|
Affordability will jump-start local housing market
By Kathleen Dayton
Staff Writer
Though still mired in tepidity, the local housing market has its bright spots, and real estate experts pinpoint affordability — both of home prices and home loans — as the key to reigniting housing sales this year.
“It’s likely there will be some new (loan) products brought to the market which will make borrowing more available and affordable,” said Mike Cassidy, a Prudential Carolina real estate agent. “I think you’re looking at people who want to get out of the rental sector and into homeownership. Some of the challenge will be getting the financing.”
It’s apt to be first-time home buyers, Cassidy said, who will kick-start the process of bringing home sales back to normal levels. He predicted that rapid activity is unlikely in the higher-end sector because those who want to buy a more valuable property must first sell their existing one.
“People can’t move up to the next stage of home because they can’t sell their own property,” Cassidy said. “Buyers have been waiting and waiting to see what the market’s going to do and now are realizing the price points are as generous as they’re likely to be. The advice I’m giving to my clients is, if you’re wanting to buy a house this year, you’d better buy it sooner (rather) than later.”
Cheryl Smithem, marketing director for Summerville Homes, said there has been a lot of interest in Baker Plantation, the company’s new community near the intersection of U.S Highway 52 and U.S. Highway 78. Homes there are priced from $199,000 to $239,000.
“There are a lot of people who are just beginning who want to buy a home and I think that’s why there’s a lot of movement in the lower part of the market,” Smithem said. “They just want to get started.”
According to data from the Charleston Trident Association of Realtors, most home sales in Dorchester and Berkeley counties last month were in the $200,000 to $250,000 price range while most Charleston County sales were in the $300,000 to $350,000 range.
Under $400,000 sells
“If you’ve got a product under $400,000, it seems to be selling a little bit better,” agreed Philip Ford, vice president of the Trident Home Builders Association. “There’s a lot of builders that are sitting in that over-$400,000 category, (including) custom builders, and that’s a problem from the banking standpoint. The higher the price point, the less buyers you have.”
Tammie Hoy, director of the Lowcountry Housing Trust, a local nonprofit organization dedicated to providing funding sources for affordable housing projects, said there has been a significant increase in the number of private-sector builders interested in finding financing to develop affordable homes.
Fourteen for-profit builders and 35 nonprofit builders attended a Lowcountry Housing Trust workshop in September and requested more than $3 million in project financing to produce housing for moderate-income families. A family of four living on a household income of $67,000 would meet those criteria, Hoy said.
“In the past, you’ve only seen a handful of private-sector developers getting into the industry, primarily through tax credits,” Hoy said. “Now, mid-point and even higher custom-home builders are looking at how to produce a more affordable product because some of the stock out there is relatively high and kind of saturated.”
Tightening credit
Credit tightening and the disappearance of risky loans that had allowed some people to buy more house than they could afford also have contributed to stagnant sales and a flooded market at mid-range price points.
Brian Crabtree, a broker with Weichert Realty/Dean Kelby, said some investors may come back now to take advantage of a buyer’s market, but he expects only a few will do so. The homes that will sell in 2008 will most likely be homes the average borrower can afford.
“I think people are buying homes to live in, and that is greatly driven by income bracket,” Crabtree said. “Most of the economists are calling for a gradual increase in home sales in 2008. Obviously, the (properties priced at) $200,000 to $400,000 will come back first, but
I think we’ll see a nice turn in the middle range fairly quickly as long as people in the north get their homes sold. That’s really the bottleneck.”
Buyers are still sitting back waiting for a pending huge price drop, but Crabtree said he thinks a good bit of that has already occurred.
“I feel positive for the first time in awhile,” Crabtree said. “We’ve had more showings in the past week than in all of December. For a real estate agent, 2008 will be on the climb…more sales, less competition. From a homeowner’s perspective, this is the year to buy; it’s probably not the year to sell.”
Walkable neighborhood
In the midst of the sluggish housing market, the I’On Group in October found optimism when it launched sales of its first homes in Mixson, a new urban sustainable-development community in North Charleston.
Alyss Campaign, vice president for strategy and marketing for the I’on Group, said the company is building 29 homes in Mixson’s first phase and has 11 contracts. Homes are priced from the mid-$100,000s to the low $300,000s.
“We have a third of our homes under contract already, which we consider a great showing,” Campaign said. “What we heard from the buyers was that they liked the price point and they trusted I’On Group and they really liked this type of walkable neighborhood.”
The I’On Group is also developing Morris Square, a village concept at Smith and Morris streets in downtown Charleston and has sold 27 of the community’s 32 homes. Morris Square homes are in a higher price range, $449,000 to the mid-$700,000s, but would be considered moderately priced in comparison to other homes in the historic district.
At the I’On Group’s signature Mount Pleasant neighborhood, home prices vary from the $900,000s to the multimillions. While there is much product in the East Cooper area in that price range, I’On Group’s niche is its master-planned community that includes shops and amenities.
“At I’On, we get a ton of people interested in the $500,000 to $800,000-plus price inventory and we don’t have enough inventory in that price point,” Campaign said. “We’re working with our guild of builders to try to meet that demand. People really put a premium on being able to walk to the school, the church and the shops.”
Teena Martindale, director of the Multiple Listing Service for the Trident Association of Realtors, agrees that the local housing market is heading for a rebound.
“I think it’s a fairly flat market right now and I think it will stay that way a little while, but I don’t think it will go down any further,” Martindale said.
She has studied home sales trends for the past 15 years based on MLS statistics, and it’s clear that what goes down always comes back up, she said.
“The further you go back, the more comfortable you can be with this market,” Martindale said. “You can see where we’ve had these trends before, and Charleston always recovers.”
Kathleen Dayton is a staff writer for the Business Journal. E-mail her at kdayton@setcommedia.com.
|
E-Mail This Article
Printer-Friendly Version