Archive for Thursday, January 15, 2009

Housing starts remain stagnant

January 15, 2009

Although construction of new single-family homes during 2008 did not decrease for the fifth straight year, it only increased by a paltry three.

The total of 12 is up from the nine new homes built in 2007. Prior to this year, building permits for single-family homes had decreased each year since 2003 when 117 permits were issued, followed by 108 permits in 2004, 96 permits in 2005 and 25 permits in 2006.

It might be thought that the overall downward turn in construction is a result of the weak economy, but Brett Fritzel, who is a managing partner of the Meadowlark Development Group, said that is not the case.

“There’s a bit of an economy problem, but I don’t think that’s a really major problem in Eudora,” Fritzel said.

Fritzel said the slowdown is more a result of the city’s lawsuit with Douglas County Rural Water District No. 4. Fritzel said the suit has caused development in the area just south of Kansas Highway 10 to come to a halt because it is not clear if the city will be able to annex the land. Meadowlark development owns about 170 acres in the area.

“We’re locked in between a battle now with the rural water district and the city,” Fritzel said. “We made a fairly substantial investment in Eudora, but we can’t build anything until that suit is resolved.”

Sandy Waller, office manager and branch broker for Reece and Nichols Premier Realty in Eudora and De Soto, said older homes will sell if they’re priced correctly and that market is simply going through a correction.

“This has been kind of a cleansing process,” she said. “We had too much new construction and homes were overvalued, so it’s correcting what probably was a mistake.”

Though the resale market in Eudora isn’t horrible — the Reece Nichols office closed on more than $2 million in homes for the month of December — Waller did say that conditions had been better.

Because of the public reading too much into media reports of rough economic waters, consumers still aren’t taking advantage of what Waller said was a buyer’s market. As a result, the firm is trying to educate the public on the truth about securing a loan.

“The main hurdle is they think they can’t get a loan,” Waller said. “They’ve heard so much negative publicity, but we are still selling homes.”

Barring an out-of-court settlement, Meadowlark Development and anyone else whose financial success depends upon the resolution of the RWD No. 4 lawsuit likely will have a long economic winter.

However, Waller was holding out hope that Tuesday’s inauguration of president-elect Barack Obama might improve the overall consumer outlook.

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