Chicago Downtown and Suburban Housing Market - 2025 Predictions

Chicago Real Estate Market Outlook for 2025

Wondering what’s in store for the Chicago real estate market this year? Here are my thoughts:

Interest Rates: Higher for Longer

The significant drop in mortgage interest rates that many anticipated for 2024 didn’t quite happen. Despite the Federal Reserve cutting the federal funds rate three times last year mortgage rates have remained elevated.

For the first half of 2025, rates are expected to stay in the 6.5%-7% range, making it crucial for buyers and sellers to plan accordingly. However, there’s some good news: I have lending partners offering rates in the low 6% range for specific loan scenarios. If you'd like to explore these options, feel free to reach out!

Keep an eye on this space as we continue to track market trends and share strategies for navigating Chicago’s real estate market.

What about Chicago's Downtown Real Estate Market?

The downtown Chicago neighborhoods (Loop, Lakeshore East, Gold Coast, River North, Streeterville, South Loop, and West Loop) have faced challenges since the pandemic. However, there are signs these areas may have hit their low point.

In 2025, I anticipate properties in these neighborhoods will start selling more quickly than in recent years. While significant price appreciation is unlikely (with the exception of the West Loop), increased transaction activity will be a positive sign for the market.

Why the Change?

A key driver of improved conditions is the ongoing return-to-office trend. With more professionals heading back to workplaces, proximity to downtown offices is becoming a priority again. The West Loop could benefit the most from this shift, thanks to its appeal to high-income professionals who want to live near their modern, upscale offices.

As we move through the year, keep an eye on these areas—they may offer new opportunities for both buyers and sellers.

The Rise of Cash Deals

A strong stock market often translates into increased buyer confidence—and that’s exactly what we’re seeing in Chicago’s real estate market. When the market performs well, people are more willing to take risks, make significant purchases, and invest in property.

Over the past 12 months (and the last five years), robust stock market growth has fueled an uptick in cash deals across several Chicago neighborhoods. This trend has created a more competitive landscape, making it challenging for buyers relying on mortgages to secure properties.

Cash Deal Trends by Neighborhood (2024):

- Lakeview: 27%

- Near West Side: 23%

- Lincoln Park: 30%

- Winnetka: 50%

- Streeterville / Gold Coast / River North: 44%

With cash buyers holding a strong position in these markets, it’s important for all buyers to have a solid strategy in place. Whether you’re planning to compete with cash offers or explore other opportunities, let’s talk about how to navigate this evolving landscape.

Let’s Connect!

If you found this information helpful, I’d love to connect with you—whether over Zoom or in person for coffee. Whether you’re looking to buy, sell, or invest in 2025, I’m here and ready to help you navigate the Chicago real estate market. Let’s make your goals a reality!

-Matt