Illinois Housing Market Forecast: Will it Crash in 2023 or 2024? – Norada Real Estate Investments

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Illinois Housing Market

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 8.5 percent in October 2023 compared to the previous year. The latest data from Illinois REALTORS® reveals compelling insights into the market trends, shedding light on the challenges and opportunities that both buyers and sellers face.


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Statewide Overview

The figures for October 2023 indicate a significant 8.5 percent drop in statewide home sales compared to the same month in 2022. The total number of homes sold stood at 10,705, down from 11,702 the previous year. Concurrently, the median home price experienced a 7.1 percent increase, reaching $265,000 in October 2023, compared to $247,500 in October 2022.

However, the most striking observation lies in the available housing inventory, which plummeted by 25.5 percent, leaving only 21,287 homes for sale statewide. Homes also spent less time on the market, with an average of 25 days in October 2023, down from 29 days in October 2022.

Chicago Metro Area Trends

Zooming into the nine-county Chicago Metro Area, home sales totaled 7,118 in October 2023, reflecting an 8.3 percent decline from the previous year. The median home price in the area increased by 5.8 percent, reaching $317,500 in October 2023, up from $299,990 in October 2022.

City of Chicago Insights

The city of Chicago experienced a 7.5 percent year-over-year decrease in home sales, with 1,610 sales recorded in October 2023, down from 1,740 in October 2022. Despite this decline, the median home price remained steady at $320,000, the same as the previous year.

Expert Analysis and Forecasts

Dr. Daniel McMillen, professor of real estate and associate dean for faculty affairs at the University of Illinois Chicago College of Business Administration, emphasizes that the declining sales and rising prices are likely to persist in the coming months across the state. He notes that these trends align with forecasts, indicating a continued challenge for both buyers and sellers.

Matt Silver, Illinois REALTORS® 2024 president, underscores the crucial role of REALTORS® in guiding consumers through the complex market dynamics. Despite external factors affecting the housing market, Silver advocates for policy changes to address taxation issues and encourage the construction of new homes to address the shortage of affordable housing.

Mortgage Rate Impact

Considering the financial aspect, the average commitment rate for a 30-year, fixed-rate mortgage in October 2023 rose to 7.62 percent, up from the previous month’s 7.20 percent. This increase is notable compared to the October 2022 average of 6.90 percent, as reported by Freddie Mac data.

Illinois Housing Market Forecast 2023

The latest housing market forecast for Illinois as of November 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 Analysis

The sales forecast for November, December, and January suggests a decrease on a yearly and monthly basis for both Illinois. Annually for Illinois, the three-month average forecast points to a decrease in the range of -10.2% to -13.8%.

Median Price Forecast Overview

In Illinois, the median price forecast indicates positive annual growth for November, December, and January. The median price is forecast to change by 8.6% in November, 9.6% in December, and 9.6% in January.

Illinois Housing Market Forecast by Zillow

The average Illinois home value stands at $252,042, reflecting a notable 4.5% increase over the past year. As of October 31, 2023, homes in Illinois are swiftly moving to pending status in approximately 9 days.

Key Metrics

  • For Sale Inventory (October 31, 2023): 31,359
  • New Listings (October 31, 2023): 12,400
  • Median Sale to List Ratio (September 30, 2023): 1.000
  • Median Sale Price (September 30, 2023): $252,000
  • Median List Price (October 31, 2023): $282,967
  • Percent of Sales Over List Price (September 30, 2023): 45.3%
  • Percent of Sales Under List Price (September 30, 2023): 41.0%

Note: The provided data is accurate through October 31, 2023.

Top MSAs in Illinois Where Home Prices Will Drop the Most by 2024

The forecasted data indicates several Metropolitan Statistical Areas (MSAs) in Illinois where home prices are anticipated to experience a significant decline by the end of 2024. Here is a detailed breakdown of the top MSAs with projected price drops:

1. Galesburg, IL

  • Base Date (31-10-2023): 0.7%
  • 30-11-2023: 0.1%
  • 31-01-2024: -4.6%
  • 31-10-2024: Projected decrease of -4.6%

In Galesburg, Illinois, the MSA is expected to witness a decline in home prices, starting from a modest increase of 0.7% on the base date to a substantial drop of 4.6% by October 2024.

