Buy? Sell? Wait? What's best in 2006?

Buy? Sell? Wait? What's best in 2006?

There's no question the last few years have been a boom time for the housing market in Champaign County.

Interest rates were at historic lows. New homes popped up to expand the fringes of Champaign, Urbana and their suburbs. "Sold" signs appeared in a matter of days after "for sale" signs. Home prices kept creeping – and leaping – upward.

"There was a desperation to people purchasing homes: 'I have to have it; I can't lose out on these interest rates!' " said Joanne Chester, an assessor in Champaign County for the last 32 years. "When interest rates go down, property values go up, and they've been going up since the late 1990s."

But will they keep going up?

Though home prices continue to rise and interest rates are still low, experts say the local housing market is slowing slightly – not like a bubble bursting, but more like a balloon letting out a little air, said Bill Craig, a RE/MAX Realtor in Champaign and board president of the Champaign County Association of Realtors.

That doesn't mean home prices – or values – are going down, but rather that homes are not increasing in value at the same pace as earlier in the decade. So home sellers might have to wait a little longer or do a little more bargaining to get their home sold.

"In the crystal ball, I think sales will be good," said David Strang, senior vice president at Busey Bank. "But I think we won't see the appreciation (that we have seen).

"It will probably be a little more of a buyer's market this year."

Jeff and Stephanie Ross are banking on finding that buyer.

Six and a half years ago, the couple moved to a spacious house in southwest Champaign, perfect for themselves and their seven kids, some of whom were still living at home. Now, their kids are almost all out of the house, and the Rosses want to downsize.

They've purchased a smaller "fixer-upper" house in rural Champaign. Shortly after Thanksgiving, they put their current home up as a "for sale by owner."

They said they're not worried about finding someone to buy the home.

"It's going to get sold; it's just a matter of when," Jeff said. "In the housing market in Champaign, because of the demand, you have a tremendous turnover."

Based on 2002-05 statistics from the Champaign County Supervisor of Assessments, average home prices have increased annually, but the percentage of increase has gone down, from a 13.5 percent rise from 2002 to 2003 to 3 percent from 2004 to 2005. During that time, the average home price in the county has gone from $121,139 to $145,901.

"We've had a very aggressive housing market," Craig said. He attributes much of that to the financially diverse and sometimes transient population the University of Illinois creates.

"The university really keeps things level," he said. "We're as cyclical as any other business, but we're not as high or as low."

Said Chester: "When places on the East Coast and West Coast would have downturns, we didn't really have that here because (the housing market) never became so overinflated."

However, local prices have increased so quickly that current homeowners, who are taxed according to property value for the prior three years, are often charged less in property tax than they should for the current value of their home, said Curt Deedrich, supervisor of assessments for Champaign County.

"We're trying to catch up to the market," Deedrich said. "Assessments are going to continue to increase for at least another year."

Expect interest rates to increase as well.

According to the Federal Home Mortgage Group, or Freddie Mac, 30-year fixed-rate mortgages fell to 5.23 percent in June 2003, the lowest rate since the organization began tracking mortgage rates in 1971.

"It really stimulated the market," Strang said. "People could afford more."

Since then, average interest rates have surpassed 6 percent in the latter months of 2005. Strang said he expects rates to go up about half a percent in the next year.

"It's all relative," he said. "The rate environment is still good ... but in comparison to a couple of years ago it seems high."

For her part, Chester remembers 18 percent interest rates and said 6 percent is still low. She said the combination of interest rates, a bustling market and smaller average plots of land have enabled many people to buy homes.

The low interest rates enabled John Lynch and his family to buy a home after years of renting.

"We just wanted to have something that would build equity," he said.

He also wanted a ranch home in southwest Champaign in his price range.

After three or four viewings, he found one. "Everything just hit it at the right time."

The Lynch family moved into its new home in July, and Lynch said he feels it only will increase in value.

"They found, I think, a good formula to enable home ownership," Chester said, "which has always been a really impor-tant part of the American dream: to own your own home and not have to pay rent."

Sections (2):News, Local
Topics (1):Education
Categories (3):News, Miscellaneous, Business

Comments

News-Gazette.com embraces discussion of both community and world issues. We welcome you to contribute your ideas, opinions and comments, but we ask that you avoid personal attacks, vulgarity and hate speech. We reserve the right to remove any comment at our discretion, and we will block repeat offenders' accounts. To post comments, you must first be a registered user, and your username will appear with any comment you post. Happy posting.

Login or register to post comments