“It was here, in Springfield, where North, South, East and West come together, that I was reminded of the essential decency of the American people, where I came to believe that through this decency, we build a more hopeful America.”
Barack Obama uttered those words on the footsteps of the Illinois state capitol in 2007 – a speech where the former Illinois state senator declared his candidacy for president. Back then, if Obama loved Springfield so much, he could have bought a home there for the median price of $108,000, according to National Association of Realtors data, significantly less than the 2007 U.S. median home price of $207,000.
Today, the gulf in home prices between the Springfield metropolitan area and the rest of the country looks as endless as Illinois’ prairie. The median Springfield area home sold for $143,000 in the second quarter of this year, per NAR. The U.S. median existing home price is $359,900.
In that NAR study, the Chicago-headquartered trade group analyzed home sale data in 183 markets. Springfield was the only one of those 183 to see a year-over-year home sale price decline.
In other words, at a moment in real estate history when the phrase “high demand, low inventory” is cliché…have we found the one place in America where there’s not high demand?
And is that necessarily a bad thing for local agents?
“Almost everything here,” said Michael McGee, a RE/MAX agent in the area, “is steady.”
Stuck in neutral
In its home price survey, NAR threads a needle between the markets it examines and the home sales it statistically samples.
The markets looked at are the metropolitan statistical areas as defined in 2003 by the federal Office of Management and Budget. The Springfield market — which totaled approximately 208,000 people through 2020, according to U.S. Census Bureau data – includes the city itself, the rest of Sangamon County and the much smaller Menard County.
But the homes NAR samples are not property deeds sifted through at county courthouses. They are abodes analyzed in NAR-sanctioned Multiple Listings Services, the private companies that real estate agents pay to learn what homes are for sale.
“Although NAR has made every attempt to provide reliable information,” reads an NAR primer on its median home sale study, “The MSA [metropolitan statistical areas] home price figures are based on a sample of Multiple Listings Services and are therefore subject to change based on additional data.”
Kathy Nicholson, CEO of the Capital Area Association of Realtors – Springfield’s local NAR chapter, argued that Springfield’s home sales will, indeed, change based on additional data. The central Illinois area, Nicholson explained, is going through a resorting where more local NAR chapters are entering information into a single MLS, the Realtor Multiple Listing Service.
Gay Cororaton, an NAR senior economist, does not say Springfield data is incomplete. But Cororaton notes that in the second quarter of 2020, the Springfield metropolitan area experienced an “abnormal surge in prices” with the median price rising from $131,000 in quarter one to $154,000 in quarter two, a 17% spike.
Between quarter two of 2020, then, and April through June of this year, the home price declined 6.9% to its present $143,000.
So, perhaps Springfield home prices are not quite in freefall. But they’re not joining the rest of the country in jetting upward. Zooming out to the past three years, Springfield prices inched 1.3% per NAR data. U.S. home prices soared 28% in the same period.
One reason why is that the city experiences notoriously little inward migration. Asked if he has ever seen an influx of residents, McGee of RE/MAX could not stifle a laugh, stating, “No, I would definitely say there has not been an influx.”
Homebuyers are usually “young people entering the housing market,” said Ryan McCrady, president and CEO of the Sangamon Growth Alliance headquartered in downtown Springfield, “or old people looking to downsize” – both buckets of buyers already in Sangamon County.
A more contentious problem cited by agents is Springfield’s existence as a state capitol in a state dominated by Chicago, 200 miles to the north.
“The state is as Blue as can be with the nine million folks living up in Chicagoland and making decisions for the folks downstate,” said Matt Garrison of Keller Williams in Springfield. “Property taxes are always rising, and a lot of people complain about property taxes in the state of Illinois.”
In fact, Illinois property taxes have consistently ranked as the second highest in the nation behind New Jersey, according to studies by the Tax Foundation. The amount of property taxes paid by Illinoisans depends on the yearly budget requests of municipalities and school districts, but they roughly average out to 2% of a home’s assessed value.
Not helping is that two recent occupants of Springfield’s governor’s mansion went to federal prison, and Michael Madigan – leader of the Illinois House of Representatives from 1983 to last year – is subject to a federal corruption investigation.
“Politician after politician have given this place a bad name,” McGee said. “I have three daughters in school, and if they weren’t in school, I might be looking for greener pastures in other places.”
The essential stasis
But neither McGee nor many others have left Springfield. Between 2010 and 2020, Springfield’s population declined but by less than 2% to 114,000 people. Sangamon County dropped less, from 197,000 residents to 196,000.
In Springfield, 25% of the labor force works in government, according to U.S. Department of Labor numbers, and 21% in health services.
“With government and health sectors workers here, the market has stayed relatively consistent,” McGee said.
Springfield’s biggest job sector– after the state government, the largest employer is Springfield-headquartered Memorial Health System – has been around since the early 1990s, said McCrady of the Sangamon Growth Alliance. And government jobs have existed since Abraham Lincoln called Springfield home in the 1840s and 50s.
Unlike other central Illinois cities like Peoria, Springfield has not lost manufacturing jobs because there were few of those jobs to begin with. The labor market, McGrady and agents argued, breeds a certainty that’s reflected in the housing market.
“Houses here are lean, mean, and clean,” said Nick Campo of Campo Realty in Pawnee, just south of Springfield, who claims the local housing market is as strong as it’s ever been.
Campo described housing market ebbs and flows that could have come from the 1970s. “The market shifts a bit after the Illinois State Fair,” Springfield’s signal tourist event, held in August. “Then the kids go back to school, and things slow way down.”
That may sound quaint, but it’s also hopeful for those involved in the local real estate market. If Springfield is impervious to the joys of the boom, it might escape the bust.
“Many people are reluctant to invest in real estate, because they don’t know if they’re at the top or bottom of the bubble,” McCrady said. “That’s not the case in Springfield.”
