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House sales downturn surfaces in B-N
By Michelle Koetters
mkoetters@pantagraph.com
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BLOOMINGTON — Builder Vic Armstrong considers himself pretty fortunate.

In the first six months of the year, he’s closed on 21 new houses in Bloomington-Normal. That’s three houses fewer than he sold in the first half of 2006 — and the first time in a long time that he remembers not increasing sales.

But he puts it in perspective.

New construction was down about 32 percent in Bloomington-Normal from January through June. The National Association of Realtors expects nationwide new home sales to drop from 1.05 million in 2006 to 860,000 in 2007. Existing home sales also are projected to fall from 6.48 million last year to 6.18 million this year.

“So I’m pretty lucky, I think,” said Armstrong, president and owner of Armstrong Construction.

The less-than-ideal national picture has become a benchmark for real estate professionals in the Twin Cities to surpass. Compared to many markets nationwide, the local market has fared very well, said Lynn Nalewanski, president-elect of the Bloomington-Normal Association of Realtors.

“We’ve peaked, and now we’re leveling,” Nalewanski said. “We’re coming back to normal.”

Real estate agents sold 1,323 homes in Bloomington-Normal in the first six months of the year, almost 10 percent less than the 1,464 houses that sold through June 2006.

The fact that sales in 2007 are not keeping up with sales from 2006 — which ended up slightly behind 2005’s record year — does not signal a despairing market, Nalewanski said.

“It is still good. It’s just not like it was when the (interest) rates were 4, 5 percent,” Nalewanski said.

Buyers flocked to the real estate market a

market

From C1

few years ago when mortgage rates dropped, Nalewanski said. Compared to rates at 7 or 8 percent 10 years ago, today’s rates in the upper-6 percent range are good, but people have to get used to that number again, she said.

Buyers also have shied away from the housing market for now because of the fluctuations with the stock market, Nalewanski said.

But she also predicts people who got five- or seven-year adjustable rate mortgages a few years ago when interest rates were low will have to refinance soon. Those individuals might decide to buy a new house since their interest rate will go up either way, Nalewanski said.

For those homeowners and others who want to buy, they can pick from a good selection of homes since fewer buyers are out, Nalewanski said.

“It is a buyers’ market right now,” Nalewanski said. “We’ve got a lot of properties out there.”

But sellers do not need to feel like they’re suffering at the fortune of buyers.

People got used to seeing homes sell quickly, but now it’s really important to make sure your home is in good condition and priced competitively, Nalewanski said. Competitive does not mean a seller needs to take a drastic price reduction, though, she said.

“You don’t have to feel like you’re giving your house away in this market,” Nalewanski said.

At the same time, whether the market will pick up for the rest of the year is uncertain, Nalewanski said.

April, May and June typically are the strongest months of the year, when families time their move around school schedules and the snow and ice from winter has passed. But the weather is also perfect for looking at houses in September and October, and Nalewanski hopes to end the year with a bang.

“Could we have peaked (for 2007)? Yeah, we could have, but I don’t know that to be fact,” Nalewanski said.

The second half of the year for new construction also is up in the air, Armstrong said.

He recognizes he probably won’t reach his goal to sell 50 houses this year after selling 44 last year.

In fact, now he’d be perfectly content to just reach that low 40s number.

“I’d be ecstatic,” Armstrong said.

Take a look
House for sale in Normal. (Pantagraph/LORI ANN COOK) August, 14, 2007)
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Reader comments on this story - 5 total

Note: All views and opinions expressed in reader comments are solely those of the individual submitting the comment, and not those of the Pantagraph or its staff.

count your blessings wrote on Aug 20, 2007 8:40 PM:

" How would you like to be holding on to some of those $750,000+ properties right now? They have to pay property tax, right? "

T wrote on Aug 20, 2007 12:22 PM:

" Who's to blame. Bankers giving loans at 0% down and lending to less than prime folks. Well guess its coming home now. And Vic wonders why new housing is slowing down? Give me a break Vic!!!! Your building 300k plus houses that the rest of us don't think they are worth that much. Especially on postage size lots "

yo wrote on Aug 20, 2007 10:59 AM:

" my question is where are all of these people coming from that are buying the houses that are being built? no company in town is hiring other than walmart and mcdonalds. with what they pay you would not be able to purchase one of these new homes. with the market going down who is going to take the beating, the builder, the banker. if the bankers take a beating it is going to cost a ton to do banking at any bank. prices have already gone up at First State Bank of Bloomington. they just spend a million on their building and have to reclaim it somehow. "

Rolling Eyes wrote on Aug 20, 2007 9:39 AM:

" A realtor trying to paint a rosy picture of the housing market? Imagine that? The NAR has been blatantly denying that the runup of Alt-A/subprime borrowers into negative-amortizing and ARMs would cause an eventual meltdown. Just 6 months ago, the NAR's public reports were predicting even higher year-over-year sales volume. (From what I gather, the non-public reports were much more realistic.) "

Housing wrote on Aug 20, 2007 8:10 AM:

" I always wondered when all these spec homes would slow down. I think we are going to see a huge slow down now. We can only build so many homes and only so many will sell. We can only grow for so long so fast before soemthing gives. Plus I think the housing industry is too overpriced anyway. I really feel you don't get your bang for the buck, unless of course you get so over your head with a mortgage. Then your really in trouble. Time will only tell. "
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