Housing market down nearly 7 percent amid election uncertainty

tadams@ledger-enquirer.comSeptember 22, 2012 

The Columbus-area housing market has cooled this year from the military-infused sales surge a year ago, and with the rental market continuing its solid performance.

Multiple Listing Service data show overall home sales are down 6.7 percent through the first eight months of 2012, with Columbus, Phenix City, Smiths Station, Fort Mitchell and Harris County all experiencing dips from the same period a year ago.

"It's just been another OK year. We're off, but we haven't suffered as badly as a lot of our peer cities out there," said Jack Key, a partner in the real-estate company Coldwell Banker/Kennon, Parker, Duncan & Key. "So we're thankful for the market that we do have here, even though it's certainly nowhere close to where it was in the mid-2000s."

Thus far, 1,852 houses have new ownership through August, compared to 1,985 last year. At this point a year ago, sales were up about 5 percent from the 2010 level.

Much of the increase in 2011 came because of the Base Realignment and Closure process, which mandated the relocation of the U.S. Army Armor School to Fort Benning, where it has united with the U.S. Army Infantry School to become the Maneuver Center of Excellence.

But the Armor's move was completed by September of last year. The thought is that more of the soldiers and their families either opted for on-post housing or began renting homes and apartments throughout the area, with some doing so until they could scope out the market and decide if and where they might like to make a purchase.

"It makes sense. If you're only going to be here for two to three years, I would rent," said Reynolds Bickerstaff, a partner and broker with Waddell Realty. Like Coldwell Banker, his company manages a lot of properties that have military-related owners.

"We've seen a big impact in our property management department, and we think that will continue as some of these owners that are leaving Columbus -- who are unable to sell their homes -- agree to rent them out for a year or two and then reassess the market," he said.

The number of homes sold isn't the only segment of the real-estate sector to take a hit. Sales prices also have slipped a bit year this, with the market-wide median closing price down by nearly $3,600 to $151,630 through August, a 2.3-percent decline from 2011.

The median sales price for all of 2010 was $158,699, according to the MLS data. That fell to $155,901 in 2011, a year in which 2,827 homes changed hands in the local market.

"Overall, I think we're talking about a very, very slow recovery," said Key. "It's going to take a long time to recover the values that we've lost in houses and commercial property (since 2008). In Columbus, we've lost something like 20 percent of our value. For a lot of people, that's a pretty heavy hit."

Even the area's most prolific homebuilding company, Grayhawk Homes, is feeling the sluggishness of the market, said Dave Erickson, its president. The builder will close about 180 home sales this year, well off the roughly 250 he sold in 2011.

"Last year was just a real tailwind of activity," he said. "You had a lot more demand, and we had a lot more people moving into the market, period.

"Now, we don't have as much in and out movement going on, and as a result we're kind of settling in to kind of the new norm for the Columbus area."

At Waddell Realty, Bickerstaff said his company's June sales were robust, but then began to slip in July and became very slow in August.

"If June was a great month, that means that business was written in April or May. So people were preparing to move in the summer, and rates were incredibly low during that time, too," he said.

The company has good business on its books for the final quarter of this year, Bickerstaff said, although he believes with the Fort Benning buildup over, the market will become much more seasonal.

That would portend a traditional spring and summer home-sales market and, hopefully, steady growth. However, most in real-estate circles believe the upcoming presidential and congressional elections, combined with the so-called "fiscal cliff" federal budget impasse looming later this year, likely will keep anxiety in the air.

"There's a certain amount of uncertainty that some people have, and then once the election is over with, regardless of who wins, I think historically people sort of get a little more confident," said Coldwell Banker broker Howard Jefferson. "I would bet you home sales pick up in the spring after an election year no matter who wins."

Bradley Jones, president of the Greater Columbus Homebuilders Association, echoed the sentiment that consumer confidence and all of the spending that goes along with it will be slow until after the election is over. Like others in the industry, he wants to see the home mortgage interest tax deduction protected.

"I don't think either way (the market's) going to come out gangbusters next year. But I do hope it continues to get better," said Jones, who with his father, Brock Jones, owns a remodeling and custom homebuilding company.

Jones' primary take on the real-estate sector now is that building in the once-sizzling Fort Mitchell area has slowed considerably with the conclusion of the Fort Knox move to the military post. That unincorporated community is situated near Fort Benning's back gate in southern Russell County.

"It seems some of these out-of-town builders that had come in are starting to trickle back up to Atlanta and LaGrange, where I think it has picked up in those areas," he said, also noting some speculative house construction is still taking place in the Ladonia area of west Phenix City.

Key at Coldwell Banker said the most positive signs he is seeing in the market are good sales on upper-end homes and in the commercial area, which has been solid for the last two years. The hottest price range for homes right now is $175,000 to $250,000, he said.

Erickson said he is hopeful that mortgage lending standards will ease somewhat over the next year to allow more people to qualify for home purchases. He also would like to see more job growth in the Columbus area.

"It's probably not going to be the big splashes. It's going to be a lot of little things," he said. "It's going to be Synovus adding a few more people back in. It's going to be TSYS expanding its work force. It's going to be Aflac expanding its back-office operations. It's going to be Pratt & Whitney doing more engine rebuilds."

Bickerstaff said he sees the housing market, like the economy as a whole, getting better "incrementally over time." The elections will have a major role both mentally and financially in that recovery, he said, although another factor will be in play -- a public weary of the negativity.

"People have got to live somewhere, and we've been holding out for the last four or five years, on the sidelines, worrying if we can afford to repaint the den or put new counters in the kitchen," he said. "Americans are just tired; we can only take so much. They're willing to get back out there and enjoy living. That's what America is about, is the freedom of choice to live the type of lifestyle you've imagined."

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