By Mark and Jennifer Monge
If houses are like the stock market, with valuations that have the ability to go up as well as down, then let’s look at things purely from an investment standpoint and see if we are headed into a buy, sell or hold status. The number one thing you can do to get your home sold is to be knowledgeable on which way the market is heading and be proactive in that regard instead of playing catch up and chasing the market. The same goes for buying a home. The more you know about the market, the more you can time it to make the most of it.
Ok…here we go.
Reasons for Increase of homes for sale
This increase in inventory is tied to 4 factors.
1) A sizable number of Caterpillar employees opted for early retirement options last fall, which lead to homes going on the market that normally wouldn’t have at that time.
2) The number of corporate employees that were relocated to other areas. Some of these moves were entire groups, which meant there weren’t any people transferring in to back fill these vacated positions.
3) There were some corporate level employees that left the area voluntarily as well as those that had their jobs eliminated.
4) Over the course of the next 12 months we’ll see some homes related to those in the Global Mining division of Caterpillar relocated to Arizona.
Number of closings related to price range
$225K to $300K Up 3.6%
$300K to $400K Up 3.2%
$400K to $500K Up 6%
$500K and up Down 21.3%
Days on Market/How long on average it’s taking to sell compared to June 2015.
$225K to $300K Down 6.7% to 84 days
$300K to $400K Up 23.4% to 116 days
$400K to $500K Up 14.1% to 105 days
$500K and up up 25% to 105 days
Inventory/Number of homes for sale. By inventory, I simply mean the number of homes for sale in each price range compared to June 2015
$225K to $300K Down 6.7%
$300K to $400K Up 23.4%
$400K to $500K Up 14.1%
$500K and up Up 25%
Months Supply of homes (meaning, if no other homes were listed, how long would it take to sell off all of the homes for sale based on the current rate of sales. A 5-6 month supply of homes is considered a balanced market. A lower number is a sellers market, a higher number is a buyers market)
$225K to $300K Down 2.9% to 6.7 months
$300K to $400K Up 16% to 8.7 months
$400K to $500K Up 28.6% to 11.7 months
$500K on up Up 69.2% to 22 months.
If our 12 month calendar year had a consistent rate of sales, this could be used to show what the next few months would be like, however we know it’s not. It’s as seasonal as the actual weather as well as tied to the school year calendar and for central Illinois it’s tied to the Caterpillar market. January is slow, Feb starts to heat up, March/April/May are usually the busiest with homes going under contract/pending and May/June/July are usually busy with closings related to those pendings.
As we approach August, we typically see a slow down in showings and closings, as many people that are moving due to the school factors have already made their decisions. They need to be settled by the time school starts in the beginning of August.
Heading into the slower season, and bringing with it a large supply of homes for sale, we’ve seen increased pressure on pricing. We can’t change the market, but we can study it very closely and prepare for it. The three main factors that sell a house are price, condition and location. Homes sell in every month of the year, in good times as well as in downturns. If those three factors are analyzed properly-homes will sell.
The local builders saw the current downturn coming and prepared accordingly with not adding to the supply of homes with an increased number of spec homes. This has helped keep some levels in check. There are some really fantastic prices out there on homes, some of the best I’ve seen in many years and I don’t expect them to stay at that level. If you are in the market to purchase a home now, or thinking about getting into the market to buy, you may be in a great position to take advantage of some spectacular deals.
If we can be of any assistance or answer any questions about this report, the market, your home or anything else real estate related, feel free to give us a call any time at 309-253-6098, or browse our website at www.markmonge.com
Mark and Jennifer Monge
Jim Maloof Realtors