Winter wreaked havoc on Q1 home sales
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- Published on Tuesday, 15 April 2014 15:56
- Written by Paul Gordon
It came as no surprise that home sales in the Peoria area were off significantly during the first quarter, said officials from the Peoria Area Association of Realtors.
One of the wettest and coldest winters in central Illinois history, which also extended further into spring than normal, left sales down 18.7 percent from the first quarter of 2013, the association said on Tuesday.
But there are signs that recovery won’t take long, said PAAR President Tonya Burris, and the organization believes there are forces in play that will bring higher sales in the warmer months.
“We’re never happy to see the numbers go down and the first quarter is usually slower anyway,” Burris said. “This year the polar vortex visited us frequently in the first quarter and many buyers and sellers stayed home. Not only were there fewer buyers shopping for homes resulting in lower sales and extended days on the market but not as many people listed homes to sell, so our listings and homes inventory are also down.
“The good news is that we are beginning to see a lift in our numbers for March.”
There were 763 houses sold during the first quarter, compared with 938 a year earlier. Days on the market increased 17.2 percent, from 87 days to 102 days, an indication of fewer people looking.
Still, the median price was up slightly, from $103,950 in the first quarter 2013 to $105,000, which Burris said indicates potential buyers who were waiting to see how low prices would drop are now getting into the market. “I think a lot of people were sitting on the fence because they saw prices were falling the last couple years and they wanted to see how low they’d go. Now that prices are slowing starting to come back up, those people are coming into the market,” she said.
“Now, every time we have a nice day we have buyers out there. We’re getting multiple offers on some properties,” Burris said. She added that one agent recently sold two houses sight unseen to people transferring into the Peoria area for work.
Burris said she’s feeling good about the immediate future. “I think consumer confidence is really starting to turn around. People have had pent-up demand and they are starting to spend money in other areas, as well. I think the housing market will follow,” she said.
Listing activity is increasing, as well. It was down more than 20 percent in in the first quarter and inventory of available houses were off. But there were 598 new listings in March, a 61 percent increase over February listings, and inventory was at 2,045 houses at the end of March, compared with 1,995 a month earlier.
Another reason for confidence, Burris said, is that loans are available at still-affordable rates. Earlier in the month, Gov. Pat Quinn announced a new home loan program called Welcome Home Illinois that is designed for first-time home buyers. It provides $7,500 in down-payment assistance with interest rates as low as 3.75 percent for FHA, VA and RD loans and $4.5 percent for conventional 30-year mortgages.
This program, PAAR said, is meant to address a significant reduction in home purchases by first-time buyers, largely the result of lending restrictions wrought by the housing downturn a few years ago that included a demand for high down payments.
“We believe the Welcome Home Illinois program will give the entire home market a boost. Buyers who want to move up must first be able to sell their starter homes and this program helps first-time homebuyers qualify for a loan to buy those homes,” Burris said. “Therefore, we feel that as pent-up demand is released, and if inventory levels stay low, this year has the potential to turn into a seller’s market.”
Burris discussed the continuing effects of last November’s tornado on the local housing markets. That tornado on Nov. 17 caused heavy damage in Pekin, East Peoria and particularly in Washington, destroying hundreds of homes and heavily damaging hundreds more.
In the aftermath many houses in the region that were on the market were removed so as to give families displaced by the tornado a place to stay. Now, as rebuilding occurs or those families have bought other homes, many houses will return to the market.
Home builders will be busy all spring and summer, Burris said, rebuilding and repairing homes. “Being forward-thinking, it is obvious that will bring more into the market and the economy,” she said.
Median prices ̶ meaning that half the homes sold were higher and half were lower ̶ declined through much of 2012 and 2013 before showing an increase in the first quarter. The average price has fluctuated more and was $135,311 in the first quarter, compared with $127,335 in the first quarter of 2013.
Burris said median prices are the truer reflection of the market because average prices tend to be skewed by such things as repossessions.
That the median price is starting to rise again, she added, “is a good sign for the economy.”
