Five takeaways on current housing market trends

Economists Ken Rosen and Lawrence Yun, center, answer audience questions after the residential housing presentation.

Did you know today’s U.S. homeowners are staying in their homes longer?

Homeowner tenure now averages 10 years compared to the past when they were more likely to stay put for an average of 6 years before moving, said Lawrence Yun, chief economist for the National Association of REALTORS®.

Yun shared some of the current trends and issues facing the U.S. housing market in his presentation, “Residential Economic Issues and Trends Forum,” at the REALTORS® Conference & Expo in Chicago on Friday. He was joined by Ken Rosen, an economist with Rosen Consulting Group.

Here are four more takeaways from the presentation:

  • Housing inventory is historically low and some areas are harder hit than others – Total U.S. inventory is averaging about four months of supply. But some communities, even in the Midwest, have even less. Kansas City has a two-month supply of inventory while Austin is just shy of that.
  • Sellers fear the “empty chair” scenario – Because of the low inventory, some sellers who would otherwise be ready to list are waiting because they fear that if they stand up and sell their home, there won’t be enough “empty chairs,” or housing stock for them to find a replacement.
  • First-time buyers face more hurdles in coming up with a down payment -Rising home prices are benefiting sellers who are gaining more home equity, making it easier for them as repeat buyers to come up with a down payment. Higher home prices are having the opposite effect for first-time buyers.
  • More new housing stock could alleviate some of the inventory crunch – Single-family housing starts are now well below a 50-year average and recent natural disasters are putting an even greater strain on available housing in some areas. An influx of new construction would provide needed inventory.

Strong buyer demand, lower inventory push Illinois home prices higher in September

September 2017 Housing InfographicHomes sold quickly and at higher median prices in September, even as statewide home sales dipped slightly amid lower than normal housing inventory levels, according to Illinois REALTORS®.

Statewide home sales (including single-family homes and condominiums) in September 2017 totaled 13,657 homes sold, down 4.0 percent from 14,223 in September 2016.

The statewide median price in September was $192,500, up 6.9 percent from September 2016, when the median price was $180,000. The median is a typical market price where half the homes sold for more and half sold for less.

“Sellers are definitely reaping the benefits of a market which in many areas continues to be dogged by tight inventories,” said Illinois REALTORS® President Matt Difanis, ABR, CIPS, GRI of Mahomet, co-owner of RE/MAX Realty Associates in Champaign. “Although the summer selling season is drawing to a close, interest on the part of many buyers does not seem to be waning as evidenced by the short time on average it is taking to complete a purchase.”

The time it took to sell a home in September averaged 51 days, down from 58 days a year ago. Available housing inventory totaled 60,669 homes for sale, a 10.5 percent decline from September 2016 when there were 67,796 homes on the market.

The monthly average commitment rate for a 30-year, fixed-rate mortgage was 3.81 percent in September 2017, a decrease from 3.88 percent the previous month, according to the Federal Home Loan Mortgage Corp. In September 2016, it averaged 3.46 percent.

In the nine-county Chicago Primary Metropolitan Statistical Area (PMSA), home sales (single-family and condominiums) in September 2017 totaled 9,634 homes sold, down 4.6 percent from September 2016 sales of 10,095 homes. The median price in September 2017 was $230,000 in the Chicago PMSA, an increase of 5.7 percent from $217,500 in September 2016.

“Housing inventory continues to dampen sales,” said Geoffrey J.D. Hewings, director of the Regional Economics Applications Laboratory at the University of Illinois. “This problem is reflected in the significant increases in the sales prices of foreclosed properties, increasing by over 15 percent compared to 5 percent for regular sales.”

According to the data, thirty (30) Illinois counties reported sales gains for September 2017 over previous-year numbers, including Kendall County, up 11.4 percent with 245 units sold; Peoria County, up 7.3 percent with 221 units sold; Sangamon County, up 3.9 percent with 267 units sold; and Champaign County, up 3.2 percent with 196 units sold. Sixty-three (63) counties showed year-over-year median price increases including Rock Island County, up 22.4 percent to $112,000; DuPage County, up 10.0 percent to $265,000; and Cook County, up 6.3 percent to $238,000.

The city of Chicago saw a 3.7 percent year-over-year home sales decline in September 2017 with 2,309 sales, down from 2,398 in September 2016. The median price of a home in the city of Chicago in September 2017 was $275,000, up 5.8 percent compared to September 2016 when it was $260,000.

“Although the market has slowed somewhat from peak summer activity, it continues to push forward, with decreases in overall inventory and market time reflecting continued interest in investing in a home,” said Rebecca Thomson, president of the Chicago Association of REALTORS® and Vice President of Agent Development at @properties. “Moving into the colder months, pricing properties correctly will continue to be the key to capturing serious buyer attention, and quick decision making and flexibility will gain greater importance as inventory declines.”

Sales and price information are generated by Multiple Listing Service closed sales reported by 28 participating Illinois REALTOR® local boards and associations including Midwest Real Estate Data LLC data as of Oct. 7, 2017 for the period Sept. 1 through Sept. 30, 2017. The Chicago PMSA, as defined by the U.S. Census Bureau, includes the counties of Cook, DeKalb, DuPage, Grundy, Kane, Kendall, Lake, McHenry and Will.

Illinois REALTORS® is a voluntary trade association whose more than 47,000 members are engaged in all facets of the real estate industry. In addition to serving the professional needs of its members, Illinois REALTORS® works to protect the rights of private property owners in the state by recommending and promoting legislation to safeguard and advance the interest of real property ownership.

Find Illinois housing stats, data and the University of Illinois REAL forecast at www.illinoisrealtors.org/marketstats.

