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Housing market immune to national woes ... somewhat
By Kathleen Dayton
Staff Writer
The housing market is the big question mark in today’s national economic picture, and that’s not expected to change much in early 2008.
The future of the slumping housing market doesn’t look as bleak, however, to those with a critical eye on Lowcountry residential real estate.
“We’re not going to see the bottom that the national economy will see, because we have a lot of people who want to move here,” said Gettys Glaze of Sandlapper Real Estate. “The problem is, the people that are moving here are from the Northeast and the Midwest, and they’re having trouble selling their homes.
“I see the market turning a little bit now, but it’s going to take a lot of positive thought and actions from people in our business and consumers. Mortgage rates are fantastic, and there’s a lot of new jobs coming into Charleston.”
Glaze anticipates his sales to be flat in 2008 compared with 2007. But he also said he thinks the downturn in the Lowcountry housing market has passed its low point.
“I think our bottom came in August or September of this past year. The market locally has been down about 20 percent in sales year-over-year, but if you compare it to 2003 it’s about the same, and actually it’s gone up a little bit,” Glaze said.
“The builders and the new construction guys have slowed their starts, which puts less inventory into the market and the people that have re-sales aren’t competing with new construction as they have in the past three or four years. The bottom line is, we have a great place and a wonderful city and a lot of people want to live here.”
Along with balmy weather and the beach, the Lowcountry has another advantage that could help boost tepid home sales sooner rather than later: Jobs.
“Personal income just went up this quarter in South Carolina,” said Frank Hefner, chairman of the College of Charleston’s Department of Economics and Finance. “It’s nice, normal growth, and the unemployment rate is still very low.”
Hefner expects local housing starts to return to a normal growth pattern by mid-2008.
“Part of the reason for that is we didn’t go through the massive overbuilding that some other areas of the country did,” Hefner said. “There is an advantage to not having super, high-powered growth. You don’t go through the super-high-powered downturn.”
Hefner pointed to massive business investment in the Lowcountry, such as Jafza International’s plans to build a 1,300-acre logistics, distribution and manufacturing center near Orangeburg, as one of the bright spots in the local economic picture.
“Developing business right now in South Carolina is relatively cheap,” Hefner said. “Companies like BMW and Bosch are all hiring American workers. As long as we don’t have a serious problem generating jobs, we should see by mid-2008 a brightening of the housing market.”
The national picture looks dimmer in the 2008 Annual Outlook released Dec. 17 by Wachovia Economics Group. The report forecasts that housing will decline further in the new year with no meaningful recovery on a national basis until the end of the decade.
“I don’t think we will get back to a market that people easily identify with as strong until 2011, 2012,” said Mark Vitner, a Wachovia vice president and senior economist based in Charlotte, N.C. “We think it might bottom out around the middle of 2008. In addition to being overbuilt and overpriced, we’ve got tightening credit conditions. A lot of people that would have bought in the past are going to be renting this year.”
The instant loans and subprime lending that accompanied the sizzling housing market in 2005 and early 2006 has local real estate agents facing challenges they didn’t have before.
“You have sellers that have borrowed all their equity, so you have sellers who are not in a position to negotiate,” said Cyndy Burris, a real estate agent with John Poston & Co. “That has been my biggest problem the last half of this year.”
Still, Burris expects a correction in the local housing market after the first quarter.
“I feel like we’re a destination,” Burris said. “We’re so unique compared with the rest of the country. People are moving here for quality of life. We’ve just overbuilt our inventory, so it’s going to take us a longer time to get rid of it.”
Inventory of new homes on the market in the tri-county area steadily declined for six months in a row, from June through November, the Charleston Trident Association of Realtors reported. December numbers will not be available until about the second week of January.
The association’s Multiple Listing Service recorded 10,530 new single-family homes on the market in November, down from 10,869 in June.
Year-to-date as of November, the median sale price of a Lowcountry home was $209,925, up from $202,650 for the same period in 2006. In November, the median price dropped to $200,000 compared with a median price of $204,624 in November 2006.
“It bodes well for our area that we haven’t seen a significant drop in home prices like other parts of the country, and we’ve brought in industry like Google,” said Philip Ford, vice president of the Charleston Trident Home Builders Association. “In talking to some builders, (I’ve heard) things have picked up a little bit toward the end of the year, when things are usually pretty slow. Everybody’s predicting the market will come back up probably the second half of 2008. Some are even saying 2009. For this market, though, I think we’re looking at 2008.”
Jon Wiley, interim director of the College of Charleston’s Carter Center in Real Estate, said the local housing market has just come through a period of major growth and seems to be at a tipping point.
“Things have kind of leveled off here in the Lowcountry,” Wiley said. “We haven’t seen the awful price declines like in the rest of the country, but things haven’t jumped up either. Credit conditions have changed…and we don’t have as many investors flooding the market with extra money, so something has to clear the market. If nothing changes, we will see more of the same, this delicate balance of uneasiness.”
Among the positive factors for the Lowcountry housing market is the number of empty nesters, retirees and baby boomers who want to move to the coast, Wiley said.
“I think that’s where Charleston has the advantage over other housing markets,” he said. “I don’t feel terribly nervous. I just bought a house myself.”
Kathleen Dayton is a staff writer for the Business Journal. E-mail her at kdayton@setcommedia.com.
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