Housing recovery in Rockford area hits high gear in 2013
The housing recovery continued to gain ground in 2013 in the Rockford market with bigger-than-expected home sales and solid price gains.
For the second year in a row, total annual housing sales increased from the previous year. Rockford Area Realtors sold 4,081 properties in 2013, up 7 percent from 3,815 properties in 2012. Sales were up 18.7 percent over the previous year, from 3,213 homes sold in 2011 to 3,815 homes sold in 2012.
“The Illinois housing picture grew brighter in 2013,” said Steve Bois, CEO of Rockford Area Realtors, “as home sales and prices improved, distressed properties worked their way though the system, and a sustained real estate market rebound was under way.”
The most noteworthy statistic was total sales hitting the 4,000-home plateau for the first time since 2007. The total of 4,081 homes sold in 2013 was the largest annual total going back to 2007, the year before the start of the housing downturn. In 2008, 3,978 homes were sold, compared to 5,844 homes in 2007.
“We believe that the market will continue to recover throughout this coming year,” Bois said. “After the roller coaster ride that real estate has endured over the past 10 years, signs are pointing to a more normal market in 2014.”
The three-month average price was up six out of 12 months year over year. In 2012, the average Rockford market home price was also up six months year over year.
National real estate experts consulted in the Home Price Expectation Survey are looking for prices to increase an average 4 to 5 percent nationally in 2014.
One concern about the local housing market heading into 2014 is the number of homes for sale. The average monthly inventory in 2013 was 2,008 homes for sale, with inventory falling below 2,000 properties seven months of the year. Total inventory in 2013 was down 18.6 percent from 2012, when monthly inventories averaged 2,468 properties.
Another concern is interest rates. The average 30-year fixed-rate mortgage rose to 4.53 percent last week, with the rate expected to hit in the range of 5.5 percent by the end of 2014, according to Lawrence Yun, chief economist for the National Association of Realtors. Rates have risen about 1 percentage point in the past year as the economy strengthened, and may be pushed up further as the Federal Reserve begins to wind down its monthly bond-buying program.
“Each percentage point increase in mortgage rates makes homes about 10 percent more expensive in terms of higher housing payments,” Bois said. “Higher interest rates may push some buyers into lower-priced homes than they could afford last year.”
Will the housing market continue its recovery in 2014?
“The fundamentals of the market are mixed,” Bois said, “but on balance appear to be good. While we may not be happy with the rate of economic growth, both gross domestic product (GDP) and net job growth are moving forward. Both are necessary for real estate market growth.”
From the Jan. 8-14, 2014, issue