Cape's construction holding its own

Despite the recent economic slowdown, the home construction business in the Cape Girardeau area hasn't suffered.

Figures from the Cape Girardeau city manager's office show that building permits for single-family homes for 2001 have actually run slightly ahead of those issued in 2000.

Fifty-six building permits were issued for single-family residences in 2000. For 2001, 59 of those type of permits were issued. In 2000, construction costs for new homes was $8,937,149. The figure for 2001 new home construction was $9,247,897.

Real estate agents and bankers say the reasons for this booming home business are a combination of low interest rates, increased competition in the mortgage industry and a buyer's market.

"Even those who are not buying new are moving up, maybe from a $150,000 house to a $200,000 house," said Ken Inman of Century 21 Ashland Realty.

He expects the low interest rates to continue for at least the rest of the year, based on his conversations with lenders.

"But once the rest of the economy starts moving, the rates will start going up," he said.

David Shell, vice president of commercial lending at Commerce Bank, agrees.

"At some point the interest rates will start going up," Shell said. "But they've been in a pretty stable environment for the past two years, and I expect that to continue for the foreseeable future."

Roger Suedekum, senior vice president at Union Planters Bank in Cape Girardeau, said interest rates are the lowest he's seen them in at least 20 years.

"I remember back in 1979 when the prime rate was over 21 percent," Suedekum said. "To be down now to a 6.75 for a 30-year fixed rate is just a terrific opportunity for people wanting to buy homes."

'Almost free money'

And he noted that buying a new home is not the only option -- home equity rates are down to 4.75 percent. "That's almost free money for people who basically like their home, but just want to improve it," he said.

Because so many people are seeking to buy, that has created a market of homes for sale, also, Suedekum said. As a result, between low interest rates and the high availability of houses, it's really a buyer's market.

"It's almost to the point that you can throw a dart at a map of the Cape-Jackson area and find a house for sale in any neighborhood," Suedekum said.

Last August, before the Sept. 11 attacks, the nationwide average for a 30-year fixed-rate mortgage fell to 8.04 percent, the lowest level in some time. The long-term mortgage rate had reached a five-year high of 8.64 in May 1999.

The idea of interest rates dropping below 8 percent seemed only a somewhat remote possibility. Now those rates range as low as 6.25 to 6.8.

Though that has not been good for people with CDs, savings accounts and money market mutual funds, it has been great news for borrowers.

More lenders to pick from

Michael Annis of Michael Annis Construction says there is another factor creating a positive home-buying market -- the advent of the mortgage broker as a lender. Up to 80 percent of moderately priced homes Annis is building are financed through mortgage brokers.

"Just two to three years ago, that was unheard of," Annis said. "This just gives the consumer more options. Instead of only having six lending institutions to choose from for a loan, now they have more like 30."

And now that the rain has stopped, he says construction people are taking full advantage of the weather and market to get as many homes as possible built right now. He says it's hard to keep crews staffed with well-qualified workers because they're so busy.

When demand is high for homebuilding workers, that can create some minor problems for people needing work done.

"I've been trying to find a carpenter to do just a small job for me," said Inman with a laugh. "I can't find one. They are all busy."