January 2023 Market Update

Written on January 6, 2023 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 (01/01/2022-12/31/2022) the MLS reported 1,952 sales with a median sale price of $192,250 and a reported average marketing time of 31 days.   For the prior twelve months (01/01/2020-11/30/2021) the MLS reported 2,107 sales with a median sale price of $180,000 and a reported average marketing time of 45 days.

This shows a decrease in the number of sales of 155 homes or -7.4%. The median sale prices saw a 6.9% increase. There are currently 127 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.

Interest Rates

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 6.125%.  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 November 2022 (the last month for which data has been published) there were 110,478 employed people in Champaign County and an unemployment rate of 3.6% In October 2021 there were 114,121 people employed with an unemployment rate of 3.8%. This results in a 3.2% 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.



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 is marketed properly 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.

Remember that each particular segment of the market is different. If you are thinking about selling your home, or buying one, the best decision is to contact your Joel Ward Homes REALTOR to obtain current information about the specific segment of the market relevant to your property.