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SPECIAL REPORTS
Housing market stronger locally than nationally
Andy Harbour uses a circular saw to cut supports as construction continues on a new house at Cornerstone at James River on Wednesday, Aug. 6, 2008, in Culloden.
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The Huntington-area housing market remains stronger than the picture painted nationally over the past year, but it is feeling some pain from the national fallout.
National news coverage is riddled with phrases like "increasing foreclosures" and "declining values" when describing the situation. But for the most part, this is not the case in West Virginia, local Realtors say.
That's not to say that the local real estate market hasn't seen a slowdown. But it's that -- a slowdown, they said.
| Click here for a look at the current local foreclosure rates and a look at Huntington's overall real estate market. |
Huntington-area property sales this year are down nearly a fifth from the 2007 pace, but it's not the crisis as seen in areas that had large bursts of housing growth over the past five years, tied to rising property values and looser lending practices.
While the national foreclosure rate is one in every 171 households, it's one in 4,620 in Cabell County and one in every 19,436 homes in Wayne County, according to RealtyTrac, which monitors default notices, auction sale notices and bank repossessions.
Lawrence County, Ohio, fares better than the national picture, too, where there is one foreclosure for every 1,442 homes. In Boyd County, Ky., it's one in every 11,270.
States such as California, Arizona, Nevada and Florida, on the other hand, have numbers that have tremendous influence on the national numbers. For example, the foreclosure rate in Riverside County, Calif., is one in every 83 homes. In Lee County, Fla., it's one in every 79 housing units.
It's the focus on places such as these that has caused a lull locally, real estate agents in the Huntington area say. Consumer confidence has gone south, and when that happens, other factors don't matter, said Patrick Lucas, president of the Huntington Board of Realtors and an agent with Century 21.
The good things about the Huntington market are that it has remained relatively stable price-wise and that interest rates are still pretty good, he said.
"When I got in the business 10 years ago, the normal fixed interest rate was 8 1/2 percent for 30-year (fixed-rate loan)," Lucas said. "Now it's 6 percent, and it's not considered to be good. We got spoiled a few years ago when it went down to almost 5 percent. But the market can't sustain 5 percent interest rates. If you're only paying 5 percent, (lenders are) only making 5 percent, too."
And home values have remained about the same, said Mike Mansour, a broker and sales manager for Old Colony Realtors.
"As far as comparing to other states, we never had the big burst of excitement, so we didn't have a drop of where we were at," he said.
Nevertheless, local home sales have dropped some, and both Mansour and Lucas attribute that to two things: consumers are timid because of the economy and what they see on the national news, and lenders are getting stricter.
The local market
Total sales are down in the Huntington market, according to Multiple Listing Service (MLS) statistics tracking the first seven months of 2008 vs. the same months of 2007. The Huntington market encompasses the Tri-State area.
Sales in residential, commercial, multi-dwelling and land dropped from 1,043 properties last year to 835 this year, a decline of 19.94 percent. Residential sales have dropped from 900 to 736 listings, a decline of 18.22 percent.
The average price of residential properties sold dropped from $138,381 in 2007 to $131,974 this year, a decline of 4 percent. But the average days on the market for residential homes has increased just one day in that time.
Along with a lack of consumer confidence is that lenders are more careful of the financial security of homebuyers, real estate agents said.
"We have buyers that, two or three years ago, would be slam dunks for a bank," Mansour said. "But because of the mortgage market, the lenders are getting stricter, underwriters are stricter and it's tougher for buyers to get out there and buy something."
Used to be, a buyer with a 650 credit score was could easily get a home mortgage, he added. "You have to be 720 or higher now and still go through some hoops."
Underwriters have been given different instructions and really aren't giving many people the benefit of the doubt nowadays, Lucas said.
"So we're seeing deals take longer," he said. "The lenders are offering less product to the buyer, basically meaning they've taken the 100 percent loan off the table. If you're going to buy a house, you have to have money down unless you're a first-time home buyer."
Government loans through the Federal Housing Administration or Veterans Administration require about 3 percent down, and conventional loans require 5 percent down, Lucas said.
"Most people don't have 5 percent sitting in their bank account in addition to the closing costs they're going to need. Closing costs are $3,000 or $4,000," he said.
Some waiting, some diving in
While lenders have become more strict, things are starting to look up, said developer Stephen Manns, who recently has placed five homes under contract in a new maintenance-free community he's building in Culloden. It's called Cornerstone at James River, and consists of one- and two-story condominiums.
The homes feature a two-car garage, custom flooring and kitchens, the possibility of adding a bonus room, access to a community club house and pool -- as well as freedom from lawn care and snow removal. They're perfect for empty-nesters and retirees who don't want the hassle of home maintenance, he said, but last year they were hard to sell, even with all the baby boomers in this market.
This year, however, things are picking up, he said.
"It's the perception. All the negative press from national media creates stale buyers," he said.
So, what he tells potential buyers is this: "What's the difference of buying it now, buying it last year or buying it next year," he said. "Our price is the same, the building is the same, and their income is the same."
By now, some buyers seem to be sick of waiting to see what happens, said Allison McConnell, director of marketing and sales with Mann's development company, Cornerstone Contractors Inc. They realize they may not make as much in selling a home, but they're ready to make a move, she said.
Realtor Francis McGuire agrees that the market should be getting better soon, though the slowdown isn't over yet.
"I don't see the market going down substantially more," he said. "The CSX input of people -- that's helped."
CSX announced an expansion at its Huntington facility that will transfer 80 employees to Huntington. They're starting to move here, but the trouble for some of them is that they have to sell property in the Jacksonville, Fla., area, which is a much softer real estate market than Huntington's. Some CSX workers who are moving are renting property here in Huntington until they can sell their homes, McGuire said. Others are just buying small houses here until they can sell their homes in Florida, he said.
If you're in the market...
McGuire said the houses that are selling locally are houses that are better priced and in good condition. Sellers whose homes have updated kitchens, bathrooms and other features, and sellers who are flexible with their prices, have more success, he said.
"Houses that are overpriced or those in poor condition are lingering on the market," he said.
Mansour recommends that people hoping to buy a house really make sure their finances are lined up before they even start looking. Talk to the bank, lender or loan officer so that you know what you can afford. And realize that the buyer has to have a lot more documentation than in the past, he said.
If you're looking to sell, be patient, Mansour said.
"Price your house to sell. Real estate agents don't put prices on houses, markets price houses," he said.
