Real Life Investing With Jason & Rachel Wagner

42. The Wagner Report: A Comprehensive Overview of the Chicago Real Estate Market as of June 2024

• Jason & Rachel Wagner • Season 3 • Episode 18

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Ready to take your understanding of the Chicago real estate market to the next level? Do you want to buy real estate today but you are uncertain about what the market is going to bring in the near term? High interest rates have turned the real estate sector upside down, causing fear to surge through would be buyers and sellers.  However, there are still people transacting in this high interest rate environment.  Do they know something that you don't? They might.  

In today's episode, we go over the key statistics that you need to know to feel confident and convicted in your real estate decision making. I give you the keys indicators to look at, my analysis and interpretation of what the trends mean, and my forecast of where I anticipate the market is heading.  

A jam packed episode with a ton of valuable insights,  you don't want to miss!

Check out the Youtube version of the episode here to see the visuals that are presented in today's episode. 

https://youtu.be/GS3jsKbbKf0?si=FcJuKC49_ioKQSLd

Jason Wagner:

All right, welcome back to the show everyone. This is the Real Life Investing Podcast with Jason and Rachel Wagner. We are going to be going over the Wagner Report today. This is a solo episode. This is just me. We're actually sitting here in my office and this is gonna be the first time I'm actually gonna be on camera and I'm gonna go over the report with you if you wanna see it. So I don't know, I'm going to post it somewhere on YouTube and try to figure that whole thing out, because that might be cool to kind of go through this together and see the visuals. But I will explain everything and give you the latest and greatest what is going on in the Chicagoland real estate market, because I have all of the data.

Jason Wagner:

I have been putting together a real estate, a comprehensive real estate market analysis report, I think since 2020, probably the end of 2019. I originally came up with this reporting because I cared about the market and I'm an investor. You guys probably maybe know that we own 19 property or 19 units amongst a various number of properties, and I had no idea when I first started investing in real estate. I had no idea where to even start looking or even if the Chicago real estate market was good and then how to determine which areas were good. And you know, it's just like yeah, I grew up in Chicagoland, I grew up in Elgin area, but as we moved to the city I had no idea where I could buy property, what was the values, what was all this jazz. And so I got licensed as a real estate agent and I realized that every single real estate agent has access to the material that I have, and so I just developed a sweet little report to it, because I've got this finance background very numbers driven. I make a lot of decisions and I give a ton of advice based off of what I am able to do with this market report and identify trends and guys. This data is so good that it gives me a ton of confidence to be very, very convicted in a lot of the advice that I give to clients.

Jason Wagner:

And when people ask me, where do I see the market going, you know this isn't a optimistic view out of my butt that I just made up right. Oh, I hope it goes up, because I'm a real estate agent. I need to sell more houses, you know. You know and give you the spin that goes up because I'm a real estate agent, I need to sell more houses, you know, you know, and give you the spin right, so that I can convince you to buy. No, that's not what. That's not why it's important to me Okay, it's important to me is that I give you truthful and real and information that I'm using for myself to help get me to another level, to help continue to build my own real estate portfolio, to feel confident making decisions when we have high interest rates, and the only way that you can ever, ever get comfortable making decisions like that that are sizable, right, every real estate transaction this is not $20 that we're throwing around here on a weekend right, this is, you might have $200,000 going into it.

Jason Wagner:

It might be much more than that, right? These are serious bets that we are making and if we don't have data to support all of that, you're really just gambling, right? So we're removing the gambling part of this. We're mitigating our risk by understanding where the market's going and what are all the indicators that help us forecast where the market's going, and is there something that we're potentially missing?

Jason Wagner:

Hey, there's a lot of construction going on in this area. Is that a good thing or is that a bad thing? That is a thing. That is a thing. Is the market oversupplied or undersupplied? Right, that is a thing. And so when we talk and you might have heard some other real estate news that's coming out lately where it's like the Southeast, we're in Florida, parts of Tennessee, we're starting to see some listings the highest amount of listings that they've seen in a long time right, okay, that's kind of scary, because if there's all this new construction happening and builders are building, building, building, because there's just so much demand for the Florida Tennessee markets, is that still the case? Right, and so a lot. We had a huge migration of people going towards Florida, moving from other states. Covid really caused this massive migration boom to Florida, but now we have a lot of people moving back out of Florida, putting up their houses for sale and we're starting to see market times really start to increase over there, and so it's just like we need to understand what's going on in our local market, because it may not be the Florida scenario. Having all this new construction going on in an area doesn't mean that the real estate market's good, or it could mean that it is good, so it's all in.

Jason Wagner:

How can we analyze the data and figure it out and what's going on in our backyard. So this is what I am committed to bringing to you right now. I do it for free, it's just free information and it is valuable information and it can help you just feel a lot more confident in whatever the heck you're doing. And that's what I want to bring, and I hope that by the end of this episode, you are certainly a lot more informed on where the overall Chicago market is going and what's going on. So let's break into it. I'm going to share my screen for anybody that is watching this on YouTube, ok, and all I do is a PowerPoint presentation, and all I do is a PowerPoint presentation. Okay, it is a PowerPoint presentation and here we go. I'm gonna go into presentation mode. I literally just put this together today, the date today, what are we? July 8th, we are doing data for June of 2024. And so welcome to the Wagner Report.

Jason Wagner:

This is a Chicago market analysis. I'm going to be only talking about mostly the overall Chicago market. I will go into other episodes later about different suburbs and different other cities, but for now we're going to talk about just general high level, the Chicago market. Okay, if you want to take a look at the overall trends here. I've got like some summary slides here but I really want to break down into I'm going to skip some of these so that you can you can really understand what's going on with the trends, because I love looking at charts and I love looking at data and like, and so I project things on like a kind of a five-year basis for everything that we're looking at.

Jason Wagner:

So the biggest thing that's driving the market right now, guys, is that we have its mortgage rates. And where are mortgage rates right now as of July 8th? Well, actually, the most recent reading that I have that's been published was on June 28th from the Mortgage Bankers Association. The average 30-year fixed mortgage rate with a conforming loan balance below $726,200. This is at 7.03%. Okay, so interest rates are still right around 7%. That's what you should expect, and I love using the Mortgage Bankers Association because that is kind of like a published general rule of thumb. You go to any lender right now and they can't necessarily tell you and advertise what a rate will be. There kind of has to be all of these rate terms and things like that. So if you ever want to know what a rate could be check out the Mortgage Bankers Association. They release stuff on a weekly basis, and so I have a chart here on the left that basically just shows you that it wasn't that long ago. Back in December of 2020, we saw rates at 2.8%, and now rates are at 7.03%.

Jason Wagner:

And what drives interest rates? Well, it's all inflation, and so on the right-hand side of this chart here, I show you what inflation has done since 2020. When December of 2020, that's when we started to see inflation really start to rise but it has historically always, you know it hadn't really moved much in a long time and we saw inflation that was between zero and 1%, you know, under 2%. Right, that was inflation just really wasn't much of a thing for a long time up until recently, and so that happened really a big surge in 2021, and it peaked in May, right around May, june, in the summer of 2022. That's when inflation had hit 9% at one point, right around there, and now we are sitting with inflation at 3.3%. Okay, so this is a very, very important indicator. We see inflation coming down, which is why the Fed is really, you know they, the Fed raises interest rates, right and so, but they base it off of economic indicators and inflation, the CPI consumer price index. That is something that the Fed is really watching closely and they've always said hey, we want to get inflation down to 2%. Well, right now we're at 3.3. Okay, that's as of May of 2024. Now there's going to be a little bit. Later this week there's going to be another release of the inflation report, cpi Consumer Price Index, and that will come out. But as of now, we're still above their Fed target rate of 2%. So there's probably still going to be a little bit more work before the Fed starts to potentially cut interest rates.

