The U.S. Stock Market has been experiencing increased volatility with the ongoing “trade war” concerns. It seems that the future upside of equities is somewhat limited and the likelihood of a correction (or certainly a pause) in the decade plus, bull-run, seems to be getting larger by the day. Savvy investors are re-balancing their portfolios. Recently, Jeffries Financial Group advised their clients to sell equities and increase their Real Estate investment holdings.
Real Estate sales are slightly slower in August, as the last of the summer vacations come to a close. With interest rates down to historic lows – we are seeing FHA rates as low as 3.5%, Investor rates (25% down) are hovering around 4.875% – more than ever, savvy investors are locking in as much “cheap debt” as they can.
Much has been noted of people leaving Illinois, but we have seen a marked economic demographic shift in Chicago, as well as many exciting real estate developments. Downtown Chicago and The Glen are two out of the ten areas, nationally, with the largest influx of people earning over $200,000/year. Chicago ranks as the most historically undervalued global metropolis, in comparison to cities like New York, London and Hong Kong. Currently, Chicago has about 50 cranes building high-rise developments around the city; the most new construction developments out of any U.S. city.
Many tech companies are also increasing their Midwestern presence, and Chicago now has the 3rd highest IT growth in the country. As tech steers our future, this is just one of the many positive metrics for the city.
Whilst the Chicago condo inventory is increasing, and the single family home sales around Illinois slowing—inventories are actually now more balanced. Previously inventories couldn’t satisfy consumer demand.
The Chicago multi-unit market remains strong, with continuous and stable price appreciation. This is especially true among the “top in breed” type buildings (new construction or full gut rehabbed buildings) in pockets of the city with high demand, like Pilsen or East Humbolt Park.
Smart money is still looking for positive cash flow producing buildings, especially with the lack of viable, stable investing alternatives. We are seeing strong Cap Rates around 8% with the right type of buildings, in conjunction with historically cheap interest rates, yielding double-digit, cash on cash returns for investors. Many of the best buildings (new construction/full get rehabs) are being pre-sold months out in advance.
If you’re reading this you likely know the potential real estate has to build long-term financial freedom. The new “off-market show” podcast features analysis of some of the “best in breed” type of off-market investment buildings: https://m.facebook.com/offmarketshow/ As always the Dunning Team is here to help with all your residential and investment needs – we’d love to answer any questions you might have. To end with a quote from one of our favorite Chicagoans, Marshall Field, “Acquiring real estate is not only the best way, the quickest way, the safest way, but the only way to become truly wealthy.”
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