Recently, we reported that the south suburban Chicago real estate market is on the mend. Home prices are rising, and investors are purchasing, rehabbing and flipping homes in several south Chicago neighborhoods.
Yet, how exactly do investors cause home prices to rise?
Investors are different from standard buyers in two ways. First of all, they can pay cash for properties and they often buy in bulk. These two factors are the number one reason for the current rising home prices and diminishing housing inventory.
These savvy investors are also lending funds to regional home builders, since investors often have an easier time obtaining loans than the rest of the population. Today’s investors are planning to rehab and rent out their purchased homes for five to seven years. When the housing market is stronger, these investors will put the homes back on the market.
Currently, homes in the Chicago Lawn, West Lawn, Near West Side, East Garfield Park and Auburn Gresham neighborhoods are experiencing some the largest price increases. Home prices in the Chicago Lawn and West Lawn suburbs have increased by 58 percent since summer 2012!
While the rise of investors has certainly helped boost the local and national real estate market, it is still important for standard buyers to purchase new homes. Strict lending standards are the number one obstacle facing homeowners, as banks are cautious about granting mortgage approvals.