2023 Chicago Housing: Prices, Trends, and Forecast

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In this analysis, we’ll delve into the latest trends and projections for the Chicago housing market. The Windy City’s housing arena has recently faced a decline in home sales and a dip in median home prices, echoing broader shifts in the real estate industry[1]. Nevertheless, opportunities remain ripe for both buyers and sellers. Let’s take a comprehensive look at Chicago’s current real estate scenario, in collaboration with insights from Norada Real Estate.

Chicago Housing Market Report & Trends

May 2023 saw the Illinois housing market grappling with a dip in statewide home sales and a squeezed housing inventory compared to 2022[2]. The data from Illinois REALTORS® offers a lens into the ongoing real estate conditions. We’ll zoom into specifics, especially focusing on the Chicago Metropolitan Statistical Area (MSA) and the city of Chicago itself.

Statewide Home Sales Decline

May 2023 registered a total of 12,817 homes sold statewide, covering both single-family homes and condominiums[3]. This marks a 22.3% drop compared to May 2022, which witnessed 16,492 homes being sold[4]. The median home price in May 2023 stood at $275,000, seeing a minor decrease of 0.2% from 2022’s median price of $275,590[5]. The average time to sell a home also saw a slight increase from 24 days in 2022 to 28 days in 2023[6].

Limited Housing Inventory

The limited housing stock emerges as a significant factor in the dip in home sales. May 2023’s inventory recorded a total of 17,649 homes available for sale, marking a 27.3% decline from the 24,268 homes in May 2022[7]. This recent inventory figure is the second-lowest monthly average since 2008, suggesting a tight market for potential homebuyers[8].

The Seller’s Market and Expert Advice

With the dearth of homes available for sale, the landscape is leaning towards a seller’s market[9]. This positions homeowners in an advantageous spot should they consider listing their properties. However, as Michael Gobber of Illinois REALTORS® and managing broker-partner at Century 21 Circle in Westchester puts it, seeking expert advice from seasoned REALTORS® is pivotal before making any real estate moves[10]. Norada Real Estate also echoes this sentiment, highlighting the importance of informed decision-making in the present market conditions.

Chicago Housing Market Report: Metropolitan Statistical Area (MSA)

The nine-county Chicago Metro Area recorded 8,952 home sales, including both single-family homes and condominiums, in May 2023[11]. This marks a 24.5% decrease compared to the 11,850 homes sold in May 2022[12]. In contrast to the dip in sales, the median price of homes in the Metro Area witnessed a 0.9% rise, moving from $326,950 in 2022 to $330,000 in 2023[13].

City of Chicago Housing Market Dynamics

In the heart of Chicago, home sales underwent a significant 29.0% year-over-year drop in May 2023, recording only 2,397 sales as against the 3,374 in May 2022[14]. Additionally, Chicago’s median home price dipped by 4.4% to $335,000 in May 2023, down from the previous year’s $350,500[15].

Dr. Daniel McMillen from the Stuart Handler Department of Real Estate (SHDRE) at the University of Illinois at Chicago College of Business Administration pinpoints the current decline in home sales to prevailing high interest rates[16]. Homeowners who made purchases during low-interest rate phases are now hesitant about transitioning to homes at significantly higher rates. As per Dr. McMillen’s projections, and supported by analyses from Norada Real Estate, the usual seasonal peak in home prices will occur in June, with subsequent months like July and August seeing milder price declines than in past years[17].

Sarah Ware from the Chicago Association of REALTORS® and Ware Realty Group in Chicago notices a slight cooling of the market in May compared to April[18]. However, she emphasizes the spike in closed sales vis-à-vis April, indicating a summer market ripe with opportunities. With mortgage rates on a slow decline, all eyes remain on its potential influence on the market[19].

Chicago Rent Prices 2023

The Zumper Chicago Metro Area Report paints a detailed picture of the latest rental prices in the region. The median rent for a one-bedroom apartment in Illinois stood at $1,325[20]. Lombard topped the list as the priciest city, with a one-bedroom setting tenants back by $2,030, while Delkab emerged as the most pocket-friendly with rents averaging at $680[21].

The Fastest Growing Cities For Rents in Chicago Metro Area (Y/Y%)

Lombard witnessed the most accelerated rent growth, soaring by 37.2% since last year[22]. Following suit, Des Plaines saw a 29.5% hike, and Elmhurst experienced a 23.8% surge[23].

The Fastest Growing Cities For Rents in Chicago Metro Area (M/M%)

On a monthly analysis, Skokie topped the list with a 6.2% rent hike[24]. Naperville, Des Plaines, and Arlington Heights witnessed a tied growth rate of 5.7%. Meanwhile, Schaumburg recorded a 4.1% uptick in rents for the previous month[25].

Chicago Housing Market Forecast 2023-2024

Chicago’s real estate landscape has been touted as one of the nation’s hottest markets, particularly appealing for rental property investments. How does the forecast for 2023 shape up?

Drawing from the market predictions presented by Stuart Handler from the Department of Real Estate at the University of Illinois Chicago, and corroborated by insights from Norada Real Estate, there’s a blend of yearly decreases juxtaposed with monthly increments. On an annual scale, Illinois could see sales drop between -10.5% to -14.2%, and the Chicago PMSA might witness decreases ranging from -12.4% to -16.7%[26]. These numbers suggest a challenging market in comparison to yesteryears.

Yet, monthly forecasts offer a silver lining. Averaging over three months, sales in Illinois are predicted to rise between 8.4% to 11.4%. In the same vein, the Chicago PMSA might see monthly upticks ranging from 7.0% to 9.5%[27]. These indicators hint at a latent demand and potential market rejuvenation.

Median Price Forecast

Price forecasts depict a mixed bag. In Illinois, annual growth rates fluctuate but maintain a semblance of stability. The median price might dip by -0.4% in May, followed by a -1.0% in June, but July holds promise with a projected 2.2% increment[28]. In contrast, the Chicago PMSA paints a bleaker picture, with May, June, and July projected to see median price drops of -0.8%, -1.6%, and -0.7% respectively[29].

However, all is not gloomy on the horizon. Zillow’s comprehensive forecast for the Chicago-Naperville-Elgin metro region points towards budding growth. As of April 30, 2023, the average home value in this region stands at $294,993[30]. Moving forward, the anticipation is for this value to ascend, signaling an uptrend in the market.