Jason Wagner:

Some people are forecasting that we might actually see interest rates cut this year. We just don't know. I mean, there's a lot of different analysts that are out there and you know we'll just see. You know, will, if the Fed does cut interest rates, will? Does that mean that mortgage rates go down? Well, it's, it's. It's not like a one-to-one thing, right, when, when the Fed cuts rates by, you know, a quarter of a point, okay, that doesn't mean that your interest rate on your mortgage is gonna go down a quarter of a point, okay, but what could happen is that now, all of a sudden, I'm gonna move on to the next slide here. Now, all of a sudden, you've got bankers that are lending, that are feeling much more confident about the market, and now their cost of money has actually reduced, so now they're not paying as much. The lenders who actually lend the money are not paying as much for their capital, and so they potentially could lend to you at a lower rate. And so that is the difference.

Jason Wagner:

We call that the spread. The spread between a 10 year treasury and a 30 year fixed mortgage is that a lot of lenders will get their capital and they base it off of this 10 year treasury rate, and then there is a cushion we call it like. It's like a profit cushion right Between whatever the 10 year treasury rate is. And then there's this profit cushion of like okay, well, if I can get you know the 10-year treasury rate is. And then there's this profit cushion of like okay, well, if I can get the 10-year around 4% and I can lend to you at 7%. That's about a 3% spread and that's my profit, that 3%. And so that's a difference.

Jason Wagner:

That spread part is very, very important. And on the right-hand side of this chart that I'm showing you, I show you the spread between that 30-year fix and 10-year treasury and, historically speaking, we have never really been at a 3% spread, except back into the financial crisis that happened in 2008. To the financial crisis that happened in 2008. And then, as of recently, we hit a 3% spread. That was in 2024. And so, historically speaking, we've always been around a 2% spread. And so if a spread is at 3% and historically speaking we're around 2%, that means there's a whole point that the bankers are putting in as extra cushion because they have uncertainty in the marketplace.

Jason Wagner:

Okay, and so why could rates come down? Is if the Fed says, hey, we feel a lot more confident about where we are in the market, we are finally going to cut interest rates, and they do that. Once that actually happens, there's going to be a lot more optimism that bankers are going to have and say, oh, the Fed is starting to see that we could start stimulating the economy a little bit more and stop putting the brakes on it. And so now maybe we can actually lower our spreads and be a little bit more competitive, maybe we can lend to more deals, right, and so that's kind of the mindset that goes on. And so, going back to that example, if I can get a. If a blender is going to be able to get 4% cost of money from their cost of money at 4% and historically speaking they usually lend at 2% that means an interest rate for a mortgage is going to be around 6%. Right now we're at 2.5%. The 10-year treasury I'm just going to kind of pull this real quick. I don't have the 808 on here to make it really accurate. I wish I did, but anyways, the spread right now we're at a 2.5% rate. Okay, so basically what we're saying is that we've got about 50 basis points. We've got a half percent that we could come down a little bit more, just based off of not really having the Fed like once they do cut rates right, once they maybe just do it, once it's very possible that we start to see those spreads come down a little bit more and we could, hypothetically, we could maybe see a quarter percent cut could be more in a bigger slide on 30 or fixed rate Right, it could. And so it's very important to understand that relationship. That's why I spent so much time on this slide right now.

Jason Wagner:

But let's, let's get into more of the sexy stuff, right? That's that the economic indicators is very important to understand. It gets a little bit technical. You probably fell asleep during some of that, so I'm sorry, but what does it mean? What does it mean for the market?

Jason Wagner:

Now let's take a look at Chicago median sales prices, and median sales prices is really what we care about. Now, if you think what the heck? Go back to stats class, right, you don't know what a median sales price is. A median sales price is basically you've got those high end properties, those luxury properties that sell for millions of dollars, and then you've got those really shitty properties that sell for thirty thousand dollars. Right, you've got the whole mix there. Within Chicago, what we care about is, right smack in the middle, not the ones that are OK. So if we had a whole sample size that we're selling, you know we don't care about the luxury ones, we don't care about the shitty ones, we care about where is the median sales price? Right, smack in the middle of the data set. Where is that moving on a monthly basis?

Jason Wagner:

Okay, so, as of June 2024, median sales prices were up 5.1% from prior year at $350,000. This is the third consecutive month of positive growth, indicating a changing trend in overall sentiment. This is huge, guys. When I saw that Chicago had hit a 5.1% growth rate year over year. I got excited because I am starting to see whoa wait a second. If you were kind of following some of the data, what was happening in Chicago just during 2023 and kind of like the first part of 2024, we actually had declining prices. The interest rate shock had actually hit Chicago and we had declining prices. But now we have gone through a new surge of prices going higher, ok, and we're at 5.1 percent. This is the third consecutive month in a row where we've seen positive year over year growth and accelerating year over year growth. We haven't seen this type of growth rate since about June of 2022. So that's huge. That's huge and there's a ton of optimism, and so I love this.

Jason Wagner:

So another cool kind of data point that I put on this slide is that you'll also see that year to date, we're up 4.2%. So what does that mean? That means, just from December to now okay, we're up 4.2%. What is the difference between a year over year price growth rate versus a year to date growth rate? Okay, so year over year is always going to compare. What is June 2024 compared to June of 2023? Where were we at at this point in time versus last time. That is a year-over-year growth rate. What about a year-to-date growth rate? That's where have we gone since end of December of 2023 till now. We've actually grown 4.2% year to date, and that is good. I like that number. Okay, I also put some other appreciation rates here. I put a one-year, three-year and a five-year growth rate.

Jason Wagner:

Okay, chicago historically has never seen, you know, really really big numbers like this, and the average, kind of going back to Chicago, chicago's always been between like under 5% for year over year growth. We've kind of just been like this non-sexy. Like you know, there are other markets that have just really appreciated a ton, but Chicago just wasn't one of them and you know, I think it really goes down to there's a lot of political issues that are happening here. The taxes are crazy and business environment is not really that favorable, and so that is what has always just kind of held Chicago back from, you know, becoming a just a bigger and better and a higher appreciating city better and a higher appreciating city and I'm wondering that maybe we could be on the turn of potentially seeing Chicago really start to flourish, purely because of affordability, and so I make my case that I think that the Midwest is one of those areas where you still have affordable pricing and it may not seem affordable for people that live here. It's always relevant to wherever your situation is. But if we were to look at other major cities, for example, you're going to see the Midwest is like dang. There's a lot of housing stock here. It's older you know 1920s, 1950s, 60s but overall the median sale prices is still relatively affordable. Okay, and I think that what is what makes Chicago relatively appealing, especially right now when we see a lot of these other cities just like they? They've boomed and it's made housing unaffordable, especially with higher rates. So where are people going to go when they need to make a change? They're going to go to affordable cities because the cost of capital is so much more right. So if you're paying a 7% rate right now, I would go to a place where I could really cut my price, and that's where Chicago offers a lot of that.

Jason Wagner:

This next slide, guys, is one of my most favorite and important slides. I track it regularly and I'm always looking to see what is going on with under contract activity. Under contract activity is something that is basically this is a rolling 12 months of activity. So these numbers, when it says 26,865,000 contracts, have been 26,865. Sorry, I misspoke there. That is the amount of contracts that we've had over a 12 month period.

