2025 Tri-Cities Real Estate Market Predictions

As we head into 2025, the Tri-Cities continue to shine as one of the most desirable areas to live in Illinois. With eclectic downtowns, strong school districts, and suburban charm, this area remains a hot spot for homebuyers.

But what does the real estate market have in store for the year ahead? Here are my predictions for 2025.

1) Steady Demand Across All Market Segments

The allure of the Tri-Cities—proximity to Chicago, highly rated schools, and thriving local businesses—continues to attract homebuyers. I anticipate steady demand in 2025, driven by a combination of young families looking to establish roots and older homeowners seeking to downsize without sacrificing quality of life. While affordability challenges might temper demand slightly, the Tri-Cities' appeal ensures that well-priced homes will still sell quickly.

2) Interest Rates May Shape Buyer Behavior

With the Federal Reserve hinting at stabilizing interest rates, mortgage rates are likely to hold steady or experience only minor fluctuations. Rates around 6.5%-7% could become the new normal, which means buyers will need to adjust their expectations. However, for those who have been waiting on the sidelines, 2025 could be the year rates open things up as some experts predict they could fall as low as 5.75%.

3) Inventory Challenges Persist

The inventory of available homes remains a challenge across the Tri-Cities. New construction projects are still scarce especially after Pulte Homes failed again on their bid to take over LaFox. Buyers that are willing to head to Elgin and further west will see more options. Sellers who list their homes in 2025 will likely benefit from limited competition outside of April-June, making this a favorable year to sell. Buyers will be hoping for more sellers to heed this message.

4) Moderate Price Appreciation

Home prices in the Tri-Cities have shown consistent growth over the past few years, and I expect this trend to continue at a more moderate pace in 2025. While we’re unlikely to see the double-digit price gains of years past, a healthy 3-5% appreciation is on the horizon, keeping the market balanced and attractive for both buyers and sellers.

5) Increased Interest in Luxury

The luxury market in the Tri-Cities, particularly in St. Charles and Geneva, remain robust. Buyers in this segment are less impacted by interest rate changes and continue to seek high-quality properties with modern amenities. We saw appreciation tempered some especially in the $1M+ price point as more inventory hit in 2024 vs. 2023. This could bring more buyers to the table in 2025.

Opportunities for Buyers and Sellers in 2025

For buyers, 2025 presents an opportunity to capitalize on stabilizing rates and negotiate favorable terms. Patience will be key—finding the right home might take time given limited inventory, but those who remain flexible will be rewarded.

For sellers, the continued demand for well-maintained homes means 2025 could be an ideal time to list. Pricing strategically and ensuring your home is market-ready will be crucial to capturing buyer interest quickly.

Bottom Line

The Tri-Cities and surrounding areas are poised for another strong year in real estate. Whether you’re looking to buy, sell, or simply understand how these trends impact you, I’m here to help.

Having an agent who is in the field is key for buyers, and for sellers, one that understands what the modern buyer is looking for ensures you will appeal to the largest pool of potential buyers.

This sponsored article was written by local real estate expert Chris Wallace, Broker for @Properties.