There is little doubt the nation is experiencing a housing slump.
Tuesday’s report by S&P/Case-Shiller revealed first-quarter home prices dropped on a national level for the first time in 16 years.
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Turn on just about any news show or read any newspaper and you’re bound to see or hear something negative about the housing market.
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Within the Iowa housing market, real estate agent Lora Murphy could be called a motivated seller because the three-bedroom, 1942 Beaverdale home she’s marketing is her own.
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Ask Susan Webster what her dream “green” home would be like, and prepare to sit awhile. According to the Des Moines Register, the Iowa real estate agent is focused on promoting healthier, more environmentally friendly living.
There’s a danger is holding an Iowa mortgage these days: better make sure you can make those monthly payments.
Donna McFadden, director of the home ownership program with Family Housing Advisory Services, said foreclosures are becoming more of a concern as many adjustable rate mortgages have adjusted upward.
“We probably see at least two a week,” she said. “A year ago it could have been maybe, three or four a month.”
Usually the reason homebuyers received the ARM in the first place is they wanted a lower monthly payment, but couldn’t get a fixed rate because of poor credit. Many were told they could home mortgage loan refinance, but circumstances didn’t work out that way and they’re now in trouble with a higher monthly loan payment.
“They’re not looking at tomorrow. They’re looking at the here and now,” McFadden said.
Scott Simpson of Western Horizons Mortgage Group in Council Bluffs said during a recent week his office saw six people who could have been approved for a home loan six months ago, but no longer were eligible.
“The person that was a tougher credit, or a credit risk, so to speak . . . those people are not going to be able to get a home loan,” he said.
Simpson is concerned that the number of foreclosures will increase as people unable to make the higher monthly payments when home loans adjust and the interest rate goes from 9 percent to 14 percent. He couldn’t immediately say what percentage of loans made in his office were subprime loans.
“It’s going to get real ugly, I’m afraid,” Simpson said. “I don’t think people understand what’s going to happen.”
Doug Goodman, president of Peoples National Bank in Council Bluffs, thinks mortgage rates are still good for those with good credit and traditional 30-year fixed rate mortgages remain in the low 6 percents. The problems are with national sub-prime lenders who took on high-risk loans.
“Those rates have gone up notably,” Goodman said. “Many of those rates were high and pegged to go higher.”
Dave Selene, Council Bluffs market president for TierOne Bank, and Rhonda Bockenstedt, assistant vice president and mortgage loan officer, said most of the bank’s lending has involved 30-year fixed rate loans.
A few years ago there was an 80/20-loan product was introduced that involved 20 percent of the mortgage as an in-house ARM, Bockenstedt said. Some people were in a “panic mode” after the ARM adjusted and the assessed value of the home wasn’t enough to convert the entire loan to a secondary market product that could be sold to Fannie Mae.
She feels TierOne has a strong underwriting team that has helped avoid many problem loans.
Byron Menke of NP Dodge, president of the Southwest Iowa Association of Realtors, said the situation has been a topic of discussion and some tightening was expected on institutions that issue higher-risk loans.
He sees few if any changes for consumers with solid credit and incomes. Many of the problems will come from those individuals who entered “creative financing” agreements with 100 percent mortgage financing, he said.
“They just walked away because there’s nothing invested on their part,” Menke said.
There may even be a positive side to the situation.
“Maybe it’s not a bad thing to see a little tightening up,” Menke said. “The industry doesn’t need to see a lot of these homes coming back on the market.”
SOURCE: The Daily Nonpareil
After recording their second-best January sales totals ever, home builders in the Des Moines housing market expect 2007 to be a fine year for selling houses.
“We’re still in the initial stages of a number of projects; we’re not backing off at all,” said Rick Tollakson, president and CEO of Hubbell Realty Co. “We believe the fundamentals are there; people are working and mortgage rates are good.”
The latest figures from the Des Moines Area Association of Realtors show that Central Iowa home sales totaled 580 in January, compared with 503 a year earlier, and the average sale price was $166,788.
That’s an increase of $4,000 from a year ago. However, the market had 6,391 active listings, 377 more than in January 2006 - reflecting the dropoff in Iowa mortgage demand over the past 12-18 months.
“I think a lot of builders were overextended,” Tollakson said. “They’ll get a lot of inventory sold off this year, but suffice it to say, a home loan lender won’t be so eager to finance spec homes in the future.”
He also predicted that a number of builders will drop out of the market.
“Our list of home builders is over 400, but well over 50 percent of them only buy one to three lots per year,” he said. “They tend to get in and out pretty easily.”
