Abilene in top 10 for home prices
By Kimberly Gray
Thursday, April 2, 2009
Special to the Reporter-News
Abilene is one of the top 10 best markets in the nation for expected performance in home prices, according to an organization that forecasts the real estate market for investors.
The Local Market Monitor, which is based in North Carolina, is predicting increases in home values of at least 2 percent for each of the cities named in the top 10 list.
Local real estate agents praised the news, saying it validates Abilene's steady growth in the real estate market even as the rest of the nation struggles with an economic downturn.
Although Richard Petree, Taylor County's chief appraiser, says he believes Abilene is doing better as far as the housing market goes, he thinks the Local Market Monitor survey is a bit "too positive."
"There are still lots of homes for sale, and that leads to a decrease in values," he said.
The other Texas cities listed as top 10 markets are Lubbock and Laredo. Other states with cities that made the list were Alabama, North Carolina, Indiana, Louisiana and Pennsylvania.
"These are markets where home prices never got out of sync with local incomes," Ingo Winzer, president of Local Market Monitor, said in a news release. "In such markets, the recession has less of an impact on home values than in markets that were overpriced."
Carolyn Beggs, the chief operating officer of Local Market Monitor, explained that they based their top 10 picks on various data, but primarily on jobs and income from each area.
The Local Market Monitor Web site states that they also use such economic data as home values, employment growth and population growth to make forecasts for real estate markets. Winzer, who is also the founder of Local Market Monitor, developed a concept called Equilibrium Home Prices, which the company says has proved valuable in assessing real estate market risk in the last two economic cycles.
Beggs said Abilene has had an average positive monthly job growth of 0.9 percent, compared with about a 2.1 percent decrease nationwide. She further explained that housing prices in Abilene have not had a huge spike like some of the other areas, which results in more loss when values plunge. Abilene has had a slow and steady increase in home values.
Jerry Mash, president of the Abilene Board of Realtors, pointed out that a home in 1990 in Abilene had an average value of $62,000, and now that average value is $126,000, which shows a steady increase.
He said that the real problem in the housing market is on both coasts.
The cities the Local Market Monitor named as Bottom 10 in expected real estate prices, with predicted declines of 25 percent or more, are in Las Vegas, Florida and California.
"This is where housing prices went up fast. Then when the economy went down, demands for homes decreased," Mash stated.
For the states in the center, he said, there has not been a large increase in prices but a steady increase. "And the affordability has stayed good," he added.
Petree, CEO of the Taylor County Appraisal District, said Abilene hasn't seen the fall in housing like other areas of the country because the area doesn't have as many subprime mortgages. He gave an example of someone who purchased a $200,000 home with a subprime mortgage and paid their mortgage for about six months, then was faced with foreclosure because their payments went up while at the same time the value of their home decreased. On a foreclosure, the bank loses tens of thousands of dollars.
"We had just 30 foreclosures here last month and 226 last year," he said.
He also credits the conservative nature of West Texans for this area being protected somewhat from the effects of the recession.
"We've never had the marketplace where people expect big raises or bonuses and then buy based on those expectations," he said. "People buy what they can afford."
Kiddy Boswell, executive officer for the Abilene Board of Realtors, said the city's place on the top 10 list is good news, especially because the housing market has been down nationwide. She also credited the fact that Abilene's housing market hasn't seen such fluctuations in the past.
"The Realtors haven't done anything special to make this happen. It has taken the cooperation of the whole town or area to make us look that good," Boswell said.
Mash noted that the Abilene area still has a strong, diverse economy, including three universities, Dyess Air Force Base and many medical facilities.
Petree agrees that things are better in Abilene than in other parts of the country and that Abilene is a great place to buy because the cost for a nice home is less than $100 per square foot, compared to up to $1,000 per square foot in other areas.
He said that the city is not seeing the drop-off of the real estate market yet but believes that it will see at least a slight decrease in values in the near future.
He said the chief economist at Texas A&M Real Estate Center predicts about a 15 percent decrease statewide.
"The larger cities drive that number up," he said.
Petree said that the economist in him agrees with this prediction, but, he added, "I hope I'm wrong."
The Local Market Monitor's Beggs, though, says buying a house in a city such as Abilene is a good investment because owners will not see the decrease in value that other cities might.
"You can buy a home and feel comfortable that it's a solid investment," she said.
Boswell said that Abilene is a "good place to live and raise kids" and that this most recent finding is another reason for that. "As long as houses are available it will be good for the buyer," she added.
Mash said the Local Market Monitor article was "wonderful news" because "any time you get good recognition on a strong economy, it's a good thing.
"Maybe people will look at Abilene a little differently now."
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