What You Need to Know
We’ve all heard the saying, “As goes Chicago, so goes Illinois,” the current housing market in Windy City’s greater metro area seems to hold its own despite the gusts of high mortgage rates and nebulous uncertainties. The latest report from Redfin, a leading digital real estate brokerage, throws some attractive light on this subject.
Before we delve into the nitty-gritty of Illinois’s housing market, it’s crucial to understand why keeping a pulse on market trends matters. Deciphering these patterns enables potential homeowners, investors, and retirees to make informed decisions and stay ahead of the curve. It’s the lens through which we can anticipate changes and strategically position ourselves for the best outcomes.
This piece, dear reader, aims to navigate you through the labyrinth of Illinois’s housing market, providing insights on affordability, the best places to reside, and the prime options for those looking forward to a serene retirement. We’ll strip down the numbers, slice through the jargon, and serve you the crux of the matter. Will the upward trend in Illinois’s housing market continue in 2023, or are we in for a surprise dip? What’s the buzz in March 2023 compared to last year? How has the growth in median prices fared in 2022?
As we wrestle with these questions, we’ll also examine the state of the market through the lens of the Redfin analysis. This report ranks the 100 largest metros based on how swiftly demand and competition have cooled between February 2022 and February 2023. So, are you ready to uncover the secrets of Illinois’s real estate market? Let’s dive in!
Deciphering the Illinois Real Estate Market: Recent Trends and Their Implications
Real Estate Market in Illinois Market Cycle
Fresh from the pandemic-induced boom, the Illinois housing market is currently in a cooling-off phase. Home sales are lagging behind previous numbers, while prices are steady compared to Q1 of last year.
Despite this, the market started showing signs of revival as early as February this year, an uptick expected to continue into spring. In this balanced market, both buyers and sellers have their unique opportunities. While the former can take advantage of less competition, the latter can benefit from the low inventory levels.
Factors Influencing the Market
Several factors are influencing the Illinois housing market currently. Economic fluctuations, job growth, population changes, and, of course, the lingering effects of COVID-19 all play a crucial role. The Freddie Mac data indicates a 6.27% commitment rate for a 30-year fixed-rate mortgage in January 2023, a slight dip from the previous month. Despite the winter slowdown, experts predict a surge in sales and prices in the next quarter.
Impact of COVID-19 on Illinois Real Estate Market: Pandemic Peculiarities and Beyond
The pandemic has undoubtedly left its mark on Illinois’s housing market. From a boom in housing sales to a significant slowdown, the rollercoaster ride is far from over. Interestingly, the market rebound started in February 2023, earlier than usual, indicating that the pandemic may have shifted typical market rhythms.
A Closer Look at Sales and Price Trends
In 2022, Illinois and the Chicago PMSA witnessed a range of growth rates, with Illinois fluctuating between -27.9% and 0.9% and Chicago PMSA between -32.4% and 0.5%. Regular sales in the Chicago PMSA saw negative growth, while foreclosed sales experienced positive growth. The ratio of foreclosed sales to total sales increased to a monthly average of 4.02% in 2022, a significant decrease from the 13% average between 2010 and 2021.
Supply and Demand: The Great Balancing Act
As of March 2023, 41,559 homes are for sale in Illinois, a 21.0% decrease YoY. With only two months of supply and a 29.4% YoY decrease in new listings, it’s evident that supply is tight. Conversely, 32.1% of homes sold below list price, and only 14.3% had price drops, indicating a competitive market environment.
Foreclosure Filings: A Peek Into Housing Distress
According to ATTOM Data Solutions, Illinois had the highest foreclosure rate in August, with one foreclosure filing for every 1,926 housing units. In total, 493 properties in Illinois were repossessed through completed foreclosures, the highest in the nation.
Affordability: A Growing Concern
Housing affordability took a significant hit in Q2 2022. The monthly mortgage payment on a typical single-family home with a 20% down payment increased substantially from Q1 and the previous year, making homeownership a distant dream for many. As we navigate through 2023, the real estate trends in Illinois will continue to evolve, shaped by economic forces, public policies, and the ongoing effects of the pandemic.
The Best Places to Live in Illinois
The Prairie State offers several opportunities for everyone, but choosing the ideal location might be a bit overwhelming. How do we choose the best places to live in Illinois? We look at multiple factors, such as overall quality of life, public school ratings, housing, safety, and local amenities. To help you make an informed decision, here is a curated list of top-ranking places to live in Illinois:
Bannockburn is ranked as the number one place to live in Illinois. With a population of just over 1,300, this suburb of Chicago offers a peaceful and quaint environment while still providing proximity to the metropolitan hub.
– Population: 1,315
– Overall Niche Grade: A+
2. Long Grove
Long Grove, another suburb of Chicago, is known for its annual festivals and top-notch school district. This vibrant community offers a balanced blend of suburban and urban living.
