“There's always opportunity in real estate. It's just a matter of finding that opportunity in the current market” - Samantha DeBianchi

Are Housing Prices Dropping In Illinois?

I decided to do a quick write-up on the HPI (Housing Price Index) this morning after looking at the chart for Illinois ( source - barchart.com ).

2024 Q1 Data Shows a Steep Drop

What Does This Mean For Homeowners?

That drop looks crazy, right?

Before we start acting like the sky is falling...looking at other states in the USA we see some states are correlating with this data, and others are not. My initial reaction is a delay in data. Recently we've seen a tumultuous employment market with covid and everything going on. Many people have changed jobs, moved, etc. and data aggregators are not immune to this challenge. They will have to find new people to hire, and spend time training them.

The National Market

If we view the HPI chart at barchart.com for the US Market, we see the trend is onward and upward. Since 2021, we've seen a jump in prices across the entire United States. The housing price should trend with inflation due to the cost of labor and materials.

People tend to like new things, and prefer buying new. This is true for homes as well. Who doesn't like a brand-spanking new home with all the trimmings?

As new homes are built, and the cost of materials (lumber, roofing, conduit, copper, steel, etc.) all increase, the price of homes naturally must increase. Builders need to sell the home for a profit, so the price must rise to accommodate the cost of building. As new home prices increase, the cost of owning homes will increase and so will the cost of older homes, and even rents across Chicagoland and the nation.

Conclusion

There just isn't enough data yet to get alarmed about a downturn in the housing market. While no market "goes straight up", we don't see a drop in HPI in many states in the USA. Only select states are showing a drop in their HPIs. So we will just have to wait for the mid year data to come out, which should be soon. More on that later.