Chicago Housing Market Update: What's Really Going On This Summer?

Written by our broker Lauren Mitrick Wood

Around here at the Olive Well office, we spend a lot of time talking about neighborhoods, architecture, local coffee shops, and where to grab dinner after a showing. But lately, one question keeps coming up around every kitchen table:

"Why is it so hard to buy a house right now?"

If you've been searching for a home in Chicago lately and wondering why everything seems to sell so quickly, you're not imagining it. Whether you're looking in Lincoln Park, Lake Forest, Logan Square, the North Shore, the Western Suburbs, or anywhere in between, one thing has become crystal clear: There simply aren't enough homes for sale.

Here's what's happening—and where we think the opportunities still exist.

There Just Aren't Enough Homes

Compared to the pre-pandemic market, buyers have dramatically fewer homes to choose from. In 2019, inventory levels looked completely different. Last year buyers had access to about 49% of that inventory. This year? It's closer to one-third. Why?

Many homeowners are staying put because they don't want to trade the ultra-low mortgage rates they locked in a few years ago for today's higher interest rates. Add a little economic uncertainty, and many families are choosing to love the home they're in instead of making a move.

Less inventory means more competition, and that competition continues to drive prices higher throughout the Chicago real estate market.

Chicago Home Prices Continue to Climb

With more buyers than available homes, prices continue to rise.

In June, median home prices reached record highs:

• Chicago: $427,500

• Chicago Metro: $407,000 (the first time ever surpassing $400,000)

• United States: $440,600

  
  

Here's what's even more surprising...

Chicago isn't just keeping up with the national market—it's outperforming it.

Home prices increased roughly 6.9% inside the city and 4.6% across the metro area, compared with just 1.8% nationally. According to the Case-Shiller Index, Chicago posted the strongest home price appreciation of any major U.S. metro area this spring.

The Sales We Still Can't Stop Talking About

Spring is traditionally the busiest season in the Chicago housing market as buyers race to move before school starts and many renters come off their leases. As spring wrapped up and we slid into summer, the market continued to clip along with aggressive offers and limited inventory.

We thought we'd seen it all...Then a few sales this year completely surprised even us.

A beautifully designed Evanston home with a partially finished basement, a one-car attached garage, and an incredible back deck hit the market for $950,000 at 1400 Lincoln Street.

It sold for $1,325,000.

That's 39.47% over asking. O.M.G.

How do you even advise your clients on what to offer in a situation like this? It’s not easy, that’s for sure. The past sales may not support the price. The appraisal may come in short. Buyers may need to waive some—or nearly all—of their contingencies. It can feel scary, stressful and, at times, completely irrational.

The reality is that for many buyers, making a move in this market requires a bit of a leap of faith.

One of the ways we’ve been helping clients make sense of it is by looking at the opportunity cost. What is the alternative? Keep renting for $5,000 or $6,000 a month for the next few years and continue waiting for the market to become more reasonable?

When you own, part of every mortgage payment goes toward paying down your loan and building equity. Depending on your individual tax situation, there may also be benefits associated with mortgage interest and property taxes. And that’s before even factoring in potential appreciation—or simply the value of having a place that is truly yours.

None of that means you should throw logic out the window or pay any price just to win. But when the right home comes along, looking beyond the list price and considering the bigger financial picture can make a seemingly crazy number start to make a whole lot more sense.

1400 Lincoln in Evanston that fetched almost 40% over asking.

Then there was another one that hit even closer to home.

We sold this Lincoln Park condo for our clients just three years ago for $825,000, which at the time was the highest sale the building had ever seen. Fast forward to this spring.

The owners remodeled the primary bathroom, refreshed the kitchen, made a handful of thoughtful updates throughout the home, and listed it for $925,000.

The final sale price?

$1,150,000.

We honestly refreshed the MLS twice because we thought it had to be a typo. This is a TWO bedroom condo in Lincoln Park. TWO bedrooms! I digress.

It's been one of those years where the right home can attract an unbelievable number of buyers.

811 Webster, unit F

But Here's the Good News...

Not every corner of the Chicago real estate market is moving at the same speed. That's one of our favorite things about this city. Chicago isn't one market—it's dozens of micro-markets. While homes in neighborhoods like Lincoln Park and many North Shore communities continue to see intense competition, other areas are offering buyers incredible value. And that's where it gets interesting.

Take one of our current listings...

Our clients purchased this downtown residence in 2019 for $1.8 million before investing more than $1 million into an incredible renovation.

Today, it's listed for just $1.3 million.

An updated residence on the 84th floor with jaw-dropping views at that price?

Honestly...We think it's one of the best values currently on the market.

401 Wabash, unit 84F listed for $1.3

Here's another example.

Everyone is talking about the homes that sell for hundreds of thousands of dollars over asking. But here's the other side of the market that buyers shouldn't overlook. Last year, a beautiful home in Winnetka sold for nearly $400,000 below its original asking price of $3.4 million. Turns out it was Old Man Marley's home from the hit movie, Home Alone.

Did it need some updating? Absolutely. But the buyers fell in love with the location, the pool, the floor plan, and the incredible bones of the home. They realized they could move in right away and renovate over time instead of waiting for a house that checked every box on day one.

In today's market, some sellers price their homes very aggressively, hoping to capitalize on strong demand. Sometimes that strategy works. Sometimes it doesn't.

When a home sits on the market or goes through a few price reductions, many buyers assume something must be wrong with it. But that's not always the case. Often, it's simply a home that was priced ahead of the market.

Those are the opportunities I love helping buyers find.

Homes that have been sitting a little longer often come with more room to negotiate—not just on price, but sometimes on inspection requests, contingencies, or closing terms as well. Instead of competing against ten other buyers and feeling pressured to waive protections, you may find yourself in a much stronger negotiating position. Speaking of negotiating in Winnetka, I couldn't resist sharing one of my favorite success stories. Back in 2020, I helped a client purchase a home for $1 million below the original list price. It was the right house, the right timing, and the right strategy. You can check out the original listing here.

The lesson? Don't let days on market scare you away. Some of the best opportunities aren't the homes everyone is chasing—they're the ones everyone else has overlooked.

Don't Overlook New Construction

If you've been frustrated losing out in multiple-offer situations, new construction could be worth exploring.

Sales of newly built homes are up nearly 6% this year, and unlike many resale homes, builders are often selling at—or very close to—the asking price instead of creating bidding wars.

We've found this to be one of the biggest opportunities for buyers in today's market.

Based on our own experience, new construction can often provide more certainty, fewer surprises, and a little more breathing room during negotiations.

My husband, also a real estate broker on our team, Charlie Wood, recently rounded up some of our favorite new developments throughout Chicago and the surrounding suburbs. You can check out his guide here.

If this market has felt frustrating, you're not alone. We've celebrated some incredible wins with our clients this year, and we've also watched buyers miss out on homes they truly loved.

As we head into the final stretch of summer, the market is doing what it typically does this time of year. Many Chicagoans are enjoying vacations, weekends at the lake, and getting ready for back-to-school season. That means inventory is especially tight right now. With that said, just yesterday, one of our agents had a client offer on a property in Wicker Park that got 12 offers. The market remains quite tight in many segments.

The good news? Fall is typically when we see a fresh wave of listings hit the market, creating new opportunities for buyers.

Every market has its challenges—and its opportunities.