First-time homebuyers are those purchasing their first-ever home to live in. In Illinois, from 2018 through 2023, this group faced a rapidly changing housing market. Historically, first-time buyers make up roughly 40% of home sales in a healthy market. But by 2022–2023, their share dropped dramatically to record lows – only about 26% of buyers in 2022 and 24% in 2023 were first-timers. This was the lowest proportion of first-time buyers since the early 1980s and well below normal levels.
Several factors drove this decline. Home prices in Illinois rose quickly during this period, especially in 2020–2021, making it harder for new buyers to afford a starter home. At the same time, competition in the market was intense. In 2021–2022, bidding wars were common and first-time shoppers often lost out to repeat buyers or investors who could pay cash or waive contingencies.
The age of first-time buyers climbed to new highs as a result. By 2022, the typical first-time buyer in Illinois was around 36–38 years old, whereas a decade ago this figure was in the early 30s. Today’s first-timers are older because many young adults are waiting longer to purchase a home. It takes more time to save for down payments and build credit, especially with high rents and student loan payments.
The Pandemic Effect on Housing
This analysis focuses on residential properties (single-family houses, condos, and townhomes) bought by first-time owners for their own use – not multi-family investment buildings. Illinois first-time buyers in 2018–2023 overwhelmingly bought homes to live in, pursuing the American Dream of homeownership. However, that dream was influenced by a rollercoaster economy: after a steady 2018–2019, the pandemic in 2020 initially halted the market, then sparked a housing boom by late 2020 and 2021.
Record-low interest rates in 2020–2021 (under 3%) suddenly made mortgage payments cheaper, drawing many new buyers into the market. Demand surged, but the supply of homes for sale did not keep up. This imbalance led to rapidly rising prices and fierce competition – conditions that were especially challenging for first-time buyers with limited budgets.
By 2022 and 2023, conditions shifted again. Interest rates shot up, inflation eroded purchasing power, and inventory remained tight. Many owners who had locked in low 3% mortgage rates were reluctant to sell and give up those rates, so they stayed put, resulting in fewer homes listed for sale. With fewer listings and higher borrowing costs, first-time buyers in 2022–2023 found it even harder to get a foot in the door of homeownership.
Property Types and Home Preferences
What kinds of homes are first-time Illinois buyers purchasing? Largely, they seek the same types of homes as other buyers – mainly standard single-family houses. About 70–75% of recent home sales statewide were detached single-family homes, while roughly 25–30% were condominiums or townhomes. First-time buyers often gravitate toward single-family houses because they offer more space, privacy, and yard area for families or future growth. These houses also tend to appreciate well over time, which is attractive for building equity.
However, many first-timers (especially younger singles or couples) do opt for condos and townhomes, particularly in urban settings like Chicago. In the city, condos can be far more affordable than single-family houses. For example, in late 2022 the median sale price of a home in the city of Chicago was about $288,000, and much of that market consisted of condos and attached homes. A house in a popular Chicago neighborhood often costs much more than a condo in the same area.
The Rise of Larger Homes
Home size is another key preference. During 2018–2019, many first-time buyers followed a traditional path of purchasing “starter homes” – moderately sized houses or condos suitable for a first home. But by 2020–2021, preferences started to shift toward larger homes. The rise of remote work during the pandemic led buyers to prioritize space over commute distance.
Suddenly, having an extra room for a home office or a bigger yard became a top wish-list item. Many first-time buyers who had spent years in small city apartments wanted more room to spread out. If they no longer needed to be in the office every day, they were willing to move farther from downtown to find a house with an extra bedroom or a dedicated workspace.
As a result, some first-time buyers “upsized” their expectations – essentially skipping the tiny starter condo and buying a larger home as their first purchase. They took advantage of 2020–2021’s 3% mortgage rates to afford more house than they could have with higher rates.
Financing Trends
First-time buyers typically rely on mortgages and put down smaller down payments than repeat buyers. Typical down payments for first-time buyers were around 6–9% of the purchase price in recent years, the highest levels since the late 1990s. Many use FHA loans or other low-down-payment programs to buy. This means first-timers are often financing most of the home’s cost and have to carefully choose a property type that fits their budget.
