Is it a good time to buy a home in southwestern Illinois?
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The COVID real estate market
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It’s a “seller’s market” in the metro-east, and that’s generally not the best time to buy a home, but people are doing it anyway, and they have their reasons.
The number of home sales have increased every month since June 2020 in St. Clair County and all but one month in Madison County, according to Deb Frazier, CEO of the REALTOR Association of Southwestern Illinois.
Home prices have consistently risen during the same period, and the process has gotten more competitive. Today, many listings are attracting five or 15 offers from people bidding $5,000 to $30,000 above asking price, and they’re selling within days or hours of being put on the market.
In some cases, sellers are requiring buyers to pay cash for the difference between higher contract prices and lower appraisal values and expecting them to skip the usual inspections.
The process can be stressful for buyers, said Barb Davidson, managing broker of Coldwell Banker Brown Reators in Belleville. She’s guessing that some have backed out of the market temporarily, just because they’re exhausted.
Buyers who stick with it and submit winning bids hope that they don’t someday find themselves “underwater” (owing more on mortgages than homes are worth) if values drop in the future.
Why is all this happening?
The COVID-19 pandemic has led to a housing shortage across the country, according to Geoffrey J.D. Hewings, emeritus director of the Regional Economics Applications Laboratory at University of Illinois, who compiles statistics for the Illinois REALTORS Association in Springfield.
Many families are looking for nicer or larger homes more suited to remote work or school.
They’re also taking advantage of historically-low mortgage interest rates — ranging from 2.75% to 3.125% — which have enabled young buyers to bypass “starter” homes and move to the next level, said Rick Owens, managing broker of RE/MAX Alliance in Edwardsville with his wife, Tammy.
At the same time, some would-be sellers have postponed listing their homes, concerned that people coming in for tours or open houses could expose them to the coronavirus.
Senior citizens who might have sold and moved into assisted living or other facilities also balked, feeling it was too risky from a health standpoint.
Demand is highest for homes in medium-level to upper-level price ranges, according to Davidson and Owens. That’s where they’re seeing most of the multiple bidding above asking price.
Bottom line: The demand for homes exceeds supply in southwestern Illinois, and that’s causing buyers to pay more. But many are concluding that it’s worth it to move their families into homes that will better accommodate their needs in the age of COVID-19.
This story was originally published July 29, 2021 at 6:00 AM.