Jackson area sees high demand for homes priced below $300K

Published 6:36 pm Tuesday, May 29, 2007

The national housing market has been cooling for some time, but local firms say the metro market, while it may have some problems, is generally bucking the trend.

Only sales of high-end homes priced at $500,000 and up are languishing.

“Here in the Jackson market, we don’t really experience those highs and lows like the other markets do,” said Joe Robertson, senior vice president at BancorpSouth.

Home purchases in the tri-county area during the last 12 months are slightly higher than during the previous year, said Crye-Leike real estate agent Dan Grimmett.

“It’s about a 1 percent increase, but that’s better than Orlando, Atlanta, Dallas or any other major city,” he said.

In Madison County, one of the area’s prime real estate locales, April sales were up almost 20 percent compared to the same month last year, Grimmett said.

“Everybody has a different perspective of the market,” said builder David Smith of Ridgeland. “Right now, we have a very good market, but it’s only good in certain locations and certain prices.”

Smith, vice president of the Home Builders Association of Jackson, said the highest demand is for homes selling for less than $300,000.

“The high-end homes just aren’t selling as fast,” he said.

Part of that could be attributed to home trends. Newer houses priced below $300,000 are coming equipped with many of the same features found in the $500,000 homes. Size is the most noticeable difference in the home price ranges, Grimmett said.

“We used to only find things like granite and stainless steel in the more expensive homes, and now some of the builders are doing that in the homes below $300,000,” he said. Homes in the more affordable range also are increasingly coming with wood and tile flooring instead of carpet.

Grimmett agreed that in the Madison County market homes going for $500,000 and more are over inventory.

“Below the $300,000 price point, where there is a high demand, we’ve got a lot of inventory, but it’s consistent with the number of sales we have,” he said. “When you get up in the higher price points — the $500,000 and above — we do have an abundance of supply.”

That hasn’t stopped builders from focusing on the high-end homes.

There recently were 29 homes for sale in Madison County with listing prices more than $1 million, according to the Multiple Listing Service. “We don’t have 29 buyers,” Grimmett said.

Ten $1 million homes were sold in Madison County during the last year, he said. “So we have about a three-year supply of $1 million homes,” Grimmett said.

The abundance of high-end homes stretches down through the $500,000 price range.

One of the houses Grimmett has been trying to sell, a French European style home on the lake in Ridgeland’s Bridgewater subdivision, was appraised at more than $1 million but has a $995,000 listing price. “We’re keeping it out of that $1 million-plus market,” he said.

Meanwhile, homes in the $200,000 to $300,000 range in the same county are spending an average of only two months on the market, he said.

Smith said, as a contractor, he doesn’t understand why builders continue to focus on high-end homes.

“The bigger homes are more fun to build. You get to add surround-sound systems and cool bathrooms,” Smith said. “But the business is being saturated.”

Smith has seen some builders with 10 to 15 $500,000 homes in inventory, he said.

“That’s a lot of money to have tied up,” he said. “I’m not sure if maybe they just aren’t business-smart or what.”

Grimmett, also a member of the Home Builders Association, said some continue to build in the high-end range despite the lower demand because they haven’t researched the market well.

Smith said some builders have experienced foreclosures as they wait for the houses to be sold, but he did not have specific details.

“We’re definitely seeing some fallout here,” he said.

Robertson would not comment on foreclosures of newly built homes.

Some builders are adjusting to the market’s demands by switching to the $200,000 and below range, Smith said, while others have decided to construct fewer homes.

“I’ve intentionally slowed down this year,” Smith said. “It would help the market if everyone did that.”