Increasing real estate activity brightens market outlook
Phil Castle, The Business Times:
Eye-popping gains in the number and dollar volume of real estate sales in Mesa County make Annette Miller increasingly upbeat about prospects for the market. “It’s pushing this year up,” said Miller, senior vice president of Heritage Title Co. in Grand Junction and a long-time observer of the local real estate industry.
Robert Bray, president of Bray Real Estate in Grand Junction, cited additional encouragement in rising home prices and especially more new home construction. August was another strong month for real estate activity, Miller said, with the largest year-over-year increases in transactions and dollar volume yet this year.
Through eight months of 2012, sales are up 13 percent and the dollar volume of those sales is up 14 percent over the same span in 2011. The outlook, she said, is for the trend to continue. “I hope it’s going to be steady with this.”
Even as real estate activity grows, though, so does property foreclosure activity. High unemployment rates remain a persistent concern as well. Miller said 350 real estate transactions worth a collective $68.8 million were reported in Mesa County during August. Compared to the same month last year, transactions increased almost 26 percent and dollar volume jumped more than 43 percent.
The August numbers bring total real estate sales so far this year to 2,293. Those sales were worth a total of $449 million. At the current rate, 2012 remains on pace for nearly 3,440 sales worth a total of almost $674 million. If realized, those numbers would be the highest since 2008, yet about half of those in 2007.
Miller said real estate activity has steadily increased over last year despite the uncertainty that usually occurs during a presidential election year. As sales have increased, housing inventories have declined. Interest rates for mortgages remain at record-low levels, making homes more affordable. Increasing activity reflects interest from not only investors, but also people buying first homes and those changing homes, she added.
Bray said statistics compiled by his firm reveal a 26 percent decrease in residential inventories over the past year. He suspects more people are interested in selling their homes, but still owe more on their mortgages than their homes are currently worth. As prices rise, more homes likely will come on the market, he said.
And prices are rising, Bray said, bolstered in part by strong demand for homes selling for $150,000 and less. Homes priced at that lower end of the range often fetch multiple offers, some of them for more than the listing price, he said.
Bray pegged the median selling price for homes sold from the multiple listing service at $175,500. As recently as December, the median price was below $150,000, he said.
Bray said he’s particular encouraged by signs the home construction industry in Mesa County has “resurrected itself.” The number of single-family building permits pulled in Mesa County so far this year has increased 40 percent over the same span last year, he said. As new home starts increase, so does hiring, he added.
With the cost of building lots a third to a half of what they were before the recession, new homes can compete in price with existing homes, Bray said.
Meanwhile, the sale of foreclosed properties as a proportion of overall real estate transactions in Mesa County has declined over the past year, from almost 36 percent in August 2011 to just over 20 percent in August 2012, Miller said.
Nonetheless, foreclosure activity remains brisk. Miller said 133 foreclosure filings and 64 sales were reported in Mesa County in August. Compared to the same month last year, filings jumped almost 53 percent and sales increased a more modest 5 percent.
Since foreclosed properties typically sell for less than comparable properties on the market, foreclosure activity can hold down housing prices. Some real estates have reported, though, that so-called short sales of homes that would otherwise go to foreclosure have brought market prices.
Bray said high unemployment rates pose an ongoing barrier to an even more robust real estate market. The jobless rate in Mesa County stood at 9.3 percent in August, the latest month for which estimates are available.
Miller said she’ll continue to monitor foreclosure activity, but expects real estate activity to continue to increase on a year-over-year basis. “I like seeing sustainable growth like this.”