Illinois is a state of strong home ownership, but Springfield’s ongoing political issues are impacting job growth and that has a ripple effect on the state’s overall economy and ultimately the housing market, economist Geoffrey J.D. Hewings told Illinois REALTORS® Wednesday at the association’s Public Policy meetings in East Peoria.
“In the last two months of the year, we’ve lost 22,000 jobs. The U.S. economy during that time and the rest of the Midwest during that time, added jobs,” said Hewings, director of the Regional Economics Applications Laboratory (REAL), at the University of Illinois.
There has been progress. Foreclosures account for a smaller share of the market, home prices are improving and the Illinois housing market is expected to see continued moderate growth in 2017, Hewings said.
But long-term, Illinois’ ongoing political battles – if not resolved – could dampen job growth, incoming tax revenue, interest from businesses looking to expand and more, he said.
Hewings and Jonathan Smoke, chief economist at realtor.com® since 2014, talked about some of the big issues facing the Illinois and U.S. housing markets.
One trend that had a significant impact on the market in 2016 and is likely to be a factor in 2017 is low housing inventory. Buyer demand is strong, but the U.S. housing market began this year with the lowest level of available housing inventory in at least 20 years, Smoke said.
There has been an uptick in new home construction that will add to the potential supply, Smoke said. Mortgage rates are moving higher, but are still considered historically attractive and affordable. Consumer confidence is at a 15-year high and credit access is improving, he said.
Other takeaways from Smoke’s presentation:
- Rents have climbed higher in most Illinois counties in the last year. In fact, rents were up 5 percent or more in 29 percent of counties.
- Based on monthly costs, it is cheaper to buy a home rather than rent in 90 percent of Illinois counties.
- Home ownership is strong in Illinois with the state’s overall rate at 70 percent. Among Millennials, the rate is 50 percent.