July 2023 Market Update
Written on July 7, 2023 by Nick WardSolid 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 (07/01/2022-06/30/2023) the MLS reported 1,810 sales with a median sale price of $195,750 and a reported average marketing time of 31 days. For the prior twelve months (07/01/2021-06/30/2022) the MLS reported 2,070 sales with a median sale price of $185,000 and a reported average marketing time of 33 days.
This shows a decrease in the number of sales of 260 homes or -12.6%. The median sale prices saw a 5.8% increase year-over-year. There are currently 127 homes on the market with an average marketing time of 78 days. This results in a 0.8-month supply of homes in inventory, which is a significant shortage relative to historical supply demand relationships in this market.
It is most note worthy that while the sales volume for the first five months of the year was down significantly, June of 2023 saw a higher number of sales than in June of the prior two years.
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 6.375%. With the federal reserve planning another interest rate increase it is likely that interest rates will remain in this range for the near future. Many experts continue to predict interest rates will stabilize and come down, but this is dependent on inflation continuing to decrease to a more stable range. 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 May 2023 (the last month for which data has been published) there were 106,079 employed people in Champaign County and an unemployment rate of 3.7%. In April 2022 there were 104,874 people employed with an unemployment rate of 4.1%. This results in a 2.9% increase 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
Conclusions
The primary factor in the residential market is a significant shortage of supply of homes in inventory. Some properties are still experiencing multiple-offer situations and sale prices well above list. Most of these properties have been extensively updated and priced competitively, and it appears most buyers are willing to pay a significant premium for updates. However, we are also seeing many listings with above average marketing time.
What does this mean to the home seller? It is highly important that a seller focuses on properly staging their home and completing the necessary updates and repairs to entice the largest pool of potential buyers. Pricing is also very important, as properties that are priced above the market rate are stagnating on the market. Properties in good condition that are priced appropriately are those experiencing multiple offers. It also appears that properties with marketing time over 14 days are experiencing negative stigma.
Despite high interest rates it is currently a very competitive market for buyers. Buyers should be prepared to pay at or above list price, and ready to move quickly once an acceptable property is identified.
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.