With demand exceeding supply in the Peoria-area real estate market for several months, the cost of buying a new home continues to increase.
But Jason Catton, president of the Peoria Area Association of Realtors (PAAR), says concerns that some buyers will be priced out of the market are offset by low interest rates.
“For example, take a home in the city of Peoria that maybe three years ago was worth $100,000 and now it's selling for $120,000. There'll be about an $80 mortgage payment difference, on a conventional note at 3%, for that monthly payment,” said Catton.
“So I feel like in some cases, it will price some buyers out, but potentially not all of them because the interest rates have offset that. If we go back to three years ago, even a lower sales price would still result in about the same amount of payment, just because the interest rates were higher then.”
Catton said the area inventory is the lowest since PAAR started keeping track in 2008, with about 400 single-family homes currently listed for sale in Peoria County.
“We're basically at like 1.5 months’ supply, and we would say a balanced market would be around six months’ supply,” he said. “So over six months’ supply, you lean into that buyer's market, and under six months’ supply (it) becomes a seller's market. We're getting inventory, but it's selling and so we're just not saturated with listings like we have been in the past.”
While figures for the second quarter of 2021 are not yet available, first-quarter home sales were up 15% over the same period last year. However, 2020 sales rebounded in the final three quarters for a record year despite the COVID-19 pandemic.
“It’s slowed down a little; we may be at the peak, but it's really hard to tell. Last year, we had a slower first quarter because of COVID, and then it just shot off,” said Catton. “We're hitting pretty accurately the same numbers as we were last year. If you go from June 2020 to May 2021, the average number of closings in our region is about 620 homes per month. So you know those are incredible numbers.”
