Five Real Estate Opportunities, Cautions and Red Flags for 2018

The real estate market is constantly changing and so are the opportunities and the red flags

The market continues to be healthy as we move into 2018. However, rising inventories in many neighborhoods, property types and price points are leveling  the “playing field” between buyers and sellers. 

Here are our 2018 real estate opportunities, cautions and red flags for Lincoln Park and the surrounding neighborhoods for both buyers and sellers. 

HOMES PRICED UNDER $500,000

BUYERS Caution

SELLERSOpportunity

Inventories of homes priced under $500,000 continue to be at record lows and with the current emphasis on rentals, that is unlikely to change in 2018. For sellers, that means that demand will again outpace supply resulting in higher prices and short market times.

 Buyers should do their homework so they are not over paying, as these homes tend to turn over faster. The market may not appreciate fast enough to cover the cost of reselling the home in a few years, if the initial purchase price is too high.

TOWN HOMES

BUYERS Opportunity

SELLERSOpportunity

Town homes represent an opportunity for both buyers and sellers. They give the unique feel of a single family home living without the million plus price.

Because larger tracks of land needed for town homes are very rare in Lincoln Park, there has been very little new town home construction in the past few years and there is unlikely to be much in the near future.

For sellers, demand continues to outpace supply causing significant appreciation in prices, with low inventories and market times.

For buyers, this situation is unlikely to change and thus the purchase and upgrading of an existing town home should keep pace with or exceed market values in the future. 

DUPLEX DOWNS

BUYERS –  Opportunity

SELLERS Red Flag

Like town homes, duplexes offer buyers a great alternative to one floor living at a more affordable price than a single family home. Unlike town homes, there is a tremendous amount of new construction, making resale of units more difficult.

These units can have the look and feel of a single family home. However, living below grade and having parents and children on different floors can be an issue, narrowing the potential buyer pool.

For buyers the lower buyer pool presents price opportunities.

Four bedroom duplexes seem to have the edge over three bedrooms, as the bedroom configuration can be more family friendly.

NEW CONSTRUCTION CONDO PRICES

BUYERSCaution

SELLERSOpportunity

Condo new construction is booming and who wouldn’t want to live in a brand new home with the latest finishes and amenities. Builders are thriving as new construction condo prices continue to rise.

The issue for buyers purchasing in this rising market is two fold:

1.      How high is the market going to go? We have seen that over supply in the new construction single family home market has               led to leveling off of pricing and we could see the same thing in condos.

2.      Your home is only new once. If you choose to sell, it joins the ranks of resale homes and needs to be priced accordingly.

Neither of these issues should prevent you from buying new construction. Buyers should be acutely aware of where prices are going in each neighborhood and property type, to be sure they are not buying at the top of the market.

RENTAL PROPERTIES

RentersOpportunity

LandlordsCaution

Chicago has always had a challenging rental market, plagued by aging units and low inventory levels.

All of that is about to change as new construction rental projects are going up all over the city. In the next few years, hundreds of new units will be coming on line in attempt to attract renters who are moving to Chicago due to corporate relocation. In addition, many local Millennials prefer renting over buying, want luxury rental homes and and are willing to pay for them. High rise, mid rise and low rise projects are popping up from Lincoln Park to River North to the West and South Loop.

As a result, three questions arise:

1.      Can the Chicago market sustain this huge influx of rental inventory?

2.      Will the increased inventory drive prices down due to over supply (particularly in the older existing inventory)?

3.      Will some of these new rental projects be converted to condominiums in the event of an over supply of inventiory. If so, how             will this affect the condo market?

There are no definitive answers as to where the rental market is headed and we will be watching it very closely.

 

Please Contact Me If You Have Questions about buying or selling your home