the point at which a series of small changes or incidents becomes significant enough to cause a larger, more important change.
So…is there a tipping point in our local real estate scene?
Good question. The answer is…..yes…and no…depending on the price range and location.
This link (click here)
shows central Illinois as a whole for Aug, but on pages 13 through 19 it shows how specific price ranges are doing. In the $400K to $500K price range, closed sales were down 5.7%, days on market was up 10.5%, inventory of homes for sale was up 31%. Above $500K it’s even more off…closed sales down 35.5%, days on market is up 21%, inventory of homes is up 20.7%. I know…I know…I’m all sunshine and rainbows again with my reports.
BUT….for homes priced below $225K, there is a 5-6 month supply of homes. What does this mean? It means that based on the current rate of sales, if no other homes were listed after today, it would take 5-6 months to sell off the current inventory/number of homes for sale. If the supply of homes is less than 5-6 months, it’s a sellers market, because there is too little inventory. If it’s around 5-6 months, then it’s a well balanced market. Supply and demand are about equal.
BUT…if it’s more than 5-6 months, then it slants towards a buyers market.
Homes priced $225K to $300K rose a little, to a 6.9 month supply. Still balanced.
Homes priced $300K to $400K rose more, about 29.6%, to a 9.2 month supply. Buyers market.
Homes priced $400K to $500K increased 72.8%, from 8 months last August, to 14 months this August. Buyers market
Homes priced above $500K increased 77.6% from 13.4 months last August to 23.8 months this August. Buyers market
The problem with the Aug stats is that it doesn’t really tell us what the market is going to be like based on the most recent layoffs at Cat that occurred the end of Sept. I think those 300+ positions will play out in our market over the next 3-6 months likely. Is hasn’t happened as of this writing. There wasn’t a flood of homes coming on the market, but as I said I expect to see some of those coming on within the next 3-6 months.
It was exactly one year ago…almost e-x-a-c-t-l-y one year ago actually, that Caterpillar first announced a global wide reorganization. The homes that came on the market as a result of job reallocation, elimination and early retirements have, for all intents and purposes, sold.
Local home builders took note of this and also cut back on the number of new spec home constructions being built, especially in the higher price ranges. As a result, we aren’t burdened with a glut of unsold new constructions and many buyers have custom built homes instead of spec homes. In fact, the number of sold new constructions in Aug the last few years hasn’t changed much between 2016 and 2013 (16 in 2016, 20 in 2015, 13 in 2014, 11 in 2013). 2012 was different, with 30 new constructions sold in Aug. 2007 was REALLY different, with 54 new constructions sold in Aug. Ahhhh….good ol’ 2007. The pre-bust days, but I digress. Two years later, in Aug 2009, that number was less than half, at 20.
For 2017 the main consideration that will factor into the market will be the 300+/- local global mining positions that will be relocated to Arizona by the end of 2017. I think we’ll see most of those homes coming on the market during the 1st and 2nd quarter of 2017. This will add some more supply to the market that maybe wouldn’t normally be there.
BUT (I know…there’s so many BUTS in this story it’s going to get a NC 17 rating)…we are still working with incoming corporate clients that are relocating here. We are also seeing an increased influx related to the local medical community. There are also many buyers that were waiting on the sideline and are seeing some great values out there. Also, there will be some positions throughout Caterpillar that were initially eliminated or merged, that will be filled locally as well. Many of those positions will be known by the end of Oct 2016.