Dec 16, 2023 - Real Estate

What 2024 holds for Chicago real estate

Animated illustration of a real estate sign with the year 2023 on it flipping over to reveal the year 2024.

Illustration: Brendan Lynch/Axios

Chicago real estate experts predict the market will be less stagnant — but not wildly different — in 2024.

Why it matters: Many home shoppers stood still this year, waiting for mortgage rates to drop before they made a move.

  • Major forecasters now expect rates to dip at least a little.

What they're saying: "People are going to get tired of putting their lives on hold," says Chicago broker Mary Jo Nathan, who tells Axios she anticipates more homes for sale.

Zoom in: Those who do walk away from low-interest mortgages will probably be high-equity homeowners who buy their next place with cash, says local broker Wayne Beals.

Zoom out: If the economy is steady, rates could land around 6%. If the economy stumbles, mortgage rates could fall more significantly, says Greg McBride, Bankrate's chief financial analyst.

  • No one can say with certainty just how much mortgage rates will change because they are impacted by inflation and the Federal Reserve.

Between the lines: Lower mortgage rates won't clear all buyer hurdles, and actually could push home prices higher if demand surges and inventory remains low.

  • Yes, but: "Moving is first and foremost a life decision," Opendoor's Merav Bloch tells Axios.

What's happening: The Fed left interest rates unchanged at its final policy meeting of 2023 and signaled next year could bring cuts, Axios' Neil Irwin and Courtenay Brown report.

Existing housing units relative to population demand in the Chicago metro area
Data: Hines analysis of Census Bureau and Moody's data; Note: Population demand is a theoretical housing demand metric based on long-term household formation and homeownership rates by age cohort; Chart: Axios Visuals

By the numbers: Chicago is short around 142,000 homes, according to figures global developer Hines shared with Axios.

  • That's 3.7% of the metro area's existing inventory as of 2022.

State of play: America needs three million more housing units, per the analysis, a shortage that's pushing up the cost of renting and buying.

  • Hines compared the stock of existing homes, either to rent or buy, with what they calculated is the population's housing demand.
  • The analysis includes housing units as defined by the census, which excludes dorms, skilled nursing facilities or other group quarters arrangements.

Go deeper: Chicago has scaled back on new apartment construction in recent years.

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