The Chicago-area housing market should gain some strength in 2018, an economist told a suburban real estate association yesterday, but there's a "but."
Lawrence Yun, chief economist for the National Association of Realtors, forecast a 10 percent increase in volume in 2018, based on growth in both the number of homes sold and the prices of those homes, in his address to the Main Street Organization of Realtors. The group, which has about 18,000 members in the suburban counties, met in Elk Grove Village for the speech.
The uncertain financial condition of the state of Illinois is the one factor that could dampen the market, Yun said both in his speech and in an interview afterward. The uncertainty over what the tax burden will be in the future would have two effects that could restart demand for housing: More people would leave the state, and fewer new jobs would be created. "The gridlock that has occurred (in Springfield) could definitely hold buyers back," Yun said.
Even so, he said, the Chicago area is already benefiting from job growth. The number of jobs here has grown to about 2 percent above the pre-bust peak. It is "lagging behind the rest of the country," Yun said, "but I see no reason that jobs creation wouldn't continue in 2018." The question is whether at a fast rate or a Springfield-impaired medium-fast rate.
On the heels of the Federal Reserve's announcement that it will end its quantitative easing policy that has helped keep interest rates at epochal lows, Yun said he expects the prevailing rate on a 30-year mortgage, which is now at about 3.8 percent, to hit 5 percent by late 2018. While that will nudge some buyers out of the market in high-priced areas like Seattle and Portland, in lower-priced Chicago, "you can absorb it."
Chicago Business
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