Chicago Real Estate Forecast for 2024

Chicago’s real estate landscape in 2024 is marked by several factors potentially shaping its trajectory. Forecasts indicate a gradual decrease in interest rates, with expectations that they might dip below 7 percent, according to sources like realtor.com and redfin. This shift can significantly impact mortgage affordability and subsequently influence home prices.

The city anticipates potential growth in new construction, driven by various factors, including the consistent increase in remote workers moving to the suburbs. However, the looming vote on the new transfer tax system introduces an element of uncertainty. The proposed reduction in transfer taxes by 20 percent for properties under $1 million and the substantial increase by up to 400 percent for properties over $1 million are subjects of concern, potentially affecting market dynamics and consumer behavior.

Adding to the complexity is the challenge posed by the upcoming presidential elections, historically known for adding uncertainty to financial markets and consumer sentiment. This may influence real estate sales and market dynamics, yet historical trends suggest that Chicago’s real estate sales remain resilient during election cycles.

Despite these challenges, suburbs like Naperville, Aurora, Skokie, and Niles present promising housing outlooks for 2024. These areas, characterized by popular amenities, accessibility, and established communities, are likely to remain desirable. The interplay of these factors will define the landscape of this dynamic market, but experts predict an overall positive start to the year.

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Tax Incentive Reflects Chicago Affordable Housing Mandate

In 2023, a property tax incentive that reflects Chicago’s mandate of creating and preserving affordable housing within its urban core came into effect. The aim is to encourage development that enables families of modest means to remain in new and existing downtown towers and West and South side neighborhoods.

Signed into law in 2021 by Governor J.B. Pritzker, the Affordable Illinois incentive package stipulates that participating developers in Fulton Market and other high-income downtown neighborhoods retain 20 percent of units within the affordable price range.

This represents a seismic shift from past policy. While Chicago has long required creating a certain amount of affordable housing when developers secure changes to zoning (and other benefits), there has never been an on-site requirement. Developers would generally fulfill their affordable housing obligations by paying fees to the city or constructing such housing in less expensive neighborhoods.

In mid-2023, the first project under the Affordable Illinois law came to fruition, with the 300-unit rental tower The Row Fulton Market completed. Located in Chicago’s most dynamic market, the building features 60 affordable units and promises to be the first of many to use the tax incentive.

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