It may seem a bit early to look for signs of warmer weather, but for home builders and buyers, a fresh season is in the air.
Once the Super Bowl flickers off the nation’s TV sets this weekend, priorities change. Those who are thinking about a new home in 2004 realize that the spring buying rush is about to commence.
Because so much of residential purchasing is tied to school schedules, those who want to be in a new home this fall will soon find that they are facing construction deadlines–even before they start looking.
Greg and Joan Gerl paid a price for waiting until early last summer to sign up for their new home.
“We were a little bit late in the season, and a lot of buyers lined up ahead of us,” said Greg Gerl.
The couple closed on their new house in southwest suburban Manhattan 10 days ago, nearly seven months after signing a contract with builder Kennedy Homes.
“It took quite awhile to build the house, but we were happy the effort took so long,” said Greg Gerl, a sheet metal worker.
He said that the new foundation was given two months to settle after being poured, which assures that the house will stand firm.
“It takes time to build a house the right way,” he said. “The result is great.”
Gerl said that at the time the couple signed for the four bedroom house, they knew they couldn’t move in before winter.
In the meantime, Joan Gerl gave birth to twins, Amanda and Allison, in November. The couple also have a 14-month-old daughter, Megan.
For other buyers, signing for a new house in the early spring may mean waiting for their builder to work through a backlog.
Schaumburg-based housing consultant Steve Hovany says builders are telling him that they are promising delivery of new homes in six months to a year.
“That tells us there are some significant backlogs. Construction is going full-tilt, pedal to the metal. Nothing has occurred to slow the housing market,” said Hovany, who added that early spring buying already has been under way for several weeks.
One couple that beat this year’s housing rush is Rev. Greg Munyon and his wife, Carol, who spent more than six months looking for a home before finding one in southwest suburban Minooka.
The two-story house, at River’s Edge Landing by Smykal Associates, was already completed. The couple, along with son, Joel, 23, and daughter, Becca, 20, closed on their purchase last weekend.
“We had been renting in Joliet because our house in Tennessee hadn’t sold,” said Carol Munyon.
The couple began looking for a home after Rev. Munyon was called to become pastor of Larkin Baptist Church in Joliet.
“We looked and looked and looked but when we saw it, we liked it right away. We realized this was the one,” said Carol Munyon. “It was ready for us to move in.”
One positive sign, according to consultant Hovany: Builders aren’t having much trouble finding subcontractors, because there has been a slowdown in commercial construction.
“The peak buying season will continue until the second week of April,” Hovany said. For builders, he added, “this is the golden time of year.”
For buyers, however, that means there may be little time to waste.
Hovany’s firm, Strategy Planning Associates, notes that permits were issued for more than 41,000 housing units in Chicago in 2003, up about 10 percent from the total three years earlier.
Home builder Roger Mankedick said construction schedules were hurt by the cold and snow that hit in January. But he said most builders planned ahead for the harsh conditions.
“We had such good weather in the late fall and into December that everyone was able to get concrete into the ground. That means houses can be framed now for delivery before midyear,” he said.
Mankedick, of Concord Homes, said his company typically has a backlog of 950 to 1,200 homes under construction, and there are no unusual bottlenecks.
“The housing market picked up right on schedule, as buyers surfaced around Jan. 15,” he said. “It looks as if 2004 will be a very good year.”
As builders’ order books are filled, construction schedules stretch out toward summer.
But does that mean home buyers should feel a sense of true urgency?
Economist Sung Won Sohn believes the housing industry will cool a bit, but will only retreat slightly from historically high levels. The reason: he expects mortgage interest rates to rise, at least modestly.
“People expected rates to rise last year, which meant that some housing sales in 2003 were borrowed from 2004,” said Sohn, of Wells Fargo & Co.
Most forecasts call for housing activity to slow by about 3 percent this year from last year’s record level — hardly enough to have any impact on new home buyers.
Consultant Hovany said “the stars aligned in the second half of last year, pushing construction to levels that won’t be seen again in a generation. We are bound to come down from these levels, but not by much.”
Adding to optimism for the year ahead: Economists are predicting that employers will start to add new jobs, creating a fresh stream of income that will be showered on real estate.
Chicago economist Robert Dederick of RGD Economics said, “Conditions are falling into place for employment growth, and that should create momentum for the economy into 2005.”
Meanwhile, home buyer Gerl says that, now that he is the parent of three children, he may find himself sacrificing a planned home office.
“When we signed up for our house, we didn’t know we were going to have twins,” he explained.
