2024 Home Price Forecast (March, 2024) | Burr Ridge & Western Suburbs of Chicago Real Estate

It’s no secret how expensive housing is. If you’re looking for relief in the real estate market, it’s not coming by way of lower home prices. Your best hope is on the financing side with interest rate cuts. I’m Eric with Eric Andersen Homes. In this video, we’ll look at seven national home price forecasts for 2024, what’s happening with home values in the western suburbs of Chicago, and we’ll also look at mortgage rate projections for 2024. We’ll start with home values. At the end of 2023, economists were predicting home values would increase by anywhere from point two percent to two point eight percent. Today, they still see home prices rising, not falling, and their expectations are even higher than they were at the end of last year. The most bearish projection comes from the National Association of Realtors, who are at one point nine percent. The average projected increase is three point two percent. If that’s correct, that means a home that costs five hundred thousand dollars today will cost almost five hundred twenty thousand dollars next year. Homes are only getting more expensive, and not by a little. So again, here you can see current home value projections for 2024 from seven major institutions. In November, nobody was predicting an increase of over three percent.  Goldman Sachs now expects home values to increase by five percent in 2024. All seven institutions have revised their forecast upward since November. Zillow was predicting virtually no increase in home prices, and now they’re expecting them to go up by three point five percent. So much for the national trends. Let’s look at home values in the western suburbs of Chicago. Here, you can see what’s been happening with home prices in Burr Ridge, Downers Grove, Naperville, and Lemont. None of these areas have become more affordable. Homes in each of these areas have only become more expensive. Burr Ridge has mostly been flat over the past year, with the average single family home costing just above eight hundred fifty thousand dollars. But we should also note that over the past three years, homes in Burr Ridge have appreciated by an average of sixteen percent. In 2021, the cost for the average single family home in Burr Ridge was shy of seven hundred thirty five thousand dollars. Today, homes in Burr Ridge are about one hundred fifteen thousand dollars more expensive than they were then. You can also see the year over year appreciation for Lemont, Downers, and Naperville, which has been more substantial. Naperville has been on fire, with homes appreciating by an average of over ten percent since last year. You’re looking at about six hundred thousand dollars on average to buy a single family home in Naperville right now. Had you bought three years ago, the average home would have run you about four hundred thirty five k. That’s a hundred sixty five thousand dollar increase. As you can see, homes are not getting cheaper, and national forecasts suggest they will continue to appreciate by over three percent next year.Downers has also added a little more than eight percent to their average home value over the past year, and homes in Lemont are almost five percent more expensive than they were at the beginning of 2023. This trend is not changing, and it’s the simple fact of supply and demand. Higher interest rates have suppressed demand, but people always need to move, and there’s just not enough inventory to keep up. Business Insider recently said, “Low home inventory is a chronic problem in the US. This has generally kept home prices up.” So where’s the relief? Things should improve on the financing side, but it’s not going to happen overnight, and rates aren’t going to plummet. The Federal Reserve has signaled three rate cuts in 2024. Rates will eventually come down, but investors aren’t expecting the cuts to begin until summer, and even then, they will be modest. The market is currently pricing in a sixty nine percent chance that the first cut will happen in June, and an eighty eight percent chance that it will be in July. Today the average rate on a conventional, thirty year fixed mortgage is almost seven point two percent. So even if the Fed cuts rates three times by the end of the year, it’s not like mortgage rates are going back to three precent. Where will rates end up? A best-case scenario is projected by Bankrate, who thinks they will be five point seven five percent by the end of the year, but NAR thinks they will only go down to six point three percent. Most forecasts see rates staying above six percent in 2024, and I am very much inclined to agree. I’m Eric with Eric Andersen Homes, a family-owned brokerage where we treat our clients like family.