The Columbus-area housing market, coming off a year of price appreciation and steadying sales on both sides of the Chattahoochee River, looks poised for more of the same in 2015.
That's the general expectation of real-estate veterans who weathered an overall sliding market through the Great Recession, but now are banking on the slow but steady recovery to continue this year and into 2016.
"The inventory is still a bit too high, but it has come down significantly and sales have inched up," said Ed Grifenhagen in a real-estate market review and outlook compiled for Coldwell Banker/Kennon, Parker, Duncan & Davis, where he is an associate broker and director of sales and development.
The detailed analysis shows home sales on the Georgia side of the market rising to 2,190 units in 2014, after bottoming out at 1,783 houses sold in 2010, a year after U.S. economists declared the recession officially over. The Georgia market includes Muscogee, Harris, Chattahoochee, Talbot and Marion counties.
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Across the river, in Russell and Lee counties, home sales dipped from 993 units in 2013 to 868 closings last year, far off the peak of 1,209 sales in 2009.
The good news on the Alabama side of the market is that home prices appreciated last year just under 3 percent, according to the Coldwell Banker affiliate's review. That was after two years of depreciation -- 3.7 percent and 2.7 percent respectively -- in 2012 and 2013.
In Georgia, home prices appreciated nearly 4 percent last year, on top of gains of nearly 1 percent in 2013 and 4.4 percent in 2012. That three-year streak followed four straight years of declining home prices.
"We can look forward to slight increases in value throughout our market during 2015 probably in the 2 percent to 4 percent range, as well as a slight decrease in inventory over coming months," Grifenhagen said. "We expect approximately a 7.75- to 8-month supply by the beginning of 2016."
He noted a six-month supply of homes on the market is typically considered "balanced," meaning it favors neither a seller or a buyer. Before the recession, with inventories lower, multiple offers on homes were fairly common, putting power in the hands of the seller.
That changed during the economic downturn, with spooked buyers remaining on the sidelines and pushing inventories higher. That meant anyone interested in buying a house could easily negotiate lower prices.
A good, strong year is what Reynolds Bickerstaff is expecting in 2015. The associate broker and partner at Waddell Realty in Columbus said he's noticed a trend recently that bodes well for potential sales.
"Some owners have started to pull their homes out of the rental market to try to sell again. And we've actually had some tenants decide it's time for them to buy a house, folks under 35," he said. "They've been renting a year or two and have gotten a little more confident in the job market or have accepted a new job. That's really encouraging because that's what we need."
Bickerstaff said much of the business that his real-estate agents at Waddell are putting on the books is taking place in north Columbus and Harris County. He also said inventory levels in some areas of the city have been trending closer to seven months.
"We still don't have enough new construction homes on the market, so that is helping the resales quite a bit," he said. "But as long as everybody prices their property at the current market price, it will be a good selling season, a good buying season, too."
However, a major concern for Bickerstaff is the tendency of prospective homebuyers to attempt a purchase without having enough of a down payment to reduce their closing costs, or simply make it easier for lenders to qualify them. He said Waddell is still seeing a large number of FHA and VA loans, which require little to no down payment. That's why saving money before a home purchase is critical, he said.
"What concerns me is that with a lot of people buying homes, will they have enough savings to maintain those homes when something does happen, when the air conditioner needs to be replaced, the septic tank needs to be repaired, the roof needs to be replaced," Bickerstaff said. "That's going to be a concern for the housing market -- how will the homeowners afford that if they have very little equity in their home?" he asked.
One of the concerns of the top homebuilder in the Columbus area, in terms of annual output, is what impact rising interest rates might have on not just the local market, but nationally.
"Right now, I would say it's going to be a positive year," said Dave Erickson, president of Grayhawk Homes. "That's very much going to be dependent upon what happens with interest rates. If you listen to the financial markets, interest rates are going to go up. How far and how fast is going to make a big difference."
That's because of the impact just a single percentage point increase can have on a monthly payment, he said. A quick check of a mortgage calculator shows that a $150,000 home -- with $120,000 financed after a 20 percent down payment -- would see a sharp increase. The monthly payment at a 3.5 percent mortgage rate would be $538.85. At 4.5 percent, it rises to $608.02. That doesn't include annual property taxes and home insurance escrows.
In 2014, Erickson's company closed on 214 new home sales in the Columbus-Phenix City market, with a few of those sales in Auburn, Ala. He also built and sold 88 homes in the Des Moines, Iowa, area.
He's already off to a hot start in Columbus through the first three months of this year, closing sales on 49 homes, compared to 34 in the first quarter of 2014.
His only other major concern locally is the direction Fort Benning will take as the U.S. Army looks to reduce its budget through an upcoming Base Realignment and Closure (BRAC) process. Fort Benning, according to Army officials, could lose nearly 11,000 soldiers and civilian employees combined if the full brunt of the cuts hit the installation.
"That's a wild card you just can't predict. So far, the Columbus economy seems to have adjusted reasonably well to what's happened on Fort Benning," said Erickson, referring to smaller cuts that have already occurred on post, along with the last BRAC round that was not as "robust" as some would have expected based on early military projections.
"On the other hand, I can also envision a situation where they turn around and bring extra resources (to Fort Benning) to balance that out. So the net effect could be very short term," he said.
HOUSING MARKET BY THE NUMBERS
GEORGIA(Muscogee, Harris, Chattahoochee, Marion, Talbot counties)
Homes sold: 2,190
Average price: $168,003
Days on market: 155
List/sales price: 95.22 percent
Homes sold: 2,117
Average price: $161,332
Days on market: 166
List/sales price: 95.01 percent
Homes sold: 1,958
Average price: $159,953
Days on market: 172
List/sales price: 94.56 percent
Homes sold: 1,849
Average price: $152,854
Days on market: 158
List/sales price: 97.56 percent
2010Homes sold: 1,783
Average price: $158,639
Days on market: 141
List/sales price: 95.31 percent
2009Homes sold: 1,849
Average price: $162,679
Days on market: 130
List/sales price: 95.92 percent
ALABAMA(Russell and Lee counties)
2014Homes sold: 868
Average price: $150,889
Days on market: 147
List/sales price: 96.88 percent
2013Homes sold: 993
Average price: $146,575
Days on market: 144
List/sales price: 96.23 percent
2012Homes sold: 1,045
Average price: $150,718
Days on market: 145
List/sales price: 96.78 percent
2011Homes sold: 1,122
Average price: $156,506
Days on market: 136
List/sales price: 97.47 percent
2010Homes sold: 1,101
Average price: $153,811
Days on market: 138
List/sales price: 97.21 percent
2009Homes sold: 1,209
Average price: $150,656
Days on market: 128
List/sales price: 97.57 percent