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By Jeff in Provo, UT on 5/22/2006


What does the housing market look like where you are? It is hot or cold? 

Here in Utah, the market took off about a year ago and doesn't look like it is going to cool anytime soon, but I keep hearing on the news about how the market is cooling in other areas.

What's your perspective?


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By John in Erie, CO on 5/22/2006


Here (Colorado) everyone says it's strong, but a lot of people have bought houses using ARM's or interest-only loans, and we have record foreclosures and a glut of unsold homes, so I'd say it's lukewarm, but not cold. Production builders are building new neighborhoods like mad, but a new neighborhood down the road from my house is 30% vacant, full of new $500K dream homes... A lot of the production builders have neighborhoods up, but not finished past the shell state, (no mechanicals, no drywall or finish) until they are sold, so the production builders do see the slowdown.
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By Michael in Cave Creek, AZ on 5/22/2006


My perspective from Arizona is that more homes are now on the market than there have been for the past decade. This means that you need to offer good value to get anyone to look at and sell your home. This should be easy for an O-B. Land that was selling for $50K an acre is now being listed at $500K. So the prices are still high, and stuff still ultimately sells for far more than it cost just two or three years ago.

Subcontractors remain busy, but there could be a slowdown in sight. I believe one of the tract builders is offering $50K incentives to get people to buy their spec (inventory) homes.

Construction costs keep rising. A roll of 14/2 wire in 2004 cost about $20. When I wired my latest house, it was $36 and change. Now it is $46. [Editor note: It was $83 at last check.]

I have done well with my O-B houses and could be mortgage free after two houses, but I will probably take out a mortgage on my latest house, so that I can buy two more acres, split them build two houses, and do it again.

I am cautiously optimistic. I would not pay the going price for a tract house, the risk of getting burned if prices drop a few percentage points is too high. As an O-B there is more margin and room for error if prices stabilize or drop a little.


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By Tim in Dunlap, TN on 5/22/2006


In Southeast Tennessee I think things are definitely going to slow down. We just sold for what should have been about thirty percent profit after three years but instead turned into $25,000 dollar loss. I have seen several spec houses that are so absurdly overpriced that they have sat for a year.

In the city I know that less unattached building permits were sold in the first quarter than last year. However the counties mostly show a slight increase in building permits.

I believe that pricing on new homes is out of whack. For instance last year, our household income was twice what it was in 2001, but we can't buy the same house for the same percentage of our income. Bought 2,000 sq ft for $120,000 in 2001. It could cost about $250,000 now. I think many builders priced themselves out of the market on larger homes and are now building 1,400 sq ft and asking $165,000. I do not know if this is a national trend, but home prices have nearly doubled in the last few years while income has only risen slightly. When rates go up, people who are already buying at their limit will be stretched and I believe we will see the whole thing snap. I think that the Gulf and the federal dollars going into there are what is keeping the building prices where they are at now. Barring no more disasters maybe building material prices will go down when all of the work in the Gulf is done. This discussion begs the question, is it better to build at a higher cost with a low interest rate or at a lower cost with a higher interest rate?

I guess I have to say lukewarm, but considering that it was red hot this could mean that it is cooling off. Sorry, not very eloquent, just tired.

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By Kenneth in Lees Summit, MO on 5/23/2006


I would say in the Midwest it is definitely cooling off. There is still considerable new home construction, and the subs seems to be quite busy, but the resale market is starting to soften up. Since most people need to sell their existing house to buy a new house, this will eventually translate into the new home market as well, although it is not readily apparent just yet.

Shift takes some heat out of home sales

Oversupply and softening demand turn the KC area into a buyer’s market

By KEVIN COLLISON
The Kansas City Star

This is peak season for selling homes, but Joey King has had his four-bedroom, 3 1/2 -year-old home in western Shawnee on the market since mid-January.

He already has dropped his asking price from $309,950 to $289,950. Now he is willing to throw in the family’s home theater setup that includes a 55-inch, high-definition television.

King and his wife, Brooke, a pharmacist, have two young children and are expecting a baby. They are building a house on 18 acres near Louisburg, Kan., that is scheduled to be finished in late July.

“We’ve tried a multiple of things,” said King, a 32-year-old computer software salesman. “We’ve lowered the price, put in incentives to the agents, and the buyer can even take the refrigerator.”

Join the growing crowd. After years of record-breaking home building and surging sales and prices, the Kansas City-area real estate market is awash in homes for sale.

Inventories for new and existing homes are at historic highs while demand is reverting to historic norms. The result is that homes are sitting on the market longer than they have in years, price appreciation is ebbing and stealthy incentives increasingly are becoming part of the negotiating process.

It’s all supply and demand — and it’s becoming a buyer’s market.

