Illinois’s housing market experienced significant swings from 2018 through 2023. After steady but modest growth in the late 2010s, the market surged in 2020–2021 amid pandemic-driven demand and low interest rates, followed by a slowdown in 2022–2023 due to sharply higher mortgage rates.
Home prices climbed markedly during this period: the statewide median sale price rose from roughly $200,000 in 2018 to around $260,000 by 2022. By mid-2024, the Illinois median home price hit a record high of $315,050 (the highest since tracking began in 2008), about 8.6% higher than a year prior. This price appreciation far outpaced income growth, squeezing many buyers.
The number of homes sold annually fluctuated: Illinois saw ~158,000 home sales in 2019, a pandemic boom peak of ~193,000 sales in 2021, then a drop to about 161,000 in 2022, and further down to roughly 132,000 in 2023 as affordability tightened.
Key Market Drivers
Several factors drove these trends. Mortgage interest rates fell to historic lows (~3%) in 2020–2021, stimulating demand, then jumped above 6% by 2022–2023, damping buyers’ purchasing power.
Housing supply was constrained as well – Illinois has long added new homes at one of the slowest rates in the nation (ranking 48th in per-capita home construction). In the decade after 2009, the state averaged under 10,000 single-family building permits per year (versus 40,000 per year before 2008). This chronic low inventory meant that when demand spiked, prices were pushed up quickly and competition intensified.
Affordability Challenges
By 2021, Illinois Realtors were reporting tight inventory and buyers engaging in bidding wars, with homes selling extremely fast (median 28 days on market in 2022, down from 55 days in 2017). In short, demand surged and supply lagged, creating a fast-rising market through 2021.
Affordability concerns grew by 2022–2023. Even though price growth moderated (Illinois home prices rose ~4% in 2022), the jump in interest rates caused monthly mortgage payments to skyrocket. For many households under $250,000 in income – essentially the vast majority of Illinois families – the cost to buy a home relative to their budget reached the highest level in years.
By 2023 the state’s homeownership rate hovered around 67%, roughly the same as it was five years earlier. In other words, despite the homebuying frenzy of 2020–2021, the overall share of households owning homes in Illinois did not significantly increase – a testament to how rising prices and then rising interest rates kept many would-be buyers on the sidelines.
Buyer Profiles: First-Time Buyers vs. Current Homeowners
Within the under-$250K income bracket, there are two broad groups of home purchasers: first-time homebuyers and current homeowners (repeat buyers) making a move. Trends differed for these groups over 2018–2023.
First-Time Buyers
First-time buyers generally tend to be younger and have lower incomes and savings than repeat buyers. National surveys show the median household income of first-time buyers in recent years was about $97,000, compared to $114,300 for repeat buyers. First-timers typically finance most of the purchase (often using low-down-payment FHA or conventional loans), whereas many repeat buyers bring equity from a previous home.
In a healthy market, first-time buyers usually make up around 40% of home sales. But by 2022–2023, first-time buyers faced increasing challenges and their share of purchases fell dramatically. The first-time buyer share dropped to around 26% nationally in 2022 – the lowest on record since the early 1980s. In 2023 it slipped even further to just 24%.
High prices and intense competition (often from cash-rich investors or trade-up buyers) priced out many newcomers. For example, in 2021–2022 bidding wars were common, and first-timers often lost out to existing homeowners who could offer more cash upfront or waive contingencies.
By 2022, the typical first-time buyer was 36–38 years old (a record high age, up from 30s a decade ago) because it took longer to save for down payments and qualify. Many younger adults simply delayed buying and continued renting.
Repeat Buyers
Current homeowners making a purchase (repeat buyers) fared a bit better in this period, but they too encountered challenges. Repeat buyers tend to have higher incomes and often gained substantial home equity as Illinois prices rose (~67% cumulative home value increase over the past decade).
This equity, plus historically low mortgage rates through 2021, enabled many existing owners to “trade up” to larger or more desirable homes during the boom. In 2020–2021, a wave of Illinois homeowners sold their houses and bought bigger ones, capitalizing on low borrowing costs. Many were middle-income families under the $250K bracket who suddenly could afford more house due to 3% interest rates and increased savings during the pandemic.
The median repeat buyer age rose to 59–61 by 2022, reflecting many Baby Boomers and Gen-Xers making later-life moves (either upsizing or downsizing).
Despite their advantages, repeat buyers also faced a tighter market. By 2022–2023, housing turnover slowed – homeowners with ultra-low interest rates were reluctant to sell and lose their cheap mortgage, so they stayed put, contributing to low inventory. Those who did wish to move had difficulty finding suitable new homes to buy, especially within a moderate budget. Nonetheless, repeat buyers remained the majority of purchasers in Illinois through 2018–2023, while first-time buyer participation languished at unusually low levels.
