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Families fuel Chicago's downtown

Like so many large U.S. cities, Chicago is sorely lacking in homes for sale; unlike other cities, its downtown is still relatively affordable. That has families waiting longer before moving out to the suburbs.

"We are seeing a trend of families that are staying in the city and are seeking larger units," said Colin Hebson, a real estate agent with Dream Town Realty in Chicago.

Chicago skyline.
Henryk Sadura | Getty Images
Chicago skyline.

Hebson points to new buildings downtown that have mostly three- and four-bedroom units.

"This is a complete 360 shift in the way developers used to design their buildings," he added, noting that new home construction in the Chicago suburbs is still weak.

The city of Chicago saw sales rise 10 percent in May from a year ago, according to the Chicago Association of Realtors. The median price of a Chicago home sold in May was $287,500, up 6.8 percent from May 2014.

"Chicago has seen homebuyers enter the market with vigor since February," said Hugh Rider, president of the Chicago Association of Realtors and co-president of Realty & Mortgage Co. "The increase in median prices and the relative lack of inventory compared to a year ago show consumers are comfortable with buying in the city and they believe the investment is worth paying a bit more."

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While just above the national median price, Chicago is much more affordable than cities like New York, Washington, D.C., or Seattle. With many tech companies like Google and Yahoo opening or expanding offices in the city, it is becoming much more attractive to young millennials.

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"For a major city, we lag far behind New York and LA and San Fran in pricing and cost of living. We are finding that buyers that are moving from these cities find Chicago a bargain and are willing to pay up for high design and luxury product," added Hebson.