Through the roof

In 2003, the lowest interest rates in four decades sent Cape Girardeau County residents on a home-buying binge, pushing sales of previously owned houses up 21 percent over last year.

"With rates being down right now, it's an excellent time to buy a home," said Lance Gragg, whose family on Wednesday looked at a home for sale on Gordonville Road in Cape Girardeau.

"After the first of the year, nobody knows," said Gragg, who also is a mortgage lender. "The rates could go up."

As of Dec. 23, there were 985 homes sold in 2003 in Cape Girardeau County, including the cities of Cape Girardeau and Jackson, for a total of $122.7 million, according to the county's Multi-List Service Inc., which tracks such statistics. In 2002, there were 813 residential houses sold for a total of $96.4 million.

Those numbers do not include homes that are for sale by owner.

The average price of homes under $200,000 -- the vast majority of homes in Cape Girardeau County -- was $102,000.

"It was a good year that started kind of slow," said Thomas L. Meyer, owner of the Thomas L. Meyer Realty Co. "In early February, things started turning around. From then on, it's been very active and very substantial."

Gary Lange, a broker with Capaha Realty in Cape Girardeau, said people saw the low interest rates as a means to move into nicer and more valuable homes.

"They can buy a bigger house now with less payments," Lange said.

The low interest rates were key, said Dr. Mike Devaney, a finance professor at Southeast Missouri State University and a real estate appraiser. "It bottomed out at about 5 percent and that's the lowest interest rate in 40 years. That has a natural effect."

On Friday afternoon, the fixed rate for 30-year loans for homes between $100,000 and $174,000 was 5.875 percent. Rates change daily.

People also have used the lower interest rates to borrow against the equity in their homes to pay down some consumer debt, Devaney said. That debt will still come due, he said.

"So it's sort of like borrowing against your future," he said. "But overall I think the housing market in Cape is real healthy."

Looking into next year

Devaney said things won't change a lot next year, and he expects interest rates to climb by no more than 1 percent or so. Slightly higher rates might reduce the number of refinancings, he said, but probably won't be prohibitive to people who want to buy a house.

Bill King, president of the Multi-List service and broker-owner of Century 21 Heartland in Jackson, said people are beginning to feel more comfortable spending money as the economy improves.

"Consumer confidence is beginning to rise," he said. "This is the best year I've seen in the 3 1/2 years I've been in the business."

The 21 percent increase in Cape Girardeau County is more than twice as much as the United States will see as a whole. Nationally, existing-home sales are expected to increase 9.1 percent to a record 6.07 million and appreciation is expected to average 9.1 percent this year, according to a forecast from the National Association of Realtors.

The national median home price is expected to be $172,600.

Unless mortgage rates jump significantly, Realtors expect a similar pace of home sales and slightly higher appreciation next year. The national Realtors group is projecting about 5.81 million home sales in 2004.

smoyers@semissourian.com

335-6611, extension 137