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Peoria area real estate market sees one of its best 3rd quarters ever, but it's still a 15% dropoff from last year

Home Sales
Elaine Thompson/AP
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AP
A "For Sale" sign stands in front of a home in the process of being sold.

Home sales in the Peoria area during the third quarter fell 15.2% compared to the same period a year ago, but Peoria Area Association of Realtors (PARR) president Robin Simpson says that figure is a little misleading.

“Last year was historically high. So, when you look back, we are still at record high numbers,” said Simpson, noting this third quarter ranks third in PAAR history behind only the past two years. “But last year, we had a higher inventory than we do now. So, some of the lack of sales is due to there's just not as many homes available.”

221101 PAAR Simpson 1.jpg
Joe Deacon
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WCBU
Robin Simpson, Peoria Area Association of Realtors president

PAAR reports 1,811 homes sold from July through September — down from a record 2,135 in 2021. Through three quarters, home sales for the year are down 14.1% from last year. Simpson said the market conditions continue to trend well for sellers.

“There is a little bit more inventory than there was in the spring of this year. So buyers are finding more homes, but still we need more listings on the market. People are out there looking for them,” she said.

While third-quarter inventory fell by 11% compared with last year, Simpson said the limited supply has remained stable lately. It’s also resulted in a 6.9% increase in the average sale price, from about $161,600 to $172,700.

“We have seen prices increase at a steady pace the last couple of years, and we're still seeing our average home sale price go up. We just need more homes to sell to fill the buyer needs,” said Simpson. “Buyers do have a little bit more on the market right now to make some choices. So, it's not as quick of pace as it was, say back in March to May of this year.”

With inflation gripping the economy, the Federal Reserve has raised interest rates five times this year. The current average rate for a 30-year mortgage stands at about 6.9%, while a 15-year term averages around 6.1%.

“We are seeing interest rates rise a bit (but) they are still historically within the normal realm of interest rates,” said Simpson. “People are having to adjust a little bit to what their money can buy, but that's not a bad thing. Sellers are making sure their homes are priced appropriately and in good condition. They're still seeing quick sales, and buyers are getting good homes for the price.”

The Peoria market seems to be doing better than Illinois as a whole. According to Illinois Realtors, statewide home sales were down 18.6% in August and 18.9% in September compared with the same months in 2021. Inventory also showed declines of 20.9% in August and 17.9% in September.

Simpson said she’s not sure when the Peoria area might start seeing a rebound of the supply of homes on the market.

“I'd love to see more new construction, and as we're dealing with supply chain issues getting better, I think we will see more new construction come into our market,” said Simpson. “People, as they're finding new homes, will sell their homes. It's just one of those (where) if you want to sell, you've got to buy — and so it keeps going round and round.”

Even with the short supply driving prices higher, she said buyers in the Peoria area are still in a good position.

“Nationally, we are still the most affordable place in the country. It's been told over and over again, this year prices have raised everywhere,” she said. “So I think we are just more getting in line with where we should be. When housing prices rose early in the 2007-08 range, we didn't see those huge raises that a lot of places did, (but) we also didn't see the huge drops. So we've just inched up to now where we need to be.”

Simpson said it’s unlikely the market will shift much in the near future.

“No one has the perfect answer, but we don't see things changing dramatically,” she said. “Everything that is coming out from the national economists and the people that look at all of the trends, expect the market to stay very stable through the second quarter of next year.”

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Contact Joe at jdeacon@ilstu.edu.