Desirable mortgage rates, low supply and few chances for development have led to a consensus among local experts: Jefferson City area housing is a seller’s market.
Homes are being sold quicker and closer to list price than in previous years, making it a good time for owners to consider making a move. Mortgage rates, which increased in 2018, have stabilized with the Federal Reserve signaling it likely won’t raise the interest rate this year, providing home buyers with attractive financing.
“So if you have a good home ready to sell, now’s the time,” said Tom Shimmens, senior vice president of Central Bank’s real estate department. “The only problem is once you’re a seller, then you’ve got to become a buyer.”
Sellers
Stephanie Biggs, president of the Jefferson City Area Board of Realtors, said a home that is well maintained and priced right should sell quickly. The demand for homes is high, she added, and the number of listings in and around Jefferson City is lower than in past years.
“We were in a buyer’s market; we were in a buyer’s market for years,” Biggs added. “But then it turned to a seller’s market.”
In 2014, there were 606 active residential listings in January, according to statistics from JCABOR’s Multiple Listing Service. This year, there were almost half as many listings in January, at 357. In July 2018, there were 380 listings, a decrease of 466 from 846 in 2013.
“The houses will sell faster, they’ll have less days on the market, they should sell for more, but there is less inventory,” Biggs said.
The number of days a house will spend on the market in the Jefferson City area has been steadily dropping in recent years. In 2018, the average number of days on market was 63, according to JCABOR statistics. In 2014, it was 123 days.
Biggs said there are houses receiving multiple offers in the first few days after hitting the market; some are going at or above list price.
Through February, houses sold at 94.79 percent of the original list price, up over a point from the previous two years. Since 2016, the yearly average of that statistic has been around 95 percent.
The median sales price locally is also up, increasing from $137,300 in 2017 to $144,000 in 2018. Through February this year, the median sales price was $148,250.
The average sales price is up through February compared to last year, as well, according to JCABOR statistics. In the first two months of 2019, the average sales price was $166,468, compared to 2018’s first two month average of $137,332. The year 2018 finished with an average of $165,144.
Biggs said today’s buyer is often looking for a house already set to move into, so homes with updates sell faster than ones in need of remodeling. But, she added, those that do need work present good investment opportunities.
Buyers
Financing for home buyers is readily available, Shimmens said, and mortgage rates are attractive. Average rates locally are around 4 percent for a 15-year fixed-rate mortgage and 4.5 percent for a 30-year. According to statistics from Freddie Mac, a federal mortgage buyer, the national average rate for a 30-year fixed rate mortgage was 4.46 in January and 4.37 in February.
“As far as our rates locally, we are very competitive,” Shimmens said. “The rates are right in where they need to be for the nation.”
Shimmens said many details influence the mortgage rate a person may be quoted, such as qualifying ratios, credit score and the type of loan.
“Quoting rates is very difficult now, because there’s so many factors that weigh into how a rate is determined,” he said.
There is also a number of programs available, Shimmens added, including rural development loans, VA loans and Federal Housing Administration loans.
Rates climbed nationally last year, causing some concern the housing market was slowing down. Rates have stabilized this year, he said, even dropping a bit.
“The Federal Reserve made three increases last year, and the Fed was poised to make another one or maybe a couple more this year,” Shimmens said. “Well, they’ve taken what they call a neutral stance where they’re going to watch the market closely, and they’re not predicting a rate increase this year.
“As a matter of fact, there’s even some part of the markets and the Fed even think that they might even see a quarter-point reduction in rates now. Don’t know if that’s going to happen yet, that’s just speculation. … Definitely the Federal Reserve has backed off raising rates this year, right now.”
Shimmens said the weather slowed home sales down in January, but February finished well and March had strong sales. The concern is the number of houses on the market dropping too low.
“That’s the fear,” he said. “We’ve got a lot of buyers, the Realtors are out there showing, they have a lot of potential buyers. We’re pre-qualifying a lot of people. We just have to hopefully keep that inventory so people can buy something.”
Development
Shimmens said an issue facing the local area is a shortage of new development, especially in the $130,000-$170,000 range preferred by most new home buyers.
Larry Burkhardt, building official for Jefferson City, said a static population and difficult terrain limit the addition of new homes.
“There’s more going out in the county, but even then the county is still kind of restricted,” Burkhardt said. “Our growth in new housing is based upon population needs. So, if our population isn’t growing, then people are trying to renovate their houses.”
There were 47 permits issued for new single family homes in Jefferson City last year, according to the city’s building permit statistics update. That’s one less than in 2017 and comparable to other years following the 2008 housing crises. Before 2006, new single family home permits in the city numbered more than 100 every year.
The number of permits for alterations and additions increased by 99 last year, shooting from 249 in 2017 to 348. The combined monetary value of those permits actually decreased by $800,000, indicating people are taking on small projects.
“People are feeling, well, it’s about time they redid that porch and made it into an all seasons room, or, you know, you can do a lot more little projects,” Burkhardt said.
Part of the issue with building in Jefferson City is the geography. Being next to the river, the city is full of changing grades, valleys and ground, which makes installing utilities like sewer more expensive. The idle land for building — rolling hills and flat farmland — is found more in nearby cities like Wardsville or Columbia.
“You don’t find that much area within the city limits, and so now we’re getting houses built on the last lots of existing subdivisions,” Burkhardt said. “And there’s a reason why they’re the last lot, usually they’re the most difficult to build on.”
Jim Lage, a long-time developer in Jefferson City and builder of the new Turtle Creek subdivision, said he sees land too difficult to build on often.
“We get contacted probably at least once every week or every other week on somebody wanting to sell us a piece of ground,” he said. “… You go look at them and it’s just, you can’t afford to do it. It’s just all rock, it’s all solid, and they want a fortune for the ground.”
Costly land and the risk in taking on a project like building a subdivision is partly why there aren’t more developers working in Jefferson City, Lage said. If the economy slows or you encounter an issue with the soil, a project can fail. Labor costs have also gone up, he added, as well as the price of materials.
Lage said that high risk makes it difficult to obtain a loan to build a new subdivision. A developer, depending on the project, often only makes a profit on that last four or five lots, he added.
Lage’s Turtle Creek Subdivision, which he expects to be finished in around two years, is one of the most recent added in Jefferson City. Most of the people moving in are older, he added, looking to downsize from larger, more expensive homes.
“I thought they’d all have a hard time selling those big homes, and they’re selling the heck out of them,” Lage said.