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Nobody Asked Me But… Is Rockford Affordable?

By Dennis Sweeney, Executive Vice President of the HBA of Rockford

Affordability starts with the cost of land. This market starts with that positive advantage.

The median home list price in Rockford is $152K, and 86.5% of homes are priced below $250K. The condition of these “affordable” houses may be why they are so affordable. Buy existing for under $250K, but then spend $50K more to clean it up and make needed repairs. That’s the rest of the story. One reason houses here are more affordable is because property taxes are so high, which keeps home prices down. If buyers could transfer $100, even $50, from the property tax portion of their monthly payments to the principal and interest portion of their payments, they could purchase more houses, new and existing, and they would.

What puts the Rockford market in a better, positive light is that it is a city with good infrastructure and more robust business and manufacturing economic activity than Flint, MI, and Youngstown, OH. I have been to Youngstown, OH, a couple of times for college football games. Lincoln Ave. in Youngstown is similar to Harlem Blvd. and National Ave. in Rockford. The last time I was there 2006-2007, many of the houses on Lincoln Ave. had plywood covering their windows and doors. That is a depressing sight, leaves a lasting impression, and definitely pulls down the cost of what was once very nice housing. It hasn’t gotten that bad here yet.

There are many elements to our affordability. Such as the previously referred-to property taxes. Which makes people from out of state arrive thinking that they can buy a $250K house. But when they see the property tax bill, they have to change their home buying budget. That $250K deal comes with an asterisk and some important small print.

Illinois is losing its population. Fewer people means less demand for houses, which creates lower prices. The aging population is often in a mortgage-free home, and if they do sell, it’s to move to a friendlier retirement state for weather and taxes, or into a retirement facility.

How these market factors balance out impacts our affordability.

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Nobody Asked Me But… Housing Regulations Create Market Dysfunction

By Dennis Sweeney, Executive Vice President of HBA of Rockford

The United States boasts of its free market economy which encourages and stimulates innovation, competition and market driven efficiencies were supply meets demand. This market driven economy was very successful in the roaring 80’ and 90’s for housing production. The Rockford, IL housing market was an excellent example of this competition as it was one of the most affordable housing markets in the entire nation while producing 1,000’s of homes each year by 100’s of private contractors for first time new home buyers up to executive new home buyers. There are Parade of Homes plan books to prove it.

The growing costs of government regulations and fees has created a dysfunctional housing policy “ax knot” which is going to be very difficult to untie. Sometimes the only way to undo it is with an ax.

Here is the short list of regulation grievances through the years starting with school impact fees, excessive connection fees, land use and zoning requirements, septic system requirements, and environmentally driven federal building code mandates (mandatory EV charging station wiring), are some of the most costly. All of these, combine to push the cost of new housing higher, dampening demand, and then, the lack of new housing supply, pushes the cost of existing housing higher. Winnebago County property owners received their new property value assessments last week. The cost of housing is going up.

As has been pointed out in previous articles the past few weeks, the United States is 6.5 million housing units behind household formations. This lack of housing supply for the housing demand should be met by the housing industry in the market place because there is money to be made. However, it has become apparent that the housing industry is not confident that it can profitably build those needed housing units where they are needed. Uncertainty has a dampening effect on home building.

Which brings me to the article on page 2 that the FHFA is considering rent regulations and controls to keep rents affordable. Given the history of rent control policies at the national and local levels, it’s difficult to understand how they expect this to be the solution for solving the most pressing housing problem – not enough housing units. The uncertainty in the market and the regulatory costs have led us into this policy “ax knot”. Rent controls are not going to encourage the construction of sorely needed housing units that would be impacted by such a policy.

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Housing starts: Construction Numbers Slip in June After a Bullish May

By: Gabriella Cruz-Martinez

Housing starts, which include new single- and multi-family units, decreased to a seasonally adjusted annual rate of 1.434 million units in June, according to the Census Bureau, down 8% from May’s revised rate of 1.559 million units. That was 8.1% below a year ago and under the 1.480 million units economists had predicted.

