"How’s the market?"
That's the first question everyone asks their real estate agent, right? So, let's look at some statistics. At the Heartland REALTOR® Organization, we track monthly 11 different items with information we receive through Midwest Real Estate Data – the region’s Multiple Listing Service.
MLS data showed closed sales in October increased from 427 total to 459 over the last year. That's a 7.5 percent increase. Through 2015, closed sales are up 9.8 percent.
Average sales price is up to $192,070 for October versus $181,740 last October. But the median sales price remains at just $177,500 for the year (still up 5 percent over last year at this time).
I’m well known for my disdain for either of these two statistics, as both are so complicated that we should probably throw them out except only to use them as an indicator without a number attached.
All it takes is one expensive home sell to skew these numbers significantly or contrarily, the lack of any higher priced home sales can cause this indicator to drop in a month. The statistics do not fairly represent what anyone’s home value did over time.
With market time, it took just 96 days to get a home under contract in October versus 114 days last October. The year-to-date number is 110 days, down 2.3 percent from last year. That's good news.
The month's supply of homes for sale totaled 5.2 months in October versus 6.7 months last October. This is my favorite statistic because it relates the rate of home sales against the rate of listings on the market (totaled 2,368 in October for McHenry County).
If we keep selling homes as fast as we did, it would take 5.2 months to "sell out." Theoretically, selling out never will happen, but it’s a good number to watch as a trend.
The National Association of Realtors says a "balanced market" is between six and eight month’s supply. This may indicate low inventory, or a seller's market. Yet, the average 96 "days on the market" still suggests a buyer's market, causing conflicting signs.
While Heartland doesn’t track mortgage rates, today rates still are extremely low, hovering around 3.5 percent for a 15-year mortgage and 4 percent for a 30-year mortgage.
That’s crazy low. But since it’s been the norm for close to a decade, no one seems to realize just how good it is. Perhaps it will take an increase in the rate – maybe even a modest increase – for anyone to really pay attention.
Reading industry news as I do, the big questions seem to surround demand. Many questions seem to be about the youngest workers – the Millennial generation – wanting to buy property.
Many studies indicate these young housing prospects do want to purchase housing at a higher rate than renting. Many, though, are strapped with either credit card debt or significant student loans keeping them unable to purchase.
Another set of this generation can’t find work. Government indicators suggest employment levels have rebounded, but some experts believe the opposite. They theorize that many of the unemployed have fallen off the radar because they no longer qualify for unemployment benefits, making the government’s unemployment rate figures grossly inaccurate.
Regardless of the statistic, many people still are unemployed or underemployed and therefore, they are unable to purchase a home or a larger home.
Also, suggestions have been made lately that the Baby Boomers are not retiring fast enough. They have stayed in their current home, regardless of their employment, and not put their home on the market, also known as downsizing.
This suggests this group somewhat is holding back the real estate market. The economy needs them to put their homes up for sale to keep the dominoes falling. Move-up buyers have nowhere to move until Baby Boomers decide to sell. Until then, first-time buyers have nothing to purchase.
On top of all the statistics, industry experts have been concerned about the lack of new construction in the last seven to eight years. New housing always has been a source of inventory for purchasers. But the significant reduction in those homes being available has, too, stifled the market.
Regardless of the places we can point our fingers, the real estate market in McHenry County still is moving.
• Jim Haisler is CEO of the Heartland Realtor Organization, a nonprofit trade group based in Crystal Lake serving real estate professionals throughout northern Illinois. Reach him at 815-459-0600.