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Illinois Real Estate Market Forecast For 2023

Home sales declined and prices increased in the Illinois housing market in 2022 as mortgage rates rose. For example, 16,194 homes were sold in Illinois in May 2022, a 10% decrease from the previous year. Also, in May 2022, there were 11,641 homes sold in the nine-county Chicago region, which is a 10.6% drop from 2022.

What does the market hold for 2023? Keep reading to learn about the Illinois real estate market forecast for next year. Then, speak to an Illinois real estate lawyer at Covert Marrero Covert, LLP if you have a real estate question.

Housing Market Forecast For Illinois In 2023

Zillow reports that the median value of Illinois homes is approximately $267,000. The value of homes in Illinois has risen by almost 12% in the last year and 27% over the last 24 months. Home prices in the Chicago area will drop by approximately .9% in 2023. Here are some additional housing predictions for the Illinois housing market next year:

Malcomb, Illinois: 3.3% drop in home values by August 2023
Galesburg, Illinois: 2.8% drop in home values
Jacksonville, Illinois: 28% drop in home values
Taylorville, Illinois: 2.8% drop in home values
Charleston, Illinois: 2.7% drop in home values
Sterling, Illinois: 2.6% drop in home values
Danville: 2% drop in home values
Pontiac, Illinois: 2.6% drop in home values
Peoria, Illinois: 2.3% drop in home values

Illinois Listed As a Best State To Live In

While home prices will generally decline in Illinois in 2023, this reflects the trend occurring throughout the country during a time of high-interest rates.

WalletHub recently found that Illinois continues to be one of the best states in which to live. The 2021 survey found that Illinois is the #18 state to live in. It was rated as #3 in quality of life, #8 in safety, and #20 for education and health.

Also, statistics show that population and household growth lead to a boom in housing demand. A survey by the US Census found recently that the population of Illinois may be undercounted by up to 2%. So, population growth in Illinois could be higher than the statistics show. While house prices are dropping in Illinois for 2022 and 2023, this is mostly because of rising mortgage and inflation rates.

In the future, prices of homes in Illinois should rise again as inflation and mortgage rates drop. It could be a good time to buy a home in Illinois because of the reduced price growth in 2023. If you have a real estate transaction to consider next year, be sure to have it reviewed by a qualified real estate attorney.

Contact An Illinois Real Estate Lawyer Today

Whether you have a short sale, foreclosure, or other real estate action, the Illinois real estate lawyers at Covert Marrero Covert, LLP can help you. Please contact us today at (630) 717-2783. Our attorneys also serve the communities of Warrenville, Naperville, Joliet, and Schaumburg.

How Rising Interest Rates Are Impacting the Real Estate Market

On May 4th, 2022, The Federal Reserve announced that short-term interest rates would increase by 0.50% to combat inflation and stabilize the economy post-pandemic. The rising interest rates have broken records and have had a noticeable impact on the real estate market, particularly for investors.

This is nothing new. Interest rates have historically been reduced to support an ailing economy by stimulating growth. It’s what happened during the recession and when the Covid-19 pandemic first hit. The downside was inflation, which increased interest rates, so businesses and people didn’t have to borrow money for large purchases.

What Rising Interest Rates Mean For Investors

When interest rates rise, houses become more expensive, and naturally, their demand reduces as well. In turn, this forces housing costs to decrease as well. However, the existing market is a bit different – there has been an increase in housing costs because of the following reasons:

Foreclosures impacted by the Covid-19 pandemic.
Millennials are old and established enough to afford homes.
Not as many single-family homes as there used to be because of labor shortages and supply chain problems.

Experts believe that while short-term investments are risky, investors can still look into long-term options that can provide better gains. You can withstand inflation with a property that can act as a source of income a few years later.

What Multifamily Investors Should Consider

You can go for a fixed rate when you refinance an apartment or buy a multifamily property, but you should look into other factors besides interest rates. These include:

Shifts in demographics

Demand is outpacing supply in the housing market as interest rates rise. However, as the economy recovers, more people may move into the cities from the suburbs. This can be a new market for you to tap into as an investor, including individuals looking for housing near their workplaces.

The local market

Real estate is mostly a local business, so look into your niche before refinancing or buying. Also, consider each property’s capitalization rate – these rise with interest rates.

The existing financing structure

Short and long-term loans may be affected by rising interest rates. Consider factors that affect mortgage rates, such as a 10-year treasury lead. These yields reflect investor sentiments on the economy. Rising yields may point to higher inflation rates and vice versa.

As interest rates rise, knowledgeable and proactive Illinois real estate attorneys can help you determine a solid plan of action regarding your real estate investments.

Contact Covert Legal for a Consultation Today

For more than four decades, the Illinois real estate attorneys at Covert Legal in Warrenville have been aiding real estate investors, and other clients reach their goals. We have experience preparing contracts, and negotiating sales for homes, vacant lands, and even commercial property. We have also represented clients in court for boundary disputes, title disputes, and other issues.

