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Oregon Road Conditions & Cams Advertisement Email Story to a Friend May 16, 2006 Chuck Moydell of ABC Drywall puts some finishing touches on a 3,200-square-foot home at 3874 Cherry Lane in east Medford�s Summerfield subdivision. The new home is priced at $639,000. (Mail Tribune / Roy Musitelli) 'A more realistic market' Homebuilders say they're 'chugging along' but notice a slower buying pace By GREG STILES Mail Tribune Four years ago, Matt Bryant says the forms were still on the foundations when buyers snapped up homes he built on speculation. Today, the owner of Riverdell Homes in Central Point says homes are nearly complete before buyers commit. "People want to see the actual finished product before they buy," Bryant says. "When the boom started, houses were sold in the first month or two." The brakes haven't been slammed on, but the foot is definitely off the pedal for Jackson County homebuilding. Rising mortgage interest rates, construction material costs and the recent flood of existing homes on the market have put a crimp in local housing starts. Advertisement U.S. Housing and Urban Development figures show 328 single-family residence building permits were issued by local jurisdictions in the first three months of this year, down 27 percent from the first quarter of 2005, when 448 permits were distributed. Spot checks in Medford and Central Point indicate that trend will be more evident in HUD's forthcoming April figures. In Medford, 217 permits were issued through the first four months of 2005, compared to 124 this year. In Central Point, 100 permits were doled out by this time last year, and just 56 were issued this year. Even so, builders are keeping busy and subcontractors are in constant demand. "We're plowing along, just a bit more cautiously," says Charlie Hamilton, a Talent developer who owns Suncrest Homes. "There aren't quite as many starts; it's a little different pace, but we're moving forward and we're chugging along." Like most local builders, Hamilton is easing up on "spec" starts, begun without a buyer lined up. More importantly he says he's keeping his houses in a desirable price range. The 1,800- to 2,400-square-foot houses he's built recently in southwest Medford and Talent are priced in the $339,000 to $415,000 range — just below the point where real estate agents encounter pricing resistance, he says. "We've always tried to be in that area," Hamilton says. "We haven't done any drastic changes. Interest rates are creeping up and there has been more product on the market, but we're assuming things can't go up forever and are expecting a leveling off or a slight dip." During the real estate boom of the past five years, a dearth of available lots helped fuel rapidly rising prices. Now, building lots that have awaited planning department approvals for years are becoming available for builders. In some parts of the country, such as the Sacramento Valley, where too many lots were dumped on the market, new construction prices have taken a dive. "I think it's a more realistic market right now," said Randy Jones, general manager of Mahar Homes of Medford. "I'm not seeing the panic, urgent-buying frenzy we've seen. During the past four months, we're seeing more good end-users, not speculators buying homes to flip them for profit. I have no crystal ball and anyone who says they know what's going on in the future is suspect at best. But I see a healthier market emerging." Building one phase at a time in a development is beneficial in several ways, including aesthetics, Jones says. "It's a construction war zone for a few months and then it's over." Roughly 50 percent of Mahar Homes' new construction is pre-sold custom work; the other half is spec. "In these types of times a person wouldn't want too many dollars tied up in too many spec houses," Jones says. "Our demand fluctuates, but we live in a desirable area so there is a consistent demand." Bryant says lot prices have been a detriment to keeping prices down. "When you are paying $175,000 for a lot," he says. "It's hard to be in the $400,000 range. The cost of Sheetrock has gone up 25 percent for June and the fuel surcharges don't seem to go away." But Bryant says most of his buyers aren't thinking about interest rates. "On the higher end, I think those people have the money and aren't as worried about it," he says. "But in the houses below that — in the $450,00 to $600,000 range — they've taken a big hit . Even when more lots are brought on line this summer, Bryant isn't sure land value will diminish. "Land costs what it costs," he says. "There are a lot of home builders and framers throwing up specs, and when you do that, you're putting yourself on the line. I think the core builders that have been here are going to be all right. They should weather the slowdown." The longer spec houses sit on the market during, the more builders shoulder the cost of rising mortgage rates that are now around 61„2 percent. "We haven't had problem selling our houses," says Mark Wickman, president of Vision Homes. "We had one sit for about 90 days, but that's a more traditional model of how it would happen anyway — instead of flying off the shelf like they have been. Personally, as a builder I'm going to be careful about getting too many specs out in front of me and focus on pre-solds. I'm very debt-phobic and never get stuck way out there." Reach reporter Greg Stiles at 776-4463 or at [email protected] Mail Tribune Home | Local News | Sports | Business | Obituaries | Life | Opinion AP News | Archives | Site Map | Community | Classified Copyright © 1997-2006 Mail Tribune, Inc. All rights reserved. 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