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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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Article Building Industry HBA Members

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%.

2023 Builders Scramble Golf Outing

September 18, 2023 @ 10:00 am – 7:00 pm

If you play only one golf outing this year, then this is the one for you! Make the last week of summer memorable.
Prairie View Golf Course, Byron, IL
Limit of 72 Golfers

Schedule:
10:00 AM – Registration with continental breakfast
11:00 AM – Shotgun Start
5:00 PM dinner & awards program in the Prairie View Pavilion, w/ comfortable indoor & outdoor seating & full service bar

Pricing:
Golf & Dinner Package: $95.00 per person (Includes golf and cart, breakfast, lunch, and ribeye steak dinner)
Dinner Only: $35.00 per person (Sponsors receive 1 complimentary dinner)

Several sponsorship levels available!
Hole sponsors $200
Contest sponsors $150 + $50 prize
Beverage sponsors $200
Lunch sponsors $250
Putting Contest $150 + $50 prize

Credit card payment accepted

To Register
Please contact Dennis Sweeney
(815) 962-1148
[email protected]

Prairie View Golf Course

6734 N German Church Rd
Byron, 61010 + Google Map
(815) 234-4653
View Venue Website
RSVP on Facebook

2023 Installation & Awards Banquet

January 6, 2023 @ 6:00 pm – 9:30 pm

Get the New Year off to a good start by celebrating the leadership legacy of the 7-year history of the Home Builders Association of the Greater Rockford Area at the 2023 Installation & Awards Banquet.

The cost is $50 per person, tables set for 6 or 8.
Please fill out the RSVP form by 3:30 p.m. on January 3rd.

Thank you Sponsors:
Green State Credit Union for Dinner Wine
Title Underwriters Agency for Centerpieces and Raffle

$50 Steak
$50 Chicken
$50 Pasta
$50 Fish

Home Builders Association of Rockford

(815) 962-1148

Lino’s Restaurant

5611 E State St
Rockford, Illinois 61108 United States + Google Map
(815) 397-2077
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Building Industry

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.