Now that interest rates are rising, there are predictions about a slowdown in Chicago home prices. Here are things Chicago home buyers and sellers should know!
As of February 2022, Chicago area home prices increased 10% on a year-over-year basis, according to CoreLogic. CoreLogic says home prices in Chicago are expected to increase 6.3% by February 2023. The 6.3% would be a “slowdown” in home price growth compared to current trends, but can you bank on it?
Such predictions assume that higher rates will thin out home buying competition. This will only be true to a certain degree – and in certain price points. For example, buyers who sold their prior home for a healthy profit could pay cash, or nearly all cash, for their next home, so rate hikes won’t stop them. Investors who are paying cash won’t be affected by higher rates. Investors using financing may get picky about the homes they purchase to rent out, or to flip – but higher rates won’t shut them down.
According to industry data by ATTOM, 8.5% of Chicago homes were sold to investors during the third quarter of 2021.Nationally, investors accounted for about 30% of all home purchases during the same quarter. As other markets around the country have become more expensive, investors have taken a greater interest in relatively affordable markets like Chicago.
The entry-level market, where first-time buyers have the most competition, probably won’t get easer. It would take a lot of new, affordable inventory to soften those prices. The mid-level market may slow a bit, since higher rates make it more difficult for buyers to stretch into higher-priced homes. However, buyers are still outnumbering the homes available on the market. Supply and demand needs to even out for home prices to slow down.
Supply is a tough problem to solve. Unless we see more listings, and homes spending more days on the market, Chicago home prices will climb. Yet the current market should entice some homeowners to sell and take a profit – and there will be pockets of opportunity for well-prepared Chicago home buyers.
StartingPoint Realty helps first-time home buyers, and home sellers too!
StartingPoint Realty proudly serves first-time home buyers throughout the entire Chicago area. Get an introduction to home buying by attending our free home buying webinar! There’s no sales pressure and no obligation.
If you’re thinking about selling your Chicago area home, we’ve got qualified buyers at the ready! We’ll give you the information and guidance you need to make the most of your opportunities. Ask us for a free consultation about your home’s market value. There is no pressure to list your home, and no obligation.
Always feel welcome to contact us with your Chicago real estate questions!
Ryan Gable Broker/CEO Starting Point Realty
Become a StartingPoint Realty Facebook Fan
Follow StartingPoint Realty on Twitter