Home sales, construction pick up

The sound of hammers and saws in residential neighborhoods is getting louder as a home-building industry nearly dormant in 2009 begins to revive in the spring of 2010.

And that’s bringing smiles to developers, builders and real estate agents as homebuilding and home sales start to take a long-awaited step forward.

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“We’re feeling cautiously optimistic this year that homebuilding is starting to turn around in Northern Colorado,´ said Dottie Weber, executive officer of Homebuilders Association of Northern Colorado.

“I think activity in general is picking up,´ said Andrea Schaefer of The Group Inc. Real Estate, who’s focusing on selling houses in Sidehill development in southeast Fort Collins. “We’re averaging around two closings a month, which is really good for new construction.”

“We’re seeing days on the market being much less,´ said Sharianne Daily with Re/Max Alliance. “You feel the excitement again with the pace of home sales.”

That also includes the pace of home construction. In the most recent report from the city of Fort Collins’ sales tax division, March building permit activity was up 27.2 percent over the same month in 2009. The report said permits for 23 single-family homes were issued in March compared to 15 in 2009.

A total of 190 homes were sold in Fort Collins in March, up by 48 from the previous month. Sales of homes were up across the region in March, with Loveland-Berthoud up by 46 over February, Greeley-Evans up by 37 and Estes Park up by six, according to Loveland-based research firm IRES.

Those numbers may not be impressive when compared to the boom times through 2007, but they appear to be signaling a climb out of the doldrums seen in the last two years.

“There’s definitely a demand for new homes,´ said David Rand of The Group, who’s selling homes in new subdivisions in Milliken and will soon be marketing homes in Windsor and Firestone.

But Rand notes that most new homes are not being built on speculation. “Builders are out there but it’s pre-sales,” he said. “Almost every builder I’ve seen is doing more pre-sales than specs because they don’t want to hold onto properties for months.”

Rand said it comes down to getting building loans, and that source of funding remains tight.

“Banks aren’t willing to lend on spec right now, so that’s a big problem for builders,” he said.

Harry Poehlmann, owner of Loveland-based Poehlmann Construction Co. and president of Homebuilders Association of Northern Colorado, said he expects a building boom if financing can be loosened.

“It does seem that the banks and the lack of lending is the biggest hurdle,” he said. “Once that gets relieved, there is a pent-up demand out there.”

Starter demand strong

There’s an especially strong demand for starter homes and those priced at $250,000 or less. The $8,000 federal first-time homebuyer tax credit, which ended April 30, pumped a lot of business into companies that specialize in lower-priced houses.

Jay Galvin, a salesman for Greeley-based J&J Construction/Journey Homes, said home sales have been brisk at Maple Hill, a subdivision in northeast Fort Collins where home prices range between $191,000 and $234,400.

Galvin said the tax credit was helpful but buyers just keep coming. “We haven’t slowed since (April 30),” he said on May 3. “I sold one over the weekend and I’m selling another today.”

Rand said he’s selling single-family homes in the Milliken market starting around $130,000. “These are houses with three bedrooms and two baths,” he said. “That’s an extremely competitive price compared to what’s in the area. At that price point, we’re hoping to take over the entry-level market.”

Poehlmann said the latest dip in homebuilding and buying was the worst he could recall in more than 30 years of building. While there have been down periods in the past, Poehlmann said the recent drop has been unusual in its scope and severity.

Schaefer said the Sidehill Bungalow Series homes she’s selling range from $265,000 to $365,000. She said the federal tax credit wasn’t a factor in the strong sales she’s seen. “The tax credit hasn’t affected us that much because we’re more aimed at the move-up buyer,” she said.

Even so, Schaefer said Jamestown Builders, a subsidiary of Everitt Cos., has been doing “great” so far this year after coming off the company’s best year in 2009.

Others aren’t quite yet to that point. Poehlmann acknowledges things are getting better but aren’t close to being back to where they were.

“I’d say we’re maybe 10 to 20 percent busier than last year,” he said. “But I once had 15 employees and now I’m down to four.”

Poehlmann said he worries about how much home prices will jump when the residential revival is in full swing.

“When it does break loose, my biggest fear is prices,” he said. “People aren’t stocking inventories of tile and lumber and building materials, and those prices are really going to skyrocket.”