2. Jacksonville, IL

  • Base Date (31-10-2023): 0.6%
  • 30-11-2023: 0.3%
  • 31-01-2024: -4%
  • 31-10-2024: Projected decrease of -4%

Similarly, Jacksonville, Illinois, is anticipated to experience a decline in home prices, with a base date increase of 0.6% turning into a projected drop of 4% by October 2024.

3. Lincoln, IL

  • Base Date (31-10-2023): 0.1%
  • 30-11-2023: -0.1%
  • 31-01-2024: -3.8%
  • 31-10-2024: Projected decrease of -3.8%

Lincoln, Illinois, is also expected to see a decline, starting with a slight increase of 0.1% on the base date and progressing to a projected drop of 3.8% by October 2024.

4. Davenport, IA

  • Base Date (31-10-2023): -0.1%
  • 30-11-2023: -0.6%
  • 31-01-2024: -3.6%
  • 31-10-2024: Projected decrease of -3.6%

Davenport, Iowa, categorized as an MSA in Illinois, is forecasted to undergo a decline, with negative percentages on the base date leading to a projected drop of 3.6% by October 2024.

5. Mount Vernon, IL

  • Base Date (31-10-2023): -0.1%
  • 30-11-2023: -0.5%
  • 31-01-2024: -3.6%
  • 31-10-2024: Projected decrease of -3.6%

Mount Vernon, Illinois, rounds out the list with a negative base date percentage, leading to a projected drop of 3.6% in home prices by October 2024.

6. Taylorville, IL

  • Base Date (31-10-2023): 0.3%
  • 30-11-2023: 0%
  • 31-01-2024: -3.4%
  • 31-10-2024: Projected decrease of -3.4%

Taylorville, Illinois, is another MSA where home prices are expected to decline. With a base date increase of 0.3%, the forecast points to a projected drop of 3.4% by October 2024.

7. Carbondale, IL

  • Base Date (31-10-2023): 0.1%
  • 30-11-2023: -0.2%
  • 31-01-2024: -3.3%
  • 31-10-2024: Projected decrease of -3.3%

Carbondale, Illinois, joins the list with a base date increase of 0.1%, leading to a projected drop of 3.3% in home prices by October 2024.

8. Macomb, IL

  • Base Date (31-10-2023): 0.3%
  • 30-11-2023: 0.4%
  • 31-01-2024: -3.3%
  • 31-10-2024: Projected decrease of -3.3%

Macomb, Illinois, is included in the MSAs where home prices are anticipated to drop, with a base date increase of 0.3% translating into a projected decrease of 3.3% by October 2024.

9. Springfield, IL

  • Base Date (31-10-2023): 0.2%
  • 30-11-2023: 0%
  • 31-01-2024: -3.1%
  • 31-10-2024: Projected decrease of -3.1%

Springfield, Illinois, is part of the MSAs facing a decline in home prices, starting from a base date increase of 0.2% and projecting a drop of 3.1% by October 2024.

10. Champaign, IL

  • Base Date (31-10-2023): 0.3%
  • 30-11-2023: 0.1%
  • 31-01-2024: -2.7%
  • 31-10-2024: Projected decrease of -2.7%

Champaign, Illinois, is forecasted to experience a decline in home prices, with a base date increase of 0.3% leading to a projected drop of 2.7% by October 2024.

11. Peoria, IL

  • Base Date (31-10-2023): 0.4%
  • 30-11-2023: 0.1%
  • 31-01-2024: -2.6%
  • 31-10-2024: Projected decrease of -2.6%

Peoria, Illinois, concludes the list with a base date increase of 0.4%, leading to a projected drop of 2.6% in home prices by October 2024.

This overview highlights the specific MSAs in Illinois where significant declines in home prices are anticipated, providing valuable insights for those interested in the real estate market in these areas.

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:

    • 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/

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