By Mason Lerner
Killeen Daily Herald
The recent heat wave might not be the hottest thing going in Central Texas. Existing homes sales in the region have increased every month this year, and all signs seem to point to more of the same going forward.
Numbers are up across the board, and there is a sense of guarded optimism permeating throughout the local real estate community.
"Sales have been up 15 to 20 percent around the state, more than that in some areas," said Dr. James T. Gaines, research economist for housing markets and development at the Real Estate Center at Texas A&M. "What we're reading from this is it is definitely indicative that (Texas') housing market is showing signs of recovery and improvement."
Gaines said Central Texas is strong, even compared to the rest of the state's real estate market, which has generally not lagged as badly as the national market.
"If you look at what is going on in the state, the traditional Texas Triangle, which consists of the I-45, I-10, and I-35 corridors, you're in the path of where growth is occurring and is expected to occur for the next 20 to 30 years," said Gaines. "And obviously, Killeen-Fort Hood is more or less in the middle of that corridor."
The numbers offered by the Real Estate Center at Texas A&M certainly seem positive. According to the center's website, 224 existing homes were sold in the Killeen-Fort Hood area in May 2012 versus 191 sales in May 2011. The median price of $120,400 for area homes sold in May 2011 improved to $125,900 in May 2012.
"Real estate is a very local thing," said Gaines. He noted even in Texas some areas are still struggling. He said Killeen-Fort Hood does not appear to be one of them.
"Just eyeballing it, it looks like things are pretty good," he said. "It looks like the market is reasonably stable."
Scott Shine certainly hopes so. The high-profile real estate agent with Shine Team Realtors in Harker Heights said he feels there is reason to get excited. And his excitement is not that of a salesman simply hoping for the best. Shine is a numbers cruncher, and what he sees makes him feel confident about the future.
"May was a good month across the board for us," Shine said. "It was definitely an increase versus May 2011."
Shine is constantly scouring data provided by the Fort Hood Area Association of Realtors and the Temple-Belton Board of Realtors MLS databases, which include data on existing and new homes.
He said May showed an 11 percent increase in home sales versus May 2011. Conditions have caused him to declare it an "extreme buyer's market" for homes in the $175,000 to $199,000 range and the $250,000 to $299,999 range. He said overall there was no market condition or price regression in May of 2012 versus 2011.
"It is exciting," Shine said. "When you look back at the history to 2004, which was kind of the last normal year in real estate, 2005 was really the last time we had an increase of sales."
"It looks like there is a very good chance that 2012 will be better than 2004, which is a good sign," he said. "And there is a good chance our 2012 sales will be higher than 2011."
"New home sales are doing very well now, too," he added. "It's a similar trend."
And while Shine does not think the area will be seeing a boom like 2005 any time soon, he sees things trending upward through the rest of the year and beyond.
Sellers need patience
But just because things are trending toward the positive does not mean selling a home is as easy as simply putting it on the market, kicking up your heels and waiting for offers to pour in.
Janeen and Steve Wood put their Harker Heights home on the market more than five months ago, and they are still waiting for a buyer.
"We've had a lot of interest, but it has kind of tailed off recently," Janeen Wood said.
"It's just not selling," she added.
Wood said she thinks part of the reason they are having a problem selling the house is the price. Their initial asking price was $309,900, but the family lowered it to $275,000 on Wednesday. She said the house was appraised at $301,000.
"I think there is definitely a market where houses in the $200,000 range are selling well," she said. "But the $300,000 range is a tougher sell."
Shine agreed with this assessment, but said that five months on the market is not abnormal for a house in the $300,000 range. Shine indicated there is more than 14 months of inventory for houses listed between $300,000 and $399,999.
Michael DeHart, executive officer for the Fort Hood Area Association of Realtors, explained why inventory is such an important market indicator.
"How much inventory you have on hand is very important," DeHart said. "What's considered the ideal market is about six to seven months of inventory. Today we are 7.4 to 7.7 months of inventory, on average, which is good."
"The worst was in July of 2009, where we had 10 months of inventory," he continued. "But now, all of the numbers are in the mid-six to low nine range."
Given these numbers, the Woodses probably should not be surprised their house is still on the market.
"In the over $300,000 market, six to eight months would not surprise me," Shine said.
Reasons for improvement
Perhaps, historically low interest rates are the biggest force behind the improved market in Central Texas. Mortgage-finance company Freddie Mac released a report on Thursday showing interest rates remain around record lows. The 30-year fixed-rate mortgage averaged 3.66 percent, remaining unchanged since last week.
"Interest rates have been a big help (with increased sales)," Shine said. "Ten years ago, it could have easily been 7 percent. So people have a lot more buying power today."
There is, of course, another obvious reason the local market seems to be recovering.
"The troops are coming home," said DeHart.
Despite all the positives, Gaines was not ready to declare the residential real estate market completely recovered, but he said the signs are pointing in that direction. He also is hopeful that what is happening in Central Texas indicates the national market is taking baby steps toward recovery.
"There is some evidence of a national recovery, but it is slow," he said. "The nice thing is we are seeing market recover this year, and Texas is poised to do very well next year."
Contact Mason Lerner at firstname.lastname@example.org or (254) 501-7567.