Home prices in Illinois expected to make gains in 2022

[January 11, 2022]  By Kevin Bessler

(The Center Square) – After two years of enormous growth in the housing market, will there be a cool down and possibly a fall in sales in 2022?

It was a seller's market in Illinois real estate last year, with low inventories and rising home prices. In some areas, home prices were nearly 10% higher than the year before.

The frenzied buying was in part propelled by historically low mortgage rates and millennials attempting to buy their first house.

Real estate experts all seem to agree that a housing correction is not in the cards for 2022. The consensus is that home prices will continue to rise due to the ongoing housing shortage.

“Overall we are expecting the price increase to be somewhere in a fairly broad range of 2% to 8% range over the course of the year,” said Daniel McMillen, head of the Stuart Handler Department of Real Estate at the University of Illinois at Chicago.
 

According to Fannie Mae’s latest set of predictions for 2022, home price growth is forecasted to be slower than in 2021, but will still be strong by historical standards. The year-over-year total number of home sales is forecasted to decline by 3.4% in 2022.

Mortgage rates are expected to go up this year after hitting historical lows during the pandemic. The National Association of Realtors predicts the rate will be around 3.7% compared to 3.4% currently.

NAR’s chief economist Lawrence Yun said the South will likely experience an increase in sales in 2022 because of baby boomer retirements and moves to southern states for affordability and the warmer weather.

“Florida, Texas and Tennessee have zero state income tax, which is also a big draw,” Yun said.

According to the NAR, last year, the median price of an existing single-family home jumped to an all-time high of nearly $358,000, up 23% from a year earlier.

Yun said you get more for your money in the Midwest where a good number of homes are priced under $200,000.

Midwestern markets seeing housing surges include Indianapolis, Indiana; Des Moines, Iowa; Columbus, Ohio; and Kansas City, Missouri.