Rumblings of housing upswing heard across Ozarks

The southwest Missouri residential real estate market is picking up with activity. As average sale prices climb and buyers snap up subdivision lots, talk of residential building is returning to the Ozarks. Fueled by the recent announcement of multiple developments, industry experts say there is a cautious optimism.

In December, Ron Stenger Cos. announced plans to build a three-phase, 82-acre subdivision just east of U.S. Highway 65 on Division Street, with construction expected to begin this summer. Located just west of Ron Stenger’s Lakes at Wild Horse, the 113-lot subdivision will be built out during the next five to six years.

A second Stenger Cos. announcement in January continues to fuel the fire. The company is planning to develop a 56-unit subdivision dubbed Overland Heights in southwest Springfield across from Wanda Gray Elementary School.

“2008 was the low point,” said Stu Stenger, a developer with the Springfield-based residential and commercial development firm. “In 2009 and ’10, there was no building going on – all the construction on the residential side just stopped. But 2012, ’13, and now ’14 have just exploded in comparison.”

On tap
Following a long winter, builders are playing catchup as they dodge the rain. Stenger said the company’s current projects are about a month behind schedule.

Stenger points to demand in southwest Springfield and Ozark, where interest in the forthcoming Overland Heights is escalating and all the lots in Ozark’s Rolling Prairie subdivision sold in one year.

Cantrell’s Patriot Homes Inc. owner Ryan Cantrell said work is picking up across the Ozarks. Cantrell currently has six homes under construction at Lakes at Wild Horse and  another three going up construction at Wild Horse – all in the $200,000 to $380,000 price range. One already sold, and the other eight are spec houses, he said.

“We sell about 10 a year in Wild Horse, and we feel really good about that number,” Cantrell said, adding he plans to be in the subdivision for a while.

The homebuilder said after his business survived the recession, it continued to grow each year by about 15 percent to 20 percent. Building about 80-100 homes annually, Cantrell said he might build fewer homes this year, though at a higher price because of a different set of post-recession challenges.

“The floodgates have really been opened with builders coming back, which is a good thing,” Cantrell said. “But if you do it too quick, you don’t have the labor to support the growth.”

The growth has put labor in demand, but since the workforce was reduced during the recession, the supply isn’t there. Thus, the price for labor has gone up while the buyer’s market hasn’t quite adjusted, Cantrell said.

“Buyers are very aware, more educated and looking for good buys,” he said. “Is the educated buyer going to pay those prices for the same home? Right now, the answer is yes, they are, but it’s something we are watching very closely.”

Irvine, Calif.-based real estate market tracker CoreLogic (NYSE: CLGX) reported Springfield home prices, including distressed sales, climbed 3.1 percent in April compared to April 2013. Cantrell confirms higher-priced homes are beginning to sell.

“There wasn’t a market for anything above $200,000 – at least that I was willing to take a risk on,” he said, of building during the recession.

While home prices are increasing, the amount of available land to develop is shrinking – a problem Cantrell said could cause another supply-and-demand issue.

“In the next year and a half, if more subdivisions aren’t developed, there will be a shortage of lots that could affect the price,” Cantrell said. “If someone wants to buy a home, now is the time to do it.”

Home Builders Association of Greater Springfield CEO Charlyce Ruth said available land in the city is mostly developed, while Stenger said Greene County has more available lots, followed closely by Christian County.

The current market
Springfield’s housing market reached an all-time low in 2011 when the average sale price bottomed out at $125,422. Through 2013, the average sale price rose about 9 percent to $136,580. On a month-over-month basis, home prices, including distressed sales, were up 1.2 percent in April compared to March, according to CoreLogic. Statewide, Missouri home prices were up 6.9 percent in April compared to last year.

The longer-than-average winter, with an unfavorable January, impacted new home construction and existing home sales alike.

“January basically just didn’t happen,” Ruth said, noting there were 16 residential building permits issued this January compared to 54 permits issued in January 2013.

Carol Jones Realtors Chief Administrative Officer Miles Noennig said the winter months “had a significant impact on sales and closings” though the feeling for the year is “optimistic, if summer and fall have average weather.”

“Indicators are that the local housing market is improving, though how healthy it is remains to be seen,” he said. “New home construction is a good sign that buyers are feeling better about the situation, and we haven’t seen building to this extent in years – that’s definitely a positive sign.”

The consolidation and regionalization of multilist service vendors in southern Missouri has made tracking specific numbers difficult, Noennig said. However, he said real estate agents are reporting numbers consistent with state figures.

Statewide, the Missouri Association of Realtors reported homes sold faster in April compared to the same month in 2013, with the average days-on-market dropping to 131 from 135 and the average price rising 4 percent over the year to $155,465.

While the market hasn’t completely flipped, Ruth said the level of growth is sustainable.

“We don’t want to see a spike, because as we have seen, it can fall just as quickly as it rose,” she said. “We’re catching back up after January. There are a lot more sticks up in the air now.”

In Greene County, residential building permits were down about 15 percent to 130 in the first quarter compared to the same time a year earlier– the most recent data available – while Christian County’s residential building permits were lagging by just one this year, with 89 at the end of March.

While April’s statewide home sales were down nearly 4.5 percent to 5,600 from the same time a year ago, MAR reports an increase of 14 percent in April home sales to 4,923 from March.

Anecdotally, Noennig said local home sale prices increased in April compared to the same time last year despite the fact there were fewer sales. He added that with a lack of listing inventory in some price ranges, there has been higher demand for houses that are available.

“The listing shortage and higher interest from buyers is putting us in multiple offer situations – phenomena we haven’t experienced in years,” he said.