A Stabilizing Market- From the St.Charles Suburban Journal
Monday, March 3rd, 2008Local housing market shows mixed signals
Well into the first quarter of 2008, the story on housing in St. Charles County remains largely one without a clear ending or even a strong hint of what the denouement might bring.
With the full results for 2007 in, St. Charles County evaded some of the more dramatic drops seen in other parts of the country in new home sales, and average sale price for existing homes remained flat.
But the number of existing home sales dropped 9.3 percent, and new home sales dropped 8.3 percent from 2006 to 2007. Nationally, those numbers were 12.8 percent and 26.4 percent, respectively.Building permit issuance tracked by the Home Builders Association of St. Louis and Eastern Missouri fell 6 percent from 2006 to 2007. During the same period, the St. Louis area as a whole saw an overall decrease in permits of 5 percent. Compared to 2005, the permits issued in St. Charles County fell 31.7 percent.
Joe Zanola, who owns Zanola Company/MarketGraphics in St. Louis, a housing market research firm, tracks new homes built and occupied. “What those numbers are indicating is a logical slowdown in permits in the last two years as we are closing and occupying a supply of homes created in ‘04 and ‘05 that was in excess,” Zanola said from a builders convention in Florida last week, adding that “we have a bit of oversupply.”
While permits can gauge homebuilder confidence in the ability to sell the homes they are building, closings on homes is a much steadier number than the ups and downs of permit numbers.
Merle Schneider, co-owner of Schneider Real Estate in St. Charles, thinks the market bottomed out near the end of November.
In a recovery market, he said, beginner buyers purchasing houses for between $130,000 and $150,000 lead the charge. Schneider said he recently sold a few properties in that range.
“I think we’ve hit the bottom of the trough in 2007,” he said.
Zanola expects median prices per square-footage to stabilize, which would stem some of the hits sellers have taken in a market that has weakened in past years. In order to ensure the health of the home market, Zanola says St. Charles County must provide better options for first-time homebuyers and the traditional retirement market, which typically seek smaller dwellings. Assuming a demand for larger lot sizes and larger homes has prohibited construction of such homes in recent years, Zanola said, laying some of the blame on lot sizes and zoning restrictions.
The entire St. Louis market ranked fifth on Forbes magazine’s list of America’s most stable housing markets. Because the area does not see great appreciation rates during periods of tremendous increases in home prices elsewhere in the country, it also does not swing hard the other way during slow periods.
Realtors in St. Charles County have undertaken a campaign to convince the public the situation is not as dire. During a news conference last week, St. Charles County Association of Realtors Chief Executive Officer Mark Stallmann tried to shift attention to the 2007 housing market’s performance in comparison to 2002, which he referred to as the “last normal market.” In the midst of public concern about the health of the housing market, the Realtors association has characterized the period of 2004 through 2006 as years of unusual growth that should not be used to gauge the present situation.
But subprime woes have touched the county market.
Missy Palitzsch, sales and marketing manager for Continental Title in St. Peters, said foreclosures in St. Charles County rose 10 to 15 percent in from 2006 to 2007. That was a greater rise than from 2005 to 2006, Palitzsch said, though she did not cite numbers.
A great part of that problem, she said, was that several people who put all their money into adjustable rate loans got into trouble when rates reset.
“By the third quarter, we’re hoping the correction has run its course,” she said.
Zanola acknowledges there are signs of weakness in the market in 2007, but argues it has stabilized.
“I feel like it’s stable and growing,” he said.
From 2006 to 2007:
Median home price: + 0.1 percent St. Charles County; - 1.4 percent Nationally
Single-family sales: - 9.3 percent St. Charles County; - 12.8 percent Nationally
New home sales: - 8.3 percent St. Charles County; - 26.4 percent Nationally