Hot B-N realty market not cooling off during spring selling season
As the seasonal increase in home sales picks up, Realtors say there are no signs the uber competitive bidding wars will ease in Bloomington-Normal, even with a potential recession coming.
There's still a shortage of homes. A big one, said Realtor Amanda Wycoff.
"Let's look at it this way. Several years ago, we would consider a healthy market in Bloomington-Normal to have 1,200 actively listed homes. Currently, we have 79 single-family homes and 25 attached units," said Wycoff.
Just two of the homes on the market now, Wycoff said, are between $150,000 and $200,000. And that's not likely to change. With materials prices the way they are, she wishes good luck to any builder who thinks they can put up a house for less than 200 grand.
Interest rates have been rising and will continue to do so. But Realtors said there has been only a blip of an effect on the pace of sales because of that. Wycoff said there was maybe a two-week slowdown when Rivian announced layoffs that coincided with action by the Fed to raise rates. Counterintuitively, Wycoff said that brief pause actually helped a particular type of client.
"Some people backed off of looking and it enabled the buyers that have an FHA loan or a VA loan that have been turned down on their bids eight times, it allowed them to be seriously considered for a home," said Wycoff.
She said mortgage rates hit 7% for a millisecond and have dropped back into the low 6s. Historically, she said that's not terrible at all.
Because the inventory of homes in the Twin Cities remains so low, Realtor Monica Bullington said incoming residents increasingly look at bedroom communities like LeRoy, Heyworth, Hudson, and Lexington.
"They started expanding their searches wider and wider and realizing the commute wasn't that bad and realizing how much more affordable those communities can be. We have people moving out to Pontiac and thinking the commute is not that bad," said Bullington.
Even within Bloomington-Normal, some areas are harder to find homes in than others. Realtor Meenu Bhaskar said Rivian workers also drive the trend in location.
"Mostly, what I'm seeing they want to be close to their workplace. That's first and foremost. Like for Rivian, people like to be very close, within three or four miles of the Rivian area. They are very up front: We don't have kids right now. We don't care about the school district, so try to find us something close to our workplace," said Bhaskar.
Buyers who have other employers, Bhaskar said, don't care as much about location, because work from home arrangements are more common for non-manufacturing businesses. Bhaskar said she does try to tell people deciding a geographic radius will limit them on the price of homes they can find, but that doesn't seem to matter much.
The shortage may even be worse because some people who have come to work at Rivian put down roots, and then bought extra homes as a side hustle.
"Yeah! I have a lot of folks that are investing, particularly closer to Parkside and Rivian and that area (has) quite a bit of success offering extended-stay, fully furnished rentals," said Wycoff.
Maybe a quarter of her buyers are picking up additional homes. Her group sold a total of 300 homes last year, she said. That's 75 investor clients just for her firm.
Bhaskar said it was easy enough to satisfy the first thousand Rivian employees who moved to town, but now, at 7,100 workers at the electric vehicle plant, home buyers just have to be patient.
"There are a lot of people I know who are living in hotels for the last few months. They are just waiting for the right house to come. And they are waiting for the time their offer is accepted so they can bring their families here, or they can have the home. I do hear and see that," said Bhaskar.
She said if home buyers are coming from an extended stay hotel, it can change the kind of house they look for, noting the more familiar they are with the community the more open they are to stretching their geographical filter.
Realtors also have to fight preconceptions about home prices. Many of the transplants arrive from places that have much higher home prices than Bloomington-Normal does right now. Even with two years of steep jumps, Bhaskar said the answer to the question, how much house you can buy for the money often surprises.
“California people, when they come here, their eyes are so big when I show them a $600,000 home because they cannot buy for $1 million, 800 square feet. That's where they are coming from. And here I am showing them ... 4,500 square feet with high ceilings and an amazing kitchen. It blows their mind," she said.
Bhaskar said she had a tough job convincing one buyer from San Diego to look at anything under $700,000, but something lower did actually turn out to be just right.
Monica Bullington said those different price expectations also have changed who finds success in the market.
"And just throw money at a home seller. We've got out-of-town people that are winning bidding wars because a townie can't let go of the value they thought a house was worth," said Bullington.
Realtors said that is responsible for a lot of the appreciation in home values of the last couple years, increases that aren't likely to stop this year.