Real estate market looking up in Peoria area
While the news concerning real estate in Illinois in the fourth quarter of 2011 was positive, the news in the Greater Peoria Area is even better.
The Illinois Association of REALTORS fourth quarter report for 2011 shows Illinois home sales (single family and condominiums) totaled 25,394, up 14.8 percent from 22,114 home sales in the fourth quarter of 2010.
Top 10 market
The Greater Peoria Area has also been named one of the Top 10 Markets To Watch in 2012 by Inman News. The markets chosen as the top 10 were selected because their market shows above-average price appreciation, a growing job market, a healthy rate of real estate sales in proportion to population, a high level of home affordability, low foreclosure activity, a below-average share of distressed sales and a low vacancy rate.
The Midwest and Northeast made up the majority of markets on last year’s list of Top 10 markets to watch. In 2012 the Midwest and the South dominate the list.
The Greater Peoria Area and Bloomington-Normal both made the list this year.
Envy of state
This recent finding by Inman News reflects the thoughts offered in October by First Busey Corp. Vice-chairman Ed Scharlau. At his annual economic seminar in Peoria, Scharlau said he is tired of being inundated with bad economic news.
“After reviewing the figures I think the Peoria area has the strongest economy downstate,” Scharlau said. “After doing research in preparation for this seminar I feel better knowing that there are some positive things happening.”
Scharlau said with so much negative economic news on the national front it is easy to fall into a pessimistic mood.
“We have been asking the same questions for the past two years. Will the economy continue slow growth? Will the economy stall? Will the economy have a double dip?” Scharlau said. “I think, overall, we will see growth nationally for the next couple of years, but it will be slow.”
Scharlau said some positive growth is already being seen. In the first quarter gross domestic product grew only .4 percent. In the second quarter, growth was 1.3 percent. “That reinforces that the economy is struggling to move forward,” Scharlau said.
But, challenges, he said, still lie ahead. One of the biggest, he said, is consumer confidence. “Consumer confidence nationally was at 45.4 percent in August, but fell to 45.2 percent in September. That is the lowest level since April 2009.
“Hopefully we are seeing the bottom of consumer confidence,” Scharlau said. “Consumer confidence is very important to the economy.”
Looking at Illinois’ economy Scharlau said he found good news. But, Scharlau said, the most positive outlook he found was in the Tri-County Area. Retail sales in the Tri-County Area, he said, which were down 6 percent in 2009, rebounded to 4.5 percent growth in 2010 and is estimated to grow another 3 percent in 2011 to a total of more than $4.8 billion.
Of that total, Peoria County accounts for 55 percent of retail sales. Tazewell County comes in second with 39 percent, and Woodford County accounts for 6 percent.
“The Tri-County Area is growing in retail sales,” Scharlau said. “Most counties south of I-74 are down. These figures indicate the local economy has started to rebound.”
Scharlau said another positive indicator of the Tri-County Area economy is the growing number of businesses paying sales taxes to the state. The number in 2010 grew 249 to 9,005.
“All three counties were up,” Scharlau said.
He also found good news in the local real estate picture. Scharlau said he found that while fewer homes were sold in 2010, more condominiums were sold. But, he said, one has to take into consideration that fewer homes were listed for sale in 2010. “It’s down, overall, but houses are moving. You should feel good about that,” he said.
Scharlau also said the fact that more expensive home sales (those listed for $300,000 or more) are up is a positive sign.
Scharlau said agriculture looks good statewide and locally. “Last year China started importing corn. They also buy about one quarter of all U.S. soybeans,” Scharlau said. “A lot of the soybeans grown here will be headed to China.”
Agriculture receipts for the Tri-County Area, which is estimated to be $506 million for 2010, is estimated to be $666 million in 2011. “That is $160 million more. It’s got to have a positive impact on the local economy,” Scharlau said.
Population in the Tri-County Area, he found, was also on the rise. Illinois’ population is up 3.3 percent over a decade ago. Peoria County grew 1.7 percent. Tazewell County grew 5.4 percent. Woodford County grew 9 percent.
“Many downstate counties showed a decrease. Macon County fell 3.4 percent,” Scharlau said.
“Looking at the Tri-County Area the total increase in population over the last 10 years is 13,164 for a total population of 360,552.”
Scharlau concluded that after reviewing several local economic factors, “The Peoria Area certainly has one of the strongest economies in downstate Illinois. You can take pride in knowing that most other communities in the country would be envious of your local economy.”
In Illinois the fourth quarter 2011 statewide median home sales price was $128,000, down 10.8 percent from $143,500 in fourth quarter of 2010. The median is a typical market price where half the homes sold for more, half sold for less.
“For home buyers who are feeling confident enough to re-enter the housing market, this data shows there is great opportunity for them,” said Loretta Alonzo, CRB, GRI, president of the Illinois Association of REALTORS. “Growing optimism about the economy and low interest rates generated a lot of interest in real estate in the final part of the year.”
That kind of optimism was not limited to Alonzo.
“Looking forward there is the likelihood that there will be year-over-year sales gains in the state through the first quarter of 2012,” said Dr. Geoffrey J.D. Hewings, director of the Regional Economics Applications Laboratory of the University of Illinois.
However, his optimism was not limitless. “While we are seeing the time on market for homes decline to less than 10 months, the large foreclosure inventory could create some challenges in the housing market this year,” Hewings said.