By Don Bolding
Killeen Daily Herald

Effects of the national real-estate bust continue while the real estate industry and government try to repair the damage of the last couple of years, and local industry leaders have been worrying all through it that news of the nation would hurt housing sales here.

Fort Hood Area Association of Realtors president Marcia Worthington thinks the negativity in the news might have had some effect. She credits the industry with offsetting any jitters by maintaining good media relations and pumping up morale with the association's newsletter for members and regular advertisements about the good points about the local housing market.

Although home sales dipped in the local area while so many troops were overseas, market forces seem to be taking hold for hope on the horizon, regardless of what the national market does.

"We'd see more effects of the nationwide troubles here if we didn't make a conscious effort to combat them," she said, "but sales will start to pick up again naturally. The returning soldiers still have some uncertainty about whether they'll stay at Fort Hood or be reassigned somewhere else, but we have good mortgage rates now. Once the soldiers know they'll stay here, they'll be more apt to buy. We're seeing sales, but we're really in a normal market, not a boom and not a bust."

Central Texas Homebuilders Association president Carol Bass said her company has been making more sales, matching news she gets from other area homebuilders. While troops were overseas, locally-based homebuilders cut production by as much as 30 percent. But reductions in interest rates have spurred sales.

"Now people can qualify for what they want," she said. "We get information from all over the state, and it all seems to be pretty good.

"The problem in some of the hardest-hit markets, like California and Florida, is that things are a lot more expensive. People didn't get fixed rates on mortgages, and then their payments went up. And it wasn't only homeowners but investors trying to get in cheap and turn a profit. Now people can't qualify as easily and they have to come up with more of a down payment."

Where adjustable-rate mortgages caused widespread foreclosures, the situation caused a housing glut. But veterans' loans used by most military personnel were always immune to the adjustable-rate bubble.

Prices went up slightly here, but it was because of the cost of fuel and building materials. According to figures supplied by past FHAAR president Jose Segarra, 3,496 homes were sold in the organization's territory in 2006, compared with 3,121 in 2007, a 10.73 percent drop, but a 5 percent price increase meant the dollar value dropped only 6.24 percent.

In the United States during the same period, sales dropped 40.7 percent, including 55.8 percent in the Midwest, 42.9 percent in the West, 36.3 percent in the South and 27.4 percent in the Northeast, according to a release from the U.S. Census Bureau and the Department of Housing and Urban Development.

The subprime, variable-rate boom in the few years past was fueled by the new ability of banks to bundle loans and sell them to investors, destroying the traditional relationship between the neighborhood lender and the neighborhood mortgagee. Lenders didn't have to care if a neighbor's payments skyrocketed. But where fixed-rate VA loans predominate, the market is immune to such a force.

The local society was kept on an even keel by successful efforts to keep military families in the area, avoiding the economic bust of the early 1990s, when families left the area when soldiers left for the first invasion of Iraq. So while the dust has yet to settle from the soldiers' return, fears that the nationwide problem would infect the temper of the local area seem to be coming to an end.

Contact Don Bolding at dbolding@kdhnews.com or call (254) 501-7557

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