Greenville Business Magazine 2010 July issue : Page 41
BY KRISTI BY KRISTI KEENAN | PHOTOGRAPHY BY NILL SILVER PHOTOGRAPHY On June 10th, Greenville Business Magazine sponsored an event of the Greenville Housing Fund’s Greenvil BY KRISTI KEENAN | PHOTOGRAPHY BY NILL SILVER PHOTOGRAPHY On June 10th, Greenville Business Magazine sponsored an event of the Greenville Housing Fund’s Greenville Housing Network which featured experts from the real estate and mortgage industries speaking to the “state of real estate.” Following is a snapshot of what presenters see for the future of real estate in Greenville. KRISTI KEENAN | PHOTOGRAPHY BY NILL SILVER PHOTOGRAPHY On June 10th, Greenville Business Magazine sponsored an event of the Greenville Housing Fund’s Greenville Housing Network which featured experts from the real estate and mortgage industries speaking to the “state of real estate.” Following is a snapshot of what presenters see for the future of real estate in Greenville. The The room full of realtors, mortgage brokers, affordable housing proponents and others at the June 10th event all had the same thing on their mind – the future of local real estate. While none of the presenting panelists had a crystal ball on hand, each had his own ideas of what recent months can tell us about those soon to come. Panelists for this event included Michael Dey of the Homebuilders Association of Greenville, James Anderson of CapitalBank and the Upstate Mortgage Lenders Association, Joe Smith of the City of Greenville, Nick Sabatine of the Greater Greenville Association of Realtors, and Dr. Joey Von Nessen of the University of South Carolina’s Moore School of Business. The panel was moderated by Will McCauley of Creative Builders. The general tone of the event indicated that, although slowly, Greenville’s real estate market appears to be rebounding. Dr. Joey Von Nessen says, “In South Carolina,we’re beginning to see positive job growth and declining inventory levels, both of which are essential to the recovering housing industry.” Figures supplied by Nick Sabatine show that – aside from February of 2010 – sales in each month of 2010 outperformed the same months of 2009. “The real estate market is much improved this year over the same period last year,” he says. JULY 2010 | GREENVILLE BUSINESS MAGAZINE 41
The State of Real Estate
Kristi Keenan
On June 10th, Greenville Business Magazine sponsored an event of the Greenville Housing Fund’s Greenville Housing Network which featured experts from the real estate and mortgage industries speaking to the “state of real estate.” Following is a snapshot of what presenters see for the future of real estate in Greenville.
The room full of realtors, mortgage brokers, affordable housing proponents and others at the June 10th event all had the same thing on their mind – the future of local real estate. While none of the presenting panelists had a crystal ball on hand, each had his own ideas of what recent months can tell us about those soon to come.
Panelists for this event included Michael Dey of the Homebuilders Association of Greenville, James Anderson of CapitalBank and the Upstate Mortgage Lenders Association, Joe Smith of the City of Greenville, Nick Sabatine of the Greater Greenville Association of Realtors, and Dr. Joey Von Nessen of the University of South Carolina’s Moore School of Business. The panel was moderated by Will McCauley of Creative Builders.
The general tone of the event indicated that, although slowly, Greenville’s real estate market appears to be rebounding. Dr. Joey Von Nessen says, “In South Carolina, we’re beginning to see positive job growth and declining inventory levels, both of which are essential to the recovering housing industry.”
Figures supplied by Nick Sabatine show that – aside from February of 2010 – sales in each month of 2010 outperformed the same months of 2009. “The real estate market is much improved this year over the same period last year,” he says. While he believes the $8,000 tax credit “may have inflated some figures in the $100,000 to $200,000 home price range” for the first half of 2010, he says that we won’t be able to see the real health of the market until the July figures come out in early August and all the properties contracted within the tax credit window have closed.
