orangeleader.com (Orange, Texas)

Local News

August 27, 2011

OC housing market on steady level

ORANGE — Home sales are down across the nation, but that is not quite the case in Orange County.

The number of people who bought new homes fell for the third straight month in July, putting sales on track to finish this year as the worst on records dating back half a century.

Sales of new homes fell nearly 1 percent in July to a seasonally adjusted annual rate of 298,000, the Commerce Department said recently in an article with The Associated Press. That’s less than half the 700,000 that economists say represent a healthy market.

Housing remains the weakest part of the economy and all types of home sales remain weak. Sales of previously occupied homes fell in July for the third time in four months, and they are trailing last year’s 4.91 million sales, the fewest since 1997. In a healthy economy, people buy roughly 6 million existing homes annually.

Jerry Hughes, owner of Jerry Hughes Realty in Orange and Bridge City, said the housing market is not as good as it was several years ago, but it is still doing well enough.

“We close on about 15 to 20 homes a month right now,” Hughes said. “That’s less than what a normal month used to be, which was around 20 to 25, but it’s OK compared to other parts of the country.”

Jimmy Smith of Flair Real Estate in Vidor concurred.

“It’s definitely down a little here in our area, but, praise God, we still have people wanting to buy homes. Last year, I had seven agents working for me, but I’m down to one agent now. I’m busy all of the time, and it seems like the market is picking up just a little right now.”

Homes are selling at an average discount of 20 percent, and they lower neighboring values. That’s made many re-sales a bargain compared with new homes, creating an average 30 percent disparity in prices.

“There are a lot of good buys and good interest rates right now,” Hughes added. “The market is different now. Sellers have to be more understanding when they get an offer.”

Smith said he has done a lot of leases lately on properties located along Interstate 10 and other main highways in Southeast Texas. He also said home sales, both new and previously owned, are less than normal figures from previous years but knows several factors have played into that equation.

High unemployment, larger required down payments and tougher lending standards are preventing many people from buying homes.

“I never thought I would see rates this low again,” Hughes said. “They are as low now as they were in the 1970s, when I first started. If you are secure in your job, it’s a wonderful time to buy a house.”

A report last week on sales of previously owned homes showed that more sales than usual fell apart at the last minute, a sign that many buyers may be nervous about the economy. At least 16 percent of deals were canceled ahead of closings last month — four times the rate in May.

A telling sign of how bad things have gotten for the housing industry: Prices have dropped more since the recession started, on a percentage basis, than during the Great Depression of the 1930s.

And it took 19 years for prices to fully recover after the Depression.

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