A Tale of Two Quarters: Comparing Q1 ‘23 and ‘24 Chicago and Nationally

Chicago’s home-buying season is in full spring again, but what can you expect for Summer of 2024?

“The recent boomerang in rates has dampened already tentative home-buyer momentum as we approach the spring, a historically busy season for home buying.”

Sam Khater, chief economist at Freddie Mac

With high mortgage rates and a record-low supply, it seems we may have to wait another year for home prices to be affordable again. “The recent boomerang in rates has dampened already tentative home-buyer momentum as we approach the spring, a historically busy season for home buying.” Sam Khater, chief economist at Freddie Mac, announced during a recent press statement. Housing prices continued to increase in 2024, with year-over-year rates going up 5% according to the S&P CoreLogic Case-Shiller National Home Price Index.

The increase in prices has slowed down as of 2024, however, and many experts are now expecting prices to flatten out later in the year. “If the 2020-2021 housing market was too hot, then the 2023 market was probably too cold, but 2024 won’t yet be just right yet.” Mark Fleming, chief economist at First American FinCorp said when asked about his forecast for the 2024 real estate market.

Housing Affordability in 2024:
Better than Last Year

While Chicago’s 2024 housing situation isn’t ideal, current economic predictions are downright rosy compared to the bleak situation prospective homeowners faced during the 2023 real estate affordability crisis.

With historically low housing inventory and a spike in interest rates which left some homeowners “locked-in”, the availability of houses for first-time homebuyers reached an all-time low. Year-over-year pricing skyrocketed nearly 20% in some localities. All of this combined to make 2023 one of the most difficult years to buy a new home, with many being forced to choose between sky-high prices or waiting years for rates to come back down.

The housing inventory crunch hit Chicago especially hard, with the total number of homes available for sale dropping nearly 30% from 2022 to 2023. This was followed up by another 30% decline in Chicago’s housing inventory during the early months of 2024. The entire city of Chicago dropped to less than 4,000 homes listed in January 2024, a record low accompanied by a 10% increase in median home prices from 2023.

Chicago Real Estate in 2024:
Due for a Rebound?

“The housing market is continuing its long-running trend of low sales and relatively high prices,” Dr. Daniel McMillen, professor of real estate at University of Illinois-Chicago College of Business Administration. “However, consumer confidence has turned up markedly, and sales traditionally increase significantly in spring. We expect the recent trends toward lower inflation rates, interest rates, and unemployment rates to lead to a rebound in the housing market in the coming months.”

Historical data shows a consistent trend towards affordability starting in late spring.

With home prices plateauing earlier than expected, Chicagoans can expect a very affordable home buying season this year.

There is still much in store for the 2024 housing market both in Chicago and the rest of the United States, but from what we’ve seen in quarter one of 2024 it appears that the post-pandemic surge in housing prices is cooling, both nationally and locally. Those looking to buy their first home may have some more waiting to do while prices plateau and slowly come back down, but the long-term future is bright for the real estate market, both in Chicago and across the nation.