Lexington, KY - As the matriarch of Central Kentucky's largest homebuilding company, Mira Ball is more apt to count her blessings these days than to dwell on the homebuilding industry's dismal past year.
That doesn't mean she's ready to predict an end to her industry's troubles just yet, but recent months have brought some welcome signs that have made her and others in her business cautiously optimistic.
"Right now I think people are getting some confidence back," Ball said. "We saw a change (in the number of houses sold) in February, and it's been good ever since."
Among the positive factors driving that sales increase, Ball said, is the $8,000 first-time buyers tax credit that was finalized in mid-February. Under the American Recovery and Reinvestment Act, first-time buyers who purchase a home before December 1, 2009, can qualify for a tax credit equal to 10 percent of the home's purchase price, up to a maximum of $8,000. First-time home buyers are defined as those who have not owned a principal residence during the last three years, and the full tax credit is limited to taxpayers with incomes of up to $75,000 for singles or $150,000 for married couples.
Whether it's the result of the tax credit or a change in consumer confidence, Ball said she's seeing less and less hesitancy to enter the market, and compared to previous years, first-time home buyers have become a larger percentage of Ball Homes' business.
"Right now you've got low mortgage rates, you've got this $8,000 tax credit, so it's a good time for people to buy - if they are careful about how they go about it, and buy something they really can afford," Ball said.
As valuable as the tax credit has been as an incentive, part of the benefit for homebuilders has been getting the question of possible incentives off the table, said Lisa Ball Sharp, Ball Homes vice president and daughter of Don and Mira Ball.
"I think a lot of people were sitting, waiting through January and February because of the talk of some sort of stimulus coming, not knowing what it was going to be," Sharp said.
"Once it was decided and went to be official, we saw things really begin to pick up."
In addition, today's buyers have become more prepared as a result of the economic downturn, according to both Ball and Sharp. With the volume that a company like Ball Homes handles, there is always some fallout expected - from homeowners who cannot follow through with the purchase or who are unable to qualify for their loans.
"We have not seen near as much of that this year as we saw last year," Sharp said. "People are more qualified and ready to buy at this point, and we're seeing more stability in that, and not as many people getting nervous."
The availability of financing has not been an obstacle to sales, from Ball's perspective.
"We are not having any problems with getting financing for people," Ball said.
In terms of the sub-prime mortgage lending that led to much of the economy's recent troubles, she said it did not appear as prevalent in the Lexington area, but the added scrutiny that it has brought has been constructive. And the buyers aren't the only ones who have used these troubled economic times as an opportunity to get smarter about their own financial picture.
"You go through somewhat of a downturn like the national economy has, and it gives you a chance to figure out what you're not doing right and focus more on the things that will help your business be competitive," Ball said.
Ball Homes started reevaluating its budget two years ago, as they saw the first signs of a coming downswing, Ball said. The tight market has also driven companies like Ball to focus more on customer service and work harder to improve those elements of their business that are within their control, she added.
Despite its cautious attitude toward a possible turn in the economy, Ball Homes is still engaged in some speculative building, Ball said.
"We have found in the last year that people don't want to wait," Ball said. "And that's more the case right now. I don't know the reasoning behind it, but I think a lot of it has to do with competing with the resale market on homes that are out there."
The poor economy isn't the only challenge that has forced Lexington's homebuilding community to make adjustments in recent years. The EPA's consent decree regarding water quality and storm water control measures in Lexington have brought more stringent oversight of the environmental impact of the local homebuilding industry. While there are still many questions to be answered on the effects of the consent decree on Lexington businesses, Ball said homebuilders had already been putting changes in place in recent years, such as adding silt fences to control erosion at building sites and paying closer attention to the design of storm water retention basins, to address the environmental concerns that have become more heavily scrutinized.
Ball Homes has faced its share of criticism, including controversy in 2007 surrounding the permitting of a development in federally protected wetlands in southeast Lexington, as well as accolades, most recently being honored with the Energy Star for Homes Leadership in Housing Award in recognition of the construction of 487 Energy Star-qualified new homes in 2008. By and large, Ball thinks the building community have been good stewards of the local environment, although there is always room for improvement.
"I don't know as anybody can say they've got it made," Ball said. "But I think recently, (builders) have certainly been made aware of things and are working hard to do the proper thing when they build or develop."
Environmentally conscious efforts, such as Energy Star qualification for homes, have been of more interest to today's homebuying consumer, Sharp said, because of its impact to a consumer's wallet as well as the planet's well-being. With energy savings of 20 percent to 30 percent over standard homes, the Energy Star program has resonated with today's more frugal home buyers, and over the past 12 to 18 months, Ball Homes has transitioned to using the Energy Star program for almost every project.
"It is something that's very important to the buyer," Sharp said. "Buyers still want those nice amenities, but they are more conscious of the value of what they are buying. They are not as worried about keeping up the Joneses as they are about trying to stay within a budget for what they need in a home."
To help potential homebuyers feel more confident and knowledgeable in the homebuying process during unpredictable economic times, Ball Homes has also implemented a home trade-in option for its customers. Started in 2006, it has been a helpful tool during the economic downturn, Sharp said.
"They've taken trade-ins in the car business forever," Sharp said. "It's not something that has been really popular in housing, but it's working. It's been good for us."
While Ball Homes has taken some homes in trade and resold them, the majority of their clients use the trade-in program as a back-up plan and end up selling their homes themselves.
"As much as anything, it's been very helpful in people understanding the market," Sharp said. "Sometimes, people haven't really kept abreast and they don't know exactly what the value is on their home at any given time. It's really helped people to understand where they need to be to get it sold."
Whether or not a brighter outlook is in the making for the homebuilding market in 2009, one thing's certain - Ball is thankful to be working in the Bluegrass. She said the Lexington market benefited from the fact that it wasn't as heavily overbuilt as some of the harder hit communities across the country. The city's balanced economy has helped to stabilize the local housing market as well, she said.
"We are so fortunate to be living where we are. This community Ö seems to be so varied that when one industry is down, another is up," Ball said.
And in addition to that, Ball still sees homebuilding as a very satisfying business.
"There's nothing like giving people their first home, and we've had so many pleasurable moments doing that," Ball said. "And now my husband (Don Ball) and I have people whose children are coming back, and kids Don coached in Little League are buying houses. It's just fun."