Real Estate News - North Myrtle Beach
Horizon 2010: Real estate prices to stabilize
Sunday, Feb. 21, 2010
By Adva Saldinger - The Sun News
The worst is over in the Grand Strand real estate market, with 2010 bringing continued sales increases and price stabilization, according to industry professionals.
"I think it's just going to be a slow uphill climb the rest of the year to get back to the levels of a balanced market," said Alex Holbert, the president of the Coastal Carolinas Association of Realtors. "We had a strong start to the year, which I hope is not an anomaly. On balance, I think we'll come out better than last year."
After a rough start in 2009, residential home sales finished up 3 percent and condominium sales finished up 7 percent for the year, according to the Multiple Listing Service. "[Sales] got so bad a year ago that it has to get better," said Tom Maeser, a real estate analyst with the Realtor association.While the real estate market has improved, it will not continue on that path until businesses start hiring and the double-digit unemployment rate drops, he said. If interest rates continue to stay low and banks ease lending standards a bit, then things may look up, Maeser said. And the home buyer tax credit, which helped jump-start sales in 2009 and was extended to the spring, will be another factor influencing sales in 2010.
"I still think we're going to be one of the first recovering areas and recover quickly if those things happen because we have a pent-up demand," he said.
The number of properties on the market has been declining, which is a good sign and could help lead to a stabilization of prices, Maeser said.
"The only time we're going to see a recovery in average sales price is if we get rid of the short sales and foreclosures," he said.
Short sales will persist.
Short sales, which have become popular as homeowners are struggling to keep their homes, occur when a seller tries to avoid foreclosure by negotiating with the lender to sell the property for less than the amount owed on the mortgage.
The number of short sales will likely increase this year, said Greg Harrelson, the owner of Century 21 The Harrelson Group.
"It's not that there's that many more people in trouble," he said. "It's really consumer awareness that it is an option."
The number of foreclosures may drop a bit but will stay at an elevated number, Harrelson said. The number of short sales and foreclosures are causing prices to decline.
"We still see a little bit of downward pressure because of short sales," Harrelson said. "At the end of the year, my personal thought is we may see some sort of stabilizing."
The median price - the price at which half of properties sold for more and half sold for less - for single-family homes was down 12 percent to $175,000 in 2009. The median condo price dropped 19 percent to $128,000 last year, according to the MLS.
"You're still going to see some good deals, but you're going to see a general firming up of prices," said Rod Smith, the director of general brokerage at Coldwell Banker Chicora. "I honestly believe that we are going to see a slow and steady increase in the number of sales and we're going to see a slow and steady stabilization in prices."
Financing properties
The consensus is that the market has hit the bottom, and that is translating into more interest from potential buyers, he said. One of the biggest remaining issues is the strict regulations buyers are facing when they try to get a loan so they can buy a property, Smith said.
"Lenders have money to lend, not under the same scenarios that we had them two years ago, but there is money available to borrow," said Rhonda Marcum, the executive director of the Mortgage Bankers Association of the Carolinas.
There will continue to be relatively strict requirements for borrowers, who must have good credit scores and a large down payment, she said. The criteria bankers used a few years ago were not strict enough, as is evident with the number of delinquencies and defaults during the past couple years, Marcum said.Borrowers may have more difficulty getting loans along the Grand Strand because many of them are buying second homes or investment properties.
"For investment and second homes it is tougher than it's ever been. The potential purchaser is going to have more invested... I don't see that going away in 2010 or 2011," Marcum said.
The challenges in getting financing, especially for second homes and investment properties, have fueled a surge in cash sales.
Last year, 37 percent of all Grand Strand real estate sales were cash, the largest percentage in at least 15 years, with 52 percent of transactions paid for with conventional financing and 11 percent with other forms of financing such as a Federal Housing Administration or Veterans Administration loan, according to the MLS.
Many of Radha Herring's buyers are bringing cash to the table. Herring, the broker-in-charge of the Watermark Real Estate Group, works with a lot of investors and people looking to buy oceanfront condos.
Those cash buyers are helping drive prices further down, because there is a limit to how high a price people can pay in cash, she said.
Sales will continue to rise
While Herring said prices will continue to fall, she expects sales will continue to rise, based on the number of inquiries Watermark received in January.
Other real estate agents across the Grand Strand are receiving more calls, e-mail queries and showings.
"I feel that we're going to see an increase in traffic, that's people looking, which they've been reluctant to do," said Chuck Houseman of The Litchfield Co.
He said that Georgetown County and the south end have not experienced the same volume of foreclosures and distressed properties as other parts of the Grand Strand.
"Across the board... I would say that this year will be improved over last year unless something unusual happens, something ... that would curtail the confidence people are showing," Houseman said.
Home buyer tax credit
When the home buyer tax credit expires, it will likely have some impact on sales, Houseman said. The tax credits - which give first-time home buyers a credit of up to $8,000 and other buyers up to $6,500 - are scheduled to expire this spring. Buyers must sign a contract by April 30 and close on the house by June 30 to qualify for the credit.
"Even though it's hard to measure the future, common sense would tell you that might have a slowing down effect temporarily," Houseman said.
The tax credit has prompted some of Harrelson's clients to buy. If it is not extended, sales will decline, but not as much if consumer confidence hadn't ticked up, he said.
"One good thing that I see is consumer confidence in buying real estate seems to be increasing," he said. "Because confidence is so high right now, I think there would be less impact."
Buyers have gotten more conservative with price, he said. About 73 percent of the properties purchased last year in Horry County and 50 percent of properties purchased in Georgetown County sold for less than $225,000, according to Site Tech Systems, a local company that tracks the real estate market.
The most expensive properties are still seeing the biggest discounts, while the under $200,000 market will probably continue to be the most successful in 2010, Harrelson said.
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