We'll discuss the latest trends and projections for the Chicago housing market. Prices are expected to continue to increase through the rest of the year while the number of sales is expected to decrease as many homeowners are staying in their homes with rising prices and interest rates.
In a seller's market, real estate prices increase. The strong buyer demand is driving prices in the Chicago metro area as compared to the previous year. In February, at the latest average annual pending sales rate, Illinois had enough housing inventory for 1.1 months (down from 1.2 last year). In the Chicago PMSA, the comparable figure was 1.0 months (down from 1.1 last year). Months of supply for homes in the lowest price ranges (<100K) experienced declines both in Illinois and the Chicago PMSA.
In the Chicago Metro Area, the median home sale price in February 2022 was $290,000, an increase of 7.4 percent from $270,000 in February 2021. Last month, 6,935 homes (single-family and condominiums) were sold in the nine-county Chicago Metro Area, a 3.0 percent decrease from the 7,146 homes sold in February 2021. The median price of a home in the city of Chicago in February 2022 was $320,000, the same as it was in February 2021.
Stronger buyer activity will continue with speedy sales and multiple offers leading to price gains. According to local realtors, on average, Illinois and the Chicago PMSA have already recovered to pre-bubble levels. The December 2008 median sale price has been adjusted to 2021 values to allow for the calculation of the housing price recovery factoring in inflation.
According to Fannie Mae’s latest set of predictions for 2022, 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 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).
Year over year, these gains will range from 2.0% to 7.9% in Illinois and from 1.40% to 7.7% in the Chicago PMSA. By December 2022, the median home price in Illinois is expected to be $261,561 and in the Chicago PMSA, it will be $306,134, an increase of 7.9 percent and 7.6 percent, respectively. In 2022, both Illinois and the Chicago metropolitan area are expected to see overall negative growth in sales.
Annual growth in monthly sales is forecast to range between -4.1 percent and 11.5 percent in Illinois, with most months experiencing negative growth. The Chicago PMSA's comparative range is – 11.0 percent to -5.0 percent, with negative gains in all months. When foreclosed sales are excluded from total sales, forecasts for regular sales indicate a range of -6.8 to 9.6 percent growth for the Chicago PMSA.