After several years of favoring sellers, the housing market in the Illinois Valley – and across the nation – is beginning to show early signs of leveling out in 2026.

Heidi Huber, owner and managing broker of Coldwell Banker Today’s Realtors in Peru, said housing inventory isn’t dramatically rising, and the market has not fully shifted to favor buyers.

However, homes are staying on the market longer, and sellers are accepting contingencies, creating a more balanced feel than the frenzied market seen in the years immediately following the COVID-19 pandemic.

“We’re starting to see it switch,” Huber said. “A year ago, you really couldn’t get contingencies. If you wanted a house, you had to be ready to go. We’re still seeing limited inventory, but not that same frenzy. Over the past couple of months, sellers have started accepting more contingencies, and homes are sitting a little longer.”

Homes that are move-in ready and priced affordably still are selling quickly in the area, Huber said, but the broader market is beginning to slow compared with last year.

Local seller Larry Mitchell, who listed his historic Ottawa home about a month ago, said the process has been encouraging so far.

“Within 24 hours of going live, we had a walk-through,” Mitchell said. “People were very interested in the home and loved the history.”

Going along with what Huber said, Mitchell’s experience as a local seller indicates that although inventory remains limited, well-marketed, move-in-ready homes still can attract buyers, even as the market begins to slow.

Nationally, existing-home sales remain near multidecade lows as inventory slowly rises and price growth moderates, according to the National Association of Realtors. High mortgage rates and home prices continue to limit affordability, especially for first-time buyers.

Rick Pretsch, an economics professor at Illinois Valley Community College, said housing market trends often mirror national economic pressures.

“When consumers have to spend more on housing, whether it’s higher prices or higher interest rates, they have less money for everything else,” Pretsch said. “Since about 70% of the U.S. economy is driven by consumer spending, that reduction has ripple effects across the economy.”

Pretsch said rising costs for construction materials, including steel, aluminum, copper and lumber, are pushing up prices for existing homes by limiting new housing supply.

At the same time, slowing wage growth and declining labor force participation are limiting buyers’ ability to enter the market, especially among younger households.

“On the demand side, people simply don’t have the spare income to purchase a home right now,” Pretsch said.

A combination of these factors has added up to a gradual shift away from the clear seller’s market over the past few years.

Huber said first-time buyers remain priced out, with demand increasingly driven by older buyers and people or families who are downsizing.

“The average buyer age is over 40, based on what we’re seeing locally,” Huber said. “And it’s not first-time buyers, and it hasn’t been for years. A lot of younger people just can’t afford to buy right now.”

She added that housing options with fewer maintenance responsibilities are in particularly high demand in the region.

Looking ahead, both Huber and Pretsch said the market could continue moving toward balance, although the outlook remains uncertain.

“If demand drops enough, sellers will eventually have to adjust prices,” Pretsch said. “That’s how a buyer’s market develops – when supply exceeds demand.”

A shift toward more affordable housing ultimately could benefit the local economy by freeing up consumer spending, Pretsch said, although broader economic conditions would need to improve first.

“For demand to be there, there has to be an income base,” he said. “Right now, I just don’t see that income base.”

Although nothing is definitive, Huber said sellers should be prepared for changing conditions over the next year or two.

“The market is constantly changing,” she said. “Sellers may need to adjust expectations, be open to contingencies, and understand that pricing from a few months ago may no longer apply.”