Welcome back to the spring season. The flowers are blooming; the climate is pleasant. It is time again to enter the home buying season. 2017 was a good year for Illinois real estate market. The annual growth rate for property prices was 5.2%. Last year, experts were talking about gains in the range of 3%-6.9%. Zillow predicted a 3.9% price increase. See our previous year article.
Overall, the growth rate was positive for major metropolitan areas except for the Bloomington-Normal area.
As for 2018, experts are predicting a steady growth rate. According to Illinois Realtor Organization, the price increase will be 4.9% while Zillow currently forecasts 3.2% growth rate.
Time will tell how the RE market responds to different metrics. So far, we believe two critical factors will affect the market timing.
The economy plays a vital role. Bureau of Labor Statistics shows that unemployment rate in Illinois is 5.0% despite the fact that 6,050,900 jobs were added in the last year. The job growth in Illinois was 0.49% in 2017. The growth is there as the unemployment rate has gone down by 0.8% but still, there is room for improvement. The economy needs to improve before we can see an amazing start for the real estate industry.
Another concern is the market inventory. Millennial buyers are purchasing homes. Almost 42% new buyers in Chicago are below the 35-year age mark. However, the market supply is not enough to cater to this market. Reports from Dec 2017 indicates that housing supply was falling as predicted. Current reading shows that market inventory is down by 1.7%. Experts do not see a remarkable change in this figure in the upcoming few months. Yes, new family units are undergoing construction. The authorities are approving building permits, but still, the demand exceeds supply which brings us back to another point.
Illinois is still a seller’s market. The Spring season will favor buyers, but the lack of inventory creates an edge for home sellers.
2018 has taken a slow start. Experts are suggesting that the sales volume will go down by 0.8% in the first quarter which is okay. The winter has never been the traditional buying season. For now, we are hoping that the market will show signs of progress as the weather changes and we enter the usual home buying season.
Statistics give us an overview of the market conditions. We can predict the future, and we can see how things have gone so far. However, it is often the market psychology that is driving those statistics. You read it right.
Interest rates or market inventory does not determine the result of individual efforts. A local housing market might not respond to national market inventory, but it will undoubtedly be affected by low-appraisals or an uncontrolled crime rate. We have observed that small neighborhoods react to appraisal system, lending requirements by local banks, local housing supply, and education facilities. It is never the national interest rate or national housing supply that affects the decisions of an individual homeowner.
So before you decide that ‘it is time to sell’ or ‘it is time to buy’; do read the local market statistics. Ignore the hype created by media and focus on your ROI. Can you afford a house? Do you envision yourself living in that place for next 5-10 years? Do you understand the closing costs and local lending requirements? Will you still have a sizeable savings account after paying for down payment and closing costs?
If you answered yes to these questions, go ahead, and make a purchase. Your new home is waiting for you. However, if the answer is no, you should wait before taking the turn.
Similarly, home sellers should work on improving the sales value of their property. Prepare your home for an appraisal. Put your best foot forward. Work with trained experts in your area. If you do these things right, you will sell your home at a reasonable price regardless of what everyone else is suggesting.
Feel free to contact us for more information.
MJ Property Solutions is a premier residential redevelopment firm in Illinois. We have been helping homeowners in different situations. Our firm buys and remodels homes. To see our portfolio, please click here.