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At Cross Street, we pride ourselves on being a true partner throughout every step of the real estate journey. By staying ahead of Chicago sales market trends, we’re able to deliver thoughtful, data-informed guidance tailored to each client’s goals.
As we navigate Q2 2025, record-low inventory and strong prices are affecting the Chicago sales market. High interest rates and challenges for builders continue to play a role.
We look at Q2 trends with insights from Senior Broker Charlie Cohen. He shares what is driving the market, what’s shifting, and what it all means for buyers, sellers, and investors. Here’s what you need to know.
While cities like Austin and Phoenix are working through excess inventory from the last building boom, Chicago is still dealing with the opposite problem: not enough housing.
This isn’t a short-term blip. Chicago hasn’t added meaningful inventory since the mid-2000s, and new development continues to be slow and expensive.
A balanced housing market typically has four to five months of available inventory, something Chicago has generally maintained since the post-2008 recovery. Today, however, many submarkets across the city are seeing less than two months of supply, falling well short of that balance.
+ Sellers hold the advantage, especially if they’re listing well-maintained, updated homes.
+ Buyers are facing tight competition, limited options, and fast-moving timelines.
+ Entry-level and mid-tier price points are feeling the most pressure. Most single family homes and large condos under $1.2M have multiple offers.
We’re often asked when things will “cool off.” Our answer is: not until we see a significant increase in supply or a large drop in demand in the marketplace. Neither is on the immediate horizon.
One of the biggest contributors to low inventory is what we call the golden handcuffs effect. Nearly three-quarters of U.S. homeowners are sitting on mortgage rates under 5%. With current rates hovering near 7%, very few are willing to trade in a low monthly payment. They are not willing to pay for something dramatically more expensive, even if their current home no longer suits their needs.
We’re seeing this across Chicago, particularly in higher priced north, northwest and near west side neighborhoods. Homeowners who would traditionally be move-up buyers are staying put, remodeling, or waiting out the rate environment.
+ Fewer new listings are coming to market than we’d typically expect.
+ Move-up buyers find themselves stuck in limbo, freezing the natural housing cycle.
+ Buyers entering the market for the first time are competing for the same homes, causing bidding wars which drive up prices.
For buyers, this underscores the importance of being prepared. Getting creative with financing, having a flexible mindset, and working with a plugged-in broker can make all the difference.
Since early 2020, residential construction costs in Chicago have climbed nearly 40%. That’s not just lumber and drywall, but diminishing workforce numbers in the trades have driven up labor costs. While some supply chain challenges have eased, labor costs have remained high, and skilled trades are in short supply.
As a result, we’re seeing far fewer new single-family homes and condos being delivered. When they are built, they’re typically targeting the top end of the market, where the margins justify the cost.
+ A slowdown in new construction across most Chicago neighborhoods.
+ A preference for luxury multi-family developments and Class A rentals over for-sale housing.
+ Fewer entry-level options for buyers and minimal relief on inventory.
This puts even more pressure on the resale market and pushes prices higher. Buyers hoping for brand-new options at moderate price points may need to reconsider location, property type, or their renovation appetite.
After the Fed began raising interest rates in 2022, many expected home prices to come down. In Chicago, that simply didn’t happen.
Prices held steady through the second half of 2023, and in many neighborhoods, they’ve started climbing again. Homes that are well-located and well-presented are still seeing multiple offers, especially under $1M. In some pockets, we’ve even seen buyers go $50K–$100K over asking to secure the right home.
Using data from InfoSparks, we reviewed the trailing 12 months and compared it to previous years. By examining year-over-year changes in median sales price, inventory levels, market time, and the percentage of list price received, we identified Chicago’s top performing markets:
+ West Town
+ Logan Square and Bucktown
+ Andersonville and Edgewater
+ Lakeview and Lincoln Park
In short: Chicago remains a market where demand outpaces supply. And while high interest rates are reducing buying power, they’re not dragging down pricing (at least not in the city’s most competitive zip codes).
In today’s climate, strategy matters more than ever. Gone are the days when a “gut feel” or Zillow scroll could replace market intelligence. We’re helping our clients succeed by leaning into real-time data and hyperlocal insight.
We’re tracking:
+ Months of inventory in every submarket
+ List-to-sale ratios and average days on market
+ Pending-to-active ratios, which indicate buyer urgency
+ Median sales price on 20 year horizons
+ Construction issues, including scope of permits
We also analyze broader trends, like:
+ Year-over-year pricing shifts by neighborhood
+ Mortgage application volumes
+ Investment flows into multifamily and rental properties
Our analysis of market data helps us price listings with precision, guide buyers toward the right offer strategy, and advise investors on emerging opportunities. It’s also how we make sure our clients are moving confidently, even in uncertain conditions.
As we look toward the rest of 2025, we expect:
+ Continued low inventory levels, particularly under $1.5M
+ Steady or slightly rising home prices, especially in central neighborhoods
+ Persistent affordability challenges for first-time buyers
+ Strategic opportunities for sellers and investors who understand the market’s nuances
We also anticipate more movement if mortgage rates begin to ease, even slightly. A dip to the mid-6% range could release some pent-up demand and bring more sellers off the sidelines.
At Cross Street, we believe every buyer and seller deserves clarity and confidence. Whether you’re buying your first condo, listing a two-flat in Lincoln Square, or looking to invest in Chicago real estate, our team is here to guide you with the insight, strategy, and partnership that defines everything we do.
Let’s talk about how to make the market work for you.
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