Learn more about the housing market in Illinois

Every state is unique when it comes to the real estate market. That’s why it’s critical to understand the market you live or operate in. Whether you’re renting, buying, or selling, it will impact many aspects of your life.  

Illinois Housing Market Overview 

Though it is nicknamed ‘the prairie state’ for its vast stretches of open grassland, Illinois is also known for its towering Chicago skyscrapers in one of the country’s most populous cities. For this reason, industry in the state is diverse, with both traditionally rural and urban sectors making an impact on the state’s GDP. However, according to data from IBISWorld, real estate, rental, and leasing was the second most profitable sector in the state in 2023. 

At the beginning of the year, experts predicted that the housing market Illinois would experience in 2024 would involve an improved balance between supply and demand. In 2023, Illinois saw a spike in home prices and mortgage rates fueled by low inventory relative to the number of buyers. According to Redfin, inventory in Illinois has increased from the beginning of the year, as 15,217 new listings were put on the market in April 2024. This is an increase of almost 10,000 new monthly listings at the beginning of the year and is an increase of 6.3% from April 2023. However, the total number of homes for sale has ultimately decreased from April 2023 to 41,290, indicating that overall issues with inventory have not gone away. 

The same article predicted that skyrocketing 30-day fixed mortgage rates that were approaching 8% would decrease and stabilize throughout the year. This prediction has already proven true, as the average fixed mortgage rate has dipped from 7.79% in October 2023 to 6.44% in April 2024. Based on these changes, the housing market in Illinois may be expected to continue stabilizing throughout the year. 

Illinois Market Trends 

To understand the Illinois real estate market, it’s important to keep up with trends. Let’s look at some key ones in Illinois: 

Note: These statistics are based on Redfin’s monthly housing data from April 2024.  

Median Home Prices 

The median sale price of a home in Illinois as of April 2024 was $295,600, according to Redfin’s monthly housing market data. This is an increase of 7.5% from April 2023. In Chicago, the median price in April 2024 was predictably much higher at $370,000, an increase of 5.7% from the previous year. In Springfield, the state capital, median prices have fallen 6.9% in the last year to $151,000. 

Number of Homes Sold in April 2024 

12,064 homes were sold in Illinois in April 2024, which is a 7.9% increase in Illinois home sales from the previous year. Though this suggests a recent increase in inventory, this number falls considerably short of peaks seen in 2021 and 2022.  

However, it is important to keep in mind that nationally speaking, sales usually peak during the spring and summer months and slow in the winter. In fact, the National Association of Realtors (NAR) predicts that in February and March alone, sales activity increases by as much as 34% and prices by 3%.  

Median Days on Market (DOM) 

Days on market (DOM) is a measure of the average length of time a home remains listed on the market before being put under contract. A lower DOM signals a highly competitive seller’s market with more pressure on buyers to make higher offers and remove contingencies. A higher DOM signals a buyer’s market as sales are slower and sellers have less leverage.   

The median DOM in Illinois in April 2024 was 43 days, which is down from 46 in April 2023. On average, listings spend 43 days—over a month—on the market before they are purchased.  

New Supply Statistics 

In 2021, there were about 1.55 new residential construction permits per 1,000 people in Illinois. This statistic, which points to the rate of new housing inventory, is about level with the national average. Increased housing supply is predicted to ease housing prices and increase affordability in many markets across the U.S. in 2024. 

Property Tax Rate 

The average property tax rate in Illinois according to Rocket Mortgage is 2.08%, making it the second highest in the country behind New Jersey with an average annual property tax of around $9,006.07. However, it is important to note that this statistic only represents the average of a very populous state comprised of both cities and prairies, and tax rates will vary depending on the value of a home and its location in the state. 

Foreclosure Rate in Q1 of 2024 

In the first quarter of 2024, 1 in every 989 homes in Illinois experienced a foreclosure filing according to recent data from ATTOM. This is significantly higher than the national average, and Illinois is ranked 6th for its foreclosure rate nationwide. 

Hottest Local Markets in Illinois 

Here are a few of the top local housing markets in Illinois for 2024: 

1. Chicago Metro Area

As previously mentioned, Chicago is one of the most populous cities in the United States and the most populous city in Illinois. Its median housing price is significantly higher than the statewide average at $370,000 in April 2024. According to Redfin, Chicago’s median DOM is 52 days, signifying a less competitive buyer’s market in the city. Some of the most popular neighborhoods in Chicago include Near North Side, Lincoln Park, and West Town. 

2. Aurora

Aurora is the second most populated city in Illinois behind Chicago and is in the Northeastern part of the state. Its median housing price is also higher than the statewide average at $350,370. Significantly, it has seen a 21.9% increase in median price in the past year.  Its median DOM is 45 days, which similarly signifies a less competitive buyer’s market in the city. Some of the most popular neighborhoods in Aurora are Far Southeast, Edgelawn Randall, and South Farnsworth. 

3. Peoria

Peoria is a city in central Illinois located on the Illinois River. Its median housing price is considerably lower than the other two cities listed above at $133,950 in April 2024. This is an 11.6% increase from the previous year, though the city saw significantly higher prices in summer 2023. Its median DOM in April 2024, however, was 22 days, suggesting a much more competitive market than other cities and the statewide average. Some of the most popular neighborhoods in Peoria include North Florence, Charter Oak Village, and Rolling Acres.  

