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2024 Chicagoland Real Estate and Mortgage Market Outlook

As we stand on the cusp of 2024, the real estate landscape in the Chicagoland area remains ever-changing, presenting both challenges and interesting opportunities for prospective buyers.  

Industry experts are forecasting a continued rise in home prices over the next five years, which means now could be the ideal time to buy the home you’ve always wanted, with plans to refinance later when the interest rates go down

Let’s delve into the myriad factors shaping the market and explore the potential impact on mortgage rates, the region’s housing inventory, and whether 2024 is your year to become a happy homeowner or successful real estate investor.

Housing and Economic Cooling

According to the experts at CNBC, while Wall Street is off to a positive start this month, overall our economy is slowing down as we continue to stave off a recession. Pending home sales dropped 1.5% in October from September 2023, and decreased 8.5% from October 2022, reaching historic lows.

So what does this mean for consumers who are tired of renting and dealing with landlords? It’s time to get your finances in order and talk to an experienced mortgage lender about your options. 

Americans are dealing with some difficult inflation right now — food prices are skyrocketing due to many factors, including the war in Ukraine, labor shortages, supply chain disruptions, and the increased cost of shipping. However, inflation as a whole is falling, and the Midwest region is generally stable, thanks to robust job growth in 2023 and low unemployment.

With an election year coming up, some industry insiders are predicting a housing market slowdown. But Chicago never fully plays by the rules, and our market remains competitive, with steady population growth and a cost of living that remains affordable (compared to other major metropolitan areas of the US)

The Fed’s Potential Interest Rate Cut: A Game Changer?

The anticipation of an interest rate cut by the Federal Reserve has captured the attention of both seasoned real estate professionals and hopeful buyers. While the Fed has maintained a cautious stance, asserting that it might be too early to cut overall interest rates, speculation persists.

The Fed is the arbiter of monetary policy in the US and controls the supply of money in the country’s economy. It raises the federal funds rate to help calm inflation, which makes loans more expensive and saving your money more advantageous. Lowering interest rates stimulates economic growth, making it more affordable to borrow money to buy a home or a car. 

Fed Chairman Jerome Powell has noted that inflation is “moving in the right direction,” which many see as a signal that the nation’s rates may be coming down soon. In the Chicagoland area, mortgage rates are declining gradually and demand has lessened somewhat, which is a good sign for aspiring homeowners or real estate investors

The average rate for a 30-year fixed-rate mortgage now sits around 7.14% (as of Dec 6, 2023), and the Fed could start lowering their federal funds rate in early 2024 if inflation continues to cool. 

Navigating an Ever-Evolving Landscape

While interest rates are higher now than the rock-bottom rates of January 2021, they’re also nowhere near the highs of the 1980s when inflation was out of control

In addition, there are a variety of terrific down-payment assistance programs for first-time and repeat homebuyers. The Illinois Housing Development Authority and the Chicago Housing Authority are helping make ownership a reality for residents, while the Federal Housing Authority (FHA) offers government-backed mortgage loans for qualified borrowers that feature low down payments and more relaxed credit score requirements. 

Buying a house or an investment property is a huge decision, and the first step is taking an honest look at your financial situation. Mortgage lenders look at a variety of factors to determine your eligibility for a home loan, including:

Buyer representation is also crucial in this day and age to ensure you’re getting the best deal. Partnering with a top real estate team and working with a compassionate and knowledgeable mortgage professional will help you find the right property and facilitate a successful sale. 

If the Fed does lower rates as expected, the race to purchase already limited inventory in the Upper Midwest will become even more competitive and offer a boon to current homeowners who are ready to sell.  

The Bottom Line

Home prices are not going down any time soon, so 2024 might be a good time to make a move. Waiting could mean losing out on the chance to start building generational wealth through real estate

Lower interest rates should also contribute to a bustling Chicagoland housing market. As remote work continues to increase in popularity, many people are finally getting the opportunity to live where they want, and the city of Chicago and the surrounding region have so much to offer in terms of culture, food, festivals, and natural beauty.

Explore your options for financing one of the area’s charming historic bungalows, a new construction home, or a multi-unit property — reach out to me today!

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