The performance of the Chicago real estate market in 2016 will be driven by baby boomers and millennials. That’s according to Chicagobusiness.com, which recently took a comprehensive look at the roles the nation’s two largest adult population groups will play this year.
As Chicagobusiness.com points out, millennials and baby boomers are critical for Chicago real estate because they represent the “supply” and “demand” for housing. Boomers are the supply, of course. As that generation ages, many will opt put their long-time homes on the market.
Millennials represent the demand. Last year, millennials—the oldest of which are now in their early 30s—took out 41 percent of residential mortgages in Chicago, Chicagobusiness.com reports. That was well above the national average of 35 percent.
Observers point out Chicago has a high number of millennials because of the tech companies in the city, and these folks are increasingly looking to buy homes because of growing families, increased income and the high cost of renting. The key will be getting boomers to make their homes available for purchase, which the article notes may not be such an easy task.
Getting boomers to sell could be an issue because of a number of factors, but the biggest could be the slow recovery of home values. The article notes because of this, “they don’t stand to reap a big enough windfall to bankroll the retirement house they’ve dreamed of.”
Another issue is many boomer-owned homes are in the suburbs, but millennials generally prefer to live in revitalized urban areas where they are close to employment, transportation and entertainment. Will this “disconnect,” as the article calls it, pose a major problem for the Chicago housing market? Only time will tell, but it is a critical issue worthy of monitoring this year and beyond.