Home sales 'pretty phenomenal'

Ben McCall/Sun Photo...Sold signs are becoming more common sights in area neighborhoods as the resale market begins to pick up.

“Absolutely,” said Terri McGowen, manager of the Reece & Nichols Overland Park real estate office.

That office did $40 million in sales in June compared to $27 million in June 2008.

“I’ve been managing with Reece 13 years and the $40 million for the month of June for this office alone, that is pretty phenomenal,” McGowen said. “It was about 150 percent above where we were last year.”

The federal stimulus dollars targeted first-time home buyers, which McGowen said were a huge part of the June sales.

To qualify for the first-time home buyer tax credit, the home must be purchased between Jan. 1 and Dec. 1, 2009 and the purchaser or his/her spouse may not have owned a residence during the three years prior to the purchase. The maximum allowable credit if $8,000 and can be applied to primary residences including single-family homes, condos, townhomes and co-ops.

Go to www.realtor.org/home_buyers_and_sellers/2009_first_time_home_buyer_tax_credit to find out more about the first-time home buyer stimulus qualifications.

“It is more first-time buyers than we have ever seen,” she said. “This month (July) we’re also having a great month and it is mainly first-time buyers. We have started having listings that will actually sell in the first week; we haven’t had that in a long time.

“And we actually saw a spurt in the upper bracket finally move, but it’s usually under the $250,000 price range (that are selling).

She said sales are taking place all over Johnson County.

“If it’s $250,000 or less, it’s really hot,” she said. “New home sales picked up slightly, but it’s mainly our resales that are selling.”

Matt Derrick, director of communications for the Home Builders Association of Greater Kansas City, said the federal stimulus package is doing exactly what it was designed to do: entice first-time buyers to purchase existing houses.

“We’re seeing a lot of pickup from the stimulus; that does seem to be bringing people out and we are seeing a pickup in sales, primarily on resales,” he said.

“The way things are going, we’re expecting that Johnson County is going to have a little bit slower recovery (in new home sales) than maybe some other parts of the (Kansas City) metro primarily because of price. The biggest inventory backlog in Johnson County is in the move-up market, in the $300,000 to $600,000 price bracket, and unfortunately, that’s the last market that’s going to pick up.”

More than half of Johnson County’s inventory of new homes is priced above $300,000 with the average price $427,000, Derrick said.

“There is some inventory at lower price points, but sales are weak compared to the inventory,” he said. “The reason appears to be that while there are $200,000 new homes available, you typically spend more money on the lot and permit fees than you do in other parts of the metro, which makes the inventory less competitive.

“I think that’s one reason why Gardner and Olathe are performing well because buyers are finding better values there in terms of more affordable prices and good values.”

Olathe and Gardner were second and third on the list of the top 10 permitting cities for single-family units in the metro area through June with 136 and 43 respectively. Overland Park was fourth with 41. Kansas City, Mo., was first with 263.

“A lot was made of the slow start that Overland Park had this year in new home permits, but they have picked up and recovered and are closer to the norm now than they were,” Derrick said.

He said the county is averaging about 150 permits a month for new homes and reducing inventory by about 100 per month and that if new home sales begin to see the same type of recovery existing home sales are experiencing now, there could be a shortage of new homes within the next 12 months.

That would put pressure on the federal banking regulators to ease restrictions and allow banks to begin lending money to builders. Derrick termed the current credit market for building and development as “horrible.”

“It’s more of a regulator issue at this point,” he said. “Consumer credit for housing is pretty good; it’s tighter than it was so you’re going to have tougher credit score requirements and there are tougher down payment requirements, which in the grand scheme of things are good things; they are going to make the housing market stronger and more sustainable.

“But what we’re seeing from the building and development standpoint is that banks are being told by the regulators they can’t make construction loans and they can’t make development loans. Our permits are doing better but we’re not seeing any speculative activity right now; everything is being driven by a contract.

“Until the regulators are willing to tell the banks to make construction loans and get back into real estate, I don’t see that improving.”

He said buyers of the future will purchase homes as a commodity rather than as an investment tool.

“Younger buyers are not going to be buying the same way that previous generations did that looked at housing as an investment long-term,” he said. “They are looking at it as buying a car; you buy it, use it, and then move on to the next one.

“I think they are going to look for houses that meet their needs in their day-to-day lives and not worry about the long-term resale value.”

McGowen remains confident about the future of the real estate market.

“I feel very positive,” she said. “I definitely think prices have stabilized and anything $250,000 and less is pretty hot … Some of the upper bracket market is not as saturated as it was and we did see some of that start to move especially in June.”

Her advice?

“I think if you have a house you want to sell right now and if it’s $250,000 or less, now is a great time to put it on the market; I would in a second,” she said. “Right now if you’re in that price range and you sell your home to a first-time buyer and wanted to move up with the low interest rate, there are some deals out there in the upper bracket if you wanted to move higher.

“And for first-time buyers, they need to get out there because they only have about 120 days or so to take advantage of that first-time credit and we don’t know if that’s going to be extended. If you have not owned a home in three years, you have got to get out there and take advantage of that tax credit; it’s just too good to pass up.”