Many people in the local real estate industry were hoping for a recovery in the housing market in 2011. But while values for existing single-family homes have rebounded in the area, developers last year took out the fewest number of permits in Stark County for new home construction since 2004.
More than eight months ago, local real estate professionals were predicting that the housing market would recover in 2011.
They cited low interest rates, more inquiries from buyers, better attendance at open houses and the sentiment that the market couldn’t get any worse.
They were partially right.
After three years of declines, the median single-family home sale price for Stark County rose in 2011 by 2.7 percent to $82,500, according to data on arms-length sales from the Stark County Auditor’s Office.
“We think certainly the worst is over and we’re on the way up,” said Joe Race, executive director of the Building Industry Association of Stark County. “I think in 2012, you’re going to see a significant uptick.”
But the county still is a long way from reversing the 34 percent slide from its median home price of $124,900 in 2007.
And while homes in many communities including Canton, Massillon and Alliance sold at higher prices last year, the number of arms-length sales of single-family homes throughout Stark County declined from 3,613 in 2010 to 3,352 in 2011. That was slightly above the 3,311 of 2007.
Meanwhile, many communities saw no improvement. Median home sales prices fell last year in several suburban areas:
• North Canton, down 2.7 percent to $116,600.
• Jackson Township, down 5.5 percent to $159,950.
• Lake Township, down 7.5 percent to $144,750.
• Perry Township, down 11 percent to $77,000.
Data from the National Association of Realtors, which unlike the county’s numbers do not include auction sales, also hinted at a recovery in Stark and Carroll counties. From January through March, the median sale price for single-family homes in the two counties was $98,600, up 21 percent.
But during the more active buying season of April to June, the median sale price dropped 1.5 percent to $109,800 — still higher, though, than the second-quarter median price of $101,500 in 2009.
For July through September, the median price climbed about 12 percent to a preliminary figure of $88,700. The final figure for that quarter and the median price for all of 2011 won’t be released until February.
“It seems to be coming back a little bit,” said Richard Kiko Jr., CEO of Kiko Auctioneers and Realtors. “Prices are starting to rebound.”
HOPES FOR FUTURE
Kiko said buyers have little interest in homes now worth less than $50,000. It’s homes above that tier that are recovering, he said, especially with almost no new home construction to compete for buyers.
He believes that the market for homes above $50,000 will come roaring back in 2013 or 2014 as more people save up the larger down payments demanded by lenders. And Kiko expects oil and gas exploration around Stark County will further drive demand for homes.
“If these people (employed in the energy industry) live in a hotel for three months, they’ll probably want a place to live,” he said.
Page 2 of 3 - FOLLOWING UP
Last month, The Repository called people in real estate whom it interviewed in March and April, to determine how they had done in 2011.
In March, real estate agent John Wolanin was working to sell a foreclosed bungalow on 33rd Street NE and Maxine Avenue NE in Plain Township. With the home valued at $89,000 in 2009, the owner CitiMortgage had dropped the asking price to $43,900 by January 2011. Two months later, it had been slashed to $29,900.
Wolanin said at least three prospective buyers submitted bids, pushing the price up to $31,000. One bidder planned to live in the house but couldn’t get approved for the loan. The bungalow ended up selling on April 27 to an investor who planned to make it a rental.
The agent said that many owners still can’t sell their homes at today’s prices because of their outstanding loan balances, but that many first-time buyers are entering the market.
He estimates his sales volume was up 3 to 4 percent in 2011 as values stabilized. He sold about 38 homes, all of them owned by banks that aggressively slashed prices to get foreclosed properties off their books. In addition, his listings were on the market an average of less than 40 days, down from 112 the year before.
“Homes in good conditions in good locations are selling,” Wolanin said. “Price cures all obstacles.”
A home a couple doors from the bungalow has not sold after more than two years on the market. Listed at $109,900, the owner can’t significantly lower the price because he owes more than $100,000 on the mortgage and doesn’t have enough cash to bring to the sale.
FEWER HOUSING STARTS
While values have recovered in some areas since 2011, the market for new homes has apparently sunk further.
The number of permits in Stark County issued for construction of single-family homes fell significantly, according to the Building Industry Association of Stark County. Between January and October, permits declined by 37 percent to 173 — the fewest permits for the 10-month period since 2004. The drop came after a recovery of 25 percent in that period in 2010 to 276 permits.
Figures for November and December are not yet available.
In April, Bob Leach, a builder and president of Regal Construction, expressed hope that 2011 would bring improvement to his industry. He was building seven spec homes last spring, homes for which he hadn’t lined up buyers in advance, hoping he was on the cusp of a turnaround.
Last month, Leach said he sold those seven homes, but at lower prices than he anticipated.
“Our expectations were not met,” said Leach, whose company once built about 70 homes a year. “You can’t build at $200,000 and sell them for $180,000.”
Leach said he also lost two or three sales where he had a firm offer but the buyer couldn’t get financing.
Page 3 of 3 - “It’s a two-month ordeal to get someone approved,” he said. “You have to sell a home three times. You have to sell it to the buyers. You have to sell it to the bank. You have to sell it to the appraiser.”
Leach said he has changed strategies. Rather than building homes in the $130,000 end of the market and competing against the large inventory of existing homes, he now focuses on custom homes costing $300,000 to $500,000.
“We faced reality,” he said. “We had ambitions and hopes that things were beginning to turn. So you hold on and hold on and do what you have to do to keep the cruise going.”
Custom homes may be where the action is.
James Rudo, president of VictoryGate Custom Homes, said he had a good year. VictoryGate sold 22 homes in 2011, he said, up one from 2010. Many of the firm’s homes, including lots, sold for about $230,000. All went to married couples, of whom about a third were buying their first home.
“Next year will be a good year, too,” Rudo predicted. “People aren’t scared anymore.”
Leach is taking a wait-and-see approach.
“Maybe housing will make a recovery,” he said. “But I’ll believe it when I see it.”