Loading Content...
Salem, Illinois: Rising Home Values and Shifting Ownership Patterns in a Charming Small Town
CATEGORY
Property Value
DATA
Percent Owner Occupied
Housing Prices
Median Rent
Population
Loading Content...
Property Value
Percent Owner Occupied
Housing Prices
Median Rent
Population
Salem, Illinois, a charming city located in the southern part of the state, has experienced noteworthy shifts in its housing market over the past decade. With a population of 8,991 in 2022 and covering an area of 6.99 square miles, Salem has seen fluctuations in homeownership rates, average home prices, and average rent prices that reflect broader economic trends and local dynamics.
The homeownership rate in Salem has shown a gradual decline from 2013 to 2022. In 2013, 69% of housing units were owner-occupied, but by 2022, this figure had decreased to 64%. Conversely, the percentage of renters increased from 31% to 36% during the same period. This shift coincided with significant changes in average home prices. In 2016, the average home price in Salem was $86,835. By 2022, it had risen to $111,419, representing a substantial increase of 28.3% over six years.
The relationship between federal interest rates and homeownership rates in Salem follows a generally established trend. From 2013 to 2015, when interest rates were at historic lows (0.11% to 0.13%), homeownership rates remained steady at 69%. However, as interest rates began to rise from 2016 onwards, reaching 1.68% in 2022, homeownership rates in Salem declined to 64%. This trend aligns with the principle that higher interest rates can make mortgages less affordable, potentially discouraging homeownership.
Regarding rental trends, the average rent in Salem has fluctuated over the years. In 2013, the average rent was $742 per month. It dipped to $655 in 2019 before rising again to $714 in 2022. The increase in the renter population from 31% in 2013 to 36% in 2022 suggests a growing demand for rental properties, which may have contributed to the recent uptick in average rent prices.
In 2023 and 2024, Salem's housing market continued to evolve. The average home price in 2023 reached $116,685, and in 2024 it further increased to $123,165. This represents a significant jump of 10.5% from 2022 to 2024. Concurrently, federal interest rates rose sharply to 5.02% in 2023 and 5.33% in 2024, potentially impacting homebuying decisions in the city.
Looking ahead, based on the observed trends, we can forecast the following for the next five years: Average home prices in Salem are likely to continue their upward trajectory, potentially reaching around $140,000 by 2029. This projection assumes a similar growth rate to that observed between 2016 and 2024. Average rent prices may also see a moderate increase, potentially reaching $780-$800 per month by 2029, assuming a continuation of the current trend and accounting for inflation.
In summary, Salem, Illinois has experienced a gradual shift towards a higher proportion of renters over the past decade, coinciding with rising average home prices and fluctuating rent costs. The recent sharp increase in interest rates may further impact homeownership trends in the coming years. As average home prices continue to rise, the rental market in Salem may see increased demand, potentially leading to higher average rents.
