If the $11,000 house for sale at 1031 N. Fourth St. is any indication, the fruit of Springfield’s housing market is ripe for the picking.
“Now is a very good time to invest in a house,” says Linda Maier, a realtor with The Real Estate Firm in Springfield. “Interest rates are low right now, and Springfield has a high inventory and good selection of homes.”
Listed at $11,330, the Queen Anne-style “shotgun” house sits near other houses at more realistic prices ranging from $49,000 to $75,000. Even though the house at 1031 N. Fourth St. is somewhat of an aberration – it has mold and plumbing problems that have prompted the city to prohibit its occupancy – it remains a good illustration of the low housing prices that make Springfield one of the top 25 cities for affordable housing in the United States.
One measure of affordability is the median home price, which depicts the middle of the housing price bell curve – half of home prices are below the median and half are above it. The median home price in Springfield for 2009 was $109,000, according to the Capital Area Association of Realtors (CAAR), a 4.8 percent increase from the 2008 median home price of $104,000. While Springfield’s median price dipped to $102,000 in the first quarter of 2010, CAAR says, the number of homes sold increased by 6.8 percent, from 649 in the first quarter of 2009 to 693 in the first quarter of 2010.
The median price in Springfield remains well below the $146,400 median for the entire Midwest, according to the National Association of Realtors (NAR). The Midwest is already the most affordable region in the U.S. for homes, NAR says, and Springfield’s median price is less than half that of the historically high-priced Northeast region, with a median of $243,000.
Housing supply in Springfield is high, Maier says, though CAAR says the time those houses spend on the market is decreasing. Maier says there are just over 1,600 residential properties for sale in and around Springfield, a decrease from the roughly 2,000 homes on the market at this time last year. The number of days a house stays on the market, which CAAR calls “perhaps the best indicator of the true market condition,” has decreased to 105 from 124 during the same time last year.
Additionally, mortgage interest rates are currently low compared with rates from the early 2000s, when the housing boom was still on the upswing. According to data from the Federal Home Loan Mortgage Corporation (Freddie Mac), the national average mortgage interest rate for a 30-year fixed-rate mortgage on June 3 was 4.79 percent, almost two percentage points below the June 2006 rate of 6.68 percent. That means home buyers who take mortgages now will pay less in interest charges for the duration of their loan.
The city’s recently-released 2010-2014 Consolidated Plan for economic development describes Springfield’s housing market as being partially isolated from the tough economic conditions in housing seen elsewhere.
“Whereas there has been a negligible increase in foreclosures, home sales have remained fairly constant during the recent turbulent economic period,” the plan notes. “Sound lending practices and a reluctance to participate in sub-prime programs by local banks and lending institutions avoided a housing sector meltdown experienced by other communities. Likewise, wholesale real estate speculation was not a common practice in this region thus allowing the market to remain relatively stable.”
“I’m a firm believer that real estate is an excellent investment,” Maier says. “I think we got sidetracked for awhile, using our homes like ATM machines, cranking out equity without putting anything back in, but I still believe that in good times and bad times, real estate is one of your best investments.”
Contact Patrick Yeagle at pyeagle@illinoistimes.com.
Dear Mr. Yeagle, I have read your article with as much interest with which I have viewed many other such articles, both in print media, and on the television. With this in mind, I have a question, which I hope you will respond to, in a follow-up article, in the Illinois Times.
Sure, housing prices are at all-time LOWS, B-U-T, where is whats left of the working class supposed to FIND the MONEY, to spend,spend,spend, and buy, buy, buy, when America is STILL losing high-paying jobs, by the boat-load?
Why do you think that housing is becoming so cheap? Could it be that this is because of people LOSING jobs, and this leads to foreclosure? Couldn't this be a primary reason why Mortgage rates are so low? Banks thought it would be "cool" to foreclose, ohn overdue mortgages. The banks thought that it would be so easy to re-sell these homes, to other working class people.
Well, guess what, now that Silicon Valley has become the latest large employer to begin MASSIVE lay-off's, banks are becoming "stuck", with so many foreclosed homes, thanks to this new Depression ( I just call it like it is) that banks have found that they almost have to GIVE homes away.
Sir, I know that it is both painful, and UN-American, to speak the truth, about the economy, and that it is better to say "Recovery is just around the corner" (whoops, thats what they said, during the last depression). The simple fact is that, until people begin to see that the business community is taking its ressponsibility, to CREATE jobs, rather than destroy jobs, I just dont see anyone buying homes, cars, or other items.
Right now, the main worry, of the American working class, is "Will I have FOOD, for my family, next week?" But, hey, dont believe me. Run a poll, and see for yourself. Ask the public if they are willing to invest their savings in property, while they dont know if they will have a job, next week, or food, for the next two weeks.
P.S.: Please thank the publisher, of Illinois Times, for making such an effort N=-O-T to print my Letter to the Editor, from last week. It was just an expansion on the worthy article, which you wrote, about Springfield Illinois becoming more Bicycle Friendly. I really appreciated Illinois Times censorship, in declining to publish my letter. It shows how truly UN-Biased that Illinois Times is.
Respectfully, Norman Hinderliter 1151 N. 8th Street # 1008 Springfield, Il. 62702 (217) 528-9592