As we reach the halfway mark of 2025, the Chicago real estate market is showing clear signs of resilience—and transformation. After a few years of pandemic-induced volatility and shifting buyer habits, the Windy City is settling into a new rhythm that’s important for both buyers and sellers to understand.
A More Balanced Market is Emerging
In recent years, Chicago has largely been a buyer-friendly market, especially compared to coastal cities where prices skyrocketed. However, 2025 is shaping up to be more balanced. Rising interest rates in late 2024 initially cooled demand, but the first two quarters of this year have shown steady recovery.
- Home prices are stabilizing across most neighborhoods, with modest increases of 2–4% year-over-year, depending on the area.
- Inventory has increased slightly, giving buyers more options, but it’s still below pre-2020 levels, keeping competition healthy.
- Average days on market have crept up to about 35–45 days—longer than last year, but a sign of normalizing rather than softening.
Where Are Buyers Looking?
Suburban migration is slowing down compared to the pandemic years, and many buyers—especially millennials and Gen Z first-timers—are returning to the city.
- Hot neighborhoods include Bronzeville, Avondale, and Jefferson Park, where relatively affordable prices and ongoing development make them attractive.
- Luxury markets like Lincoln Park and the Gold Coast have remained strong, with cash buyers still very active despite higher rates.
Renters Are Feeling the Pressure
While the sales market finds balance, the rental market is tightening. Rents have increased across the board, with an average hike of 6–8% compared to mid-2024. New construction is helping ease demand slightly, but with more people priced out of buying due to interest rates, rental demand remains high—especially for well-located, updated units.
Commercial Real Estate is Slowly Rebounding
Office vacancies in the Loop remain elevated, but there’s movement. Tech companies and startups are leasing smaller, flexible spaces rather than full floors, and mixed-use developments continue to grow. Meanwhile, retail and industrial sectors are seeing consistent demand, especially in transit-connected corridors and distribution hubs.
What to Watch in the Second Half of 2025
- Interest rates: If the Fed makes any cuts before year-end, expect a fresh wave of buyers to enter the market.
- New construction: More units are set to hit the market late this year, which could increase inventory and offer more choices for buyers.
- Legislation: Chicago’s proposed affordable housing ordinances and tax changes could impact investor activity—something landlords and developers are keeping a close eye on.
Final Takeaway
Whether you’re buying, selling, or investing, 2025 is presenting a more measured, strategic landscape for Chicago real estate. The frenzy of the past few years has settled, making this a great time to plan long-term—especially if you’re working with a knowledgeable broker who understands the nuances of the city’s evolving neighborhoods.
Need help navigating the Chicago market or getting licensed as a real estate professional? Contact the Chicago Real Estate Institute today—we’re here to help you succeed.
