BOURBONNAIS — Daniel and Lisa Trahan had been doing all the right things as they prepared to buy a home.
They got their credit in order, put together money for a down payment and began to explore the housing market from afar.
With all of those factors checked off, the parents of 2-year-old twins became pre-approved for a home loan and in early January set out to buy their first home.
They had no idea what they were about to encounter.
Instead of being able to negotiate the homeowner’s asking price in a downward direction, they discovered they would be required to pay above the asking price. Competition among prospective buyers was fierce.
They learned if there was a property which checked off their boxes of must-haves, they were going to have to act and act quickly. Contemplating a purchase overnight was not an option.
“I had been paying attention to the market. I could not believe how fast homes were moving,” Lisa said. “It was very competitive.”
Upon finding the first house the couple agreed would be a great home for them, they made an offer above the seller’s asking price.
They were shocked to learn they had been outbid.
They found another home they desired. This time they put in a bid at $4,000 over the asking price. They got the single-story, 1,460-square-foot property, which was built in 1976.
“If we wanted the house, we knew we had to make an offer right away,” she said. The couple took possession of the house in mid-February.
The situation the Trahans experienced has been repeated hundreds of times in Kankakee County.
To sum it up, the Kankakee County real estate market is hot. Extremely hot. Red hot.
The pandemic only caused a short-lived slowdown of the market in the spring of 2020. The market came into 2020 strong and the pandemic only caused a one- to two-month cool-down period in April and May.
Since then, real estate agents are working overtime to get anxious homebuyers into properties.
And realtors have one problem in common: There is not enough housing inventory to satisfy the home-buying demand.
While the COVID-19-induced pandemic and economic slowdown may have caused a number of industries to pump the brakes, don’t count the world of residential real estate among them.
As businesses struggled, unemployment rose, anxiety grew and uncertainty reigned, the housing market churned.
2020 was an incredible year in terms of the housing market in Kankakee County and 2021 appears to be on this same course.
“Our biggest fear was there were not enough houses to sell,” said Peter Grant, owner and managing broker for Speckman Realty, one of Kankakee County’s top real estate firms. “There were not enough available homes to put buyers in.”
Grant noted it’s not just one or two communities capturing buyers. Homes, he said, are selling quickly everywhere.
HOME PRICES RISING
According to data from the Kankakee-Iroquois-Ford Association of Realtors, the total sales volume in 2020 rose to just over $218 million in Kankakee County. In 2019, in what most would describe as a year of prosperity, the total sales was $185.5 million.
Those year-over-year numbers reflect a 17.5 percent increase in county housing sales.
Total units sold in 2019 were 1,186. In 2020, it increased to 1,274.
And home sellers are cashing in on the home buyers’ quest for a new house.
In December 2019, the median house sale price in Kankakee County was $125,000. By comparison, in December 2020, the price had risen to $163,500 — a 30.8% spike.
The average sale price in December 2019 in Kankakee County was $143,342. One year later, it was $179,068. That increase translated to a jump of 24.9 percent.
Statewide, the average sale price increased from $212,000 in 2019 to $232,000 in 2020 — a hike of 9.4 percent.
And competition is fierce, Franklin noted. She said on average a house was on the market for 61 days in December 2020. In December 2019, a buyer had a house on the market for an average of 107 days.
And to show the supply-and-demand situation, she noted in December 2019, there were 309 homes for sale. In December 2020, the inventory had been slashed by 42 percent, to 178 homes.
“Obviously we were not expecting that to happen,” noted Gina LaMore, owner and managing broker for LaMore Realty of Manteno. LaMore explained after the first two months of the pandemic — March and April — the housing market, which had been strong prior to the two months, simply took off.
“It was truly insane. My summer was just pure insanity. We were working all day long,” she said.
Like Grant, LaMore said the only obstacle is the lack of available housing.
Inventory is a problem statewide. According to the Illinois Realtors, there was an inventory of 18,928 single-family homes statewide at the end of 2020. At the conclusion of 2019, the figure was 36,797.
So what is driving such movement?
Two things. First, during the pandemic people found their homes to be smaller than what they needed due to increased use. Secondly, cheap money. Interest rates are in the low 3% range and when money is less costly to borrow, it allows buyers to raise their debt level.
A buyer who may have been thinking $150,00 to $175,000 was their ceiling, discovered they could be looking at properties in the $200,000 range.
Sue Miller, Illinois Realtors president, described 2020 as the strangest year she has experienced in 34 years as a real estate professional.
“It was the hottest market and the most unpredictable market. It was the first we as humans have had to use our homes for more than rest and shelter. We truly used it for every aspect of our lives and people discovered their homes didn’t have what we wanted,” she said.
Once it became clear the pandemic would be an extended event and many people have discovered their work situation may never return to pre-pandemic normalcy, they began seeking a home to handle this need.
And with more demand than supply, it becomes a seller’s market.
“It’s crazy across the board,” Miller said. “There is not a marketplace that is not experiencing this in some fashion.”
How long interest rates will remain low is a question many ponder, but few have a real handle on. But if it rates start to tick back up, the climb will be slow. Interest rates will remain in this historically low levels for at least the new 12 to 18 months, most believe.
“This market will remain like this through the fall,” LaMore suggested. “But it has to give.”
But until then, buyers and sellers may want to strike while the iron is hot.
“There has never been a better time to sell. People are routinely getting more than the listing price,” LaMore said. “I tell my buyers, ‘Present your biggest and best offer.’ I don’t like to be pushy, but I’ve had to be pushy.”
On the flip side, people selling their house obviously are paying more to replace the house they just sold.
Miller said this red-hot market will continue as long as home buyers outpace home sellers. Until those forces level, buyers can expect stiff competition for homes.
“Sellers are in a great position as long as it remains a seller’s market.”