New construction was up a whopping 21.7% in May over April.

Permits to build were at an annualized rate of 1.440 million units in June, 3.7% below May’s revised rate of 1.496 million units, with modest increases in applications on the single-family and multi-family sides. The figure came in lower than the expectation of 1.500 million.

The shortage of previously owned homes for sale has given homebuilders an edge in today’s market, as they’ve continued to ramp up construction of new units in recent months. But that may not last.

Rising costs of imported raw materials such as aluminum, softwood lumber, and steel could cause delays in new builds, the National Association of Home Builders (NAHB) found.

“The lack of resale inventory means prospective home buyers who have not been priced out of the market continue to seek out new construction in greater numbers,” NAHB chief economist Robert Dietz wrote in his Eye on Housing blog.

Single-family housing starts in June dropped to a rate of 935,000, 7% below May’s revised estimate of 1,005,000. On the multi-family side, starts in June were 482,000, also down from approximately 624,000 from the month prior.

At the same time, building permits for single-family home construction rose to a seasonally adjusted annual rate of 922,000, up 2.2% from May’s revised rate of 902,000.

Building permits for multi-family homes were at a rate of 467,000 in June, down from approximately 542,000 the previous month.

New construction has become a larger part of today’s housing market. More than a 33% of homes on the market this spring were new construction, the NAHB estimated. That share is historically 13%.

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Don’t Get Scammed: Hire a Qualified Contractor

By Dennis Sweeny, Executive Vice President of HBA Rockford

There are hundreds of legitimate, ethical contractors in business around Northern Illinois. Unfortunately, there are also scam artists who pose as legitimate contractors. These “fly-by-night” operators often show up in communities impacted by natural disasters to scam distressed home owners into paying for shoddy repairs or work that they will never show up to perform, or, perform poorly and then disappear.

Here are some warning signs to look out for:

  • Doesn’t have license, if required, and insurance. All professional contractors should be insured and able to show their certificate proving such insurance. Although all states do not require licensing, contractors in states requiring licenses should have it and be able to provide a copy. Roofing contractors are licensed in Illinois.
  • Asks you to sign anything before you’ve hired them. If they want you to sign an “estimate” or “authorization” before you’ve made the decision to hire the contractor, look out. They may be trying to get you to sign what is an actual binding contract.
  • Doesn’t write contracts. Professionals have clear contracts that outline the job, process, the cost, and helps clarify how problems will be managed. If you don’t have a contract, you are not protected when something goes wrong. Don’t hire anyone who tells you a contract “won’t be necessary.”
  • Requires cash or payment in full before starting the job. Shady contractors demand cash and then run with the money. Many home owners have been stranded by paying in full up front. A deposit towards materials is common, but only pay it once you have a contract signed by both you and the contractor. It’s also suspect you’re asked to pay cash to a salesperson instead of a check or money order to a company.
  • Vastly underbids all other contractors. They may have the best price, but that doesn’t guarantee the best work. Such contractors may cut costs on quality, which can end up costing you more when you have to have the substandard work redone.
  • Offers “special” pricing. If you’re told you’ve been “chosen” as a demonstration project at a special, low price, or you’re told a low price is good only if you sign a contract today.
  • Cannot provide customer references. Professional contractors should have current references they can provide from current and past clients — and you should be able to reach those references, not just an answering machine.
  • Difficulty contacting the contractor. Professionals have a physical office, mailing address, phone, and email. They should respond to your queries in a timely manner. Make sure you can verify the contractor’s business address.
  • Tells you to obtain the building or remodeling permits. Professional contractors go to the city or county offices and get the permits for their work themselves. Asking the home owner to do it is a sign that they are not a legitimate contractor.

Do your research and choose someone you feel comfortable with. If your city or state requires contractors to be licensed, look them up on the licensing website even if you’ve seen a piece of paper that looks like a license. Verify they don’t have a record of consumer complaints lodged with your local Better Business Bureau. You can also call the Home Builders Association of Rockford, 815 962-1148, for a list of their member contractors in your area.

