With 2023 arriving sooner than later, it is time to prepare for the upcoming year by understanding what housing market trends we can expect in the Chicago area. However, it is crucial to note predictions of this kind can be difficult because of how vast the Chicago area is. Furthermore, such predictions often vary from person to person, depending on their standpoint. Based on various research and forecasts, we have accumulated information we can share regarding the Chicago housing market predictions for 2023.
What will happen to Chicago’s home prices in 2023?
The number one thing most people want to know about when researching Chicago housing market predictions for 2023 is the possible home prices. These prices will determine if it is lucrative to sell your home or affordable to purchase one in 2023. While some people may remain hopeful that home prices will crash as they did from 1973-1977, this is incredibly unlikely. Such a drop of 30% is not expected to occur anytime soon.
The main reason prices won’t drop anytime soon is that the inventory in Chicago is as low as it has ever been. Therefore, prices will remain relatively flat, with some sources claiming an insignificant rise of 1%.
On the other hand, other sources such as Zillow claim Chicago home prices will drop 0.9% from August this year to August 2023. Depending on the area, there may be a more significant drop of 3% to 5%. If you’re curious about the specifics of a neighborhood you’re looking at, be sure to contact a professional.
Will mortgage interest rates drop or rise during 2023?
Mortgage interest rates are an essential factor that pulls the strings of various other related factors. For example, if interest rates go up, home prices will likely also. Therefore, predictions about them may be detrimental to what can be expected in 2023.
Interest rates have approximately doubled from their lowest point in 2022. Most believe the 30-year and 15-year mortgage rates will increase throughout 2023 due to persistent inflation, generally higher interest rates, a possible recession, and geopolitical tensions. Since these factors are changed almost daily, check on them to know where interest rates are going. For example, based on the Federal Reserve’s ability to slow down inflation, we may look at a lower increase in interest rates in the upcoming year.
What is to be expected with house sales next year?
If you’re planning on moving in the upcoming year, professionals such as Relosmart Movers suggest always keeping an eye on current issues affecting our country. After all, if any of these factors change, based on what occurs in 2023, we are looking at three different possible scenarios that will affect your plans:
1. Inflation rates continue to be high:
That will cause mortgage rates to also remain high, which will, in turn, make fewer and fewer people buy homes in the Chicago area. Some expect a drop of around 10% in homes sold in 2023 compared to 2022.
2. The Consumer Price Index (CPI) lowers inflation levels:
With other inflation rates lowering gradually, we may look at mortgage rates stabilizing around the 7% to 7.5% mark. That will result in home sales dropping by around 7-8%.
3. Recession occurs:
Although a recession may cause mortgage rates to drop, it will make people less confident in their ability to keep their jobs and acquire a home. Therefore, if a recession occurs, there will likely be a drop in home sales of around 15%.
Will the housing inventory go down or up?
As previously mentioned, Chicago has been dealing with an incredibly low housing inventory. And, when it comes to Chicago housing market predictions, most sources agree that there likely will not be a significant spike in inventory. That is due to many reasons. The main reason is that selling a home will not be so lucrative. People with fixed 3% mortgage rates will likely not want to settle for higher mortgage rates. Alternatively, with such high home prices and interest rates, few people will want to buy a home. Lastly, we may look at an even smaller housing inventory if building properties slow down more.
Who will the market favor in the upcoming year: buyers or sellers?
Generally, the housing market (no matter the location) always favors buyers or sellers. For the past year, it has been truly a seller’s market. However, what can we expect in Chicago in 2023? Well, many expect it will be a balanced market. Since who the market favors depends on the location and season, these predictions vary. It is expected to be a seller’s market from January to June. At the same time, this will slowly evolve into a buyer’s market from around May until the end of the year. That means no matter which side of the coin you’re on, you will have time to prepare yourself and your financial situation.
Should you purchase/sell a home in Chicago in 2023?
The last question you may be asking yourself is if you should purchase or sell your home (or even both) in Chicago in 2023. Let us help you with the answer.
Is it a good idea to purchase a home?
Unfortunately, this is not a one-fits-all type of answer. Your ability to purchase a home and it is a good decision depends on many personal factors. Do you feel confident in your financial stability for the upcoming years? Is your credit score good, have a down payment ready, and are you ready to own a home for at least five years? If the answer to all of these questions is yes – then congratulations! You are ready to purchase a home in Chicago in 2023. However, if you are unsure about some of these questions, you may need to better yourself for the big decision of becoming a homeowner.
Is it a good idea to sell a home?
Similarly to selling a home, you must consider Chicago housing market predictions and look within. Does your current situation allow you to sell your home, do you have a plan for your future residence, and are you ready for the turmoil of selling a property? Understand that prices will still be up in 2023, and it will still be an excellent time to sell a home, just as long as you are wise about how you go about it. As mentioned before, the beginning of the year is ideal for sellers, so prepare yourself (and your home) until then.
About Gerardo Zavala, Realtor
There is a true passion for connecting people with real estate that makes me fall in love with my career over and over again. While my title says, REALTOR® I think I am much more than that. For example, I am present and actively listening to my client’s needs, on the spot when things are urgent, and by your side to say “congratulations.” Most of my clients will say that I am a connection away from support no matter the situation, day, or time. In my opinion, customer service, educating the client on progress and next steps, and overall satisfaction are my top priorities. How can I help you?