Jason Wagner:

And it's important to really understand why we're looking at things. We're looking at 12 data points on each one of these little lines. We're looking at 12 data points on each one of these little lines. We're looking at 12 data points, okay, and it's important to recognize that in Chicago, especially the Midwest, seasonality is such a big thing. We have a spring market, we have a summer market, we have a fall and winter market and the buying activity during all four of those is different and I'll show you another slide of what seasonality really looks like. But the reason we look at 12 months rolling activity is so that we strip out any of that seasonality and we get the pure trend of what is going on in the market.

Jason Wagner:

As of recent, we've had a massive, massive, massive decline of buyers in the marketplace. We are seeing some of the lowest sales overall in the market and it's been like this for since June of 2023, literally, and prior to that right, we've been on this massive trend trend downward. But what's really interesting? Let's go back a little bit. Let's really understand what happened prior to COVID.

Jason Wagner:

Okay, once COVID hit, we had this very fascinating thing happen where every single buyer retreated the market. The market stopped. They didn't know what to do and then, once we realized that it wasn't just going to be two weeks to stop the spread, it was going to be months, then everyone was like we need to move right. We got to change our living condition. We can't even be by anybody. So there was this massive boom of buyers into the marketplace and we saw buyers come out of literally nowhere and we saw a massive, massive uptick in buyers where we saw a 34% increase. At one point that's insane there was almost 40,000 contracts deals happening, when the normal amount of contracts is anywhere around 32,000. So we had a huge swing upward in the amount of deals that we're actually transacting, and that happened for about a year about a year, okay, where we had that much activity happening.

Jason Wagner:

And then we saw the interest rates really shoot up and that caused everybody to be like all right, I'm done, we're out of the market, we're retreating. And all those buyers retreated from the market because of high interest rates, which is affordability. Prices kept skyrocketing. Okay, that's affordability. We're at an extremely low inventory point right now and when you got high interest rates that are all of a sudden happening out of nowhere. There's a lot of uncertainty in the market. We have no idea what's happening, so let's stop and not do anything, okay.

Jason Wagner:

So then we saw this huge free fall of buyers and then finally beginning in June of 2023, we finally started to see a flattening out start to form, and I was watching this flattening out and I was just like boy. I'm getting confident that we're starting to bottom in buyer activity, because if you look at my orange bars, here is really the growth rates. It's the growth rates, it's the year over year stuff that has, so that we can see where things are really like trending and how much velocity those trends are having. And what you'll notice is that from June of 2023 to June of 2024 now, we've had a steady, a slowing rate of decline. We've actually had 13 months of a slowing rate of decline. Now we're only down 1.6% from prior year. Under contract activity. It's down 1.6% from prior year and you really clearly see that buyers are starting to get a lot more comfortable with the current market conditions. So when I see a trend of bottoming that is starting to form. That tells me that we've made it through the thick of it. Right, we have totally made it through the thick of it, and how.

Jason Wagner:

I was talking about interest rates and how potentially we might have the Federal Reserve lowering rates at some point this year. What's going to happen when we see that we've potentially bottomed in buyer activity and we see the Fed lower interest rates, that all of a sudden is going to shoot more confidence into these buyers. The buyers are going to start coming back out again. Guys, we have bottomed right now. From what I see, now, unless there's a big black swan event that happens World War III the Fed says nope, we're actually going to raise interest rates again. Something like that. Or massive recession literally hits us out of nowhere. Something like that. Or massive recession literally hits us out of nowhere.

Jason Wagner:

I'm really, really optimistic because of viewing this chart, thinking that when buyers, when just think about it, naturally like, hey, if all of a sudden, hey, you've been wanting to get back into the marketplace, shit, we had to rent for another year. And then we hear that finally, hey, rates are actually declining. Wait, they lowered rates and we're starting to hear that I want to get back into the market and what's going to happen? Prices are going to continue to go higher. Prices will definitely go higher and you're going to be like well, how do you know that? Well, as we get to it, we'll get to understanding what the inventory levels are like and why prices have literally nowhere to go but up in Chicago, which is very, very fascinating.

Jason Wagner:

But let's look at the seller side, right, because there's a couple of things that kind of play into the thoughts of well, if we don't have any buyers right now, what's going on with the sellers? Aren't sellers really interested in selling their properties right now? No, they're not. We're actually at the lowest amount of listings that are coming into the market that we've seen, I'm pretty sure, on record. For example, here's a chart as of June of 2024, we had about 50,000 new listings in the city of Chicago 50,000.

Jason Wagner:

We peaked in COVID when we were at about 76,000. The average the three years prior to COVID the average about 67,000. We're at 50. The average prior to COVID was 67,000. I like to put the average out there so that we can remember what a normal market was prior to COVID changing everything. We're at 50,000.

Jason Wagner:

We are so low in sellers and why? What's going on with the sellers? Why are sellers not selling? It's because it wasn't that long ago that every single seller, potential seller, homeowner either paid off their mortgage or they refinanced to a 2% interest rate, two to three or under four, and so it makes no sense for them to sell their home right now because they have the golden handcuffs, and the golden handcuffs are my cost of living is so cheap right now it makes zero sense for me to sell my property and to go find something else where it's going to cost me. I can't find a home. Inventory is tough and it's going to cost me. I can't find a home. Inventory is tough and it's going to cost me a heck of a lot more to buy a new property because cost of capital is so much higher and your interest rates and mortgage rates so much higher, and so that's why we've seen sellers remain hesitant to list their properties, with new listings down 8.9% from prior year. But here's an interesting thing we are starting to see sellers bottom a little bit. This is the fifth consecutive month of a slowing rate of decline, and I think that's interesting to kind of recognize is that there might be a lag period. That's happening here. The buyers have they bottomed. I guess it was about six months prior to that and their bottom is still extending. The sellers had a lag of about six months and we're starting to see that kind of level out a little bit. I think the sellers are starting to get a lot further.

Jason Wagner:

In order for sellers to be like okay, I'm finally going to capture my equity because my home price value has gone up dramatically, the average single family home owner who has owned their home since probably prior to COVID is very likely that you've gained anywhere between $50,000 and $100,000 in equity just within that period. So that's pretty substantial. So it's kind of attractive to want to tap into. But you need a reason to move and that could be a life event that does force you to move. And that's why we still have transactions happening is that there's life events happening where it's like babies are coming. Families growing, divorces are happening, happening where it's like babies are coming, families growing, divorces are happening, things like that Deaths in the family Okay, those things cause people to sell. We're really talking about is the upgrade person. There Is the upgrade person who is, you know, think about it this way. We have.

Jason Wagner:

We were also in a different job scenario market, where we have a lot of people that no longer have to be where their office is, and now you know they could stay wherever they want. They don't have, they don't. They don't give a shit about their commute, right, because they work from home, or they just got to go in the office once, twice a week, you know, it doesn't matter. Ok, I got to drive an hour or whatever, that's no problem, it's only twice a week, right? So there's this like job change thing that's happening, and so that's not really giving people a lot of motivation to sell their homes. So what is going to give people the motivation to sell their homes?

