2020 was tumultuous, but the Illinois housing market proved to be resilient. Initially disrupted by the pandemic, home sales and prices ultimately were the strongest in years, even while inventory sank to new lows. 

What’s ahead for 2021?

Expect Illinois median prices to continuously grow in 2021 within a higher and broader range compared to 2020. Home sales are also forecast to post positive gains, according to the Regional Economics Applications Laboratory (REAL) at the University of Illinois.

Download the 2021 Illinois housing forecast and learn more about the Illinois housing market at www.IllinoisRealtors.org/Marketstats.

Geoffrey J.D. Hewings, emeritus director of REAL, cautions that “the uneven impact of the COVID-19 pandemic on employment by sector and income level is likely to be reflected in the housing market in 2021.” 

“With increasing opportunities to work from home for higher income employees, analysts suggest an increased demand for larger homes perhaps in suburban and ex-urban locations,” he said.

“This flexibility is not available for lower-income employees, especially those in the retail, leisure and hospitality sectors where layoffs and furloughs have been more severe, dampening both demand and supply of homes in the bottom 25 percent of the price distribution.”

Hewings shared three housing trends to watch in 2021: 

Forbearance and foreclosures

Foreclosures had a profound impact on Illinois home prices and sales after the Great Recession. In 2018 and 2019, new foreclosure filings (or inflow) in the Chicago Metro area began to increase faster than the outflow of foreclosures through sale or REO. But in 2020, both dropped dramatically. This may be due to financial institutions honoring forbearance requests on mortgage payments, combined with the protracted foreclosure legal process in Illinois. The concern now is whether this will turn into a problem once the vaccine availability provides the basis for economic recovery and lifts the pause button on forbearance and foreclosure moratoriums.

Housing inventory

For the last three years, there has been increasing concern about the sharp decrease in available housing inventory. Inventory dipped to record lows in 2020. It is likely that mobility, even post-recovery, will be muted as individuals, businesses and homeowners take stock of their prospects and decide to stay put. 

Relocation

Some homeowners may relocate out of urban areas to get more space. For smaller households, urban locations will remain attractive because of the desire to have access to amenities only found within cities. The costs of relocation are not trivial and the impact will vary depending on household income levels.