On the supply side, there were a record 21,104 new and existing homes listed for sale in April, a 30 percent increase from a year earlier, according to the Kansas City Regional Association of Realtors. That figure did not include homes being sold privately by owners.

On the demand side, meanwhile, sales softened. In April, the Realtors reported 3,090 closed sales, still healthy but down 13.5 percent from a year earlier. The average sale price for a new or existing home in April increased 2 percent, to $180,128, from a year earlier.

What is happening, real estate professionals say, is a shift to a more normal market after several years of red-hot real estate. They say there are fewer discretionary buyers who took advantage of the exceptionally low interest rates of the last few years to move up the housing ladder. As a result, the inventory of available new and existing houses has swollen significantly — and it will take time to work it off.

“The people who wanted to buy entered the market during the past five years when rates were more favorable,” said Jim Gamble, an agent with Reece & Nichols Realtors and past president of the area Realtors association.

“Now, the people who have to buy are driving the market: people moving into town, people getting divorced, people having more children — all the things that happen in life. It’s a more balanced or average pool, and the inventory is sitting on the market longer.”

A buyer’s market

When there is less than six months of inventory for sale, Real estate agents consider it a seller’s market. Above that constitutes a buyer’s market.

By that standard, April marked a buyer’s market, with 6.8 months’ supply of new and existing homes on the market. There were 6.2 months of existing-home inventory for sale in April, while there were 9.1 months of newly constructed home supply for sale.

Some industry experts have warned that sales competition would make it tough for people trying to sell larger, recently built homes near outlying subdivisions where similar larger houses continue to be built.

That appears to be what is hampering the Kings in selling their home in the Maplewood of Crimson Ridge subdivision in Shawnee.

“There are so many new spec homes sitting out there, which I think is hurting resell,” Joey King said.

Tim Underwood, executive vice president of the Home Builders Association of Greater Kansas City, said builders had noticed the shift in the market.

So far this year, permits for future construction are down 13 percent from last year, but inventories remain high. The local industry is coming off four consecutive years of building more than 10,000 houses annually.

“The number of finished unoccupied homes is 35 percent higher than a year ago,” Underwood said.

To be sure, no one is predicting that the housing bubble will burst in Kansas City in the way that some expect in such hot coastal markets as Florida and California, where prices exploded in recent years and unsold inventory now is piling up even faster.

Indeed, industry studies and the financial press regularly cite Kansas City as a comparatively safe housing bet because of its steadier growth and price appreciation in recent years.

Even so, the local real estate market is adjusting to the new supply-and-demand equation. One early indicator is the appearance of stealthy incentives to attract buyers.

Homebuilder Bruce Rieke, for example, is offering buyers a free two-year lease on a BMW 325. He has sold four homes since the promotion began in mid-April and has two sales in progress. His homes range from $300,000 to more than $1 million.

“There’s more competition than before,” said Rieke, who has built homes in Johnson County for 17 years. “You have to differentiate yourself from the competition.”

Soft landing?

Despite the increase in incentives, housing prices generally are holding up, according to the Realtors association. Price appreciation is expected to continue — albeit at slower rates.

The average price for a new house in the Kansas City area was $264,574 in April, up 8.5 percent from the previous year. The average sale price of an existing home was $158,199, up 1.3 percent.

“We’re not seeing the appreciation we had seen,” said Dan Whitney, president of Landmarketing Inc., an area housing research firm. “Builders and developers don’t have the elasticity to move up their prices. It’s a difficult time because costs are rising rapidly.”

One key expense that is affecting buyers and sellers alike is mortgage rates.

The typical interest rate on a 30-year mortgage has climbed about one percentage point in the last year to nearly 6.75 percent. That means the cost of repaying a $150,000 home loan is almost $110 more per month than it was a year ago, said James B. Nutter Jr. of James B. Nutter & Co. mortgage bankers.

“We’ve completed the move to a buyer’s market,” Nutter said. “More and more people are so informed about this. They understand that supplies are up and sales are down. They’re going to try to get the best deal they can.”

A slowdown in the national housing boom — which some economists credited for helping create four out of 10 new jobs in recent years — would affect the broader economy. Although the U.S. gross domestic product surged at an estimated 5.3 percent annual rate in the first quarter, it is expected to slow in the latter half of the year.

David Lereah, chief economist for the National Association of Realtors, said he expects a “soft landing” for the national housing market. The national association on Thursday reported that April sales of existing homes were down slightly, and the nationwide median price of $223,000 was up 4.2 percent from a year earlier, the smallest year-over-year increase since September 2001.

Some see that as a buying opportunity, if would-be buyers can sell the houses they already are in.

“Some of the consumers who haven’t bought the past four or five years will find better values, but their challenge is getting out of their existing houses,” Whitney said. “Many have taken cash out of their houses by refinancing, and they don’t have as much room to negotiate a price.”

