In March, the Fed started to raise interest rates to slow down the market, reduce price growth and get a handle on inflation. Because the housing market is a huge driver for the national economy, it will have the biggest impact on inflation in the overall economy. This seems to be working on a national basis, and buyers are feeling the difference. Rates have risen from 3.25% to around 6.5% in December, and price growth has significantly slowed or flattened on a national level.
Locally, our prices have remained strong and continue to trend upward, but the number of overall sales has decreased. The 12-month average sale price for a single-family home ended the year at $227,990, an increase of 7.8%
Starting in 2023, we had a mere 205 residential homes for sale in Champaign County! This is just a few properties away from an all-time low. This does not make a home search any easier for buyers, but the positive side of low inventory is the support it provides to home values. The supply/demand balance is still strong and definitely in favor of the seller on an overall basis. (Individual neighborhoods still matter!)
There were 2584 home sales in 2022. This count is down 10.7% from the prior year but still ranks as the second-highest # of sales in a year for the Champaign County area.
Right now, we have a 1 month supply of homes. Historically, 4-5 months of supply is a balanced market, so the supply and demand balance is very tight. Over the course of 2023, I expect supply to increase, but I will be very surprised if it gets over 2.5 to 3 months.
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Where do we go from here?
We are right around the corner from the Spring market, and I fully expect it to be another strong market for sales and home values. With low inventory and strong demand, multiple offers will continue, and prices will increase.
If you have questions about your home’s value or what is happening in your neighborhood, let us know! We have a variety of free tools and reports that we can share with you whether you are a buyer, seller, or both.
