2019 Predictions – Chicago
Chicagoland’s real estate outlook for 2019 is less than favorable according to NAR and realtor.com’s yearly market report. It predicts a 1.9% decrease in median home price and 7.4% decrease in home sales throughout the city, suburbs, and metro areas of Wisconsin and Indiana.
Expected to have the weakest market in the country, it could be a dark year ahead. What’s causing the cloudy forecast and is there a silver lining?
In addition to the decreased property tax deduction, climbing mortgage rates, and low inventory levels nationwide, Chicago’s local concerns include high taxes, population decline, and the nation’s largest share of homeowners with underwater mortgages.
When costs rise, the value of homeownership declines. Illinoisans saw the most substantial permanent income tax increase in state history in 2017 and today have the second highest tax burden in the country (behind New Jersey).
Tax strain and rising rates will limit buyers’ ability to enter the market in 2019, as well as reduce pricing power for sellers with the need to compete with rate hikes.
Other potential sellers in Chicago, an estimated 13% according to realtor.com, are underwater on their mortgage and can’t afford to sell, which will sustain low inventory levels.
It’s also important to note the high cost of land in Chicago and the metro. Plans for new subdivisions are the lowest in two decades. The city skyline, however, is dotted with construction cranes, most of which are rental buildings.
So, where are the buying and selling opportunity for this year’s market?
While a 1.9% home price decrease isn’t good for homeowners and sellers, it is good for buyers who want to enter the market.
And despite continued low inventory, homes that do come on the market will sell. If properties new on the market are priced right and ready for sale, multiple offer situations will remain commonplace. Active buyers must be prepared to jump when “the one” come to market.
Lack of construction should also drive down land prices and create new inventory.
See there. The sun might peek through this year.