Location Preferences: Urban, Suburban, and Rural
Where did Illinois first-time buyers decide to live? The state has diverse communities – from the dense city blocks of Chicago, to sprawling suburban neighborhoods, to small towns and rural areas downstate. Location preferences shifted notably over 2018–2023, influenced by prices and new remote work realities.
In the late 2010s, many first-time buyers in Illinois were concentrating in the Chicago metropolitan area, which is the economic hub and where jobs are abundant. Within the city of Chicago, a lot of first-timers bought condos or starter homes in neighborhoods that offered an urban lifestyle – easy access to work, public transit, restaurants, and so on. Meanwhile, others chose suburban locations around Chicago, seeking more house for the money or good schools for young children.
Pandemic-Driven Relocation
The COVID-19 pandemic upended some of these patterns. When remote work became widespread in 2020, living near the office became less critical. Suddenly, many renters in Chicago (and other cities) realized they could move farther out and still keep their jobs. Zillow found that nearly 2 million renting households nationwide who couldn’t afford homes in pricey metro areas could afford a home if they moved to a cheaper region, once commuting was no longer an issue.
This was very much the case in Illinois: a wave of city dwellers turned their eyes toward the suburbs and even beyond. In 2020 and 2021, suburban counties around Chicago saw an influx of first-time buyers leaving the city in search of more space and affordability. The result was a mini “urban exodus” during the pandemic’s peak. Chicagoland home sales and prices surged in 2020–2021, especially in suburban areas, with the region seeing around 10–12% price growth in 2021 – some of the fastest in decades.
It’s important to note that Chicago’s urban market did not collapse – people still bought in the city, and by 2023 city demand was recovering. But relative to the suburbs, the city was quieter in 2020. Condo sales in downtown Chicago, for example, slowed in the early pandemic as some buyers avoided high-density living. By 2021, as vaccines arrived and life reopened, the Chicago condo market rebounded strongly – Illinois condo sales jumped 26.6% in 2021 compared to the prior year.
The Downstate Difference
Outside of the Chicago metro, Illinois first-time buyers have vastly different experiences. The areas often called “downstate” Illinois – essentially central, western, and southern Illinois outside the Chicago region – include smaller cities (like Peoria, Springfield, Rockford) and rural communities. Housing in these places is much more affordable. As of late 2022, the statewide median home price was around $261,000, but in many downstate cities median prices ranged from roughly $150,000 to $250,000.
For example, a city like Peoria might have a median home price near $150K, which is less than half the median in the Chicago area. This means a local teacher or nurse in Peoria earning $60,000 a year could reasonably buy a house, while someone earning the same in Chicago might struggle to find anything in their price range. Downstate markets also consist almost entirely of single-family homes – condos and townhomes are rare outside of the Chicagoland region.
One might assume low prices make it easy for first-time buyers in rural Illinois. In terms of affordability, that’s true – downstate Illinois remained more buyer-friendly, with modest price gains and even surplus inventory in some years. However, the challenge downstate is economic: job and population growth has been slow or negative in many areas. A lot of young adults leave these areas for better opportunities, which means fewer first-time buyers locally.
Economic Factors Shaping First-Time Buyers
Buying a home is not just about personal preference – it’s also about economic reality. From 2018 to 2023, several economic factors had a profound impact on Illinois first-time homebuyers:
Interest Rate Volatility
Mortgage interest rates swung from lows to highs in this period, directly affecting first-timers’ buying power. In 2018, a typical 30-year fixed rate was around 4.5%. By early 2020, rates had fallen below 3.5%, and during the pandemic they plunged under 3% – an almost historic low. These ultra-low rates in 2020–2021 were a double-edged sword: they made monthly mortgage payments more affordable (letting buyers qualify for higher loan amounts), but they also spurred a surge in demand that drove home prices up.
Then in 2022, the situation reversed. The Federal Reserve raised interest rates sharply to combat inflation, and mortgage rates jumped above 5%, then above 6% by late 2022. By 2023, rates hovered around 6.5–7% – the highest in about 20 years. This increase had a brutal effect on affordability: a mortgage that might have cost $1,000 a month in 2021 could cost $1,300 or more for the same house in 2023 due to interest alone. By 2023 the typical monthly payment on a median-priced Illinois home was roughly 50% higher than just a few years prior.
