2025 Illinois Housing Market Forecast

The 2024 Illinois housing market proved to be challenging, particularly for home buyers across suburban Chicagoland. Limited inventory and rising mortgage rates caused housing affordability to hit historic lows. Despite this, well-positioned homes remained in high demand, quickly moving off the market, often leaving many buyers feeling frustrated.

So, what can we expect for the Illinois housing market in 2025?

Cooling Inflation and Lower Interest Rates

As inflation cools, many real estate experts predict a gradual decline in mortgage interest rates. This could boost activity in the Illinois housing market, but it might not immediately lower home prices. With housing inventory in the Chicagoland area sitting around two months’ supply—well below the healthy market average of six months—prices are likely to remain elevated until more homes are available. 

Matthew Bowser, Associate Broker at Compass and a member of Mainstreet REALTORS®, advises Illinois home buyers, "Have patience. Most buyers will not find the house of their dreams in the first weekend of tours. You must be vigilant and understand it may take a few offers before you get your new home."

Inventory Boost on the Horizon

The National Association of REALTORS® (NAR) projects an increase in national home sales, from 4.5 million in 2024 to 5.4 million in 2025. While this boost is expected nationwide, it remains uncertain how much it will impact the Illinois housing market. Pent-up demand continues to drive fast sales for homes that are well-priced and show well in Illinois.

For sellers in Illinois, Bowser advises, "Price your home right! Sellers get excited when they hear of other homes receiving multiple offers and going for over asking price. However, if their home isn't priced right as well, it will never have this type of attention and can often hurt them in the long run. Work with a professional who knows the market and will price your home right!"

Tina Abbatecola of OneTrust Home Loans and member of Mainstreet REALTORS® also shares, "The highest offer isn't always the best offer. Understand the offers and why one may make more sense over the highest offer. The market has created so much competition that the bait-and-switch buyers want to win and then change the terms, but you've already denied another buyer who gave you a solid and real offer the first time around."

Changes in Real Estate Practices for 2025

In 2025, real estate practices in Illinois will continue to evolve due to changes initiated by the National Association of REALTORS® settlement in 2024. Offers of compensation are no longer listed on the MLS (Multiple Listing Service) but can still be discussed between agents and clients. Buyers in Illinois must also enter agreements with agents before touring homes.

Robyn Flowers, of Berkshire Hathaway HomeServices Starck Real Estate, suggests, "Interview buyer agents before beginning your house hunt. Buyer agents should be knowledgeable in the areas of interest and can offer advice on pricing, what is available and what may or may not be affordable. Buyers agents work with your needs in mind."

Jane Haynes, a REALTOR® at Baird & Warner, emphasizes the importance of choosing the right agent, "Interview potential REALTORS®, and choose the person who can explain their value to you. This will let you know what they will do for you, and you can compare agents in order to find the best fit for you. It will give you confidence that this person is someone that you can trust to act in your best interest."

Preparing for 2025 in the Illinois Housing Market

The only constant in the Illinois housing market is change. As we move into 2025, it’s vital to work with a knowledgeable REALTOR® who understands the intricacies of the local market and can help you navigate buying or selling a home successfully. 

Abbatecola concludes, "Buying a home involves so many decisions and when you are in the center stage, it is easy to let your emotions get the best of you and make poor choices. The REALTOR® is with you as your partner to support you through those choices and decisions wisely."

As we enter 2025, the Illinois housing market will remain dynamic, with opportunities for both buyers and sellers who are prepared for the challenges ahead.