Illinois home prices increase in April; Sales lower amid tight inventory

Homes sold faster and prices rose, but home sales slowed in April with seasonally low inventory levels, according to Illinois REALTORS®.

Statewide home sales (including single-family homes and condominiums) in April 2017 totaled 13,958 homes sold, down 3.4 percent from 14,453 in April 2016.

The statewide median price in April was $200,000, up 7.5 percent from April 2016, when the median price was $186,000. The median is a typical market price where half the homes sold for more and half sold for less.

“Sellers flooded the market in March, and as a result inventories were struggling to keep pace with demand in April,” said Illinois REALTORS® President Doug Carpenter, ABR, AHWD, GRI, SFR of Mokena, managing broker of Coldwell Banker The Real Estate Group in Orland Hills. “It’s clear from the relatively short average time to sell that buyers really do want to find a home. The problem is they are having to work much harder to find one that meets their criteria due to a shortage of options.”

The time it took to sell a home in April averaged 61 days, down from 68 days a year ago. Available housing inventory totaled 54,666 homes for sale, a 15.3 percent decline from April 2016 when there were 64,554 homes on the market.

The monthly average commitment rate for a 30-year, fixed-rate mortgage was 4.05 percent in April 2017, a decrease from 4.20 percent the previous month, according to the Federal Home Loan Mortgage Corp. In April 2016 it averaged 3.60 percent.

In the nine-county Chicago Primary Metropolitan Statistical Area (PMSA), home sales (single-family and condominiums) in April 2017 totaled 10,157 homes sold, down 2.3 percent from April 2016 sales of 10,397 homes. The median price in April 2017 was $242,000 in the Chicago PMSA, an increase of 5.2 percent from $230,000 in April 2016.

“While sales will continue the usual early summer upward growth, there are some sharp differences in the forecasts for median prices” said Geoffrey J.D. Hewings, director of the Regional Economics Applications Laboratory at the University of Illinois.  “The forecasts for median price indicate continued positive changes, but the REAL Housing Price Index (HPI), which compares specific housing characteristics, suggests declines and may also be reflecting the employment losses in the state over the past two months.”

According to the data, thirty-four (34) Illinois counties reported sales gains for April 2017 over previous-year numbers, including Madison County, up 11.0 percent with 353 units sold; Rock Island County, up 1.3 percent with 153 units sold; and Kane County, up 0.2 percent with 662 units sold. Fifty-four (54) counties showed year-over-year median price increases including Will County, up 12.2 percent to $218,700; Winnebago County, up 8.5 percent to $108,450; and Cook County, up 5.5 percent to $253,000.

The city of Chicago saw a 4.4 percent year-over-year home sales decline in April 2017 with 2,586 sales, down from 2,706 in April 2016. The median price of a home in the city of Chicago in April 2017 was $297,150, up 3.9 percent compared to April 2016 when it was $286,000.

“With the spring market underway, buyer demand has not abated in the least,” said Matt Silver, president of the Chicago Association of REALTORS® and partner at Urban Real Estate. “Rather, increased competition for homes that are priced well and move-in ready will continue to drive prices upward. Both motivated sellers and buyers should be prepared for these conditions to continue in the coming months.”

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 May 7, 2017 for the period April 1 through April 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 44,000 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.

Observations on the Illinois housing market

Today the Illinois Association of REALTORS® released its January home sales report which showed some positive signs in terms of the volume of sales while home sale prices are still under significant pressure from distressed properties in the marketplace.

Here are some observations by University of Illinois economist Dr. Geoffrey J.D. Hewings, director of the Regional Economics Applications Laboratory, from his forecast for the Illinois housing market.

  • While it is too early to signal a housing market turnaround, there are some encouraging signs. Sales declined by a very small amount, year-over-year, and would have been higher than 2010 had the effect of the home buyer tax credit been removed. Prices, however, are still being challenged by the volume of distressed properties on the market.
  • There are different supply-and-demand forces that could affect the housing market in the future. On the demand side, buying a house is still very affordable: the housing price is trending back to the early 2000s, and the 30-year fixed mortgage rate is still around 5%.
  • However, on the supply side, there is still a lot of distressed property that is flooding the market, creating a huge downward pressure on the market prices.
  • While the housing market is still sluggish, the rental market is heating up. After falling 27% between 2006 and 2009, values of apartment buildings rose 16% in 2010, according to the brokerage firm Marcus & Millichap. Renter households have reached a record high of 37 million after increasing by 3.5 million in the past five years. Green Street Advisors expects an additional 4.4 million rental households to be added by 2015. The pressure of rental property demand is driving up rent. Further dramatic increases in rents could push consumers back to the housing market to take a mortgage and become homeowners.
  • However, the mortgage market has also tightened up. On the side of private lenders, banks are pushing homebuyers to put down more cash as a down payment. The median down payment in nine major U.S. cities rose to 22% last year on properties financed by private lenders. This figure was only 5% in early 2007.
  • On the side of government, the Obama administration outlined a plan to shrink the government-owned mortgage giants, Fannie Mae and Freddie Mac. The proposed new plan has three goals: to gradually increase the fees the mortgage companies charge lenders, to tighten underwriting standards, and to require borrowers to put down larger down payments. Possible consequences of this plan are that it could drive up housing costs and make buying a house harder for some consumers.
  • There is some good news from the labor market: the unemployment rate, currently 9.0 percent, fell by 0.4 percent for the second month in a row.