Frank Sinatra deemed Chicago "my kind of town," but may have changed his mind had he considered investing in the city's 2016 realty market. In May 2016, Trulia noted the city's housing market showed a 1% year-over-year (YOY) rise in median sales price and a 3% rise in median rent per month. Between 2015 and 2016, the median sales price for homes in Chicago soared to $227,000. During that same period, the median rent for apartments in Chicago was $1,550. People who bought property or commercial office space paid an average of $182 per square foot, up 4% from 2015. Home sales have declined as more locals decide to rent. Those who can least afford the soaring rent hope to benefit from Chicago's 2003 Affordable Requirements Ordinance, which aims to stimulate development in neglected neighborhoods.

Market Insights

In mid-2016, top real estate analysts noted that most millennials in Chicago preferred renting to buying. At the other end of the spectrum, an aging population, scared by high property taxes, chooses to rent in buildings that offer amenities such as a pool, basketball court and high-end service. Condominiums are becoming the norm, but projects are small and hover around 60-unit developments, rather than the 300-unit condominiums that used to be built in the pre-recession era. Buying skews to baby boomers, who have more income and tend to buy larger units.

A look at the housing inventory shows that demand far exceeds supply. This is especially true for first- or second-time homebuyers and for typical lower- to middle-class families. Real estate agents service an inventory where sellers raise prices at their volition. The result is surging costs and houses that tend to go to older boomers and millennials aged 25 to 34 who have the wherewithal to afford them. Residential property vacancies have declined. Prices and rental costs have shot up.

At the other end of the scale, neighborhoods, such as Chicago's South Side, struggle against depressed living conditions. The City of Chicago aims to supply affordable units to low- to moderate-income families with its Affordable Requirements Ordinance. This 2003 legislation requires the development of 10 or more affordable units in certain depressed neighborhoods. Top real estate developers doubt that the struggling law will succeed.

As of mid-2016, the average age of Chicago's citizens is 34. Almost half, or 45%, of Chicago's citizens own homes, and 37% of its citizens are single . Median household income is $44,650.

Property and Transfer Taxes

In 2015, the Tax Foundation reported that Illinois homeowners paid the second-highest property tax in the nation. As of 2016, the median homeowner paid $3,507 for a house that costs $202,200 in fair property value. Tax varies according to region. DuPage, Kankakee, Macon, Ogle, Rock Island, Ford, Grundy, Peoria and Whiteside have the highest tax rate. Escalating property tax deters some prospective homeowners from buying, and forces some individuals to move to neighboring states. The City of Chicago uses this tax to mostly cover government pension payments and budget deficit.

Property transfer tax is paid by the buyer, seller or both parties for the transfer of property from one party to another. Transfer tax depends on the property's sale price. In 2016, Municipal Code 3-33 levied $3.75 per every $500 of the transfer price and required an additional $1.50 per $500 to support the Chicago Transit Authority. The tax rate is $5.25 per $500 of the transfer price. In Chicago, the buyer pays $3.75, while the seller pays the remainder.

Most Expensive Neighborhoods

Chicago has 77 neighborhoods, each with its own vibe and price tag. Streeterville, River North, the Loop, West Town and South Loop are the most expensive neighborhoods. These neighborhoods carry high-end skyscrapers and claim some of the choicest views in the city. River North, for instance, has the sprawling Merchandise Mart, while the Loop, Chicago's central business district, pulses with urban life. Professionals rent or buy in these areas. The South Loop, home to several colleges and some of the most expensive properties in Chicago, has often been compared to New York’s Upper East Side. West Town, conversely, overwhelms with its quirky, eclectic pride.

Top Real Estate Websites

Top real estate websites in Chicago include YoChicago, where Joe Zekas publishes several articles a day about Chicago’s real estate news and trends. Dream Town Realty provides an inside look at Chicago’s real estate. Its authors cover local listings, market trends and premier properties. GettingReal.com provides real estate news and extensive market analysis in a simple, candid manner. Fran Bailey’s Chicago Metro Area Real Estate announces market trends for neighborhoods in the Chicago metro. The Carpe Diem Real Estate blog gives buyers and sellers tips and links to further information. The Chicago Real Estate Local, run by veteran real estate bloggers Eric Rojas and Bob DePalma, offers readers a large and eclectic choice of properties throughout Chicago and its suburbs.

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