Tollakson said that with shifting market dynamics, Hubbell is becoming more involved with the multi-family home market - condos and townhomes.
“We started last year with one project, and hopefully we’ll have five or six this year,” he said. “The demographics are there; it’s still a good starter-home market.”
That matches the experience of Triton Homes in Ankeny, which specializes in multi-family construction rather than single-family homes.
“In 2006, we closed 318 townhouses in the Des Moines area,” according to Pam Ireland, the company’s Des Moines metro vice president. “That’s double what we did in 2005.”
Triton, founded in 2003, has had enough success to encourage expansion.
“We’re already building in Omaha, Nebraska, and we’re branching into Kansas City and Arkansas. We have land picked out in Kansas City and are working on due diligence there, and we’re identifying property in Arkansas,” Ireland said.
In short, look for home loan activity to remain strong in Central Iowa this year as buyers look to take advantage on optimal buying conditions.
SOURCE: Des Moines Business Record
The Iowa housing market continued to cool in December as total sales dropped for the sixth straight month and prices flattened, the Iowa Association of Realtors reported.
According to statistics, there were 2,623 property sales recorded in December, down 7 percent from 2,840 sales a year earlier. Sales have been falling steadily since July 2006 when 3,797 closings were recorded.
The state’s median home price of $128,200 was essentially unchanged from both its November and year-earlier levels.
The steepest decline in sales among large metro areas was reported in Greater Davenport, where closed transactions were down 49 percent year-over-year to 179, and the median home price posted an impressive 18 percent gain to $129,350. This casued Iowa mortgage applicants to stay away.
The only large market to show growth in both sales and mortgage loan compared to a year earlier was Greater Sioux City, where sales rose 6 percent to 161 and the median home price gained 8 percent to $108,300.
Among small markets, the Boone County area in the middle of the state reported the biggest losses overall, as sales tumbled 52 percent from a year ago to 12, and the home-price median plummeted 34 percent to $58,600.
Diane Dubansky Haase tells the Des Moines Register that she has a “slew of concerns” about selling her Beaverdale, Iowa, home in a slower housing market - among them lower prices and higher inventory.
“It would be a Christmas miracle if we got our asking price,” she told the newspaper, jokingly.
Will they? A new report released this week shows sellers have reason to worry, but also to cheer.
The Des Moines Realtors Association says the Des Moines metro market has about 800 more homes for sale than a year ago. Although sellers face more competition, sales last month were about even with a year ago, a record for most real estate agencies. Also, homes were on the market in November about a week less than a year ago.
Average home sale prices dipped slightly from a year ago - 1.3 percent - to $167,297, as the cost of Iowa mortgages remains close to its 2005 level.
“This is the most inventory we’ve had in a long time, but it also means it’s the best selection we’ve had in a long time,” said Don Godwin, a Re/Max real estate agent. “Instead of two or three homes in buyers’ price range, there’s about 10.”
R. Michael Knapp, CEO of Iowa Realty, said November’s statistics show Iowa home sales are beginning to “replicate the sales rhythm we saw in 2005.”
Helping were continued low mortgage rates.
“Interest rates were where they were a year ago, and so were sales,” he said.
Rates for 30-year fixed home mortgage loans averaged 6.12 percent last week, a little under last year’s 6.30 percent. Knapp said Iowa Realty’s sales will be less than 2005, but still healthy.
Anticipating a buyer’s market, Dubansky Haase said the couple’s renovated home is “priced to sell” at $169,900. They’re hoping to break even, given the relatively tight - and wintry - time frame they have for selling their home.
Cindy Waters and her brother hope patience pays with a home they’ve remodeled in Des Moines’ Waterbury neighborhood. The siblings decided to buy and renovate the 1935 brick home after giving their parents’ home on 55th Street similar treatment a year ago. It sold in eight days.
Waters feels confident they will get close to the $329,900 they’re asking.
“Maybe it’s foolish, but I believe if you have a wonderful house, at some point, someone will buy it. Of course, if I’m still in the same position in six months, I might feel differently.”
Their house has been on the market for two months.
Iowa Realty agent Chad Baker, 26, said he’s had luck selling homes in the $250,000-plus new-home market, which many said is stagnant, given the cost of home loans of that size.
Knapp, who leads Iowa Realty, said buyers will likely see new home choices shrink next year as builders cut back on new starts and supplies tighten. Some home builders estimate cutbacks of about 30 percent.
