Why doctors are fleeing Leland Grove

Is there a doctor in the house? Not as many in the Springfield area, thanks to the state of Illinois’ budget woes.

Uncertainty over the state’s fiscal situation, fueled by Illinois’ record-setting budget battle and huge backlog of unpaid bills, is having a noticeable impact on the sale of high-end homes in the area. These homes are traditionally occupied or desired by those in the local medical community, and lately doctors seem to be reluctant to commit to an expensive residence. That means more homes in the upper part of the real estate market have “for sale” signs up much longer than usual.

“I’ve definitely noticed it, at one point we had 37 homes listed in Leland Grove,” said Leland Grove Mayor Jill Egizii. “The larger homes that are in the $500,000-andover price point are staying on the market longer in our community.” Leland Grove is a separate municipality of approximately 1,600 residents in the middle of west central Springfield.

“The great medical community that is here, doctors aren’t coming in and buying anymore. They are leasing, or they’re seeing what they like or where they like before they purchase a home,” Egizii said. “I don’t think the economy of Illinois has helped at all. The budget affected at least one person in every household here. It’s pretty sad when you look at the people who haven’t been paid by the state.”

Jim Fulgenzi is a Leland Grove resident and the owner of Jim Fulgenzi and Company, a real estate firm that is part of ReMax Professionals in Springfield.

“Those homes that are hanging around out there are the ‘hangover’ from the budget battle,” Fulgenzi said. “Some of those homes are still for sale because nobody could get along on Capitol Avenue.”

“The people who can really spend money on the expensive homes tend to be people who have a business that does business with the state,” Fulgenzi said. “Whether they be contractors, or physicians with SIU as an example, these folks who were caught in the middle of the budget battle couldn’t make commitments on buying expensive homes until they saw how that came out.”

Fulgenzi said that move-in-ready homes in the middle part of the real estate price range can and do sell in just a few days. But he said his firm noticed a distinct difference in buyer attitudes before and after the state budget deal was reached.

“After the middle of July, once they reached an agreement, my team’s sales picked up significantly,” Fulgenzi said. “No one said to me, ‘Hey Jim, I’m buying a house because they have a budget,’ but one week they didn’t have a budget and the next week they did. One week I wasn’t busy, and the next week I was.”

Doctors are not only reluctant to purchase an expensive home in the Springfield area, it’s also become more of a challenge to get them to locate in Illinois. HSHS Medical Group, which operates St. John’s in Springfield and 105 other health care locations throughout the region, has attracted 285 of its 470 medical providers in just the last three years, with 35 more committed to joining the group in the coming months. But HSHS CEO Melinda Clark said it now takes more effort to keep those doctors coming.

“Recruitment is a challenge for us,” Clark said. “The things we hear when we are calling from Illinois and asking folks to join us are concerns about the increase in the state income tax compared to other states, and the property taxes tend to be higher in this market.”

“There’s always concern over the political climate in Illinois and around the budget itself, even though we have one, there are concerns about how the state is doing overall,” Clark said. “Our recruiting is very strong, but we are getting a lot of questions, so it takes us a little more time to sell the area and the state than it would probably in another market.”

The medical community is a good barometer of the area’s economic health, according to Ron McNeil, dean of the College of Business and Management at University of Illinois Springfield. He stressed that it’s vital to keep that portion of the workforce thriving.

“The city of Springfield has depended historically on government workers, but the highest employer in Sangamon County is health care,” McNeil said. “Those are goodpaying jobs. We need to exploit that and accommodate them better, rather than have them go somewhere else.”

“Illinois is an extraordinarily rich state, but we have a flow of people out of the state,” McNeil said. “Because of the high tax rate, it’s hard to attract more industry back into the state. So part of the solution is straightening out the state.”

Leland Grove isn’t the only area with a concentration of high-dollar homes. Panther Creek is a Springfield subdivision comprising more than 330 homes that was laid out in the 1990s. It is located west of Illinois Route 4 and south of Interstate 72. Panther Creek has many residences that are in the upper price range. There are usually about 20 homes on the market at any time from among Panther Creek’s 330 homes, according to Tom Frost, the president of the Panther Creek Homeowners Association. Frost, who is also a realtor with the Julie Davis Team at the Real Estate Group, said he has noticed trends that have been caused by the ongoing Illinois budget situation.

“They are still bringing physicians and medical personnel into the community, but a lot of them are sitting on the sidelines because they wonder what will happen with the state budget,” Frost said. “Now that that’s resolved we still have to deal with whatever spillover there might be.”

“As our local economy continues to deal with that budget problem, the whole issue about health care and health insurance has an impact on the medical community,” Frost said. “You bundle all of that together, and there are people here who are choosing not to buy right now. The ripple effect is, we have a finite number of buyers in that upper bracket, and it’s slower in the upper part of the market.”

