Housing trends: On the rebound?Published 10:01am Wednesday, August 1, 2012
Low interest rates, home prices are boosting the housing market
Shane and Evan Tieskoetter stepped inside a home for sale in southwest Austin Tuesday evening with the intention of buying it. They had made an offer, which the owner accepted, and they were waiting for an inspector to finish his rounds and give the word that everything was up to par before they pulled the trigger. With their 2-year-old daughter, Brekyn, and infant Kinsley in tow, they anxiously anticipated the inspector’s report.
The Tieskoetters, like many perspective homebuyers in Austin, are entering the market at a good time, according to many local Realtors. With interest rates at record lows — generally between 3 and 3.5 percent — and home prices very favorable, buyers have been taking advantage, and it’s starting to show in the number of homes sold. Through June, there have been 190 homes sold in Austin, up 11 percent from 171 through June in 2011, and up 8 percent from the 176 sold through June in 2010.
“The public perception still today is that it is still a depressed market, and the housing market isn’t very good,” said Casey Hatch, broker and owner of Integrity Real Estate in Austin and treasurer of the Southeast Minnesota Association of Realtors. “But right now we’re in such a prime opportunity for both buyers and sellers, and that wasn’t the case before this year.”
The big change for the sellers, Hatch said, is that demand is up and the supply is shrinking. The absorption rate — or the time it would take to sell every home on the market at current sales rates — is less than seven months. Through June 2011, it was around 11 months.
“Now there may be one of only a handful of homes in a price point,” Hatch said. “You have people fighting for properties.”
The Tieskoetters, who were also selling their starter home in northwest Austin, witnessed that first hand, when that property sold in 36 days.
“We were so worried ours wasn’t going to sell, and all of a sudden, boom boom boom, we sold it,” Shane said.
They sold that home on July 18, and immediately needed a place to live. They had looked online at between 40 and 50 homes and toured six. But the one in southwest Austin — a 2,100-square foot, four bedroom, four bathroom ranch listed at $155,000 — stuck out.
They made an offer that Friday, and they were back Wednesday for final inspections. By Thursday, it was officially their home.
“We were very lucky,” Evan said. “It was meant to happen.”
‘Over the worst of it’
Like many local Realtors, Fawver Agency Manager and Associate Broker Jerry Wolesky is cautiously optimistic about trends in the local housing market.
“We certainly are producing more sales than we have the past few years,” he said. “The volume is up. Prices are definitely down.”
The issue, he said, is that sellers aren’t getting what they would have before the housing market crash. And while that may not be a concern for those buying and selling in the same market — as they can make up for a low sales price with a low purchase price — those who are selling exclusively aren’t seeing favorable conditions.
“If you’re only selling, it’s a tough market,” Wolesky said. “You’re not going to get much for your dollar.”
The median sales price for a home in Austin through June this year is $73,000, up slightly from $72,000 through the first six months of 2011, according to SEMAR. However, that’s down considerably from the first six months of 2010, when the median sales price was $87,250.
Still, Wolesky said, there’s reason for optimism. The 190 homes sold in Austin through June tops several comparable markets in southeast Minnesota, including Winona and Goodview, at 179, Owatonna, at 147, and Albert Lea, at 94. And, he added, Austin survived the worst of the housing market crash and the 2008 recession without a significant amount of layoffs: the Austin unemployment rate topped out at 8 percent and was only above 7 percent for six months. That’s well below the national rate, which peaked at 10 percent and has been above 8 percent since February 2009, according to the Minnesota Department of Employment and Economic Development.
“It could have been a lot tougher,” Wolesky said.
Mary Lindgren, Realtor for Fuhrman Real Estate and the one who sold the Tieskoetters their new house, said the market is definitely showing signs of recovery.
“We’ve been telling people bad news for the last four years or so,” she said. “But it’s getting better now. The fun is starting to come back into it. I think we’re over the worst of it.”
Getting off the couch
Hatch, Wolesky and Lindgren agree the biggest drag on the housing market is consumer confidence. While interest rates and home prices are favorable, potential homebuyers are still hesitant.
“Consumer confidence needs to come back,” Lindgren said. “We haven’t been hit that hard with unemployment here. There’s no reason why we shouldn’t be doing better.”
Lindgren attributes that to an inaccurate, negative view of the conditions.
“Procrastinators just need to get up off the couch,” she said. “The conditions are perfect, but people aren’t pulling the trigger.”
Another factor, she said, is unreasonable expectations from some buyers and sellers.
“People are under the assumption that when they buy a house they can go in and offer 20 percent less,” she said.
That’s not the case anymore. Most homes, she said, are selling only slightly less than what they’re listing for.
“Usually now people will start out at a realistic list price,” she said. “No more of this ‘I want to try it up here. I can always go down. I can never go back up.’ Those are the people who probably don’t get their house sold.”
But if they start at a realistic price, she said, they probably have to reduce it one time before it sells.
“Homes are selling, but nobody is getting rich,” she said. “But they are getting relief.”
The Tieskoetters got relief when their starter sold just below the asking price of $65,000, but the most nerve-racking part of the experience was finding their next home quickly. When that fell into place, they said, it was a huge weight off their shoulders.
“It’s a big sigh of relief,” Evan said.
Shane said it will be great to have a place to start a family.
“The first home was a smaller, starter home,” he said. “Definitely not a family home. This will definitely be our home.”