Illinoiss housing market experienced significant swings from 2018 through 2023.
This price appreciation far outpaced income growth, squeezing many buyers.
Key Market Drivers
Several factors drove these trends.
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This chronic low inventory meant that when demand spiked, prices were pushed up quickly and competition intensified.
In short, demand surged and supply lagged, creating a fast-rising market through 2021.
Affordability concerns grew by 20222023.
Trends differed for these groups over 20182023.
In a healthy market, first-time buyers usually make up around 40% of home sales.
But by 20222023, first-time buyers faced increasing challenges and their share of purchases fell dramatically.
In 2023 it slipped even further to just 24%.
High prices and intense competition (often from cash-rich investors or trade-up buyers) priced out many newcomers.
Many younger adults simply delayed buying and continued renting.
Despite their advantages, repeat buyers also faced a tighter market.
Even budget-conscious buyers gravitate toward single-family homes for the space, privacy, and often better long-term appreciation.
Condominiums and Townhomes
Condominiums and townhouses are especially popular among younger buyers and those in urban areas.
Downsizing
Another segment of buyers were downsizing.
Downsizers contributed to condo demand as well, though some opted for smaller single-family homes in quieter areas.
Its a creative solution to affordability issues, effectively allowing families to upsize collectively.
Even within the under-$250K income bracket, dual homeownership became a trend for a minority.
Price and Property Differences
Home prices and property types differ greatly by region.
In general, the Chicago area is more expensive.
Chicagos market also has a higher concentration of condos and townhomes.
In contrast, downstate markets (like Rockford, Peoria, Springfield, etc.)
are almost entirely single-family homes and see far fewer condo sales.
Market Dynamics
The market dynamics during 20182023 also varied.
The Chicago metro experienced a hotter boom in 20202021 and a sharper cooldown after 2022.
Suburban counties around Chicago saw an influx of buyers from the city seeking more space.
In 2021, Chicagoland had double-digit price growth (~12%) and record sales volume.
Downstate markets, on the other hand, saw more muted swings.
On the flip side, affordability in downstate Illinois remained better.
Construction and Inventory
Another difference: inventory and new construction.
Many smaller towns have an aging housing stock with few new homes built since the Great Recession.
In fact, some downstate cities occasionally had higher inventory or slower sales, giving buyers more negotiating power.
The exception might be sought-after university towns or state capital regions (e.g.
Champaign-Urbana or Springfield) where there was a bit more demand and less inventory.
The period 20182023 saw notable shifts in the rental market that provide context for homebuying trends.
Rent growth was modest in the late 2010s, roughly 23% per year.
However, in 2021 as pandemic restrictions eased and young adults returned to cities, rents jumped.
Chicagos average rent hit a record high in late 2021 up about 9% year-over-year (e.g.
from ~$1,626 in Nov 2020 to ~$1,773 in Nov 2021).
This dynamic led some would-be first-time buyers to stick with renting.
This ratio didnt change drastically, but behind it there was some churn.
This contributed to the homeownership rate ticking up slightly in 2021.
Regional Rental Markets
Rental markets differed regionally too.
Illinoiss rural leaders have highlighted that finding decent affordable rentals is difficult in many areas.
It especially benefited younger buyers and those without familial wealth to tap.
Local and Federal Programs
In addition to state-level help, local programs in certain cities provided aid.
On the federal side, low-down-payment loan programs were crucial.
In 2022, FHA loans accounted for about 29% of mortgages used by first-time buyers nationally.
The 2008 financial crisis and subprime mortgage meltdown hit Illinois hard.
Foreclosures flooded the market, particularly in lower-income communities.
Homes could sit on the market for months back then.
Affordability will be the key concern.
Market Factors
Interest rate trends will heavily influence the future.
Home prices are likely to remain high, though the pace of increase may slow.
There is little evidence of a price crash in Illinois on the horizon because inventory remains tight.
Housing supply issues will persist.
Support Programs
Assistance programs will remain crucial.
Demographics and Trends
Demographic shifts will gradually change the buyer pool.
The tail end of the Millennial generation is now approaching prime homebuying age (late 20s to mid-30s).
Gen Z is entering the workforce.
In Illinois, economic factors like job growth and income growth will also play a role.
The states economy has been steady but not booming.
Buying a home will continue to be challenging but achievable for those households.
Some trends from 20182023 will carry forward, such as multi-generational purchases or relocating to find affordability.
The market is poised to remain competitive at entry-level price points because demand exceeds supply.
