Is new housing construction starting to rebound?
Q: Do you know approximately how many residential subdivisions remain partially completed because of the housing downturn?
A: It could be as many as 20, if you take in all of Jackson County. In East Medford there are five or six, including little projects from Montero, off Lone Pine, up to Saddle Ridge, Aerial Heights and Summerfield. You've got Cedar Landing by Cedar Links. (A) lot of subdivisions are still available for development.
Q: What makes some subdivisions more attractive right now?
A: There were lots in Vista Point priced for between $150,000 and $220,000. Now the price is $60,000 to $80,000; it makes it more affordable to build. Ultimately, a builder is going to ask, 'What is my finished product going to cost me, and what can I sell it for?'
Q: Are built-out subdivisions more attractive to buyers than developments with few or no houses?
A: There is a project over by Rogue Valley Country Club on North Phoenix Road, across from the GoodBean. It has one house. It's definitely more attractive when you've got an area where there are existing homes. People buying a lot in subdivisions are looking for a neighborhood and a community.
Q: Will new construction appraise better as subdivisions fill?
A: Appraisals are usually for property within a quarter-mile radius. It certainly will be more helpful because they are getting some comparable figures right there. New construction is an indicator of an area coming back, and we've had a nice uptick in residential sales going on. For the past two years, we've been feeding off bank-owned and short-sale properties. When you see new construction, you know things are coming around.
Q: When would a low lot price attract as much interest as a bargain-priced, existing house?
A: You really have to have it in mind that you want to build a home. It's about someone having a say in how a house is laid out. You plan it your way, pick colors, pick appliances, pick, pick, pick, as opposed to preexisting houses where you may have to do some stuff to make it yours.
Q: What are the priorities for people who are scouting for lots?
A: Right now, they are looking for what's affordable and a good value. It can be a deal at $400,000 or $150,000; it depends on how good of a deal it is. A couple of years ago, all that was getting bought was entry-level and rental homes, and anything over $250,000 was just sitting. Now, the price point doesn't matter — if it's a good deal, it's going to be purchased.
Q: What do buyers have to be wary of in an unfinished development?
A: They still need to look for a quality builder and quality development. Vista Point (has) been there for 11 or 12 years. It got hit by the downturn, but it's a great subdivision and a viable project. People have been wary of the economy, but what I've been seeing is that people are jumping off the fence and into the game. There are a bunch of different builders. Joe Hughes has six or seven building jobs going on right now. Steve Major and Whittle Construction are building what they want and putting it on the market, and they're selling. We're not having problems with appraisals because everything built is selling.
Q: How long do you think it will take before the subdivisions that started going up between 2004 and 2006 will reach completion?
A: What you are talking about is absorption. If you go from 2005 to now, you could say 10 years. Where prices are at right now, it could be five to 10 years before many of these subdivisions are completed. We have 2,000- to 4,000-square-foot houses being sold for $300,000 to $400,000, which means $99 to $130 per square foot, and they are able to compete with short sales and foreclosures. There are people fed up with going after distressed homes. They are able to buy something at a comparable price, and they are even willing to pay a little more with interest rates as low as are.
Q: Do you anticipate building construction will pick up this summer?
A: Activity breeds activity. New construction is so affordable right now, and I'm expecting builders will have a very good year.
Reach Mail Tribune business editor Greg Stiles at 541-776-4463 or email firstname.lastname@example.org. Read his blog, Economic Edge, at www.mailtribune.com/economicedge or follow @GregMTBusiness on Twitter.