The head of the Bloomington-Normal Association of Realtors predicts a strong home-selling climate in 2017, from about mid-year on.
Until then, Ed Neaves said things will be steady. He said about 100 homes are under contract so far this year, about the same as at this point in 2016. Sales last year rose 2.8%.
Neaves said a lot of buyers are out there but they are educated and particular.
He said one indication of that is that the years-long average for time on the market has been 90 to 120 days. This past year it has been 60 to 70 days, showing houses that are in good condition and priced correctly sell fast because buyers are waiting for the right thing.
Since the Great Recession, sales of new homes have slowed. Neaves said that shows signs of changing, but the kind of home being built is different. He said there is still a market for mansions, but far less than before. The mid-scale houses may still have a high price, but not the floor space.
"They're gonna build new. But, they're gonna build what they want. They're not gonna be a 5,000 square foot house. They're gonna be maybe 1,800 square feet," said Neaves.
Neaves said that is a trend across the country. Even in Las Vegas, which saw its housing market regain only half the volume lost during the recession, Neaves said, has had home sales come back on the strength of subdivisions with smaller houses. The same may be true in central Illinois.
"There are a couple of subdivisions in this area that had success this past year and the majority of the buyers are anywhere from 30 to 45, in that demographic," said Neaves.
A lot has been made, as well, about the changing home buying habits of the so called millennial generation. They are deferring home purchases until they are ready to start a family and have accumulated nest eggs. He said studies show they still approve of home buying. And as they come off the sidelines, Neaves said, they too are likely to embrace the not so big house part of the culture.
"They have waited. They have saved money. They are ready to buy. And when they are ready they are going to buy exactly what they want. It may be smaller than in years past. But, it does have all the bells and whistles, all the amenities, smart homes, technology driven," said Neaves.
Neaves cited data from the Chief Economist of the National Association of Realtors indicating the shift to smaller homes will accelerate in the middle of 2017 and continue at least through 2020, which may help builders who can demonstrate an attractive model house.
Countering factors to that cultural indicator, Neaves said, include tougher credit requirements, fewer builders qualifying for speculative loans, and higher interest rates for builders seeking to put up houses. The cost of building materials, taxes, and regulation have increased the cost of new construction as well. He said the result is that buyers can find very good values in existing construction for a lower price than new. While there is a good forecast for new construction, Neaves said, it will continue at far lower levels than in the last 20 years.
