Are Home Prices Going Down or Up This Spring?

Are home prices going to trend up or down in this spring’s real estate market in northern Illinois? The answer is both – depending on where you are looking.

Jessica Wallack of CBS News sums up the current market conditions succinctly. “Interest rates are currently on the higher end. The Fed has been holding its rate at 5.33%, putting the average mortgage rate at close to 7% — a high not seen until recently, but a decrease from the near 8% it was in 2023,” she said. “While Fed rate decreases are expected this year, many don’t think they’ll come until at least summer.”

Wallack adds, “As for inflation and home prices, both have come down but are still elevated. The inflation rate has been fluctuating between 3% and 4%, while the median price of houses sold is sitting at $417,700 — down from $479,500 at the end 2022, according to the St. Louis Fed.”

Based on the above summary, what would make home prices go down? The basic formula is as follows: if there are more homes on the market, there is more competition, so prices will go down. That is possible this spring. Even with higher interest rates, people still have to move for various reasons, but there has been hesitancy by potential sellers to move on and accept a higher interest rate on their next house.

However, there is a lot of equity in homes right now, and cashing in on some of that and getting a smaller place has appeal. If sellers see this, prices will drop – not a lot, but a bit.

Why would home prices rise? Desirable neighborhoods drive higher prices. In the current “hot” areas, prices keep slowly rising. Waiting for prices to fall in this kind of community will not happen any time soon – buying now may be your best option. Also, if an area took a big price hit in 2022 or 2023, those places are probably bouncing back this spring.

So what do you need to do? Get yourself someone that actually knows the marketplace – where it is hot and where it is going to get hot. Go to AddressNIllinois.com and get hooked up with a pro who can help you find your way home.