Jason Wagner:

We need interest rates to come down dramatically, dramatically in order to start to see a lot more new listings hit the market. So we're going to watch new listings. I think that's a substantial thing. What would give me the red flag? What would give me the red flag right now if I saw Jason rates are at 7%. We have the lowest amount of buyers that we've ever seen in the marketplace right now, but we had sellers. We saw all these new listings coming to the market. That is a recipe for recession. That's a recipe for declining home values. But we don't see that. We don't see new listings coming to the market. We see the lowest amount of new listings that we've seen on record and that combination of the lowest amount of buyer activity and the lowest amount of new listings. That is a very safe combination and that's why I like it right. That's where my optimism comes from. So then that kind of plays into months of supply.

Jason Wagner:

We move on to the next slide here, months of supply, a metric that, if you want to know and understand one thing out of this whole conversation it's probably way too long of a podcast, but I hope that you can kind of tell my tenacity and my interest in the data here, because it can tell you so much and you can really really become so confident and convicted in the decisions that you're making because you're understanding and analyzing the data and somebody has told it to you in a way that you can recognize it. But here is one thing that you need to walk away with. One metric is called months of supply. Months of supply is the measure of how many months it would take for the current inventory of homes on the market to sell, given the current pace of home sales. Right now we're at 3.7 months. This says that if no new homes came to the market right now, in 3.7 months all the inventory would be sold.

Jason Wagner:

That is the measure of how many listings we have to the current demand, and the lower the number, the more of a seller's market you're in. If you are less than four months, you are in a seller's market. If you are four to five months, you're a very neutral market. You are six, seven plus months, you're in a buyer's market. Those are probably terms that you've heard thrown around before. We are in a seller's market and we are in a very deep seller's market. We're at 3.7 months. This is still one of the lowest amounts of inventory that we have, given the current rate of buyers that are out there, and so low inventory continues to be the largest issue facing this market.

Jason Wagner:

Again, going back to that example where I was telling you, if we had the lowest amount of buyers in the marketplace right now and we saw new listings starting to rise and rise dramatically our months of supply, of inventory, that number would rise higher. It would go from 3.7 to probably five, six or seven months of supply, because we have all these new listings that are coming, but nobody's buying them, because nobody wants to act in a market where there's 7% interest rates and a lot of uncertainty, right, but that's not what's happening. You have all of these sellers that have locked in the golden handcuffs low rates, and they're not deciding to sell. And so is this different than the 2008 recession? I think so, totally, because if we looked at the 2008 recession, we would have seen months of supply extremely high, and the moment that you start to see months of supply start to really trend higher, that's when I'm going to be calling the alarms, man. That's when I'm going to be telling you be cautious. Be cautious when you're buying property right now, because your pricing may come down. But I'm not telling you right now. I'm not telling you that. I'm definitely not telling you that. I'm telling you do everything possible to get in the market right now, because you're going to want to be in the market. Because if you think about everybody that you thought when COVID happened, you're like oh, a lot of uncertainty. No way I'm doing anything crazy. There's no way I'm going to buy a house. I'm going to continue to rent. Well, all of those people that bought in 2019, 2020, 2021, 2022, 2023, literally every single one of them are saying right now boy, I'm really glad I bought my house. They said it every single year and they're still saying it. Okay, especially here in Chicago, and I think you can All right.

Jason Wagner:

Homes for sale. This is another very dramatic chart that kind of tells you where is the overall inventory. Right now we have 8,400 homes that are available for sale. Prior to COVID we had that would have been about almost 14,000. That was the pre-COVID average, about 14,000 that was on the market at any given time. We're at 8,400. A very dramatic low-rate decline, or low-rate homes for sale, and we're continuing to trend lower. There's not a lot of indication that the homes for sale is going to go back up. Everything is still trending lower.

Jason Wagner:

Here's an interesting slide that I talk about for Chicago seasonal trends and remember how I was saying the spring market's different than the summer market, fall and winter market. So this is a great, great slide that tells you exactly what to expect. On the left-hand side here I have under contract activity and what this is showing is that it's if you've ever been to a roller coaster at Six Flags Six Flags, great America Basically what happens here. I have three data points One. I want to show you the 10-year average pre-COVID, this dotted line. It goes up like a roller coaster.

Jason Wagner:

It starts in January. It goes click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click. April we peak in April in buyer activity and then May, june, july, august, september, october, november, december it just tails off. Okay, we kind of have a little slight fall push. That happens in September and October, the fall push, but then it tails off. This literally happens every single year in the state of Chicago. Happens every single year and people are always like when is the best time to be selling my house? The best time to be selling your house is not in December. Okay, when there's the least amount of buyers that are out there. It is literally to be posting your home when there's peak buyer activity, and that is March and April. Even if you were to start it in January and February, I love it too.

Jason Wagner:

The spring market starts in January. Because why do we say that? Because if we look at how many buyers are in the market in December versus January. January is much greater than December. Nobody's buying houses in December. Everybody's out in the holidays. They're getting drunk with their family and friends. Nobody is buying homes.

Jason Wagner:

But once January 1st takes over, shit, new Year's resolutions kicks in and they are like I'm going to get it done. I'm going to get it done right away so that I can enjoy my new home for the rest of the year. And that's why we call the spring market starting January 1st and it peaks in April. So but what about listings Like that's? Here's an interesting part. A lot of times, like for example last year, we saw our listings peak in May. Well, may is when we've already had buyers. Like that's not the most amount of buyers, right? So there's kind of a lag period that's happening, where sellers aren't really in tune with the amount of when buyers are most out in the market and they continue to think that, well, as we get into the summer, that's when we should be selling our house. No, that's not the optimal time. I mean, it's still good, don't get me wrong, it's still good. The optimal time is in the spring market January, february, march. That's when you should be posting your home for sale. You want the most amount of buyers out on the marketplace. So what's happening as of recent?

Jason Wagner:

How do we compare this year's market versus last year's market in the month of June? Well, we've actually had a little bit more buyers come to the market than we were at this point last year. We had 2,600 buyers in the market and last year we had 2,500. Nice, right, that's actually almost a 3% increase. Great, but compared to where we were on a normal 10-year average pre-COVID, we typically see in June about 2,800, 2,900 contracts and we're at 26. All right, so we're still not at a normal market, but actually trending in line with last year, maybe slightly above. Okay, so that's optimism, right.

Jason Wagner:

Let's flip over to the listing side. This is actually a dramatic decline that we've seen in new listings, which is dramatic. It's down 10% from where we were at this point last year in the month of June. We had a lot less sellers in the month of June than we did at this point last year. Okay, 4,500 versus 5,000 last year. In a normal market we see about 6,000 new listings that come to the market in Chicago. So new listings is still nothing is giving me confidence that sellers are really going to start listing their homes. We just don't see it. We don't see it in the data and it's really important to understand these trends.

Jason Wagner:

And then I break it down even further, guys. I go into what's going on with pricing for condos, single-family homes and two to four units. Everything I was telling you was very overall, generalized. But now we kind of care about property types. We care about what are the major property types that we have here in Chicago condos, single-family homes and two to four units. We actually have a decent amount of two to four units that are out there. It's great. It's one of the rare cities that has it. You go out in the suburbs you can hardly find any two to four units, but in Chicago there's tons of them. It's great. This is why the housing stock in Chicago is very, very attractive. We've got all types of different pieces here that you can certainly live in and enjoy.

Jason Wagner:

So what have we seen? So the median sale price of a single family home right now is $315,000. That is up 4.7% from prior year. The median sale price of a condo can you believe this? A condo is more expensive in Chicago at 350,000, and that's up 5.3%. Okay, that's actually always been the case, because Chicago has so many single family homes and there's a lot of them that are just like in different areas that are. You know the values are really low, right, just not good areas to really necessarily be buying real estate in and the values there are really low because they're really crime ridden and you know there's just a lot going on there, right? So a lot of where people, developers, will build condos are in more expensive areas, right, and people will want to live there and there's a lot more businesses and things like that. So, anyways, that's why we have condos, you know, more priced or higher price, right, things are in like, a lot of the condos are actually in the loop, right In the loop, and near North River, north Streeterville, okay, that's where a ton of condos are and we're actually at. So 350,000 is the average condo or median sale price of a condo here, and that's up 5.3% percent.

Jason Wagner:

And then we've got the monster, the behemoth. Oh yeah, baby, this is where I made my money, this is where a lot of people make their money. Okay, it's the classic two to four unit and I fricking love it. Man, you could do use an FHA mortgage. You could buy a two to four unit in Chicago, live in one unit, rent out the other, and what is the best way to combat inflation is a multifamily property that you are living in and collecting rent from the other side. It is the biggest cheat code ever. You can do three and a half percent down and it may not cash flow for you right now, but back when rates were in the twos and threes, everything was cash flowing. Could you live in a property for free? Yeah, if you did a little bit of work and you increased the rent. Yeah, I was living for free in my first house hack. It was amazing and I love that Chicago has so many two to four units.

Jason Wagner:

The median sale price of a two to four unit right now is 396,000. That is up 5.6%. That is the fastest growing price property type that we see of the three 5.6% for two to four units. And actually when we were in the COVID phase, when we had the COVID craze going on, where prices were appreciating crazily, two to four units and single family homes saw the biggest growth rates Condos stayed relatively flat Condos.

Jason Wagner:

I always tell this to people if you're not really familiar with different property types, if you want to just get into real estate and buy something because you know it's a smart choice buy a condo. It is going to be very stable. It's a stable investment. Are you going to make a ton of money on it? No, you won't. But if you held that thing for five years it's very likely you'll be able to sell it for the same price. That's just what happens with condos. Now there is a difference.

Jason Wagner:

If you were to buy a, for example, I saw the great success of condos that were in Logan Square West Town area. They bought newer construction high end has all the bells and whistles and then a year later they were able to sell that for anywhere between $50,000 and $100,000 more not quite a year later, but like two to three years later, because those areas became very sought after and the amount of inventory for new construction condos with all the bells and whistles okay, extremely low. So that's why we saw a huge appreciation rates for luxury condos versus just your average 1920s building. You really won't see much price growth. So, going back to it, if you want to buy, just in general advice, hold your condo for at least five years. You're probably going to be able to sell it for the same price, maybe a little bit more at the end of that five years.

Jason Wagner:

But if you really want to buy something that is going to make you some money, what is it? It's going to be single family homes. Those are the ones that are going to get you the best bet, best bang for your buck. And so here's what I'm, here's what I show you on this one slide. I show you the median sales price on the left and I show you the months of supply. And if you remember months of supply and understanding where that trend is going, it's so important to really just follow that. Okay, when we see months of supply going downward, we know that prices only have one way to go. When months of supply is going downward, that means we don't have a lot of new listings coming. We got more buyers out in the marketplace. That means prices are going to go higher, and we're seeing look at the strong trend in months of supply.

Jason Wagner:

We actually have the most amount of inventory. This is a very fascinating part. I told you that two to four units was appreciating at the fastest rate out of all three property types. Right, but they actually have the most amount of inventory that is out of the market. There's almost four months of supply out in the market. It's very interesting. So there's a lot more opportunity for people to purchase two to four units. It's just harder and it's the ones, those two to four units, that are likely the updated ones. Those are the ones that are starting to see the best appreciation, and so it's just a tough property class, right, but it's interesting to me that you have the most inventory available because there's a lot less buyers in that space. The most inventory available because there's a lot less buyers in that space. The most inventory available. Not in like absolute terms, though. Right, there are way more condos than there are two to four units. Right, just absolute numbers, right, when we're talking like way more. But what we're talking about is the relationship between buyers of those condos and buyers of the two to four units. We actually have the most opportunity for the two to four units.

Jason Wagner:

Okay, I hope I didn't lose you there, but it's a very important concept to really kind of understand. Long story, short months of supply trending lower for two to four units. Single family homes and condos has been relatively stable 28 months. That's all good stuff. That's all very optimistic stuff. If there's anything that you need to care about of this whole conversation is where are prices going? What are the months of supply? You can literally figure out any market from median sales prices and months of supply. Show me the last five-year trend of those two metrics and I'm feeling very good about whatever I'm doing. That's why I put it on one slide so that you can understand it and feel confident about it All right.

Jason Wagner:

Next one is really comparing new listings under contract activity. It's literally beating the same drum. We don't have a lot of new listings coming to the marketplace and under contract activity we don't have a lot of new buyers. But it's just kind of flattening for both of these downward trending to flattening. But actually what's interesting is that we do start to see we have an increase in two to four units for buying activity. So there's more buyers that are starting to pick up two to four units. And why is that? It's probably because that is the only way to combat inflation. It's literally the only way to combat inflation.

Jason Wagner:

Live in a property that you can live. Also, at the same time we've seen dramatic rent increases. That has happened here in Chicago, and so people are probably recognizing that hey, I can live there, I can raise the rent, because it looks like I could raise it 400 bucks because the guy hasn't raised it yet, and that makes a smart financial decision that helps lower my living expense. If I can raise the rent and then as I move out of that property, I can keep it as a property that maybe cash flows right, where there's more rent coming in than the expenses and the mortgage is being paid right, that's what positive cashflow is. That's great, right, that's real estate investing. That's a cool thing. Ok, next slide I'm also comparing the homes for sale.

Jason Wagner:

You can kind of see the breakdown of how many homes for sale. Here's the absolute numbers that I was kind of telling you. In Chicago right now, we've got about 1,100. Two to four units for sale. For condos we've got about 3,000. Ok, so the absolute numbers. So this kind of gives you some some sense of what can I buy and how much are there of them. So, going back to, we've got two to four units that have 1100 homes for sale. Well, the amount of buyers that are out there, right, the number is how many homes are for sale and how many buyers do we currently have. So that's how they come up with their months of supply number and there's actually the most opportunity. There's the least amount of competition for the two to four units. It's interesting Average market times two to four units is at the highest mark 78 days.

Jason Wagner:

Single family homes at 64 days. Condos 60 days. We are seeing that market times are trending downward. Another positive indication that the real estate market when market times are trending downward. Another positive indication that the real estate market when market times are trending downward and not going up. I'm optimistic. I like this. I love seeing this. We want to see market times come downward because that's going to push prices higher.

Jason Wagner:

Anybody that owns property right now you want to see things selling fast, right, because you know that means that my house is going to be worth more, right. When things start to slow down and all of a sudden it's not 60 days, it's 90 days on the market, shit man Like you hate that. You don't want to see your neighbor's house not sell for four months. That's scary, okay. Now there's plenty of things that still kind of goes on in today's day age, right, and that's a lot of real estate agent issues that could be going on there. For example, if you have a, a home on the market right now, in where we have low inventory, and you have and it has all the bells and whistles and you can't sell that thing. You've completely overpriced it or your marketing totally sucks. You should be able to move those properties because the market wants it, and so there are anomalies that happen, but the general trend is that we have market times going down and then sale price to list ratio. This is important.

