Fritz Pfister

Following drops in the number of home sales of over 17% in September, and over 19% in October, November rebounded with sales up 5.4%. One should place into perspective that 2006 was on a record setting pace when sales fell in November and December. That means that this November surpassed the first significant slowdown in ten years. This November’s performance indicates a return to more stable, and normal market activity for this very stable central Illinois housing market.

While many markets are reporting significant double digit decreases in home sales, the local housing market is down by only 5.2% through November for the year. While most markets are reporting declining home sale prices, the median sale price in the local market is up 4.1% for the year to $104,000.

The proof of the stability of the local housing market can be found in sales data for the preceding five years. There is no argument that 2003, 2004, and 2005 were markets that favored home sellers due to 40 year low interest rates combined with normal numbers of homes for sale. During those three years of seller’s market the member brokers of The Capital Area Association of Realtors reported closed home sales of 3996 in 2003, 4005 in 2004, and the record of 4197 in 2005.

The market changed in 2005, in October to be precise, when the inventory of homes listed for sale eclipsed 1700 for the first time on record. The inventory continued to build throughout 2006 with the inventory exceeding 1800 homes for sale for the first time. With rising interest rates along with rising inventories the market changed to favor home buyers. The rising inventory continues through 2007 when in the summer the number of homes for sale nearly reached 2000, and today eclipses 1800 for the first time ever in December.

The surprising news is that the demand has held steady. In 2006 closed home sales finished only 22 shy of the record with 4175 closed home sales. Through December 7, closed home sales stood at 3802, with 310 sold pending. This indicates that 2007 will finish behind 2006, however with closed home sales at or just under 4000. It is surprising that during the buyer’s markets of 2006 and 2007 home sales continued to fall within the same range, 3900 to 4200 as the seller’s markets of 2003 through 2005.

The year began with 1540 homes listed for sale with Realtors adding over 6200 new listings throughout the year. To date 48.7% of those listings have sold and closed. We will report the inventory levels, and preliminary 2007 closed sales on January 1, 2008. This will be the only source for that information available for the public on that day.

To read about the three challenges the local housing market contends with today go to SpringfieldHome.com and click on Weekly Observations. That article will be available through Friday December 14.

My annual predictions for the upcoming year will be posted between Christmas and New Years.