Progress in the Works: Better Housing Market Expected

RISMEDIA, Jan. 23, 2007-(MCT)-A private consultant for the residential home building industry predicts a better housing market in 2007 than last year, but not without improved selling strategies.

"The economy is good right now. There are international risks, but not economic risks," said Page M. Vornbrock, a sales and marketing consultant from Columbus. "The challenge for Realtors and home builders to improve on the year we had in 2006 is how well they can convince people to buy."

He said interest rates shouldn't be an issue in 2007, but consumer confidence could be.

Vornbrock named three economic variables that have to be positive to stimulate housing activity: jobs, oil and gas prices, and consumer confidence.

"People have to be secure in their jobs. They need stability," Vornbrock said. "The ups and downs of the gas prices are not a good thing. At the end of the day, people want some normalcy."

Vornbrock said consumer confidence generally dictates what people are willing to spend.
"Many consumers are one payment away from bankruptcy, so you have to make sure they can afford the monthly mortgage payment."

Akron Realtors agree that economic conditions affect their ability to get sales.
Home sellers have tried to lure buyers with gift cards, timeshare bookings for a week, Browns tickets and even a Corvette.

"Buyers are picky; they want a clean house and will walk away from a deal if the carpet is the wrong color," said new 2007 Akron Area Board of Realtors President Tom Campensa.

"We can have a strong year; we just have to work harder for it. We are no longer merely order takers," he said. "We have a good economy and good interest rates, a solid foundation to build on. We just have to find out what the buyers want and supply that."
Campensa said 5,926 units were sold in Summit County in 2006; that was 4% higher than in 2003 (the benchmark year for Akron sales).

"The first half of the year was decent, but the market was personalized. Some Realtors did great, and others did not," Campensa said.

According to reports from the Akron Area Multiple Listing Service, which covers sales in Summit, Medina, Stark and Portage counties and part of Wayne County, last year's best months were, in descending order: June (595), August (561), May (551) and March (538).

Average time on market

In 2006, the average time a home was on the market was 77 days. In 2005, the average time was shorter by only a day: 76.

Historically, homes sell faster in June and July, and the market is slower in November and December. Homes sold in June had been on the market for 76 days, and those that sold in July only 71 days.

Homes that were sold in November had been on the market for 79 days; it was 78 days for those sold in December.

The median price of a home sold in 2006 fluctuated from $125,859 in February to
$178,683 in June. But the year closed in December with the median price at $139,484, down from $152,521 in December 2005.

The average median price of a home sold in 2006 was $140,139.

Research Director Trista McClelland of CRM Development Research of Cleveland, who tracks real estate cycles, said home sales in Summit County fell by 5% from 2005. That report was based on research on sales of new and existing homes.

Realtors said the Akron market continues to be affected by the strong performance of 2003. Although 2006 figures are lower than 2005's, they believe the sales totals are relatively healthy.

McClelland said home construction in Summit County dropped by 30% from 2005. Housing starts totaled 1,223 in 2006, down 540 from 2005.

Based on her research, the Summit communities with the most housing starts in 2006 were Green with 138, Akron with 137 and Copley Township with 136. Each of the three communities had about 11% of the total starts.

Summit growth markets

The biggest growth markets for housing starts were Coventry Township, Tallmadge and Cuyahoga Falls. Housing starts increased in Coventry by 85% from 2005, 13% in Tallmadge and 6% in Cuyahoga Falls.

The top builder in Summit County in 2006 was Ryan Homes with 334 units, or 28% of the market.

Second was Gross Builders with nearly 5%. Gross Builders builds mostly in Macedonia, Twinsburg and Coventry Township; it is the leading developer in Coventry's Brighton Bay subdivision.

Advice for Realtors

Vornbrock of Vornbrock & Associates LLC said that because people's attitudes affect the housing market, Realtors and home builders will have to manage their listings better. He said that if residential properties are on the market more than 90 days with no activity, something should be done, whether it's reducing the price, extending the listing or canceling it.

He warned construction companies not to overbuild and suggested they reduce inventory.

"There will always be buyers who want new homes. They may not be looking in November and December, but at least they will be looking," Vornbrock said.

He said builders must also leave their egos at the door. "A builder may feel they have built the biggest and best, and forgo key selling points such as location, price and the quality of their workmanship," Vornbrock said.

He said incentives will help sales, suggesting that homeowners help with closing costs or fees, or builders add free upgrades. Homes must be priced right, "dressed up" for their best presentation, and inspected so that loose details are fixed, he said.

Vornbrock suggested using an Internet service to help sell homes, citing a report that 77% of buyers use the Internet and 24% of them end up buying a home seen there.

Vornbrock predicted 2007 will be a challenging year based on the strength of the economy and housing affordability.