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* Center Square headline…
Illinois home sales plummeted in May compared to last year
The article reports that home sales fell 22 percent in Illinois compared to May of last year. Not noted is that national home sales have fallen as well. The St. Louis Fed reported national existing home sales dropped 20.4 percent during the same time period.
* Once you get beyond the anti-Illinois clickbait headline, however, they at least provide a good reason…
According to Daniel McMillen, head of the Stuart Handler Department of Real Estate at the University of Illinois at Chicago, low housing inventory is hampering the market.
“The really big change that we see is that the available housing inventory is down about 27% and is at the lowest it’s been since 2008,” said McMillen Thursday during a virtual news conference.
McMillen said higher interest rates have contributed to slower sales, but he expects them to ease as the year goes on.
I have some personal experience with this topic and, anecdotally, the lack of inventory checks out.
posted by Rich Miller
Friday, Jun 23, 23 @ 9:14 am
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In my neck of the woods, home prices have caught on fire.
Zillow is not exactly always reliable, but they’ve been close. In just the past week, all homes within about 15 miles(I didn’t check much farther out) have shot up by 20%-30%. Month to month gains are getting insane.
Inventory is extremely low, to the point I can’t remember them being lower since at least 2007.
Lower inventory + stable demand = increasing home prices.
Now, I’ll just sit back in my paid-for house and take pleasure in all the people who listened to the doom and sold their homes to ‘flee’ over the past few years. Or the ones who were going to ‘wait for the imminent housing crash in Illinois’ - 5 years ago.
Comment by TheInvisibleMan Friday, Jun 23, 23 @ 9:22 am
“available housing inventory is down about 27%”
Anecdotally, my small town (and county) has virtually nothing for sale. We’ve spent 40 years tearing down viable housing. Now the most basic housing gets listed for twice what it would 3 years ago. And that’s when you could get a 3% 15-year mortgage. I feel for anyone who is at the point in life where buying a home is a priority.
Comment by Ducky LaMoore Friday, Jun 23, 23 @ 9:24 am
Lack of inventory is a largely (purposely) “misunderstood” aspect of forcing these narratives.
It’s like a Yogi Berra twist…
“Nobody goes there anymore. It’s too crowded.”
What’s terribly sad is that when one looks at what this market is telling not only sellers… but buyers… it’s not like folks can’t give away homes, it’s where buyers are finding challenges to their choices.
Comment by Oswego Willy Friday, Jun 23, 23 @ 9:28 am
Not only is lack of inventory an issue, but the impact of the significantly higher interest rates means that the amount of house a buyer would be able to afford on the same income, inflation adjusted or not, is going to be significantly different. This impacts what price people can afford to pay, and disincentivizes people with existing home mortgages at very low rates from moving to another property where they would need to pay a higher interest rate, and the amount they can afford to finance is significantly lower.
That’s without even trying to consider the people that took advantage of the lower interest rates to buy property as an investment, rental, or short term rental, or the corporations that have done the same that are now trapped into their investment with fewer buyers that can afford to buy them out of it without a loss.
Comment by Candy Dogood Friday, Jun 23, 23 @ 9:30 am
Complaints about property taxes and a desire for one’s home value to rise, the ultimate paradox. I support replacing Illinois’ property tax system with a land value tax system personally as long as the state constitution allows it.
Comment by Lake villa township dem pc Friday, Jun 23, 23 @ 9:32 am
While inventory remains low, buyers are facing more challenges in qualifying for loans on the higher prices with current interest rates. A $500K mortgage is now over $1K higher per month than it would have been 12-18 months ago.
Comment by Pundent Friday, Jun 23, 23 @ 9:37 am
Adding to the anecdata, I have a friend staying with me temporarily as their apartment building was sold and the new owner broke their month-to-month lease, which is about 8 months earlier than they were planning, as they were going to buy a house next year. They are struggling hard to find something to buy, as the few listing in the area get snatched up immediately by 10-20% over asking price.
Comment by Leap Day William Friday, Jun 23, 23 @ 9:41 am
So when goofballs like Dave Ramsey make comments about millennials still living at home, they should also keep this in mind.
Comment by Baloneymous Friday, Jun 23, 23 @ 9:41 am
I have a 2.5% interest rate on my mortgage. I’m not going to give that up unless I absolutely have to move. I assume that’s a huge driver in the lack of inventory.
Comment by Sox Fan Friday, Jun 23, 23 @ 9:51 am
And I thought everybody’s leaving the state. LOL.
Comment by walker Friday, Jun 23, 23 @ 9:57 am
In my opinion, a major contributing factor to the lack of supply of homes is that so many now are owned by corporations that are choosing to rent them out or just hold on to them as an investment
Comment by Bothanspied Friday, Jun 23, 23 @ 9:58 am
Is it called Center Square because they are blockheads?