Economic Factors Impacting the Illinois Housing Market  

A holistic view of Illinois’ housing market requires a basic understanding of the main economic drivers affecting the market. Let’s look at a few critical ones below:  

Mortgage Rates 

Mortgage rates are a common cause of concern for would-be homeowners across the U.S. in 2024. According to Zillow, Illinois’ current average for 30-year fixed-rate mortgages is 6.44% in April 2024 which is 23 basis points lower than the U.S. average of 6.67%. As previously mentioned in this article, this number is down from mortgage rates that approached 8% at the end of 2023, and experts expect that this number may continue to decrease throughout the year. 

Inflation and Cost of Living 

Mortgage rates are tied to inflation, another massive contributing factor to the affordability of housing and the state of housing markets in general. Inflation has increased the cost of living for many across the U.S., including in Illinois. This means fewer people can truly afford to limit housing costs to less than 30% of their monthly income.  

Population Changes and Demographics 

A changing population can also have implications for the housing market. According to the U.S. Bureau of Labor Statistics, the unemployment rate in Illinois is one of the highest in the country at 4.8%. This relatively high number could help to explain to some of the difficulties in the housing market such as the median DOM. 

Illinois Housing Market Forecast 2024 

As previously mentioned in this article, the Illinois housing market was expected to reach a greater balance with increasing demand to match supply. While this has so far proven to be true given the growing number of new listings throughout the year as of April 2024, these numbers are still lower compared to previous years. Factors such as high DOM and increasingly lower interest rates mean that the market is becoming slightly more competitive but is ultimately continuing to favor buyers over sellers.  

Likelihood of Illinois Housing Market Crash

Though there is some contention, experts insist that a housing market crash in Illinois is unlikely for 2024, thanks largely to the rapid growth of Chicago in 2023 and the relative affordability of the cost of living in certain areas in the state. The increasingly stabilized mortgage rates in the state continue to stay over 6%, but the market seems poised to continue favoring the buyer. 

Forecast for the U.S. Housing Market 

Now that we’ve looked at Illinois’ housing market, let’s zoom out a little bit. What about the U.S. housing market? What do you need to keep an eye on in the coming years?

The United States’ current median existing-home sale price is around $384,500 per the National Association of Realtors. The inventory, though, remains low. A balanced market typically has a 5-to-6-month supply, but the current figure is 2.9. 

We’re currently in a seller’s market with buyers looking at continued rising house prices. The same trend can be seen with renters. Housing continues to appreciate, in general.  

Dr. Lawrence Yun, Chief Economist and Senior Vice President of Research, National Association of Realtors, believes the housing market will appreciate 15 to 25% over the next five years. He thinks that the seller’s market will continue because housing inventory will remain low. In five years, however, he predicts a more balanced market, in which neither party has a built-in advantage. Thus, the market will shift to a case-by-case basis to determine what kinds of deals people can get.  

Hybrid work also impacts the housing market. This shift in work culture means suburbia will continue to grow. States like Texas, the Carolinas, Tennessee, and Florida should see continual growth.  

The number of single-family homes built decreased over the past couple years while the number of multi-family homes increased due to lower prices and a demand for affordable housing. Higher mortgage rates and inflation (affecting price of materials) were the main causes.  

Lower income households continue to struggle in the current housing market. This trend appears likely to continue into the foreseeable future. Without enhanced supply or helpful subsidies, the outlook is that many Americans will still wrestle with housing affordability in the years to come.  

Illinois Rental Market 

The rental and buying market are obviously closely linked. When home prices fall, landlords are more likely to buy properties to rent out. Home prices and rental prices are correlated as well because a hot market means prices rise.  

Rents were more unaffordable than ever in 2021 and 2022. In 2022, 22.4 million households paying rent said it was unaffordable, which is the highest that figure has ever been, according to a January report from the Joint Center for Housing Studies at Harvard University. The study found that half of all renters in the United States spent over 30% of their income on rent and utilities.  

The markets cooled in 2023, though, due to new units and decelerating demand. But a serious problem persists: Rent increases are still outpacing income gains.  

Moreover, high interest rates are keeping borrowing and transaction activity down. Over half the banks surveyed by the Federal Reserve reported that demand for multifamily loans decreased year-over-year.  

The pandemic caused a housing disparity that isn’t going away anytime soon. Unaffordable housing is a serious issue across America. Whether high rents or low income is the main cause doesn’t change the fact that this problem is widespread.

This short summary leads directly into Illinois’ current rental market. Below are just a few of the current trends for Illinois’ rental market based on data pulled from Zillow: 

Illinois Rental Market Key Trends

• Median rent: $1,800 

• Month-over-month rent charge: $0 

• Year-over-year rent charge: +$45 

• Available rentals: 17,415

Conclusion

The diversity of the Illinois landscape means that its average housing market statistics are pulling from a mix of urban and rural populations where the housing market is experiencing very different conditions. But the state is stabilizing and improving in critical areas, making it a market for investors and buyers alike to watch. Illinois realtors, experts, and analysts will continue to monitor this market, as well as nationwide factors like interest rates and new construction.