What Will Rising Interest Rates do to the Real Estate Market?

Rising real estate interest rates impact sellers and buyers in the market. Hypothetically, house prices and property value are directly proportional to mortgage rates. However, the phenomenon is far from clear-cut. An Illinois real estate attorney will tell you that the economy’s health ultimately determines what rises and what falls.

The Link between Economy Health and Interest Rates

Rising mortgage rates will not affect house prices and property value much if the economy improves fast. So if, say, mortgage rates increase by a single point and increase monthly payments, a strong economy will allow employers to increase salaries to compensate for the increase in interest rate.

A robust economy acts as a foundation for job and salary growth. In this case, rising interest rates should not harm the real estate market. However, it seems home buyers and investors can expect increased interest rates this year. Here are some of the things they can expect if or when that happens:

A Reduction in Buyer Demand

Buyers may pull back slightly if interest rates increase to the point that homes become less affordable. If that happens, you can expect fewer bidding wars for properties on the market. As such, interested buyers may not have to resort to risky strategies that they were forced to use last year when interest rates were at the lowest they had been since 1971. A whopping 72% of buyers found themselves in a brutal bidding war.

Refinancing May Slow Down

Last year, rates were low enough that buyers had no qualms getting loans for refinancing that ultimately amounted to $1.6 trillion. Lenders were swamped with refinancing jobs, and real estate owners across the country were able to reduce their monthly payments and long-term interest costs significantly.

However, if interest rates increase this year, refinancing will also slow down, even if the former increases by a small margin. The refinancing process comes with additional costs and stress. Even a slight increase in interest rates may discourage investors and homeowners from going through the hassle of refinancing. It will also hurt their savings.

Price Growth Will Slow Down

The pandemic had one huge benefit for real estate investors and buyers who wanted new space and a fresh new perspective to overcome their stress. It led to rock bottom interest rates and thus highly affordable home prices.

Those trends have long passed, so property prices are expected to grow in 2022. Experts believe those may remain 2 to 6 percent most of the year and manageable.

Contact Covert Marrero Covert for Real Estate Advice

Whether you are a first-time home buyer or an experienced real estate investor, hire a dedicated Illinois real estate attorney from Covert Marrero Covert to enhance your portfolio. Besides handling everything involved in property sales, we can also handle short sales, negotiate with the mortgage company on your behalf and ensure you walk away with complete peace of mind. Get in touch with us for a consultation today before interest rates skyrocket! Don’t wait for those rates to rise before making important investment decisions.

Are We In Another Real Estate Bubble In The US?

Owning a home is one of the most sought-after dreams that anyone can have. While the world is still reeling with a pandemic that seems to grow stronger by the year and the resulting economic recession, they take heart from the favorable real estate market that allows them to buy homes at record low mortgage rates.

While it may seem that a rapid increase in demand may lead to a real estate bubble, the opposite seems to be the case. A Warrenville real estate attorney from Covert Marrero Covert can guide you to the best decision.

Why the US Housing Market Can Avoid Another Real Estate Bubble

As more and more people opt to work from home in 2021, the value of residential properties across the US is increasing. As the world grows hopeful for a return to normalcy during successful vaccination campaigns, economic growth has been positive across the board. There has been a positive increase in high investments in the stock market along with higher consumer expenditures.

Both of these factors have impacted the US housing market amidst a housing boom that outperformed expectations. As of March of this year, the median home prices in the country increased by more than 11%.

The steady growth of the housing market has led many to wonder if we are in the middle of a new real estate bubble. As per market updates, as consumer demands coincide with the real estate season, a reduced number of homes have increased prices.

The news is heartening. While median home prices in the US are expected to be higher than those in 2020, the median mortgage rate is forecasted to remain around 3% at most. This alone should be enough incentive for homebuyers to lock in properties before the rates go up any further.

The expectation of a housing market crash is understandable, but so far, the data has proven that there is nothing to worry about at present. Like other economic sectors, the real estate market is susceptible to several factors. The patchy impact of the Covid-19 pandemic on the employment sector and the country’s overall income level will likely affect the 2021 housing market.

As such, there has been a slow but steady decline in home sales in 2021 on a monthly and yearly basis. This proves that the housing market is cooling down slowly after the buying frenzy of 2020 and 2021. The good news is that the decline is slow enough to prevent a large housing bubble from making a difference.

Contact an Experienced Warrenville Real Estate Attorney for Lucrative Investments

If you are interested in buying a home or investing in real estate, you need to have a dedicated Warrenville real estate attorney in your corner. This is where the real estate lawyers at Covert Marrero Covert can help. We are experienced in guiding clients such as yourself through complex real estate transactions that can result in great investments. Our professional attorneys are skillful in helping our clients with a range of real estate transactions to improve their portfolios. Get in touch with us for a consultation today and see how we can help you.