Home sales remain low, while prices continue to grow in the Illinois housing market in 2022. Inflation and rising mortgage rates are affecting the market. According to statistics from Illinois REALTORS®, median prices increased and homes sold more quickly in July 2022 than in July 2021, as mortgage interest rates declined and inventories decreased year-over-year. In July 2022, the average Illinois home sold in 20 days, compared to 25 days in July 2021.
15,068 homes (including single-family homes and condominiums) were sold statewide, a 22.6 percent decrease from July 2021's 19,480 sales. Compared to July 2021, the statewide median price increased by 4.0 percent to $272,975 in July 2022. The median represents the market price at which half of the residences sold for more and half for less. In July 2022, there were 27,910 homes for sale statewide, compared to 34,518 in July 2021; this is a 19.1 percent reduction in active listings.
Illinois Housing Market Forecast
According to Zillow, the typical value of homes in Illinois is $267,079. This value is seasonally adjusted and only includes the middle price tier of homes. Illinois home values have gone up 11.8% over the past year and 27.2% over the past two years. Here's Zillow's 1-year forecast for some of the metro areas in Illinois. These MSAs of Illinois are predicted to see the largest home price decline between Aug 2022 to Aug 2023. Chicago MSA is projected to see a home price decline of 0.9%.
| Macomb, IL home values are forecasted to drop 3.3% between August 2022 to August 2023. |
| Galesburg, IL home values are forecasted to drop 2.8% between August 2022 to August 2023. |
| Jacksonville, IL home values are forecasted to drop 2.8% between August 2022 to August 2023. |
| Taylorville, IL home values are forecasted to drop 2.8% between August 2022 to August 2023. |
| Charleston, IL home values are forecasted to drop 2.7% between August 2022 to August 2023. |
| Sterling, IL home values are forecasted to drop 2.6% between August 2022 to August 2023. |
| Pontiac, IL home values are forecasted to drop 2.6% between August 2022 to August 2023. |
| Peoria, IL home values are forecasted to drop 2.3% between August 2022 to August 2023. |
| Danville, IL home values are forecasted to drop 2% between August 2022 to August 2023. |
| Lincoln, IL home values are forecasted to drop 2% between August 2022 to August 2023. |
This report provides an analysis of the housing market in the Second Quarter of 2022 with forecasts for the Third Quarter of 2022. The forecast is provided to Illinois REALTORS by the UIC Stuart Handler Department of Real Estate. In the Second Quarter of 2022, overall sales in Illinois decreased compared to last year. Positive growth was recorded in one MSA, and negative growth was in the other nine MSAs.
For the Third Quarter of 2022, overall sales in Illinois are forecast to decrease. All ten MSAs are forecast to experience decreases in their sales. Increasing median prices for Illinois are found in all MSAs except Davenport-Moline-Rock Island MSA in the Second Quarter. The overall median price for Illinois in the Third Quarter is forecast to increase in all ten MSAs.
- The median price forecast indicates a positive trend with annual rates of change between 8.6% to 10.3% in Q3 2022.
- Sales volume in Q3 2022 is forecast to change by an annual rate between -16.0% to -21.7%.
- Median prices in Q2 2022 were 5.6% higher than a year ago.
- Sales volume in Q2 2022 was -12.5% lower than a year ago.
- In Q2 2022, market shares of homes priced at $100-200K experienced the largest change, decreasing from 24.8% a year ago to 22.9%.
- By Q2 2022, the overall quarter’s supply is 0.5 quarters, decreasing from 0.6 a year ago.
The forecasts indicate positive annual growth in the median price for the state as a whole for the Third Quarter of 2022. All ten MSAs are forecast to experience positive changes in the median price in the Third Quarter of 2022.
- Bloomington-Normal (8.1%)
- Champaign-Urbana (8.1%)
- Chicago PMSA (11.4%)
- Davenport-Moline-Rock Island (2.1%)
- Decatur (5.5%)
- Kankakee (14.4%)
- Metro-East (7.8%)
- Peoria-Pekin (5.3%)
- Rockford (6.7%)
- Springfield (0.2%)
The overall sales in Illinois are forecast to decrease by -16.0% to -21.7% compared to a year ago. All MSAs are forecast to experience decreases in sales.
