Home prices soar, even as frenzied Bloomington-Normal market cools off
The frenzied Bloomington-Normal housing market has cooled off, though a local Realtors group says rapidly rising prices might not level off until the middle of 2023.
This year, the average price of an existing home sold in Bloomington-Normal jumped to $241,133, up 27% (or about $50,000) from 2020, according to the Mid-Illinois Realtors Association (MIRA). It’s an even sharper increase for sales of newly-built homes — $381,333 on average, up 32% from two years ago.
A low inventory, or supply, of houses is keeping those prices high. There are only about 1.3 months of inventory on the market, making it a so-called sellers’ market, said MIRA president Tammy Heard, a Realtor with Berkshire Hathaway.
“We’re coming out of a market frenzy from the past two years like we had not seen prior to COVID. Right now, our available inventory is still lower than the year before. So our home prices are still elevated, compared to the supply of homes available,” Heard said. “So we are seeing a shift in the market, but looking at it from a perspective helps you understand where we are and where we’re headed into 2023.”
MIRA’s data are the latest showing a constrained housing market in Bloomington-Normal, for both buyers and renters. A study from the Bloomington-Normal Economic Development Council earlier this year showed a 4,300-unit housing shortage in the community, including rentals.
The pace of home sales is now slowing for existing, or resale, homes, that represent the bulk of the Twin City market, according to MIRA data. There were 1,596 sales in the first 10 months of this year, down 12.5% from the 2021 pace.
“Even though the market might be slowing, that does not mean price depreciation or loss,” Heard said. “We might see some of the price (increases) — where there was rapid price appreciation — maybe start to level off toward the middle of the year.”
When asked about affordability concerns amid rising prices, Heard said interest rates are actually the area of concern. Since late last year, mortgage rates have seen their biggest increase in 40 years, from 3% to around 7%. Heard said that’s having an impact on buying power, though she also noted a 7% rate is nearing a long-term historical average.
“It’s more of an adjustment for buyers out there that are looking to purchase and may have been in the market the past few years, but not able to secure a property. They’re having to maybe give up some of those amenities and things that they’ve been looking for that was available in previous years. It’s just a matter of an adjustment period,” Heard said.
Demand for newly-built homes continues to rebound in Bloomington-Normal. In all, 114 newly-built homes have sold through October 2022, up from 78 this time last year and 58 in all of 2020, according to MIRA data. Subdivisions are growing after years of homebuilding dormancy here.
“That’s one part of our community that we really needed — more new construction, to give our buyers more options,” Heard said. “That helps ease that pressure for some of the buyers out there that are still looking for properties. It gives them some more time and opportunities to find a home.”