While some pundits are all doom and gloom about what the coming year holds for the national real estate industry, the outlook for Chicagoland, Wisconsin, and the Midwest, in general, is much sunnier.
As the Fed continues to raise interest rates hoping to stanch inflation, “smart buyers will take advantage of weakening prices as interest rates peak, knowing that they can refinance when rates drop.”
Let’s take a closer look at what the experts have to say about 2023, and how you can leverage this volatile market to the advantage of your clients.
The Current Landscape
Housing costs skyrocketed during the pandemic as more people shifted to working remotely, raising demand and causing waves of gentrification and urbanization across the country.
Communities in the Sun Belt, such as Austin, TX, Phoenix, AZ, and Cape Coral, FL, saw the steepest increase in sales prices. Miami is now more expensive than New York or Los Angeles.
But here in the heartland, homes remained relatively stable and affordable — NBC Chicago rates Lake County, IL as the most promising housing market for potential buyers, as this area wasn’t as prone to the dramatic upswing as other regions.
The scene in Wisconsin is also somewhat sunnier than in the rest of the country. With a relatively low cost of living and urban revitalization, this area’s housing market continues to experience strong home appreciation.
Even though interest rates have risen, accessibility throughout the state has remained strong, adding to the appeal of Milwaukee for Gen X and Millennial buyers. While Wisconsin won’t see quite the explosive growth of 2021, there will be a “healthier balance between buyers and sellers, resulting in more churn.”
Madison property values continue to appreciate, steadily rising over 70% in the last 10 years, maintaining this city’s status as a desirable location for real estate investment.
Encouraging First-time Buyers
To stimulate sales, many lenders will focus on attracting first-time and low to moderate-income buyers and those who want to refinance and renovate their current property.
While economic uncertainty is always a consideration, more Millennials are getting married, starting families, and looking for a path to homeownership. These clients are free from the burden of having to sell another house before buying and all of the hassles that process entails.
There are also robust down payment and first-time home buyer assistance programs available to those who qualify, which leads to more opportunities for building diverse and sustainable communities.
Savvy real estate professionals will incorporate strategies for targeting a younger audience and building relationships with inexperienced buyers into their 2023 business plan.
It’s Not 2008
Many investors still cringe in horror when they think of the housing bubble and its subsequent implosion in 2008-2009, and the thought of ending up underwater on a mortgage can be terrifying to consumers with the dream of owning a home.
But data analysis shows that even though housing prices rose dramatically in the last few years, we’re not in the same situation as we were 15 years ago.
The world has changed, mortgage lenders have much more restrictive underwriting standards now, and there’s currently a shortage of inventory in many markets, including (and especially) Illinois, Wisconsin, and the rest of the Midwest.
In 2008, there was a surplus of homes for sale, many of which were short sales and foreclosures, which led to the rapid fall of prices once people were no longer able to qualify for subprime mortgages. Many banks created an artificial demand by lowering lending standards and providing financing for just about anyone.
Another huge difference between now and then is that foreclosures have plummeted due to buyers being more qualified, more financially literate, and less likely to default. Compared to the depths of the crash, there are hundreds of thousands fewer foreclosures now.
With falling prices, homeownership will become more holistic and accessible for your clients as we move toward an overall normalization of the Chicagoland housing market. They’ll no longer have to face quite the level of competition we’ve seen in the past two years and can afford to be more thoughtful when making an offer.
Creativity is the Key to Success
A cookie-cutter approach to business development, lead generation, and client servicing just won’t work as well next year as it might have in the past.
Now is the time to focus on forging new relationships and strengthening your community connections. Testimonials and referrals are some of the most powerful tools at your disposal, and studies show that consumers are up to 10 times more likely to work with a REALTOR or other business that was referred to them by a trusted friend or associate.
It’s also the perfect time to evaluate your tech stack, online presence, and social media strategy. While in-person events like open houses are possible once more, the ease and accessibility of virtual house hunting are here to stay.
Mastering the Chicagoland and Wisconsin market and staying ahead of the game in 2023 means thinking outside the box, leveraging the latest technology, and moving the needle any way you can.
It’s crucial to do your research and gain an intimate understanding of the nuances and trends in this ever-shifting real estate landscape so you can educate your clients and act in their best interests. There needs to be more hand-holding and cheerleading than you’ve had to do in the past.
Real estate brokers are known for being “always on,” and unfortunately that aspect of the industry shows no signs of changing. Openness and communication build trust, which leads to more referrals and more business, even in a slowing economy.
Explore the Possibilities
A market cool-down was to be expected after the frenzy of the past couple of years. And while other areas of the country are facing more of a stumble, the Chicagoland area and other Midwestern metros like Madison and Milwaukee are unique, as home prices here didn’t see the wild inflation of places like Florida, Colorado, and Texas.
Mortgage rates might seem sky-high to prospective buyers now, but the market is actually rebalancing to a healthier level. And many experts predict that rates will decrease over the course of the year to meet historical norms.
No matter what 2023 brings, it’s vital to stay engaged, adopt a flexible plan, and nourish your network so you can be prepared for whatever the future brings.
Partnering with a trusted title company will ensure you consistently deliver a stellar experience and a smooth closing process for your clients. Landtrust offers a full spectrum of services for real estate brokers, attorneys, and investors. Reach out today to learn more about building your business in 2023 and beyond.