Home sales in Champaign County down
It truly is a buyer's market.
That's the fastest way to sum up Champaign County's current residential real estate market. In fact, there are 50 percent more homes on the market in Champaign and half of Piatt counties than there normally are this time of year.
While Champaign County's residential real estate market is generally insulated from the extreme ups and downs of big cities and the coasts, the local market has slowed down, but perhaps not as much as the national market.
A total of 378 houses and condominiums sold in January, February and March 2007 in Champaign County, compared to 466 in January, February and March 2006, a decrease of 18.9 percent.
But John Schumacher, president of Coldwell Banker/Devonshire Reality, who oversees 13 offices in central Illinois, said he has heard reports from agents from either coasts that residential real estate sales are down 25 to 40 percent there, he said.
The extreme winter weather in the first few months of the year may have been the culprit, at least in Champaign County.
“April is the first month [in 2007} we have seen where the number of units and the total value of the real estate we sold exceeded April of 2006,” Schumacher said.
Champaign County has seen 22 consecutive years of appreciation in the real estate market, Schumacher said.
It makes sense that the real estate bubble burst nationally. In fact, 2005 was the single best year in real estate history, Schumacher said.
Chuck Ehler, co-owner of Twin City Realty in Champaign, said he isn't sure why the market has been so slow since unemployment is low in Champaign County and interest rates are low by historical standards.
“We have had several really good years in a row and now the market is taking a breather,” he said. “It will be back and we will be ready.”
More and more people are purchasing homes at a young age, Schumacher said. He believes the market is going to recover.
“The real estate market looks very robust nationally looking into the future,” Schumacher said.
He said Champaign County's market is the same way, with more smaller family units purchasing real estate than ever before.
According to the Illinois Association of Realtors first quarter report, total home sales in the state in the first quarter of this year totaled 29,390, down 14.2 percent from 34,235 home sales in the first quarter of 2006.
The first quarter median home sale price in Illinois was $197,000, up 0.5 percent from $196,000 a year ago. The average sale price was $251,375, up 1.9 percent from $246,610 for the same period a year ago.
It's too early to measure a significant impact from tighter lending standards due to the subprime fallout, which could moderately dampen activity, according to the Illinois Association of Realtors.
The National Association of Realtors predicts sales of new homes will decrease 18 percent this year.
The time of year and weather have a huge impact on real estate sales, at least in the residential real estate market.
“Between the first of March and the end of May, we will sell approximately 40 percent of the real estate we are going to sell for the year and it's highly dependent on the weather, Schumacher said.
The heaviest time for real estate listings is in February, and buyers start coming out around March 1.
Ehler said the height of the season is the start of the elementary school year minus 30 days. Summer is a big time for home sales because most people want to get situated by August or September.
Schumacher said the season peaks around mid-May to mid-June, but Ehler said it peaks from mid-July to mid-August.
January and February are fairly quiet, but the market starts slowly picking up in February.
Ehler said, “My personal take on January is everyone is getting their credit card shock from December.”
From March to June, the market is incredibly busy, from July to Thanksgiving, it's moderate and from Thanksgiving to the first of the year, it's quiet again, Schumacher said.
Ehler said, “When people get done with their turkeys, they start Christmas shopping.”
They generally aren't interested in finding a new home then.
Commercial real estate
Unlike the residential real estate market, the commercial real estate market is not as tied to the weather and doesn't shut down as much over the holidays, said Alex Ruggieri, senior investment advisor for commercial real estate at Sperry Van Ness/Ramshaw Real Estate in Champaign.
“Between Thanksgiving and New Year's, you're lucky if you sell one house,” Ruggieri said. “In commercial real estate, it sometimes speeds up because people are trying to get year-end sales closed because of the tax consequences.”
As compared to last year, commercial real estate transactions in Champaign-Urbana and Savoy have increased in this market, which Ruggieri said is one of the best in the state.
“The activity level is blistering in commercial,” Ruggieri said. “It's just smoking. We've got transactions galore.”
Purchasing new property and building a commercial building is one option, but some companies opt to purchase an existing building and renovate it to save lots of money. While this doesn't work for some businesses like franchises, it suits other businesses well, Ruggieri said.
“There's a lot of situations where it would fit well to renovate and use an old building again, and I like to see people do it.” He said it works well because the infrastructure, including sewer, water and police protection, is already in place in existing buildings.
One example is Champaign-Urbana's Public Health District, which purchased a 100,000-square foot building at 201 Kenyon Road from Patterson Dental Supplies that also included a 400-space parking lot. Public Health spent $2.2 million to purchase the property and is spending $3 on a renovation, for a total of $5.2 million. They had been considering spending $15 million to contruct a new, smaller facility. The renovated building will have more than enough space in case the Public Health District expands programs.
There are countless other examples of old building being remodeled into new ones or being torn down completely and rebuilt. For example JSM Development Inc. of Champaign is planning to redevelop the old Denny's Cleaners site in Urbana and build a mixed-use building with 56 to 84 apartments. One Main Development, LLC, is building a 9 or 10-story, 230,000 square-foot building at the northwest corner of Neil and Church streets in downtown Champaign. The facade of the Gallery building will be preserved and included in the new building.
Champaign, Urbana and Savoy all have lots to offer prospective businesses, Ruggieri said.
“Campus is always popular, downtown Champaign is enjoying a renaissance, downtown Urbana is rapidly catching up,” he said. The Neil Street corridor that goes south from Champaign to Savoy is also popular, as is North Prospect Avenue.
“Savoy has an ardent can-do attitude. They're extremely easy to work with as far as development,” Ruggieri said. Savoy is also close to Champaign, close to campus and has lower taxes, he said.
Urbana has started to aggressive compete for commercial development, as compared to 30 years ago, Ruggieri said.
“They've shifted 180 degrees,” he said. “They're going after quality developments.”