Montgomery Business Journal

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April 2014

Brad Owen is the executive vice president of the Montgomery Area Association of Realtors. He was recently interviewed by the Montgomery Business Journal’s David Zaslawsky

Montgomery Business Journal: What are your responsibilities as executive vice president of the Montgomery Area Association of Realtors?

Owen: I basically oversee the association for the Realtors here in the River Region. We operate the MLS (multiple listing service) for the Realtors. We handle the lockbox system for the (listings). We handle their education; their code of ethics; any arbitration issues that may come up.

MBJ: How many members does the association have?

Owen: Just under 1,000 between affiliates and Realtors.

MBJ: How do you describe the overall residential real estate market in the Montgomery area?

Owen: If you want one word to describe Montgomery it’s stable. Whenever you look at the charts we’re just stable.

MBJ: Isn’t stable a good thing at this point?

Owen: It’s a great thing at this point. We like to say that we’re stable and that we never saw the gigantic upswing a few years back and we didn’t see the bottom drop out the way a lot of markets did. We’re a lot more stable with subtle changes and that’s good for a market like ours, which is typically a long-term investment type market.

MBJ: Please talk about the long-term investment market.

Owen: A lot of people still see their home as a long-term investment. They are not looking to move every two years. The typical homeowner is not a flipper in Montgomery. You do have those type of investors who come in and do that, but in Montgomery we’re more consistent as far as homeowners and the length of time they stay at their property.

MBJ: You said the Montgomery area market did not experience the high highs and low lows that other cities did. What did Montgomery experience?

Owen: We were not a California, Arizona, Florida or Las Vegas type of market. We did have issues and still have issues. Building is slowly coming back. I was talking with a builder the other day and they are getting ready to bring about 100 lots on line. We haven’t seen a 100 lots come on line in quite a few years.

MBJ: What part of the city?

Owen: It’s going to be East Montgomery.

MBJ: Could that open the door for other builders?

Owen: Others will follow suit and the financing has eased up a little bit. The banks are open to new projects now and are willing to lend money. The developers are then able to move forward with their projects. One of the problems we saw in real estate in the Montgomery area was when the new construction stopped it hurt residential sales because those folks that wanted to move up didn’t really have that new home option to look at. If you had someone who may have been in their first home and wanted to move up to a new home that option wasn’t there so they stayed. The new buyers coming into the market didn’t have that first-time home market to choose from as well. It was kind of a domino effect.

MBJ: What is the story that the latest sales numbers tell you?

Owen: What it tells us is that literally over the last three years we have seen increases in every area of the River Region: Montgomery, Prattville, Millbrook, Wetumpka. And that’s what we needed to see. We needed to see consistency throughout the River Region to show a healthy market and that’s what we’ve seen.

MBJ: What is the percent range of those gains?

Owen: Ten percent increases over that three-year window.

MBJ: Is the residential real estate market ready to go beyond stable? Has the foundation been set?

Owen: We think so. In talking with our membership, the comments that I get from the members over and over and over again who cover the River Region – ‘I haven’t been this busy in years.’ They are showing properties. They are opening up doors and their phones are ringing. You can’t ask for anything more than that. It’s all over town.

MBJ: Is that with existing homes or new construction?

Owen: The new construction is selling as fast as it can come out of the ground for the most part, but it (buying) is across the board. It can be anything from a high end $300,000 house and up to a $50,000 foreclosure. It runs the gamut.

MBJ: Is this the best the real estate market has been in years?

Owen: Absolutely.

MBJ: Is it back to pre-recession levels?

Owen: No.

MBJ: Are we still a year or two away from those pre-recession levels?

Owen: Two years-plus if we ever reach those numbers again. I don’t know if you can say that was a healthy (time) for real estate. I think you might have had too much easy money in the real estate market.

MBJ: How do you characterize the single-family residential market in the River Region?

Owen: It’s the lifeblood of real estate. It’s what we sell the most of. It’s what everybody wants. It’s the American Dream.

MBJ: And it’s looking better and better here.

Owen: Everyday.

MBJ: How do you characterize the multi-family market in the River Region?

Owen: The multi-family market is actually doing fantastic across the board. Our property managers are as busy as they have ever been.

MBJ: Is one of those sectors – single-family and multi-family outperforming the other in the local market?

Owen: They are probably close to equal. Montgomery’s rental market is very diverse. You have everything from the condos downtown to again high six-figure properties and everything in between with the apartments. The choice there is very, very broad and again, it’s all over the River Region – Montgomery, Wetumpka, Prattville, Millbrook. There are options everywhere. As the market slowed and the appreciation of houses slowed and the ability to sell a house on a two-year deployment slowed, you tended to see the military shift a little bit more toward rentals than purchasing. I think that was a big factor in the boon in the rental market here.

MBJ: Are the military personnel starting to buy more because the real estate market has improved?

Owen: Yes. Obviously, they want something nice to raise their family, but I think they do see it as an investment as well.

