The Good:
Evidence is mounting that inventory will finally improve in 2019, and we have already seen that in a few areas (especially condos). This may apply some downward pressure on prices for beleaguered home buyers. Perhaps a buyer’s market is ahead or at least a more balanced market (where the inventory of homes is 4-6 months). Mortgage rates spooked some buyers in the fall as the 30-year mortgage rate was above 5% for the first time in years, but they have since fell back to around 4.25% for a single family home. Other bright mortgage news is Fannie/Freddie loans have a new loan limit of $484,000, up from $453,000. Most buyers want the best interest rates offered by Fannie/Freddie loans and so they try to keep their loan under these amounts.
The Bad:
Unemployment rates remained remarkably low again in 2018, and wages continued to improve for many U.S. households. It is generally good for all parties involved in real estate transactions when wages grow, but the percentage of increase, on average, has not kept pace with home price increases. This created an affordability crux in the second half of 2018. Housing affordability will remain an important storyline in 2019.
The Ugly:
The State of Illinois and Chicago has still not solved its budget deficit and pension crisis, and uncertainty exists with a new Chicago mayoral election. Record numbers have fled the State, over 100,000 in 2018. This uncertainty has led to a sharp reduction in real estate transaction on buy and sell side, as people wait it out.
To get a detailed market report, fill out the form below: