If no more homes came on the market in Killeen and surrounding cities, it would take almost a year at the current pace to sell the more than 500 homes listed.
Known as home inventory, the distinction is an important indicator of any housing market’s overall strength. Although inventory has come down from last year’s 11 months of inventory, according to MLS data obtained by the Fort Hood Area Association of Realtors, the area’s current inventory sits at nine months, suggesting a struggling local housing market.
According to many local real estate experts, a healthy inventory is typically about three to four months.
“When we start to find that the inventory of homes for sale is starting to increase, like when you get around over seven months of inventory, when those things start creeping above that, that’s when I would start to maybe be a little concerned about it,” said Roger Chesser, deputy chief appraiser at the Tax Appraisal District of Bell County.
A big contributor to monthly inventory is the rate at which cities such as Killeen and Harker Heights have been building new homes. According to Killeen’s permit reports, the city built between 40 and 100 single-family homes each month of 2014.
“Between 2013 and 2014, we saw in residential about a 1.97 percent increase (in appraised home values) and almost all that was due to new homes,” Chesser said. “It wasn’t really based on re-appraisal.”
Regardless of the Army’s reduction in force, Chesser said new home builders haven’t slowed their pace.
“There still seems to be development in the area…” Chesser said. “We’re starting to see the lot counts for dedicated lots that are platted each year starting to rise throughout the county.”
“Are there a lot of homes for sale in Killeen? Yes, there are,” said Johnny Frederick, chairman of Killeen’s planning and zoning commission.
But Frederick and others said much of the increased home inventory can be explained by seasonal market trends that remain constant year to year.
“The reason it’s really high right now is we’re coming off of a holiday, so a lot of stuff has hit the market,” said David Hall, MLS coordinator for the Fort Hood Area Association of Realtors. “We have a lot of people putting their houses on the market right now. If you look at last year’s reports by month, you’ll see we’re getting ready to come into a high season where things are going to start selling and you’ll probably see that number start to come down.”
Frederick agreed, saying in the coming months, inventory will hopefully come down.
“Inventory is always going to be a little higher this time of year because people don’t buy homes in December and January,” Frederick said. “Around here, everybody moves in June or July with the military. That’s the big housing sales months, so inventory drops off in those months. Is it excessive? I don’t know.”
Nonetheless, Frederick admitted new home sales are essentially keeping older homes on the market longer by offering almost no money down for qualified military and nonmilitary new homebuyers.
“With the new home builders, because money is so cheap on the credit side right now, they can borrow money so cheaply, they can afford to do that,” Frederick said. “That impacts existing home sales more than anything else, I think, in this town. The fact that with the VA and other programs out there right now, it’s just so cheap to move into a new home versus an existing home.”
Michael DeHart, the Fort Hood Area Association of Realtors’ executive officer, said new home builders will likely continue their pace of building as long as they keep selling homes.
“Builders are selling houses while they’re a slab,” DeHart said.
DEFYING THE TREND
Some homebuyers aren’t going for new homes and instead want to buy an older home in a desirable area.
“Sometimes it’s better to buy an older home because the way they make things nowadays, they’re not really built to last versus back then, they built things to last,” said Jaclyn Mance, whose husband is in the Army. “Sometimes it’s not really bad buying an older home.”
Mance said she and her husband considered buying a new home.
“We considered it. But my husband is the kind of person who likes to get his hands on a project and do a fixer-upper,” she said. “I think he gets inspired a lot by HGTV.”
Chesser said Mance’s future home value may remain flat.
“The mid-range homes are kind of staying flat, but I think it’s also because when you’re building a lot of newer homes and they’re all within a certain price range, the existing homes in that price range aren’t going to appreciate because you can go out and buy a brand new one of the same type for the same price,” Chesser said.
Although new home building may affect the value of their future, older home on Michelle Drive, Mance said she’s still confident they’re making the right decision.
“It kind of makes me second guess if I’m buying the right house, but then I really like the location of the house,” she said. “You can always change the house, but you can’t always change the location of the house. ... I would rather invest in a location rather than the house itself because the house we can fix and change. Location is everything for both me and my husband.”
As the high rate of new homes being built continues, Frederick said those with older homes on the market have their work cut out for them.
“If you have an existing home for sale, a used home for sale, it certainly is an issue because of the time it takes to sell one,” Frederick said. “But I’m not sure that we’re out of whack with other areas similar to ours as far as the amount of inventory on the market.”
As far as incentivizing home sales in older areas of Killeen, Frederick said he’s one to shy away from government intervention in Killeen’s housing market.
“The city’s job is to let the market take care of itself. It will autocorrect over time. It always does. You’re going to see that happen everywhere, not just here,” Frederick said.
“When there’s too much inventory on the market, people don’t feel comfortable with the risk and they’ll stop building new homes. Existing home sales will go up. When they reverse that risk, it will go the other way, so its just a natural market flow.”