Look for Illinois REALTORS® September housing report tomorrow

Hewings

Illinois REALTORS® will release its September 2017 housing report Friday morning, with data breakdowns for the state of Illinois, city of Chicago and the nine-county Chicago Primary Metropolitan Statistical Area (PMSA).

Also included will be a housing market forecast by Geoffrey J.D. Hewings, director of the Regional Economics Applications Laboratory at the University of Illinois.

Members of the statewide association can access member-only market statistics by using their passwords.

Attention Chicago-area REALTORS®: October luncheon offers financing information that could help your clients!

Space is limited so make your reservation now for the free Oct. 11 lunch program titled, “Increase Your Business: How to create opportunities out of potential challenges facing the real estate industry today.”

Special guests will include Cook County Commissioner Bridget Gainer, Freddie Mac representatives and Chase Bank representatives as they discuss affordable mortgage products, including an alternative to loans offered by the Federal Housing Authority (FHA). The event, which is sponsored by the Dearborn Realtist Board, will be held at the Crown Plaza Hotel, 733 W. Madison St., Chicago.

Doors open at 11 a.m. and the event is scheduled to end by 2 p.m. Tracey B. Williams, ABR, Secretary for Dearborn Realtists, says the organization is excited to share the information with fellow real estate professionals and hopes they find it valuable, too.

“As the real estate industry continues to recover from the real estate collapse, potential homebuyers remain challenged with finding opportunities for affordable housing,” says Williams. “The FHA loan product has made home ownership possible for many; yet the FHA loan often comes with additional cost. I am certain that potential homebuyers and industry professionals would like to know that FHA is not the only option for affordable financing.”

August brings higher Illinois home prices, lower sales amid tight inventory

The summer’s competitive housing market extended through August with lower seasonal inventory driving home prices higher, but tempering total home sales, according to Illinois REALTORS®.

Statewide home sales (including single-family homes and condominiums) in August 2017 totaled 16,196 homes sold, down 3.4 percent from 16,771 in August 2016.

The statewide median price in August was $200,456, up 5.0 percent from August 2016, when the median price was $191,000. The median is a typical market price where half the homes sold for more and half sold for less.

“The summer selling season was marked by high demand and lower-than-ideal inventories, said Illinois REALTORS® President Doug Carpenter, ABR, AHWD, GRI, SFR of Mokena, managing broker of Coldwell Banker The Real Estate Group in Orland Hills. “The data show homes are selling at a lightning-fast pace, which speaks to how quickly consumers are prepared to move to get the home they want.”

The time it took to sell a home in August averaged 48 days, down from 55 days a year ago. Available housing inventory totaled 60,462 homes for sale, an 11.4 percent decline from August 2016 when there were 68,240 homes on the market.

The monthly average commitment rate for a 30-year, fixed-rate mortgage was 3.88 percent in August 2017, a decrease from 3.97 percent the previous month, according to the Federal Home Loan Mortgage Corp. In August 2016, it averaged 3.44 percent.

In the nine-county Chicago Primary Metropolitan Statistical Area (PMSA), home sales (single-family and condominiums) in August 2017 totaled 11,660 homes sold, down 3.9 percent from August 2016 sales of 12,139 homes. The median price in August 2017 was $239,900 in the Chicago PMSA, an increase of 4.3 percent from $230,000 in August 2016.

“The uncertainty in the Illinois economy over the last two years has contributed to a dampening of housing demand in contrast to the generally positive outlook in the rest of the country,” said Geoffrey J.D. Hewings, Director of the Regional Economics Applications Laboratory at the University of Illinois.  “At the same time, declines in inventory are still exerting upward pressure on housing prices and thus reducing affordability.”

According to the data, forty-two (42) Illinois counties reported sales gains for August 2017 over previous-year numbers, including LaSalle County, up 26.5 percent with 148 units sold; Will County, up 5.5 percent with 1,149 units sold; and Sangamon County, up 4.4 percent with 286 units sold. Fifty-two (52) counties showed year-over-year median price increases including Peoria County, up 12.6 percent to $128,000; Lake County, up 11.8 percent to $255,000; and Kane County, up 10.2 percent to $234,950.

The city of Chicago saw a 4.5 percent year-over-year home sales decline in August 2017 with 2,716 sales, down from 2,844 in August 2016. The median price of a home in the city of Chicago in August 2017 was $285,000, up 5.2 percent compared to August 2016 when it was $271,000.

“With the improvement in the economy, people decided to enjoy their summer and the disposable income in their pockets,” said Matt Silver, president of the Chicago Association of REALTORS® and partner at Urban Real Estate. “While this contributed to a slight slowdown in year-over-year sales, the market is on track and poised for a strong autumn; days on market continue to decline, and our year-to-date sales are higher than last year’s. Energy and attention is shifting to the housing market and the opportunities therein.”

Sales and price information are generated by Multiple Listing Service closed sales reported by 28 participating Illinois REALTOR® local boards and associations including Midwest Real Estate Data LLC data as of Sept. 7, 2017 for the period Aug. 1 through Aug. 31, 2017. The Chicago PMSA, as defined by the U.S. Census Bureau, includes the counties of Cook, DeKalb, DuPage, Grundy, Kane, Kendall, Lake, McHenry and Will.

Illinois REALTORS® is a voluntary trade association whose more than 47,000 members are engaged in all facets of the real estate industry. In addition to serving the professional needs of its members, Illinois REALTORS® works to protect the rights of private property owners in the state by recommending and promoting legislation to safeguard and advance the interest of real property ownership.

Find Illinois housing stats, data and the University of Illinois REAL forecast at www.illinoisrealtors.org/marketstats.