Housing Price Forecasts Illinois Metropolitan Statistical Areas

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1 Housing Price s Illinois Metropolitan Statistical Areas R E A L Regional Economics Applications Laboratory, Institute of Government and Public Affairs, University of Illinois Dr. Geoffrey J.D. Hewings, Director 4Q10 Analysis 1Q10 February 10, 2011 This report provides analysis of the housing market in the fourth quarter of with forecasts for the first quarter of Complementary analysis of the economy is provided to put the housing market into a broader perspective. For more information, visit or contact Mary Schaefer, Director of Communications for the Illinois Association of REALTORS , mschaefer@iar.org. The Illinois Economy and Jobs The Illinois shed 9,400 jobs in December at a rate of -0.17%, compared with a revised 1,600 job loss in November (see Table 0). Compared to December, Illinois added 46,300 jobs, the largest monthly year-over-year increase since July The three-month moving average of jobs, a more stable measure of labor market, was up by 200 jobs per month. In Dec, the Nation added 103,000 jobs at a rate of 0.08%, compared with a revised 71,000 job gain in November. The three-month moving average of jobs was up by 128,000 jobs per month. Since the beginning of the recession in Dec 2007, Illinois has posted negative job changes 24 times and positive job gains nine times so far. The state of Illinois now has a net loss of 381,500 jobs since the beginning of the recession in December Five sectors in Illinois have employment levels in this month that are lower than January 1990 Construction, Manufacturing, Trade, transportation & utilities, Information and Financial activities. Through Dec, the cumulative job growth for Illinois, RMW and the Nation compared to January 1990 stood at 6.41%, 8.1, and 19.75%, respectively Illinois Metropolitan Statistical Areas (MSAs) One of the highlights in the MSA December data is that "December unemployment rates fell in every Illinois county for the first time since the data set began in 1974" according the IDES. To summarize the year of, Illinois s performance (an average growth rate of 0.07%) is better than the RMW (an average growth rate of 0.02%) and compares favorably to the nation (an average growth rate of 0.07). According to IDES, only Texas, California and Pennsylvania added more jobs than Illinois in. In the last month, Chicago-Downstate and Metro-Rural experienced mixed performances. While Chicago and Metro were experiencing job loss, the Rural and the Downstate were experiencing job growth. The Rural continued the job gains, maintaining the recovery to the employment level of June 2000 for the third consecutive month. 1

2 Table 2 provides a league table for the MSAs The first set of data refer to the most recent month while the second set record the performance over the last 12 months. As for the MSA league table, 5 out of 10 MSAs posted a net improvement from November to December. Kankakee ranked first in terms of monthly growth performance, while Decatur remained in the last place. Over the last 12- month period, Davenport-Rock Island- Moline stayed in the first place by adding 1,400 jobs while Decatur dropped to the last place. 2

3 Housing Market 1Q11 For once, there appears to be some encouraging news. Several MSAs, such as Bloomington-Normal, Decatur, Metro East and Peoria-Pekin are forecast to have positive median price changes in the first quarter; care should be taken with these results since the number of sales in this quarter can often be small and the results subject to wide fluctuation depending on the distribution of the sales across price tiers. For Chicago, the first quarter of 2011 will be a reprise of with three negative months of price change; Davenport-Moline-Rock Island will have a similar 2011 but only two of the three months were negative in. Champaign-Urbana, Rockford, Kankakee will have two negative months while the remaining MSAs will experience two positive and one negative month. Overall, median prices seem to be stabilizing or moving back upwards an encouraging sign even in MSAs in which the year-over-year changes are forecast to be negative. Recall that the first quarter of was a period in which the main effect of the housing stimulus program ended, generating a heightened degree of sales in all markets. As a result, many MSAs will see annual sales decline in March 2011 but the month-to-month changes will often be positive. Given the effects of the stimulus, it is difficult to discern any clear trend in the sales data for this quarter; absent the effect of the stimulus, most of the annual changes would probably be positive. $180,000 $170,000 $160,000 $140,000 $120,000 $220,000 $210,000 $200,000 $190,000 $180,000 $170,000 $160,000 14,000 12,000 10,000 8,000 6,000 4,000 Illinois $169,900 $167,000 $165, $151,500 $158,500 $135,963 $140,625 $132,960 $126,281 Chicago $213,350 $207,002 $210,000 $188,000 $193,000 $175,000 $169,931 $162,672 $140,625 $153,015 Illinois 13,131 11,561 11,037 10,501 8,281 8,188 7,676 6,913 5,588 4,808 3

