Slowing market may not be all bad
KINGMAN - Headlines around the country are portraying the housing market as "gloomy," "hopeless" and, for those non-sensationalists, "slow." But a different phenomenon is taking place in Kingman.
No, Kingman isn't so special that it's dodged the national slump, but there may be an advantage to the slowing market if you don't like growth.
If the market continues to stagger, which is the assumption given the abnormally stellar market of the past two years, construction of new developments, homes and subdivisions aren't likely to increase. If fewer people are buying homes, fewer new homes will be built and the mass influx of developers who've migrated to Kingman will leave.
It's been a gripe of constituents since Mayor Les Byram took office in June that he's abandoned his campaign promises by allowing into the city big contractors seeking land for subdivisions and new homes. But some Kingmanites predict that the hordes of realtors and builders who inundated the growing city to earn an extra buck - many of them before Byram took office - will filter out as the housing market continues to slow.
By year's end, John Kirby, sales manager at Angle Homes Inc., is expecting a 20 percent decrease in the number of new homes the company builds. And right now, he said, because the market is flooded with builders, his outlook on 2007 isn't positive.
He added that the downward trend "will definitely filter out some of the companies."
"It'll be interesting to see who's standing when the dust settles. It's just who was smart with managing their resources when the market was good," he added.
Second, exactly how much the market has slowed has been a controversial topic as homeowners and constituents increasingly fret over plummeting home values, which are measured by the closing price. To claim, as many realtors and market analysts have on the national level, that buying a home right now is a bad idea isn't necessarily the same perspective held by local Realtors.
National statistics are far worse than numbers the Southwest region is putting up, one realtor said.
Bob Bass of Century 21 Barbara Ricca Realty said, "Kingman is still doing pretty well compared to everybody else."
Prices are falling, and interest rates are respectable. "Its an excellent time to buy a house right now," he said.
Bass was last year's No. 1 sales agent in the Southwest region, which includes Las Vegas and Phoenix. Currently, Bass sits at No. 9. Another Kingman realtor is at No. 14, and one from Lake Havasu City holds the No. 17 spot, Bass said.
"You have two agents in the entire southwest region out of Kingman, Ariz., that are sitting 9 and 14, that tells you the market's not too bad," he said.
For those residents worried about home value, the message Realtors are sending is that the heavenly market of the last few years was abnormal. "We definitely saw in the last couple of years a fluke in the market, as far as how it took off," said Bass.
"The type of buying and selling that was happening, the increase in price, that wasn't normal at all," he added.
Buyers want prices to be low, but not to continue to fall because that would decrease the value of their home. Sellers want prices high to make a profit on their investment.
The average price of a single-family home on the market in Kingman this year is $249,843 and falling, according to data collected by Todd Tarson, president of the Kingman/Golden Valley Association of Realtors and Realtor at RE/MAX Preferred Professionals. Drop $13,000 from that for the October average. September's average asking price fell below October by nearly $11,000. The big difference was realized in the selling price, which on average was $40,000 below the yearly asking price, according to Tarson, whose data includes Valle Vista, Kingman, the Hualapai areas and Golden Valley. Between September and October, the selling price fell $20,000 to $201,250 for the average home.
"Everybody's sitting here ready to hit the panic button," Kirby said. But Kirby's not going to be the one to push it. With a good reputation and good fortune, Angle Homes hasn't had to slash prices, although it has lost some employees. And while he's seeing a decrease in homes being built, the company is doing enough business, he said, to keep their heads above water. Angle Homes, which has been in Kingman since 1996, didn't outsource any work. It kept everything in-house during the last few years of a bustling market.
To hope for anything to continue like that would only postpone, and likely worsen, a future market crash.
Kingman home sales, as expected, are down compared to earlier this year. November saw 113 new listings, but because of a new data entry system, Tarson said there may be 103. October saw 109 houses go on the market, and 46 sales (42 percent.) That's 13 fewer homes than the previous month and an 8 percent lower sales average than the year average. June and August reached 70, according to Tarson's reports, but they've dropped from 104 in January, falling to the lowest this year for October. The difference from October to the yearly average, about 8 percent, is between four in 10 houses selling versus five in ten. For November, according to Tarson's calculations, 113 homes have gone on the market. Five have entered contracts and already sold.
The recent downturn isn't solely a product of a slow market. This time of year, the number of homes sold and built usually decline anyway. And this compounding might be making the market look worse than it actually is.
"Over the last few years, we were very fortunate - there was no slowdown at all," Kirby said.
The question all Realtors have come to abhor is, how long will this downward trend last? In a perfect market, the amount of time it takes to peak matches exactly the amount it takes to hit the trough. Unfortunately, too many factors make a perfect market impossible.
When prices do start going back up, wannabe buyers will hit the news stands to pick up a fresh copy of the home-buyers guide, because "people don't want to buy when they think they're going to lose" value on their homes, Kirby said.
"They want to hear that we've hit bottom and know prices will go back up."
There have been some analysts who've made predictions about when the market will recover, but Realtors in Kingman have mostly kept quiet. To make such a prediction, given the large number of factors such as interest rates, inventory, general economic stability, inflation and the changing price of materials, would be idealistic at best. And one factor, the number of quality jobs, is another significant determinant of how many people are out buying homes.
Without adequate paying jobs, people aren't going to buy.