Laura Hickman is ready to swap back the palmetto trees and cobblestone streets of Charleston, South Carolina, for the Chicago suburban lifestyle in which she and her kids grew up.
She put her downtown four-bedroom, single-family home on the market for a few months last year and said she only got “lowball” offers that she rejected. She never got the chance to bid on a home she liked in Chicago because she faced all-cash offers that caused the already limited inventory to fly off the shelves.
“We are waiting in Charleston for our house to sell, and … nothing would sell here,” said Hickman, 59, who works in the finance department of a medical office. “It was quite the little mess.”
Hickman has listed her Charleston home again for $1.5 million and is looking for a house between $800,000 to $1.2 million in the Chicago suburbs, where she thinks she will find more bang for her buck in terms of square footage.
Hickman’s story is one that unfolded for homebuyers and sellers across the Chicago-area market and the nation last year as mortgage rates and home prices remained elevated. And her hope for better luck in 2025 is something shared by others involved in the real estate market.
Experts were optimistic for a busier real estate market last year after significant declines in home sales in 2023, but home sales in Chicago and statewide saw slight declines in 2024, according to Illinois Realtors, a trade association for real estate agents. Nationally, existing home sales, which exclude new construction homes, fell to the lowest levels in nearly 30 years for the second consecutive year, National Association of Realtors data show.
A stubborn lack of inventory of for-sale homes continued to plague the Chicago-area market, as sellers remained reluctant to give up their lower mortgage rates, keeping potential homebuyers such as Hickman sidelined. Affordability also remained a challenge. In December, inventory increased nationally by 16.8% year-over-year compared with only 3.2% in the Chicago metropolitan area, according to Orphe Divounguy, a senior economist at Zillow.
“While the market loosened, it didn’t loosen as much in the Chicago area as it did across the rest of the country,” Divounguy said, citing a lagging local labor market as a cause for less mobility in the housing market compared with nationally.
The annual median price of a home statewide was $290,000 in 2024, a 7.8% increase from the median price in 2023, according to Illinois Realtors. For the Chicago metro area, this number was $350,000 in 2024, a 7.9% increase from the previous year. And inside the city limits, the annual median price for 2024 came in at $355,000, up 7.6% from 2023.
The good news for local buyers? Chicago was among the top 10 metro areas for an increase in housing permits last year, with a boost of 24% between January and August compared with the same time in 2023, Divounguy said. That means a bigger supply of new homes in 2025, which could allow price growth to ease in Chicago and provide more options for buyers.
Steven Brandt and his wife, Albiona, bought a new condo in the South Loop last year. After a seven-year military career and a cross-country tour of cities including Los Angeles, Miami and Boston, the couple landed on Chicago for their first home purchase because of Chicago’s location, the price of the two-bedroom condo, the new construction and ample building amenities.
They purchased the home in October for $632,000 and got “lucky” with their roughly 5.8% mortgage rate, leading to monthly payments of about $5,000 (including property taxes and homeowners association fees), Brandt, 31, said.
“(Chicago is) all kinds of vibes with my wife’s career (as an architect),” said Brandt who runs a startup remotely. “This is the perfect type of city and type of building for what we like and the type of work we have.”
While some buyers like Brandt got lucky with a lower mortgage rate thanks to a drop at the end of summer last year, rates have already spiked this year. Freddie Mac data shows the 30-year, fixed-rate mortgage average hitting above 7% in January for the first time since May 2024. Sam Khater, Freddie Mac’s chief economist, cited the “strength of the economy” as a contributing factor to the increasing rates. And the Federal Reserve held interest rates steady this week, which doesn’t directly affect mortgage rates, but is a potential indicator that those rates may stay elevated.
December home sales data for Chicago and statewide shows that more buyers jumped into the market before the 7% spike, as home sales went up for that month year-over-year.
With the Chicago market, real estate is hyperlocal, real estate agents say. There has been a surplus of downtown condos since the COVID-19 pandemic drove a lot of buyers out of the city and caused people to crave more space. Because of this, some downtown condo sellers are not experiencing the multiple-offer flurry that suburban home sellers have and, in turn, are selling at a loss. And Brandt’s building — even though it is new and offers more space — is still not near capacity, he said. Closing sales began in 2023 for his building.
Heidi Graham and her husband sold their Streeterville condo, which included a parking space, for a roughly 23% loss in May. The $335,000 one-bedroom unit and $40,000 parking space they purchased in 2014 ended up selling for a total of $288,000.
Graham said they got tired of renting the property and had listed it for sale above what they had paid for it in 2018 and then again at the end of 2021 into 2022, but did not find any takers. Since they purchased the property, the building changed the rules so that only a certain percentage of units could be rented. And parking spaces are also not allowed to be rented out to nonbuilding residents. Both rules make the unit less desirable, Graham said.
“We knew that we were making a decision in a down-market to sell our place,” Graham, 54, said.
Graham and her husband primarily live in Arlington Heights with their greyhound Sloane (after Ferris Bueller’s girlfriend) in “too big of a house” — five bedrooms and about eight dog beds, a number that dwindled after Ferris the greyhound died last year, she said. They also own two Gold Coast condos, with one rented out and the other for their own visits downtown, units Graham expects to sell for a loss one day, too.
As for selling their Arlington Heights home, she said they are “in a holding pattern right now,” nodding to the “if it ain’t broke, don’t fix it” mantra.
After 2024 brought uncertainty for many given continuing fluctuations in mortgage rates, the shake-up in the real estate industry as rules around real estate agent commissions changed and the election, Tony Mattar, Graham’s real estate agent who works for Compass, said he thinks more buyers and sellers will come into the market in 2025.
“If you … outgrow your rental or are having a second kid, you don’t have the luxury of sitting on the sidelines and waiting,” Mattar said. “We are going to see even more of that in 2025 … because the further and further we get away from the spike in interest rates, it just becomes more commonplace to accept interest rates (for) what they are.”