Property Types and Buyer Preferences
Single-Family Homes
Homebuyers in Illinois with under $250K income purchased a range of property types, with preferences shifting depending on life stage and location. The bulk of purchases were detached single-family houses, which are typically the most abundant and preferred type of home for families.
Even budget-conscious buyers gravitate toward single-family homes for the space, privacy, and often better long-term appreciation. According to Illinois Realtors data, roughly 70–75% of home sales statewide in recent years were single-family homes, while about 25–30% were condominiums or townhomes.
In 2020–2021, there was a notable shift toward larger homes as remote work enabled buyers to prioritize space over commute distance. Buyers with moderate incomes took advantage of low interest rates to stretch into bigger houses, often in outer suburbs or smaller cities where their dollars went further. Many young families moved from apartments or condos to single-family houses with yards, while some existing homeowners upsized from a starter home to a more spacious property.
Condominiums and Townhomes
Condominiums and townhouses are especially popular among younger buyers and those in urban areas. In the city of Chicago, condos often represent a large share of sales due to the prevalence of multi-unit buildings. These attached homes tend to be more affordable than single-family houses in the same area, making them an attractive option for households with limited budgets.
For instance, the median sale price of a home in Chicago was about $288,000 at the end of 2022, and much of that market consists of condos (as single-family homes in desirable Chicago neighborhoods usually cost more). Through 2018–2023, many first-time buyers under $250K income bought starter condos or modest townhomes as their entry point to homeownership.
However, the condo market faced some ups and downs – during the early pandemic, urban condo sales slowed as people sought more space, but by 2021 the condo market rebounded strongly (condo sales in Illinois jumped 26.6% in 2021).
Downsizing
Another segment of buyers were downsizing. Older homeowners (empty nesters and retirees) within this income range often sold their larger family homes and bought smaller single-story houses, condos, or senior-friendly dwellings. The typical home seller in recent years was about 63 years old, meaning many were selling the homes where they raised families.
A portion of them stayed in Illinois but chose smaller, easier-to-maintain homes – for example, moving from a large suburban house to a townhouse or a condo downtown. Downsizers contributed to condo demand as well, though some opted for smaller single-family homes in quieter areas.
Multi-generational Housing
Multigenerational housing also became more common: by 2022, a record 14–17% of buyers were purchasing multi-generational homes to accommodate grandparents, adult children, or other extended family. This trend, partly driven by cultural factors and pandemic economics, saw some moderate-income households pooling resources to buy a larger home together (for example, a two-flat or a 5-bedroom house where multiple generations live under one roof). It’s a creative solution to affordability issues, effectively allowing families to “upsize” collectively.
Second Homes and Investment Properties
Finally, a notable subset of buyers in 2020–2021 were those purchasing second homes or investment properties. Even within the under-$250K income bracket, dual homeownership became a trend for a minority. Some mid-career households kept their primary residence but, thanks to low interest rates and savings, bought a vacation home.
Nationally, vacation home sales soared during the pandemic: 2020 saw a 16% jump in vacation-home purchases, and the first four months of 2021 were up 57% year-over-year. By early 2021, vacation/second homes made up 6.7% of all home sales, up from around 5% pre-pandemic.
However, as mortgage rates rose and lending standards tightened (including higher fees for second-home mortgages in 2022), this trend cooled. By 2023, second-home demand fell significantly (U.S. second-home mortgage originations in 2023 were 65% below 2021 levels). Thus, the frenzy of “buying a getaway home” was largely a short-lived pandemic-era phenomenon affecting a slice of Illinois buyers.
Regional Differences: Chicago Metro vs. Downstate
Illinois is a diverse state, and homebuying trends varied markedly between the Chicago metropolitan area and downstate regions. The Chicago metro (Chicagoland) – encompassing the city of Chicago and its suburbs in Cook, DuPage, Lake, Will, Kane, and other collar counties – accounts for a large majority of the state’s housing market activity. The remaining downstate areas (smaller cities, towns, and rural communities across central and southern Illinois) have distinct economic and demographic patterns that influence homebuying.
Price and Property Differences
Home prices and property types differ greatly by region. In general, the Chicago area is more expensive. As of late 2022, the median home price in the Chicago PMSA (Primary Metropolitan Statistical Area) was around $306,000, compared to about $261,000 statewide. By 2024, the Chicagoland median was about $350,000 – significantly higher than downstate medians, many of which ranged from ~$150K to $250K depending on the locale.
