Area home prices up in 2014; total sales off slightly

Home sales in the Peoria area slowed in the fourth quarter, bringing sales for the full year below 2013 levels, but overall the area saw continued recovery thanks to price gains, according to the Peoria Area Association of Realtors^® (PAAR).

Sales for 2014 were 4,883, down 1.4 percent from a year earlier when 4,952 homes sold, the association said. That was because sales in the fourth quarter were off nearly 3 percent, wiping away slight gains through the first three quarter of the year.

However, the association said, the average sales price set a record at $147,917, up 4.8 percent from $141,215 in 2013. The previous record average price for a full year was $146,292 in 2012. The median sales price was up 1.7 percent to $120,000, from $118,000 in 2013.

Still, 2014 inventory levels, closed sales, and new listings could not keep up with the gains of the previous two years. PAAR officials said that reflects market-slowing factors such as stagnant wage growth, inadequate mortgage liquidity and student loan debt, which are still reducing the numbers of young buyers and limiting buying and selling between all price levels of home owners.

Besides the slight decrease in closed sales, the number of new listings was off 0.3 percent for the year, to 7,752 from 7,779 in 2013. There were fewer homes to choose from, with the inventory of homes for sale at the end of the year at 2130, down 4.2 percent from 2,224 in 2013. Month’s Supply of Inventory decreased slightly, down 1.9 percent to 5.3 months from 5.4 months in 2013, with the market still evenly balanced between buyers and sellers.

Locally, new-home construction was down 10 percent, PAAR said. It has not returned to its five-year high reached in 2010, in part because local builders are still busy with home-replacement construction and renovation, as they step up to help Washington, East Peoria and Pekin residents ravaged by the Nov. 17, 2013 tornado.

Lower interest rates fueled buyer activity at all levels, and while the lower price rungs showed the most activity, it was the $500,001 and above priced homes that showed the largest growth, with a 35.6 percent increase over 2013. This increase in the upper price ranges drove up the average sales price. Increased demand in upper price levels may also reflect a shortage of available builders, since buyers in this price range are often also potential new-home-construction buyers, the association said.

“Overall we are encouraged by the continued recovery and are optimistic about 2015, given recent economic reports,” said PAAR President Phil Harvey. “Gross domestic product growth is rising at a 5 percent annual rate. The national unemployment rate is under 6 percent and we are in the midst of the largest stretch of job gains on record. The deficit is down by two-thirds and gas prices are at multi-year lows.

“If expected economic tailwinds stick around as they should, housing will get a boost in 2015; qualified first-time buyers need good jobs, down payment money and access to mortgage options with attractive interest rates. We are watching for movement on housing finance reform and expect rates to remain stable until mid-2015 when the Fed is expected to raise key federal fund rates,” he said.

“Locally, builders report that they are looking forward to a good 2015 season. Pent-up building demand means that potential buyers are seeking them out to begin breaking ground this spring. As the activity of rebuilding homes in Washington, East Peoria and Pekin gets closer to completion, builders will once again be available for traditional new construction,” Harvey added.

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).