Blackstone Group, an alternative-asset manager, has recently started buying up distressed properties in Chicagoland real estate market after private-equity and hedge-fund firms sent property values up enormously in hard-hit markets, according to Businessweek.
Taking advantage of fallen real estate prices, along with demand for rentals among Americans who lost their homes to foreclosure, many institutional investors, led by Blackstone’s Invitation Homes and American Homes 4 Rent, are purchasing these distressed properties all over the U.S. As many as 200,000 have been bought up in the last two years.
With the onset of low mortgage rates and a growing economy, Chicago, the third largest U.S. city, is joining the housing comeback. In the Windy City, home prices jumped up to 11 percent last November compared to November of 2012, which was the largest increase in almost 15 years.
Chicago is falling just behind major cities in the S&P/Case-Shiller index, including Phoenix, Las Vegas, Atlanta, Los Angeles, San Francisco, Minneapolis, Miami, and even Detroit, which, on a side note, is now experiencing the largest municipal bankruptcy in American history.
High unemployment and an overhang of foreclosed homes have helped contribute to Chicago lagging behind the housing recovery, Brad Hunter, chief economist, Metrostudy, told Businessweek.
But on the bright side, more and more city dwellers are landing jobs, making them more likely to purchase properties. Chicago’s jobless rate has gone down quite a bit in the past the four years from 11.9 percent in 2010 to 8.3 percent this past December.
Homes in Chicagoland are selling more quickly, and the rate increased 8 percent in December 2012 from the previous year. The median sale price of homes also grew, and it is now up to 18 percent at $177,0000. Within the city limits, sales rose 12.5 percent from the previous year, and prices climbed up to $210,000.
With these major companies buying up distressed properties, Chicago can continue to be on the mend. American Homes 4 Rent, the largest single-family rental company after Blackstone, owns 1,443 homes in the Chicago region, valued at $211 million.
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