Should You Buy Chicago Real Estate in 2026?
Should I Buy Real Estate in Chicago in 2026?
Chicago has a healthy and rapidly improving housing market going into 2026. A great number of people thinking of purchasing a home in Chicago today are concerned that they might be missing a buying opportunity, since the Chicago area housing market was a “hot” real estate market during 2020-21 and then cooled off a bit. Now, the market is returning to a more “normal” state.
A Market Finding Its Balance
When we say the Chicago housing market is normalizing, we mean the frenzied buying and selling seen during the COVID-19 pandemic is slowing down. We also mean that the real estate market has not yet shifted completely to a buyer’s market either.
Industry professionals predict that there will be a 5.1% gain in closed home sales in 2026, compared to 2025, indicating increasing levels of home transactions.
Median home prices are expected to grow by nearly 5% year-over-year, which is a slow enough rate to suggest that the market is experiencing a slow and steady growth pattern rather than a speculative bubble.
The Affordability Advantage
One reason why Chicago is such a good choice for homebuyers continues to be its relative affordability compared to other major metropolitan areas.
Cities like New York, San Francisco and Los Angeles have become far too expensive for many average homebuyers. However, Chicago is able to offer its residents affordable home prices and high-quality urban lifestyles.
In terms of affordability, the median home value in Chicago is approximately $297,772, which provides a lot of square footage per dollar when compared to other major metropolitan areas.
This affordability gap creates opportunities for first-time buyers, remote workers relocating from expensive markets, and investors seeking better yields on rental properties.
Mortgage Rates: The Double-Edged Sword
While interest rates have retreated from their peaks, they are still relatively high compared to the all-time lows experienced recently. Experts believe that interest rates will continue to trend downward throughout 2026, although not dramatically so.
As a result, homebuyers are faced with a strategic dilemma: wait for possibly lower interest rates or take advantage of current home prices and locking in a mortgage at today’s interest rate before prices climb further.
The math increasingly favors action over hesitation, as even modest price appreciation can quickly outpace the savings from marginally lower rates.
Chicago Neighborhoods Matter
Chicago is not one large market; it is comprised of smaller micro-markets, each with their own unique characteristics.
Some neighborhoods near downtown Chicago continue to experience a high level of competition among homebuyers, with some sellers receiving 20+ bids on a single listing.
These neighborhoods are typically priced at a premium and require quick decision making.
On the other hand, neighborhoods located on the south and west side of the city are offering attractive value options for buyers. These neighborhoods are continuing to benefit from government funded infrastructure projects and community redevelopment initiatives.
They provide opportunities for buyers who are interested in purchasing a home in a neighborhood that is beginning to transform itself.
Inventory Challenges Persist
While inventory has increased somewhat in the Chicago area, particularly in desirable neighborhoods, it still lags behind historical norms.
Many homeowners who purchased homes several years ago, when interest rates were very low, have opted to remain in their homes rather than selling and having to refinance to a new, higher-interest loan.
This "golden handcuff" phenomenon has limited the amount of available homes for sale.
In southwest suburbs, homebuyers are starting to see a decline in prices on older homes due to a lack of activity and a glut of available properties.
On the other hand, newer homes in these same neighborhoods are receiving a significant number of offers and selling quickly. Homebuyers would do well to focus on purchasing newer, quality homes and be patient when considering older homes that need renovation.
Renting vs. Buying – Is It Still Worthwhile to Rent in Chicago in 2026?
Some individuals may be inclined to buy a home because of the rising cost of renting in Chicago. Forecasted rent price increases of 3.5% to 5.2% through 2026 indicate that renters can expect to pay higher prices for rent.
This rent price inflation indicates that for those with enough money for a down payment and stable employment, the cost of owning versus renting is becoming more favorable to owning.
Investment Perspective
From an investment opportunity, Chicago offers a number of fundamental advantages. Chicago is a diverse city with a large employment base and a number of top-tier educational institutions, creating a steady demand for housing.
Investors in multi-unit properties in neighborhoods such as Logan Square, Bronzeville and Avondale can anticipate earning favorable yields on their rental properties.
Prospective homebuyers must consider that the property taxes in Cook County, Illinois are generally higher than national averages. Property taxes are an ongoing expense and must be factored into any long-term investment strategy.
The Verdict: Strategic Timing
Should you purchase Chicago real estate in 2026? That depends on your specific situation, but market conditions are now favorable for homebuyers who are ready to purchase.
Moderate price increases, steadily decreasing interest rates, and improving inventory levels provide homebuyers with opportunities that may not exist for much longer.
To successfully purchase a home in this market, homebuyers must:
Obtain a mortgage pre-qualification prior to starting house hunting in order to react quickly to quality listings;
Choose to focus on neighborhoods with strong fundamentals rather than chasing trendy areas;
Pricing homes accurately and not anticipating peak market values;
Be flexible regarding cosmetic issues while scrutinizing structural problems;
Focus on the long term rather than attempting to time the short-term movement in the market.
Overall, sales are forecasted to increase and interest rates are predicted to decrease, making 2026 a healthier and busier real estate market.
Homebuyers who have been waiting for the right moment to enter the Chicago housing market may find that 2026 represents the best time to do so, prior to the next wave of demand raises home prices substantially.
The Chicago housing market does not offer a discount to buyers, but it offers buyers good value if they are willing to understand and navigate the complex characteristics of the market.
In a real estate marketplace where many cities are experiencing an overheated or unstable market, Chicago represents a solid option for buyers in 2026.
Sources:
S&P CoreLogic Case-Shiller Indices - Used for the 5.83% home price growth statistic in Chicago and comparisons to national growth rates
Realtor.com 2026 Housing Market Forecast - Used for the 4.4% year-over-year price growth prediction for Chicago
Illinois REALTORS® 2026 Annual Forecast - Used for the 5.1% increase in closed home sales projection
Institute for Housing Studies at DePaul University (Geoff Smith, Executive Director) - Used for insights on Chicago's low ranking in new home construction among large metros
Crain's Chicago Business - Listed as the source publication for S&P CoreLogic Case-Shiller data
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