As we pass the halfway point of 2024, the real estate market remains in a familiar place. Similar to last summer, both the Elmhurst and Chicagoland markets as a whole are stuck in a low inventory, low transaction cycle.
Low Inventory
Lock-In Effect
The lock-in effect contributes to low inventory.
When homeowners delay home purchases because they are “locked in” to historically low, pandemic aided rates from 2020-2022.
Many would-be sellers interested in downsizing or upsizing find themselves on the sidelines of the real estate market because their new purchase would be tied to a rate that could double.
Low Inventory Time Span
In Elmhurst, we have seen inventory continually sit below 2 months since March of 2023.
Good News
But there is some good news for homeowners: despite higher interest rates, lack of inventory has kept appreciation on a positive track. Elmhurst experienced 4% appreciation over the summer of 2023.
Low Transactions
One of the more telling statisitcs is the dramatic drop in closed transactions. The chart below shows Elmhurst closed deals over the past ten years. Looking back past the red-hot Covid-inflated market, there is a significant drop in the number of closed transactions in 2023-2024 as compared to more normalized years like 2017-2019.
Impact on Would-Be Buyers
Would-be-buyers are among those experiencing the most profound struggle. The combination of solid, year-over-year appreciation (due to low inventory levels) coupled with higher interest rates has made affordability more difficult for buyers.
Optimism for Rate Predictions
Help may be on the way: by many accounts, the Fed plans to lower rates in September. Many experts predict more cuts will follow through the coming winter and spring as we move into 2025. Lower rates may help alleviate the lock-in effect, leading to more inventory and more transactions.
To learn more about potential rate cuts, check out our recommended reading.
- NAR Magazine: Effect of falling interest rates on buyers
- Reuters: Possible rate cut details
- Chicago Agent Magazine: Connections between lower interest rates and increased supply
Are you ready to upsize or downsize but feel stuck in the current real estate cycle? Is affordability impacting your readiness to buy a new home?
If you are ready to move but are not sure if you should wait, our real estate experts can help you explore and evaluate your options. Contact an LW Reedy agent today.
