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The Springfield News-Sun provides unmatched coverage of the economy in Clark and Champaign counties. For this story, the paper spoke to local economic development experts, real estate agents, construction firms and others to find out whether the region’s housing market is showing signs of improving, or if concerns about the area’s economy remain.
By the numbers:
443 — Homes sold in Champaign County in 2015
$116,814 — Average sale price in Champaign County in 2015
1,295 — Homes sold in Clark County in 2015
$103,441 — Average sale price in Clark County in 2015
Source: WRIST Inc. Housing Statistics
Clark and Champaign counties have shown signs of an improved housing market — from an increase in new construction permits to the lowest foreclosure rates in more than a decade.
A rapid tanking of home prices and a tidal wave of foreclosures are largely attributed with pushing the economy into the Great Recession. So the health of the local housing market is often a barometer for the local economy.
The improving statistics are a good sign for Clark and Champaign counties, local experts said. But they also pointed to some concerns, including the rate of new foreclosure filings in Clark County ticking up again toward the end of last year. The region also has recovered from the recession more slowly than other parts of the state.
And even with home construction up, building remains well below demand in the late 1990s and early 2000s.
Still, the area’s housing market is benefiting now from low interest rates, as well as homes that often offer a better value that some other communities in the region, said Jeff Harvey, president of the Clark County Board of Realtors.
“Typically the Springfield market lags behind some of the metropolitan markets like Columbus, Cincinnati and the Dayton metro area,” Harvey said. “What we’re seeing is those other markets improve at a higher rate than our area does, people can come into our market and buy more house. It’s still a better value here. That’s probably more than anything what’s contributing toward our market.”
Local construction firms are finally seeing more demand for new homes, a market that had been stagnant for years, said Dan Kegley, president of the Building Industry Association of Clark County.
Permits were sought for 37 new residential buildings in Clark County in 2014, but that spiked to 51 last year, a roughly 38 percent increase. Residential permits also rose about 10 percent in Champaign County last year, including those for renovations.
But 15 to 20 years ago, area firms constructed closer to 200 homes annually, Kegley said, and several local builders went out of business at the height of the recession.
“There are several reasons at work, mostly the economy,” he said. “A lot of people who have wanted to build have been waiting for their existing home prices to come back up in value so that they could get a fair price for their home before before they invested in a new build.”
Home sales
Duke Level, owner of Un Mundo Cafe in downtown Springfield, bought his wife’s dream home on South Fountain Avenue last year. The home, built in 1913, had several improvements and sits on roughly an acre of land.
He first noticed the property more than four years ago but didn’t have the money needed to buy it at the time. But when he found out it was on the market again, he completed a homebuyer’s course with the Neighborhood Housing Partnership of Greater Springfield and secured a grant to cover some of the initial costs.
“That is a great resource and it was a great refresher of the process,” Level said of the NHP program.
Information from the area’s WRIST listing service shows 1,295 homes were sold in Clark County in 2015, a roughly 12 percent increase from the previous year. However, the average sale price was basically flat. Champaign County also saw a 13 percent increase in home sales between 2014 and 2015, and the average sale price rose about 10 percent.
The Federal Reserve raised its key interest rate in December for the first time since the Great Recession and mortgages rates are expected to eventually rise gradually again. But in the meantime, the low interest rates have helped encourage more home sales as the economy has recovered, Harvey said.
“The low interest rates are still our best friend,” Harvey said. “That’s probably the strength of the market right now.”
Employment has also improved, he said, which has encouraged more residents to get back into the local housing market. Harvey also pointed to the time homes have remained on the market as a positive sign.
Homes in Clark County spent an average of 130 days on the market in 2009 during the recession. That dropped to 114 days in 2014 and 96 days last year. Homes remained on the market in Champaign County an average of 135 days in both 2014 and 2015, according to the WRIST statistics.
Devin Black was living in Northridge in a home he and his family had rented for about two years. In June last year, they purchased the home from their former landlord. Black also sought assistance through the home buyers program at NHP, where staff members helped him improve his credit score and secure a Rural Housing loan from the U.S. Department of Agriculture.
“My family grew up in Northridge, my wife’s family grew up in Northridge and it was kind of the natural place we wanted to send our kids to school and live,” Black said.
Homes have been selling at various price ranges, even though inventory overall is still slightly low before the spring season hits, said Jerome Vinson, an agent for Real Estate II.
“Even though in the last couple of weeks the stock market’s been taking a dive, in the long-term people have a positive outlook on the economy, especially coming into the spring months, Vinson said.
Foreclosures
Foreclosures have also dropped in both counties, falling in Clark County last year to the lowest point this century.
Clark County saw 340 foreclosures last year, compared to more than 1,020 in 2009 near the worst of the recession, according to records from the Clark County Sheriff’s Office.
About 140 foreclosures occurred in Champaign County last year, down about 14 percent from the previous year. More than 280 foreclosures happened in 2009, according to the Champaign County Sheriff’s Office.
“The big news is because of the overall foreclosure market being down, the mortgage servicing industry has become much more attentive to consumers,” said Michael Mahon, president of HER Realtors. “That is also helping mitigate that overall foreclosure number, which we anticipate to be at to be about the same or a little bit less for 2016.”
Although foreclosures are down, the number of defaults has been on the rise, Mahon said. That figure accounts for residents who are more than 60 days behind on their mortgage payments.
That may be because lenders have shown more reluctance in recent years in filing for foreclosures because of a backlog of those properties working their way through the system. As that has eased and market conditions have improved, he said lenders are being more aggressive.
The real estate market statewide has improved in the past two years, which in most places drove up sale prices between 3 and 6 percent, Mahon said.
“Now as consumers if they are falling behind on their mortgage, they’re seeing that the real estate market has been robust and there’s not a lot of active listings on the marketplace,” Mahon said. “They’re taking advantage of putting their home on the market and cashing out their equity and kind of hitting the button and taking advantage of the overall sales prices are on the market today. That’s also helping people avoid foreclosure.”
New construction
Clark County also saw demand for new residential housing permits creep up last year.
Permits were requested for 37 new residential buildings in Clark County in 2014, but that rose to 51 permits last year. There was also a slight increase in demand for new single-family housing in Springfield, mostly in the Darby Glen development.
Residential permits in Champaign County, which included both new construction and renovations, were about flat, according to county records. There were 320 permits, including renovations, filed in 2014. Last year 290 permits were filed.
Many builders who shuttered their businesses during the Great Recession have re-opened, Kegley said, but the recovery has been slow.
“Clark County in the late 1990s and early 2000s was building 200 to 300 homes a year,” he said. “Last year was 51. So yes, local construction jobs were hurt and we lost several home builders in the process also.”
Demand for new homes has been across the board, from residents looking for their first home to others looking to move into a more expensive property, he said.
Despite the slow recovery in construction, Kegley said he is optimistic as long as the economy continues to stabilize.
“We have got a lot going for us,” he said. “We just need to push forward, work hard and recruit new business, train our work force and the rest will fall into place.”
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