The area housing market is whispering optimism in the new year. Prices are moving up. Inventory is balanced. Foreclosures are down. Four units in Galesburg's first new subdivision in 20 years are coming out of the ground.
The area housing market is whispering optimism in the new year. Prices are moving up. Inventory is balanced. Foreclosures are down. Four units in Galesburg's first new subdivision in 20 years are coming out of the ground.
In recent years, new home construction in west central Illinois has been dismal.
"Galesburg is turning upward. That is showing from the target market analysis," said Dena Turner, president of the West Central Chapter of Capital Area Realtors, which is the governing board for local Realtors and manages the Multiple Listing Service for the area. "Higher-end homes are trending up and foreclosures are less. Those lower numbers (foreclosures) are not bringing the market down like they used to."
The new subdivision on Lincoln Park Drive is being developed by Mark and Jeannette Kleine. The city has issued four building permits for the project and more are expected. The Kleines have contracted with Peoria Builders Inc. for the construction. Illinois Sen. Chuck Weaver is a principal in that company.
"Mark was aware of the work Peoria Builders has been doing in Peoria," Weaver said. "He and Jeannette toured our homes and then agreed to have us build similar homes at a similar price in their subdivision in Galesburg. We were excited to be involved because of the quality of his project and the great amenities Galesburg has to offer."
The project is also generating excitement among local real estate agents.
"I'm thrilled they are doing it," said Kit Wilcox, managing broker at Century 21 Tucker-Swanson in Galesburg. "We have a definite need for it, and I think it will do well. We've had some interest, and when those homes get going, I think there will be a tremendous amount of interest."
The subdivision is platted for 24 town homes and 13 single-family homes. The building lots are in the $45,000 range, the town home price is in the $225,000 range and the single-family houses in the $285,000 range. Two town homes are framed up; the foundation is dug and framing has started on two more.
"We have had a great response from buyers and have a number of homes under contract," Weaver said. "Those contracts have proven our belief that we can offer new homes that can compete with the pricing of existing homes in Galesburg. There is pressure on the market because of the lack of new home construction over the last several years. But today there is a renewed interest in the Galesburg housing market."
He added, "We have enjoyed working with Mark and Jeannette. They are smart, hardworking and honest. That is all you can ask for with regard to your customers when doing business. They are doing great things for Galesburg. We believe this is a project where the community, buyers, builders and the Kleines can be really excited."
Local officials agree, and the City of Galesburg also is invested in the project.
"It's been my position that Galesburg needs to have an inventory of newer homes to purchase, and we haven't had that for many years," said Mayor John Pritchard. "A healthy community ought to be adding new housing inventory. This is a good thing."
The subdivision wouldn't have happened without city support and incentives. It took $450,000 of infrastructure investment by the city to get the project started.
The public money came from the New Residential Infrastructure Assistance Program, a city fund earmarked for such development partnerships.
A look ahead in 2017
"Key market indicators to watch as we head into 2017 will be mortgage rates, inventory, median sale price and time on market," Turner said. "The overwhelming feeling about the prospects for residential real estate in the immediate future is optimism."
According to data provided by the Capital Area Association of Realtors:
* Inventory is the time it would take to sell all the houses on the market at the current pace. Inventory in west central Illinois is at 5.4 months, down from 5.8 months in the previous year, but in Galesburg it is tight at 4.4 months, down from five months last year.
* The median price for property in the region is $56 per square foot and unchanged from the previous year. In Galesburg, it is up $3 per square foot from last year.
* Foreclosures in west central Illinois dropped 54 percent in 2016. There were 49 foreclosure sales in 2016 compared to 107 in 2015. In Galesburg there were 14 foreclosure sales in 2016 compared to 44 sales in 2015.
Galesburg has a shortage of higher-end rental properties, and that is another promising market.
"We have a tremendous need for executive rental properties," Wilcox said. "I work a lot with the medical community. They are coming from out of town, and they want to lease for a year and take their time looking for a home. The good news for us is they end up buying because they can't find anything to lease. I had a guy from the railroad call yesterday. He doesn't want to buy because he knows he is only going to be here for a year, but he wants a nice home."
Wilcox said the Center Pointe Apartments on Home Boulevard and the new apartments downtown, some of which the Kleines are developing, are doing well for this reason.
"The railroad relocation people come and want to spend the day looking at rentals, and I may be able to find one for them to look at," Turner said. "They want pools and other amenities, and there's just nothing to show them."
Ken Springer, executive director of the Knox County Area Partnership for Economic Development, also has optimism for the market.
"I think the Kleines' project is very good for the single-family home market," he said. "Housing is important for economic development and job creation; if a company wants to come here, it is very important to have adequate housing stock."
A primary indicator is building permits issued. That number is flat, but the near future will tell if it is turning around and starts following the increasing price and sales numbers.
Housing beyond Galesburg
According to city records, Galesburg issued no single-family home building permits in 2015, but issued seven permits in 2016. Two of those permits were issued for Habitat for Humanity of Knox County projects. Four were issued to Peoria Builders for construction at the Kleines' development, and the seventh went to Ted Schieler for a new home at 444 N. Academy St.
"There hasn't been a new home start in Abingdon since 2013," said Building Inspector Mike Kirkpatrick.
Knoxville has had one new home start each year for the previous three years, each more than $200,000 in value.
There has been more activity in rural Knox County, but that has declined sharply.
County Tax Assessor Chris Gray reports that in 2014, 25 single-family home building permits were issued, and of that, 15 were valued at $200,000 or more. By 2016, the number of permits dropped to 11, and four were for projects valued more than $200,000.
In Warren County, Marcia Difuntorum of the Warren County Clerk's Office said in 2014 there were six new homes, of which four were more than $200,000 in value. Nine permits were issued in both 2015 and 2016. Of those 18 permits, 10 were for $200,000 or higher homes.
The City of Aledo in Mercer County had one permit in 2015, and that was for a $256,000 home.
