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Housing conference calls for collaborative recovery efforts

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More than 80 building industry professionals gathered at the Ramada Oasis Inn & Convention Center on May 11 to share information about the current state of the local building market and strategies for economic recovery.

The 2010 Ozarks Regional Housing & Construction Conference, hosted by the Home Builders Association of Greater Springfield, offered 13 sessions for builders, developers, Realtors, lenders, suppliers, contractors and the public.

Speakers at one session, “In It Together: How Builders, Realtors & Lenders Can Help Each Other Regroup and Recover,” said Ozarks building professionals need to adjust their strategies to participate in the recovery.

“As builders, we seem to have this John Wayne mentality. We think we can do it ourselves, but people are a little more open to helping each other right now,” said panelist Rusty MacLachlan, president of J. Russell MacLachlan Custom Homes and the HBA.

In the first quarter of 2010, housing permits jumped more than 50 percent in Greene, Barry, Christian, Stone, Taney and Webster counties combined to 351 permits for single-family homes, up from 149 in first-quarter 2009, according to an April housing analysis by MarketGraphics Research Group Inc.

Recovery and risks
While the permit numbers are promising, they aren’t an absolute indicator for recovery, according to panelist Tom Rankin, owner of Rankin Development LLC and managing director of commercial real estate firm Sperry Van Ness/Rankin Co.

“The bump we saw recently is due to a pent-up demand,” Rankin said. “It’s not being driven by new jobs or increased income. Companies aren’t hiring, and that’s what it’s going to take to sustain.”

A change in consumers’ spending habits also is challenging real estate growth, panelists said. Before the recession, homeowners took equity out of their homes to pay off credit cards, buy cars and go on vacation, but today, they are taking fewer risks.

“One of the opportunities I see is that we are getting back to a consumer-driven marketplace based on what makes sense for the consumer’s budget, rather than speculation on wealth achievement that really wasn’t there,” said Art Maxwell, sales manager at Coldwell Banker Vanguard Realtors.

Banks have been taking a more cautious approach to lending, and some are now under regulatory oversight. Before the recent recession, banks would lend money based on a property’s appraised value, which contributed to the housing crisis.

“There became a mentality of speculation,” said Mike McGoldrick, senior vice president and lending manager at Metropolitan National Bank. “Now, we ask about equity. We want to share the risk with our borrowers. Everyone is looking for sustained recovery before they get aggressive again.”

Many homeowners are stuck in their current homes due to falling home values. MacLachlan said owners of custom homes will ultimately help the market rebound because these owners are buying with down payments.

“The problem is these properties don’t get listed on the (Multiple Listing Service), and we need to get that information out there,” he said.

On the commercial front
Commercial builders also face plenty of challenges. “We are going to see on the commercial end what we saw on the residential end two years ago with declining property values. The worst is yet to come,” Rankin said.

He forecasted that 42 percent of commercial real estate properties will be under water – meaning that they are worth less than what’s owed on them – in 2010, and he doesn’t expect that to change until mid-2011.

“We have a lot of commercial foreclosures coming,” Rankin said. “I see an abundance of caution on the commercial side. Very few people want to build out there, and banks don’t want to lend. Strip centers are selling for $65 per square foot, where three years ago they sold for twice that.”

Mike Fusek, a senior adviser with Sperry Van Ness/Rankin Co. LLC, said in a separate interview that he already has seen a slight increase in commercial foreclosures. In February, he closed on the sale of the former Jiffy Mart building at Cherry Street and Oak Grove Avenue, owned by Empire Bank, to Bishop & Hayes Law Offices PC. And on May 27, he was set to close the sale of another bank-owned building at 3850 W. Battlefield Road, to an undisclosed buyer.

And while challenges may lie ahead, Fusek finds that he’s been able to keep plenty busy in the last six months.

“I’ve seen an increase in inquiries and activity, and also completed leases, sales and properties under contract,” he said. Fusek anticipates that he will do as much business in the first five months of this year as he did in all of 2009, though he declined to disclose his 2009 sales figures.

Owner-occupied buildings have been increasingly popular in the last six months, Fusek said, citing the recent sale of the 17,000-square-foot ProTel building, 2929 N. Eastgate Ave., which had been on the market for two years. Fusek said ProTel’s current owners, Bruce Jones, Randy Harris and Shane Taylor, bought the building in April from former owner Steve Thompson, who had leased the property to them since the 2008 sale of the business.

Also in April, Fusek closed on a 12,000-square-foot office/warehouse building at 1661 Lloyd in Ozark. Within a week of listing the property for Southern Heights Investments for $450,000, Fusek said the property drew five offers. It was purchased at full asking price by Tiedemann Bank Equipment Inc., he said.

Fusek acknowledges, though, that purchasing might not be the best choice for all companies.

“For most businesses, if their needs are going to change in the next two or three years, or if they don’t have a down payment, they’re better off leasing,” he said.

Features Editor Maria Hoover contributed to this story.[[In-content Ad]]

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