Even amidst some uncertainty as to where the global market is heading in the next few years, real estate investors and analysts have recently confirmed that Chicago will experience growth well into late 2016.
According to Moody’s/Real Capital Analytics, 2015 represented the sixth straight annual gain for Chicago. The property index for Chicago actually increased to around 4.7%, far less than 12% in 2013 and 2014. This data essentially highlights the varying degrees of growth in major cities across the country with respect to global investment, demand and marketability across commercial and residential spaces.
Even though the growth is slowly dwindling percentage wise, the property price index compiled by Moody’s analytics projects that there will be another 5% rise in 2016.While investors validate Chicago’s steady real estate growth, the windy still had a lower CPP index among metro areas in the U.S. with cities such as L.A. (16.4%), and New York City (14.7%) topping the list and Boston (13.4%), Washington D.C. and San Francisco respectively all had higher price indexes, with Chicago maintaining the lower rate.
Within Chicago real estate alone, both commercial and residential space have surged in development, price and occupancy. One factor in particular that has driven up prices across the board is a strong lending environment, along with low interest rates.
In other words, both these factors have collectively allowed to rent and sell properties for hefty financial gains. In the past months, the economy has shifted years due to volatile financial markets, uncertainty in the Chinese economy and the potential for a U.S. recession. Researchers and investors alike have showed a fair amount of concern when forecasting how the U.S. will alter in its state within the next year or so.
Unlike more internationally marked U.S. cities with more global investors such as New York City or San Francisco, some researchers confirm there is still substantial market growth in Chicago due the city’s lower cost. The contraction of mortgage backed securities has also played a primary part in creating a more difficult environment for investors to stretch an acquisition.
Meanwhile, it is becoming increasingly clear that investors can no longer rely on property value to equate with their returns. Allocating funds to an engaging marketing plan or a renovation are becoming new tactics to attract customers.