The consistency in the number of home sales within the local housing market should be the envy of the state and nation. Considering that 2003, 2004, and 2005 were seller's markets, and 2006, 2007 were buyer's markets; look at the consistent number of home sales as reported by member brokers to The Capital Area Association of Realtors (CAAR) MLS:
2003 3996
2004 4005
2005 4197*
2006 4175
2007 3998
*CAAR record high
The rise in the median sale price of a home in the face of an oversupply of homes for sale defies the laws of supply and demand as witnessed below:
2003 $90,500
2004 $92,750
2005 $100,000
2006 $99,000
2007 $104,500*
*CAAR record high
The only reason 2006, and 2007 were buyer's markets was due to the record number of homes for sale. Although demand remained steady, supply skyrocketed. The number of home listings increased from 6213 in 2003 to a record 8082 in 2006, and fell slightly to 7960 in 2007.
There's more to the story from 2007. A record number of listings did not sell with the supply of homes vastly outnumbering buyers. A record 2362 home listings expired, and 1174 withdrew without a sale. There were 367 more pending contracts that failed to close than in 2006, resulting in 1554 home listings returning to the market.
The great news to begin 2008 is that interest rates fell below 6% for only the second time this decade. That should provide motivation for indecisive home buyers to purchase. Caar also reported closed home sales were up in December, however pending sales were down which will be reflected in January closings.
It may have been a struggle for home sellers in 2007 due to excessive numbers of homes for sale, however overall it was a good year in the local housing market. There are hundreds of markets that would trade places in a New York second, proving once again that real estate is local. In spite of the negative psychology within the housing market created by the media, flat job growth, incompetent state government, a tax and spend governor, and the highest interest rates in two years throughout most of the year, 2007 in Springfield Illinois turned out pretty darn good.
Just imagine how good the local housing market could have been, and would be if there were; responsible reporting in the media, there was a functional state government, and there was a governor with policies that encouraged business growth along with lower taxes; which creates jobs.
