2023 Housing Market Predictions

Casselyn Tertell  |  January 1, 2023

2023 Housing Market Predictions

As 2022 ends, many buyers and sellers are wondering if now is the time to start their home transaction process. Nationwide, housing prices are projected to decline going into 2023, although higher interest rates and inflation may be obstacles for buyers. When looking in the Illinois villages of Hinsdale and Clarendon Hills, they’ll likely follow national trends while remaining desirable locations for buyers. Sellers entering 2023 who are planning on listing their Hinsdale luxury homes should be mindful of the market’s shift into buyers’ favor. Before diving into housing market predictions for the next year, here’s a review of what to expect from Illinois.

Illinois real estate market

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Currently, the real estate market in Illinois is a seller’s market. In August 2022, the median prices increased, year-over-year inventory decreased, and homes sold faster than a year ago. However, the number of closed sales has decreased by 12% since last year. A slowing and cooling market is expected for Illinois going into 2023, with a continued decrease in sales. Despite cooling, an increasing sales price is projected going into 2023.

Hinsdale homes had a high median list price of $1.174 million in September 2022, although in the past month it experienced a slight decline. The number of homes for sale has also increased, indicating lower demand and higher supply, while the median days on the market is leveling out. In Clarendon Hills, the median list price has significantly increased since August and is currently $737,500. With declining median days on the market and dipping numbers of homes for sale, buyers’ demand for this area is up.

Buyers searching for Clarendon Hills real estate in 2023 should be mindful of certain trends impacting all of Illinois. One obstacle will be the increasing median home price, which will continue into the new year. As well, high-interest rates will continue going into 2023 and further cool the housing market. As of December 28, average Illinois rates are 6.45% for a 30-year fixed mortgage and 5.91% for a 15-year fixed mortgage. Sellers should also be mindful of how these potential obstacles for buyers will impact the frequency of sales, as well as the listing time of their properties in Illinois villages.

2023 predictions

Those buying or selling Hinsdale luxury homes in 2023 should be mindful of economic factors that impact the ability to buy or sell. The hot market of 2021 is behind the country since home values aren’t projected to drastically spike. Despite a shift in buyers’ favor, buying houses may still be difficult for those searching for properties. Here’s a deeper dive into what’s predicted to happen, and how to act.

Mortgages rates will rise, then fall

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As inflation intensifies, interest rates will continue rising to fight against its effects. Rates reaching higher percentages will create lower supply and demand, bringing market conditions back to normal. However, as inflation decreases due to mitigating steps like higher mortgage rates, rates will start to decrease in 2023. Buyers searching for properties in 2023 may have good reason to be wary but should also understand that these high rates won’t be permanent.

When interest rates begin falling in the second half of 2023 and into 2024, buyers can return to the market with more confidence. Those who can’t wait to buy will likely be able to refinance, locking in a lower interest rate. Until then, alternative financing options may prove a viable course. Options like seller financing, FHA loans, private money lenders, VA loans, and hard money loans may all provide better solutions for buyers or investors.

Shift into a buyer’s market

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Those buying or selling Clarendon Hills real estate should brace for shifting market conditions in buyers’ favor. As more sellers start listing their properties now, the increase in inventory alongside a decreasing number of buyers affected by interest rates will cool the market. Although home prices aren’t projected to drop, small increases of about 1-2% are likely, alongside more normal appreciation rates. Even with the challenges buyers face, they can expect some reprieve from this slowing trend.

However, these shifting market conditions have a few obstacles to overcome. For one, new construction is struggling to meet buyer demand, which keeps inventory lower. Demand for properties will keep prices high and inventory low for the months to come. A mix of positive and negative factors for buyers and sellers will create a unique market experience going into 2023.

Opportunities for investors

Those searching for investment properties can expect stable demand for vacation rentals, as well as more options to invest in. As people search for ways to travel, vacation rentals provide the perfect solution for maintaining space and privacy while enjoying a new environment. Working remotely will also have an impact on rental properties. With a cooling trend in 2023, those looking to invest should do so in the new year to start generating revenue rather than waiting for 2024 forecasts.

It’s important to note that rising rents are expected to encourage higher rates of first-time homeownership. Rental rates are already high and projected to increase going into the new year. This may push demographics like Millennials and Gen Z to start looking at home ownership. Although the overall rental market is projected to stay strong in 2023, long-term or traditional renters with investment properties should keep up to date on local market trends.

Ready to enter the 2023 housing market?

Buyers and sellers looking to enter the 2023 housing market can expect equal parts advantages and obstacles. Illinois is projected to follow the cooling trends of the rest of the nation, while the villages of Hillsdale and Clarendon Hills will likely maintain higher median list prices, even as interest rates rise. Overall, the market will shift in buyers’ favor as interest rates start decreasing in the second half of 2023. When you’re ready to start your search or list your home, contact trusted local agent Casselyn Tertell to guide you through the process.

*Header photo courtesy of Casselyn Tertell

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Finding a home is a very intimate process, and we want you to know we will be there for you, not only during the home selling/purchasing process but for anything your future may hold. We are here to help you with all your real estate needs, whether it is just a question or help to sell/find a home, feel free to contact us at any time!