This article first appeared in the St. Louis Beacon, May 30, 2012 - Each month’s reports of housing market statistics spark the inevitable question about recovery: Are we there yet?
Glenn Vatterott, president of the St. Louis Association of Realtors, told the Beacon that he is guardedly optimistic about sales and prices.
“We’ve kind of sloshed around on this sloppy bottom for 18 months or so, but now transaction numbers are up significantly, and the average sales price at least in the last 60 days have seemed to be on the upswing -- which is an encouraging sign that we’ve turned the corner,” he said.
For additional perspectives, we also talked to two veteran St. Louis Realtors -- John Williams and Terry Gannon – who shared their views from the trenches.
Realtor John Williams: 'You have to be creative'
A sign of the times: Six townhomes in the Cambridge Commons development in Maplewood sat on the market for three years -- so long, in fact, that they were no longer marketed as new but as “never lived in.”
Since fall, though, John Williams of MORE Realty says four of the two-story three-bedroom brick units have sold.
Williams views it as a positive sign in what has been a long and trying market. He also credits a willingness to find the right equilibrium between buyer and seller: Prices for the remaining units had been gradually adjusted downward to the $220,000s from the $300,000s paid by initial buyers.
Williams expects the remaining two townhomes to sell within six weeks to two months -- which will finally close the chapter on a $6 million 20-unit development started in the mid-2000s by his business partner Dennis Norman.
The project stalled in 2008, a victim of the housing market collapse. Norman said he was committed to completing the development but was only able to do so because of the cooperation of his lender and the city of Maplewood, which had originally provided tax increment financing to the project.
Williams said he knew the townhomes were desirable because he got many calls from people interested in renting the empty units. The location is appealing to younger families and also to older homeowners looking to downsize from larger homes.
“Maplewood has had a lot of energy,” he said. “People want to be in this location; they like the feel, and they want new homes.”
In general, Williams said househunters are showing less fear of the economy.
“I think buyers are feeling a little more confident, but I can’t attest to whether that is because they’re more confident that they’re going to have their jobs,” he said. “The other factor is the low interest rates. When you’re looking at a situation where you can buy a new property at a low interest rate, these become very affordable.”
Williams noted that some housing economists believe the worst is over.
“The economy isn’t great, but I don’t think we have this fear that was going on in 2007-2008. I think it took a lot of time to shake down,” he said.
“Is this sustainable? I don’t know,’’ he added. “It was truly a buyers' market in November. It is still a buyers' market, but sellers are staying a little stronger now.”
In the case of the Maplewood townhomes, Williams said that sales spurred more sales.
“When there are six available and you don’t see activity, people are scared to make the jump,” he said.
Williams said the warm winter also helped sales earlier in the year.
“We had no weather issues,’’ he said. “The question that I’m going to have for this market is, ‘Are we going to peak out earlier than we normally do?’ ”
Williams, who has been selling real estate for 30 years, teaches ethics to new real estate agents.
“I’ve taught several thousand agents,” he said. “I tell them, ‘If you can make it in this market, you’ll be just fine.’ ”
Williams sells throughout St. Louis, though he has in the past focused on west county and St. Charles. He says his sales have increased and he is hearing from buyers who seem to be ready to take action. But he keeps a wary eye on gas prices, which drastically affect housing sales and also on mortgage interest rates that have been at historic lows of 3 to 4 percent.
“I don’t know how the interest rate increase will affect sales, but interest rates have to rise,” he said.
He views it as a good time to invest in real estate.
“You have to be creative to make things happen,’’ he said. “Real estate has a black eye, but this is the time you don’t do what everybody else does. If you do what everybody else does, then you get everybody else’s results.”
Realtor Terry Gannon: Are interest rates too low?
Although it may seem counterintuitive, Re/Max Realtor Terry Gannon believes mortgage interest rates are too low.
“I see a lot of people who want to buy houses, and lenders don’t lend,’’ said Gannon who has been selling real estate for three decades. “I don’t know who in the world ever thought it was a good idea to lend money at 3 and 4 percent for 30 years. Banks don’t want to do it. It’s not worth it for them; they’re not making any money. No one’s making any money on their money at this low interest rate.”
Before the housing collapse, she said buyers were willing to take mortgages at 6 to 10 percent.
“The question wasn’t, ‘What is my interest rate?’ It was, ‘What is my monthly payment and can I afford it?’ ’’ she said. “Our problem has never been the interest rate, it was reducing the qualification guidelines and making all this free money available to people who really couldn’t qualify. So it wasn’t that people didn’t want to pay the interest rates, it was the lending guidelines that allowed scammers to get in there and ruin everything for everybody. Now they’re trying to close the barn doors after the horses are gone and make everything so tight that nobody can buy.”
Gannon specializes in north county real estate, though she points out, “I sell anywhere my car will go.’’
She said she recently shared her take on financing with officials from the Federal Deposit Insurance Corp. who were interested in north county. She believes lending has slowed down while financial institutions take a wait-and-see approach to regulatory reforms established by the Dodd-Frank legislation. She is also concerned that student loans are having an adverse effect on debt-to-income qualifying ratios and will hinder first-time homebuyers from getting loans.
Gannon said that determined buyers -- particularly investors -- are finding a way around lending institutions.
“Most of the transactions I did last year and so far this year have been cash -- in all price ranges,” she said. “If people have the money, they can take it out of their 401(k)s and their savings and they don’t have to jump through all these hoops the lenders make them jump them through.”
She said young homebuyers are borrowing from their parents and grandparents. Other buyers are investing in real estate instead of low-interest CDs.
“The investment market is tremendous,” she said. “If you’ve got money, now’s the time to be buying, and they are. If people can’t buy, they have to rent, and so these people are buying houses that were foreclosures -- that were a drain on the neighborhood. They’re fixing up these houses and revitalizing neighborhoods. When the market turns around, those people will be sellers and maybe the people renting them will be able to buy them.”
Gannon said she told the FDIC officials that increasing interest rates will stimulate the market.
“I think the federal government needs to increase interest rates to stir people into buying now while rates are low and then inch them up a little until we get to the point where people can actually make money on their money sitting in their savings accounts or they can make money on their investments. Then they won’t have to risk everything they own and put it in the volatile stock market. They can buy government bonds, they can buy CDs. Then the government can ease up on lending guidelines and make it easier for people to buy houses.”
Gannon said she has never worked so hard to make so little.
“Back in the day, I would earn close to $200,000 in commissions a year. In the last six months, my commissions have gone from thousands to $500. I’m selling lots of little stuff, at $500 a hit. So if I have grossed $20,000 so far this year I’d be stretching it. That’s how it is. I’m busy. I’m selling stuff; I’m making money, but it’s not the kind of money I used to make.’’
Gannon said she used to have three offices that employed 45 agents.
“Now I’ve merged my company with another company and I am back to being independent,” she said. “We’re surviving. We’re all treading water. Doing the best we can with what we’ve got.”
