First-time homebuyers are those purchasing their first-ever home to live in.
In Illinois, from 2018 through 2023, this group faced a rapidly changing housing market.
Historically, first-time buyers make up roughly 40% of home sales in a healthy market.
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This was the lowest proportion of first-time buyers since the early 1980s and well below normal levels.
Several factors drove this decline.
At the same time, competition in the market was intense.
The age of first-time buyers climbed to new highs as a result.
Todays first-timers are older because many young adults are waiting longer to purchase a home.
Illinois first-time buyers in 20182023 overwhelmingly bought homes to live in, pursuing the American Dream of homeownership.
Demand surged, but the supply of homes for sale did not keep up.
By 2022 and 2023, conditions shifted again.
Interest rates shot up, inflation eroded purchasing power, and inventory remained tight.
Property Types and Home Preferences
What kinds of homes are first-time Illinois buyers purchasing?
Largely, they seek the same types of homes as other buyers mainly standard single-family houses.
These houses also tend to appreciate well over time, which is attractive for building equity.
In the city, condos can be far more affordable than single-family houses.
A house in a popular Chicago neighborhood often costs much more than a condo in the same area.
The Rise of Larger Homes
Home size is another key preference.
But by 20202021, preferences started to shift toward larger homes.
The rise of remote work during the pandemic led buyers to prioritize space over commute distance.
Suddenly, having an extra room for a home office or a bigger yard became a top wish-list item.
Many first-time buyers who had spent years in small city apartments wanted more room to spread out.
Financing Trends
First-time buyers typically rely on mortgages and put down smaller down payments than repeat buyers.
Many use FHA loans or other low-down-payment programs to buy.
Location Preferences: Urban, Suburban, and Rural
Where did Illinois first-time buyers decide to live?
Location preferences shifted notably over 20182023, influenced by prices and new remote work realities.
Pandemic-Driven Relocation
The COVID-19 pandemic upended some of these patterns.
When remote work became widespread in 2020, living near the office became less critical.
The result was a mini urban exodus during the pandemics peak.
But relative to the suburbs, the city was quieter in 2020.
The Downstate Difference
Outside of the Chicago metro, Illinois first-time buyers have vastly different experiences.
Housing in these places is much more affordable.
Downstate markets also consist almost entirely of single-family homes condos and townhomes are rare outside of the Chicagoland region.
One might assume low prices make it easy for first-time buyers in rural Illinois.
A lot of young adults leave these areas for better opportunities, which means fewer first-time buyers locally.
In 2018, a typical 30-year fixed rate was around 4.5%.
Then in 2022, the situation reversed.
By 2023, rates hovered around 6.57% the highest in about 20 years.
Much of that increase came during the 20202021 boom when demand far exceeded supply.
While Illinois isnt as high-cost as coastal markets, affordability still worsened for locals.
Illinois has a high number of college graduates, and with that comes large student loan balances.
Before 2020, only a small fraction of jobs were work-from-home.
This had a direct effect on housing decisions.
Second, remote work changed what people wanted in a home.
Changing Household Formations
Social trends in marriage and family also play a role.
Americans are marrying and having children later than in past decades, and this is reflected in homebuying.
A growing share of first-time buyers in Illinois are single individuals rather than young married couples.
Many people now purchase a home on their own or with a partner before marriage.
Regional Differences and Comparisons
Chicago vs. Downstate Illinois
Real estate is local.
is by far Illinois largest housing market.
Home prices here are notably higher than elsewhere in Illinois.
By mid 2023, the city of Chicagos median was about $330K and climbing.
During 20182023, the market dynamics in Chicago versus downstate were distinct.
On the other hand, downstate Illinois had a milder ride.
Many downstate cities have struggled with slow job growth or even population loss.
Illinois vs.
Neighboring States
How do first-time buyer trends in Illinois compare to its neighbors like Indiana and Wisconsin?
Illinois generally has higher home prices and property taxes than Indiana, and slightly higher than Wisconsin.
Wisconsin was roughly in between or similar to Illinois in median price.
Wisconsins property taxes (roughly 1.5%) fall in between.
For first-time buyers calculating their monthly payments, this matters.
Because of these affordability factors, Indiana and Wisconsin tend to have higher homeownership rates overall.
Wisconsin is also around the low 70s percent.
This suggests first-time buyers might find it easier to become owners in those states.
In Illinois, home prices plummeted after 2007 and foreclosures flooded the market.
That tax credit drew many people into buying their first house during the recession.
By contrast, 20182023 had rising prices and no comparable nationwide tax credit.
Rather than a surplus of cheap homes, there was a shortage of listings.
Home prices after the crash bottomed out around 2012.
From 20132017, they rose gradually (roughly 1020% total over those years).
Fast forward to 20182023: prices not only fully recovered but hit new highs, especially after 2020.
By 2022, Illinois home values were roughly 67% higher than they had been a decade earlier.
The shifts over time highlight how economic cycles and housing supply can dramatically alter the first-time buying experience.
