Home prices predicted to fall in multiple US cities: What about Chicago? – WGN TV Chicago

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(NEXSTAR) — After two years of surging home prices and mortgage rates, some relief could be coming to the real estate market in 2024, according to a new report.

Across the U.S., Realtor.com predicts home prices will fall 1.7% next year, though larger drops are anticipated in 21 of the country’s largest metro areas the real estate firm analyzed in its forecast.

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Austin, Texas, could see the steepest decline, with a 12.2% drop expected. Three other cities in the Lone Star State could see falling home prices, including San Antonio, Dallas and Houston. Others expected to see prices drop include Denver, San Francisco, Salt Lake City, and St. Louis.

But what about Chicago?

Unfortunately, buyers in and around the Windy City may not be as lucky. Instead, Realtor.com is forecasting an increase in home prices by 1.1%. While that is a jump, it’s much less than those predicted for Detroit (10.9%); Rochester, New York (10.4%); Des Moines (9.9%); Hartford, Connecticut (9.1%); or Toledo, Ohio (8.3%).

Home sales in the Chicago area are, however, expected to decline by 9.2% next year, Realtor.com predicts.

Both home sales and inventory have been on a decline recently, according to Illinois Realtors, a member of the National Association of Realtors. In October, 10,705 homes were sold, 8.5% less than the same time in 2022. But the monthly median price was $265,000, or 7.1% higher than last October.

The median price for a home in the Chicago metro area was $317,500, up from $299,990 in October 2022, Illinois Realtors reports. It may not let up anytime soon, either.

“The number of sales continues to decline throughout Illinois while prices continue to increase,” said Dr. Daniel McMillen, head of the Stuart Handler Department of Real Estate (SHDRE) at the University of Illinois at Chicago College of Business Administration in a November report to Illinois Realtors. “Our forecasts indicate that these trends will continue over the next three months throughout the state.”

In the U.S., the price of a typical home skyrocketed to $410,200 in June, according to the National Association of Realtors, the second-highest recorded in 24 years. The median price cooled this October, dropping to $379,100, but that’s still 40% higher than in October 2019.

Realtor.com said the shift in housing affordability might inspire some first-time buyers to enter the market, but high mortgage rates could deter some current homeowners from moving.

Meanwhile, Zillow said in its 2024 outlook that it expects homeowners who got in when rates were at all-time lows to put their homes up for sale as they “grow weary waiting for the historically low rates of 2021 to return.”

The average rate for a 30-year fixed mortgage in the U.S. is 7.22% as of November, the Associated Press reported Thursday, citing mortgage buyer Freddie Mac. Realtor.com predicts that will drop to an average of 6.8% next year.

“We’re not going to see a major breakthrough in the logjam that has been the housing market over the last year or so, but 2024 will be a baby step in the right direction,” Realtor.com’s chief economist Danielle Hale said. “It’s going to stop getting worse.”

Similarly, Lawrence Yun, the NAR’s chief economist, believes interest rates will fall between 6% and 7% by the spring.

Even though the market might stabilize next year, Realtor.com still expects challenges — like low home sales, limited inventory, and the scarcity of move-in ready homes in desirable areas.

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