The Chicago real estate market is no stranger to the winter slowdown, and the end of 2022 proved no different. But following what looked like market softening at the beginning of the year, things are starting to look up for Chicagoland housing in 2023.
While the market hit a low in November, it shows promising signs of bouncing back. According to Redfin, as of February 2023, the market has seen increases in potential buyers seeking home tours and those reaching out to agents with interest in buying, up 17% and 13%, respectively, compared to November 2022. The uptick in activity points to the possibility of home sales increasing and bidding wars making a comeback.
One of the main reasons for the rise in interest from buyers is due to the continued decline in mortgage rates from their peak last fall. With rates sitting just under 6.5%, analysts predict we will continue to see rates remain stable or drop slightly through the remainder of 2023.
To be sure, although the increase in involvement from potential buyers is a positive sign, the area is still seeing inventory levels at historic lows. For sellers, this means the potential of getting multiple offers on a property and a quick sale, according to Realty Times. For buyers, the competition for scarce inventory may seem daunting, but for pricey homes and condos that aren’t selling fast, there could be added incentives for sellers to close a deal, which always gives the buyer an advantage.
While sellers aren’t contributing much to the thinned market, a continued surge in new-home construction is. According to Chicago Magazine, housing starts rose 9.8% month over month in February. As to be expected, single-family homes increased by just 1% and the majority of new construction projects, including apartment buildings and condominiums, climbed by 24%.
Looking ahead, Forbes predicts that home prices will remain steady, but considering the longer timeline for new condominiums to hit the market coupled with a majority of homeowners sitting on a mortgage rate of 4% or less, the Chicago market won’t likely see a spike in activity for a while.