Ralph Hanauer is the Springfield Ward 10 Alderman and represents the Panther Creek area. He minced no words regarding the impact the state’s budget has on his constituents.

“This is a direct reflection of what’s been going on with the state,” Hanauer said. “They always said that the city was recession-proof because of state government. Well, state government is having tough times and I think you are seeing that.”

“It’s really hurt the medical community especially. I was told the hospitals and the clinic in town at one time were owed over $250 million,” Hanauer said. “I mean, come on, that’s just ridiculous. Until they start paying all of their vendors and getting their act together, I think we are going to see more of this.”

Over in Panther Creek West, Homeowners Association President Gary Warnick said part of the problem might be due to the state, but slower-moving real estate is not a new phenomenon for the southwest end of town.

“I think it’s something that we in that area get accustomed to,” Warnick said.

“There are some high-end homes that come up and they sit on the market for a while before they sell because of the smaller pool of buyers that are interested in those.”

“I think a percentage of it is due to the state’s budget mess,” Warnick said. “But there also is a percentage that’s doctors who come in for a year or two at SIU and then move on to something else.”

Seeing “for sale” signs in yards is one thing, but what do the numbers show? Ed Mahoney is the new president of the Capital Area Association of Realtors, and the organization keeps its finger on the pulse of the area real estate market. Mahoney said the entire upper-end market has been slow and the data collected by his organization graphically illustrates the situation.

“Inventory in that price range has been fairly steady throughout this past year at a high rate of close to 18 months’ worth of inventory, compared to about 4.1 months for the market as a whole,” Mahoney said. “Days on the market for the upper price range has ranged this past year from 103 days on the low side to close to 200 days on the high side back in June 2017. The market as a whole is about half that, 46 days on the market is the yearly average.”

“The median price per square foot is a really good indicator in this price range, and the price per square foot has declined significantly over the last year,” Mahoney said. “That means sellers are discounting their prices in the upper brackets. Those homes are taking longer to sell, they are selling for less and the buyers are getting more for their money.”

The Capital Area REALTORS® Multiple Listing Service statistics show the median sale price for homes at the upper end of the market dropped from approximately $600,000 in 2016 to approximately $550,000 in October 2017.

Illinois REALTORS® takes a broader view, and spokesman Jon Broadbooks said there may be other factors in addition to the state’s fiscal situation that are driving Illinois’ upper-end real estate market.

“There likely is a holdover effect from the recession at play here. Many people are content to stay put rather than move and take on more financial costs,” Broadbooks said. “In some cases, homeowners were able to lock in historically low interest rates, and they may be loath to trade up to a larger home due to the costs involved.”

“However, Springfield has so many ties to state government in terms of employment and funding for health care that it’s hard to see how that would not have an effect on the overall housing market,” Broadbooks said. “But it’s hard to tell to what degree.”

Springfield realtor Susan Madison of RE/MAX Professionals, who has several listings in Leland Grove, agreed that fewer local buyers are looking to move up, which contributes to the slow market.

“People look at what’s going on with the state, and rather than search for that dream home, they decide to stay where they are,” Madison said. “But the reality is, with motivated sellers in the upper price brackets, there isn’t a better time to buy.”

The Regional Economics Applications Laboratory (REAL) at the University of Illinois at Urbana-Champaign regularly analyzes real estate trends for Illinois REALTORS®. A recent REAL survey showed that the share of total real estate listings in the Springfield area in the $300,000 to $500,000 price range was 10.6 percent in August 2017, up from 9.1 percent in August 2016. That means there have been more homes in that price range coming on the market over the past year.

The only other price segment showing an increase during that time was the $100,000 and under category, with 30.2 percent of listings in August 2017 compared to 25.9 percent in August 2016.

“Homes in the highest prices ranges are not selling well in Illinois, especially Chicago. Part of this may be attributed to out-migration of folks who are mobile and have found the state’s fiscal condition to be more than they can stomach,” said Geoffrey J.D. Hewings, emeritus director of REAL. “However, I do not think that is the main reason. Potential home buyers complain that the choice on the market does not meet their needs; the inventory is tight and many are just not buying a house that does not fully appeal to them.”

Another high-end community economic barometer, country club membership, seems to be unaffected by the latest local real estate trends. Illini Country Club is Leland Grove’s sole source of sales tax revenue, and they are doing well.

“I can’t speak for other clubs in the area but at Illini our membership is still staying strong,” said general manager and chief operating officer Joe Burden. “The club is active and membership continues to grow each year.”

Leland Grove Mayor Jill Egizii is pleased that Illini is doing well, and hopes people will see the “for sale” signs in the village as open invitations.

“We’d love to have people here. I don’t want to discourage people from taking a look at Leland Grove,” Egizii said. “We are a biking, hiking, walking friendly neighborhood community and we welcome people here and would love to fill these homes up as quickly as we can.”

David Blanchette is a freelance writer from Jacksonville and is also the co-owner of Studio 131 Photography in Springfi eld.