Jason Wagner:

What did I just say in terms of two to four units offers you the least amount of competition comparatively to condos and single family homes. Well, this is interesting because that also goes with the same point 99% sale to list ratio. So basically saying that, all right. So if I'm asking $500,000 for a two to four unit, I am expecting to sell that thing at 99%, which is $495,000. Okay, five grand off.

Jason Wagner:

Technically, single family homes are 99 ago, where two to four units were selling in the 98% range and you could get the best discount. But now we're starting to see a lot more confidence coming back into the marketplace where we see the final sale price to list ratios going higher. Anything that is above 100% means that it's sold for above asking price. Anything that is above 100% means that it's sold for above asking price, and we have trends that we're trending back towards 100%. Okay, this is all very good news and a very good time to be an owner and a potential seller in the market, or to be buying right, because everybody else is buying. So it's interesting there's more people buying out there than you think, right, even though we're at the lowest amount of buyers that we've ever seen. Again, what would be red flags? Red flags is if we see sale to list ratios tanking and they get into the mid-90s. That would be an issue I would be very fearful, but I'm not. I'm very optimistic about where we're heading on price and it's a good time to be an owner of real estate.

Jason Wagner:

What about switching over to the multifamily space? So now we're talking about the asking rents versus the annual rent growth and Chicago and I put a trend back to 2017 on this one and you'll see, historically Chicago has never really had big price movements on rent. It's always just been between 1% and 2%. I mean nothing sexy whatsoever. And then, when COVID hit, we actually saw rents decline overall everywhere, down 1%. But then the slow, the spread that was only supposed to last two weeks. Well, everybody started coming back to the city and hey, I actually still have to work and they figured out their stuff. The market came roaring back. We saw some of the best rent growth that we had ever seen, up at almost 8%, and we still see rents going higher. But now we're trending backward, back towards about that 2% range that we've always historically been. Right now we're at 2.4%.

Jason Wagner:

The asking rents right now are about $1,778. Prior to COVID they were about $1,500. So that is a pretty sizable gain. If I were to hold up my calculator real quick just to see what that is, so back in the third quarter of 2019, so I'm going to do $1,778 divided by $1,502 minus one times 100. This is an 18% growth that we've seen since the third quarter of 2019. That is pretty dramatic in terms of rent growth and I don't see reasons for it to for rents to decline right or come back down. I think that we're probably going to be steady at this, between one to 2% growth for the foreseeable future, and I've actually also seen reports of potentially seeing another big rent surge. That happens Just not a lot of new rentals coming to the marketplace and interesting seeing some reports of there's a lot more. The jobs that are coming to Chicago are actually a lot higher paying. So we're getting a nice mix of new workforce, wealthier workforce, right, sort of say. So interesting things that are going to be happening with the rental market.

Jason Wagner:

The next slide here is comparing the asking rents versus the vacancy rates. The vacancy rates is how much is a percentage of the month? Are you vacant? This is about 5.4% of the year. Are you vacant About 5.4%. So if you were to take all right 52 weeks in a year, times 0.054 basically says that you're vacant for about two, almost three weeks in the year. Right, that is what we're saying.

Jason Wagner:

And if you were to consider, like, think of yourself as being a landlord right now. It takes okay, a tenant moves out, I have to repair the unit, paint the unit, clean the unit and then have the next tenant move in. That might be two weeks. It might be two weeks for that to happen. Now, if you're really good, like I have kind of stated, here's how exactly we do our tenant turnover is that we can do it literally in the same day. Tenant moves out by 10 am on the 31st. Painters get there at 10 am. They paint all through the night, all through the afternoon and through the night. The cleaner comes before 8 am and cleans the whole unit. The tenant moves in by 10 o'clock noon that next day, and if the tenant notices anything that needs to be fixed maybe the blinds aren't cracked or doorknob is loose, whatever okay, we'll fix it over the week that they are moving in, and so that's kind of our turnover process.

Jason Wagner:

And so what does that essentially mean? That means we have zero vacancy, but the overall general trend here is that we are at low vacancy, about 5.4%, historically speaking. I like to show the history where we normally are between 7% and 8%, and so right now we have very low vacancy rates because there's not a lot of apartments. I don't know if we'll ever get like less than I don't know if it's possible to get less than two weeks, like if you just were to think again, like the unit has to turn over. I really don't know if it's possible to get less than two weeks unless you literally have no inventory and then nobody's moving and everything is all taken, like I just don't really think it's possible. But we do, things have happened. So, anyways, that's the thought process behind asking rents and vacancy. I will continue to say that I think rents are going to continue to rise at a very slower rate, but in Chicago they will probably continue to rise.

Jason Wagner:

So good time to be a landlord. Also good time to start considering buying a home. If you're renting right now, right, that's another thing. If you know, you've seen it as a renter right now, you have probably seen it. You've seen your rent raise so much and maybe you got lucky with your current landlord. But then maybe your landlord goes to sell their building. You're like, oh shit, my day of reckoning is coming. I have to go move because there's no chance that I'm going to be able to ride out this sweet low rent. Typically, that's what happens when they sell the building. The new person coming in is likely going to raise the rent to the market rate or do something with the building. They bought it for a reason and you're going to have to go look at the market and see what's available and it's going to be very, very hard to replicate whatever your current rent was and find that available. Right, we have this low inventory thing. That's happening. Okay, it's even happening on the rental side, all right.

Jason Wagner:

This next slide is looking at sale price per unit versus market cap rate. This is getting into more of the advanced stuff. This is more like for the commercial people and we just look at overall cap rates. Okay, a cap rate is what is the net operating income over the purchase price of a property. We value investment properties based off of how much income the property is generating. The more income the property is generating, the more it's worth. The less income the property is generating, the less it's worth.

Jason Wagner:

If you guys have heard of anything that's kind of going on in downtown think of downtown skyscrapers We've had a lot of office vacancy. We have some of the highest office vacancy that we've ever seen, and it's because work from home thing right, what I was talking about before, work from home thing. And then if you've seen that some of these people that are actually trading those buildings, selling those buildings it's like for fractions of what they were previously worth. And why is that? Because they have massive vacancy and so they're collecting a lot less rent. And when you collect a lot less rent, your building is worth a lot less, and so that's why you can actually have buildings that actually trade for half of what they were previously worth. And so here's also another relationship that you should know Again, just kind of like basics of commercial 101 here is that when interest rates rise, that means that people cannot pay as much for that property as they previously did.

Jason Wagner:

When interest rates rise, the cost of capital is a lot more expensive, and so if they're trying to search for a certain amount of income and a certain amount of return, they can't pay as much for it as what they previously could, when rates were in the threes or fours. So this is the hard part about the commercial market, and there is a big problem happening with commercial right now. A huge problem, a huge problem that could actually have a big snowball effect into the overall real estate market. A very big problem. So could this be the black swan? Maybe, and here's where I kind of see this potentially playing out. Here is that if you've got downtown buildings that were once worth 200 million, for example, and now they're only worth 100 million or less, you just wiped out a ton of property taxes. Well, the city still has a budget and the city still has to fund that budget, and the city was counting on a 200 value property, but now they are only going to get a hundred of those property taxes, a value based off a hundred thousand. That money has to come from somewhere and it is very likely that that money has to come from somewhere and it is very likely that that money is going to trickle into the residential side of things and that the residents of Chicago are going to have to pick up the bill for the lack of downtown occupancy. So it's a huge, huge thing. It needs to get fixed and I don't know what's going to cause it to get fixed. So that's the big fallout of commercial right now is that you just you don't have a lot of things in their favor. You don't have people that are just rushing to get into these office buildings because the whole work environment has really changed. But I will, I will share this.

