An ongoing issue for the Rockford-area’s top-ranked real estate market: Not enough homes on the market

By Kevin Haas
Rock River Current
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ROCKFORD — There’s an ongoing problem for the real estate market that was just named the top in the country: There are too few homes for sale to meet buyer demand.

New data released Friday by the Northwest Illinois Alliance of Realtors shows that March began with a historic low number of homes on the market. There were 193 homes for sale in Boone, Winnebago and Ogle counties to start the month, two fewer than the previous record low in March 2023.

More news: Rockford ranked as country’s top housing market in new Wall Street Journal report

The low inventory has driven up prices in the three-county region the association tracks. The average sales price in March rose nearly 19% compared to March 2023. That’s an increase from $170,145 to $202,244.

That’s the largest year-over-year monthly price increase in records going back to 1998, when the group first started collecting stats on the Rockford market.  The previous record was in June 2021, when prices jumped from $146,901 in June 2020 to $176,345.

The organization said earlier this week that it would release its latest data at 3 p.m. Friday. That was before a Wall Street Journal article named the Rockford metro region the top real estate market. The low inventory of homes for sale has been an ongoing issue for Realtors for roughly two years, and it’s a major part of what is driving prices to historic highs, the group has said.

“Competitively priced homes are moving quickly, and multiple offer scenarios are commonplace due to strained inventory and buyer demand,” said Conor Brown, CEO of the Northwest Illinois Alliance of Realtors.

The inventory of homes on the market is trending down 7% through the first three months of the year. If the trend continues, this will be the 10th consecutive year in which housing inventory declined, according to the Realtors alliance.

Monthly average housing inventory

2024*: 220
2023: 282
2022: 371
2021: 424
2020: 684

*Through March

The city has tried to help alleviate the issue by incentivizing home construction. City Council and Rockford School Board members approved a program last fall that provides a three-year property tax rebate to the owners of newly built homes and other residential structures.

Building permit data shows home construction in the Rockford region never returned to its levels before the Great Recession in 2007.

There were 157 single-family home construction permits in the city of Rockford alone in 2007, the year the housing bubble burst. The highest number since then was 41 in 2019 before the pandemic took hold. There were 19 single-family home permits in 2023.

https://infogram.com/rockford-area-home-sale-prices-1h8n6m3j55lzj4x?live

Part of the issue with low inventory, Realtors have said, is that homeowners who may want to upgrade their home or move don’t want to give up historically low interest rates they previously received in exchange for today’s higher rates.

However, the start of spring home-buying season appears to show more sellers getting off the sidelines, according to the Realtors group. There were 301 new properties put on the market throughout March, the largest number in the last five years.

“Homeowners planning to sell their properties this year have been thinking about doing so for an average of two years,” Brown said. “They’re ready to take that equity they’ve seen building up in their homes and make that next move to a property that better meets their current family needs. This will be an exciting spring home buying season to watch.”

This article is by Kevin Haas. Email him at khaas@rockrivercurrent.com or follow him on X at @KevinMHaas or Instagram @thekevinhaas and Threads @thekevinhaas