Area home sales remain strong despite rising interest rates
Home sales continued to top 2012 numbers in late summer as prospective buyers began to acclimate themselves to higher mortgage interest rates.
Statewide, home sales in August were up 17.3 percent compared to August 2012, and median prices were 13.6 percent higher, according to MLS data reported to the Illinois Association of Realtors. August was the 12th consecutive month of sales and price increases.
Illinois home sales in August totaled 15,814 compared to August 2012. The median price in August was $167,000, up from $147,000 in August 2012.
MLS data for August provided by the Greater Gateway Association of Realtors showed home closings up by 7.26 percent in St. Clair County and down 5 percent in Madison County. St. Clair County had 251 closings and Madison County 260 closings.
St. Clair County closings are up 18.3 percent for the first eight months of the year while Madison County closings are up 13.8 percent.
“The trend is positive even with the slight uptick in interest rates,” said Al Suguitan, president of the Realtors’ association. “We’re still at 5 percent (interest rates) or below.”
Chris Brown, senior loan officer with Mortgage Makers, a mortgage brokerage with offices in Belleville and Edwardsville, said the interest rate percentage jump from the mid 3s to the mid 5s of recent months was a shock to many potential homebuyers.
“It was almost like they turned off a waterspout,” he said. “People who were just starting to look, it scared the heck out of them.”
But Brown said the telephones began ringing again in recent weeks as rates settled back into the mid 4s. He said 2013 still shapes up as a good year.
“People are realizing that the 3s are gone and the 4s are here,” he said. With time, he said, buyers will come to recognize that rates in the 4- to 6-percent range are all historically low.
“This is still a once-in-a-lifetime opportunity,” he said. “Money is still extremely cheap.”
Suguitan said bankers continue to chafe at what many consider to be unreasonable lending standards. He said standards were tightened to safeguard against the excesses of a few years ago but have swung too far in the direction of regulation.
Nationally, August home sales were 13.2 percent higher than in August 2012 and reached the highest level in six-and-a-half years, according to the National Association of Realtors. The national median existing-home price was $212,000, up 14.7 percent from August 2012.
Lawrence Yun, NAR’s chief economist, said sales may have hit a temporary peak and could be uneven in the months ahead.
“Tight inventory is limiting choices in many areas, higher interest rates mean affordability isn’t as favorable as it was and restrictive mortgage lending standards are keeping some otherwise qualified buyers from completing a purchase,” Yun said.
Suguitan said Metro East home sales are being limited more by low inventories of available properties than by interest rates. He said there are short supplies of homes in all price ranges.
On Sept. 13, he said, there were 5,168 residential properties offered on the MLS that covers Madison, St. Clair, Monroe and several other Southwestern Illinois counties.
“A healthy inventory is 5,000 to 7,000,” Suguitan said. “As it dips closer to 4,000, it’s a strong sellers’ market.” He said continuing low inventories would push prices up.
Suguitan said home prices have been recovering from recession levels slowly but steadily.
“I don’t expect them to achieve the highs of a few years ago because the highs were unsustainable,” he said.
Interest rates spiked upward in May and again in July as Chairman Ben Bernanke suggested a likely cutback of purchases of mortgage-backed securities and Treasury bonds, which have held down interest rates and helped stimulate the larger economy.
The Fed was widely expected to “taper” those purchases beginning in September but Bernanke announced Sept. 19 that it would continue the purchases at the rate of $85 billion a month. Bernanke cited a sluggish economy and continuing fiscal uncertainties as factors in the decision.
Brown said the Fed seems unable to chart a consistent course of action and uncertainty makes for volatile markets.
“We could see a fall in rates or we could see another spike,” but rates are likely to remain under 5 percent in the short term, he said.
Suguitan said he expected rates to run a quarter- to a half-percent lower following announcement but thought they would remain in the mid-4 percent range barring unforeseen events.
‘Understanding Affordable Care Act’ offered
ALTON – RiverBend Growth Association will present speaker Laura Minzer on “Understanding the Affordable Care Act 2014-15” at 11:30 a.m. Wednesday, Oct. 9, at WellSpring Resources, 2615 Edwards St.
She will address deciphering employer obligations and coverage options under the act. As executive director of the Illinois Chamber of Commerce’s Healthcare Council, her primary role is to interpret and respond to state and federal legislation and regulatory issues regarding the implementation of the act.
To register contact Dawn Formea at email@example.com or (618) 467-2280.
Jason Epps joins Gori Julian
EDWARDSVILLE – The Edwardsville-based law firm Gori Julian & Associates announced the addition of Jason B. Epps to the firm’s roster of attorneys. Epps is a resident of Maryville and graduated with honors from Southern Illinois University School of Law in 2013. He will focus on plaintiff’s personal injury and products liability litigation.