A Conversation With ... Jeff Parker

Real estate market tracker CoreLogic expects significant nationwide home sale increases in 2015, up 9 percent, and housing starts to climb by 14 percent. How will southwest Missouri fare?
I believe we are going to surpass that in the next 12 months. Referring strictly to new construction, I think we will see an increase of anywhere from 20 percent to 25 percent. In real estate as a whole, CoreLogic is about right on. I think our area will see about a 10 percent increase overall.

With new construction, we are seeing a lot of demand. With rates being historically low, and maintaining, I think we will continue to see consumers be much more confident in the real estate market. In the past few years, they have been apprehensive. With the financing options available today, the first-time homebuyer market (this) year is going to really pick up.

Interest rates influence things a lot, but also employment and we expect that to be steady.

With new construction, you have to factor in labor and material costs and those are both going up. Most importantly, lot costs are increasing. It’s more difficult to find buildable lots.

With the (U.S. Department of Agriculture) program, we still have a lot of 100 percent loans out there for first-time homebuyers, and the majority of our new construction sales, last year were between $135,000 to $150,000 in the Springfield market. But the last three months, the median sale price has gone up even, above $200,000.

Has the recession created a new construction backlog?
Yes, demand is up because we haven’t see new builds lately. Right now, we have about 10 months of inventory in the new construction market, but that is typical at the end of the year because the months of inventory takes into consideration what was sold the prior month. Last year, it averaged around five months. There is demand there and not enough housing starts to keep up with the demand. We are going to see that more this year, especially in the first-time buyer market and a continued demand in the upper end.

Will contractors be able to meet the increased demand?
I think we will, but labor costs are going to increase and materials are up. You are going to see new prices increase – there is no way around it – labor costs especially, because there was such a lull. You have to get people back into the construction business who had gotten out at times when it was really slow.

Do existing home sales still surpass new construction?
Yes, by a lot. About 5 percent to 10 percent are new builds.

Where are you seeing the most demand for lots?
With the first-time homebuyers, USDA is really popular. You are looking at outlying areas, such as Willard and Republic. In Springfield, there is a high demand for building lots in the southeast part of town. There just aren’t very many. Most of the new construction you see in Springfield is in the southwest and north. Nixa is also very popular.

What trends are you seeing from homebuyers?
One of the biggest misconceptions in the market is you’ve got buyers who are looking at everything on a cost per square foot basis. They are trying to compare houses to things they are seeing. This builder is $85 a square foot, why are you $135 a square foot? They don’t take into account things such as materials used.

What I’m seeing come across my desk, in terms of things sold, most of that is very competitive. The builders who were able to get lots at a lower cost than they are today are at an advantage because they may break that $100 per square foot price range.

The average last year for construction was $85 or $90 a square foot. In the past three months, it’s broke over $100. In December, my numbers showed the average price per square foot for new construction at $105.

That will continue to go up because materials and labor costs are increasing. These are similar to prerecession prices. Maybe at the peak in 2006 or 2007 we were over $100 per square foot on average.[[In-content Ad]]