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What Past Recessions Tell Us About the Housing Market

By: Keeping Current Matters

It doesn’t matter if you’re someone who closely follows the economy or not, chances are you’ve heard whispers of an upcoming recession. Economic conditions are determined by a broad range of factors, so rather than explaining them each in depth, let’s lean on the experts and what history tells us to see what could lie ahead. As Greg McBride, Chief Financial Analyst at Bankratesays:

“Two-in-three economists are forecasting a recession in 2023 . . .”

As talk about a potential recession grows, you may be wondering what a recession could mean for the housing market. Here’s a look at the historical data to show what happened in real estate during previous recessions to help prove why you shouldn’t be afraid of what a recession could mean for the housing market today.

A Recession Doesn’t Mean Falling Home Prices

To show that home prices don’t fall every time there’s a recession, it helps to turn to historical data. As the graph below illustrates, looking at recessions going all the way back to 1980, home prices appreciated in four of the last six of them. So historically, when the economy slows down, it doesn’t mean home values will always fall.

What Past Recessions Tell Us About the Housing Market | Keeping Current Matters

Most people remember the housing crisis in 2008 (the larger of the two red bars in the graph above) and think another recession would be a repeat of what happened to housing then. But today’s housing market isn’t about to crash because the fundamentals of the market are different than they were in 2008. According to experts, home prices will vary by market and may go up or down depending on the local area. But the average of their 2023 forecasts shows prices will net neutral nationwide, not fall drastically like they did in 2008.

A Recession Means Falling Mortgage Rates

Research also helps paint the picture of how a recession could impact the cost of financing a home. As the graph below shows, historically, each time the economy slowed down, mortgage rates decreased.

What Past Recessions Tell Us About the Housing Market | Keeping Current Matters

Fortune explains mortgage rates typically fall during an economic slowdown:

Over the past five recessions, mortgage rates have fallen an average of 1.8 percentage points from the peak seen during the recession to the trough. And in many cases, they continued to fall after the fact as it takes some time to turn things around even when the recession is technically over.”

In 2023, market experts say mortgage rates will likely stabilize below the peak we saw last year. That’s because mortgage rates tend to respond to inflation. And early signs show inflation is starting to cool. If inflation continues to ease, rates may fall a bit more, but the days of 3% are likely behind us.

The big takeaway is you don’t need to fear the word recession when it comes to housing. In fact, experts say a recession would be mild and housing would play a key role in a quick economic rebound. As the 2022 CEO Outlook from KPMG, says:

“Global CEOs see a ‘mild and short’ recession, yet optimistic about global economy over 3-year horizon . . .

 More than 8 out of 10 anticipate a recession over the next 12 months, with more than half expecting it to be mild and short.”

Bottom Line 

While history doesn’t always repeat itself, we can learn from the past. According to historical data, in most recessions, home values have appreciated and mortgage rates have declined.

If you’re thinking about buying or selling a home this year, you can make the best decision by working with a trusted real estate professional. That way, you have expert advice on what’s happening in the housing market and what that means for your homeownership goals.

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No One is Talking About the Elephant in the Room : Energy Code Requirements


By Dennis Sweeney, Executive Vice president

HBA of the Greater Rockford Area

I read an article about adaptive office building reuse, and it caught my attention because 1) our members have done similar and related (school) reuse projects in Rockford, and 2) it mentioned building codes as an obstacle to affordable residential conversions, although it only mentions one requirement—the bedroom window.

Over the past two decades, the once-local residential building code has become a national code driven by the Model Energy Code and green energy and zero carbon footprint policy objectives. As a result, market forces for energy consumption and conservation have been replaced by energy consumption and savings code mandates.


The first such mandate that had an impact on my thinking about this was when the ARC’s Great Home Give Away raffle house had to add insulation to the interior foundation walls, resulting in insulation and installation costs that were not budgeted for. Then there are the three air exchanges per hour mandate for new homes. (With pressure to lower it in every code cycle) There’s pressure to get a certificate of occupancy, requiring houses to be so airtight that you have to pull in outside air to operate modern gas furnaces and water heaters, appliances that will be on the radar to be eliminated as carbon fuel users.

