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Author: Mark Ainely | Partner GC Realty & Development & Co-Host Straight Up Chicago Investor Podcast
Chicago real estate prices keep rising, mortgage rates remain high, and finding a good two-flat or four-unit investment property isn't getting any easier. So what's actually happening in the Chicago housing market, and where should investors be paying attention?
According to Jason Wagner, Chicago's biggest problem isn't a lack of buyers. It's a lack of properties for sale. With approximately 6,500 active listings compared to 12,000 five years earlier, the city's shrinking housing inventory is creating some interesting opportunities for existing property owners and some serious challenges for buyers trying to get into the market.
In this episode of the Straight Up Chicago Investor Podcast, hosts Tom Shallcross and Mark Ainley welcome back Jason Wagner, creator of the Wagner Report, to break down Chicago real estate market trends, rising property values, mortgage rates, and the neighborhoods experiencing the strongest appreciation in the two-to-four-unit space.
Jason shares his top five appreciation neighborhoods from two Chicago market groupings, including Logan Square, West Town, North Center, Woodlawn, Brighton Park, and West Pullman. He also explains why a neighborhood with 21% appreciation and less than two months of inventory is a completely different investment environment from one with 35% appreciation and significantly more available properties.
The conversation also covers a Jefferson Park four-flat that sold in just six days after failing to sell in previous years, why cash buyers are influencing Chicago property values, and where investors may still find opportunities to negotiate.
Whether you're looking to buy your first Chicago two-flat, expand your multifamily portfolio, or understand what your current rental property might be worth, this episode offers useful data and a realistic look at the market.
Questions We Answer in This Episode
Q: What is happening in the Chicago real estate market despite high mortgage rates?
A: Jason reports that Chicago experienced 31 consecutive months of year-over-year property price increases leading up to the episode. According to his market data, the median sale price reached approximately $400,000 in September, an increase of about 5.5% from the previous year. Even with mortgage rates in the 7% range at the time of recording, limited inventory continued to support prices.
Q: How are Chicago two-to-four-unit properties performing compared to other property types?
A: Chicago's two-to-four-unit properties were up approximately 7% year over year in Jason's report. Single-family homes increased around 5%, while condos also appreciated approximately 7%. Jason explains that smaller multifamily properties remain competitive, making it important for investors to evaluate purchase prices, financing costs, and realistic rental income before buying.
Q: Why has Chicago housing inventory declined so dramatically?
A: Jason identifies the mortgage rate lock-in effect as a major reason. Many homeowners and investors have mortgages with much lower interest rates than those available to new buyers, so selling means giving up favorable financing. His data shows that Chicago had roughly 12,000 active listings five years earlier compared to approximately 6,500 at the time of recording. He also reports a 10% year-over-year inventory decline in September.
Q: What does low housing inventory mean for Chicago real estate investors?
A: Existing property owners may benefit from stronger property values, while new buyers face increased competition and fewer choices. Jason believes limited inventory could continue putting upward pressure on prices, although his prediction of further inventory declines is an opinion rather than a certainty. Tom and Mark also discuss the affordability challenges created when property values rise faster than buyers' ability to purchase.
Q: Why did an older Jefferson Park four-flat sell in just six days?
A: Jason shares a deal involving a four-unit building constructed around 1890. The property had wall heaters, older electrical wiring, galvanized plumbing, no basement, no common laundry, and an unusual floor plan. Its owner had struggled to sell it in 2019 and 2021. In the tighter market discussed during the episode, Jason listed the property and received a full-price, as-is offer within six days. His takeaway is that reduced inventory has changed what buyers are willing to consider.
Q: Which five Chicago neighborhoods showed the strongest appreciation in Jason's first two-to-four-unit ranking?
A: Jason identifies North Center and West Town as tied at 21% year-over-year appreciation, followed by Lakeview at 18%, Logan Square at 17%, and East Garfield Park at 16.9%. Their reported median sale prices were approximately $1.07 million in North Center, $970,000 in West Town, $1.36 million in Lakeview, $845,000 in Logan Square, and $485,000 in East Garfield Park. Jason also notes that these neighborhoods had less than two months of available inventory.
Q: What are the top five South Side Chicago neighborhoods for property appreciation?
A: According to Jason's report, West Pullman led with approximately 35% year-over-year appreciation and a $192,000 median sale price. Brighton Park followed at 24% with a $436,000 median, South Chicago at 17% with a $255,000 median, Roseland at 14.5% with a $205,000 median, and Woodlawn at 13% with a $509,000 median. Jason cautions that percentage appreciation can be affected by a small number of sales, so investors should look beyond the headline numbers.
