburbs, bringing with them suburbanites looking for a shorter commute. An estimated 21,000 Millennials will move to the city by 2019, with most finding homes close to downtown to avoid long commutes in traffic and to enjoy the conveniences of the urban neighborhoods.
Home sellers in Chicago enjoy an advantage in the downtown market. The apartment rental market is slowing as residents look to buy rather than rent. Chicago experienced the biggest year-over-year increase, 27 percent, in sales volume from 2012 to 2013 among 20 of the nation's largest metro areas. Propelled by a rising demand and few areas for new construction, housing prices will likely continue their upward trend. Real estate database Zillow statistics show that metropolitan Chicago-area home values have gone up 9.5 percent over the past year and are predicted to rise 3.6 percent within the next year. With a median sale price of $211,359, owners selling their homes without the services of a real estate agent will further benefit, saving the agent's 6 percent commission, an average of $12,682 in the Chicago market.
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The most important features driving a purchase are focused on location and amenities. Chicago neighborhoods close to downtown, such as the Loop, River North, South Loop, Streeterville and Gold Coast, are in high demand for their proximity to downtown workplaces, dining and entertainment choices. The restaurant scene offers a wide selection of eateries, from casual rib joints and gourmet hot dog stands to the city's 25 Michelin-star-winning restaurants; Chicago’s downtown cultural activities range from the Art Institute of Chicago to the Chicago Symphony Orchestra and a robust theater scene. For those properties farther out, accessible transportation options and manageable commuting times help home buyers see suburban neighborhoods as hidden gems.
In-home amenities and innovations that are highly sought after include a fully "wired" house, a "green" house, outdoor space, and available sports or gym options. Wherever the home owner lives, outdoor activities are plentiful, from the city's downtown expanse of lakefront beaches and parks to its forest preserves that include picnic grounds, golf courses, bridle paths, swimming pools and nature museums.
Up next: Dallas, where a combination of a booming economy, increase in net migration and low housing inventory presents great opportunities for sellers.
See what other cities made our Top Real Estate Markets list.