Lower prices, coupled with rates on fixed mortgages that have dipped to the lowest levels on record, have created more incentive for buyers to enter the recovering housing market.
The market still has a long way to regain full strength five years after it collapsed. But the data from the first six months of 2012 suggest that a recovery is under way.
In McHenry County, home sales were up 13.2 percent in June, compared to June 2011 – from 296 to 335 homes sold. Home sales were up 27.7 percent in May, 26.6 percent in April, and 47.3 percent in March.
The increase in sales numbers is a result of a number of factors, said Jim Haisler, chief executive officer of Heartland Realtor Organization. “Clearly the low interest rates are very helpful but summer months typically fare well – families trying to make a purchase before school starts.”
Haisler said some of the big banks have bundled their foreclosed properties to sell to large investment firms. “Those firms who buy these 100 or so packaged homes take longer to get them to market.”
This, along with the increased demand, has resulted in lower inventories.
“In McHenry County alone inventory has declined 26.2 percent over last year,” Haisler said. “With increased sales of 31.5 percent, a resulting Months Supply of Inventory is now just 8.5 months. This is down from 16.3 a year ago.”
County median prices have been struggling to stay in the black year-over-year. In June 2012, the median price was $144,340, down 9.8 percent from $160,000 in June 2011.
May saw a slight increase in the median price at $152,608, up 4.6 percent from a year earlier. But the median price was down 5.5 percent year-to-year in April and 11.3 percent in March.
“The median price of homes continues to fall as low-end markets continue to clear,” Haisler said. “The low-end homes are being swallowed up by investors buying them up for flipping or renting out. Many of our cities are seeing multiple offers on these low-priced properties.”
Haisler added that real estate agents are seeing an increased demand for middle- to upper-end homes, as well. “This is something we haven’t seen for a few years. We’re starting to see the domino effect that was so common before – that is, when someone buys a low- end home, those sellers go buy a little larger home. Those sellers buy a little larger home, and so on.”
Foreclosures also may be blamed for continuing to bring the median price down in McHenry County neighborhoods.
“There are still a lot of foreclosures in the hopper,” said Fran Dugo, broker-owner of Your Choice Real Estate in West Dundee. “That puts pressure on valuation, and brings down the average price per home. It’s a domino effect.”
Dugo noted she has seen more buyers in the market. “There are a lot of short sales and foreclosures. That’s not going away anytime soon.”
For the second half of 2012, Dugo said she expects things to be “business as usual until we get the economy really rolling and people back to work.”
The state unemployment rate rose one-tenth of a percent to 8.7 percent in June.
Last year, illinois’ unemployment rate was 9.9 percent. Two years ago it was over 10 percent.
“When one feels secure in their job – or perhaps less insecure – they consider making purchases,” Haisler added. “A lot of people have held off on making a move for several years. This has created pent-up demand that is starting to release.”
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