Showtime for sellers

Real estate agents like to talk about “staging” when it comes to selling a home. That includes making sure the first impression from the curb is positive, and once the buyer is inside, making the home feel more spacious and inviting by properly positioning furniture and eliminating clutter. Scented candles, soft music and freshly baked cookies often are part of the show.

“It’s critical that sellers stage their properties well and price according to the market,” said Greg Koons, broker-owner of Re/Max of Kansas City and a past president of the Realtors association.

Bob Hennecke and his wife, Debbie, recently bought a home in the Highcroft area of Overland Park. They had been living in a condominium in Mission but decided last winter to search for a bigger place after having their first child. Their price range was $180,000-$220,000.

Bob Hennecke estimated that he and his wife looked at 50 houses before buying.

“I did notice the houses that were quality houses were selling quickly and the ones that need work, unless priced right, were staying on the market,” he said.

“It was my impression that people still thought it was a seller’s market and could put any house on the market at a price above the market. They weren’t so much concerned about how it would appear.”

Teresa Booker, a real estate agent with Keller Williams Realty Partners, organizes quarterly seminars on the housing market for fellow professionals. She detects a growing nervousness among some colleagues.

“Some agents feel they’ve already hit a summer slump,” Booker said. “People are best served by talking to agents who are candid, honest and realistic about the condition of their property. Then they’ll get accurate and competitive pricing.”

On the pricing front, the homes that are taking the longest to sell generally are the more expensive ones. Entry-level homes continue to do well. In all categories, rational pricing is the key to getting a deal.

Kathy Copeland, an agent with Prudential Kansas City Realty and the president-elect of the local Realtors association, said how well the local housing market does this year may depend as much on psychology as supply, demand and mortgage rates.

“We need to be very positive,” Copeland said. “If we believe it will slow down, then indeed it could. I’m telling agents it’s a very decent market.


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By Jeff in Provo, UT on 5/24/2006


Here is an article that I bumped into today about the Utah housing market found via the Utah Monitor.

Quick Summary: First quarter 2005 to first quarter 2006, home sales are up 12% statewide with average sale prices up 17% statewide. The average price of a home sold in Utah is now $243,200.

Here is another about the overall housing market in the United States.

 


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By P in North, FL on 5/25/2006


Our area is red hot. It slowed over the winter, but is back at it again. Here is a recent article.

gainesville.com


Gainesville and Ocala have both registered two of the country's largest percentage increases in the median price of single-family homes.

Gainesville and Ocala tied for the third strongest percentage increase of the median price of existing single-family homes in the country between the first quarters of 2005 and 2006, according to the National Association of Realtors, which tracks transactions through multiple listing sales.

Both registered a 32 percent increase of median home prices - which are $211,100 in Gainesville and $161,400 in Ocala - while metro Orlando's median home prices increased 34 percent - to $257,300.

Gene Ritch, president of Coldwell Banker/MM Parrish and who is in charge of residential sales, said the figures should not be misconstrued to indicate there is an uncontrolled increase in existing home prices.

"My take on it is prices have not increased so much as it is the affordable product is not there," Ritch said. "The median prices are going up because there are so many homes being sold in the $300,000-$400,000 level, but few available in the $150,000-$175,000 level, where we need them. That is something that has been coming."

Ritch also said Gainesville is a relatively small market and the sale of a few expensive houses could skew the figures.

"It's not that everything has come up more expensive," he said.

The largest increase in the 149 metro areas reporting to the Realtors' association was the Phoenix-Mesa-Scottsdale area of Arizona - 38.5 percent higher January-April 2006 than the same period last year. The median price of homes there was $268,300.

The median is a typical market price where half the homes sold for more, half for less.

Gainesville's 32 percent increase between the two periods is significantly higher than the 8 percent increase between the first quarters of 2004 and 2005. Ocala's is only slightly more: 32 percent this year compared with 27 percent in 2005.

Statewide, there was a 20 percent increase of the median sales price between the first quarter of 2005 and that of 2006.

However, for the first time, statewide sales of homes, condominiums and co-ops decreased significantly: 15.7 percent between the two first quarters. National figures show there were 557,200 units sold between January and March 2005; there were 469,600 sold during that period this year.

In Gainesville, there was a 13 percent decline in sales of existing homes during January-April between the two years; in Ocala, a 5 percent increase.

On the other hand, in Gainesville, there was a 59 percent increase of resales of condos (149 to 237); with a 23 percent increase in median price ($125,900 to $154,300).

Both the Florida and National Realtor associations attribute the slight slowing of the market to economic factors, namely the rise in mortgage rates and the price of gasoline.

While the percentage increases seem significant, North Central Florida still has homes that cost less than most other areas of the state. According to Florida Association of Realtors, the highest first quarter median price was in Naples, $505,600; of the 20 metro areas, only five are priced lower than Gainesville.


