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Residential market not showing signs of slowdown

People are wondering if the residential housing boom and refinancing market will last as interest rates fluctuate and riskier mortgage arrangements come into play. What will the coming months bring to the housing market in Mississippi?

“We’ll continue to see minor fluctuations as we’ve experienced over the last year or so, but overall I don’t anticipate any big swings in the next six to 12 months,” says Joe W. McNeese III, first vice president with Trustmark Bank in Jackson. “Interest rates are starting to edge up a bit, but it hasn’t seemed to slow things down very much.”

He says demand for mortgages continues to be strong with the bank’s retail and wholesale mortgage offices. “Mortgage rates are still historically very low, and that is driving a very strong purchase market,” he added.

In Hattiesburg, Elaine Jarrell, a Realtor with 35 years of experience, says sales are absolutely not slowing down. “It is just basically booming here,” she said. “Generally, it slows down this time of year but that has not been the case this August. We’ve seen it continue on and have enjoyed brisk sales.”

She cites new business construction and growth at Camp Shelby, William Carey College and the University of Southern Mississippi as part of the area’s growth formula. With so many different types of loans available to homebuyers, including down payment assistance programs, she thinks the residential market will remain strong. “Normally when interest rates inch up a little bit, we see more sales because people want to get in on lower rates before they go up more,” Jarrell said. “Sales generally slow down in the winter months but I don’t see it slowing because of rising interest rates. They would have to rise a lot for that to happen.”

Jarrell started Town & Country Real Estate in Hattiesburg in 1986. Her husband, Sonny Jarrell, does home inspections and son, Joey, does appraisals in the family business.

Trustmark’s McNeese says refinancing has slowed down from the record volumes of 2003. “We continue to see fairly strong demand from borrowers wanting to take some equity out of their home by doing a cash-out refinance,” he said. “Many of these borrowers are doing that to reduce other debt.”

Kelly White, office manager for the Jackson’s First Mississippi Capital Corporation, sees the same cash-out trend. “We’re seeing more of that right now. People are wanting refinancing for projects, repairs and debt consolidation,” he said. “They see better rates and want to refinance before the rates rise. It can still be done at a good price.”

He notes that Mississippi is still a good housing market and not slowing at this time. “I believe we’ll have an increase in rates, but not in big intervals,” he said. “It won’t be 7% by the end of the year, and a slight rise is not going to be a significant impact.”

Dr. Charles Cartee of Gulfport agrees that interest rates will continue to rise in the next year and believes the increase will price some people out of the home-buying market. “There are people who would qualify at one rate but not at another,” he said. “Certain borrowers don’t take that as an answer, but change mortgage products. They may get an interest-only loan to qualify. That type loan will make payments lower, but no one can guarantee the home will appreciate.”

Cartee, a real estate professor at Southern Miss for 30 years who also runs a consulting business, sees that type of loan as a problem. “People will buy as much house as they can get, and that’s a concern I have with the mortgage industry,” he said. “A few years ago, this loan was unheard of.”

He thinks the refinancing boom is over. “Some homeowners did it more than once,” he said. “People who are holding an adjustable rate mortgage are now scampering to lock in a fixed rate because they anticipate rates going up. Anyone who has an adjustable rate needs to look at that now.”

Cartee, who says he’s no residential guru but does keep a “paw on the pulse” of the market, does not see the home market slowing at this time in Mississippi. He notices that brand new homes sell quicker than previously owned homes and says up-to-date bathrooms and kitchens are the primary reasons.

McNeese says that while analysts are beginning to detect signs of a slowing housing market nationally, he doesn’t see that here. “Especially if you look at some of the hot housing areas in the state,” he said. “For example, Madison, Rankin and DeSoto counties, the Hattiesburg area and the Gulf Coast. They all continue to have strong housing markets.”

He offers advice for anyone considering buying or refinancing a home. “Know who you are dealing with anytime you are financing a home, whether to purchase or to refinance. Also, be aware of what type loan program you are getting. New loan programs have come on the market in the last few years. While many of these can make a house seem much more affordable, be sure you totally understand your loan and how it works before you sign those papers.”

Contact MBJ contributing writer Lynn Lofton at mbj@msbusiness.com.

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