MBJ: Why has the Montgomery residential market led the state in growth the past two years with a 14.6 percent increase last year and 12.1 percent increase in 2012?

Owen: I wish I knew. I asked my leadership what do you think is the trend? They said, ‘If we knew we would build everything that we could build to meet that trend.’ No one knows.

MBJ: Why is Montgomery a hot real estate market for the past two years?

Owen: We rely on the fact that it is the seat of government. You have manufacturing with Hyundai. You have the military bases. You have colleges and universities. You have retail. We have such a broad economic community that (supports) that stability. It’s just always been that way. Those are good-paying jobs that allow people to purchase a home – (that’s) why we didn’t see the big peaks and valleys.

MBJ: What are the trends you are seeing for inventory; prices; time on the market, etc?

Owen: Days on the market is probably still a little high at 125 days. We would like to see that move to below 100.

MBJ: What about prices and supply?

Owen: Supply is actually a little low. With the lack of new construction the inventory has gotten a little low. We are hoping that as the builders begin this spring to start building that inventory will come back.

MBJ: What is a low inventory?

Owen: About 3,200.

MBJ: Is there an ideal inventory number?

Owen: There’s really not, but I think choice is a big factor when people are purchasing homes.

MBJ: Are prices starting to rise?

Owen: Slightly.

MBJ: How does that impact people moving up and people buying their first homes?

Owen: People with a home seem a little hesitant to sell right now because they think they are going to lose money on their sale, but at the same time they can buy more house than they could four years ago.

MBJ: Do people realize that they can buy more house now than in the past few years?

Owen: Realtors are saying that when they actually show them (clients) a property and start talking numbers they seem a little surprised. They don’t understand that the values came down across the board. If you are going to move up you might sell your house for a little less than you think it’s worth, but you are going to buy more house than you could of a few years ago.

MBJ: Please talk about the three major residential markets in the Montgomery area: East Montgomery, Midtown and West Montgomery. Let’s talk about Midtown first.

Owen: Midtown is actually doing very well. Midtown tends to be a different buyer than East Montgomery. You have beautiful architecture; old homes; trees; convenient to everything. There’s a lot more activity going on.

MBJ: In Cloverdale, isn’t most of the activity with existing homes?

Owen: There’s a little bit of new construction in Cloverdale, but it’s primarily just existing homes.

MBJ: What about West Montgomery? Are you starting to see some activity?

Owen: Not much. I would say it’s even at best.

MBJ: And East Montgomery?

Owen: East Montgomery has fortunately been the majority of the new construction this side of town. It’s actually done very well. When we talk new construction in Montgomery that tended to be in the Pike Road area and the eastside of town. It’s primarily because that’s where the available land and lots were. From 2012 to 2013 we are seeing considerable increases in sales.

MBJ: What are you seeing in the surrounding communities of Prattville, Millbrook, and Wetumpka?

Owen: The military loves Prattville. Millbrook is the same way with a lot of military and access to the interstate. Wetumpka is different. There are some military, but more similar to Montgomery.

MBJ: Are there particular areas where multi-family units are being built?

Owen: Not really. It just seems to be where there is an availability of property.

MBJ: Where do you see Montgomery’s residential market in five years?

Owen: I think we’re still going to be increasing in values, sales and the numbers across the board are going to be better. Without a crystal ball, hopefully the economy across the board is doing better. Having looked at the trends over the last three years, obviously we have nowhere to go but up. With builders coming back and starting to build new homes hopefully that will be the beginning of the next five-year cycle, which shows those increases.

MBJ: Isn’t that the key – builders building new homes, which shows they have confidence in the market?

Owen: It is. It shows that there are available buyers. It shows that they can get financing. When people buy homes they then go to the store and buy furniture, drapes, dishes – the things that fill up a home. That’s the one big-ticket item that we’ve been missing in the economy is new home construction. It puts people back to work.

MBJ: You said that someone is building 100 lots. Are you seeing that anywhere else?

Owen: Not really. It’s Lowder New Homes. I was talking with one of their staff and they said they were finally feeling confident in the market and they were going to start putting lots together and building again. That’s showing confidence in the market. The builders are the ones who build the products that our Realtors sell. We have to have new homes because that first-time buyer that bought several years ago wants to move up – wants a new home and wants to choose his colors; maybe design his home; choose exactly what he wants and that’s his dream home. With a lack of construction, we really didn’t have that option. It also took some sellers off the market that probably would have tried to sell had the new market been a little bit better. In the last four or five years, we haven’t had any real development as far as lots go. We haven’t had new lots come on line. That’s why it’s important to look at what Lowder is doing. They are creating new lots and that’s something we haven’t seen in a long time.

MBJ: Where are those new lots?

Owen: They are going to be out at Woodland Creek, StoneyBrooke (Plantation), The Oaks (at Sturbridge). I think this is big news having these lots come on the market.

 

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