The last few years have been a true anomaly. No one could expect that during the COVID-19 pandemic the market would take the hectic pace that it did. Now, inflation rates and mortgage rates are up, and inventory is low, so what can we expect for 2023?
In January, the Chicago Association of REALTORS® were joined by Dr. Lawrence Yun, chief economist for the National Association of REALTORS®, and Rhea Stephen, senior director of market analytics for the CoStar Group, for our Market Outlook event, where they shared their insights on this year’s real estate market.
Amid rumblings about whether we’re headed toward a housing crash akin to 2008’s or not, Dr. Yun expressed how different the current economy is from where we were 15 years ago. Looking at key economic factors then, where jobs were few, subprime loans were abundant and we saw an influx of inventory, today’s market — by comparison — has more jobs, significantly fewer subprime loans and less inventory.
When it comes to mortgage rates, the rise or fall will depend on inflation rates. Mortgage rates hit a peak in November 2022 and have been declining ever since. If inflation continues to decrease, which it appears to have recently, we can expect mortgage rates to continue to do the same.
We’ll likely see a change in the rental market, as well. This year, Stephen expects rents to grow — doubling the typical annual growth to 4%. This metric ranks Chicago toward the top of the nation’s cities with the highest forecasted rental increases this year.
With this knowledge, how can you prepare yourself and your clients for the year ahead? First, it’s important to keep up with market statistics.
Utilize tools like InfoSparks and FastStats; they are free for Chicago Association of REALTORS® members and provide a local, granular look at the Chicagoland market through visually approachable charts. These tools drill down to individual neighborhoods and include all the data points you’re looking for, from the median sales price to closed sales to market time.
The data from these two tools are available through our partnership with MRED, who also co-hosted the Market Outlook event with us. These tools, along with others such as Remine and Cloud CMA, are available for REALTORS® to make transactions that much easier.
Once you have collected the data you’re looking for during the transaction, use it to further demonstrate your value. Provide it during your tailored listing presentations and while creating your listing and buying strategies. You can also use this data to stay top of mind with your sphere of influence by posting or emailing specific insights on the neighborhoods you work in. Lean into your expertise!
As we know, data and trends can change quickly, so build habits that continue to look at the most current information. For example, through FastStats, you can access weekly and monthly data. Keep an eye on headlines to prepare yourself for questions that may come up from your clients
The Chicago Association of REALTORS® has recap blogs, presentations and event recordings from the 2023 Market Outlook event for you to revisit, but don’t forget to consistently use the many tools you have at your fingertips. Be creative with your social media posts, your email newsletters and the ways you show up in the communities you serve.
With the knowledge and the tools, you’ll set yourself up with everything you need to have a successful 2023.
Sarah Ware, principal and managing broker of Ware Realty Group, is 2023 president of the Chicago Association of REALTORS®.