A Burgeoning Market

Now is a good time to be involved in new construction. Chicago has been one of the most active markets in the country in recent years.

The city has issued more than 240 building permits for new construction projects in the first three months of the year, according to data aggregated by the building industry data portal Chicago Cityscape. Though those numbers lag slightly behind those for 2016, when the city granted 289 such permits over the same time frame, in the greater Chicago-Naperville-Elgin metropolitan area 1,632 new privately owned housing units were issued in February, an increase from the previous year’s 1017, according to Census data.

Low inventory has been the major trend in markets across the nation. Inventories have remained low nationally and throughout Illinois. The number of available homes in the state stood at 51,227 in February 2017, according to Illinois REALTORS. That is a 14.9 percent decline year over year. But homes sold in January stayed on the market an average of 54 days, down 14.3 percent from 63 days the same month last year.

Illinois REALTORS found that in the nine-county Chicago Primary Metropolitan Statistical Area (PMSA) February home sales totaled 5,891, a 5.2 decrease from February 2016.

In its 2017 National Housing Forecast, realtor.com predicted that the market would move at a slower, more moderate pace to take expected bumps in mortgage rates in stride. Interest rates on home loans are expected to climb to about 4.5 percent. The forecast predicts that sales of existing homes will increase by 1.9 percent – a bump of almost 5.5 million.

The report forecasts new home sales will grow by a robust 10 percent, with new home starts expected to rise by 3 percent. Those numbers are based on increases in the gross domestic product and the consumer price index, coupled with an expected 4.5 percent national unemployment rate.

For the Chicago area, the report predicts home sales will rise by 2.27 percent and prices will increase by 1.95 percent. The Chicago-Naperville-Elgin region, extending into portions of Northwest Indiana and Southeast Wisconsin, is ranked at 100 on realtor.com’s list of top 100 markets.

Spending on new residential construction in the city is robust, topping more than $1.09 billion year date. By comparison, just over $631 million was spent over the same period in 2016, according to Dodge Data & Analytics. Those numbers put Chicago among the strongest markets for new construction in the country. They also follow data from the end of December, when Dodge Data & Analytics reported that more than $452 million was spent on residential construction, outpacing other large markets such as Seattle, San Francisco and Boston. Chicago finished 2016 with more than $7.2 billion in new construction spending, an improvement of 46 percent over the previous year.