Dubansky Haase has been preparing to sell via home staging of sorts - decluttering, organizing and cleaning. She knows the drill, having struggled to sell a home once before - in Ames, Ia., about three years ago.
In September, home sales and home prices in Iowa tumbled.
In October, it was more of the same.
The Iowa Association of Realtors recorded 3,023 property sales in October, down 4 percent from a year ago when 3,141 homes sold. Meanwhile, the state’s median home price declined to $109,650 in October, down from $110,000 the month before.
This is at least good news for those that would presently consider a home mortgage loan in the area; you can probably bargain most sellers down.
In Des Moines, the state capital, there were 825 home sales recorded in October, down 9 percent from the same month last year when 905 homes sold. The city’s median home price during the period remained at $148,650.
Sales in the Greater Davenport area were off 14 percent from a year ago, registering 192 sales in October compared with 224 in October 2005. The area’s median home price was mostly flat during the period at $109,600.
Despite the overall cooling statewide, Cedar Rapids posted a 9 percent sales gain between October 2005 and October 2006, with closings rising from 330 to 359.
The city’s median price also increased, gaining 4 percent to $128,500, although this was down from September’s median of $132,900. This makes it one of the few areas in the state - and country, really - where those applying for home loans are not in the driver’s seat.
Though the slowing housing market is bad news for prospective home sellers, real estate agents and the construction industry, it’s actually resulting in increased business for a handful of people in Greater Des Moines.
With the housing slump beginning to become evident in Iowa, businesses specializing in “staging” homes are reporting more demand for their services.
Home staging is “dressing up” or marketing a home to help it make a good impression on potential buyers. It often involves rearranging furniture and artwork, removing distracting personal items and incorporating a few new pieces into the decor.
“The way I live and the way I show my house are different,” said Sharon Hatten, owner of Roomscapes, a home staging firm. “Things that you have in the house for your own comfort, you might have to re-evaluate when it’s time to sell.”
According to a 2006 survey from StagedHomes.com, homes listed for sale without staging spent an average of four and a half months on the market, while homes staged before listing spent less than one and a half months on the market. Costs for staging vary widely depending on where you live. On the West Coast, professional stagers charge upwards of $200 per hour, but in Greater Des Moines, the rate tends to be $50-65 an hour.
“Staging is worth the upfront cost if it gets you an offer sooner,” said Jennifer Gruber, an agent with Iowa Realty’s Jordan Creek office, which hires a local company called Artistic Attitude to stage home listings.
With a growing inventory of homes on the market, staging has never been more popular. According to the Des Moines Area Association of Realtors, there were 6,980 active listings on the market in October, up from 5,937 a year ago. There were 825 homes sold in October, 80 fewer than a year earlier.
“With so many properties on the market, if the buyer coming through doesn’t have a good immediate reaction to your home in the first minute, they’ll move on because they have plenty more homes to look at,” Gruber said.
As Iowa home sales flatten, this endeavor is seen as more important than ever before. Hatten said awareness about staging homes has been growing over the past couple of years in Greater Des Moines.
Five years ago, she spent most of her time educating real estate agents and home owners about the process. Now, she gets many inquiries about staging, which has grown to about 75 percent of her business.
Trying to get inside the mind of a potential mortgage loan applicant who’d be walking through the house, the stagers begin assessing a home before they even walk inside. Approaching the house from across the street, they take note of things such as the quality of the landscaping, outdoor clutter and the condition of the paint.
Inside, they go through the home using a “buyer’s eyes,” looking for problems such as loose caulk in the bathrooms, curling wallpaper, chipped paint, cluttered closets, an abundance of family photographs, etc.
The goal is to suggest improvements, remove clutter, make rooms appear larger with proper furniture placement and de-personalize the home so that potential buyers can picture themselves living there.
“You would be surprised at how some people don’t see beyond the things you have in your home. Sometimes people will remember that collection of beer steins you had in the family room, but not the great fireplace they saw there,” Hatten said.
People are quick to make judgments on a home based on how it’s decorated. When Gruber takes prospective buyers through houses, they often have a stronger reaction to colors and furnishings than overall size.
“I’m amazed when I go through homes with buyers. Sometimes I stop and ask them if it’s really the house they like or the furniture, because the house may be smaller than what they told me they were looking for.”
Homes on the market in Des Moines typically sell within 6-8 weeks, but now, according to market statistics from October, the average home is spending 11 weeks on the market. With those market conditions, and uncertain home mortgage costs, staging can make all the difference in snaring a buyer.