Mel Foster Company celebrates solid year

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By Jennifer DeWitt | Friday, February 2, 2007 1:13 AM CST | () comments

Though not the “banner year” of 2005, Mel Foster Co. wrapped up a solid year of real estate and insurance sales in 2006 in a marketplace where home sales slumped mid-year before rebounding, Bonnie Sparks-Gray said Thursday.

Just beginning her second year as president of Mel Foster’s real estate division, Sparks-Gray said the company reported total sales volume of $799.94 million for 2006. That was down from total sales in 2005 of $892.33 million. The company captured a 43.2 percent market share in Scott and Rock Island counties with $472.67 million in sales volume. That was down slightly from its 45.3 percent market share a year earlier.

“We didn’t expect 2006 to be a repeat of 2005, but we’re pleased that our markets remained steady,” she said. “2005 was just a banner year. We expected it to be steady in 2006 — a period of retrenchment.”

More than 400 Mel Foster agents and employees will gather this morning at the Golden Leaf Conference Center, Davenport, to celebrate last year’s sales performance. During the annual awards breakfast, nearly 40 awards will be presented by Sparks-Gray, who also will recognize the company’s Honor, President’s, Executive and Chairman clubs. The company will host its annual dinner and dance Saturday at the RiverCenter in downtown Davenport.

Sparks-Gray said Mel Foster’s revenues were down only 4 percent in 2006, which she said points to a strong year — especially when compared to what other regions experienced. At an October meeting of Realty Alliance, a national alliance of real estate firms, she said firms from other parts of the country were reporting revenues decreasing as much as 45 percent at that point.

“Except for a midyear stall, resulting from national headlines and trends that did not reflect the Midwest but affected it, we closed 2006 and began 2007 with a steady, stable market,’’ she said.

Citing data from the first three weeks of 2007 home sales, she said Mel Foster had 256 written offers. At the same time last year, it had 315 pending offers but Sparks-Gray said those sales still “were riding on the coattails of a banner 2005.”

The buying frenzy that began in 2002 when interest rates helped many buy their first homes or upgrade continued for three years, she said. “Sellers began to get on the bandwagon, often seeking new construction, and for the next three years we experienced a seller’s market — still more buyers to buy than sellers to sell.”

She said that situation changed in late 2005 when “almost overnight that pent-up buyer need was satisfied.”

“But homeowners continued jumping on the bandwagon to sell at a price higher than the now leveled buyer’s market would pay,” creating a buyer’s market — more listings and fewer buyers, she said.

Of the company’s 2006 sales, she said new construction sales amounted to $144.42 million, or 697 closings. Mel Foster was involved in 45.7 percent of the year’s new construction sales in the Quad-Cities, she said. In 2005, Mel Foster sold 49.8 percent of the new construction, or $122 million.

She said the lower percentage but higher dollar amount in 2006 may indicate that sales prices were higher, inventory was larger and possibly that builders were selling more of their own properties.

Also in 2006, Mel Foster was involved in 5,628 residential transaction sides at an average sales price of $127,351.

The company’s warranty program with TMI Home Warranty ended the year with 1,718 new warranties sold and 414 renewed for a 25 percent increase over 2005.

While residential sales contributed a total of $739.3 million to 2006’s total sales, she said commercial sales fell in 2006 to $60.63 million from $91.69 million in 2005. One significant sale in 2005 boosted the 2005 total, she said.

Mel Foster’s insurance division reported premium growth of more than $3.17 million in 2006, said Mark Fensterbusch, the insurance division president. The division wrote $45.27 million in premiums last year.

He said most of the growth came in the commercial property side of the insurance business, which contributed $29 million in written premium.

“That’s a good year in a market that is pretty difficult because the insurance industry in a soft cycle … and they’re lowering pricing.” Fensterbusch said the division’s 42 employees had to write a considerable amount of new business to make up for the fact that premium costs went down an average of 10 percent across the industry.

Sparks-Gray, who took over as division president in December 2005, said revenues and transactions could have increased had 2006 been a year of mergers and acquisitions for the company. “But I thought we needed to be conservative and I wanted to focus on strengthening the training of our agents and the services we provided,” she said. In 2007, she added, her strategy is to continue to take business and its service to the next level.

The only new office in Mel Foster’s portfolio in 2006 was one in Clinton, Iowa. Outside the metro Quad-Cities and Eldridge, Iowa, the company has Illinois offices in Galesburg, Geneseo, Kewanee and Sterling and satellite offices in Knoxville and Monmouth, Ill. Another office is set to open in Rock Falls in mid-2007.

“This year we may be looking at growing again,” she said. “We have a good foothold in Illinois so we are looking at a couple of market in Iowa.” While she would not reveal what communities, she did say “they would be down Interstate 80.”

Jennifer DeWitt can be contacted at (563) 383-2318 or jdewitt@qctimes.com.