Home Prices and Affordability
Home prices in Illinois climbed significantly from 2018 to 2023, outpacing income growth. Statewide, the median home price rose from roughly $200,000 in 2018 to around $260,000–$270,000 by 2023, a gain of ~30% or more in five years. Much of that increase came during the 2020–2021 boom when demand far exceeded supply.
While Illinois isn’t as high-cost as coastal markets, affordability still worsened for locals. Wages did grow in this period (and many households saved money during COVID shutdowns), but not as fast as home prices. By 2022, buying the same house required a substantially higher income or down payment than it did just a few years earlier.
The Student Loan Burden
A major social factor affecting many millennials (the primary first-time buyer age group in these years) is student debt. Illinois has a high number of college graduates, and with that comes large student loan balances. The average student loan balance in Illinois is around $39,000 per borrower, and over half of borrowers are under age 35 – right in the first-time homebuyer cohort.
Large monthly student loan payments make it harder to save for a down payment or to qualify for a mortgage (banks consider that debt when approving loans). Many young adults in Illinois reported that student debt delayed their home purchase by years. This problem was recognized by state authorities: the Illinois Housing Development Authority launched the SmartBuy program in late 2020, which offered up to $40,000 in student loan forgiveness for first-time buyers who bought a home in Illinois.
Remote Work Revolution
Remote work has been mentioned several times, but it’s worth emphasizing as a socio-economic factor. Before 2020, only a small fraction of jobs were work-from-home. By mid-2020, huge numbers of Illinois workers (especially in tech, finance, and professional fields around Chicago) switched to remote or hybrid schedules.
This had a direct effect on housing decisions. First, as discussed, it freed some people from needing to live close to the office, allowing moves to more affordable areas. According to a Zillow survey, 66% of those working from home during the pandemic said they would consider moving if remote work continued long-term.
Second, remote work changed what people wanted in a home. Buyers prioritized features like an extra bedroom (to use as an office), a finished basement, or simply more square footage and a quiet neighborhood for better work-life balance. Condos without dedicated office space became less appealing to some, while single-family homes or larger townhomes grew in popularity.
Changing Household Formations
Social trends in marriage and family also play a role. Americans are marrying and having children later than in past decades, and this is reflected in homebuying. A growing share of first-time buyers in Illinois are single individuals rather than young married couples. In 2023, the percentage of single women and single men buying homes increased, while married couples made up only 59% of recent buyers – the lowest share of married buyers in over a decade.
Many people now purchase a home on their own or with a partner before marriage. This delays buying for some (waiting until they feel financially secure solo), but it also means the profile of first-time buyers is more diverse. By the early 2020s we saw more single women in particular achieving homeownership in Illinois, reflecting both social empowerment and the desire for stability even without waiting for marriage.
Regional Differences and Comparisons
Chicago vs. Downstate Illinois
Real estate is local. The Chicago Metropolitan Area (which includes the city and surrounding suburbs in counties like Cook, DuPage, Lake, Will, Kane, etc.) is by far Illinois’ largest housing market. Home prices here are notably higher than elsewhere in Illinois. By late 2022 the median home price in the Chicago metro was around $306,000, compared to about $261,000 statewide. By mid 2023, the city of Chicago’s median was about $330K and climbing.
Property types also differ: Chicago and its suburbs have a mix of condos, townhomes, and houses, while downstate is almost entirely single-family houses. During 2018–2023, the market dynamics in Chicago versus downstate were distinct. The Chicago area went through a hot boom in 2020–2021 – home sales and prices there surged at some of the fastest rates since the early 2000s.
On the other hand, downstate Illinois had a milder ride. Many downstate cities have struggled with slow job growth or even population loss. Demand for homes grew more modestly, so while they did see the pandemic boost, it was not as extreme. In some downstate markets, there were periods of ample supply: homes could sit unsold for a while, and buyers had more choices.
Illinois vs. Neighboring States
How do first-time buyer trends in Illinois compare to its neighbors like Indiana and Wisconsin? In many ways, the broad trends were similar (all states experienced the pandemic housing boom and subsequent affordability crunch), but there are some differences in costs and preferences worth noting.
