Interest rates have more than doubled this past year landing a blow on a historic pandemic-era housing boom.
Some experts are saying the chill could become an all-out freeze by next year if the interest hikes continue.
“The primary thing we don’t know is what’s going to happen with interest rates,” said Dennis Rodkin, a residential real estate reporter for Crain’s Chicago Business. “They’ve come down a little bit. The Federal Reserve is saying that maybe it’s been a little too much, so if interest rates continue to go up as steeply as they were, then we’ll probably see quite a deeper freeze on the housing market. If they pull back on that, maybe we get some breathing room.”
Fast sales of houses on the market listed for two weeks or less have also virtually disappeared, currently sitting under 10%, after hitting a high in 2021, according to Crain’s.
“It really means that if your neighbors were selling their house last year and it went off the market in less than two weeks, you should not expect the same,” Rodkin said. “Things have slowed down so much. Sellers in particular need to be aware that most homes are sitting on the market far longer than they were. The pace was furious for so long and the brakes went on when interest rates went up.”
Still, Chicago remains one of the more affordable cities in the U.S. on the housing front.
“While our home prices went up quite a bit during the boom, they didn’t go up anything like what was going on in Phoenix, in Seattle, San Francisco, so there’s not as much air that was pumped into those prices and not as much to come out,” Rodkin said. “Some of those places have started to see prices fall. We’re still seeing them grow just by much smaller amounts … Among big cities, we’re one of the most affordable for housing.
Rodkin added that Chicago is well positioned heading into next year.
“We’re in a really good position going into 2023. The question is if there’s going to be demand for these homes,” he said.