Homebuilders haven't been a particularly confident bunch the past few years, and who can blame them?
But that appears to be changing. While it won't mean an abundance of homes coming to a new subdivision near you immediately, it may mean that 2013 could be a busy year for earth-moving equipment and concrete trucks at new-home construction sites.
Last month, a national measure of homebuilder confidence rose again, bringing it to the highest level since May 2007 amid expectations that the single-family new construction market will maintain a gradually improving pace.
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Homebuilder Jamie Bigelow is confident, too, but he's no longer placing his bets on the Chicago market. Two months ago, he set up shop full time in Austin, Texas, in effect mothballing his suburban Chicago operation.
When he started dabbling in Texas six years ago, it was his third division. Now it's his primary division.
Last year, he sold 36 homes in the Austin market. This year, he expects to sell 56. By current definitions, he says that equates to success. Meanwhile, it's been two years since he built a house in Chicago's market.
Others continue to turn over dirt in the Chicago area. Ryland Homes is marketing homes in the partially completed Lakewood Crossing project in Hampshire. Hovnanian Enterprises reported that during its second quarter, net contracts in the Chicago market were up 98 percent from a year ago. And in Chicago, Belgravia Group has started marketing $1 million single-family row homes in Chicago's Lincoln Park neighborhood.
More is on the drawing board.
"I've got eight market studies under way and that's the first sign of homebuilder confidence," said Lance Ramella, Midwest director of consulting for housing data provider Metrostudy. "I'm doing work for companies that are looking to develop raw land and it's private builders, not just public builders. They clearly think we're either at the bottom or bouncing along the bottom or just off the bottom."
The most recent report on existing-home sales may give a little credence to that thinking. The median price of an already-built home sold in the nine-county Chicago area in May broke through a psychological barrier, posting a $100 gain after 49 straight months of year-over-year median price declines.
Brian Brunhofer, president and owner of Meritus Homes, said he's seeing a greater level of optimism from consumers as well. Brian and his wife, Karen Brunhofer, launched Meritus in mid-2010 and are doing the planning for their third, fourth and fifth developments, in St. Charles and Naperville.
"We're starting to hear from more buyers with a higher level of confidence," Brunhofer said. "People want to get on with things as opposed to sitting around."
He also finds it safer to concentrate on stable submarkets and to target move-up and move-down buyers, rather than first-timers.
"Both those buyer groups, they have more equity in their homes than most and they have the ability to get financing," Brunhofer said.
As for Bigelow, he still controls 50 developed lots in Aurora. "We think the market is going to come back one day," Bigelow said. "It's not worth enough right now to sell it and we're not looking to give it back to the bank.
"When the phones start ringing, that's when we'll come back," he said. "(Chicago) is my home. I love it, but you've got to make a living."
Foreclosure review update. The federal government has extended again — now to Sept. 30 — the deadline for eligible borrowers who think they were wronged in a mortgage foreclosure action in 2009 or 2010 and want their cases reviewed to see if they are due any financial settlement.
Consumers who feel they suffered financially from errors made in their foreclosure actions could be eligible for lump sum payments of $500 to, in the most egregious cases, more than $125,000, according to newly released guidelines from the Federal Reserve and the Office of the Comptroller of the Currency.
The review process and settlement funds were the result of an April 2011 settlement between banking regulators and 14 mortgage servicers to fix their mortgage servicing process. More information is available at independentforeclosurereview.com.
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