What does the future hold for Chicago area home buyers and sellers? We have some educated predictions for you!
First, we need to talk about the variables.
In March 2024, Chicago voters will decide if the city’s real estate transfer tax will be changed. A transfer tax is basically a sales tax on real estate transactions. If passed, the transfer taxes for residential and commercial properties sold for less than $1 million would be reduced by 20%. But properties that sell for over $1 million could see their transfer taxes increase by as much as 400%. Some property owners and real estate brokers say that the new system would have unintended consequences. Namely, it could negatively affect real estate sales and property values, and in turn, potentially increase annual property tax obligations.
That said, transfer taxes only happen when a property is sold, so this shouldn’t be a show-stopper if it passes. But, we can’t rule out some domino effects if there’s a sales rush to beat any new transfer tax. When sellers are in a hurry, market values can fall.
Next, we have the fact that 2024 is a presidential election year. This can cause uncertainty in the financial markets and in consumer sentiment. Yet the 2020 election didn’t slow down Chicago area real estate sales. The 2024 election cycle isn’t likely to stop people from carrying on with their lives and business.
Now for the rest:
Interest rates will probably decrease in 2024, but gradually and in small amounts. Mortgage interest rates may get below 7%, but economists don’t expect them to get below 6%.
Chicago area home prices will depend on what happens with home inventory. As long as there are more buyers than homes for sale, home prices will keep rising. There is some hope that home inventory will improve when mortgage interest rates come down…but there wasn’t enough home inventory when rates were 3%. Still, lower rates could help home builders and rehabbers increase their production, and lower rates could allow some homeowners to tear themselves away from the 3% to 4% mortgage they have on their current house.
Yes, the 2024 Chicago area real estate market could look a lot like 2023! For home buyers who are well-prepared for the market, it may be better. And this is the rule no matter what. Being educated about the process, about the market, and about your mortgage options is essential. Being financially equipped to get a mortgage approval is essential. Having a real estate brokerage who works for you and cares about your success is essential.
Buying a home isn’t the easiest thing you’ll ever do. Though it’s one of the most important things you’ll ever do. When you’re ready to get started, we’re here to help!
Happy Holidays, and all the best to you in 2024!
StartingPoint Realty – serving Chicagoland since 2004!
StartingPoint Realty proudly serves home buyers and sellers throughout the entire Chicago area. We offer free, first-time home buyer seminars every month! Contact us for your free home buying or home selling consultation!
Ryan Gable Broker/CEO Starting Point Realty
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