Jason Wagner:

Going back to the multifamily front, getting a little bit more optimistic, we look at things for a price per unit sale. Okay, so how many units in the building? What was the final purchase price? Divide the purchase price by the amount of units that are in the building and a price per unit is kind of a trend that you just kind of watch. Okay, so what this slide is showing you is that, as of most recent, about $210,000 per unit is what they're paying. Now, again, this is overall Chicago. This seems extremely expensive, right, extremely expensive. But this is kind of taking into properties that are downtown, through properties that are up in the Northwest side to all over the place, right. So, anyways, $210,000 is the price per unit. That is actually higher than what it was at its lowest point, which was right around $200,000. So it actually has bounced higher in the last two to three quarters so far. So that's good. And we're actually starting to see cap rates stabilize at about 6.8% as of now. That's good as well. So is there a little bit of optimism that might be coming back to the multifamily market? I could kind of see it here, because we're starting to see people paying a little bit more and we're starting to see cap rates starting to maybe potentially level out. Now we got to give it a little bit more time here before I start making some serious calls, but as of right now, we potentially could be flattening to maybe getting our prices to come back a little bit more. So interesting stuff happening on that front.

Jason Wagner:

And then I go into the top 10. Wait, where are the best places to be a homeowner buyer in this market right now? So in my report, guys, I look at all 77 neighborhoods and I rank them based off of condo single family home and two to four unit what their median sale price is. But I rank them based off of their growth rates, their year over year growth rates, and these are the top 10 North side areas that have been seeing the strongest growth. Now I'm going to stick with single family homes to start with. So we're talking the near West side. This is kind of like the West loop area. Yeah, a lot of the West Loop. $725,000 up 20% year over year. Single family homes. Edgewater is the next one. Okay, median sale price almost $1.1 million up 19% from prior year. Okay, lincoln Square holy smokes, man. 1.1 million up 17% year over year. Lincoln Square is a hot, hot neighborhood for single-family homes man, just a hot neighborhood. Forest Glen 586, up 15%. Okay, that's on the farther north side, uptown 1.2 million up 14%. Okay, those are some top single-family home neighborhoods On the 2-4 unit front.

Jason Wagner:

East Garfield Park Look at that, man. East Garfield Park at $376,000, up 28% year over year. There's a lot of development that's kind of going on on that west side there. East Garfield Park is one of them. Home of the conservatory yeah, just a lot of great stuff side there. East Garfield Park is one of them. Home of the conservatory, yeah, just a lot of great stuff happening there. And 376, boy up 28%. That's a strong number, really strong number. Irving Park 593, median sale price for a two to four unit up 19%. North Lawndale 315,000, up 17%. Jefferson Park here's my hometown, or not really hometown, but here's my jam. That's where I got a property at. Jefferson Park $515,000, up 14%. And Lincoln Square $775,000, up 14%.

Jason Wagner:

How about the condos? Do we care about the condos as much? Let's check these out. I mean, they're lower-priced condos. These are kind of like very affordable condos that are seen Interesting point right, okay, people that are going to be, they want to get into home ownership and they're going to be buying condos because a condo is smaller space but it's going to be more affordable.

Jason Wagner:

But there are condos that are outside of the loop area, obviously, or outside of the hot neighborhoods that you can buy, and this is Mount Claire. That's like far West, kind of like just West of Belmont. Cragen, mount Claire $238,000 up 36%. North park $250,000 for a condo there up 28%. Albany park two 72 up 21%. Orange park up 16% $186,000. You can get a condo in porch park for $186,000. And then in the loop. The median sale price is 395. And the loop is actually up 14%. Interesting, I do go a little bit further.

Jason Wagner:

Let's see if there's any outliers that's worth talking about here. You know, here's an interesting one. Lincoln Park is number 10. Okay, I like to bring this on up because Lincoln Park is one of the most expensive neighborhoods in Chicago. The median sale price of a condo in Lincoln Park is 525. That is up 12%. That is big. Okay, and I want to point that out because if you were to think about stable, the most stable neighborhood in all of Chicago, it is Lincoln Park. Going back to the procession of all the neighborhoods, every neighborhood really declined but Lincoln Park was the one that stayed strongest for longest and it continues to be the shining city on the hill, the neighborhood everybody wants to go to. Lincoln Park. That one is a great area to be investing in. I do like it.

Jason Wagner:

Just buying anything in Lincoln Park, I think will be a good. Yeah, I don't think you can go wrong. Honestly, really don't Anything else really to point out here. Oh well, we can talk about Lincoln Park single-family homes, where it's almost it's 1.9 million to buy a single-family home in Lincoln Park and that's up 9%, right? Holy smokes. Up 9%, could you imagine? I mean I need to put this in absolute dollars 1, 9, 10. And if I were to say let's just assume it appreciates another 9% next year, I mean, is that possible? But let's just do that, right, I'm just going to do the math so you can really see in absolute dollars what does that equal? 172 grand, damn right, 172 grand. If 1.9 million increases, another 9% next year could be 172 grand, damn Right. Interesting stuff.

Jason Wagner:

And this is why I love creating this report, so that you can take a look at some of these neighborhoods and be like what numbers are starting to pop off and why is it doing that? And should I be looking there? Should I be looking there Now? All of a sudden I might be opening up my phone and be like boy man. It's always been my dream to own a single family home in Lincoln Park and then I realized like never, I just can't, can't afford it, okay, but maybe one day, right, maybe one day. Or maybe I'm going to find an opportunity of how is it possible for me to buy a condo in Lincoln Park, because I think that might be a really good play. So interesting type of stuff here.

Jason Wagner:

This is why I do this, so that you, as the reader, there's value in this. However you want to take it, you can have 100 people look at this report and maybe 90 of them say like, okay, whatever Jason says, that's what I'm going to listen to. But then you're going to have these other people that are going to be like, no, look at all these other ones that I could be going after and, like you know, here's opportunity, right, and this is why it's so, so valuable and why I love to. Just you know, I do it for free and I just give the information out there because it's kind of fun to think about. And then if you actually go out and take the action, you actually go out and buy a property or you actually say, hey, I own a place in Lincoln Park. Shit, my home is worth that much, it's grown that much. What's the real value of my home? You actually start to put these action items into play. That's where knowledge is power, right, that's where some real knowledge is power.

Jason Wagner:

The bottom five Northside neighborhoods don't buy a condo in Belmont Craig and apparently it's down 15% $167,000. Avondale is actually down down 7% $335,000 is your average Interesting Lincoln Square down 6% $319,000 for a condo in Lincoln Square. You know where we just said Lincoln Square single family homes is up really dramatically, but it's the condos just not quite holding up. Now, as I start to think about this out loud, what could be driving that it could be just the condo stock is that there are a lot of older condos that are in Lincoln Square, these 1920 build properties, not necessarily a ton of newer ones. You know, that could be the thing you could say that what also drives property values. If you think about I bet you for some reason, logan Square was not here.