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By Melissa in Richmond, KY on 5/26/2006


Things in Kentucky are doing well and new homes have really taken off in the past few years. Things have cooled down a little recently, but new homes and homes less than 10 years in age are still doing great. We seem to be overloaded with older homes on the market as these homes are priced only on square footage without taking into account that they are extremely out of date and would need a great deal of remodeling.

Given the choice, buyers are definitely going for newer homes that have the same square footage but are more up to date and are priced the same as the older homes. Homes that are 1-10 years old have seen an excellent increase in value.  For instance, my husband and I bought our current home, which was three years old at time of purchase, for $130,000.  We have around 2,500 sq. ft., 3 bed, 2 bath, cathedral ceilings and lots of extras. After four years in our home, we're expecting to sell for around $200,000+. It's going to be an excellent start for the new home that we are going to build.

The real hot market in Kentucky is land. In some areas, good land is hard to come by because of mountainous terrain. In other areas, it's been hard to come by because family-owned farms take up thousands of acres, sometimes in the middle of a thriving city. A lot of farms are now selling off their land and it's more common now to see lots between 3 and 10+ acres versus normal city-sized lots. My husband and I bought a five-acre lot in a covenant controlled subdivision and we paid around $90,000 for it. Sounds like a lot of money, but that's a great deal considering one-acre lots are selling for $35,000-$45,000. We'll have a lot of privacy and we're guaranteed that we'll be living in a high quality neighborhood where our investment is going to be protected.

Because of the increase in large parcels of available land, there's also been an increase in what I call "cookie cutter" subdivisions. Developers are creating subdivisions where every other house has the same floor plan and all of the homes sit on 1/4-acre to 1/2-acre lots. Some of these subdivisions have really detracted from the appeal of surrounding land. Many city councils have created ordinances preventing further development of these types of subdivisions as they fear being overrun with cheap homes that won't stand the test of time and will eventually be eyesores and economic drains. The new ordinances usually require a certain lot size and square footage for any developers or mass building.


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By Jeff in Provo, UT on 5/26/2006


Here in Utah, the land market has gone crazy in the last little bit of time.

I can only dream of purchasing a five-acre lot for $90K! ;-) We will be closing next week on a 1/2-acre lot that is nearly three times that price. A year ago, we purchased a 1/3-acre lot in an "exclusive" neighborhood for $180K (which I thought was too much money!) and now our neighbors are selling their lot for $375K. And just down the road, a 2.4-acre lot is going for $2.5 million!

Let's just hope (for me anyway) that land prices keep going up...


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By Paula in Melrose, FL on 10/18/2006


Hello to all... new to site, very impressed ...The O-B Book was my best investment.

We are outside of Gainesville... 1.5 acres in Putnam County, Hawthorne area... lake view off of one of the smaller lakes... anyone have any comments or input as to the growth heading this way, as we feel this should be eventually a pretty good investment ???

Much appreciated...

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By Bill in Irving, TX on 11/14/2006


Growth and demand are definitely big factors to consider, but here is something you might not have considered:

Owner-built homes are often customized to the needs and desires of the person(s) building them. Such customization will definitely enhance the enjoyment for these specific people, but may adversely affect the saleability to others who have different needs. For instance I built my house as my dream home, to retire in and live in for the remainder of my life. It was customized to meet our family needs. As we have begun to consider selling due to unexpected circumstances, we now look at some of our choices as being somewhat less than optimal for the purpose of resale.

Experienced builders use generic home designs, and then offer customizations on the basic theme. the result are houses that meet a broader range of needs and therefore appeal to a larger audience. If you plan to sell your house, to look at it as an investment, or an opportunity to make a profit, rather than as your long term home, be careful not to over-customize it. Use a design that can be easily modified to satisfy other potential owners needs.

Good Luck!


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By Dale in Richland, AZ on 4/8/2007


Its been a year since this topic started and a lot has changed in the housing markets.

Tucson still is growing, our net monthly population growth is about 1,100 people.

Just before the holidays, this past winter, there was a big scare because a few of the low-end production builders were laying off workers. It was the harbinger of dire times.

The current problems with the sub-prime lending market are revealing what the problems really are. Builders did just about anything to sell a new home, even buy your old home as part of the contract. Then the financing was interest only for two-three years. A recent article in the newspaper was saying some subdivisions where this was the common practice will have foreclosure rates as high as thirty percent, THIS YEAR!

The article continued that the estimate for Tucson is about 7% foreclosure rate for mortgages written in the past five years.

Given that every bad winter drives people to Florida, Texas and Arizona,  I doubt our "bad" market is going to hurt anyone but those who speculated outrageously on land or construction.

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By Joseph on 2/7/2018


Hi, there I have recently joined this community.

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