A major indicator of real estate prices – the S&P/Case-Shiller Index – shows prices are not rising as quickly, which could result in more investments in the rental market. The index’s latest reading indicated home prices have increased at a slower rate in June compared to the same period last year, according to the report. Economists note the price slowdown could be attributed to an increase in housing supply, Bloomberg reported.
While the index for 20 U.S. cities has seen lower price gains, property values continue to rise. As investors consider purchasing properties at a time when prices are not gaining as fast, they should look into areas with affordable properties, such as Chicago.
Investors should buy Chicago investment properties as a source of steady income as housing prices in the area are not rising as much as the national average. A report by real estate data company CoreLogic found housing prices in Chicago rose 7 percent in July compared to July 2013 – lower than the average in the U.S. with housing prices reaching 7.4 percent in July from the previous year, The Associated Press reported.
Chicago sees rise in employment rate
Chicago housing prices saw smaller price increases than housing markets in states like California, which had a 10.5 percent rise in prices, which could indicate the market is stabilizing. Investors often have more confidence in the market when they know houses will not see rapid price rises followed by market crashes.
“We’re seeing more inventories coming on line, which is putting downward pressure on prices,” Anika Khan, a director and senior economist at Wells Fargo, said before the report, according to Bloomberg. “In general, we have seen prices rise at a faster pace than the fundamentals would call for. There’s a normalization happening.”
There are several factors helping to revitalize the Chicago housing market and leading to increases in housing demand.
One is the rise in Chicago’s employment rate, according to news source ChicagoNow. The Chicago area added more jobs in June than it has in six years. Another is growth in the region’s tech sector is contributing to new job generation as companies in Chicago are attracting candidates with a lower cost of living compared to San Francisco, Chicago Business reported.
As the tech industry and other sectors add more jobs in Chicago, housing demand could increase. To generate a supply of rental homes, investors can consider buying Chicago investment properties to meet the demand for housing.