Despite all the doom and gloom reports about the national housing market, South Dakota realtors say the Yankton area has not been impacted.
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Buyers and sellers say it’s true: Now is a good time to get a new house in the South Dakota housing market. And according to the Sioux Falls Argus-Leader, the figures back up the claim.
Currently, mortgage interest rates hover around 6 percent. What that means favorable home loans for buyers. And there are not many homes listed in the $100,000-200,000 range, which is good for homeowners trying to sell.
The Sioux Falls housing market year-end numbers for 2006 hit a record high with 3,600 homes sold, five more than in 2005, the Realtor Association of the Sioux Empire reports. At the same time, residential home values increased by more than 2 percent.
The good news doesn’t necessarily extend to all segments of the home loan market.
Homes at some price levels are moving slowly, and because there are more homes on the market than needed, a slight building slowdown has occurred.
But for the most part, Sioux Falls’ housing market continues to churn on, unlike the situation in other parts of the country where reports of declines in sales and prices are common, said Barton Hacker, CEO of the Realtor Association of the Sioux Empire.
Pointing to figures collected from sales and purchases, Hacker said that although there are a lot of homes in the Sioux Falls regional inventory, sellers continue to get more than 98 percent of their listing price.
“We’re seeing increased inventory of homes, but prices are not dropping. What’s happening is that now there are more choices for buyers to select from, but the prices are remaining stable,” he said.
Depending on location and price, homes also are selling more quickly than a year ago. A home valued at $150,000-200,000 took 7.3 months to sell at this time last year, compared with 1.5 months today, according to local reports.
Keller wants to sell fast, since she already bought a new home in Hartford and doesn’t want double South Dakota mortgage payments. Before her $143,900 home was even listed a couple of weeks ago, there were several groups of people at her open house. During a Saturday blizzard.
“I have never sold a house before, so all this has been nerve-wracking for me,” Keller said.
Her house hit the multiple listing service through Dunham Co. late last month, and her Realtor is optimistic.
“I get e-mails from different lenders in town and noticed that the mortgage rates just went under 6 percent,” Don Dunham III said. “So that means that with our inventory of homes on the market, it truly is a great time to buy or sell, depending on your price range.”
“The middle price range has been selling very slowly this winter, but I think that when the sun comes out, we’ll see a lot more interest and traffic,” Clark-Zellmer said.
Statistics show it takes an estimated 3.9 months to sell a home valued at $300,000-350,000, down from the 13-month average sale time last year.
Sioux Falls has demonstrated a steady growth rate in recent years as South Dakota mortgage costs have remained relatively affordable.
“Sioux Falls is kind of the rabbit and turtle story: We’re the turtle,” Hacker said. “We’re slowly moving forward, and because of that, we’re beginning to see better trends here than you would see in California or Florida because we have that slow and steady growth.”
Follow the link to continue reading in the Sioux Falls Argus-Leader …
Darl Woolf sold his Rapid City, S.D., house six years ago and moved to Laramie, Wyoming. Now, according to the Rapid City Journal, he wants to come back home.
Six years ago, the Woolfs sold their Rapid City house for just under $100,000 - $30,000 less than the equivalent house in Laramie.
Now, Woolf isn’t sure how much the South Dakota housing market has changed since he moved away. But between selling in Laramie and buying in Rapid City, he hopes to come out ahead financially.
His timing, according to Realtors, is good. After the grim uncertainty of 2005 amid fears that Ellsworth Air Force Base would be closed, home prices in the Black Hills have leveled off in 2006.
The median price for homes sold through the Black Hills Board of Realtors last year was $147,900, up just 2.7 percent over 2005’s median price. The average price, just under $164,000, was up about the same.
More good news — for Realtors, anyway — is that the total value of homes sold ($384 million) was up about $6 million. And the better news is that houses were selling faster: 73 days on market, on average.
In 2005, it took 112 days to sell a house. Now, South Dakota mortgage demand is picking up and houses are moving faster. But is a modest 2.7 percent increase in home prices — about the same as inflation — cause for concern among Black Hills homeowners?
“We’ve heard all kinds of horror stories from other parts of the country, so I’m pretty proud of this market,” Marty Wilcox, sales manager at Heartland Real Estate, said.
Meanwhile, mortgage rates are favorable; a 30-year mortgage last week was 6.125 percent, down from as much as 8 percent six years ago.
Realtor Faith Wendt conceded that the market leveled off in 2006. But with prices falling and people unable to sell homes in other markets, realtively low home loan costs and stable prices are probably a good thing.
