Today the Illinois Association of REALTORS® released its third quarter housing report for sales totals and the median home sale price for combined the months of July, August and September. The tax credit effect is evident in this period as homebuyers sped up their purchases to meet the deadline of April 30 followed by a significant pause in the market.
Year-to-date, Illinois home sales are stronger than last year’s January through September totals: up 4.9% statewide and up 10.5% in the nine-county Chicagoland region.
What will the future hold for the housing market? Jobs and consumer confidence hold the key.
University of Illinois economist Dr. Geoff Hewings has been reporting this inextricable link between jobs and housing for over a year now, and the Illinois housing market forecast he prepares as director of the Regional Economics Applications Laboratory points to these facts:
“Since the beginning of the recession in December 2007 Illinois has added jobs in eight months and suffered declines in 24. If account is taken of population (and thus the labor force growth), Illinois would need to add 450,600 more jobs to put it in a comparable position to the last peak level recorded in November 2000.”
In September Illinois added +8,600 jobs; year-to-date +50,700 private sector jobs, according to the Illinois Department of Employment Security (IDES). Where are most of the jobs coming from? Says IDES: Trade, Transportation & Utilities; Educational and Health Services; and Financial Activities. On a positive note, Illinois has added manufacturing jobs for seven consecutive months.
Still, the Illinois unemployment rate was 9.9% in September, higher than the national rate of 9.6%.
“The broader economy is showing positive signs, with businesses enjoying strong profits, sitting on huge cash reserves, and even adding jobs,” said economist Lawrence Yun, speaking at the National Association of REALTORS® Conference last week in New Orleans. “But for the positive trend to continue, businesses will have to start spending some of their cash to fuel job growth at a far greater pace than they’re doing now. Currently, businesses are adding jobs at a pace of about 100,000 a month. That needs to grow to about 400,000 a month for unemployment to start shrinking.”
Yun added: “The scenario will be far more negative if businesses continue to sit on their cash.”