Published April 06 2013
F-M home sales are booming
The F-M Area Association of Realtors reported 475 closings on pre-owned residential listings through March 31, up nearly 20 percent from the first three months of 2012 and the most first-quarter closings since at least 2000. The next closest count was 441 closings in 2007.
“Our market is really crazy right now,” said Kevin Fisher, a real estate agent with Park Co. Realtors and the association’s current president.
“This compares back to when I first started eight, nine years ago where a new listing would come out and if it’s in good condition and priced correctly, you might have three offers in the first two days,” he said. “It’s insane.”
Builders also are seeing high demand for newly constructed homes.
“We’re booked out through half the summer already, so it’s busy,” said Darrick Guthmiller, manager of Kochmann Brothers Homes Inc. and board president of the F-M Home Builders Association.
Officials say the combination of low mortgage rates, low unemployment, population growth and a robust local economy are driving demand to such levels that housing inventory can’t keep up.
Todd Berndt and his wife, Bobbie Jo, who got married in January, have run into competition for the tighter housing supply as they think about moving from an apartment to a house, looking in the $200,000 to $240,000 range.
“There isn’t much out there, and what is out there is going fast,” he said.
Flood threat not issue
The association’s rosy first-quarter closings figure, which includes single-family homes, twinhomes and condos, stands tall compared with figures from recent major-flood years in Fargo-Moorhead.
In 2009, which brought a record Red River crest of 40.84 feet on March 28, real estate agents reported 303 closings at the end of the first quarter.
The 2010 crest of 36.99 feet on March 21 was the seventh-highest on record and the earliest crest out of the top 10. There were 367 first-quarter closings that year.
Realtors reported 294 closings in the first quarter of 2011, a year that saw the fourth-highest crest on record, at 38.81 feet on April 9.
In spring 2012, the Red River in Fargo didn’t reach minor flood stage for the first time since 1992. With no flood threat and the economy continuing to recover from recession, first-quarter closings rebounded from 2011, with 398 reported.
The National Weather Service predicted on March 21 that the Red River in Fargo has a 50 percent chance of topping 38.1 feet and a 10 percent chance of surpassing 40.9 feet.
Fisher suggested confidence now is higher that the flood-tested metro area can protect its residents, making the flood threat less of an issue for potential homebuyers. Still, he and Guthmiller said permanent flood protection in the form of the proposed Red River diversion is needed to maintain a healthy, growing housing market into the future.
Housing inventory tight
Increased home sales are outpacing the number of new listings, Fisher said, creating stiffer competition for buyers eager to take advantage of low interest rates.
The Multiple Listing Service that covers primarily Cass and Clay counties had 778 listings in the first quarter of this year, down 18 percent from 949 listings in the first quarter of 2012.
Fisher said the local market has roughly a 3½-month supply of pre-owned homes, while a neutral market with a healthy balance between supply and demand typically has a six-month supply.
Low interest rates on home loans continue to drive demand, he said.
Mortgage rates dipped last week to an average of 3.54 percent for a 30-year fixed-rate loan, down from 3.98 percent a year ago, according to Freddie Mac’s weekly survey of lenders.
The average 15-year fixed rate fell to 2.74 percent last week, down from 3.21 percent a year ago.
Freddie Mac, which provides mortgage capital to lenders, noted the average 30-year fixed-rate mortgage has teetered around 3.5 percent for the past two months, providing ongoing help to the housing market recovery.
Berndt, who works in supply management for a local electronics company, said that along with getting married, interest rates were “a driving factor” in the couple’s decision to buy a home now.
“However, housing prices seem to be rising, as well,” he added.
Low interest rates and low inventory of existing housing stock has also put pressure on builders, Guthmiller said.
“The demand, it’s more than what it’s been in the past.” He compared it to 2007 and 2008, “when things were really going gangbusters.”
Permit applications for new home construction are normally sparse during the first quarter, Fargo Planning Director Jim Gilmour said, and this year was no different.
In West Fargo, which Guthmiller said continues to be the hottest spot for new construction, the city issued 32 permits for new single-family dwellings, two less than during the same period in 2012, the city assessor reported.
Fargo issued permits for 22 single-family homes, up three from the first quarter of last year. Moorhead issued one such permit, compared with three in 2012 and one in 2011.
Guthmiller said builders go where buyers want to build, and currently that’s more often in West Fargo, a trend he believes has a lot to do with the flood protection provided by the Sheyenne Diversion.
Fisher and Guthmiller both said they don’t foresee any slowdown in the metro’s housing market in the near future.
“If anything, we are going to run into an area where, are we going to have enough houses to sell?” Fisher said.
Readers can reach Forum reporter Mike Nowatzki at (701) 241-5528
First-quarter closings up substantially
The number of closings on pre-owned residential properties – single-family dwellings, twinhomes and condos – jumped by nearly 20 percent in the first three months of 2013 over the same period in 2012 in the Multiple Listing Service area that covers Cass and Clay counties.
The final first-quarter tally normally increases slightly by the end of the year as paperwork rolls in – for example, the initial report of 398 closings in the first quarter of 2012 ended up at 429 closings – but for consistency in this comparison, the closings reported as of March 31 were used.
Following are the number of closings reported at the end of the first quarter over the past five years:
2009: 303 closings
2010: 367 closings
2011: 294 closings
2012: 398 closings
2013: 425 closings
Source: Fargo-Moorhead Area Association of Realtors