The residential real estate world has certainly had a busy couple of years since the pandemic, and, at long last, the market seems to be finally downshifting. While some major metropolitan areas across the country are experiencing the brunt of it, the Chicago-area housing market still shows signs of life.
As interest rates continue to rise across the country, the housing market is experiencing its first lull since the market picked up after the pandemic. Even with the market concerns, prices continue to rise narrowly. New data from Illinois REALTORS® shows that home prices in the Chicago area in September 2022 are up 5.2% from a year prior. Home prices within the city, however, continue to dip slightly.
Alongside home prices, time spent on the market in the city of Chicago continues to increase dramatically. According to real estate marketplace Redfin, the average time on the market for homes is now up to 55 days, another indicator that rising interest rates are affecting sellers in the city. History shows that there is typically a knee-jerk reaction to a rise in interest rates but eventually the market grows accustomed to it. And while that number isn’t completely unusual for the season, the year over year has been continuously rising since January 2022, when it was a YoY of -14 days on the market; it now sits at a YoY gain of 2.9 days.
On the other hand, buyers are looking at the market from a different perspective, and some see opportunities to capitalize. Instead of the constant bidding wars and selling prices climbing beyond 100% that we’ve seen over the past few years, buyers are now making informed offers they weren’t able to make a year ago.
Looking ahead, Illinois REALTORS® predicts that house prices and sales will change only modestly over the next couple of months, and Mortgage Banker Association forecasts rates decreasing back into the 5% range in 2023.