'Market's really, really good in Brookings' ; home sales doing well, few foreclosures
BY JOHN KUBAL
Published in The Brookings Register on Friday, September 28, 2007
The news about real estate nationwide has of late been less than good. The market is headed south and will soon be in the tank or is there already. But not so in Brookings, say a pair of Realtors and members of the East Central Board of Realtors, past-president Scott Hodges and President Ryan Krogman.
Hodges, who has been in real estate for more than 30 years, said, "Our situation is entirely different; and yet I have customers and clients that are making comments to me all the time about their perception that the market is bad."
"And it's really, really not in Brookings; our market's really, really good in Brookings. It's just not mirroring what we're seeing in the national media."
He added that prices are not down and inventories and foreclosures are not up.
Smiling, Hodges said, "For the first time ever, being 48th in the nation is a good thing; because we're 48th in the nation in foreclosures, in South Dakota." The only states with lower foreclosure rates are North Dakota and Vermont.
Only about 50 houses are for sale in the city of Brookings. That's not a lot for a city like Brookings with a population of about 20,000.
Nationwide the real estate market might be considered a "buyer's market ," but not so in South Dakota. Hodges said, "In Brookings, it hasn't been (a buyer's market). It's not unusual for us still to get multiple offers on properties when they come on the market; it's not unusual for properties in Brookings to still sell over their list price."
Turning to some numbers, Krogman noted that locally property appreciated about 6 percent.
Also noting that the real estate market does not mirror the national scene, he added that homeowners who want to upgrade or people wanting to build a new home will not have to take a loss on their investment.
And, on average, homeowners who sell are realizing 98.9 percent of the list price of their property. Krogman added, "If we were seeing a big drop in values, we'd see that lower like 80 percent, or 75 percent.
"But we're still staying real strong; on some properties, we're getting over (the) asking price." Krogman said it would be good to have more houses on the market : such as 80 in Brookings and 120 to 130 in the area.
Assessment, appraisal factors in home's sale price
Joyce Dragseth, Brookings County Director of Equalization, explained, "The equalization office of each county is charged by state statute to value all property in the county at market value."
She added, "If the market goes up, we would have to follow it up; or if the market goes down, we would also have to follow it down.
"So if this recession that the rest of the country is talking about ever hits Brookings, we will have to follow that with our assessments. It's a yearly job to study each neighborhood and what we need to do with it. One neighborhood might need a 2 percent adjustment; another neighborhood might need a 5 percent adjustment."
The statute does allow some leeway: "We have to be at 85 percent of market (value)," Dragseth said.
However, she pointed out that the Department of Revenue, which oversees her office, "really stresses that we be at 90 to 95 percent."
That magic number is arrived at by taking all sales and dividing the assessed value by the sale price to come up with a ratio. The city of Brookings has "probably 300 house sales a year." To date in 2007 there have been 230 sales.
Dragseth also pointed out that South Dakota is an "ad valorem" state, meaning that "property is taxed by value for government purposes to pay for services."
While Dragseth's county-run office works on a "mass appraisal" basis, private appraisers work on a more individual for-hire basis.
Location, location, location still key
Patrice Gabel, a certified general appraiser and president of Hansen & Gabel Appraisers, on Sixth Street in Brookings, explained, "We're hired by banks, private individuals , attorneys. That's pretty well our client base, but mostly the banks, mortgage lenders.
"And it's either for a refinance situation or a sale, potential sale, divorce, estate purposes for the IRS and things like that." An appraisal of property is in some ways like a military inspection: It includes measuring the interior and exterior, noting (literally, writing down a lot of information) the condition of the interior and exterior, improvements and the age of the improvements.
Also to be factored in is "location , location, location," with a focus on comparable listings and sales of like properties in the "immediate neighborhood." Three to five properties are likely to put an appraiser in an appropriate "range of values."
Viewed with an appraiser's eye, what is Gabel seeing in Brookings?
"We're not seeing any depreciation in the marketplace," Gabel said. "We're not seeing appreciation as high as it had been in the past years, but properties are still appreciating as long as they're being maintained."
Show me the money
In the end, all real estate transactions come down to the dollars. What got a lot of home owners nationwide in over their heads were such fanciful financing initiatives that include ARMs adjustable-rate mortgages where over time a buyer's monthly house payment can become a moving target and "sub-prime lending" to "people with questionable credit." Included, too, are "interest-only " options, where the principle is not being paid down. Bottom line across the nation: Too many buyers have too much house and too little money. That's not often the case in Brookings, where mortgage dollars tend to be obtained in more convential fashion.
Connie Bridges, a mortgage loan officer at First Bank & Trust, said, "We want to make sure that our borrowers can afford the payments . Typically, around here they can.
"They've got two income earners in the household. And we look at ratios; we want to make sure that we're not getting them overextended. We look at a 28 percent debt-to-income ratio on the house and then 36 percent for total debt with everything. We look at insurance and taxes as well."
She added, "First of all. we want to be sure they're comfortable with the payments."
In Brookings, foreclosures are "pretty rare."
Reporter John Kubal may be reached at firstname.lastname@example.org