Comment by Big Dipper Friday, Jun 23, 23 @ 10:04 am
Baloneymous, there was an interesting article recently in The Atlantic that said: But contrary to that narrative, Millennials’ homeownership rates in 2020 were only slightly behind Boomers’ and Gen Xers’ at the same age: 50 percent of Boomers owned their own home as 25-to-39-year-olds, compared with 48 percent of Millennials, hardly a difference deserving of headlines or social-media memes.
Comment by Big Dipper Friday, Jun 23, 23 @ 10:18 am
I can only speak anecdotally about this situation but I can tell you that in my neighborhood houses that do go up for sale are selling within days and sometimes have even sold before they officially go on the market. And the prices are reflecting that. Some are selling for well over asking price. That is proof to me that there aren’t enough houses out there for people to buy.
Comment by Demoralized Friday, Jun 23, 23 @ 10:27 am
I live in Springfield. Not a week goes by that I’m not contacted by at least one realtor wondering if I’m interested in selling my home. They have buyers and are beating the bushes to find something to sell because there is no inventory. Interest rates are higher right now but by historical standards they’re really not terrible.
Comment by Manchester Friday, Jun 23, 23 @ 10:32 am
==replacing Illinois’ property tax system with a land value tax system ==
Can you explain how a land value tax works?
I’ve never heard the term before.
Comment by Teacher Lady Friday, Jun 23, 23 @ 10:44 am
In my neck of the woods, houses are still going fast once listed. Realtors are still putting up signs that say coming soon, prior to it being even listed on MLS.
There are definitely less up for sale than there were the last two years. But again they’re still selling fast.
Comment by Frida's boss Friday, Jun 23, 23 @ 11:01 am
===Can you explain how a land value tax works?===
A land value tax (LVT) is a method of assessing property taxes that only considers the value of the land itself and related improvements, and not the structures built on the land.
https://www.investopedia.com/terms/l/land-value-tax.asp
Comment by Rich Miller Friday, Jun 23, 23 @ 11:26 am
An absolute dump behind me just sold for $420k in less than a day on the market, and I live in Cook County, the murder capital of the universe where everyone cowers in their homes 24/7 because of all the woke mobs running amok.
Anyway I’m sure this willingness to spend big to live here is a REALLY BAD SIGN for the CRATERING ILLINOIS ECONOMY.
Comment by Larry Bowa Jr. Friday, Jun 23, 23 @ 11:30 am
In Springfield the MLS currently has about 370 homes for sale. In June of 2018/2019 the MLS would have had about 1300-1400 homes on the market.
AND June 2023 numbers are about 20% above April of this year.
The more you know.
Comment by Cool Papa Bell Friday, Jun 23, 23 @ 11:41 am
NW Indiana not any better; relatively few homes for sale; vacant land is still pricey. Some houses sit on market for several months or more, and not all are gut/rehabs, but overpriced for their area.
Comment by thisjustinagain Friday, Jun 23, 23 @ 12:04 pm
Several people have hit on the biggest driver. So many people are locked into low interest loans that it makes no financial sense from a monthly mortgage perspective to move.
Comment by allluck Friday, Jun 23, 23 @ 12:06 pm
===So many people are locked into low interest loans that it makes no financial sense from a monthly mortgage perspective to move. ===
That’s what I keep telling my realtor. Lol
Comment by Rich Miller Friday, Jun 23, 23 @ 12:09 pm
=it makes no financial sense=
And I think you would be surprised to know how many all cash sales their are right now.
Comment by Cool Papa Bell Friday, Jun 23, 23 @ 12:15 pm
Thanks for educating me, and others, on the land value tax.
Comment by Teacher Lady Friday, Jun 23, 23 @ 12:57 pm
The Illinois Policy Institute’s Springfield house was one of those May 2023 sales: https://www.zillow.com/homedetails/802-S-2nd-St-Springfield-IL-62704/2063003561_zpid/
Comment by DuPage Dad Friday, Jun 23, 23 @ 2:56 pm
“And I think you would be surprised to know how many all cash sales their are right now.”
That’s why boomers are outnumbering millennials as home buyers. It really only makes financial sense to upsize or downsize if you have a valuable property to sell that you owe little or nothing on.
Comment by Ducky LaMoore Friday, Jun 23, 23 @ 3:01 pm
===So many people are locked into low interest loans that it makes no financial sense from a monthly mortgage perspective to move. ===
That’s what I keep telling my realtor. Lol===
Same thing here in Kane County. By most thoughts, we should be downsizing right now. We’ve crunched the numbers and it would cost us more per month to get into a townhouse because of the interest rate. We will ride this out as best we can.
Comment by Proud Sucker Friday, Jun 23, 23 @ 3:18 pm