Illinois generally has higher home prices and property taxes than Indiana, and slightly higher than Wisconsin. In 2023, the median home value in Illinois was around $285,000, whereas Indiana’s was about $259,000. Wisconsin was roughly in between or similar to Illinois in median price.
More striking is property taxes – Illinois is known for very high property tax rates (about 2.0% of home value on average, second highest in the U.S.), whereas Indiana’s property tax rates are much lower (around 0.8% of value). Wisconsin’s property taxes (roughly 1.5%) fall in between. For first-time buyers calculating their monthly payments, this matters.
Because of these affordability factors, Indiana and Wisconsin tend to have higher homeownership rates overall. As of around 2022, about 74% of Indiana households were homeowners, compared to about 68% in Illinois. Wisconsin is also around the low 70s percent. This suggests first-time buyers might find it easier to become owners in those states.
2018–2023 vs. 2008–2017: Historical Context
It’s insightful to step back and compare the recent trend (2018–2023) with the prior decade (2008–2017). The housing landscape for first-time buyers changed in several significant ways:
The 2008–2012 period was dominated by the housing crash and Great Recession. In Illinois, home prices plummeted after 2007 and foreclosures flooded the market. For first-time buyers with secure jobs and good credit, the early 2010s actually offered a rare opportunity: houses were selling at bargain prices and interest rates were low.
Indeed, around 2009–2010 first-timers briefly grew to a larger share of the market as they scooped up foreclosed homes and also benefited from a federal incentive – the $8,000 first-time homebuyer tax credit in 2009. That tax credit drew many people into buying their first house during the recession.
By contrast, 2018–2023 had rising prices and no comparable nationwide tax credit. Rather than a surplus of cheap homes, there was a shortage of listings. Early 2010s was a buyer’s market (homes lingered on the market and sellers were eager), whereas 2020–2021 was a seller’s market (homes sold in days with multiple offers).
Home prices after the crash bottomed out around 2012. From 2013–2017, they rose gradually (roughly 10–20% total over those years). Affordability in the mid-2010s was actually quite favorable: prices were still relatively low and interest rates were around 3.5–4.5%, so monthly payments on a median home took up a smaller chunk of income than they would later.
Fast forward to 2018–2023: prices not only fully recovered but hit new highs, especially after 2020. By 2022, Illinois home values were roughly 67% higher than they had been a decade earlier. That outpaced income growth, making 2022 one of the least affordable moments for first-time buyers in a long time.
Conclusion
The 2018–2023 period marked a challenging chapter for first-time homebuyers in Illinois, with record-low participation and older buyer ages, largely due to high prices and low inventory. This is a stark contrast to 2008–2012 when first-timers were briefly a larger force taking advantage of low prices, and to the mid-2010s when conditions were comparatively balanced and affordable.
The shifts over time highlight how economic cycles and housing supply can dramatically alter the first-time buying experience. Yet, despite the obstacles, many Illinoisans still achieved homeownership in the last five years, adapting to remote work, leveraging low interest rates when possible, and finding creative paths to purchase.
As we move beyond 2023, the hope is that increasing awareness of these challenges will lead to more solutions – whether through building more homes, easing financial burdens like student loans, or new buyer assistance – to ensure the next generation of first-time buyers can make that leap into owning their homes.
References
- Illinois home sales dipped while median prices rose in August – Illinois REALTORS®
- Home buyer and seller trends – Illinois REALTORS®
- Zillow and Census Bureau Data Show Pandemic’s Impact on Housing Market – U.S. Census Bureau
- Lowest Homeownership Rate for Younger Householders in Four Years – NAHB/Eye on Housing
- Mapped: Average Student Loan Debt By State – Visual Capitalist
- SmartBuy Program Offers up to $40000 to Pay Off Student Debt for New Home Buyers – Amdani Law
- Redfin: Outflow of Chicago residents slowing – Chicago Agent Magazine
- Illinois continues to lose population – Capitol News Illinois
- Median Home Price By State: How Much Houses Cost – Bankrate
- Property Taxes by State and County – Tax Foundation
- Student Loan Debt by State – Education Data Initiative
- Pritzker Administration Relaunches “Opening Doors” Homebuyer Program – Illinois.gov