Chicago’s market also has a higher concentration of condos and townhomes. Within the city of Chicago itself, condos dominate in many neighborhoods; the city’s median price ($330K as of August 2023) reflects a mix of high-rise condos and single-family homes. In contrast, downstate markets (like Rockford, Peoria, Springfield, etc.) are almost entirely single-family homes and see far fewer condo sales.
Market Dynamics
The market dynamics during 2018–2023 also varied. The Chicago metro experienced a hotter boom in 2020–2021 and a sharper cooldown after 2022. During the boom, Chicago-area home sales and prices shot up at some of the fastest rates seen since the early 2000s. Demand was fueled both by local buyers and by inbound migration from denser coastal cities (some remote workers moved from places like New York or San Francisco to Chicago for its relative affordability while keeping high-paying jobs).
Suburban counties around Chicago saw an influx of buyers from the city seeking more space. In 2021, Chicagoland had double-digit price growth (~12%) and record sales volume. By 2022, as interest rates rose, Chicago’s market began to stabilize; price growth cooled to the mid-single-digits and sales volume declined.
Downstate markets, on the other hand, saw more muted swings. Many downstate areas have struggled with slow population growth or even population loss, which kept housing demand in check. Communities in central and southern Illinois often have a surplus of older housing and fewer buyers, which limited price appreciation relative to Chicago.
From 2018 to 2023, a city like Peoria or Decatur might have seen only modest home price growth each year (a few percent annually), except during the 2021 boom when even smaller markets got a slight bump. On the flip side, affordability in downstate Illinois remained better. A household earning $80,000 (around the state’s median income) could buy a comfortable single-family home in many downstate cities, whereas in the Chicago area that same household would be much more stretched.
Construction and Inventory
Another difference: inventory and new construction. Downstate Illinois saw very little new home construction in the past decade, even less than the Chicago area in proportional terms. Many smaller towns have an aging housing stock with few new homes built since the Great Recession.
This means buyers in those areas often choose from older homes, and the limited supply of modern homes can drive competition for any newer listings. However, since demand is also limited, inventory in downstate markets did not reach the extreme scarcity seen in Chicago’s suburbs during 2021.
In fact, some downstate cities occasionally had higher inventory or slower sales, giving buyers more negotiating power. The exception might be sought-after university towns or state capital regions (e.g. Champaign-Urbana or Springfield) where there was a bit more demand and less inventory.
Renting Trends vs. Homebuying
For Illinois households on a budget, the decision to rent or buy has been a balancing act influenced by market conditions. The period 2018–2023 saw notable shifts in the rental market that provide context for homebuying trends.
Rental Market Dynamics
Rental costs in Illinois rose through the late 2010s and accelerated during 2021, mirroring national trends. In 2019, the median gross rent in Illinois was about $1,020 per month (slightly below the U.S. median). Rent growth was modest in the late 2010s, roughly 2–3% per year.
However, in 2021 as pandemic restrictions eased and young adults returned to cities, rents jumped. Chicago’s average rent hit a record high in late 2021 – up about 9% year-over-year (e.g. from ~$1,626 in Nov 2020 to ~$1,773 in Nov 2021). This surge made renting more expensive just as home prices were also spiking, putting many Illinoisans in a financial squeeze.
By 2022–2023, rents continued to increase, though at a slower pace, and even plateaued in some areas. As of early 2025, the average rent statewide is around $1,800/month, virtually unchanged from a year prior (indicating a cooldown after the earlier surge).
In Chicago, rents remained high, and in many cases the monthly cost of renting a home or apartment was lower than the monthly cost to buy the same unit at 7% mortgage rates. This dynamic led some would-be first-time buyers to stick with renting.
Homeownership Rates
Illinois’s homeownership rate was about 66–68% throughout 2018–2023, meaning roughly one-third of households rent. This ratio didn’t change drastically, but behind it there was some churn. During 2020–2021, low interest rates allowed a segment of renters (often higher-earning renters) to become homeowners – they seized the chance to lock in cheap mortgages.
This contributed to the homeownership rate ticking up slightly in 2021. However, in 2022–2023, the trend reversed: with housing less affordable, some households that might have bought instead remained in the rental market. The homeownership rate in Illinois actually dipped from 68.3% in 2021 to 66.7% in 2022, indicating that growth in homeownership stalled out as costs rose.
Regional Rental Markets
Rental markets differed regionally too. Chicago’s rental market is large and saw the biggest swings – high-end downtown apartments had vacancies in 2020, then were in hot demand by late 2021. Downstate rental markets tend to be smaller and more stable; in some small cities, renting a house can be quite affordable (hundreds of dollars less per month than the equivalent mortgage).
