Home sales strong in 2015; prices up slightly

Peoria-area home sales were at their highest in eight years in 2015 while prices continued to climb, albeit slightly, according to the Peoria Area Association of Realtors.

There were 5,479 housing units sold in 2015, a 6.6 percent increase from the 5,142 that were sold in 2014.It was the fifth consecutive years sales were higher and it was the most since 5,820 were sold in 2007, the association said.

The year-to-year increase came despite a slight downturn in the fourth quarter, when 1,160 homes were sold compared with 1,209 in the last three months of 2014, the association said.

The average sales price was $145,898 in 2015, compared with $145,449 in 2014, a 0.3 percent increase. The median price, where half the homes sold were high and the rest lower, was up a notch, from $119,000 in 2014 to $120,000.

Inventory of homes for sale decreased slightly in December, down 1.0 percent to 2,416 properties compared to 2,441 from December 2014. Month’s supply of Inventory dropped to 5.3 months from 5.7 months in 2014.

It took less time to sell a home in 2015 in the Peoria area; the average was 86 days versus 87 days in 2014, the association said.

“In 2015, the Peoria area residential real estate market experienced its best year since 2007, setting a higher pace than at any time in the past eight years,” said Becky Peterson, PAAR president. “The biggest news in 2015 was the lack of news on mortgage rate increases, so buyers kept locking in low 30-year fixed rates below 4 percent. Optimism in the nation’s economy, improved wage growth, lower energy prices and lower downpayment mortgage programs introduced earlier this year attracted more homebuyers into the market, making it a strong year for housing.

Peterson noted that sales “lost a little steam in the fourth quarter” and said it may have been attributed to some economic worries by some buyers in certain employment sectors, especially after Caterpillar announced employee cutbacks.

The association said there were 210 new-construction home sales in the area in 2015, down 2.3 percent from 215 sales a year earlier. Peterson said she expects to see gains in new home construction this spring fueled by the demand of buyers for new housing inventory.

Dr. Lawrence Yun, chief economist for the National Association of Realtors, said he expects  existing home sales to rise nationally, between 1 percent and 2 percent, in 2016 to about 5.40 million. The national median existing home sale price is expected to rise 5 percent in 2016.

Locally, Peterson said that while winter is typically a slower time of years for sales, “there are many nuggets of optimism moving forward into the new year. We expect housing demand to remain stable driven by the ongoing release of pent-up buyers,  including millennial buyers, who are just entering the market and sellers who are realizing equity gains and using it towards the downpayment of their next home. Mortgage rates are still going to be at very attractive levels. Freddie Mac projects that the 30-year fixed-rate mortgage will average below 4.5 percent for 2016 on an annualized basis.”

The average rate on a 30-year fixed-rate mortgage in the North Central region, according to the Federal Home Loan Mortgage Corporation (Freddie Mac), was 3.85 percent in December 2015, the same rate as in December 2014.

“Overall, we are encouraged by the ongoing housing recovery and are optimistic about home sales growth in the new year in the Peoria area. Buyers who are on the fence hesitating on whether to purchase should seriously consider making that move sooner rather than later as the availability of affordable rental properties are only expected to tighten this year as we see rents on the rise. Also, a one percent increase in mortgage rates translates into about a 10 percent reduction in buying power,” said Peterson.

  Peoria Area Association of REALTORS®   YEAR-END SALES, AVErage & Median Sales Prices

About the Author

Paul Gordon is the editor of The Peorian after spending 29 years of indentured servitude at the Peoria Journal Star. He’s an award-winning writer, raconteur and song-and-dance man. He also went to a high school whose team name is the Alices (that’s Vincennes Lincoln High School in Indiana; you can look it up).