Despite the data, local Realtors and homebuilders see turnaround

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By MATT OLBERDING/Lincoln Journal Star

There’s little doubt that these are not the best of times in the local real estate market.

Through the first six months of  2008, existing home sales are off nearly 15 percent from the same period last year, while sales of new homes are down more than 30 percent, according to figures from the Realtors Association of Lincoln.

Building permits are at a two-decade low, and, while the median price of new homes continues to rise, the median price for existing homes is down slightly.

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Jason Hatterman cuts rafters for a new home for Apthorpe Homes in the Stone Bridge Creek 8th addition in north Lincoln. (ROBERT BECKER/LINCOLN JOURNAL STAR)

Jason Hatterman cuts rafters for a new home for Apthorpe Homes in the Stone Bridge Creek 8th addition in north Lincoln. (ROBERT BECKER/LINCOLN JOURNAL STAR)

And even though home sales are down, there are still a near-record number of homes for sale — almost 2,400 as of July 15.

But despite those numbers, some Realtors and homebuilders say they are optimistic that things are about to turn around.

“I think in the last few months  we’ve pretty much hit a bottom,” said Duane Hartman, owner of Hartland Homes.

Hartman said he has seen no real solid reason why Lincoln has experienced the downturn in homebuilding that it has.

He said there wasn’t a lot of overbuilding, prices haven’t been out of whack, interest rates have remained relatively steady, and the city hasn’t experienced huge job losses or high unemployment.

Hartman said he thinks media coverage of housing bubbles elsewhere has led people to conclude the local market is worse than it really is.

“The mindset is more the problem than anything else,” he said.

That’s one of the reasons Hartman says he is so optimistic about a couple of homebuying incentives that have been in the news lately.

Late last month President Bush signed into law a housing bill intended to stave off hundreds of thousands of foreclosures.

The bill also has incentives for potential homebuyers in an attempt to stimulate the real estate market nationally.

The most prominent of those is a temporary tax credit for first-time homebuyers of up to $7,500.

It works like this: Anyone who closes on a home sale between April 9 of this year through June 30 of next year is eligible if the home will be their primary residence,  IF they haven’t owned a home in the past three years and IF they meet certain income guidelines. Those who buy can take the credit on either their 2008 or 2009 federal income tax return

The credit is temporary: it must be paid back over 15 years, starting in the second tax year of purchase.

Despite the temporary nature of the credit, homebuilders are optimistic it will encourage a rebound in sales of new homes.

“The tax credit is the best stimulative measure,” said National Association of Homebuilders President Sandy Dunn. “It will increase housing demand, get home buyers back into the marketplace and fight falling home prices, which threaten the economy as a whole.”

Hartman said he is optimistic that the tax credit, combined with Mayor Chris Beutler’s proposed $1,000 stimulus payment to local new-home buyers, could release what he sees as “pent-up demand” for new homes.

By Hartman’s calculations, even 200 additional new homes built would mean $2 million in extra revenue for the city in the form of sales taxes, property taxes and fees.

“I think it could be a real plus for the Lincoln economy,” he said.

Jerry Boyce, president of the Home Builders Association of Lincoln, said he hopes the incentives will get people off the sidelines and into the market.

“You can’t fault buyers for staying put and waiting it out and seeing what’s going to happen,” he said.

But if they wait too long, Boyce said, they could miss out on an opportunity to get an incredible deal.

Costs for building materials and even oil prices have dropped, while contractors are more willing to make concessions to get much-needed work, he said.

Boyce said he can’t predict when the market is going to turn around, but history shows it always does. And when that happens, “there will be significant price increases.”

Price increases are what Rich Rodenburg is hoping for out of the tax credit.

While sales of existing homes haven’t fallen off so much, there’s a lot more pressure on prices as people struggling to make mortgage payments are forced to put their homes up for sale, said Rodenburg, co-owner of Nebraska Home Sales.

Rodenburg said he doesn’t think the tax credit alone will cause people who weren’t already looking to buy a house to start searching for one. But he does think it could be a deciding factor for potential buyers who are on the fence.

“This $7,500 may make enough difference that someone might step up and buy the home they desire,” he said.

Reach Matt Olberding at 473-2647 or molberding@journalstar.com.