Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, January 26, 1992 TAG: 9201270168
SECTION: NEW RIVER VALLEY ECONOMY PAGE: 30 EDITION: NEW RIVER VALLEY
SOURCE: M.J. DOUGHERTY CORRESPONDENT
DATELINE: LENGTH: Medium
RATES EXCITE HOME BUILDERS, SELLERS
At least one group has reason to feel good about the economy in the New River Valley: home builders and sellers.The reason is simple - lower interest rates.
"This is the lowest they have been since I went into real estate 14 1/2 years ago," said Lucy Draper, a longtime agent with Owens and Co. in Christiansburg and the president of the New River Valley Association of Realtors.
"The lowest interest rate I had ever got over the years was 8 3/4 [percent]. It was a VA [Veterans Administration] loan and the company where I worked at the time didn't do a lot of them. Everyone was so excited about it. Now you can get loans at 8 [percent]."
The interest rates have fallen to below 8 percent for 30-year fixed mortgages with some lenders.
The Virginia Housing Development Authority has started low-cost loan programs that will allow qualified buyers to purchase properties at 7 1/2 percent - and that rate could fall significantly lower in the next month or so. Some adjustable-rate mortgages already have fallen to about 5 percent.
All of this low-cost money should become an incentive for home buyers in the new year.
"The home builders in general all feel there is going to be a slow recovery," said Jeanne Stosser, owner of MCR Properties and the president of the New River Valley Home Builders Association. "They all feel positive about the 1992 season."
Stosser also said that things seemed to be picking up already, although it could take up to six months before a stable pattern of recovery will emerge.
Of course, virtually any activity would be an improvement over 1991. Fewer building permits and fewer houses were sold last year than in 1990 in the New River Valley. And 1990 was far from a banner year.
The New River Valley Association of Realtors reported that 240 homes were sold by its member companies in the third quarter of 1991, down from 256 the previous year.
The average home's stay on the market was 151 days in the third quarter of 1991, a week longer than in the previous year. And it sold for $81,690, almost $4,000 less than in 1990.
Meanwhile, building permits for single-family houses fell for the second straight year throughout Montgomery and Pulaski counties and in Radford.
But already, the first signs of a slow recovery are starting to be seen: home refinancing and renovation requests.
"The interest rates have dropped so much that a lot of people are refinancing," said Scott Hill, president of Hill-Thomas Builders and vice president of the home builders' association.
"At the same time they are refinancing, some people want to get some extra money to renovate. We're not going broke [waiting]. And we should see a mild increase in building."
The demand for renovation work has helped keep some construction companies busy. And as spring nears and the available housing stock shrinks, the builders are looking forward to beginning new projects - at least if they are houses.
"Anything not single-family is not eligible for these [financing] programs," said Stosser.
That lack of financing - as well as the building glut in areas like Northern Virginia - will make it difficult if not impossible for commercial and multifamily projects to get under way in 1992.
Last year, few multifamily units and virtually no commercial projects were built in the New River Valley. And the lack of such undertakings will mean the building industry rebound will probably not be as strong as in the past.
"The building industry has generally bottomed out," said Pat Cupp, president of BCR Realty, president of the Blacksburg Chamber of Commerce and past president of the home builders' association. "But it won't be like it was. [The recovery] is going to take a long time."