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Local home sales down: Buyers are 'in the catbird seat'
[July 20, 2008]

Local home sales down: Buyers are 'in the catbird seat'

(Messenger-Inquirer (Owensboro, KY) (KRT) Via Acquire Media NewsEdge) Jul. 20--Mike and Ashley Lawing put their house, at 2121 Locust St., on the market two months ago.

"We've showed it a lot," he said last week. "But the best offer hasn't been close to what we need. So, we're going to try to rent it for $1,000 a month until the economy improves."

The national economy -- rising unemployment, gas and grocery prices -- has put the brakes on home sales nationally, with the National Association of Realtors reporting that sales in May were down 15.9 percent from the same month last year.

The Owensboro housing market is still better than many parts of the country.

But even Tony Clark, who wrote the book on optimism, is seeing as many clouds as silver linings these days.

"I don't want to paint a gloomy picture," Clark, president of the Owensboro Board of Realtors, said last week. "But I don't want to paint a sunny picture either."

Board records show that home sales in Daviess County dropped 21 percent in the first half of 2008 -- from 738 houses in the first half of 2007 to 583.

The total value of the houses sold dropped 17 percent during the period -- down $14.2 million -- from $83.4 million to $69.2 million.

But the average price of houses sold climbed 5 percent -- from $113,057 to $118,693.

"Our actual inventory of houses is falling," Clark said. "Fewer people are putting their houses on the market this year. That's helping keep prices up."

A lower inventory is good for those trying to sell property, said Tony Schaad, associate executive for the board of Realtors.

"If listings keep rising in a down market, prices will drop," he said. "This is keeping stability in the market."

There is only a seven-month inventory of houses in the popular $150,000 to $200,000 price range, Clark said.

At the current rate of sales, if no other houses were added in that range, all would be sold in seven months, he said.

"As long as listings are priced right, they are selling," Clark said.

Lawing said his property, priced at $169,000, includes a vacant lot next door.

"Our house looks like it's priced high for the neighborhood," he said. "But it has a lot more land."

Schaad said that among houses that sold in the first half of the year, the average stay on the market was 118 days. That's about the same as last year.

With home sales down 21 percent, Realtors are having to "work harder and smarter now," says Robert Johnson, who won the top-producer award at Home Realty GMAC for selling 59 properties in 2007.

"Things are slower this year, but they're not as slow as they are in some of the larger cities," Johnson said. "I probably won't sell as many houses this year."

"We have Realtors who are taking part-time jobs to augment their income," Clark said. "We just have to ride the storm out. It's unusual this time because it turned on us when interest rates were low. Usually, it happens when interest rates are high."

"It's like any business," Johnson said. "Some people come and some people go. When things are easy, anybody can do it. But it's not easy now. I put in a lot of odd hours. It's most definitely not a 9-to-5 job."

Even Realtors who are struggling are keeping their dues paid, Schaad said.

"We had 204 members last July and we have 194 today," he said at midweek. "But we could be back to 200 by the end of the week. They know the economy is going to come back, and they want to be ready for it."

The decline in local sales escalated in the second quarter, when 24.5 percent fewer houses were sold than a year ago.

The first quarter decrease was 16 percent.

A drop in home sales rarely translates into more business for auctioneers, said Bill Kurtz of Kurtz Auction & Realty Co.

"That's a small element of auctions," he said. "When people have no equity in a house, we can't help them. About 90 percent of the people who choose auctions do so because of business decisions, not financial decisions."

Lawing's family wants to move to Henderson.

"My wife works in Henderson, the kids are in day care in Henderson and I'm teaching part-time in Henderson," he said. "So, we're driving back and forth with $4 gas until we can either sell or rent the house. We don't want to take a chance on buying a house there until we can sell this one. We did that when we moved here from Nashville and making two house payments really ate up our savings."

After the move, he'll still be driving to Owensboro for his day job as assistant director of the International Bluegrass Music Museum.

"If I had the money, I'd be buying houses all over the place," Lawing said. "I'm starting to see signs that say, 'Make offer'."

"We've got to have an upturn in the economy, so people will have faith in making major purchases," Clark said. "Everybody is being very cautious right now. I know I am."

The National Association of Realtors is predicting an improvement in the second half of 2008 and a 5 percent increase nationally in 2009.

"Lenders are starting to breathe a little easier," Schaad said. "If people have reasonable credit and a job, loans can be made. If you're a buyer, this is your time. You're in the catbird seat."

Nationally, the conventional loan rate in May was 6.04 percent interest, down from 6.26 percent last year, he said.

But Schaad said he's seeing changes in the way houses are paid for.

Since 2006, the number of conventional bank loans here in the first six months has dropped from 513 to 343. Federal Housing Administration government-backed loans have risen from 21 to 85. And cash sales have dipped slightly from 80 to 77.

The median price of a home here in the first half of 2008 was $103,475, Schaad said. That's half the median national price of $206,700, he said.

"You can buy great homes here for almost nothing," Schaad said.

Local houses are holding their value better than the national average, he said.

Nationally, the median price -- the level at which half sell for more and half sell for less -- has dropped 6.8 percent in the past year, Schaad said.

"In our local market, the median has increased 10 percent," he said.

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