The Illinois housing market has been on an upward trend for the past few years, but in 2023, many are wondering if this trend will continue. With the ongoing pandemic and economic uncertainty, some are predicting a drop in home prices. In this report, we will examine the current state of the Illinois housing market and make a forecast for what we can expect in terms of prices and trends for the rest of 2023.
Illinois Housing Trends for 2023
The real estate market in Illinois experienced a decline in statewide home sales and a decrease in available housing inventory during the month of April 2023, according to data from Illinois REALTORS®. This trend suggests ongoing challenges for homebuyers and sellers in the state. Let's take a closer look at the key findings.
Decrease in Home Sales
In April 2023, the number of statewide home sales, including both single-family homes and condominiums, reached 10,600 homes sold. This figure represents a significant drop of 30.2 percent compared to April 2022, when 15,193 homes were sold. The decline in home sales indicates a slowdown in the real estate market.
Median Price Increase
While home sales experienced a decrease, the median price of homes in Illinois showed a modest increase. In April 2023, the median price stood at $272,250, which represents a 0.8 percent rise from the previous year's median price of $270,000. Although the increase seems marginal, it indicates a sustained demand for properties despite the challenges posed by limited inventory.
Longer Time on the Market
Another notable change in the market is the average number of days it took for homes to sell. In April 2023, homes remained on the market for an average of 32 days, compared to 28 days in the previous year. The extended time on the market suggests a slower pace of transactions and a more competitive environment for buyers.
Decline in Available Housing Inventory
One of the key factors contributing to the challenges faced by homebuyers is the declining availability of housing inventory. In April 2023, the total number of homes for sale in Illinois was 17,186, marking a 23.6 percent decrease from the previous year when 22,492 homes were on the market. This decline in inventory is concerning, as it reaches levels not seen since 2008, according to records from Illinois REALTORS®.
Regional Trends: Chicago Metro Area
Zooming in on the Chicago Metro Area, comprising nine counties, the real estate market faced similar challenges. In April 2023, home sales (including single-family homes and condominiums) totaled 7,593, a significant decline of 31.2 percent compared to April 2022 when 11,041 homes were sold. The median price in the Chicago Metro Area in April 2023 was $320,000, reflecting a 1.5 percent decrease from the previous year.
Insights and Forecasts
Dr. Daniel McMillen, the head of the Stuart Handler Department of Real Estate (SHDRE) at the University of Illinois at Chicago College of Business Administration, shared insights on the current market situation. While prices increased in April 2023, both statewide and in the Chicago PMSA, the median sale price remains lower than the previous year in the Chicago area. The number of sales is also projected to increase in June but is expected to remain lower than last year's levels. This suggests that the real estate market in the region will continue to face challenges.
Illinois Housing Market Forecast 2023
Based on the forecast presented to Illinois Realtors® from UIC Stuart Handler Department of Real Estate, the housing market in Illinois is expected to face both challenges and opportunities in the coming months. According to the sales forecast for May, June, and July, there will be a decrease in sales compared to the previous year but an increase when compared on a monthly basis.
Looking at the sales forecast for Illinois, the three-month average suggests a decrease on a yearly basis. The anticipated decline ranges from -10.5% to -14.2%. Although this may seem discouraging, on a monthly basis, there is expected to be an increase in sales. The three-month average forecast indicates a growth range of 8.4% to 11.4% compared to the previous month. This suggests a potential for a temporary rebound in sales activity.
Median Price Forecast
The median price forecast for Illinois indicates mixed annual growth rates for May, June, and July. In May, the median price is expected to change by -0.4%, suggesting a slight decrease. In June, a larger negative growth rate of -1.0% is projected. However, in July, the forecast predicts a positive growth rate of 2.2%, indicating a potential recovery in median prices.
Therefore, the Illinois housing market is anticipated to experience a decline in sales on a yearly basis, while monthly sales are expected to show signs of improvement. The median price forecast suggests mixed growth rates, with some months indicating slight decreases and others showing potential for recovery.
It's crucial to consider these forecasts in the context of the current housing market conditions and external factors such as economic indicators, interest rates, and inventory levels. These forecasts serve as guidelines but should not be considered as definitive predictions.
Housing Forecast for MSAs in Illinois
Zillow, a popular online real estate company, has provided MSA-level forecasts for Illinois. MSA stands for Metropolitan Statistical Area, which is a geographic region that includes a densely populated urban core and surrounding areas that are economically and socially integrated with the core.
The forecasts provided by Zillow give an indication of how the real estate market in each MSA is expected to perform over the next few years. According to the data provided by Zillow, a housing forecast for multiple metropolitan statistical areas (MSAs) in Illinois for 2024 reveals both regions where housing prices are projected to increase and those where prices are expected to decrease.
Chicago, IL MSA: The forecast for the Chicago MSA suggests a moderate increase in housing prices. In May 2023, prices are predicted to rise by 0.3%, followed by a slight growth of 0.1% in July 2023. However, the most significant increase is expected in April 2024, with prices projected to rise by 1.5%.
Peoria, IL MSA: The Peoria MSA also shows promising growth in housing prices. May 2023 indicates a 0.5% increase, followed by a more substantial rise of 1.2% in July 2023. By April 2024, prices are anticipated to further increase by 2.6%.
Rockford, IL MSA: The Rockford MSA demonstrates positive momentum in the housing market. Prices are forecasted to rise by 0.6% in May 2023 and 0.8% in July 2023. However, the most notable increase is expected in April 2024, with prices projected to grow by 3.8%.
Bloomington, IL MSA: The Bloomington MSA also exhibits a positive housing market outlook. May 2023 indicates an 0.8% increase, followed by a larger growth of 1.5% in July 2023. By April 2024, prices are anticipated to rise by 3.4%.
Charleston, IL MSA: The Charleston MSA shows a mixed forecast but overall positive growth in housing prices. While May 2023 predicts a slight increase of 0.1%, July 2023 is expected to experience a decrease of -0.3%. However, in April 2024, prices are projected to rebound and grow by 2.2%.
Carbondale, IL MSA: The Carbondale MSA indicates a decline in housing prices. May 2023 predicts a minor decrease of -0.2%, followed by a more substantial drop of -1.0% in July 2023. By April 2024, prices are expected to level off with a slight decrease of -0.2%.
Kankakee, IL MSA: The Kankakee MSA also demonstrates a decrease in housing prices. May 2023 suggests a slight decline of -0.1%, followed by a further drop of -0.4% in July 2023. However, in April 2024, a potential rebound is predicted with prices projected to rise by 1.6%.
Decatur, IL MSA: The Decatur MSA presents a negative outlook for housing prices. May 2023 indicates a decrease of -0.2%, followed by a more substantial drop of -1.0% in July 2023. By April 2024, prices are expected to show some signs of recovery with a small increase of 0.6%.
Jacksonville, IL MSA: The Jacksonville MSA reveals a significant decrease in housing prices. May 2023 predicts a notable decline of -0.6%, followed by a more substantial drop of -1.9% in July 2023. By April 2024, prices are expected to continue to decrease with a significant drop of -3.1%.
Lincoln, IL MSA: The Lincoln MSA depicts a downward trend in housing prices. May 2023 forecasts a decrease of -0.6%, followed by a more significant drop of -2.0% in July 2023. By April 2024, prices are projected to continue declining with a decrease of -1.3%.