Chicago Home Prices Will Likely Keep Climbing In 2017
By Stephen Gossett in News on Dec 15, 2016 8:00PM
Getty Images; Photo: Joe Raedle
Housing prices in Illinois could climb even higher in the new year as the market faces a triple threat of potential interest rate hikes, inflation and a dearth of inventory, according to a recent report.
The 2017 Housing Forecast, published in November by the Illinois Association of Realtors, forecasts median home prices to increase in 2017 in Chicago and across the state. The expected increase ranges from 2.1 percent all the way up to 6.9 percent for Illinois and, at the local level, between 3.8 percent and 8.4 percent in Chicago.
Where exactly those numbers fall depends in part on interest rates, which have been held low for several years. (“A fraction of a percentage point increase in mortgage rates might not make much difference; a full percentage point increase would,” according to the report.) Another wild card is Trump’s tax policies: Large-scale cuts (which would not exactly surprise us) could drive up inflation. Plus supply is low, as home stock in the Chicago area has tumbled over the last several years, especially in the mid-priced tier. Housing inventory in Illinois has plummeted from 107,400 in 2008 to 57,310.
The never-ending budget stalemate in Springfield and suboptimal employment growth have negatively have apparently impacted the outlook, too. “Over the last 12 months, Illinois’ economy has grown at a much slower rate than the U.S.” said Geoffrey J.D. Hewings, Director of the Regional Economics Applications Laboratory of the University of Illinois, in the report. “The state budget impasse combined with weaker (compared to 2015) employment growth has dampened the housing market. “