The Illinois housing market faced challenges in September 2023 with declining home sales and rising median prices. Inadequate housing inventory continues to impact the market's performance. While there is still buyer demand, the market struggles with low inventory and affordability issues. With forecasts indicating a continued decline in prices, the real estate market in Illinois remains in a delicate state, emphasizing the need for strategic solutions to address these issues.
Is the Illinois Housing Market Slowing Down in 2023?
Indeed, the housing market in Illinois has shown signs of slowing down in 2023. Statewide home sales, including both single-family homes and condominiums, declined by 17.4 percent in September 2023 compared to the previous year. The Chicago Metro Area also experienced an 18.6 percent drop in home sales during the same period. These statistics indicate a decrease in housing market activity, which can be attributed to factors like limited inventory and affordability issues.
Inadequate housing inventory continued to hinder the housing market in September, driving home sales lower and median prices higher, according to data from Illinois REALTORS®. The number of statewide home sales and the available housing inventory in September 2023 dropped in comparison to September 2022 figures.
Statewide Home Sales Decline
In September 2023, statewide home sales (including single-family homes and condominiums) of 11,483 homes sold was 17.4 percent lower than 13,900 sold in September 2022. Also, the monthly median price of $270,000 in September 2023 was 6.5 percent higher than it was the year before at $253,594. In September, there were only 21,256 homes for sale statewide, a 28.5 percent decrease from 29,717 homes on the market in September 2022. Homes sold an average of 24 days this past September, compared to 26 in September 2022.
Challenges in the Housing Market
“Now is a good time to reflect on the status of the market. First, consumers can still find value in buying and selling homes right now based on their family’s needs,” says Matt Silver, Illinois REALTORS® 2024 president and partner and senior broker for Corcoran Urban Real Estate in Chicago.
“That said, the state’s housing market is struggling with continued low inventory and issues of affordability. We need policymakers to understand that and work with us to increase housing availability. Imposing burdensome regulations and increasing taxes on property sales, purchases, or ownership arbitrarily will only damage this fragile market.”
Chicago Metro Area Home Sales
In the nine-county Chicago Metro Area, September 2023 home sales (single-family and condominiums) totaled 7,608 homes sold, down 18.6 percent from September 2022 sales of 9,345 homes. The median price of a home in the Chicago Metro Area in September 2023 was $325,000, up 6.6 percent from $305,000 in September 2022.
Illinois Market Forecast
“Prices continued their usual seasonal decline from their peak in June for both Illinois and the Chicago area,” said Dr. Daniel McMillen, professor of real estate and associate dean for faculty affairs at the University of Illinois Chicago College of Business Administration. “However, they remain much higher than at this time last year. Our forecasts indicate that prices will continue to decline somewhat over the next three months, while remaining higher than at this time last year. The number of sales remains low and is forecast to decline further over the next three months.”
City of Chicago
The city of Chicago saw an 11.3 percent year-over-year home sales decrease in September 2023 with 1,830 sales, down from 2,064 in September 2022. The median price of a home in the city of Chicago in September 2023 was $324,450, up 1.4 percent compared to September 2022 when it was $320,000.
Market Demand
“In September, closed sales decreased while days on the market remained consistent. The combination of these points shows there is still buyer demand in the market,” said Drussy Hernandez, president of the Chicago Association of REALTORS® and vice president of brokerage services for Coldwell Banker Realty in Chicago. “There is a demonstrated commitment on both sides of the transaction. Work with a REALTOR® to create the best listing or offer strategy for you.”
Are Home Prices Dropping in Illinois?
While home prices have experienced a seasonal decline in 2023, they remain notably higher than the previous year. In September 2023, the median price of a home in Illinois was $270,000, showing a 6.5 percent increase from the same month in 2022. This suggests that while prices may be stabilizing, they are not dropping significantly. It's important to note that real estate markets can vary, so it's advisable to consult with local real estate professionals for region-specific insights.
Illinois Housing Market Forecast 2023
The latest housing market forecast for Illinois as of September 2023, provides valuable insights into the upcoming months. These forecasts have been presented to Illinois Realtors® by the UIC Stuart Handler Department of Real Estate.
Sales Forecast
The sales forecast for October, November, and December indicates a decrease in both monthly and yearly figures for both Illinois and the Chicago PMSA. Annually for Illinois, the three-month average forecasts suggest a decrease in the range of -8.8% to -11.9%.
On a monthly basis, the three-month average sales are forecast to decrease in the range of -6.9% to -9.3% for Illinois.
Median Price Forecast
The median price forecast, on the other hand, presents positive annual growth for October, November, and December in Illinois. In Illinois, the median price is forecast to change by 7.3% in October, 8.8% in November, and 9.8% in December.
