Column: Economic uncertainties pose risk to south suburban housing market

Chicago Tribune

14-04-2025

Risks of recession, potential job cuts and forecasts of trade war-related higher consumer prices could put a damper on the housing market as the spring and summer home buying and selling season approaches, real estate agents said.
'I think our clients have concerns about all of that,' said Erika Villegas, president of the Chicago Association of Realtors, which has more than 16,000 members including members with clients throughout the Chicago metropolitan area. 'Unfortunately, it feels like it's a little bit of everything' weighing on clients.
'We know that's at the top of everybody's mind right now,' said Alonzo Abron Jr., founder and owner of Oak Forest-based A. Progeny Global, a full-service real estate firm with a heavy focus on the south suburbs.
'The thing is the fear. Fear controls a lot in the industry,' Abron said. 'The average person will question should they move or shouldn't they move.'
Uncertainty about the economy understandably can make people feel less confident about making long-term investments like buying a home, said Geoff Smith, executive director of the Institute for Housing Studies at DePaul University.
The data reflects that. Fannie Mae reported in March that its national home purchase sentiment index decreased 1.8 points in February. That was the first year-over-year decline in nearly two years driven by consumers' increased pessimism that mortgage rates will go down in the next year, a decline in consumers' optimism toward their personal financial situation, including household income, and concern they could lose their job, Fannie Mae said in a news release.
Nationally, consumer sentiment dropped 11% in April from March, falling for the fourth straight month, the University of Michigan's survey released Friday showed. Expectations for business conditions, personal finances, incomes, inflation and labor markets all deteriorated. The share of consumers expecting unemployment to rise in the year ahead increased for the fifth straight month and is more than double the November 2024 reading and the highest since 2009, Joanne Hsu, surveys of consumers director, said in a news release.
'I certainly can see that applying to the Chicago area,' Smith said of the national consumer indicators. The Chicago metropolitan housing market already had challenges related to general affordability and a limited supply of for sale housing, he noted.
Illinois is one of the states where the for-sale housing supply hasn't rebounded to where it was before the COVID-19 pandemic.
'The inventories of for sale homes in Illinois are about 60% less than what they were in 2019 pre-COVID,' Smith said.
That's among the weakest recoveries in the country, he said.
'This is statewide, but I think it generally would apply to Chicago metro as well,' he said. 'You combine all those conditions with economic uncertainty, it would point to a potentially challenging year in the housing market.'
Real estate professionals report the uncertainties, including job security concerns, have already prompted some of their clients to change their plans.
Villegas, who is designated managing broker and co-owner RE/MAX in Oak Park, said she had a client under contract to sell who went to work that following Monday and was told the company would be making job cuts.
'They decided not to sell,' she said.
'I have a couple planning to sell, and a spouse suddenly lost the job,' said Carol Moore, real estate broker and instructor at Keller Williams Preferred Realty in Orland Park. 'They've had to re-evaluate.'
Abron has also had a few clients change their plans.
Would-be sellers, who locked in considerably lower mortgage interest rates in 2019, 2020 and 2021, have opted to stay in their homes because of the continuing higher rates, real estate professionals said. The 30-year fixed-rate mortgage averaged 6.62% as of April 10, 2025, down just slightly from 6.64% a week earlier and from 6.88% a year ago, according to Freddie Mac.
Paris Williams lives in a condominium in Chicago and was in the market for a larger home in the south suburbs for him, his wife and 3-year old daughter. But the couple, who have a 2.5% interest rate on their condo, put the brakes on plans to move until interest rates drop substantially.
'I'm kind of spoiled; 6%, 7% interest rates, financially that makes no sense to me,' Williams said.
Closed sales activity in the Chicago metropolitan area is forecast to rise 3.5% in 2025 compared to sales activity in 2024, and home prices are projected to increase nearly 6%, Smith said.
But February 2025 sales of single-family homes and condos in the Chicago metropolitan area fell 0.1% to 5,160 from a year earlier, and the inventory of homes fell 1.7% to 11,037, according to the Illinois Realtors monthly report released in March. The median price rose 7.5% to $344,000 from a year earlier.
'Heaven only knows' what the ultimate impact of economic uncertainties will have on the housing market this year, said Moore. 'I feel there is a sense of uneasiness.'
In order for real estate professionals to be successful in this market, they have to continue focusing on serving their clients well, she said.
'Regardless of what's going on, if people still need to buy, they still need to buy, and if they still need to sell, they still need to sell,' said Moore.
Abron, who is chair of the Global Real Estate Council with the Chicago Association of Realtors, echoed those sentiments.
'There's some fear in the market, but there's always opportunity,' he said.
He said his company remains focused on the community and holding outreach events.
'You have to be a resource and not just a brokerage,' he said.
Villegas said it's important for real estate professionals to be knowledgeable on the market.
'Knowledge is power, and it allows us to empower our clients,' she said.