While 2020 was tough for many businesses amid the COVID-19 pandemic, Peoria's real estate market enjoyed one of its best years on record.
According to the Peoria Area Association of Realtors(PAAR), 6,778 home sales closed last year--an 18.3% increase over 2019, bolstered by third- and fourth-quarter totals nearly 30% above the previous year.
“To me, it was very shocking. We actually recorded the highest number of closings,” said PAAR president Jason Catton. “We haven't hit a number close to this since 2005, and it was a completely different market back then, if you remember.
“Fifteen years ago, we had a really big growth spurt with a lot of new construction, so there was more inventory out there as far as new homes. But right now, there's not a lot of new construction going on in our area.”
Catton said that instead of depressing sales, the COVID-19 pandemic actually may have motivated many buyers.
“People wanting more flex space in their house is definitely something we saw this year, with everybody doing the work from home and the homeschooling,” said Catton. “I feel like if you had two parents working from home and three kids at home all during e-learning, they probably found that they just didn't have enough space to do what they needed to do.
“So I think that was a big contributor. I think also we had people that wanted to get out of the shared living spaces, like apartment buildings and get into their own homes.”
According to PAAR’s figures, the median price for a home in 2020 rose to $125,000 from $118,000 the year before, while the average price jumped from $138,000 to $147,500.
“A lot of that has to do with the inventory, supply and demand,” said Catton. “When you don't have the homes out there for sale, people are willing to pay more for them. I personally have a client that's looking in a certain part of the Peoria region and the last two offers they made on a home, they lost out on to other buyers making over-ask price offers.”
Catton said the urge to have a place of their own that they can renovate to their liking has engaged many new buyers interested in “do-it-yourself” upgrades.
“I believe that in their lifestyles, they find that they need to get into their own space and want to have home ownership, build up and other things that you can do to your home versus being a tenant,” he said. “If you want to remodel the kitchen, you can go in and do that as far as what we have with ability in 2020.
“Five years ago, you used to go into a Lowe's and buy a book to learn how to wire a three-way switch. Nowadays, you just have the information out there and you can go to YouTube; there's a lot you can look up on YouTube and find for home improvements. So you're seeing a little bit more a DIY, and you've probably noticed that the local hardware stores have been very busy this year. I talked to a store manager in East Peoria who said they have had a record January.”
One of the biggest issues currently facing the Peoria real estate market is having enough homes for sale, as 2020 ended with a little more than a two-month supply in the area compared to almost five months’ worth at the start of the year.
“The biggest thing we’re fighting is inventory; inventory is down,” said Catton. “Typically, we see the spring market is when a lot of the homes turn up for sale. Right now is a really good time to put your house on the market, because there's just not much inventory.
“Historically, in the winter months we typically see houses sell for more, just because there is less inventory on the market, and when you do have buyers that need to definitely get into a home--whether it be for a job relocation or they got their house sold--typically, they're looking at lower inventory in the winter months. So you kind of see higher prices.”
Catton said historically low interest rates were a key contributor to driving the 2020 sales, with the 30-year mortgage rate averaging 3.125%. Catton said the market’s reasonable prices also were a factor.
“It's all about affordability,” he said. “Thankfully, the whole country basically has seen increase in real estate. But what's great about our region is the affordability here, and I think that plays a big role along with the interest rates. When you look at what you pay for rent for a house, now you can own a home.”
While 2021 is not yet a full month old, Catton said he anticipates another strong year will hinge on how many properties hit the market.
“We may see a little bit of change in numbers. When the inventory is less, obviously we're going to have less pendings, less ‘solds’ come through,” he said. “In December, for example, we have 449 closed sales and as far as pending sales in December, we have 380. If you look back to last December, we had 330 in 2019 and the year before that was 269 for the month of December.
“So you can't read into it too much. But we definitely need the inventory to show up. Historically, a lot of people would put (selling their homes) off around Thanksgiving, and then the spring market would start … sometime around Super Bowl is where we start seeing the inventory start to hit the market. But it’s definitely a good time to sell your home right now.”
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