Grant County housing market on mend

Nathan Custer, regional sales manager of Arbor Homes — which operates Arbor Homes at The Heritage at University Village in Marion — classified Marion as “a steady market.”

“This wasn’t an area that was highly inflated before the crash,” he said, so Marion was shielded from that bubble burst in the real estate market.

“The market is good right now, and interest rates are scooting up a little bit,” said Linda Kitts, a Realtor at Century 21 Kilgore in Marion. “Homes are selling, and the market is the best it’s been in years.”

Custer said things are going so well at the Arbor Homes development that they are “just about to start development on 120 new sites in that community — that’s breaking news.”

“About 17 sites are land that we own, and we’re starting development immediately,” he said. “The other 100-plus is land that Meijer owns, and we’re in the process of purchasing it from them.”

Though U.S. home prices have risen for 14 consecutive months, first-time buyers are often left out.

According to the National Association of Realtors, first-time buyers accounted for 28 percent of existing home purchases in May, which was down from previous years. In May 2012, that number was 34 percent, in May 2011, it was 36 percent, it was 46 percent in May 2010, and it was 47 percent in May 2009.

One major factor that might be negatively affecting home ownership for young buyers is the increase in money owed on student loans.

Comments from the 28,000 consumers and industry leaders who participated in a June study by the Consumer Financial Protection Bureau indicated that one of the main steps taken by Millennials in debt is delaying home ownership.

According to the Census Bureau, the percentage of men living in their parents’ home rose from 13.5 percent to 16.9 percent from 2005-2012; for women, the rate went from 8.1 percent to 10.4 percent.

Student loan debt also affects the ability of younger home buyers to qualify for a mortgage.

Kitts called scraping together the requisite funds to purchase a house for recent graduates “a big issue.”

With real estate still being a buyer’s market, Kitts said some young people “are using family money” to dive into home ownership.

“Now, mom and dad are giving them the down payment on the home they’re buying,” she said.

A recent study from the United States Education Department said students are more likely to default on their student loans than full-time freshman are to graduate. The study looked at 265 colleges and universities in 40 states where at least 30 percent of students have loans.

Back on the positive side, however, home sales were up again in April and May.

According to the Standard & Poor’s Case-Shiller index — released June 25 — home prices rose a record 12.1 percent in the year ending in April. Year-over-year, all 20 cities in the index showed positive gains.

New home sales rose 2.1 percent from April to May — to their highest level in almost five years — according to the Census Bureau.

Kitts said the market is the best she’s seen since it plummeted in about 2008.

“I noticed a turnaround June 1, 2012,” she said. “People are able to get financing, and banks have loosened up.”

Because of this better news, however, mortgage rates are also increasing, and the Case-Shiller index measured home prices from sales that took place prior to interest rates elevating in early May.

Kitts said that foreclosures are still a big part of the market in this area.

For her, one-third of all home sales in Grant County this year — and in 2012 — were foreclosures.

Moreover, as more houses are purchased, supply decreases, and prices should rise. Custom-homes are still too expensive for most buyers, so many are electing to acquire existing homes.

Joe Grubb, a Realtor at Marion’s Century 21 Kilgore, said Marion and Grant County have drifted away from custom built homes, though that could change if the market continued to improve.

“We’re still on the existing homes, but the better the market gets, the more chance people will build ‘spec-homes,’” he said.

Prior to the economic downturn in 2008, some subdivisions were reaching 1,000 homes. Now, however, governments have begun restricting lot sizes.

The goal is fewer — but more higher-end — homes in a given area, with the hope that those homes will generate more in property taxes.

That is a trend Grubb said he’s seeing as well.

“The people who have the money are the ones having homes built, and they’re going with bigger homes,” he said.

Custer said there hasn’t been any downturn in sales in the Arbor Homes development — even during the past few years — but “the trend has been toward smaller homes.”

Now that the market has improved, however, larger homes are back in style. But, as interest rates continue to inch up from historic lows, the trend will move back to the “middle ground” in terms of size, he said.

The Marion Building Department’s Stephanie Gallaway said the homes currently being constructed in the Arbor Homes at The Heritage at University Village and Crane Pond developments are similar in size, shape, and scope to those built before the real estate crash. Both subdivisions are still constructing homes with regularity.

Another development, Fox Run, attempted to gain traction recently, but they haven’t had any development, Gallaway said.

Kitts said she believes the proposed wind farm near Swayzee will also depress the market locally.

“I’ve had four calls from people in Swayzee wanting to sell their homes,” she said. “They want out, now.”