By Kevin Haas
Rock River Current
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ROCKFORD — Karl Gasbarra can remember a time when Realtors scoffed at the idea of a home selling for six figures in Rockford.
It was the early 1970s, and Gasbarra was on a walkthrough for brokers of the then-new Shaw Woods subdivision on the city’s east side. He came across a two-story, four bedroom, 2.5-bath home with a brick front on a corner lot. The new home was listed at a little less than $100,000.
“I remember the old-timers going through the broker’s open with me saying, ‘Have they lost their mind. Nobody is ever going to buy a house here for $100,000,'” Gasbarra said.
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Today, you can commonly find homes in that neighborhood valued at more than three times that price. It’s not just Shaw Woods, home sale prices across the region are at an all-time high this summer. Not only are they six-figure sales, they’re six figures higher than they were less than a decade ago.
New data released today by the NorthWest Illinois Alliance of Realtors shows that June was yet another record-breaking month for sale prices.
The three-month rolling average price of a home sold in Boone, Winnebago and Ogle counties was $198,254 in June. That’s up $4,677 from the previous monthly high of $193,577 in August 2022, and it more than doubles the record low of $88,142 in March 2014.
The average sale price is up 45% from the same month five years ago, when homes were going for $136,891 on average in June.
“For years we enjoyed affordable housing, and now at $200,000 it may appear that we lost that,” said Frank Wehrstein, a Realtor with Dickerson & Nieman. “However, when you compare us to other markets, we would still be affordable. We just have to retrain how we think about our marketplace.”
To illustrate Wehrstein’s point about Rockford’s comparable affordability, consider that the average home sale price in Illinois in June was $291,945. That’s $93,963, or 47%, more than the Rockford region. Across the country the median home-sale price for all housing types was $410,200 in June, according to the Realtors group. That’s the second-highest mark ever and $211,946 more than Rockford.
“Housing affordability is a major strength that should be strongly marketed to business and industry looking to expand, as providing affordable housing to employees is a key attribute in convincing companies looking to relocate to Rockford,” said Conor Brown, CEO of the Realtors group.
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A limited inventory of homes on the market and lack of construction for new homes has supercharged sales prices over the past two years.
“It’s an incredibly competitive market for anything that’s even close to being priced fairly,” Gasbarra said. “People are pricing their houses based on the conditions of the market, which means they’re being aggressive with the pricing.”
In June, a total of 369 single-family homes and condominiums were sold in the Rockford market, down 15.6% from 437 properties sold last June. However, it was the highest monthly sales total in the last 10 months.
There were just 265 homes on the market in June compared to 412 the same month a year ago.
“Inventory levels are still at historic lows,” Brown said. “Therefore, multiple offers are returning on a good number of properties. Home values skyrocketed over the course of the pandemic, so selling now is likely a wise financial decision.”
Homes are also selling at a fast pace, too. In June, it took an average of 16 days for a home to move off the market. The record pace was 10 days in July 2022.
“We’re seeing multiple offers on property, some over the full asking price, some people waving appraisals and inspections,” Gasbarra said. “We’re seeing an unprecedented amount of cash offers. More than I’ve seen ever in my career.”
Wehrstein, who has been a Realtor for 34 years, said growing interest rates have also contributed to the lack of inventory.
Last week, the Federal Reserve hiked its benchmark interest rate to its highest level in 22 years. It also left the door open to further rate hikes as the Fed tries to slow inflation.
The average 30-year fixed mortgage rate last week was 6.81%, according to Freddie Mac. A year ago it was about 5.3% and rates were sub-3% for much of 2020 and 2021.
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Homeowners locked into a low interest rate don’t want a new mortgage with a higher rate, Gasbarra said.
“It doesn’t even really create a reasonable possibility,” Gasbarra said. “They can’t even rebuy their own house and not substantially increase their payment.”
There are still reasons why buying now makes sense, the Realtors say. Rockford is still affordable compared to surrounding communities, and prices aren’t likely to make a major downward swing.
“I think we’ll look back in 10 years and prices will go up again,” Wehrstein said. “I’m sure there will be small corrections here and there, but prices will continue to rise. Labor and materials aren’t going to get cheaper.”
This article is by Kevin Haas. Email him at khaas@rockrivercurrent.com or follow him on Twitter at @KevinMHaas or Instagram @thekevinhaas and Threads @thekevinhaas