Lake County, IL Market Update - January, 2024

Optimistic 2024! 

Although 2023 was a challenging year for real estate, I am optimistic about 2024.  Before we move forward, let’s look back at 2023 for real estate.

Here are a few stats nationally:

1. There was an 18% drop in home sales from the previous year

2. The number of new listings was at the lowest point in history

3. Due to higher prices, higher interest rates, and a limited supply of homes, 2023 was the least affordable in real estate history.
   
   WHY? Why was it so difficult to conduct a real estate transaction in 2023? One-quarter of all homeowners currently have a mortgage with a rate below 3% and many who wanted to sell were reluctant to give up that low mortgage rate; or, they could not find a house they wanted to buy.
   
   

So in 2023, the market felt really hot, but there were significantly fewer transactions nationally, and for me personally. BUT, I remain confident and optimistic that 2024 will see a brighter year and all experts predict a better 2024 in the real estate market.

Why should you care about real estate, especially if you are not thinking about buying or selling a home? First and foremost: A robust real estate market is beneficial for the economy because it creates jobs and boosts economic activity. When people buy and sell homes, it stimulates demand for various goods and services, such as construction materials, home furnishings, and other home services. This, in turn, helps businesses thrive, leading to overall economic growth.

Interest rates impact everyone, even if they're not buying real estate because they affect the cost of borrowing money. When interest rates are low, it becomes cheaper for individuals and businesses to borrow, promoting spending and investment. 

On the other hand, high-interest rates can slow down economic activity by making borrowing more expensive. 

So, even if you're not directly involved in real estate transactions, changes in interest rates can influence your ability to get affordable loans for things like cars, education, and other major purchases.

The good news is that we have already seen rates drop more than 1 point from their high of last year. And all experts agree that we should see rates continue to decline a bit–probably not to 3% again. But we expect the rate to be more reasonable.

So what does this mean? In general, this is just good for the economy. 

And if you are thinking about real estate. Buyers who were on the fence are probably going to return to the market.  Sellers who wanted to move last year but didn’t will be less freaked out about their new mortgage rate.  So I expect more homes for sale, but also more competition from buyers.

Let’s get a jump on that competition now.