However, in many rural communities, rental housing is limited – there may be a shortage of quality rental units, which can actually push people toward homeownership if they can afford it, simply because there aren’t many good places to rent. Illinois’s rural leaders have highlighted that finding decent affordable rentals is difficult in many areas.
Affordable Housing Programs and Assistance
Given the affordability challenges, various programs and initiatives played a role in supporting Illinois homebuyers under the $250K income level. Both government and private programs helped buyers with down payments, closing costs, and financing, which in turn affected homebuying behavior.
State Programs
One of the most impactful state programs has been the Illinois Housing Development Authority (IHDA)’s homeownership assistance. In 2018, IHDA launched the Access Mortgage program, offering up to $10,000 in down payment and closing cost assistance to eligible buyers statewide. This program, available to both first-time and repeat buyers with moderate incomes, gained traction throughout 2018–2023.
By 2023, it was reported that “one in every thirteen people who bought a home in Illinois utilized an IHDA program to help with down payment costs.” This is a remarkable figure – roughly 7.7% of Illinois homebuyers received state assistance, highlighting how critical these programs became for bridging the affordability gap.
The IHDA assistance often comes as a forgivable or deferred loan, essentially providing the upfront funds many buyers struggle to save. It especially benefited younger buyers and those without familial wealth to tap. The popularity of IHDA’s program likely grew in the 2020–2021 boom (to help buyers compete with cash offers) and continued as interest rates rose (to mitigate higher mortgage costs by reducing loan principal).
Local and Federal Programs
In addition to state-level help, local programs in certain cities provided aid. For example, the City of Chicago has periodically offered down payment assistance grants or incentives for first-time buyers purchasing in specific neighborhoods. Some employers in Illinois also implemented employer-assisted housing programs, giving grants or low-interest loans to employees for home purchases.
On the federal side, low-down-payment loan programs were crucial. Many Illinois buyers under $250K income rely on FHA-insured mortgages, which allow as little as 3.5% down. In 2022, FHA loans accounted for about 29% of mortgages used by first-time buyers nationally.
FHA is especially common for buyers with credit or savings constraints – its usage likely spiked in 2020–2021 when buyers scrambled to afford rising prices. VA loans (for veterans) and USDA rural loans (for rural area buyers) also helped certain segments with zero-down options.
Comparison to 2008–2017 Trends
Looking at 2018–2023 in context, it’s useful to compare these trends to the prior decade (2008–2017). The period 2008–2017 was defined by the housing crash, a slow recovery, and a fundamentally different market environment for Illinois homebuyers, especially those on a budget.
Housing Bust and Recovery
During the housing bust (2008–2012): Illinois experienced steep home price declines and a collapse in sales. The 2008 financial crisis and subprime mortgage meltdown hit Illinois hard. Home values plummeted; in the Chicago area, prices fell around 30% from their 2006 peak by 2012.
Many households under $250K income were either stuck underwater on homes they owned or, if they were renters, found it very difficult to get a mortgage as lending standards tightened dramatically. Foreclosures flooded the market, particularly in lower-income communities.
This period was actually an opportunity for some first-time buyers who had secure jobs and good credit – they could scoop up foreclosed homes at bargain prices and low interest rates. Indeed, first-time buyers briefly grew to a larger share of the market around 2009–2010, aided by a federal $8,000 tax credit for first-time buyers in 2009.
The recovery phase (2013–2017): Home prices in Illinois gradually stabilized around 2012 and then started rising again, but at a moderate pace. From 2013 to 2017, Illinois home prices grew, cumulatively, by perhaps 10–20% (nothing like the rapid run-up of the 2020s).
Interest rates in this span were low by historical standards (hovering ~3.5–4.5% for 30-year mortgages), which provided a supportive environment for homebuyers. Homeownership rates, however, remained subdued – after falling from ~70% in 2005 down to ~65% by 2015, homeownership only inched up slightly toward 2017.
Market Differences
Compared to 2018–2023, the 2008–2017 period had far more stagnant demand and abundant supply (especially early on). In 2011, for example, Illinois home sales were very low – a stark contrast to the frenzy of 2021. Buyers in the early 2010s had the upper hand in many markets, with ample choices and sellers often desperate. Homes could sit on the market for months back then.
By the late 2010s, the market had normalized; 2015–2017 saw balanced conditions with modest price gains and reasonable inventory. In fact, Illinois’s housing affordability around 2015 was quite favorable: prices were still low relative to incomes (thanks to the earlier crash) and interest rates were low, so the monthly cost for a median-priced home consumed a smaller share of median income than it would in 2022.
Many who bought in that window locked in both low prices and low rates, benefiting greatly by the time 2020s rolled around.
