Pandemic forces a rise in the cost of buying, renting homes

Local News

CHAMPAIGN, Ill. (WCIA)– The price of homes in and around Champaign-Urbana has gone up 15% in the span of one year. Something that is pretty unusual, according to the designated managing broker of AroundCU Real Estate Company.

It remains a seller’s market, according to managing broker Mariya Vandivort, who told us her company sold more houses in June and July of 2021 than they have in those summer months in the last four years.

“It’s very hard to predict,” she added.

In comparison, the last nationwide financial crisis, the Great Recession, created a buyer’s market. That was caused by a drop in standards for banks that gave mortgages to people who probably couldn’t get them today. What’s happening now is brand new and it affects both homeowners and renters.

Why would the pandemic force a price increase?

According to Vandivort, it’s hard to know. “I think initially when things started with the pandemic, people were reluctant to put their homes on the market and the supply became very low,” she said.

A struggling supply chain slowed the construction of new homes Vandivort added, “which also helped to increase the costs of, really of, housing.”

Although, for the most part, this is about demand.

“We are still seeing multiple offers on properties, or at least I am,” Vandivort confirmed.

So, why is the demand up?

“Interest rates are very good right now,” she said, adding that does help compensate for the rise in prices.

So, why people are moving?

“People are still moving for the same reasons they did in the past,” Vandivort responded.

Rental prices are on a similar trend in the last six to eight months, according to Senior Managing Editor for Apartment Guide Brian Carberry.

“Generally the price has gone up,” he confirmed.

“So really right now everything is playing a role,” Carberry added. “…There are a lot more people renting than really would be just because the housing market is kind of crazy. People are getting into bidding wars.”

The demand differs from city to city. Apartment Guide data shows rent for a one-bedroom in Champaign went up significantly, about 16% when you look at the average prices of rent for the year of July 2020-July 2021, compared to July 2019-July 2020.

“It is becoming a more competitive market which, again, can point to the rise in some of those one bedroom prices,” Carberry said.

The cost of a two-bedroom in Champaign dropped about 3%, and Urbana’s prices were flat for the same time period.

“Which is kind of unique,” Carberry added. “It probably just points to inventory coming off and other inventory coming back on that’s priced similarly.”

Meanwhile, reports from the U.S. Consumer Financial Protection Bureau show housing insecurity has improved since March. However, the number of homeowners at least three months behind on their mortgages is nearly three times higher than before the pandemic as of June.

About 10% of borrowers are behind, according to Vandivort who estimated the rate is lower in Central Illinois.

The managing broker said the area could be turning a corner, as prices are starting to be not quite as unusually high, and houses are taking slightly longer to get off of the market. She said it’s too early to tell.

Vandivort expects the number of homes on the market will increase, at least slightly, once the state’s eviction moratorium is lifted.

The Federal Housing Administration is allowing mortgage payments to be paused or reduced in some cases through mortgage forbearance, but that is set to end on September 30.

Vandivort added, if you’re struggling, talk to your bank or lender.

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