Real estate continues rebound

By Dick Hughes  

DECEMBER 30, 2009 1:12 p.m. (1)

Realtors in the Greenville and Spartanburg see signs that home sales are slowly improving even as the year ends as the worst in recent years.

To jump start the market, the federal stimulus money that boosted sales late this year to first-time home-buyers has been extended and expanded to cover existing homeowners.

Citing recent sales figures, Nick Sabatine, chief executive of the Greater Greenville Association of Realtors, says “things are pretty positive. That’s not just spin. Things are getting better.”

Gwen Gray, who has been in the trenches of real estate in Spartanburg going on 25 years, agrees, noting that her firm, Southers Real Estate, “had a little bit better year than we had in ‘08.”

“All positive notes for the end of 2009 and all of 2010,” observes Adair Smith Senn of Donna O. Smith & Partners in Greenville, a member of the Prudential C. Dan Joyner network.

Things are better, to be sure, but recent headlines heralding a 63 percent increase in home sales statewide in November inflate the state of recovery. The burst was fed by the government stimulus at the low-end of the market and by comparison to depressed sales a year earlier.

Realtors such as Smith Senn, Gray and Sabatine say that while the middle and high end markets are showing signs of life, growth will be gradual as credit is tight, appraisals problematic and unemployment is high.

Gray says during the loose credit days “loans were made that should not have been made, but right now you have to have a pretty good credit score and a strong down payment to get a mortgage. I understand why they are doing that.”

Smith Senn, incoming president of the Greater Greenville Realtor Association, says in most cases financing has not been a problem.

“These are the same requirements that were in place 13 years ago when I first began my career in real estate,” Smith Seen said.

What counts is interest is picking up with qualified buyers, even if many are bargain-hunters with unrealistic expectations.

“In some cases in time they come around and are more reasonable in the negotiation process,” Smith Senn said.

Sales spiked in the fall as first-time homebuyers took advantage of the Obama administration’s $8,000 tax credit, low interest rates and depreciated prices in the starter-home market.

Congress has extended the tax credit for first-time homebuyers and, to stimulate sales in the general market, granted a credit of up to $6,500 for trade-up buyers of homes under $800,000. Sales have to close by April 30.

Sabatine is “a little skeptical” about how much of help the $6,500 credit will provide because there has not been as much publicity about it as for the first-time-buyer credit and Realtors “haven’t jumped on it.”

“We are working hard to spread the word even more,” says Smith Senn. “I do believe that there are many people out there who were waiting on a good reason to purchase and the $6,500 just may be that push they need to get off the fence.”

Multiple Listing Service statistics of the South Carolina Realtors Association show the number of homes, condos and villas sold increased 63 percent statewide in November over November of 2008.

Year-to-date, however, sales volume was down 10 percent, median value of homes sold was down 8 percent to $142,000 and average days on the market rose 8 percent to 155.

With December yet to be recorded, sales statewide are on track to be around 2008’s total of 46,914 homes, which was the lowest since 2002 and far below 2005 when the market peaked with nearly 73,000 sales.

The South Carolina numbers were skewed on the up and down sides by the boom and bust in the markets of Beaufort, Hilton Head, Myrtle Beach and Charleston. Those areas rose fastest in the go-go years and fell hardest.

Greenville and Spartanburg didn’t experience the same outsized growth in sales and prices of real estate, didn’t get hit as hard in the collapse and are experiencing more modest rates of recovery.

During the height of the boom in 2005, sales soared 44 percent in Hilton Head and 35 percent in Myrtle Beach while growth in Greenville was 16 percent and Spartanburg 11 percent.

Home sales in Greater Greenville rose 40.3 percent in November to 581, up from 414 in November last year. The median price was down 14.2 percent to $133,000, and the average number of days on the market was 100, one day longer than in 2008 but among the lowest in the state.

Through November, Greater Greenville home sales were 15 percent below 2008 when 7,038 were sold and the decline accelerated. Before the recession, annual sales increased steadily: to 8,641 in 2005, 9,212 in 2006 and 9,370 in 2007. The median price of homes sold in 2007 was $150,000.

Sales in Spartanburg rose 25.8 percent from November 2008 to 229. The median price was flat at $119,000, but days on the market rose to 143 from 131. Sales were down 14.7 percent through November.

The sales surge has helped clear inventory of unsold homes, a key to getting housing construction back on track. Sabatine said Greenville’s December inventory is down 5 percent to 6,465 homes from last December. Gray said Spartanburg’s inventory down to 3,083.

In its third quarter report on the housing market, South Carolina University’s Moore School of Business said an ever-so-slight average increase of 0.2 percent in building permits since January “suggests the excess supply of housing inventory in South Carolina has been eliminated . . .”

The Moore economists cite housing price appreciation throughout 2009 and “only small increases in foreclosure rates” as other signs of a stabilizing market.

“Still,” they said, “there are areas of the economy that have yet to turn and that are going to keep growth in housing to a minimum through much of 2010; namely (1) the commercial real estate market and (2) unemployment and foreclosures. While there is evidence the residential housing market is turning around, the same cannot be said for commercial real estate.”

South Carolina’s unemployment rate of 12.3 is among the highest in the nation. Greenville’s jobless rate is 10.5 and Spartanburg’s is 12.5.

The Moore economists predict credit will be tight and limited into 2010 as “banks are only now beginning to fully deal with the loss of commercial property values” and the consequential losses from defaults.