4 Mortgage Rates The 4Q10 interest rate for 30-year, fixedrate mortgages averaged 4.44% in the North Central Region, according to the Federal Home Loan Mortgage Corporation. It was down from 4.45% in the third quarter and also down from 4.99% a year ago in 4Q09. Source: Freddie Mac 10,000 8,000 6,000 4,000 2,000 Chicago 9,077 7,423 7,130 6,874 5,774 5,557 5,198 3,921 4,518 3,034 Illinois and Chicagoland Price Stratification Looking at the sales distribution by price, in the last quarter of, about 65% of sales in Illinois were in the first two price ranges, then gradual decline in contributions through upper ranges. 4 35% 3 25% 2 15% Illinois Price Stratification 33.4% 16.5% 11.9% Q4 Q3 Q4 Inventory more evenly distributed in terms of supply but with higher number in the upper price ranges. 5% 3.2% 3.1% In Chicago we see more even distribution of prices compared to other MSAs but increasing share of sales in <$K range; inventory more evenly distributed in terms of time to clear market. 4 35% 3 25% 2 15% % Chicago Price Stratification 19.2% 15.9% Q4 Q3 Q4 5% 4.6% 4.7% 4

5 Illinois Housing Market Gains Ground in in a Tough Economy 4Q10 Home Sales Skewed by Tax Credit SPRINGFIELD, Ill. The Chicagoland region ended nearly even with home sales in while statewide the Illinois housing market continued to ride out the turbulent economic times boosted by sales from the homebuyer tax credits. For the year, statewide total home sales (single-family homes and condominiums) were down 3.8 percent in with 103,710 homes sold compared to 107,782 sales in ; in the nine-county Chicagoland PMSA, home sales reached 69,010, off just -0.5 percent from 69,367 home sales in. According to the Illinois Association of REALTORS (IAR) fourth quarter report, Illinois home sales (single family and condominiums) totaled 21,957 down 26.6 percent from 29,922 home sales in 4Q09. The 4Q10 statewide median home sales price was $144,001, down 7.0 percent from $154,900 in 4Q09. The median is a typical market price where half the homes sold for more, half sold for less. For the year, the statewide median home price was down 3.2 percent to $152,000 compared to $157,000 in. More than 53 percent of homebuyers were first-time buyers, according to the Profile of Illinois Home Buyers and Sellers, which is more than the national rate of 50 percent and significantly higher than the average since 2001 of 40 percent, said REALTOR Sheryl Grider Whitehurst, ABR, CRB, GRI, president of the Illinois Association of REALTORS and the Development and Operations Coordinator for Traders Realty in Peoria. The tax credit effect in year-over-year sales comparisons likely will continue in early Still, we re seeing some positive signals from the economy and improvements on the jobs front will help give people more confidence and release some pent-up demand for housing. Adds Whitehurst: Affordability conditions remain good for first-time buyers although credit-worthiness and lender documentation requirements have become hurdles for some would-be buyers. First-time buyers can look to help from the Illinois Housing Development Authority s SmartMove loan programs that provide up to $6,000 in down payment and closing cost assistance for those who qualify. See for more information. In the Chicagoland Primary Metropolitan Statistical Area (PMSA) total home sales (single-family and condominiums) were down 27.8 percent in 4Q10 to 14,392 homes sold compared to 19,943 home sales in 4Q09. The region s 4Q10 median price was $172,500, down 7.8 percent from $187,000 in 4Q09. The Chicagoland PMSA median home sale price for was $185,000, down 5.6 percent from $196,000 in. In the city of Chicago, total home sales (single-family and condominiums) in 4Q10 were down 32.5 percent to 3,804 sales compared to 5,638 sales in 4Q09. Forty-three of 98 Illinois counties reporting showed year-over-year median home price increases or no change for 4Q10 including Grundy, up 3.8 percent to $149,900; Iroquois up 4.4 percent to $69,950; Knox, up 10.2 percent to $69,000; Macon, up 3.4 percent to $87,900; McLean, up 14.1 percent to $165,500; Peoria, up 12.1 percent to $123,000; Saint Clair, up 11.3% to $128,000; Sangamon, up 4.3 percent to $120,000; Stephenson, up 13.6 percent to ; and Tazewell, up 5.4 percent to $125,425. Sales and price information is generated from a survey of Multiple Listing Service sales reported by 35 participating Illinois REALTOR local boards and associations. The Chicago PMSA, as defined by the U.S. Census Bureau, includes the counties of Cook, DeKalb, DuPage, Grundy, Kane, Kendall, Lake, McHenry and Will. Source: The Illinois Association of REALTORS, 5