Tax credit or no tax credit, realtors who endured a tough 2009 slump were glad for the bump in business so far this year. Figures supplied by Sabatine from the latest Multiple Listing Service (MLS) report available at the time of press show 2,767 homes sold through May 31st of this year. That number represented a volume of $465,777,424 and an average sales price of $168,333 (an increase in 15 percent and 17.2 percent, respectively, over the same time period of 2009). Sellers were able to command more than 91 percent of their original listing price. A disappointing figure of the report indicated that Greenville had an increase in the length of time most homes are staying on the market - an average of 106 days – which can be tough news to people who are trying hard to sell their home in order to avoid foreclosure, make a lifestyle change or move in search of a job.
For those in the market for a home, the new MLS listings year to date are up 7 percent over 2009, providing a large field of homes from which to choose. But how easy is it to get the money to buy a new home? Mortgage banker James Anderson addressed that issue. “Mortgage money is still available for qualified buyers,” he says, “but because the landscape of mortgage banking is changing so rapidly lately, buyers, builders and realtors all need to be working with competent, ethical, experienced, local mortgage professionals.”
How about new construction? We certainly don’t see the same number of homes going up in Greenville now as we saw in the building booms of 2005 and 2006, but building permits for the first quarter of 2010 (359) were significantly higher than in any quarter of 2009. While those tied to the new home construction industry are glad to see this figure begin to increase, those new homes will add to a saturated market. Dr. Joey Von Nessen of USC says, “Greenville has been overbuilt for a longer period of time than other markets in the state and is therefore taking longer to recover.”
While the real estate tumble has a lot to do with a nationwide drop in new home construction over the last few years, Michael Dey of the Homebuilders Association presented a theory at the June 10th event that got a lot of people thinking.
Dey says that after years of following building trends and the factors (demographics, labor, land, materials and capital) that contribute to them, he began to research generational population shifts to see what kind of effect they had. The National Association of Realtors says the average age of a first-time homebuyer is 33. If you consider the generations of the 20th century – the Greatest Generation (1901-1924), the Silent Generation (1925 – 1942), the Baby Boom Generation (1943 – 1960), Generation X (1961 – 1981) and Generation Y (1981 – 2000) – and then add 33 years to each range of numbers, the generationally-driven need for housing becomes apparent. The first two generations have already bought their last homes and do not factor into the current housing need except in their need for assisted living, says Dey.
The Baby Boom Generation – some 80 million strong – has driven the housing market for the last 30 years and will continue affect it for the next 20, although in a different way, he says. Boomers have different needs going forward – they want smaller lots and single level floorplans for their second homes.
Generation Xers – those in their thirties and forties – are the current generation of first-time homebuyers, but they number 30 million fewer than the generation before them, translating to a far smaller need for homes - essentially a generation that was “not big enough to pick up the slack” of and industry that overbuilt thinking Boomers would keep buying at the rates they had in previous years. “The home building industry failed to see how demographics impact its market,” says Dey
“The folks in Generation Y (70 million) will be the first-time home buyers of the next 20 years, the oldest of them looking to buy homes starting around 2014. And what they will want from homebuilders is a product that is more urban, more compact, and more environmentally conscious,” he says. Builders who see and understand these generational differences will be the ones who find the most success, Dey believes.
Joe Smith, project manager for the City of Greenville's Comunity Development division, spoke to the affordability of local real estate and of the building projects the City is currently undertaking. The City partners with a variety of local organizations to help revitalize declining neighborhoods and provide housing that is affordable to all income levels (see article on page 38 for more information about community revitalization).
In an economy like the one we’re currently facing, most everyone is concerned with affordability. The fortunate side of a slide in housing prices is that the homes become affordable to a greater segment of the population. David Arbit of 10k Research & Marketing keeps track of the Housing Affordability Index (among other real estate trends). “An HAI of 120 means that the median family income is 120 percent of the necessary (minimum) income to qualify for the median priced home using a 20 percent downpayment, 30-year fixed rate mortgage,” he says. The current year to date AHI is 190, which is 29 percent higher than it was in 2008. “High HAI = high affordability. At the peak of the bubble around 2006, the HAI was relatively low. After the bubble burst, prices came crashing back down to Earth, and affordability was on the rise,” he says.
There are plenty of houses on the market and prices are affordable. If you’ve been smart about minding your credit and can work with a reputable lender, now is the perfect time to buy a home. GBM
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