Jason Wagner:

I was wondering that if you saw Logan Square, where you've got a lot of from the hipsters, you put them the younger crowd right, a lot of the booming neighborhoods right. That's where people want to be, the younger crowd, the younger, young professionals. Okay, young professionals are boosting values in Logan Square because that's just where you go. As you kind of move your way northwest, you kind of get into more family oriented neighborhoods and are there a lot more families moving into condos in Lincoln Square or would they rather be buying something else? Right? So it's, you know, you just kind of like you try to come up with some scenarios. You're never really going to know what's driving at all, but you can come up with some type of hypothesis and you know, and you just watch the the trend and you just watch the trend and then you figure out, hey, is this trend stable or is there something changing? Right, if we really wanted to know, we could kind of dive into Lincoln square and we can look at where the months of supply is and like, and really start to like analyze that. That's what I would be doing, right? And so, believe it or not, I take these things a step further and I post what the month's supply trend is in Lincoln Square and we have that data and I have all of these neighborhood reports, literally for every single one. So you want data, come talk to me and I'll definitely give you a ton of it. But anyways, no, this is fun stuff, right? This is really really fun stuff. I do this on the top 10 on the south side as well.

Jason Wagner:

I'm just going to read off a few of these Single family homes in Englewood up 101% at $139,000. You know, some of these are just like there's not a lot of transactions that happen. That could be the case. Well, I guess the yeah. Well, I guess it wasn't that long ago where the average single family home in Englewood was like $60,000, right, and so now it's at $139,000. Very interesting, right, even low inventory in Englewood. But I think relatively speaking there's probably the most months of supply there.

Jason Wagner:

But we do just have to look at that. I don't want to be saying things that aren't true, but I do just have to look at that. And no, it's just that you start looking at some of these neighborhoods single-family homes All right. Inglewood 139, up 101%. Crazy Holman 215, up 34%. New City 260, up 30%. Lower West Side 390, up 22%. East Side 225, up 17%. All right, let's move on to do the two to four units Clearing 475 up 20%. Roseland 250 up 19%. West Anglewood 215 up 16%. Lower Westside 500,000 up 12%. Gage Park 307,000 up 12%. And on the condo front, west Lawn is up a hundred percent of 122,000. Mount Greenwood 150 up 29. Washington Park 184 up 27%. Woodlawn 235 up 16%. Kenwood 238 up 8%. I do go further into the total top 10 here on the South side, the ones that are not doing so hot, let's look at Woodlawn single family homes now 250.

Jason Wagner:

You know Woodlawn was one of those last year. I was talking about shit. It was actually. It was like this boom thing that was going on. Now I don't spend a lot of time in Woodlawn. I physically have not seen, I haven't walked the neighborhood a lot, okay.

Jason Wagner:

And so is saying $250,000 for the average single family home. It's down 51%. Just understand what could be driving. That is that you could have a mix of like there were newer construction homes that were really driving that price higher, and you know you saw really big growth last year and now there may not be as many newer construction homes that are happening. And now you have a lot of like as many newer construction homes that are happening and now you have a lot of like traditional, just resale properties that are selling, that are pulling the price back down, right. So you have to think about areas like that and understand the dynamic a little bit. And so when you see big numbers like what's going on there, right, just take it with a grain of salt Single family homes in Bridgeport down 20%. That's interesting, interesting to see that, right, and like again like you start thinking why, why could this be? Why could some of these properties be declining as much as they are.

Jason Wagner:

And it's like Jason, you're telling me that the overall real estate market is doing well, but you're actually saying that some of these particular neighborhoods are not doing hot. Well, remember, everything is local. At the end of the day, everything is local and in Chicago we are block to block and we have to understand the local neighborhood trends in order to feel very confident Because you could be buying overall. In general, you could be buying, buying anywhere could be a great idea, unless you're buying these areas right, right, unless you buy in these, these areas that are not doing so hot, right. And what drives some of that, some of that? Well, it could be crime. We could have a big issue with crime and you know, things just not being as desirable where people want to live, right, remember that people get driven out of areas because they don't feel safe. That is a thing, all right.

Jason Wagner:

And then finally, we kind of get into the top Chicago rental neighborhoods. So this is kind of fun. I actually we take this data from Rentometer and I've been collecting it for over a year now, and what's really great is that you can't really get this data anywhere else and you have to manually collect it and literally, guys, I've manually collect this data for all 77 neighborhoods and we've recorded it for the last 12 months or about, and I give you these growth rates and it's not easy to come across the data and so, anyways, on a very localized level, I was showing you rent trends of the overall Chicago market. But to get it in a neighborhood perspective, this is where we start to get whoa boy, we got some real power here. And especially if you are a commercial investor right, multifamily investor person looking for a two to four unit, where can I find the best rent growth? And where are those neighborhoods? Well, I'm going to give them to you right now.

Jason Wagner:

On the north side of Chicago, norwood Park is the top number one where the average rent is $1,752. And that is a 22% growth rate since April of 2023. I couldn't actually get this to be a year over year thing, so you just have to bear with me on this because, again, there might've been a month that I missed it, but I have as of April of 2023. And I actually haven't. I haven't run it because we're still really early in the month, so these are as of last month numbers. But anyways, long story short, those details don't matter. What matters is that you have Norwood Park up 22%. Belmont-craigan the average rent there is $16.22. And I like to do a little dance whenever I see this, because I bought a building with a partner of mine and we have seen that rent growth in Belmont-Craigan up 21.6%. Edgewater average rent 21.77, 18 percent growth.

Jason Wagner:

West Garfield Park 13.61, up nearly 18 percent. Albany Park 17.27, up 15 percent. Humboldt Park seeing some nice growth up 15 percent. East Garfield up 15 percent. Irving Park up 14 percent. Jefferson Park up 14 percent. Logan Square 14%. Logan Square up 13%. Moving to the south side, brighton Park up 20%. Pretty low rent there in Brighton Park $1,300. Archer Heights $1,432, up 16%. New City up 15%. Woodlawn up 13%. West Palm up 13%. Englewood up 13%. Chicago Lawn up 12%. Auburn, gresham up 12%. Washington Park up 12. And Clearing up 11. So the best rent growth areas and guys, that's the report. Holy shit, was that a lot of information? This was an hour and 20 minutes talking about real estate and hopefully this was helpful for you.

Jason Wagner:

Long story short. I'm extremely optimistic about where the market's going. I think we have a bottoming period of buyers. I think that we're going to see buyers really enter the market if we have any slight indication that rates are going to come down in a more dramatic fashion where it could be Fed rate reduction, and I'm very, very optimistic about where things are going, purely because we have the golden handcuffs that majority of sellers still have, in which they don't want to sell their properties. So when we have a low inventory environment and we have more of an incentive that buyers are going to come into the market, okay, prices are going to go higher.

Jason Wagner:

Here is where I actually have an issue on the political side of you know, the only way to fix this inventory problem is to build, and we need politicians that are actually going to incentivize more building, because you know some of these politicians Bobby Kennedy is one of Biden, I believe. You know they're just talking about let's give buyers more incentive to buy homes, because they can't do it with high interest rates right now, and so Bobby Kennedy was one of those guys that said I'm going to make a 3% mortgage rate. Well, that's great, but that's going to cause more buyers to come into the marketplace. I'm pretty sure Biden said that he was going to give a tax incentive or some type of credit that was going to help buyers afford buying homes, okay, great, but that is not going to help the inventory problem. The root cause of all of our issues and a lot of what's driving inflation is housing and it's the inventory problem.

Jason Wagner:

If we were to flood the market with a ton of more new construction inventory and how do we do that? We need to give builders a lot of incentive. We need to cut the red tape, we need to make it easy to build. Then you'll have prices level out. That is natural. That's a natural economic cycle. That needs to happen and for some reason, we're just not doing it. So that's my two cents. That's the latest on the market. Thank you for listening. If you found any value in the show, please, please, share it and we'll catch you on the next episode.