December 2022 Market UpdateWritten on December 6, 2022 by Nick Ward
Solid information about our local market is helpful for everyone, and especially for our clients who are thinking about entering a real estate transaction this year.
This update is based upon information supplied by the Champaign County Association of REALTORS Multiple Listing Service for all attached and detached single-family properties in Champaign, Savoy or Urbana. It is important to keep in mind that specific segments of the market may have performed better or worse than the overall market analyzed below.
Comparing the Last 12 Months with the Previous 12 Months
For the most recent twelve months (12/01/2021-11/30/2022) the MLS reported 1,982 sales with a median sale price of $190,000 and a reported average marketing time of 30 days. For the prior twelve months (12/01/2020-11/30/2021) the MLS reported 2,100 sales with a median sale price of $179,900 and a reported average marketing time of 47 days.
This shows a decrease in the number of sales of 66 homes or -5.6%. The median sale prices saw a 6.1% increase. There are currently 164 homes on the market with an average marketing time of 100 days. This results in a 1.0-month supply of homes in inventory, which is a significant shortage relative to historical supply demand relationships in this market.
Month-over-month sales in Champaign-Urbana saw and increase of 8.1% between October and November ($181,000 in October and $195,500 in September). This follows a decline in median sales prices in Q3, which stabilized in September. Marketing times have risen significantly, at 100 days on average, and is well above the average for the prior two years.
The Interest Rate Story: In 2020, rates varied from 3.5% to 3.6% through March. During the peak of the Covid-19 pandemic the Federal Reserve cut the interest rate, which resulted in more volatile interest rants that fluctuated within the 2.0% to 3.5% range. In the first quarter of 2022 we saw a sharp increase in interest rates, peaking in around 7.0%.
Currently, 30-year fixed rate mortgage financing is available at 6.5%. Many experts are projecting interest rates to stabilize in the range of 4%-5% over the coming year while inflation slows. Please note that the interest rate can vary significantly between lending institutions and borrower qualifications. Contact your Joel Ward Homes agent for recommendations!
Local Employment Analysis
The close connection between employment levels and the strength of housing markets has been well established, both locally and on a national basis. In October 2022 (the last month for which data has been published) there were 105,771 employed people in Champaign County and an unemployment rate of 3.7% In October 2021 there were 108,188 people employed with an unemployment rate of 3.7%. This results in a 2.2% decrease in the number of people employed.
What follows is a graph showing the number of jobs in Champaign County, by month, based upon non-seasonally adjusted U.S Bureau of Labor Statistics data.
NUMBER OF JOBS IN CHAMPAIGN COUNTY NON-SEASONALLY ADJUSTED DATE PER BLS
It is most notable that while there is still a significant shortage of homes available in inventory, the market is showings signs of moving back to a state of relative equilibrium. Prices remain strong though marketing times are increasing significantly. This is likely due to seasonality of the market (see graph “Number of Sales by Month”), combined with high interest rates.
What does this mean to the home seller? Marketing time has increased significantly over the past 30 days. This means that pricing your property competitively and ensuring that the house marketed property is more important that it has been in the prior two years.
For buyers, the market is beginning to show signs that are in the buyer’s favor following two years of an extremely strong seller’s market. However, we are seeing interest rates remain high despite the long-term projections. It is important for buyers to take into consideration their buying power as higher rates put pressure on monthly payment amounts.
Overall, Champaign-Urbana real estate has proven to be a good investment over time with an average annual appreciation rate of 2.6% since 2000, and this includes the 2009-2013 financial crisis and recession.