Articles

December 12, 2022 By Marco Santarelli

We'll discuss the latest trends and projections for the Chicago housing market. Is the Chicago-area housing market vulnerable to a recession? Home prices are expected to decline slightly over the next twelve months but the forecast for the fourth quarter of 2022 is still positive (+4.5%). The forecasts also indicate positive annual growth for the state as a whole with no decline in home values.

The median home sale price in the Chicago Metro Area in October 2022 was $300,000, up 3.2 percent as compared to last year. In the nine-county Chicago Metro Area, 7,645 homes (single-family and condominiums) were sold last month, a 32.4 percent decrease from the 11,303 homes sold in October 2021.

The median price of a home in the city of Chicago in October 2022 was $320,000, an increase of 2.2 percent from $313,000 in October 2021. In Chicago, home sales (single-family and condominiums) in October 2022 totaled 1,709 homes sold, a 30.8 percent decrease from October 2021 sales of 2,469 homes.

The annual home price growth in the United States is forecasted to be slower than in 2021, but still, be strong by historical standards. So, what are the projections for the state of Illinois in 2022? Well, according to the housing forecast published by the Illinois Association of Realtors and presented by the Regional Economics Applications Laboratory, Institute of Government and Public Affairs University of Illinois, in 2022, median prices are expected to grow continuously within a narrower and lower range than in 2021 (source).

In the last twelve months, median prices maintained positive annual growth in each month while sales experienced a more mixed trend. The median sale prices in both Illinois and the Chicago PMSA generally experienced a lower than-forecasted annual growth rate at the beginning and end of the year while the growth rate was higher than forecasted in midyear.

Actual sales in both Illinois and the Chicago PMSA experienced similar or higher annual growth rates than forecasted.  In 2022, median prices are expected to rise steadily in a lower and narrower range than in 2021. Year over year, these gains will range from 2.0% to 7.9% in Illinois and from 1.4% to 7.7% in the Chicago PMSA.

By December 2022, the median price of homes is forecasted to be $261,561 in Illinois and $306,134 in Chicago PMSA, respectively 7.9% and 7.6% higher on an annual basis. Sales are forecasted to experience overall negative gains in 2022 for both Illinois and the Chicago area. The annual growth in monthly sales is forecasted to range from -4.1% to 11.5% for Illinois, with negative gains for most months. The comparative range for the Chicago PMSA is from -11.0% to -5.0%, with negative gains for all months.

 

Chicago Real Estate Market Forecast 2022 and 2023

The Chicago housing market is shaping up to continue the trend of the last few years as one of the hottest markets in the United States. It is also one of the hottest real estate markets for investing in rental properties. What are the Chicago real estate market predictions for 2023? NeighborhoodScout.com's data shows that over the last ten years the Chicago annual appreciation rate has been averaging 5.37%.

The cumulative appreciation rate over the ten years has been 68.79%. Over the last twelve months, from 2021 Q2 – 2022 Q2, Chicago's appreciation rate has been 9.59%, which is lower than appreciation rates in most communities in America. Between 2022 Q1 – 2022 Q2, the house appreciation rates in Chicago were at 2.59%, which equates to an annual appreciation rate of 10.78%.

Let us look at the price trends recorded by Zillow over the past year. Since the last October, Chicago metro home values have increased by around 9.6% (Current Zillow Home Value Index = $311,225). Here is Zillow's housing forecast for Chicago MSA.

Chicago-Naperville-Elgin Metro home values have gone up 9.6% over the past year.

Zillow predicts that home values in Chicago MSA may drop by 1.4% between Oct 2022 to Oct 2023.