These forecasts provide essential data for both buyers and sellers, offering valuable insights into the evolving real estate landscape in Illinois and the Chicago PMSA. It's advisable for those interested in the real estate market to consider these projections when making informed decisions.
Illinois Housing Market Forecast by Zillow
Zillow provides valuable insights into the Illinois housing market as of August 31, 2023, including key metrics such as home values, sale-to-list ratios, and days to pending. Here are the highlights of Zillow's forecast for Illinois:
- Average Home Value: The average home value in Illinois stands at $252,134, reflecting a 2.5% increase over the past year. This indicates a modest appreciation in home values in the state.
- Median Sale to List Ratio: As of July 31, 2023, the median sale to list ratio is 1.000, indicating that, on average, homes in Illinois are selling at or very close to their listed price.
- Percent of Sales Over List Price: In July 2023, an impressive 49.5% of sales closed above the list price, highlighting strong competition among buyers in certain segments of the market.
- Percent of Sales Under List Price: Conversely, 36.6% of sales in July 2023 closed under the list price, indicating that opportunities for negotiation exist for buyers.
- Median Days to Pending: Homes are going pending in just 7 days on average, demonstrating the brisk pace of transactions in Illinois.
Top 10 MSAs for Home Price Growth
Zillow's data also includes forecasts for the top 10 Metropolitan Statistical Areas (MSAs) in Illinois with the highest expected home price growth by August 2024. Let's explore these areas and their price growth projections:
- Macomb, IL: Macomb is forecasted to experience a slight decline in home prices by -0.8% by August 2024.
- Jacksonville, IL: Jacksonville is expected to see a modest increase in home prices by 0.6% by August 2024.
- Carbondale, IL: Carbondale is forecasted to have a slight price increase of 0.2% by August 2024.
- Mount Vernon, IL: Mount Vernon is projected to experience a price growth of 0.3% by August 2024.
- Taylorville, IL: Taylorville is expected to see a notable price increase of 0.7% by August 2024.
- Davenport, IA (MSA in Illinois): Davenport is forecasted to experience a moderate price growth of 1% by August 2024.
- Galesburg, IL: Galesburg is anticipated to see a robust price increase of 1% by August 2024.
- Lincoln, IL: Lincoln is projected to experience a price growth of 1.2% by August 2024.
- Quincy, IL: Quincy is forecasted to have a price increase of 1.4% by August 2024.
- Springfield, IL: Springfield is expected to see substantial price growth of 1.8% by August 2024.
These forecasts provide valuable insights for both buyers and sellers in the Illinois housing market, helping them make informed decisions in a dynamic real estate landscape.
Are House Prices Dropping in Illinois?
As of the latest available data, house prices in Illinois have exhibited mixed trends. While Zillow reports a 2.5% increase in the average home value over the past year as of August 31, 2023, it's essential to note that real estate markets can vary significantly by location and property type.
However, the market forecast for the Third Quarter of 2023 suggests that median home prices may experience fluctuations in different Metropolitan Statistical Areas (MSAs) across the state. Some areas may see price increases, while others may experience decreases. It's crucial for prospective buyers and sellers to monitor specific regions of interest to gain a more accurate understanding of local market dynamics.
Is Now a Good Time to Buy a House in Illinois?
The decision of whether now is a good time to buy a house in Illinois depends on several factors, including your individual circumstances, financial readiness, and long-term goals. Here are some considerations to help you make an informed decision:
1. Current Market Conditions:
As of the latest data, the Illinois housing market exhibits various trends, with some areas experiencing price appreciation, while others may see slight declines. If you're considering a specific location, it's essential to research the local market conditions, including supply and demand dynamics and recent price trends.
2. Personal Financial Situation:
Evaluate your financial readiness to buy a home. Consider factors such as your credit score, available funds for a down payment and closing costs, and your ability to secure a mortgage at a competitive interest rate. It's advisable to consult with a financial advisor or mortgage professional to assess your financial readiness.
3. Long-Term Goals:
Think about your long-term plans and objectives. Buying a home is a significant investment, and it's essential to align your real estate decision with your future goals. Consider factors such as job stability, family plans, and your intended length of stay in the property.
4. Local Real Estate Expertise:
Engage with a local real estate expert, such as a real estate agent or realtor, who possesses in-depth knowledge of the Illinois market. They can provide valuable insights into specific neighborhoods, property values, and negotiation strategies.
5. Interest Rates:
Monitor mortgage interest rates, as they can impact your monthly mortgage payments and overall affordability. While rates may fluctuate, securing a favorable rate can be advantageous for long-term homeownership.
Sources:
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- 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://ides.illinois.gov/
