Online Staff Report
Rockford Area Realtors sold 4,032 homes and condos in Winnebago, Boone and Ogle counties in 2014, the second-highest total since the 2007 housing bubble burst, which then sent the nation into a recession.
Rockford market sales were down 49 homes in 2014, just a 1.2 percent drop from 4,081 properties sold in 2013.
Steve Bois, CEO, Rockford Area Realtors, said the local market could have hit a higher total in 2014 than 2013, “except for the polar vortex and the especially harsh winter early in the year, which crippled sales in the first quarter.
“This was a year of gradual continuing recovery,” Bois continued, “which, in many respects, is a good thing. It was fueled by significant improvements in the economic fundamentals for most Americans and historically low mortgage rates.”
The 2014 Rockford housing market showed steady advances over 2013, with significant improvement in the following key housing metrics:
• Prices up — The three-month average rolling price finished the year with six straight months of year-to-year increases. August through December average rolling prices reached their highest levels in the last five years.
• Foreclosures considerably down — 2014 saw fewer foreclosures and short sales in the composition of Rockford market transactions, from a high of 55 percent of sales in January 2014 to a low of 20 percent in August. In total, seven of 12 months had foreclosure levels below 30 percent.
• Less time to sell a home — It took 5.41 months to sell a home in December, matching the same level reached in March. This was the lowest absorption rate since the average home sold in just five months in April 2007.
Three major factors excite and somewhat concern Realtors heading into 2015: inventory levels, the economy and mortgage rates.
The Rockford housing market ended the year with the lowest monthly inventory in 12 years. Inventory levels were at 1,818 in December, the lowest since November 2003.
“One concern is that the local housing market may not meet the demand forecasted due to regional industrial growth,” Bois remarked. “What happens when the announced expansions hit our region in the near future? We need inventory to help meet that demand.”
The improving economy will also play a major role in the local housing market in 2015.
Unemployment dropped to 5.6 percent in December with nearly 3 million jobs created in 2015, the best job performance since 1999.
“Economists are predicting the economy will come closer to full employment in 2015 and that average wages will finally start rising,” Bois said. “This would lead to more folks feeling secure enough in their job situations to become first-time homebuyers.”
Mortgage rates continue to be a major positive factor in spurring on sales (especially among first-time buyers), but may go up in 2015. The 30-year, fixed-rate mortgage averaged 3.66 percent for the week ending Jan. 15, down from 3.73 percent the previous week and 4.41 percent a year ago. This is the lowest level since the week ending May 23, 2013.
However, rate projections from Fannie Mae, Freddie Mac, the National Association of Realtors and the Mortgage Banking Association predict a rise in the 30-year fixed-rate mortgage to an average 4.28 percent in first quarter, 4.5 percent in second quarter, 4.78 percent in third quarter and 4.98 percent at year’s end.
“Interest rates will inch up,” Bois said, “but on the other hand, even if we end up at 4.5 percent, that is still a great interest rate.”
Bois said a significant housing development in 2014 was the growing understanding of housing as a major driver of the economic rebound.
“Congress has realized how critical all aspects of housing are to the overall health of the economy,” Bois said. “If the government takes any steps that affect housing this year, they should do so gingerly.”
Following are Rockford market home sales by year:
2014 — 4,032
2013 — 4,081
2012 — 3,815
2011 — 3,213
2010 — 3,341
2009 — 3,642
2008 — 3,978
2007 — 5,844
Posted Jan. 16, 2015