Illinois home sales increased 25.3 percent over previous-year levels in April, and the market looks to be in good shape, according to the spring numbers from the Illinois Association of Realtors.
Statewide, home sales (including single-family homes and condominiums) in April 2013 totaled 12,621 homes sold, up from 10,076 in April 2012. This was the best April performance since 2007. The statewide median price in April was up 7.7 percent year-over-year.
“The spring numbers are very encouraging, especially as we see substantial tightening of the numbers of homes on the market,” said Michael D. Oldenettel, president of the Illinois Association of Realtors and managing broker/owner with RE/MAX Results Plus in Jacksonville, Ill. “While prices are inching up slightly due to strong demand, the interest rates continue to be a powerful lure for those who want to own a home and the spring housing market looks to be a strong one.”
Here are some key figures:
- The inventory of homes for sale has fallen 30.6 percent year- over-year.
- The time it takes to sell a home has also dropped 19.8 percent from April 2012.
- The monthly average commitment rate for a 30-year, fixed-rate mortgage was 3.42 percent in April 2013.
- In the nine-county Chicago Primary Metropolitan Statistical Area, home sales (single-family homes and condominiums) went up 31.2 percent from last year’s numbers.
- The median price in April 2013 was up 8.1 percent year-over-year.
“The housing market is exhibiting signs of a more stable recovery with an anticipated strong early summer led by strong sales gains and more modest but still positive gains in median prices,” noted Geoffrey J.D. Hewings, director of the regional economics applications laboratory of the University of Illinois. “Average time on the market, the growth in the pending sales index and an increase in the share of total sales captured by more expensive properties point to a return to greater stability in the market.”
Fifty-five of 102 Illinois counties reporting to IAR showed year-over-year home sales increases in April 2013. Forty-two counties showed year-over-year median price increases including Knox, up 32.1 percent to $72,000; Lake, up 16.1 percent to $188,125; Grundy, up 15.7 percent to $155,000; Cook, up 11.9 percent to $172,900; and Madison, up 4.5 percent to $116,000.
Statistics in the city show steady growth: the city of Chicago saw a 28.4 percent year-over-year home sales increase in April 2013; the median price of a home in the city of Chicago in April 2013 was up 22.0 percent since last April and Chicago condo prices posted a 21.1 percent jump.
“Housing numbers continue to indicate a steady market recovery in Chicago,” said Zeke Morris, president of the Chicago Association of Realtors. “We are pleased to see condo sales, in particular, regain their strength. The biggest challenge currently is a steep decline in inventory, which may pose difficulty for buyers looking for a wide selection in certain areas. On the other hand, it is a great time for people who are considering selling to talk with a Realtor.”
These condo statistics also come out at a time when, at least for now, the downtown rental market is still flying high. For the time being, rents per square foot have been increasing; price per square foot in Class A buildings rose 1.9 percent from 2012’s fourth quarter to 2013’s first quarter, hitting $2.63 a square foot. Since bottoming in 2009, downtown rents for Class A units are now up 26 percent.
Rent increases, however, are not restricted to Class A buildings. Class B rentals rose even more aggressively from quarter to quarter, jumping 6.9 percent to $2.32 a square foot.
However, such increases are temporary. Though analysts anticipate rents to rise another 4 to 5 percent over the next year, developers are planning on unleashing a huge supply of rental units into the greater downtown rental markets. According to Crain’s, seven high-rises with 2,895 units will hit the market in 2013 alone, and another 2,330 will arrive in 2014. And beyond those immediate developments, Appraisal Research calculates that 26 additional developments are underway in the greater downtown area (including the eagerly anticipated Wolf Point), which will add another 6,292 units.
In short, though lagging supply has allowed landlords to raise rents the last couple years, the shoe may be on the other foot come early 2014, with landlords competing for tenants with lower rents.
But could supply rise too quickly? As Crain’s reported, more than 5,200 rental units will hit the market over the next two years; however, according to Appraisal Research, the absorption rate for rentals in Chicago has averaged just 1,540 units per year since 2009, which would lead to a surplus of roughly 2,000 units.