COLUMBIA — The economy has hit Columbia's real estate market hard, with home sales down to near-record levels and a big drop-off in building permits.
Real estate transactions for November were the lowest they’ve been for any one month since 1993, according to the Boone County recorder of deeds.
- A total of 1,535 real estate transactions in November, compared to 2,198 in October and the year’s high of 2,852 in July.
- During the previous November, 2,061 transactions were recorded; in November 2006, there were 2,532.
- The second-lowest number of transactions is 1,545, recorded in February 1993.
Third-quarter home sales overall were down from previous years. Realtors sold 66 new homes in Boone County in the third quarter of 2008.
In contrast, 113 new homes were sold in the third quarter of last year, 146 in 2006 and 175 in 2005, according to the Columbia Board of Realtors.
Sheri Suzanne Radman, president of the board, said she’s still seeing first-time buyers looking for homes that cost less than $200,000. The only difference this year is they expect more for their money.
“Buyers are more picky about the kind of home they’re buying because they know they have choices,” Radman said. “It’s a buyers' market.”
Applications for city building permits last month dropped 50 percent over the previous November.
In November, only 12 permits were filed, down from 29 in 2007 and 42 in 2006.
Builders filed 25 permits for single-family detached houses in October, down from 29 in 2007 and 42 in 2006.
“Builders have virtually stopped,” said Mike Tompkins of Tompkins Construction.
“We’re still working, but I would say for our company we usually do about 12 to 20 houses a year under normal circumstances, and I think this year we’ll do eight,” he said.
He said his company has been taking on different types of jobs to keep employees busy. They branched out into foundation repairs, the rental home market and long-term projects that don’t pay off right away but keep employees working.
Ken Kroll, who owns and operates Designer Home Builders with his wife Dena, said he and other members of the National Association of Home Builders have had to cut back because of low buyer demand. Kroll’s company sold only one home in 2008; he said he typically sells three or four homes per year.
Kroll often encounters buyers who want to buy one of his new homes but can’t sell their old one, he said. In such cases, Kroll will buy an old home or property and turn it into a rental or try to sell it. Trading up is a risky investment, but Kroll said creative deals are becoming more common and are often the only way to sell long-vacant homes.
“I think the days of relatively easy, straightforward transactions for homes are not probably there to the same degree,” Kroll said. “It complicates things.”
Carol Van Gorp, chief executive officer of Columbia Board of Realtors, said this year 20 percent of the deals that would have been successful in 2007 are falling through.
“Buyers get analysis paralysis,” Van Gorp said. “They’re analyzing what’s going on; they’re afraid to make a move, and everyone’s nervous about committing themselves. Those that do are finding good deals right now.”
Tompkins, who tends to build homes in the $500,000 to $700,000 range, tried to nudge into the $200,000 market with a home at the October Parade of Homes.
“We actually built that cheaper one because things are a little slow, and we wanted to test that showing,” he said.
He also showed a home that cost close to $600,000 and said, so far, he hasn’t had to slash the prices of his more expensive homes.
“Overall price here hasn’t really dropped much,” he said. “Volume’s dropped – the quantity of houses – but the price here in Columbia is stable.”
According to the Columbia Board of Realtors' third-quarter data, the average price of new Boone County homes in 2008 was $240,479, an increase over previous years.
In 2007, the average price in the third quarter was $216,470. In 2006, it was $213,212; in 2005, it was $196,116.
Van Gorp said the median home price is also indicative of price stability.
"The median home price is what we prefer to look at, and that is rising as well," Van Gorp said.
The median home price for the third quarter rose every year for the past four years. In 2005, the median price was $168,500. In the third quarter of 2008, it was $205,000.
Even with stable home prices, both Tompkins and Kroll are concerned that the housing market will have a slow recovery.
"I think we may be near the bottom, maybe not quite there," Tompkins said.