May housing sales up 26.6 percent over April 2011
Rockford Area Realtors reported 276 property sales in May, up 26.6 percent from 218 sales in April. The historical April to May increase since 1998 is 14.4 percent (with this year’s increase 85 percent higher than the typical April to May shift).
The three-month average rolling price in May basically held ground at $103,916, similar to the April price of $104,015.
“Recall that this time last year, the influence of the federal housing incentive program was at its peak, with housing sales elevated over the levels recorded the previous year,” said Steve Bois, CEO of Rockford Area Realtors.
Like the rest of the nation, year-to-date sales still show a housing slowdown with lower transactions than last year’s heightened totals from the federal tax homebuyer credit.
Through the first four months of 2011, 1,038 properties have been sold in Winnebago, Boone and Ogle counties, compared to 1,484 in 2010, a 43 percent drop.
The big current news in the housing market is prices. Bois said just-released statistics indicate significantly lower housing prices, which should bring more buyers into the market. Standard and Poor’s recently announced the Case-Shiller Home Price Index fell 0.8 percent nationally in March. This pushed the index to a new post-housing bubble low of 33.1 percent under the July 2006 peak. Housing prices are back to where they were in mid-2002, even taking inflation into account.
Likewise, the National Association of Realtors’ Housing Affordability Index in May showed the typical monthly mortgage payment of a median-priced home is now only 13 percent of gross household income, the lowest since record keeping began in 1970.
“The average median income household can afford almost 75 percent of all homes for sale on the market today,” Bois said. “The home affordability indicators are especially great news for first-time homebuyers. With interest rates below 5 percent and home affordability at the lowest level recorded, first-time homebuyers have historic opportunities to buy and benefit from the joys of living in their own home.
“It’s worth repeating that market conditions today are optimal for all buyers,” Bois added. “Interest rates remain below 5 percent, and prices are close to a 10-year low, making affordability at an all-time high for specific segments like first-time homebuyers, investors and move-up buyers.”
The Illinois Association of Realtors released new data this month that show significant economic ripple effects every time a single home is sold, reinforcing housing as a key element to the economic recovery. The total direct expenditures per home sale in Illinois is $28,581, a total of $3.2 billion in added annual expenditures for all home sales made in the state. The net effect is $7.9 billion, when direct and indirect expenditures are counted, with housing purchases impacting related industries such as moving and warehousing, the retail trade and financial services.
“This research really underscores the importance of the housing market on the health of the overall economy,” Bois said. “If there are fewer home sales in the Rockford region in a given year, there will be an impact across many related industries and the local economy.”
From the June 22-28 issue