– Population: 8,258
– Average review score: 4.2 out of 5
3. Clarendon Hills
Clarendon Hills offers a well-run town with excellent infrastructure. Its top-tier schools and proactive community management have ranked it among Illinois’ best places to live.
– Population: 8,707
– Average review score: 4.43 out of 5
Naperville, one of the larger cities in Illinois, is a thriving community known for its exceptional education system and active community engagement. Its modern downtown area is filled with attractions and activities for all ages.
– Population: 149,013
– Average review score: 4.2 out of 5
Inverness, another Chicago suburb, is a serene and family-friendly location. The neighborhood is calm and quiet, offering the perfect environment for families and individuals seeking a peaceful lifestyle.
– Population: 7,684
– Average review score: 3.8 out of 5
Illinois Real Estate Market Forecast for 2023
As we turn the corner into 2023, the real estate market in Illinois stands at a compelling crossroads. According to the forecast from UIC Stuart Handler Department of Real Estate, some exciting dynamics are expected to play out, shaping the market trends for the year.
A Dip in Annual Sales, A Surge Monthly
According to the forecast, annual real estate sales in Illinois are expected to take a dip, ranging between -13.9% to -18.9%, with the Chicago PMSA witnessing a decrease between -14.9% to -20.1%. However, the silver lining in this cloudy horizon is the predicted monthly increase of 22.5% to 30.4% for Illinois and 25.8% to 34.9% for the Chicago PMSA.
Median Price Projection: A Slight Downward Trend
As for the median price forecast, a slight decrease is anticipated for February, March, and April in Illinois. The change was expected to be -1.8% in February, -2.3% in March, and -1.9% in April. In contrast, the Chicago PMSA is predicted to remain almost stable, with minor fluctuations.
Opportunities for Buyers and Sellers in Illinois
What does this mean for potential buyers and sellers? While the market is poised for a slowdown, it also presents an opportunity for buyers to capitalize on the market conditions and negotiate better deals. Conversely, sellers must navigate these market conditions with a keen eye on their property pricing to stay competitive.
The projected short-term recovery in the spring season, coupled with an increase in sales every month, could result in a higher inventory of homes on the market. This might be the silver lining for buyers, providing them with a wider variety of choices.
For sellers, the winter slowdown and lower inventory levels present an opportunity to capitalize on the market by selling their homes before the spring selling season.
Mortgage Rates, Home Sales, and Affordability
The real estate market is not immune to the broader economic environment. The surge in mortgage rates, the plunge in home sales, and the potential for a continued rise in interest rates all point to a slowdown in the housing market in 2023.
Despite the slowdown, the Illinois housing market is expected to see some level of recovery in the spring season, even as it grapples with a decrease in sales and negative growth in median prices on an annual basis.
With mortgage rates set to climb due to continued inflation, potential recession, and geopolitical tensions, home sales are expected to take a hit, with some experts predicting a 10% drop. This could lead to a shift in home pricing, with some sellers lowering their prices to current levels.
Looking Forward: Chicago’s Housing Market in 2023
As we delve deeper into the intricacies of the Chicago housing market, we find a equally challenging and promising market. The surge in interest rates has made home buying more expensive, putting the brakes on the pre-pandemic housing boom. However, the current slowdown could be a golden opportunity for buyers who can afford to wait and see how the market unfolds.
With the demand for homes in Chicago decreasing, buyers now have the upper hand, able to peruse various properties without the pressure of making immediate offers. As for home prices, they’re still on the rise, albeit at a slower pace than other regions.
Two thousand twenty-three promises to be an intriguing chapter in this ever-evolving story, bearing the imprints of a post-pandemic world. As we keep our fingers on the pulse of market dynamics, whether you’re an aspiring homeowner, an investor, or looking to spend your golden years in tranquility, this guide empowers you to navigate the market confidently.
With an understanding of Illinois’ real estate’s ins and outs, you’re better equipped to make informed decisions that cater to your unique needs.
- What’s the Current State of the Illinois Real Estate Market?
While cooling off from the pandemic-induced boom, the Illinois real estate market is showing signs of resurgence. It’s a balanced market with unique opportunities for both buyers and sellers.
- How Has COVID-19 Impacted the Illinois Real Estate Market?
The pandemic has significantly shaped the Illinois housing market, causing a boom in sales followed by a slowdown. Yet, the market is already showing signs of an early rebound as of February 2023.
- What is the Forecast for the Illinois Real Estate Market in 2023?
The forecast predicts a dip in annual sales but a surge in monthly sales. Median prices are expected to see a slight downward trend early in the year.
- What are the Best Places to Live in Illinois?
Bannockburn, Long Grove, Clarendon Hills, Naperville, and Inverness rank among Illinois’s top places to live, factoring in quality of life, schools, housing, and local amenities.
- How is the Chicago Housing Market Expected to Perform in 2023?
The Chicago housing market is expected to slow down due to rising interest rates. However, this slowdown could present opportunities for buyers who can afford to wait and see how the market evolves.