“What is it with people from Chicago that they're so happy to have been born there?” Jed Bartlet famously quipped during the second season of the West Wing. “I meet so many people who can't wait to tell me they're from Chicago, and when I meet them, they're living anywhere but Chicago.” The episode, which first aired in the early aughts, may have been onto something: Everybody loves Chicago, but like other big urban centers, the Windy City has seen its population dwindle in recent years – a trend that picked up steam during the pandemic.
How has this population shift impacted the region? And how has it affected local real estate prices? We dove into the data to find out.
A Midwestern Reshuffling
Illinois has seen significant out-migration over the past several years, with many former residents heading elsewhere for job opportunities or a lifestyle change. According to census data, some 141,500 residents moved away from the Prairie State between 2010 and 2020 – and moving companies estimate Illinois to have been the most popular state to move away from in both 2021 and 2022.
Cook County in particular, home to Chicago and still the second-most populous county in the United States, bore much of the brunt of this exodus. But foot traffic data shows that the Illinois outflow was matched by positive net domestic migration to many other Midwestern states. Neighboring Indiana, in particular, experienced a population increase of 1.0% over the past three years as a result of domestic relocation. And while people moving to Cook County hailed from a variety of places, nine out 10 of the top destination counties for people leaving the area were in the Midwest.
Cook County Housing Costs Decline
To explore the impact these shifts had on local home prices, we layered Cook County’s population-change foot traffic metrics with data on housing market trends, using Zillow’s real estate indices.
Perhaps unsurprisingly, the Windy City’s population decline appears to have had a significant impact on the local real estate market. In early 2018, the cost of the typical Cook County home was just about on par with the cost of the typical home nationwide. But as the county’s population waned, there emerged a widening gap between area and nationwide housing costs, reaching 18.2% in Q4 2022.
Area rental rates followed a similar pattern. In early 2018, it cost about 11% more to rent a home in Cook County than in the U.S. overall. But the local rental market began to slow over the pandemic, with rental prices falling below the national baseline in Q4 2021.
Sweet Home Chicago: New Opportunities
A slowing real estate market can spark concern – but it can also serve as a kickstarter for urban renewal. More affordable housing creates opportunities for younger and more diverse communities that may be priced out of more expensive markets. And as housing prices cool off, more people can start moving back in.
Despite the Cook County outflow, several neighborhoods in the Windy city have experienced a population renaissance in recent years. And as the graph below shows, many of the Chicago zip codes that drew high levels of inbound migration over the past 12 months boast a median age that is significantly lower than the Cook County average. Bustling areas like The Loop, hailed as the fastest-growing downtown area in the nation, have become magnets for young professionals and others who crave the convenience of downtown living. And while housing prices in some of these neighborhoods remain high, a slower market means that more people can actually afford to live there.
Urban population shifts present myriad challenges for civic decision-makers and business stakeholders alike. When large numbers of people relocate, the ripple effects impact everything from housing prices to retail preferences. But even when people leave major cities, the outflow also creates new opportunities – both for smaller regional markets and even for the cities themselves.
How will Cook County continue to fare in today’s post-pandemic new normal? What lies ahead for the Windy City?
Follow Placer.ai’s data-driven migration insights to find out.