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 If
you find yourself considering a new home, maybe now is the time to
start looking. Of course, a low price is very nice, but not the only
thing to consider when purchasing a new home. Let’s take a look at
the current housing market and see if now is the time.
What is the current state of the housing market in the United
States? What about in Illinois, or locally in Logan County? The
website Redfin has some interesting data that helps people to get an
understanding of the nationwide housing market. According to their
data, since January of 2024, the average price of a home in the
United States has hovered between $400,000 to $450,000, with the
current median price being $438,837. The number of homes for sale
has also risen fairly substantially during that time, going from
about 1.38 million for sale in January to over 1.8 million in July.
The percentage of homes for sale that drop their prices has also
risen, with 15.3 percent of them dropping the price in January to
20.6 percent doing the same in July.
The same types of data can be viewed on Redfin’s
website for the state of Illinois and the city of Lincoln. This data
shows that Illinois homes have a median price of $309,000, lower
than the median price of the nation. The number of homes for sale
has also jumped quite a bit from January to July. Also, the
percentage of homes with decreases in their price has also jumped
quite considerably, sitting at 21.3 percent in July, higher than the
national median. These numbers, as we are all aware, can be skewed
by data coming from Chicago, so let’s take a closer look at what
Redfin has to say about Lincoln.
In Lincoln, the median selling price of a house is $123,700. This,
however, is a 31.6 percent increase from the median prices last
year. Unfortunately, Redfin does not have data on the number of
homes for sale or the percentage of homes that dropped their price.
Overall, however, Redfin does give each region a competitive level
score based on data from the past three months. Out of 100, Redfin
lists Lincoln at 87, putting it in the very competitive category.
This shows readers that buying a house in Lincoln right now is a
very costly and competitive venture.
While having access to all this data can be helpful in determining
the current status of the housing market, what might be even better
is hearing from someone local, who has their finger on the pulse, as
it were. Seth Goodman, owner and real estate broker of ME Realty,
had several things to say about this topic.
When asked about the current condition of the housing market in
Logan County, Goodman described the market as “strong,” saying a
property, if it is priced right, will receive several offers.
Goodman did say the lack of existing homes for sale has “proven to
still be an issue.” When asked about the cost of houses, and whether
high interest rates have had an effect, Goodman did not think so.
Goodman stated, “prices have remained fairly consistent.” He did
share that some houses are selling above listing price since there
are not as many homes on the market. This could account for Redfin’s
claim that housing prices in Lincoln have risen about 33 percent
since last year. When asked about whether the current housing market
was a buyer’s or seller’s market, Goodman responded with “sellers
for sure.”
Goodman also gave some general advice to anyone looking to buy a
home. The two most important things to do first when looking for a
home is to contact a real estate broker and a lending institution.
Once the institution pre-approves you for a loan, this gives you a
better idea of the price range you should be looking for when
shopping for a house. Goodman also said, “if a property comes on the
market today that is of interest yet you have not done either of
these, you are likely already too late to the game!”
Speaking of lending institutions, one of the most important things
to consider when looking to take out a mortgage is the interest
rate. While interest rates are not the highest they have ever been
(in the 1980’s, they pushed past 18.5 percent), they are still
hovering around seven percent today. This is in stark contrast to
January of 2021, when the average interest rate was just over two
and a half percent, the lowest they have ever been.
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Let’s look at an example. Bankrate has a mortgage
calculator that we can plug some numbers into and see what would be
paid for a house today. According to Forbes, the average down
payment on a house in Illinois is fourteen percent. Also, according
to US Bank, the current APR (annual percentage rate) of a 30-year
mortgage is 6.133 percent. Let’s apply these numbers to the average
selling price of a house in Lincoln, according to Redfin, from
earlier ($123,700). A down payment of fourteen percent would set you
back over $17,000 but would help in keeping your monthly mortgage
payments lower for the term of the loan. With all the above
information considered, you would be paying approximately $794 a
month with all of the fees included (insurance, property taxes,
etc.) This is only a rough estimate, but if we multiply this number
by 360 (the number of monthly payments over 30 years), we see that
you will have paid $285,840 for that house. Just for context, with
no down payment, your monthly bill would shoot up to $899 per month,
with $323,640 being paid over the term of the loan.
With all these numbers in mind, buying a house can
seem like a scary thing to do at the moment. Interest rates,
however, may be on the decline soon. According to the Associated
Press, job reports (the number of jobs added month-to-month) have
been “sluggish.” This indicates the Federal Reserve could start
cutting interest rates a little here and there by the end of the
year. Now might not be the time to buy, but it could be soon. At the
end of the day, though, only you are the one who can determine
whether it is time to buy a new house. Just make sure that you have
as much information as you can before committing.
[Matt Boutcher]
Sources:
https://www.ramseysolutions.com/
real-estate/best-time-to-buy-a-house
#:~:text=Keep%20in%20mind%2C%
20winter%20is,and%20snow%20to%20
deal%20with).
https://www.redfin.com/us-housing-market
https://www.redfin.com/state/Illinois/
housing-market
https://www.redfin.com/city/11091/IL/
Lincoln/housing-market
https://money.usnews.com/loans/
mortgages/articles/historical-mortgage-rates#:~:text=From%201971%20to%20
present%2C%20the,12%2C%201981.
https://www.bankrate.com/mortgages/
mortgage-calculator/
https://www.forbes.com/advisor/mortgages/
average-down-payment-on-a-house/
https://apnews.com/article/jobs-hiring-federal-reserve-inflation-unemployment-economy-bac1b453d3873d5f23f2061344d28fd9
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