Investing in real estate properties in Illinois can be rewarding but also carries certain risks. The Illinois real estate market, especially in major metro areas like Chicago, sees strong demands due to population growth, job market expansion and rising household income. However, factors like property tax, maintenance costs and market fluctuation may affect returns of investment properties. This article analyzes opportunities and risks in Illinois housing market, provides 2023 predictions and gives advice on successful property investments.
Steady price growth and demands create buying opportunities for investment properties
The Illinois real estate market sees healthy growth recently. According to data from Illinois Realtors, the median sales price of homes in Illinois rise 5.6% year-over-year in Dec 2022. Major cities like Chicago and its suburbs experience even higher growth above 7%. Strong economy, inflow of new residents, rising income and millennial home buying keep fueling the real estate demands. These factors present attractive opportunities for buying investment properties in Illinois.
Illinois property tax is among highest and may lower investment returns
While the real estate market promising, relatively high property tax in Illinois could eat into profits of rental income. Illinois has one of the highest effective property tax rates in the nation at 2.67% according to 2022 data. For Cook county where Chicago locates, the average property tax amounts to 3-6% of property value each year. Investors need take this into consideration when calculating returns on investment property.
Maintenance and fluctuations add variables to real estate investment in Illinois
Owning an investment property also comes with maintenance duties and market risks. Illinois adopts relatively lenient building codes allowing lower-cost wooden structures in housing construction. However these buildings tend to require frequent maintenance and repairs which incur additional costs. Market shifts and property value changes also add investment risks for real estate investors.
Investment property market in Illinois sees positive momentum with tight inventory in 2023
The new year seems promising for Illinois housing market and real estate investors. Though risks exist, the current undersupplied market with strong buying demands will likely drive property value and rental income higher. According to 2023 predictions from leading real estate analytics firm CoreLogic, home prices in Illinois are expected to rise 5% as demands continue to outpace supply. Investors may take advantage of the tight inventory before demands get satisfied later.
The Illinois real estate investment market shows attractive opportunities like price growth and undersupply in 2023, but higher property tax and maintenance costs should also be accounted for when considering investment properties there.