Future Outlook for Budget-Conscious Buyers
Looking ahead, the landscape for Illinois homebuyers with moderate incomes (under $250,000) remains challenging but not without hope. Affordability will be the key concern. As of 2025, mortgage rates are still elevated (around 6–7%), and home prices in Illinois are at record highs. This combination means the typical monthly payment on a median-priced Illinois home is roughly 50% higher than it was just a few years ago, a significant strain on middle-class budgets.
Market Factors
Interest rate trends will heavily influence the future. If inflation abates and the Federal Reserve eases policy, mortgage rates could gradually come down in late 2025 and beyond. Even a drop from 7% to, say, 5% would meaningfully improve affordability, potentially bringing a wave of pent-up buyers back into the market.
Home prices are likely to remain high, though the pace of increase may slow. There is little evidence of a price crash in Illinois on the horizon because inventory remains tight. Even during the slower sales of 2022–2023, prices generally kept rising modestly year-over-year in Illinois, illustrating a floor under values due to limited supply.
Housing supply issues will persist. Illinois’s slow rate of new construction is not easily or quickly reversed, especially with high construction costs and labor shortages. That said, there is growing awareness at the state and local level of the need to boost housing supply.
Support Programs
Assistance programs will remain crucial. IHDA is continuing its Access Mortgage down payment assistance (the state even publicized in 2024 the availability of funds and encouraged more people to apply). It’s likely the income limits for such programs will be adjusted so that households up to a certain threshold (often around 120% of area median income) can qualify – which would cover many in the under-$250K bracket.
Future initiatives, possibly at the federal level, could also materialize (there’s ongoing discussion of a renewed first-time buyer tax credit or other support). Budget-conscious buyers in Illinois should stay attuned to these resources, as they can literally make the difference between buying or not.
Demographics and Trends
Demographic shifts will gradually change the buyer pool. The tail end of the Millennial generation is now approaching prime homebuying age (late 20s to mid-30s). Gen Z is entering the workforce. These younger groups are numerous and will sustain demand for starter homes – keeping pressure on that segment of the market.
At the same time, Baby Boomers are increasingly downsizing or moving out of homeownership (some into rentals or senior housing). This could free up some existing homes for sale, albeit often at higher price points or in need of renovation.
In Illinois, economic factors like job growth and income growth will also play a role. The state’s economy has been steady but not booming. If Illinois can attract new employers or high-paying jobs (for instance, in tech hubs around Chicago or manufacturing downstate), that could increase local incomes and help more households afford homes.
The future for Illinois homebuyers earning under $250,000 will likely involve careful budgeting, creative strategies, and leveraging all available resources. Buying a home will continue to be challenging but achievable for those households. We can expect many to “buy within their means” – perhaps choosing smaller or more distant homes to make the numbers work – or to team up (through co-borrowing with a partner, friend, or family member) to afford property.
Some trends from 2018–2023 will carry forward, such as multi-generational purchases or relocating to find affordability. The market is poised to remain competitive at entry-level price points because demand exceeds supply. However, if interest rates fall and new supply modestly increases, conditions could improve: more listings, slightly slower price growth, and a better negotiating position for buyers than in the frenzy of 2021.
References
- Illinois REALTORS® – 2022 Annual Report on the Illinois Housing Market
- WIFR News (Gray Media) – Illinois home prices reach new high, sales fall
- Chicago Agent Magazine – Annual Illinois home sales dipped but rose in December at year-end
- St. Louis Fed (FRED/ALFRED) – Homeownership Rate for Illinois
- National Association of REALTORS® – Highlights From the Profile of Home Buyers and Sellers
- National Association of REALTORS® – First-Time Home Buyers Shrink to Historic Low of 24% as Buyer Age Hits Record High
- WTTW News (PBS) – Chicago Area Housing Market Soared in 2021 But May Slow in 2022
- Construction Coverage – Cities With the Largest Increase in Home Prices Over the Last Decade
- Forbes – The Average Rent In Chicago Reaches Its Highest Point Ever
- Zillow Rental Manager – Illinois rental market
- Department of Numbers – Illinois Residential Rent and Rental Statistics
- Illinois Housing Development Authority – State of Illinois Offering $10,000 To Help Buy a Home and Put Down Roots
- NAR Economists’ Outlook Blog – Vacation Home Sales Surges During Pandemic
- Illinois Policy Institute – Illinois home building lags virtually every other state during past decade
- farmdoc daily (Univ. of Illinois) – Rural Growth Requires More Housing
- NPR Illinois – Home Improvement: Illinois’ Real Estate Market is Regaining Some Lost Ground
