Regional housing supply in state of contraction

There may be light at the end of the housing tunnel.

That was the sentiment from the 215 attendees of the Oct. 20 Housing Summit & Residential Construction Forecast presented by the Home Builders Association of Greater Springfield, the Greater Springfield Board of Realtors and the Tri-Lakes Board of Realtors. Realtors, builders, subcontractors and lenders turned out to hear the latest sales figures and an analysis of the residential construction market.

Real deal in real estate

Real estate sales updates paint a picture many expected.

Tri-Lakes Board of Realtors Vice President David Gubin said in Taney County, the average home sales price dropped 18 percent from the first nine months of 2008 to the first nine months of 2009, leaving the current average at $134,176. In Stone County, Gubin said, prices are down 14 percent to $187,651.

In the area covered by GSBOR - primarily Greene, Christian and Webster counties - board President Miles Noennig said the year-to-date average sales price is down about 6 percent to roughly $133,500.

But there is reason for optimism. Tri-Lakes Board of Realtors President Kathy Clark said the housing markets on the East and West coasts are starting to recover, which means the Midwest should follow. The upward trend seems to already have begun. Noennig said there has been a modest year-over-year increase of 2 percent in closed units during third-quarter 2009.

The summit's main attraction was a housing market research and residential construction forecast presented by Joe Zanola, owner of St. Louis-based Zanola Co. and franchisee of MarketGraphics Research Group in southwest Missouri. Zanola and his group have researched Greene, Christian, Taney, Stone and Barry counties since 2003. Three times a year, he said, his research team physically drives to every new subdivision with five lots or more in each of the five counties.

That amount of research lends credibility to the Zanola group's numbers, attendees said.

At National Home Products supply house, owners Andy and Monica Jenisch already had been adapting to market changes, notably fewer homes under construction in the $200,000-range. They've added vendors that carry products at lower price points and now sell to builders of starter homes and some commercial jobs. They hoped Zanola's research would confirm what they'd only been speculating: that the worst was behind them.

"It's just nice to hear from someone who has done the legwork and can validate where that information is coming from," Andy Jenisch said.

On the lending side, Great Southern Vice President Kent Lammers said perceptions are changing.

"We're hearing anecdotally that things are getting better from some of our clients out there," Lammers said. "It was good to see that the numbers presented through the MarketGraphics presentation tend to confirm that there was light at the end of the tunnel."

The builders' climb

Zanola said home builders would still face challenges, noting that his group projected 854 residential permits in the five-county area for this year. That number is low but necessary, he said, since right now, the market is adjusting and reducing the overbuilt supply.

Zanola is predicting a 7 percent population increase across the five counties during the next five years. That, he said, is tied to employment numbers. Compared to other parts of the country, he added, this market is seeing a relatively stable employment picture.

The economy will dictate where people decide to move, Zanola pointed out, and that leads to opportunity.

Family values and a low cost of living leave this area in a perfect position to identify itself as the newest retirement destination area, he noted.

"I was struck by the opportunity, that not just the tri-lakes area, but Stone, Taney, Christian and Greene counties has before them," said Branson Mayor Raeanne Presley. "We really ought to be thinking regionally."

An expected growth in population should not be a signal for builders to go back to business as usual, however.

"Don't presume you can go back to building homes without understanding the people you're building the homes for," Zanola cautioned in his presentation.

Anyone building for 35-to-49-year-olds should expect significant competition, he said. Not only does that age group have a tendency to move more frequently, builders often overbuild homes targeted toward that segment.

"Most buyers will be over 50 and younger adults entering the workplace," he said.

Zanola predicts the biggest demand will be for homes priced below $175,000.

So what does the face of the next home buyer look like? Zanola said there will be three segments: first-time buyers, buyers moving up from first homes, and buyers older than 50 who are looking for smaller homes.[[In-content Ad]]The Full Report

In partnership with the Home Builders Association of Greater Springfield, MarketGraphics of Southwest Missouri will be making its research available through annual subscriptions. HBA will act as the merchandising partner.

Prices will vary because each subscription is customizable, said HBA Executive Officer Matt Morrow. Subscribers can narrow data down to specific price ranges or any subdivision that includes five lots, Morrow said.