This air exchange requirement has made the traditional wood burning fireplace obsolete. There may eventually be an energy code requirement to mandate their conversion to a ventless fireplace as a condition of a housing sale. This would be an energy version of a clear water inspection.


Finally, the excessive insulation requirements result in increased structural building costs due to the extra volume of insulation product. There is a lack of new insulation technology that would achieve the requirements with less product. HBAR member Bill Carlson of Carlson Roofing commented to me, “We’re making money the new fashion way, government mandates.”

I have no quarrel with those who want to build a zero-carbon footprint house, and neither will the builder. The issue is that they are mandating everyone must do the same. With the amount of known natural gas reserves, it makes no economic sense to impose this in the United States. Listen to the builders who have been in business, survived the recessions, and built hundreds of new homes. They know what they are doing and how to give buyers the best, affordable, energy-efficient product for their housing dollar. Then if you want to, you can always pay for more.

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Top 5 New Year’s Resolutions for Your Home

By Dennis Sweeney,
Executive Vice President HBA of Rockford

Top 5 New Year’s Resolutions for Your Home

The beginning of 2023 is the perfect time to start planning for a home project. To keep your “castle” comfortable, attractive, and functioning correctly, it’s essential to keep up with home maintenance. The refresh and clean-up can be fun and personally rewarding. Here are a few New Year’s resolutions for your home.

Add Space to Increase Your Comfort.

After spending more time at home during the pandemic, many home owners began to reevaluate their living spaces and want more of it. According to the National Association of Home Builders recent analysis of U.S. Census data, the average size of a new single-family home is 2,506 square feet. If you’re ready to expand your space, or build a new home, contact the HBA of the Greater Rockford Area, [email protected], (815) 962-1148 to find an experienced builder or remodeler. A residential construction industry professional can guide the feasibility of your project starting with the estimates, zoning, building codes and the permitting process to final completion.

Refresh Your Floors.

Taking steps to refresh your home in the new year doesn’t always require a significant renovation. One way to liven up your living space is to replace your floors. Style and décor aren’t the only factors to consider when selecting new floors. Other features you’ll want to consider when replacing the floors in your home are durability, the amount of moisture in the area of your home you plan to refresh, and maintenance. Connect with a professional remodeler to help you evaluate what works best for your home.

Spruce Up Your Landscaping.

A well-manicured front lawn can make all the difference in beautifying your home’s exterior. If your yard needs attention, start with a basic clean-up. Try pruning trees, trimming shrubs, and removing weeds. Once your yard is cleared, consider planting a tree or adding flower beds for a fresh look this year.

Increase Your Energy Efficiency.

There are a variety of ways to reduce energy consumption in your home. One step is replacing heating, cooling, or water heaters with more energy-efficient units. If your appliances are new or energy-efficient, remember to do regular maintenance so they can run optimally. Installing drapes and shades on windows is an easy and low-cost way to regulate the temperatures in your home.

Declutter Your Home.

Another year has gone by, so you may have accumulated more items in your home. By decluttering your home, you may find that you have the space you need. Experts recommend clearing your home room by room to avoid feeling overwhelmed. To help manage what stays and what goes, sort items by type: toss, keep, reuse, repair, recycle, and donate.

For more information about home repairs, renovations, and new construction, contact the HBA of the Greater Rockford Area.

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Inflation Continues to Cool in November Except for Housing

By Fan-Yu Kuo ,
Economist at National Association of Home Builders
December 13th, 2022

Consumer prices in November saw the smallest year-over-year gain since December 2021. While still elevated, inflation
experienced the second month below an 8% annual growth rate since February 2022. However, the shelter index continued to rise at an accelerated pace and more than offset decreases in energy indexes. Shelter inflation will be primarily tempered in the future by increased housing supply.

