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As construction slows, old homes become new

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Posted: Sunday, April 17, 2011 12:00 pm

By Colleen Flaherty

Killeen Daily Herald

Jenn Martin and her family were looking to buy a home with personality upon relocating to Killeen from Savannah, Ga., in December.

They walked a few new homes, said Martin, 33, but eventually settled on a 27-year-old home in an established southwest Killeen neighborhood.

"We wanted a home with character and just enough room for our four-person family to be comfortable, even when we have company stay for a few days," said the Army wife and arts and crafts sales consultant. "We received that and more."

From the wooden beam that runs through her living room to the covered porch out back, Martin's home has features that some new "cookie cutter" models don't, she said.

"They have different amenities, sure," Martin said. "Nonetheless, they're just lacking something."

Fellow Fort Hood spouse Jennifer Lynn Howell also prefers older homes.

"Not only are the rooms bigger compared to the 'boxes' you see in newer homes," she said, "they also have a lot more originality to them. Houses nowadays look way too much like each other, even with different companies."

Martin and Howell aren't alone.

Old is new

Slowed construction due to rising costs, declining Fort Hood troop levels, national economic conditions and tight credit markets have recently led to greater interest in older area homes, longtime Killeen Realtor Marina Prieto said.

Of course, Prieto said, many clients still come to her wanting or expecting to buy newer homes. But if they keep an open mind and look at some older homes, they can be swayed by what they see.

"They see a difference as far as the construction and the size of the bedrooms," Prieto said. "They're a lot bigger in the older homes. They have more space and they're in an established area, and the yard may be fenced in, with trees."

Michael DeHart, executive officer of the Fort Hood Area Association of Realtors, said he encourages would-be-homeowners to look not only at the front of a house, but also at the back. If they look equally well built, he said, chances are it is well built throughout.

Quality of construction was also of concern to Martin. Even if she'd wanted a new home, she said, she would have only done it with a 20-year warranty for the foundation.

Over the past several years, Prieto said she's sold about 50 percent new-to-recently-built homes and 50 percent older homes, even in Killeen's relatively "young" market.

Fort Hood Area Association of Realtors number-cruncher Jose Segarra, owner of Killeen's Exit Homevets Realty, said there's little data on older-to-newer homes sales in the area, as Realtors tend to distinguish between "pre-owned" and "new" homes only. Differentiating between those sales can also prove difficult, he said, as larger builders don't always enter their homes into the local Market Listing Service.

But builders are cutting back, Segarra said, and with that comes more relative variety in the older home market.

Sometimes, but not always, homeowners can get more for their money in the older market, Prieto said. She expects that will become increasingly true as construction costs continue to rise.

Stalled construction

Central Texas Home Builders Association president Trent Dalton, of Trent David Custom Homes, said he's already cut back on his output since 2009, when the recession dragged on and 4th Infantry Division left Fort Hood for Fort Carson, Colo.

These are tough times for builders, he said, not only because of soaring costs, including 10 percent increases in the price of fuel and lumber.

"Mortgage lenders have really tightened down on who can qualify for a new home, and that affects everyone, new and resale," he said, including builders who need financing to start a home.

Prieto said 640 is the going credit score for lending, across all three major raters.

"Then you have a lot of inventory," Dalton said. "Typically, the Killeen area had been insulated and followed a year-round selling cycle, and now we've gone to a normal selling cycle, where over the winter months there's lots of inventory and they'll sell it through the spring, summer and fall."

Dalton believes the new home market will right itself in the near future, he said, but in the meantime, excess inventory means fewer or no new projects.

"I'm watching my neighborhood real close," he of upscale Evergreen Estates in Harker Heights. "I'm fixing to start keeping inventory at one or two, versus five or six until I figure out what's going to happen."

Building permit applications, a good indicator of future construction, were up in Killeen year over year last month. The city received payment for 153 single family home permits in March, up from 139 in March 2010.

Sustaining growth

Another boom in new home building doesn't worry DeHart yet, he said, as the area will continue to grow from the new Carl R. Darnall Army Medical Center project at Fort Hood and development at Texas A&M University-Central Texas.

Killeen's population is now bigger than Waco's, he said, not including Killeen's surrounding communities, and has thus far been saved from the housing busts that have ravaged communities in states such as Arizona and Michigan.

He attributed the area's resilience to Fort Hood, which he called the largest economic engine in Texas.

But, DeHart said, market sustainability is being discussed "in more rooms than this one."

The market is generally self-correcting, however, Segarra said. More inventory means lower prices, which will eventually lead to less inventory and higher prices.

The area is still well below the six-months-on-the-market threshold that would make it a buyer's market, Segarra said.

Contact Colleen Flaherty at colleenf@kdhnews.com or (254) 501-7559.

Follow her on Twitter at KDHfeatures.

Area home prices jump 5 percent

Although fewer homes were sold in the greater Fort Hood area in the 12 months leading up to April 1 than in the previous year, sale prices were up 5 percent year over year, according to data from the Fort Hood Area Association of Realtors.

Between April 2009 and March 2010, 2,698 homes were sold here, each taking 85 days on average to clear the market. Between April 2010 and March 2011, 2,401 homes were sold, taking 101 days to clear the market.

The median home price, however, jumped from $117,500 to $123,700 at the time of sale.

Killeen's price jump puts it far ahead of national downward trends, according to data released this month by California-based analytical firm CoreLogic.

National home prices, including distressed sales, declined by 6.7 percent in February 2011 compared to February 2010.

Association spokesperson and Exit Homevets Realty owner Jose Segarra attributed the discrepancy in number of homes sold year over year in part to the $8,000 first-time homebuyer credit that expired April 30, 2010.

Credit markets are also tight, longtime Killeen real estate agent Marina Prieto of Diamond Realty said, although interest rates for those who are able to qualify for mortgages are attractively low.

- Colleen Flaherty

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