The hottest real estate market in the country isn’t one of the usual suspects such as Miami, Los Angeles nor one of those pricey suburbs along Chicago’s North Shore.
Eat your heart out, Winnetka: Rockford has posted a 52% gain in home prices year-over-year and, as of last week, buyers were still shopping aggressively for the limited inventory of homes on the market.
Yes, we’re talking about Rockford, 90 miles northwest of Chicago, the same city that has endured hard times for longer than most Americans have been alive.
First, the Rust Belt bust of the early 1980s hammered its manufacturing base. Then came the housing bust of 2008-09, which turned the city into ground zero for underwater mortgages. Unemployment, crime, drug abuse and a lack of opportunity for the young made it a perennial underperformer even by the slow-growth standards of Illinois.
Today, Rockford is putting those rough days behind it, and local real estate agents such as Peter Dunn say it’s about time. “Our price increase is long overdue,” Dunn said on April 28, at the open house he was staging for a lovely, five-bedroom home at the end of a wooded cul-de-sac. “You get a good bang for your buck.”
Indeed, the house at 5140 Farmington Close in the heart of Rockford that he’d priced at $380,000 would go for double that if it were in Elgin, a suburb about 50 miles closer to Chicago, Dunn estimated. The same property located in the closer-in suburb of Arlington Heights might even go for triple. Put it along the lake in Winnetka, and the sky’s the limit. “We’re seeing people moving in because it’s still affordable here,” the Rockford native observed.
The word is getting out. On April 25, The Wall Street Journal declared Rockford to be America’s top housing market, celebrating its “improbable turnaround” in a ranking based on its WSJ/Realtor.com housing market index. The boosterish story went on to feature Rockford’s dynamic mayor, Tom McNamara, lauded the area’s health care, aerospace and logistics industries, and stated boldly that a direct train line to Chicago is “due to open in a few years.” A train line is not the same as fast, frequent trains, so fingers crossed on that one.
Still, not all the happy talk is puffery. Rockford’s economy, down-and-out for so long, is making real progress. While its unemployment rate of 6.8% as of February is well ahead of the state and national jobless rates, that’s a big improvement compared with the stretches of double-digit unemployment in its modern history. And Rockford’s workforce still knows how to make things, as evidenced by successful manufacturers such as Collins Aerospace, Ingersoll Machine Tools and others that together employ thousands of area residents.
Another huge plus is on the way. Giant automaker Stellantis is planning to invest nearly $5 billion to relaunch the idled Belvidere assembly plant, which had long been one of the area’s top employers. As the Tribune reported in November, Stellantis plans to produce an all-new midsize truck beginning in 2027, while also building an adjacent electric vehicle battery plant and a big parts distribution center. Those investments are expected to create thousands of good-paying jobs.
For President Joe Biden, the Belvidere plant’s revival under his administration is a welcome success story. But the surge in Rockford real estate is flashing a warning sign for him and other incumbents as well.
With interest rates still elevated since the COVID-19 pandemic, homes have become less and less affordable. Inflation is one of the main reasons why most voters say the U.S. economy is not working for them, and housing costs, along with groceries and fast-food, are the most flagrant sources of sticker shock.
Markets tend to correct themselves if the government stays out of the way, and already some real estate markets that were leaders on the way up have started to cool down, most dramatically in Florida. The Wall Street Journal analysis that put Rockford as the No. 1 market in the country also listed small Rust Belt cities such as Akron, Ohio, and Fort Wayne, Indiana, among the top 10. When the laggards start catching up with the rest of the country, it’s a sign the real estate market may have peaked nationally.
In Rockford, real estate broker Jay Dowthard is taking the city’s boom in stride, holding an open house April 28 for a spacious split level in the east part of town priced at $237,000. Dowthard said his phone started ringing when the pandemic hit in 2020 and interest hasn’t stopped, including from others like him who see investment opportunities.
During the rough period after the housing bust, Dowthard said he bought up distressed homes as rental properties, paying as little as $3,000 for a house. Now those homes are worth much more, and he said he’s tempted to put them on the market. “If you’ve got the right product,” he said, “the homes are selling.”