Q: Why is the difference between North Side and South Side inventory important?
A: Jason explains that the neighborhoods in his first ranking had less than two months of housing supply, while Woodlawn had more than six and a half months. That difference affects competition, marketing time, and negotiating leverage. A neighborhood can show impressive appreciation while still offering buyers more choices and opportunities to negotiate.
Q: Are cash buyers making Chicago real estate more competitive?
A: Tom discusses recent flips involving cash buyers at approximately $1.8 million and $2.6 million. The hosts explain that buyers who aren't dependent on mortgage financing may be less affected by higher interest rates and appraisal requirements. Jason also contrasts Chicago with markets that experienced substantial new construction, emphasizing the role of housing supply in determining property values.
Q: Can investors still negotiate deals in Chicago's competitive housing market?
A: Yes, particularly in neighborhoods with more available inventory. Jason describes working with a buyer on a Woodlawn property using an FHA 203(k) renovation loan. He explains that some South Side neighborhoods offer greater flexibility for buyers because properties may take longer to sell. His advice is to understand the specific neighborhood's inventory and demand rather than assuming the entire Chicago market behaves the same way.
Show Notes
00:38 Chicago real estate market update: mortgage rates, inflation, and multifamily property trends
01:38 Chicago's 31 consecutive months of appreciation and the $400,000 median sale price
02:33 Why Chicago housing inventory has fallen nearly 50% over five years
03:37 How limited inventory could affect Chicago property values and future affordability
05:15 Jefferson Park four-flat sells in six days after struggling to sell in previous years
07:25 Why homeowners and cash buyers are competing for older Chicago properties
09:31 The Wagner Report and MLS data for Chicago real estate investors
10:10 Top five appreciation neighborhoods: East Garfield Park, Logan Square, Lakeview, West Town, and North Center
11:53 South Side market leaders: Woodlawn, Roseland, South Chicago, Brighton Park, and West Pullman
13:16 North Side versus South Side inventory, buyer negotiation opportunities, and FHA 203(k) financing
Takeaways for Chicago Property Managers and Landlords
Chicago's limited housing inventory continues to influence property prices, even when mortgage rates make financing more expensive.
According to Jason's data, Chicago two-to-four-unit properties experienced approximately 7% year-over-year appreciation during the period discussed.
The decline from approximately 12,000 to 6,500 available listings illustrates how dramatically the market has changed over five years.
Property owners with low existing mortgage rates may be reluctant to sell, keeping inventory limited.
North Center, West Town, Lakeview, Logan Square, and East Garfield Park recorded strong appreciation, but their purchase prices and limited inventory create challenges for investors.
West Pullman, Brighton Park, South Chicago, Roseland, and Woodlawn also showed substantial appreciation, although inventory conditions vary significantly.
Appreciation percentages don't tell the whole story. Investors should consider transaction volume, months of supply, rental demand, and operating expenses.
Older Chicago multifamily buildings may attract more interest in a low-inventory market, but electrical, plumbing, heating, and other building conditions still require careful due diligence.
Cash buyers can create additional competition because they may be less sensitive to interest rates and financing requirements.
Neighborhood-specific inventory can influence negotiating leverage. Some South Side markets may offer buyers more flexibility than highly competitive North Side areas.
Investors purchasing two-flats, three-flats, and four-unit buildings should evaluate realistic rental income, property taxes, insurance, maintenance, and financing before making offers.
For existing Chicago landlords, property appreciation is only one part of investment performance. Effective leasing, tenant retention, and maintenance management remain important to long-term returns.
Guest info
Guest Name: Jason Wagner
Guest Company: Greystone Realty
Guest Link: https://greystonerealtychicago.com/?page_id=139
Because finding good tenants and property management shouldn’t feel like online dating.
Dear Investor,
If you are an investor in either the city or suburbs of Chicago, I would love to speak with you about how we can help you on your real estate journey. At GC Realty & Development LLC, we help hundreds of Chicagoland real estate owners and brokers each year manage their assets with both full service property management and tenant placement services.
We understand that every investor’s goals are unique, and we love learning about each client’s individual needs. If there is an opportunity to help you buy back your time by managing your rental property or finding quality tenants, please check us out.
Founder, Partner, Podcast Co-Host, and Investor
