Homes remain steady investment during volatile times

Matt Morrow is the executive director of the Home Builders Association of Greater Springfield.

In this time of economic uncertainty, the home-building sector of our national economy consistently has held strong. While people fret about the stock market, their 401(k)s and even the occasional corporate scandal, many are looking to their homes as a stable, appreciable asset and a wise investment.

Home buyers see the combination of exceptionally low interest rates, tax deductibility, and steady appreciation in home values as an irresistible invitation to take a close look at their housing goals. And, as new home construction continues to boom, new jobs, economic growth and prosperity all naturally follow. No place has the flourishing housing market been stronger than right here in the greater Springfield area.

In 2001, homes built in Springfield and Greene County alone were valued collectively at more than $186 million, up more than 20 percent from 2000. This year, Springfield and Greene County housing starts are up more than 21 percent from 2001.

The true economic impact of the local home-building industry can be calculated at many times that number, when one considers the multiplier effect of jobs created and income spent here as a result of home building. Clearly the demand for housing remains strong, and locally it is increasing.

However, those who have been considering building or buying new homes but have not yet taken the plunge may need further convincing.

Now might be the best time in more than 50 years to build or buy a new home in the Ozarks. Here are a few of the reasons.

Mortgage rates

Mortgage and construction lending rates remain near record lows. Many people believed that when the average interest rate for a 30-year fixed mortgage dipped below 7 percent a year ago, we had seen rock bottom.

How could rates possibly go lower, many wondered, when they already are at 40-year lows?

Yet, remarkably, rates have dipped even lower since then.

Right now the national average for interest rates on a 30-year fixed rate mortgage was 6.608 percent! With growing concern about the stock market and the economy, more investors are turning to the bond market, which results in lower lending rates. That makes it an optimal time to borrow for a new home.

Inexpensive construction

Home construction here still is relatively inexpensive. The American Chambers of Commerce Research Association recently reported that the Springfield Metropoli-tan Statistical Area (Greene, Webster and Christian counties) ranks among the least expensive areas for housing in the entire nation. Relatively low labor and regulatory costs and stiff industry competition are among the factors that contribute to the low housing costs in our area. The result is more home for the money in Springfield.

Quality construction

Home construction here is widely acknowledged to be of superior quality. That's right, as if getting the same home for less money weren't enough; you can actually get a better home here for less money, too. Again, stiff competition is a key reason. Demand for new homes in the greater Springfield area is as strong as ever, but supply also is very strong.

Our market is unique in that most of the homes here are built by small-volume builders. That means that there are many more builders out there. Builders must keep profit margins narrow and quality high to compete. That is to the buyer's advantage.

Safe investment

Finally, a home is a safe and lasting investment. Local bankers say that more people are coming to them looking for safe ways to invest money they've recently pulled out of the stock market. For those who don't have the stomach for today's volatile markets, the home makes a sensible, steady and appreciable investment for the future. It also is an investment in your family, as memories and shared moments will accumulate over the years.

Of course, for most of us, our home is the largest single investment we will make. That's why it is important to take great care in this decision-making process.