Housing prices in Chicago have risen rapidly during the last decade, but they have not risen evenly. While prices on average have climbed considerably in the city as a whole, some neighborhoods have been much hotter than others.

How does one determine which neighborhoods are "hot?"

Well, that of course depends on how you define the term. For real estate types, a neighborhood is often considered hot in the earliest stages of rehabbing and development, especially if it's somewhat run-down, with bargain prices and big potential for appreciation. That's the outlook of the professionals, though, who see communities in terms of dollar signs. Home buyers are certainly concerned with investment value, but if they plan to live in a neighborhood for five or ten or twenty years, it's not the only or even the biggest concern.

Our list of "hot neighborhoods," admittedly a subjective one, factors in appreciation, but also takes other considerations into account - safety, services, convenience, amenities - home buyers' typical concerns. Certain popular neighborhoods, such as Lakeview and Lincoln Park, have not been included despite high marks for livability. Prices in these areas simply are already too high for the neighborhoods to be considered hot.

The neighborhoods we have selected are not necessarily places where buyers will get rich by investing in real estate, but these areas do show the promise of above-average appreciation for years to come. They also meet certain minimum standards for livability. Some neighborhoods not on the list may well be "hotter" in terms of investment value, but if they did not have a certain level of safety or services we did not include them.

Perusing our list of hot neighborhoods is not a bad way to begin the search for a home, but the bottom line in selecting a location should be the most common sense criterion: does it seem like somewhere you'd like to live? If a neighborhood passes that test, odds are you're making a good decision. These days, almost any neighborhood in the city seems like a safe bet.

Loop
New East Side
Median condo: $260,000

In addition to the Loop proper, bounded by the elevated train tracks that circle the city center, this label is used for the blocks that fall between the lake on the east, the river on the north and west and Roosevelt on the south. Once the domain of businesses and institutions, the Loop / New East Side has become one of the hottest residential locations in Chicago.

New developments in the area include Metropolitan Tower, Metropolis, the Columbian, Waterview Tower and the Heritage at Millennium Park. Lakeshore East, a 28-acre development that will include nearly 5,000 homes at Randolph and Lake Shore, has seen brisk sales at highrises the Regatta, the Lancaster and 340 on the Park.

The stunning new Millennium Park has been one of the most obvious attractions for buyers. Another factor will one day make prices of half a million here seem like an absolute steal. While views and access to the lake and parks are unparalleled, the amount of property available for development is extremely limited. And that's a hot combination.

The median sale price for a condo in the Loop was $260,000 during 2004, according to CAR, up 16 percent over the year before.

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