Two men who know a lot about real estate recently discussed the state of the Dayton and U.S. housing markets with the Dayton Daily News.
Bill Armstrong, treasurer of National Association of Realtors, and Steve Brown, co-owner of Centerville real estate firm Irongate Inc. Realtors, agreed to a joint interview. Brown is also 2014 president-elect of the national realtors trade group of about one million members.
Armstrong and Brown spoke June 21 at a ribbon-cutting for SentriLock LLC, a business owned by National Association of Realtors that manufactures electronic lockbox systems used by the industry. SentriLock is opening new headquarter offices along Interstate 75 in West Chester Twp.
It seem in 2012, it was the year that in most markets home prices finally stopped declining. What are the key trends you see in the housing market in 2013?
Steve Brown: “The Dayton crisis really stopped declining in 2009. That’s when we saw the market finally reach that bottom. And so we saw certainly a consistent average price around 2009, 2010, ‘11 and then ‘12, and then in ‘12, we saw just a little bit of an increase in the average selling price and then ‘13, we’re seeing that as well.
“Because we’re seeing an increase in the average price, it doesn’t necessarily mean that we’re seeing an increase in all property values. What you’re seeing is some of the upper end market really beginning to sell and becoming much stronger than it was, which has driven up that average selling price.
“As you know, the average selling price in Dayton just came out at (about $129,000), something in that neighborhood. We were as low at one point as $109,000. Now we were as high at one point in the $160,000s prior to the recession, so we still have ground to make up for.
“Bear in mind that the average appreciation rate in the Dayton market, even prior to the recession, still really averaged about 1 to 2 percent a year. We won’t see double-digit appreciation.”
Bill Armstrong: “Every market is a little different. We’ve got markets that were severely impacted like Las Vegas, Phoenix, South Florida. However, they’re rebounding beautifully right now.
“Overall inventory is limited. That’s one of our biggest issues right now — limited inventory. The homebuilding market has not really commenced yet for a number of reasons. The cost to build new product is still greater than much of the now newly established basis for resale properties. So new homes can’t come in.
“Financing is very difficult, tough for everybody really because they’ve gone 180 degrees, where they were letting everybody and anybody have a loan for a period of time. Underwriting standards went by the wayside. That was inappropriate, inexcusable, but now they’ve gone to the point where a lot of people’s credit scores were damaged by virtue of this, maybe in many cases through no fault of their own.
“When you start to see new home construction start to uptick a bit, that means that we’re really starting to see I think fairly significant improvement.”
How would you describe the state of the market right now?
Brown: “The key here is that you have to understand all real estate is local. It’s really hard to generalize.
“So I would say the market certainly on a national level, it’s very healthy right now. The market is healthy, there’s a lot of consumer confidence in the market. When consumers feel good about the economy, feel good about their jobs, they feel more confident about making that major purchase which is buying a home or a property.
“The Dayton market as you know, our unemployment situation has gone down, which is wonderful. And as you see job increases, you’re going to see more people that are able to purchase property.”
What do you see happening with interest rates this year?
Brown: “We’re going to see interest rates inch up a little bit. You are still, even an inch up, at historic lows. Still, I think the general feeling is interest rates are going to inch up a bit in the marketplace and we’re probably looking at an increase in the next 12 months of about 1 percent over where we are today. One, maybe 1.5 percent.”
Armstrong: “Let’s face it, rates will not be going down and they will indeed, at some point, go up. I think we’ve seen enough people sitting, wondering if this is the right time, if rates are going to lower. They can’t go lower; we have a zero percent short term lending rate.”
Brown: “Certainly it could spur some activity, there’s no question about that.”
What do you see to be the single biggest challenge remaining?
“The appreciation in the marketplace, it’s going to be a gradual appreciation. The reason is that the appraisers… are going to have a tough time finding the comparable sales to justify these slightly escalating prices. That’s why there is a tempered movement in the market.”
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