- Bloomington-Normal (-13.2% to -17.9%)
- Champaign-Urbana (- 10.3% to -13.9%)
- Chicago PMSA (-6.2% to -8.4%)
- Davenport-Moline-Rock Island (-2.7% to – 3.6%)
- Decatur (-5.3% to -7.2%)
- Kankakee (-6.0% to -8.1%)
- Metro-East (-9.1% to -12.4%)
- Peoria-Pekin (-2.8% to -3.7)
- Rockford (-6.7% to -9.0%)
- Springfield (-6.2% to -8.4%)
Factors That May Influence the Illinois Housing Market Outlook
A rise in job growth and a decrease in the unemployment rate are two factors that contribute to a housing market boom. Both of these factors interact to cause the boom. It is impossible to break the link that exists between the economy and the housing market. The purchasing power of those considering purchasing a home is affected by both the strength of the economy and the amount of job creation.
In 2021, the real Gross Domestic Product (GDP) of Illinois increased by five percent when compared to the previous year. This was the largest increase in Illinois' GDP since 2000. The state's largest decrease in the real GDP was in 2020 when it decreased by 5.1 percent compared to the previous year.
Illinois has the nation's fifth-highest GDP and is the fifth-most populous state. Illinois's GDP is $785,671,000, and its median household income is $69,187. Illinois is currently ranked 45th in the United States for its economic outlook. It is currently ranked 43rd in the United States for its economic performance.
Illinois has seen considerable improvements in its unemployment rate. The Illinois Department of Employment Security (IDES) announced https://ides.illinois.gov/ that the unemployment rate rose +0.1 percentage point to 4.5 percent, while nonfarm payrolls increased by +4,100 in August, based on preliminary data provided by the U.S. Bureau of Labor Statistics (BLS) and released by IDES. The increase in statewide jobs and the continued historic decrease in continued claims levels for unemployment insurance benefits point to a strengthening Illinois labor market.
The Illinois Department of Employment Security produces both 2-year and 10-year projections. The 10-year (2018- 2028) COVID-impacted employment projections were developed to provide the public with a preliminary assessment of potential long-term structural changes in the Illinois labor market caused by pandemic-induced changes in consumer and firm behavior. The 2-year (2020-2022) employment projections will be made available in Spring 2021 and will also reflect the economic impact of COVID-19 on the Illinois economy.
State of Illinois Industry Employment Projections to 2026
According to WalletHub's 2021 Best States to Live In list, Illinois is the 18th best state to live in the country. People are finding Illinois to be a place to live, work, and play. WalletHub compared all 50 states based on five factors: affordability, economy, education and wealth, quality of life, and safety.
States were also compared on 52 livability indicators, such as housing costs, income growth, education rates, and hospital quality. Illinois ranked third in terms of quality of life, at No. 3. It was also ranked eighth in terms of safety, 37th in terms of affordability, 49th in terms of economy, and 20th in terms of education and health.
Population growth, particularly household growth, leads to an increase in housing demand. In the long run, population decline may lead to a decrease in housing demand. After a review of 2020 data, the U.S. Census Bureau announced that Illinois’ population was undercounted by nearly 2 percent.
That means the state’s population grew by nearly 250,000 from 2010 to 2020 and now, has over 13 million people for the first time in state history. These numbers from the U.S. Census Bureau show that Illinois is now a state on the rise with a growing population. However, it is not growing as fast as in places like Florida and Texas.
Home prices are directly affected by demand, which, according to real estate experts, isn't going away anytime soon. However, they are not rising as quickly as they once did, and Illinois real estate agents predict that prices will level off or drop slightly over the next twelve months. Some of this is most likely due to rising inflation and mortgage rates.
Moderate price appreciation has historically been accompanied by a six-month supply. Construction has slowed for much of the pandemic, owing to labor shortages and supply-chain issues that have made certain materials difficult to obtain. Illinois' housing supply is still well short of a balanced real estate market.
Housing Inventory: Active Listing Count in Illinois
Sources:
- https://www.illinoisrealtors.org/marketstats/
- https://fred.stlouisfed.org/series/ILSTHPI#
- https://www.zillow.com/il/home-values/
- https://www.neighborhoodscout.com/il/real-estate
- https://fred.stlouisfed.org/series/ACTLISCOUIL#
- https://www.statista.com/statistics/306782/illinois-gdp-growth/
- https://worldpopulationreview.com/state-rankings/richest-states-in-usa
- https://wallethub.com/edu/best-states-to-live-in/62617
- https://ides.illinois.gov/
