The Illinois housing market has been on an upward trend for the past few years, but as we enter 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 Illinois housing market experienced a slowdown in sales and median prices in January 2023, which is typical for the winter months. However, the low number of homes for sale provides an opportunity for both buyers and sellers to benefit from the current market conditions.
According to the data from the Illinois REALTORS®, the median price of homes sold in January 2023 was 1.5 percent lower than the previous year. The monthly median price of $234,000 in January 2023. The average time to sell a home increased from 39 days to 41 days, while the available housing inventory declined by 7.6 percent compared to January 2022.
Despite the slowdown, real estate experts predict that both sales and prices will increase over the next three months throughout the state. The Freddie Mac data shows that the monthly average commitment rate for a 30-year, fixed-rate mortgage was 6.27 percent in January 2023, which was slightly lower than the previous month.
In the Chicago area, the president of the Chicago Association of REALTORS® and principal and designated managing broker for Ware Realty Group, Sarah Ware, stated that buyers have their eyes on the spring market with the hope of increased inventory. Sellers, on the other hand, are preparing their homes for the spring market by making necessary repairs and improvements to increase their property's appeal to potential buyers.
While the current market conditions may seem challenging, both buyers and sellers can still benefit from the low inventory and less frenzied market. As interest rates and prices have both leveled off, buyers can take advantage of a less competitive market, compared to the last two years. Meanwhile, sellers can benefit from less competition with inventory still being at a low level.
Illinois Housing Market Forecast 2023
Based on the forecast presented to Illinois Realtors® from UIC Stuart Handler Department of Real Estate, the sales forecast for February, March, and April suggests a yearly decrease of -13.9% to -18.9% for Illinois and -14.9% to -20.1% for the Chicago PMSA. However, there is an expected monthly increase of 22.5% to 30.4% for Illinois and 25.8% to 34.9% for the Chicago PMSA.
Furthermore, the median price forecast indicates negative annual growth for February, March, and April in Illinois, with a projected change of -1.8% in February, -2.3% in March, and -1.9% in April. Meanwhile, the Chicago PMSA is expected to remain almost unchanged, with a change of 0.2% in February, 0.3% in March, and -0.2% in April.
For buyers, the forecast indicates a potential opportunity to capitalize on a market slowdown and negotiate better deals. However, it's essential to keep in mind that the market can be unpredictable, and trends may shift quickly. For sellers, it's crucial to be aware of the market conditions and price their properties accordingly to remain competitive.
While the forecast for the Illinois housing market in 2023 is projecting a decrease in sales and negative growth in median prices on an annual basis, it is important to note that the market is expected to see an increase in sales on a monthly basis. This indicates that the market may experience a short-term recovery as it transitions into the spring selling season. However, it is also worth noting that the decrease in sales on an annual basis may lead to a higher inventory of homes on the market, providing more options for buyers to choose from.
For sellers, the low inventory levels coupled with the winter slowdown may present opportunities for them to capitalize on the market by selling their homes before the spring season arrives. Meanwhile, buyers may have greater negotiating power due to the increased inventory and slower market. However, buyers should keep in mind that the projected negative growth in median prices may be an advantage for them in terms of affordability but could also lead to less appreciation in the short term.
Overall, the Illinois housing market is expected to experience a mixed bag of trends in 2023, with a short-term recovery expected in the spring season but a decrease in sales and negative growth in median prices on an annual basis. Both buyers and sellers can take advantage of the market conditions to achieve their real estate goals, but it is important to stay up to date on the latest trends and forecasts to make informed decisions.
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 Zillow, the average home value in Illinois is currently $228,698, which represents a 4.9% increase over the past year. Homes in Illinois are going pending in around 22 days, with a median sale-to-list ratio of 0.984. Additionally, 26.7% of sales are over list price, and 59.4% of sales are under list price as of January 31, 2023.
Looking at the MSA level forecasts, Zillow predicts that the Chicago MSA will see a slight increase of 0.4% in home values by March 31, 2023, followed by a decrease of -0.1% by May 31, 2023, and a more significant decrease of -1.9% by February 29, 2024. In contrast, the Bloomington MSA is expected to see an increase of 0.7% by March 31, 2023, followed by another increase of 0.9% by May 31, 2023, and a slight decrease of -0.7% by February 29, 2024.
Other MSAs in Illinois, such as Decatur, Dixon, and Taylorville, are expected to see an increase in home values over the forecasted period, while areas like Springfield and Jacksonville are expected to see a decrease in home values. However, it is important to note that these forecasts are not a guarantee of what will happen in the future, as various factors can affect the real estates market, such as economic conditions, government policies, and natural disasters.
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://ides.illinois.gov/
