Pending April sales show bright spot for local housing market

While new home sales for the first quarter of 2009 have lagged somewhat behind those for the same period a year ago, April may be brighter for Cape Girardeau County.

Through March, 172 residential units sold for about $21 million, compared to 205 units sold at $28.5 million during the same time period in 2008, according to the Cape County Multiple Listing Service.

About 165 additional units in the area are under contract -- that is, in the final stages of being sold -- and are listed at $23.2 million. In April 2008, 109 homes listed at $12.2 million were sold.

Bill Cole, broker and owner of Realty Executives of Cape County, expects many of the homes under contract to close by April 30.

"I am optimistic about 2009," Cole said. "The reality of historical low mortgage rates, favorable home prices and first-time homebuyer income tax credits is creating enormous interest from buyers. I believe the fact that so much property is already under contract is a good indication that the market is heating up."

Several homes are for sale along Bessie Street in Cape Girardeau. (KIT DOYLE ~ kdoyle@semissourian.com)

Cole said March was Realty Executive's second-best March on record, with 19 percent more contracts written than in March 2008. He said that is "largely because buyers are realizing that we have a rare opportunity where mortgage rates are at historic lows and home prices are favorable."

The National Realtors Association also reported an increase in pending contracts signed in February to 82.1 on its Pending Home Sales Index, an increase from 80.4 in January. An index of 100 is equal to the average level of contract activity in 2001.

"My sense is that the housing market in Cape County is holding up better than it is in many other parts of the state and country," said Michael Devaney, a professor of finance at Southeast Missouri State University who has studied housing trends. "This partly has to do with the fact that the local bubble was less severe and the economic base is fairly well diversified into health care, government, education and more."

John Thompson, president of the Bank of Missouri, said lower prices and interest rates at or below 5 percent may motivate some people to buy a home.

A first-time homebuyers tax credit of up to $8,000 for those who purchase a home by Dec. 1 is another motivator, he said. Homes that cost $80,000 or more qualify for the $8,000 credit while homes costing less will be 10 percent of the total cost. Unlike the 2008 homebuyers tax credit, this one does not require repayment.

"The one criteria that may be missing for some is their own personal confidence level with the stability of their job and in turn their income," Thompson said.

To entice buyers, some developers have offered deep discounts and incentives.

Enclave Lake Estates, a new 92-lot gated subdivision near Gordonville, is offering a one-year 3.75 percent interest rate on its new homes purchased. Homes at Enclave Lake Estates start at $189,000.

At Warren Place in Jackson, zero percent financing is being offered to those purchasing lots for the construction of a home. The development offers 90 lots starting at $29,900.

"We feel there are some prospective lot purchasers in the marketplace who have identified that this is still a good time to acquire a quality building lot with the amenities found in Warren Place," said Tom Kelsey, broker with Lorimont Place Ltd., which owns the development. "With interest rates at historically low levels and building contractors not so loaded up on projects, many have discovered it is an excellent time to construct their dream home. We felt incentives, such as price discounts and zero percent financing, is a way to attract and motivate these prospective buyers in the marketplace to purchase now."

While Cape Girardeau and Jackson saw little change in the number of permits for new homes issued in the first quarter, they did experience a significant drop in the total value of homes constructed.

In Cape Girardeau, the city has issued seven building permits for single-family homes through March, the same number for the first three months of 2008. The value of those projects is $627,592, compared to $2,093,924 in 2008.

In Jackson, seven single-family home building permits were issued through March, compared to nine such permits in the first quarter of 2008. Permits issued for January through March totaled $808,000 while those in 2008 totaled $1,629,500.

Janet Sanders, Jackson city building and planning superintendent, said she started seeing the trend toward building lower-priced homes in late 2008.

"Once they dropped under $175,000 is when I started noticing it," Sanders said. "There had been a few at that price level in the past but not as many. Now the trend is more closer to the $100,000 range or less.

"The developers are doing what we call speculative homes where they are building on older, existing lots in some of the older neighborhoods where the homes are smaller and fit more into those neighborhoods at a lower cost."

bblackwell@semissourian.com

388-3628

By the numbers

First-quarter new home building permits and their total value, 2009

Cape Girardeau: Seven at $627,592

Jackson: Seven at $808,000

First-quarter new home building permits, 2008

Cape Girardeau: Seven at $$2,093,924

Jackson: Nine at $1,629,500

First-quarter area new home units sold and amount, 2009

172 valued at $21 million

First quarter area new home units sold and amount, 2008

205 valued at $28.5 million

Pertinent address:

Cape Girardeau, MO