“We’ve been climbing for a number of years now. At some point, you’ve got to hit a nice level or you’re going to end up like the eastern and western sides of the country,” she said.
And so far, 2007 looks like it could be a good year, Wendt said.
“This is usually the time of year when we take vacations and our desks are very neat. But I have three listing appointments today,” she said.
Sellers with two mortgages and virtually no home equity might have cause to worry about the slow growth in home prices, Wendt said. “But for the overall market, I think that stabilizing out was needed,” she said.
New construction last year was down substantially. According to building permit figures, Rapid City and Pennington County had 440 housing starts last year, off 79 from 2005.
Experts say some of the blame for the home construction slowdown was the rising cost of copper, steel, cement, drywall and other materials. That also might have kept housing prices for existing properties from dropping.
For example, copper prices have increased about five-fold in the past five years. The average new home uses about 400 pounds of copper in water pipes and wiring. That item alone would have added $1,000 to the price.
“The cost of a new construction home — with the same square footage, same number of bedrooms — could cost $5,000 to $15,000 more,” Wilcox said.
That might have led people to shop instead for an existing home, which would be available for a smaller home mortgage loan than a new home in almost all cases.
SOURCE: Rapid City Journal
The Sioux Falls Argus-Leader reports that as the South Dakota city continues to grow, so does the number of homes sold.
It seems like simple logic – more people move to an area, therefore more homes are sold. Barton Hacker, CEO of the Realtor Association of the Sioux Empire, believes there’s more to it than that, though.
“Some of it is just a function of population growth,” Hacker said. “But there’s got to be a reason for that growth.”
Some of those reasons, Hacker said, are a strong economy, prices leveling off, and even declining in some areas, mortgage interest rates being near historic lows and more jobs being generated by projects such as Sanford Health.
“That whole project is going to improve the quality of life in Sioux Falls,” Hacker said of the Sioux Falls housing market. “It’s not going to happen all at once, but it’s going to be huge.”
According to statistics compiled by the local South Dakota Realtors, 2006 broke a record high for the number of homes sold with a total of 3,600. That number broke the previous record of 3,595 homes sold in 2005.
Those numbers also revealed an increase of over 2 percent in residential home values, boosting values from $153,162 in 2005 to $156,641.
Bruce Berger, an agent with RE/MAX, attributed that increase to modest South Dakota mortgage costs and the types of home being sold.
“I think that has to do with more expensive houses being sold. The way I’m looking at the market, we don’t have a lot of houses in the mid-level price range,” he said.
Hacker doesn’t fully agree with that.
“Mid-range homes are staying on the market a little longer. But sellers are getting about 98.5 percent of their asking price. Industry-wide, it’s a very strong market,” he said.
Lisa Ottmar, public relations director for the Home Builders Association, agreed with Hacker.
“Interest rates are at historic lows,” she said. “A lot of people are thinking [home mortgage] rates are going up, but they’re still low. The economy is really good in Sioux Falls. Especially with the whole Sioux Valley - Sanford deal.”
To combat the negativity people are hearing about the housing market, area home builder and Realtor groups have joined together to promote a year-long campaign called “It’s a Great Time to Buy.”
That pretty much speaks for itself.
“Price levels here have not increased like some areas of the country have,” Hacker said said. “Sioux Falls is almost the perfect storm for home sales.”
SOURCE: Sioux Falls Argus-Leader
A long-anticipated project by Sanford Health is going to open a lot of new doors in the medical field, but Realtors in the South Dakota housing market see it as a window of opportunity for their own careers.
It’s been the cold reality of home sales across the country.
Hundreds of new listings on the market for more than a year with no buyers, with prices flat if not falling. Here is no exception, with South Dakota mortgage demand remaining tepid at best.
But Sioux Falls realtors think for sale signs will soon read “pending.”
“Our market share will actually go up as far as people out there looking for homes,” said Clark Kelly, a real estate agent with Dunham Company.
Clark Kelly says realtors with Dunham talked about the opportunities that will come to Sioux Falls with Sanford Health promising to bring in 9,200 new workers over the next 10 years.
There are 1,600 homes to choose from right now in Sioux Falls. Kelly says as more people move to town looking for a place to live, the price of homes could jump.
“It certainly could strengthen the market as far as a seller’s side, a seller could feel that it could strengthen the area’s housing prices a little bit.”
The Sioux Falls housing market saw about a three month lull last summer, but it’s rebounded since then. Minnesota and Iowa mortgage activity has also picked back up in the areas of those neighboring states closest to South Dakota.
