The Time Is Right

The data and trends I have seen over the last several  months suggest that the St. Charles IL and Geneva IL real estate markets are close to hitting the “bottom,” unless something else happens to throw the economy into a tailspin.  I think the next year or two will offer one of the greatest opportunities to buy a home in our lifetime. There are many basic reasons for this fabulous opportunity:

Home prices have already dropped anywhere from 25% to 39% in St. Charles and Geneva since the 2006 peak, which is a huge discount on purchase prices.  Are ALL home prices done falling?  The answer is no.  However, we are starting to see signs of stabilized pricing and the sales prices are most much closer to the asking price (if priced properly).  In some areas of St. Charles and Geneva, prices are starting to rise.  Sometimes you can wait too long for the prefect deal, the perfect house, and the perfect mortgage rate to all come together.

Well priced homes are starting to sell in a much shorter time period and, in some cases, generating multiple offers.   This is occurring due to the fact that more sellers, banks, and relocation companies have finally adapted to this market. As sellers, buyers, and banks have become more realistic in their expectations, we are seeing huge drops in inventory levels and homes are getting “snapped up” and closing in shorter time periods.   For example, year to date in Geneva  there are 330 homes sold which is up 29% from last year’s 254 homes sold.  The Geneva real estate market has been so strong (even November was a good month),  that 30 homes are currently under contract compared to last November’s 20 homes.  The St. Charles real estate market has seen even higher growth.  The number of homes sold this November was a whopping 55–compared to last November’s 28, which is a 96.4% increase.   These encouraging statistics, in turn, create a higher degree of optimism and positive market sentiment.

I think the biggest reason, combined with lower more realistic prices, to consider buying currently are these historically low rates. A  30 year fixed rate mortgage is  floating somewhat between 3.4%  and upwards depending on many factors in the buyers’ profile.  In August of 2006, the rates were at 6.88%, which did not allow buyers to purchase nearly as much home for their money.  As we have seen numerous times before, rates can be explosive and will not stay at this level forever.

There are more reasons to start thinking about buying now than just the ones mentioned above.  Here are a few other  examples that might help you think about buying this upcoming year or risk paying more in the future.

1.  Increased purchasing power

Current home buyers are getting “more home for their housing dollars spent.”  The average 30-year fixed rate mortgage has fallen  to 3.50% this year, which is an all-time low.  As a result of these falling rates, current home buyers have 20% more purchasing power than they did in 2011.

The favorable, impressive rise in purchasing power is one of the main reasons why home ownership is 40-45% less expensive than renting in the United States. Low rates will not last forever, and as the economy continues to recovery and rebound, low mortgage rates will continue to creep upwards.

2.  Less inventory with more buyers in 2013

As I discussed in my St. Charles IL Real Estate Trends For August 2012 blog more homes are selling.  There was a 40.9% increase in the number of contracts in August 2012 compared  to August 2011.

The National Association of Home Builders reports builder optimism at 6-year high. However, the interior supplies, drywall, lumber, etc., have risen and will continue to rise somewhat. New construction will be more expensive to build which adds “fuel to the fire” for buying an existing home. Higher end buyers will pay more to get exactly what they want and the higher quality.

The old adage of “supply and demand,” will be in play as more more buyers enter the market and inventory levels are lower which causes the home prices  to rise. Median prices are up in many U.S. cities and with lesser inventory will probably drift upwards in 2013. With banks coming to grips with shorter times for short sales and more willingness to circumvent foreclosures, less foreclosure inventory will be available in future.

Maximize your buying opportunity in 2013

As 2013 begins, there seems to be a strong housing market as inventory has been greatly reduced and the mortgage rates are continuing to remain low and stable. Since the Fiscal Cliff has currently been avoided and the economy continues to improve, this Spring market of 2013 may be one of the best times to purchase a new home.  Please contact me if you are thinking of moving and or have questions concerning the process.

Homes sold in 2012

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