As inflation appears to have peaked and continues to slow, this may ease pressure on the Fed to maintain a more aggressive monetary policy. The Bureau of Labor Statistics (BLS) reported that the Consumer Price Index (CPI) rose by 0.1% in November on a seasonally adjusted basis, following an increase of 0.4% in October. The price index for a broad set of energy sources fell by 1.6% in November as the gasoline index (-2.0%), the natural gas index (-3.5%), and the electricity index (-0.2%) all declined.

Excluding the volatile food and energy components, the “core” CPI increased by 0.2% in November, following an increase of 0.3% in October. This is the smallest monthly increase since August 2021. Meanwhile, the food index increased by 0.5% in November, with the food index at home also rising 0.5%.


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8 Tips for Hiring a Contractor

By Dennis Sweeney,
Executive Vice President HBA of Rockford

1. Check out a contractor’s work and their references.

Talk to people who own homes built or remodeled by the builder. Word of mouth is also important. Talk to people in your church, service clubs, etc. ask if they have had a similar project completed to their satisfaction and who they hired. Remember there is a difference between knowing someone who does work, and, having that work satisfactorily done.

2. Check insurance and license information.

Ask the builder what kind of insurance they carry, including liability and workers’ compensation, ask for their certificate of insurance and verify with the insurance company that the policy is still in effect. This is important if you already own the property being built on or being remodeled. Building contractors are not licensed in Illinois; electrical contractors are licensed in Rockford; plumbers and roofers are licensed by the State of Illinois.

3. Know who will be working on your house.

Find out who will be in charge on the job site and meet with them before the job starts. Find out which subcontractors will be on the job. Ask how long they have worked with the builder.

4. Establish good communication

The builder should be available to answer questions before, during, and after construction. Ask the builder how you get in touch with them day or night and the best time to contact.

5. Demand thorough written bids and contracts.

Each bid should specify the materials involved, and, the cost to complete major phases of the project corresponding to project payouts. Compare the bids based on what each offers in terms of material quality – not just the price. A builder should be able to explain to you why a bid is higher or lower than another. Make sure you understand the contract; pay a lawyer to review it if you have reservations. Any changes to the contract should be in writing, dated and initialed, by you and the contractor.

6. Set up a schedule of payments based on stages of completion.

This should be part of the contract. If you have a mortgage, then the title company or mortgage company can make these payments for you and verify that the work has been completed. If it is a remodeling project that you are paying for withhold final payment until after the final building inspections are completed and the terms of the contract have been fulfilled.

7. Make sure all permits are obtained and a building inspector approves the final project.

The contract should specify that the contractor is responsible for obtaining all necessary building permits. Building inspectors work for the property owners and with the builders to protect the health, safety, and welfare of the home owner and the community. Building permits and inspections are your insurance policy that the project is built to the standard established in the building code.

8. Find out what service the builder provides after construction ends.

Read the contract warranty language. Ask the builder how you properly document warranty service requests to the company, and, the policy for responding to your request. Find out who will do the warranty repairs. In the real world, things will happen that need to be fixed. It’s how and when they are fixed that is important.

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Nobody Asked Me But… It’s a Catch-22

By Dennis Sweeney,
Executive Vice President HBA of Rockford

Catch-22, by Joseph Heller, a WWII bombardier, is a satirical war novel examining the absurdity of war and military life through the experiences of numerous characters attempting to maintain their sanity while fulfilling their service requirements so that they may return home. The title refers to a fictional bureaucratic stipulation that embodies illogical and immoral reasoning, which has become associated with such policies since the publication of Catch-22 in 1961.

Here is the current housing situation. As a result of the federal spending to mitigate the economic impacts of the COVID pandemic, inflation has ballooned. To mitigate the impact of this inflation and reduce its long-term impact on the economy, the Federal Reserve is raising interest rates. As a result, 30-year mortgages are now over 7.00%, and housing sales are plummeting. To counter this, the housing industry is lobbying the federal government for support to build houses, and one federal response is to spend more money. That is a catch-22.