Now, with the announcement of Sanford Health planning to expand, Realtor groups and other real estate professionals are hoping that upward trend will continue.
“We had a very strong year again last year, but this will certainly force and expand the opportunity that’s going on in Sioux Falls, we’re going to have a very strong market for the next five years now because of this,” said Kelly.
It doesn’t grab the headlines, but the South Dakota housing market has gotten increasingly expensive in the past few years like much of the rest of the United States.
The reason? An explosion in bad credit mortgage lending.
Now that it’s gotten out of hand and more and more homeowners are staring down the barrel of default, the state’s banking division wants you to understand what you are getting into before you sign up for an interest-only mortgage or another non-traditional loan product.
According to the Sioux Falls Argus-Leader, the South Dakota state banking division this week adopted guidelines on non-traditional mortgages sold by lenders licensed by the state.
Roger Novotny, Director of Revenue for the state, as well as the S.D. banking department’s regulation’s division, said the guidelines will help promote consistent regulation for every mortgage lender and offer another layer of protection for consumers.
Mortgage lenders will have to more clearly define the potential risks and benefits of non-traditional mortgages to consumers.
“The guidance is designed to clarify how residential mortgage providers can offer non-traditional mortgage products in a way that clearly discloses the risks borrowers may assume,” Novotny said.
“By disclosing those risks, it will help to protect consumers from taking on high-risk mortgages without having a full understanding of the terms of such home mortgage loans.”
The state guidelines mirror those developed by the U.S. government earlier this year. Other states have already followed suit. Connecticut mortgage lenders will be subject to the new rules, and New Hampshire is close to passing the regulations as well.
Homeowners in every state but Alaska spent more of their incomes on housing costs last year than at the start of the decade, according to data released by the U.S. Census Bureau.
In South Dakota, where residents’ median income is $40,310, 25 percent of all homeowners with a home mortgage spent 30 percent or more of their income for housing. For renters, that figure jumps to 35 percent.
The median monthly housing cost for home loan holders in South Dakota was $986. For renters, it was $500. The government considers housing costs excessive if they top 30 percent of household income.
Hugh Grogan, director of the Minnehaha County Human Services Department, said 30-35 percent of an income going to housing and utilities is typical.
“The issue is with low-income residents. We see so many people not in subsidized housing paying 40-45 percent. Thirty percent plus utilities could be a stretch for people, and it’s a definite stretch for people at the low end,” he told the Sioux Falls Argus-Leader.
While residents of smaller towns often pay less for rent, that could be balanced by the higher cost of utilities. Housing costs, by definition, are mortgage payments, taxes, insurance and utilities.
That’s why when looking at home ownership, a person must look at more than just the South Dakota mortgage payment, said Lorri Halverson, director of Consumer Credit Counseling of Lutheran Social Services.
“So it’s never something as simple as, ‘At this percentage you can do it and at another percentage you can’t,’” she said.
“If you’re making $2,000 a month and paying 30 percent for housing, you have quite a bit more discretionary income to balance the buffers. That’s not to say someone on a lower fixed income can’t do home ownership, but it’s very individually based.”
There is no easy way to decide if it would be better to rent or to own.
“We’ve known for quite time the cost burden in South Dakota is high because incomes are lower. So when we’re working with someone who’s considering home ownership, there are a number of things to look at,” she said.
That includes the stability of their jobs and how long they plan to stay there. In the Upper Midwest, the Minnesota real estate market has the most expensive average housing.
The median housing value of owner-occupied housing units in Minnesota is $198,800, compared to just $101,700 for South Dakota and an even smaller $88,600 in North Dakota.
Those Minnesota homeowners also pay the most for their homes per month: $1,351, compared to $986 in South Dakota and $972 in North Dakota.
America’s home ownership rate is at a near-record 68.7 percent, but despite that, many housing advocates warn that declining amounts of affordable housing made it hard for low-income owners to keep their homes.
The Sioux Falls housing market is stronger than the U.S. market, according to Barton Hacker, director of the Realtors Association of the Sioux Empire.
There is a slowdown in new construction, but sales continue at the same level. The only real slowdown he has seen is in the number of buyers for houses that cost more than $250,000. Those homes are staying on the market a little bit longer, and the inventory of those homes is a little bit higher than it was a year ago.
Home prices still are much higher than they were in 2000. Nationally, the median home values jumped 32 percent from 2000 to 2005, to $167,500. In this area, the increase in median home values is much more reasonable, in the 5-7 percent range. Median home value in Sioux Falls has increased from $152,000 to $157,000.