Housing market making a comeback
Editor's Note: The following article appeared in the July 2013 edition of the Denton Business Chronicle.
Nationally and regionally, sellers and buyers are seeing a more vibrant housing market than the past few years, with numbers increasing across the board for sales and prices, while the amount of time spent on the market and foreclosures continues to drop.
Marti Kay, a realtor with Remax North Associates in Denton said for many years it was a buyer’s market, but that stopped around three months ago.
“Now it has turned around,” she said. “It is a seller’s market.”
Kay said many people have been waiting for the right time to get into homes, especially new homes. Some of them waited to get interest rates as low as they could.
“They are thinking the interest rates were going to go down more, but they do not remember when it was 18 percent,” Kay said.
Jayne Howell, a real estate broker with Scott Brown Properties in Denton, said since interest rates have started to trickle back up, more potential buyers have locked down mortgage rates after debating whether it was the right time to buy.
“Interest rates have remained historically low, but they’re climbing upward slightly and that’s alerting the people that have been sitting on the fence to buy that the time is now,” she said.
Part of the problem affecting home ownership right now is that houses are not staying on the market for very long. Home inventory as of May 2013 was 2.4, according to the Texas Real Estate Center. Just two years ago in May 2011, the home inventory was 7.1.
Clients desire either new homes or homes in good condition, said Karin Seligmann, a realtor in Denton. Older homes are also selling fast, as long as they are in good areas and in good condition.
“I feel a greater sense of urgency in the buyers this year because frankly, we don’t have enough homes that are in good condition on the market,” she said.
This is partially because of the growing popularity of home sale and improvement shows on networks like HGTV, raising clients’ expectation for a property. Since the economic downturn, she has been staging homes for sales to make them look more desirable, and coaching the sellers more to make their properties more lucrative.
Many of Kay’s clients have relocated from other areas to Denton, Lewisville and Flower Mound. The majority of her clients have been first time homebuyers during the past three months, while other clients are downsizing. Howell said Scott Brown Properties continues to see variety in its clients, with a lot of first-time homebuyers, people buying larger homes, and people relocating to the area.
“It is a good time to sell, since prices are still reasonable that it might be a good time for them to move up [a home size],” Kay said. “They are finding Texas is a good place to live. We don’t have a state income tax, but our property taxes are high. They are still happy.”
According to the May Statistical Trends and News of Denton Report, there were 367 properties (including commercial) in state of foreclosure in Denton County. Of those, 43 were located in the city of Denton.
In May, the number of properties that received a foreclosure filing in Denton County was 37 percent lower than the previous month and 62 percent lower than the same time last year, according to the foreclosure listing firm, RealtyTrac Inc.
Erica Sullivan, an economic development analyst with the City of Denton, said banks have been more willing to complete the foreclosure process more quickly because housing values are rising and inventory was low. Locally, homes are sometimes selling before they are even placed on the market, she noted.
The median sales price of a non-distressed home was $99,500. The median sales price of a foreclosure home was $124,000, or 25 percent higher than non-distressed home sales.
The number of people interested in buying a new home has increased in the past couple of months.
As of May 2013, 972 new homes were sold in Denton County, according to the Texas Real Estate Center. Denton County had 2.4 months of inventory with the average price of home listed at around $225,000, according to the center’s website.
Home sales for April 2013 were up 38 percent compared with the previous month, and up 35 percent compared with a year ago, RealtyTrac.com reported.
Some consumers instead have opted to build their own homes.
Hallye Fletcher, of Ponder, said she and her husband found a lot they liked in the area at the end of January and began building their own home in February after little success in the existing market.
“We originally looked into pre-owned homes, and even put an offer in only to be turned down to a lower offer, as the buyers were worried about the house not appraising for what would have been our sale price,” Fletcher said in an e-mail. “There weren’t many options in Ponder that met our criteria, so we found a lot we liked and went from there.”
The average median rent in the city of Denton is $821; the county, $879. Both are higher than the statewide median rent of $813, according to the U.S. Census Bureau 2011 American Community Survey one-year estimates.
Don Manning, chief operating officer for Scott Brown Properties in Denton, said the rental business has been strong in their office, even with an increase in new construction of apartments. About 75 percent of the company’s rental listings are apartments, and about 25 percent are houses.
In Denton, he said the rentals continue to cater to college students, and the rest of the customer base remains diverse. This year, he said, the rental climate in Denton is different with people beginning to seek rental properties for September as early as March and April. The period historically began in May and June and stayed steady through August.
“People were looking to be a little more proactive,” he said. “I think they’re realizing it’s harder to qualify for a mortgage, and therefore are scared the leasing market might be a little bit tighter than normal.”
He said the leasing environment remains strong, and the company is on track to exceed last year’s figures for rentals.
Home sales are at the highest level since November 2009 with 5.18 million single-family homes, town homes condos and co-ops sold in May, according to the National Association of Realtors. This is a 4.2 percent increase over April and 12.9 percent increase from May 2012.
Distressed homes accounted for 18 percent of May sales, unchanged from April but down from May 2012 when distressed homes were 25 percent of all sales, the National Association of Realtors also reported.
The number of first time buyers in May was lower than April and even last May. New buyers accounted for 28 percent of home sales nationwide for May while they were 29 percent in April and 34 percent in May 2012.
With increased sales, available homes have decreased since last year, but are up from April, according to the National Association of Realtors. There were roughly 2.22 million homes for sale in May — 10.1 percent below a year ago but up from the end of April by 3.3 percent.
JENNA DUNCAN can be reached at 940-566-6889.
KARINA RAMÍREZ can be reached at 940-566-6878.