Depending on whether you have been a buyer, seller, or homeowner in the Mahomet area in the last few years, you may have discovered that the real estate market within the friendly confines of the Mahomet-Seymour School District can range from seductive to vexing. It’s all a matter of perspective.
As we kick off 2014, I want to provide you with a bit of historical perspective on the Mahomet area real estate market, as well as a look at factors that will influence the market in the new year.
The easiest way to communicate the last few years of highs and lows in the local market is with a visual aid. This graph shows closed real estate sales volume within the M-S School District for each of the last four years by month.
2010 and 2011 were both rough years, with total closed volume for both years near the $30 million mark, down sharply from the $40 million plus years in 2005, 2006, and 2007. By 2010, the real estate market pullback was evident locally, and generally speaking, the market got worse through much of 2011.
If you were trying to sell a home at the time, you might have felt like you could barely give it away, and your agent’s most oft-heard refrain was probably “price reduction.” Your agent was probably not actually possessed by the forces of evil, as you likely suspected at the time; rather, if you experienced this, it was just the reality of the market.
2012 could only be characterized as a spectacular comeback. While 2011 saw 157 homes sell at a total volume of just under $30 million, 2012 saw 253 units and nearly $60 million. When the number of closed units increases by 61 percent, while the closed volume doubles, that indicates that the average home sale price increased substantially, too.
In 2011, the average closed home price was $189,030, and the median—the price point at which half the sales were higher and half lower—was $169,900. Fast forward to 2012, and those figures moved up to $234,076 and $204,000, respectively. Those increases don’t mean that individual home values were appreciating at that rate; rather, they indicate that high-end sales had thawed out and were once again accounting for a larger share of the total transactions in the local market.
Were it not for the historical context, 2013 would look like a disappointment in comparison to 2012. Volume slipped by 18 percent, and closed units dipped by 22 percent. But consider that 2012 represented a year when a great deal of pent-up demand was unleashed, making up for the largely lost years of 2010 and 2011.
2013 was still vastly busier than the worst years when real estate licenses came with Prozac prescriptions. And 2013 represented a new high water mark for mean and median sales prices of $246,180 and $215,000, respectively. That reflected an ongoing recovery in the high-end housing market, as well as an increase in new home sales, which tend to be higher than average transaction prices.
So what about 2014? There seems to be widespread consensus that mortgage rates, which remain very attractive at the moment, will almost certainly drift higher over time as the Fed reduces its Quantitative Easing program of bond buying. This program was intended to stimulate the economy by artificially pushing down long term interest rates.
While rising rates sounds like less of a party than crazy low rates, the good news is that the rise should correspond with continued broader economic recovery. If you have a home sale in your near future, the sooner you hit the market, the more certain you can be of hitting the market while rates are still low. If you are a potential buyer on the fence, consider buying sooner than later, so long as you are reasonably confident that you’ll be in the area for the next several years.
As of this writing, the Mahomet area has a total of 71 active listings, which translates into a 4.3 month supply of inventory. A normal market—one neither biased toward buyers or sellers—is typically considered to be a six month supply. Mahomet’s current inventory is well below that, which likely bodes well for continued strengthening and recovering values through the new year.
Matt is a partner with RE/MAX Realty Associates, the area’s market leading firm with offices in Champaign, Mahomet, and Monticello. Matt is a longtime resident of Mahomet. He was the 2012 President of the Champaign County Association of REALTORS® and was the Association’s 2013 REALTOR® of the Year. All statistics are from the Champaign County Association of REALTORS®, and are deemed reliable, but are not guaranteed.
