Home builders outpacing demand
STACEY ROBERTS
May 9, 2006
Residential builders and developers have outpaced the demand for single-family housing in some price ranges during the first three months of 2006, according to a quarterly real estate report.
The latest figures, released Monday, showed 2, 084 houses completed but unoccupied in Benton and Washington counties during the first quarter of 2006, a 37 percent increase over same type of houses in the previous quarter.
“At the current rate of absorption, there are enough new homes to meet the market’s demand for six months, assuming not another new home is completed,” wrote Jason Kincy, a spokesman for Arvest Bank. Arvest Bank commissions the Skyline Report.
The residential Skyline Report studies real estate in the two counties and is conducted by the Center for Business and Economic Research at the University of Arkansas at Fayetteville. The Center for Business and Economic Research is part of UA’s Sam M. Walton College of Business.
Another 19, 200 residential lots have been approved for construction in the two counties, enough supply for eight years at the current rate of absorption and growth, Kincy said.
Kathy Deck, assistant director for the Center for Business and Economic Research and the lead researcher for the Skyline Report, said previous reports have been building to the results found in the first quarter of 2006.
“No one should really be surprised about the absorption rate. The big surprise is that housing activity continued to climb. Demand is very healthy — that is the bright shining star of the report. The economy in Northwest Arkansas is climbing,” Deck said.
While the outlook for the region remains positive, nation- ally the decline in new-home sales is spreading.
Majestic Research analyst John Tomlinson, in his monthly report that tracks new-home sales in 40 major markets, found that sales fell year-over-year in every market during February and March, with the average decline being 25 percent.
“Almost every single major market that we track is showing pretty significant yearover-year declines in sales,” Tomlinson said. “It’s much more broad-based” than it was before February.
In Northwest Arkansas, existing-home sales remained strong with 1, 613 houses sold in the first three months of 2006, an increase over the first quarters of the two previous years.
The average sales price of existing houses also increased by 6 percent during the first quarter of 2005, to about $ 180, 000 in both counties.
Even the number of completed homes that were sold increased by 1, 051 houses becoming occupied in the first quarter, a 15 percent increase from the previous quarter.
Arvest Bank uses the report to advise customers on real estate trends and needs in Northwest Arkansas. The results are presented in a series of meetings before the report’s public release.
Bob Boehmler, loan manager for Arvest Bank in Bentonville, said the report confirmed what Arvest’s customers have been observing in the marketplace.
“Basically, they see it as a realization and a confirmation that you have to be practical about where price points on new homes are coming in,” he said. The slowdown of homes purchased was attributed mainly to higher-priced houses, those $ 250, 000 and up, he said.
The low apartment vacancy rates in the area, reported in the Skyline Report’s multifamily section in previous quarters, shows an increasing lack of affordable single-family housing in the area, Boehmler said.
The Skyline Report on mulifamily housing for the 2006 first quarter is due to be released next week.
“That will be the major challenge over the next five years to 10 years, how to get more affordable housing,” he said.
Deck said the lack of housing costing less than $ 120, 000 needs to be addressed.
“Things in the affordable housing market, at starterhome prices, are not detached, single-family homes,” she said. “Before, it has been relatively attractive to get into ownership situations for lower-income families, but with interest rates rising and the cost of that first home going up, that may send people back to rental situations.”
The report confirms that the real estate market remains strong, and growth is continuing in Northwest Arkansas, but builders and developers have met and exceeded the demand, Deck said. Builders and developers need to be discerning and think strategically about where they build and about the prices for those homes, in addition to slowing the rate of new construction, Kincy said. “Without this restraint, it is possible that home prices will begin to see erosion,” he said.
Source: http://www.nwanews.com/adg/Business/154206/
Home improvement -- council first, architect second
May 12, 2006
David Burrows
Property development can leave homeowners out of pocket even before a brick has been laid, the Royal Institute of Chartered Surveyors (RICS) has warned.
Not understanding local council planning rules can mean plans for loft conversions or extensions being dismissed out of hand, leaving the homeowners footing a bill for architect drawings on work that can never be undertaken.
A RICS spokeswoman said it was important to be clear what the local council was likely to approve or disallow before a penny was spent.
The southwestern London borough of Wandsworth was an example.
"The council there has a strict policy on roof gardens -- they will not allow people to develop them any more," she said.
"What frequently happens is that prospective buyers are told of the potential to develop by estate agents and can see for themselves roof gardens in the same area that were granted planning permission some years before.
"They assume they will be able to do the same as their neighbours, but they will not."
LEASE OR FREEHOLDER
Another common misconception is that all homeowners will be treated the same when applying for planning.
Leaseholders and freeholders face different requirements -- the most notable being that leaseholders have to go through more hurdles when it comes to loft conversions.
Under permitted development rules, freeholders only require building regulations and a party wall agreement with their neighbour's property if applicable -- assuming the conversion does not raise the level of the existing roof.
Leaseholders on the other hand must apply directly to the council for planning and in many cases will be denied permission for work to start, even if a similar extension has been built by their freeholder neighbour.
Leaseholder Chris Dunkley had to resort to the claims court to recover deposits he paid on a loft extension that was refused permission by Richmond-upon-Thames borough council in Surrey.
"I was told that because the Victorian terrace property next door to me had a recently converted loft, planning would not be a problem. As a result I paid a 3,000 pound deposit on a planned 30,000 pound loft conversion," he said.
Despite the freeholder neighbour using the same company and having had an identical loft conversion built, Dunkley was still unable to proceed.
"Richmond Borough Council told me that they viewed the conversion as unsightly, so I was left with two options: go to appeal or change the drawings and re-apply," he said.
"There was no indication that new drawings would be any more successful and would only incur more architects' fees."
As it turned out, Dunkley went to appeal which after a 12-month wait he lost. His loft company Absolute Lofts still refused to return his deposit, saying he should appeal again.
Eventually, after incurring hundreds of pounds in legal fees, he reached a settlement with the loft company at the Small Claims Court. He received 2,200 pounds back, which took into account the costs of the architect's drawings.
"In the end the project cost me 1,200 pounds with not so much as a brick laid and the aggravation was immense," he said. "If I had known the different requirements of leaseholders from freeholders at the outset I may never have proceeded."
PARTY CONTROL
The RICS spokeswoman said the issue was complicated and not always logical.
"Planning approval can differ substantially from one borough to another and may also depend on the political party in control of the council at any one time," she said.
"It is always best policy to call the planning department from the outset and take advice on what they are likely to sanction and what they are not."
In Dunkley's case, Richmond said they were refusing mansard loft conversions on leasehold properties as a matter of course. That knowledge at the outset would have saved thousands of pounds and endless headaches.
Those in conservation areas or listed buildings may also find it difficult to make any structural changes to their property.
Source: http://today.reuters.co.uk/news/newsArticle.aspx?type=personalFinanceNews&storyID=2006-05-12T113845Z_01_NOA241908_RTRUKOC_0_FINANCIAL-HOMES.xml&pageNumber=0&imageid=&cap=&sz=13&WTModLoc=3
|