Even keel – that’s the word from Springfield-area real estate experts as third-quarter market stats hit the record books.
Mirroring the nation, the Springfield metropolitan statistical area real estate market took a steep dip during the recession and began an uphill battle to regain traction in the years following. The Sept. 30 close of the third quarter marks the end of the busy spring and summer buying season. Local experts say things are improving – albeit slowly – but the market may never again reach prerecession levels.
Carol Jones Realtors President Shaun Duggins said the current market is “nothing to write home about.”
“Unit sales are down, sales prices are up, but the market is fairly flat,” said the leader of Springfield’s second-largest residential real estate agency. “That’s sort of the trend across the nation right now – things are pretty even keel. In southwest Missouri, strong and steady is a good thing.”
According to the National Association of Realtors, slow economic growth in Missouri is partially to blame. An aggregate percentage of economic conditions, such as job growth and unemployment rate, in the Show-Me State improved 2.7 percent in June, when compared to June 2013. However, the nation as a whole grew 3.2 percent.
Expand the focus area 36 months and the nationwide growth outpaced Missouri by 1.4 percent.
NAR reports single-family housing permits also are down by 2 percent, compared to nationwide growth of 6.4 percent, noting reduced residential construction will limit new supply to the market, allowing demand to catch up with inventory more quickly.
Commercial construction could be a bright stop for the local economy as area leaders predict roughly 115 projects exceeding $388.7 million on tap during the next year. However, R.B. Murray Co. Vice President Ross Murray said more is sill needed.
“During the recession we saw significant vacancy, but most of the nicer, newer and quality buildings have been reabsorbed,” he said. “There is a need in the industrial and retail sectors for quality well located buildings.”
Residential holding pattern Missouri real estate agents sold fewer homes in August, but at a faster rate and a higher average price. Overall, Realtors sold 6,483 homes in August, a 7 percent decrease compared to 6,971 homes sold in August 2013, according to the Missouri Association of Realtors.
In Greene County, agents sold 312 homes in September, down slightly from 365 in September 2013, according to the Greater Springfield Board of Realtors.
The weak sales month comes on the heels of a hot and heavy summer in Greene County when agents sold a combined 1,183 homes during June, July and August.
The county’s average sale prices mimicked sales monthly trends weighing in at $163,060 in August, but falling to $148,635 in September.
GSBOR Executive Jessica Hickok said the August figures are “a fluke of sorts,” noting prices have consistently hovered around $149,000 to $150,000 all year.
“In the summer before school starts is a popular time to buy a house because you can move while the kids are out of school and start them fresh in a new school if need be,” she said. “If you think about it, people start looking in June, get the contract process going in July and finally sign and move in in August.
“That increased demand during the summer causes bidding wars and increased prices.”
Duggins said as lending guidelines begin to ease up and interest rates remain low, he believes the market should pick up in the coming months.
“We are seeing a lot of activity in vacation homes and buyers who are looking to move up, that’s a good sign,” he said. “I don’t know that I can say we will ever get back to pre-recession levels, but I don’t know that I can say we won’t either. I have a feeling it will be close.”
Commercial climb Examining industrial, office, retail and vacant land space in the Springfield area, Ross said “there is tremendous future potential” in the market going forward.
“The influx of new construction is encouraging,” he said, “especially in the retail sector when we’ve seen a lot of redevelopment, but not a lot new.
There is pent up demand for industrial space ranging from 25,000 to 50,000 square feet.”
While vacancy still remains in small, high-end boutique space, Murray said the retail sector must find new ways to grow following significant absorption in high demand areas, such as in and around Battlefield Mall.
“I’m working with six to seven national retailers and restaurants who want to be in Springfield and want to be in or near the mall, but there isn’t much vacant land left to development in that area,” he said, noting the mall has a waiting list for new tenants. “That area is densely developed and it takes time to find the right deal and perfect fit.”
Three new tenants are slated to open stores in the Simon Property Group (NYSE: SPG) mall by the end of the year: U.S. Cellular and clothing retailers Tilly’s and J. Jill.
Murray points toward JGTS LLC’s September purchase of the former Carlos O’Kelly’s restaurant as an example of the future of Springfield commercial development. The owners of Panera Bread franchisee Traditional Bakery Inc., the company plans to build a multitenant retail development with Panera Bread as anchor tenant.
Similarly, property management firm Bill Beall Co. is developing a former Sonic Drive-In property along South Campbell Avenue for Popeyes franchisee Smitco Eateries Inc.
“The desirable areas of Springfield are becoming so densely developed, a tear down and rebuild is increasingly becoming the best option,” Murray said.
As infrastructure continues to improve, Murray said the commercial sector will see growth in the U.S. 65 and Battlefield Road area, along with 65 and Sunshine Street, South Campbell and James River Freeway and Republic Road and Glenstone Avenue.
Potential data shift Mirroring national trends, Hickok believes the residential market may be undergoing a data shift due to what are known as pocket listings, or marketing a property to a specific group of friends and/or investors rather than placing it on multiple listing service.
“These are becoming a huge problem and as they become more prevalent they begin to affect our data and the economic health of the region,” she said. “If homes are listed on the MLS, it appears as if southwest Missouri is in a real estate slump, when in actuality, business could be booming.”
As a safeguard, the Southern Missouri Regional MLS requires all properties be listed within four days of going on the market.
“Sellers like pocket listings because they are often quick and easy. A Realtor can market a home to a specific group of people on Facebook they know might be interested,” Hickok said, adding the Internet has increased the prevalence of such listings. “But pocket listings are good for the dealer, not the seller. If you only have a small group of people looking at a home, you might sell it quickly, but you aren’t necessarily going to get the best price.”[[In-content Ad]]
