The bullish run witnessed in recent years in the Chicago housing market is slowly easing off. The commercial sector is leading the unexpected slow-down. Consequently, experts are scrambling to unravel the factors putting breaks on the steady recovery in the market. The city has experienced a constant growth rate since the housing market crash of 2009. More commercial properties are turning up vacant including office, industrial as well as retail spaces. Similarly, hotel bookings have gone down.
The market has experienced a steady climb between 2010 and 2016. Apartment sales and rentals drove the initial push. It quickly spread to the commercial section. Experts argue the property market in the city will top out soon. This will be followed by a modest decline in volumes of sales and actual property prices.
Realtors on the ground are already reporting the classic standoff that is the precursor to a top-off. Ready buyers are increasingly looking at the price and opting to hold their decisions until a time it eases off a little bit. Optimists argue that the housing industry in the city is aligning itself to other economic cycles in the country.
Factors influencing the slow-down
For one thing, everyone agrees that there’s no imminent crash expected. A few factors are keeping hopes alive for thousands of developers, realtors and homeowners. Notably, lenders have not sounded the alarm. They are still whipping out loans maintaining that crucial elements in the space equation remain healthy. While the income per square foot has reduced across all sectors, the market is only slowing down and not contracting.
The market presents exciting options for the real estate investor craving for a deal. Realtors and landlords are finding creative ways to keep occupancy up including hefty discounts on rentals. The commercial sector is expected to provide critical signals to guide the overall market. At the moment, developers are still in high gear racing to deliver the next generation of contemporary spaces including mix-use warehouses and manufacturing facilities.
The construction wave is expected to deliver more than twenty million square feet by the end of the year. Supply is on track to exceed demand in the mid-term. The effects of the excess supply of office space are likely to filter down to other segments of the industry. In contrast, demand for office space in the downtown sections of the city is still high.
Unlike trends in other regional markets, the cooling phase is unlikely to be rescued by the retail sector. In fact, it is one of the weakest segments of the industry. Reports released by the CBRE Group indicate that vacancy rate in the retail section had risen to more than ten percent, a new seven-year high. Other structural shifts will also influence the recovery phase.
For example, Amazon, the unstoppable online retail conglomerate, has also thrown a spanner into the real estate market toolbox in the city. The city is bidding on a deal to host the retail giant’s second headquarters.
It is important to ask your service providers for relevant reports and up to date industry analysis of the regional housing market of your choice. These enable you to make the best decisions about your assets as well as the best investment opportunities available. Outfits such as Tweed Financial Services specialize in delivering financial advisory that positively influences your investment decisions.
There are crucial local factors that influence the price of a property and its mid-term value to a new investor. The slowdown turns the market into hunting grounds for hungry investors looking to leverage the dip in prices. Take advantage of Tweed Financial Services to arm yourself with relevant market information and insightful tips to enable you to profit from the housing market.