Amid economic uncertainty, Chicago’s real estate market is defying national trends with rising prices, strong demand, and growing appeal as a climate-safe investment.
As many real estate markets across the U.S. grapple with volatile conditions, including inventory surpluses in Austin and Tampa and stagnating or declining prices in Phoenix and Miami, real estate in the Windy City is on the upswing. Despite the broader national challenges brought about by high mortgage rates and concerns over inflation and tariffs, Chicago is showing remarkable resilience. Home prices here continue to rise, fueled by strong demand and exceptionally low inventory.
The numbers tell the story. In May, home prices in the Chicago metropolitan area rose 5.5% year-over-year, with Chicago proper seeing an impressive 8% increase. Similarly, April reports by the Illinois Association of Realtors and the National Association of Realtors revealed that the median home price rose 5.7% in the metro area and 8% in the city year-over-year – well above the national average home price increase of 1.8% in the same timeframe.
That’s not to say that Chicago is totally immune from the uncertainty that comes with each day’s headlines. While some buyers are putting a pause on a home purchase due to stock market fluctuations, others are diving into homeownership, seeing it as a safer, more tangible place to park their money. Additionally, interest rates may be a deterrent to some but they are a motivating factor for others. If the debt and deficit continue to grow, as some economists predict will happen, interest rates may rise even further in the years ahead.
In just five years, Chicago-area homebuyers have, on average, gained approximately $100,000 in equity in their homes. This, coupled with current concerns about the economy, is leading some buyers to feel their money is better invested in real estate.
In the city of Chicago, the luxury real estate market remains somewhat insulated from broader economic factors, as exemplified by activity at the upper end of the market. In May, new contracts for homes priced above $1 million rose by 7% year-over-year, while the supply of available properties dropped by over 26%, highlighting the competitive nature of the city’s luxury housing market.
Similar to many large cities around the country, Chicago continues to experience tight supply conditions. In May, the market had just two months of supply (MSI) — the time it would take to sell all available homes at the current sales pace. This remains an extremely tight market by historical standards. A balanced market typically offers around six months of inventory.
Even sub-markets that once had a surplus of inventory, such as the Loop and Near North Side – which had over eight months of supply at one point in 2023 – now have 3.5 months as of May 2025.
The continued lack of inventory could cause a slowdown in the market if buyers grow weary of competing in multiple offer situations and return to the rental market to wait out the frenzy.
One factor driving the inventory shortage is a growing population. Following a decade of decline, the Chicago region is once again experiencing population growth, according to new estimates from the U.S. Census Bureau. This increase reflects renewed confidence in the region’s long-term potential and enduring appeal.
With relative affordability compared to other large U.S. cities and less volatile weather than some regions of the country, Chicago is also becoming more attractive to homebuyers seeking a location insulated from climate-related disasters. Unlike cities prone to persistent floods, wildfires, hurricanes, or earthquakes—events that cause widespread property damage and skyrocketing insurance costs—Chicago offers a level of stability. Some high-net-worth buyers looking to relocate have also mentioned Chicago’s access to fresh water, which is virtually guaranteed due to the Great Lakes Basin Compact. The GLBC prohibits almost all diversions of water out of the Great Lakes, meaning lakefront Midwest cities like Chicago will maintain a consistent supply of fresh water for decades to come.
Spring and summer 2025 are proving that Chicago real estate remains a compelling investment, both for personal lifestyle and financial security. In a city with growing demand, limited inventory, and global relevance, making a move now may be the smartest decision of the year.
Your Trusted Resource for Real Estate
@properties shares my commitment to offering the most comprehensive and professional marketing, sophisticated technology, and expert market knowledge, supporting the highest standards of service and representation you expect and deserve. With local leadership and national and international reach, I bring results to clients wherever their buying and selling goals take them. I'd love to assist you. Whether you're in the research phase at the beginning of your real estate search or you know exactly what you're looking for, you'll benefit from having a real estate professional by your side. I'd be honored to put my real estate experience to work for you.
I appreciate and welcome your inquiry, real estate need, or referral!
