As we stand on the threshold of 2024, the real estate landscape in Chicagoland and the Upper Midwest could be poised for some intriguing shifts.
Whether you’re a seasoned real estate professional, a hopeful homebuyer, or a potential investor eyeing the region, understanding the upcoming trends and dynamics is crucial for making informed decisions.
Let’s take a deep dive into the key factors shaping the 2024 real estate market and what they mean for various stakeholders.
The Region’s Unique Economic Resilience
To truly understand the market environment in the Midwest, it’s essential to assess various economic factors influencing the region. Job growth, wage changes, and population trends are pivotal in shaping supply and demand.
With a diverse economic base encompassing manufacturing and agriculture, the old Rust Belt and meatpacking districts are now attracting tech and finance professionals looking for a lower cost of living and more affordable housing.
Across the US, the economy shows mixed signals as we continue to ward off a recession. While Wall Street is off to a positive start in the last month of 2023, pending home sales dropped 1.5% in October from September 2023, and decreased 8.5% from October 2022, reaching historic lows.
Consumers in every corner of the country are dealing with heavy inflation and other challenges, with food costs at an all-time high due to the war in Ukraine, lingering supply chain issues, and other worldwide problems. Corporations are charging a premium price for their products and recording record profits.
It’s not all doom and gloom. Several new laws are going into effect in Illinois in 2024 that should serve as a boon to the local economy. The minimum wage is rising to $14, service industry workers will enjoy a bump in hourly pay, and millions of Americans can remove medical debts from their credit reports and improve their chances of landing an affordable mortgage loan.
What does all this mean for the real estate industry in Chicagoland and the Upper Midwest in 2024?
Creativity and Opportunity
The slowing growth of home prices will provide some relief for buyers but still favors sellers able to capitalize on elevated home values. The number of Chicago-area listings available to buy dropped from around 41,500 to roughly 25,500 between October 2019 and October 2023.
However, the median home price in the region is still lower than the national average. The city’s urban landscape is rapidly evolving, and a new “78th neighborhood” along the Chicago River will be breaking ground in early 2024, bringing over $7 billion in economic activity to the area.
At the same time, the rise of remote and hybrid work models is causing a shift in the housing paradigm and gives hopeful homebuyers more freedom to explore non-traditional places to live like converted office spaces and tiny homes. Additionally, some new home buyers are using alternative financing, and “house hacking” — renting out part of a home to generate additional income.
There’s a rising interest in mortgage products guaranteed by the Federal Housing Administration (FHA) that enable consumers to purchase multifamily properties of up to 4 units. FHA 223(f) loans, for properties with 5 or more residences, are an increasingly competitive way for regular people to become real estate investors.
Pundits are unsure what the future holds when it comes to interest rates in 2024. Federal Reserve Chairman Jerome Powell is being coy about declaring victory over inflation and refused to confirm or deny a looming rate cut in a recent interview with CNBC. High interest rates are a big reason why inventory remains low, as current owners are reluctant to lose their historically low rates from a few years ago.
Savvy real estate brokers should be keeping a very close eye on new construction trends in their communities, as well as on emerging neighborhoods and investment opportunities. The Upper Midwest economy will remain stable, which may help upwardly mobile buyers interested in relocating to the area from vastly more expensive metro areas on the East and West coasts.
The convergence of technology and real estate will continue to reshape how properties are bought, sold, and managed in 2024. According to the National Association of REALTORS, almost half of all potential buyers research the local market online before they even contact an agent. It’s imperative for brokers to embrace a digital transformation and utilize omnichannel marketing strategies.
Title searches are now powered by sophisticated software, virtual tours and remote closings are common, and cybercriminals are increasingly targeting the real estate industry and owners of vacation or second homes. Those looking to rent are especially susceptible to online scammers.
It’s crucial to remain positive and adaptable to new trends. The coming year may present some unique obstacles for brokers, agents, and buyers, but it also offers an array of promising opportunities.
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