6 Bloomington-Normal Bloomington Normal Price Stratification Price stratification indicates dominance in the $-200K range; inventory also reflects more brisk sales in this price range. Price forecast suggest a return to levels exceeding both and in the first quarter % 45.1% 23.2% 12.5% Q4 Q3 Q4 1 MSA: McLean County 1.6% 0.5% $200,000 Blomington Normal $190,000 $180,000 $174,000 $170,000 $162,852 $166,000 $162,500 $160,000 $165,774 $162,308 $140,625 $156,250 $140,000 $135, Bloomington Normal

7 Champaign-Urbana Pattern similar to Bloomington-Normal but with greater share in <$120K range and lower share in the upper ranges; higher priced inventory moving very slowly. Prices trending up but still below levels in Q % 4 35% 3 25% 2 15% % Champaign Urbana Price Stratification 46.9% 14.5% 6.5% Q4 Q3 Q4 MSA: Champaign, Ford, Piatt counties 5% 0.5% 0. $170,000 Champaign Urbana $160,000 $155,000 $142,000 $142,500 $140,000 $125,931 $121,188 $120,000 $120,847 $114,500 $109,000 $, Champaign Urbana

8 Davenport-Moline-Rock Island Davenport Moline Rock Island Price Stratification 7 Almost 9 of sales in the <200K price range; inventory reflects the pattern very well % Q4 Q3 Q4 Median prices trending upward in Q but still below and but not by much % MSA: Henry, Mercer, Rock Island counties in Illinois % 1.2% % Davenport Moline Rock Island $120,000 $98,500 $,000 $94,900 $80,000 $79,831 $70,000 $73,464 $75,619 $71,000 $60,000 Davenport Moline Rock Island

9 Decatur 7 Decatur Price Stratification Pattern similar to Davenport-Moline- Rock Island Q4 Q3 Q4 Median prices (except for January) forecast to be above those for and in Q MSA: Macon County % 0.5% 0. Decatur $105,000 $94,357 $87,894 $86,273 $70,000 $115,000 $105,500 $50,000 $39,375 $30, Decatur

10 Kankakee 6 Kankakee Price Stratification Dominance in lower price ranges but $-200K accounts for largest share; higher priced inventory not moving Median prices trending down (influence of Chicago market?) but above those for in Q % 41.7% 14.5% Q4 Q3 Q4 MSA: Kankakee County 1 1.4% Kankakee $160,000 $146,000 $140,000 $120,000 $,000 $101,277 $111,240 $102,550 $129,000 $104,000 $87,000 $80, Kankakee

11 Metro East 5 Metro East Price Stratification Pattern similar to Kankakee but inventory more evenly distributed 45% % 37.3% Q4 Q3 35% Q4 Median prices trending upward and expected to match 201o levels in March 2011 MSA: Bond, Calhoun, Clinton, Jersey, Macoupin, Madison, Monroe, St. Clair counties 3 25% 2 15% 1 5% 17.1% 3.9% 0.6% 0. Metro East $140,000 $136,250 $127,000 $120,000 $114,570 $106,742 $108,328 $,000 $104,000 $80,000 Metro East

12 Peoria-Pekin Pattern similar to Kankakee but two upper level price ranges account for expanding inventory 5 45% 4 35% 34.9% 39.3% Peoria Pekin Price Stratification Q4 Q3 Q4 Prices slowly moving upward and by March 2011 are expected to be above and levels. MSA: Marshall, Peoria, Stark, Tazewell and Woodford counties 3 25% 2 15% 1 5% 15.6% 8.6% 1.2% 0.4% $170,000 Peoria Pekin $136,500 $120,319 $117,493 $118,089 $124,950 $81,375 $70,000 Peoria Pekin

13 Rockford 6 Rockford Price Stratification Patterns of prices and inventory similar to Kankakee % Q4 Q3 Median prices trending down; by March 2011, expected to be at same level as but below. MSA: Boone, Winnebago counties % 7.4% 4.8% Q4 0.4% 0. $140,000 Rockford $125,450 $120,000 $103,049 $,000 $102,354 $119,200 $97,950 $96,000 $80, Rockford

14 Springfield 5 Springfield Price Stratification Less domination but still significant in first two price categories; inventory in the >$500K range significantly larger than any other category. Prices decline then rise in Q to levels about the same at and. 45% 4 35% 3 25% 2 15% 37.5% 42.9% 14.3% Q4 Q3 Q4 MSA: Menard, Sangamon counties 1 5% 4.1% 0.6% 0.8% Springfield $140,000 $120,000 $119,021 $110,002 $126,241 $132,900 $117,000 $,000 $, Springfield