The Illinois housing market is continuing its correction to where it was before the pandemic, but would-be homebuyers looking for the right time to jump into the market will have to wait and see, housing experts say.
While the annual median price of homes was 4% higher in 2022 than in 2021 statewide, prices and sales are now lower than they were at this time last year, with another drop in December, according to Illinois Realtors, a trade association for real estate agents.
Chicago median home sale prices in 2022 remained the same as the prior year at $335,000, according to Illinois Realtors. But in December, prices were down 8.1% compared with the same month in 2021. The number of home sales decreased by 41.2% year-over-year in December and 15% for the year.
While the price drop may be encouraging for potential homebuyers, the housing market typically slows down this time of year. And with the potential for further interest rate hikes from the Federal Reserve on the horizon, housing experts are hesitant to make predictions for 2023.
“Although the housing market in Illinois has slowed since its peak in June, the decline is largely due to the usual seasonality in house prices and sales,” said Daniel McMillen, head of the department of real estate at the University of Illinois at Chicago, in a statement. “Our forecasts indicate that house prices and the number of sales will increase as the housing market picks up during spring.”
[ How Chicago area home values compare by ZIP code ]
Chicagoans looking to buy a home now will continue to face a tight market, as inventory remains low due to sellers’ desires to hang on to their low mortgage rates. New listings in Chicago were down 35% year-over-year in December, according to Zillow.
The upside for potential buyers is that monthly mortgage payments for a home purchased for around $300,000 fell 0.8% last month to $1,552, though they are still about 58% higher than the prior December, Zillow data shows. Freddie Mac data has national rates for a 30-year, fixed-rate mortgage at 6.15% this week, down from the 7.08% peak on Nov. 10, 2022.
Also, at the end of last year, Zillow data reveals that the share of homes selling for above asking price fell to 29%, and listings were sitting on the market for roughly 33 days — 12 days longer than the year before, illustrating a decline in bidding wars.
Michael Gobber, this year’s president of Illinois Realtors, said December’s results suggest the market is balancing out in a way that could benefit both sellers and buyers.
“But it is way too soon to predict the future because of the fluctuating economy and interest rates,” he said in a statement.