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Real estate pros expect 2007 to be local market's bottom

Fewer homes were sold in the Columbus and Phenix City housing markets in 2007, and it took longer to find buyers for those dwellings that did sell.

However, data from the Multiple Listing Services in both cities show local home prices not only holding their own, but also increasing appreciably from the gangbuster atmosphere sellers enjoyed in 2005.

‘‘Our market didn't suffer like other markets have because homes here in Columbus only appreciated at 5.6 to 6 percent’’ during the last couple of years, said Sandi Green, president of the Greater Columbus Board of Realtors.

Green, a 29-year real estate veteran and associate broker with Waddell Realty Co., said unlike red-hot housing markets in California and Florida, which saw soaring appreciation, Columbus' gains were more modest. That means the pricing bubble did not grow so much that it burst.

But the national media coverage — pounding home the message of a ‘‘mortgage meltdown,’’ ‘‘subprime crisis,’’ ‘‘foreclosure fallout,’’ and the dreaded ‘‘r’’ word, ‘‘recession’’ — has had an impact, she said. It has generated fear, prompting many prospective homebuyers to sit tight.

‘‘We are not really losing value in our market here,’’ Green said. ‘‘There's such an abundance of inventory just because people got frightened of the national news, and Columbus is not affected by the national market. We did appreciate at a more normal rate.’’

The Multiple Listing Services' figures confirm that. They show the average selling price of a home in Columbus rose to $178,595 last year from $167,316 in 2005. Across the Chattahoochee River in Phenix City, the average selling price jumped to $153,414 last year from $129,908 in 2005.

That's the good news.

The single-family home markets in both cities did turn bearish toward the end of 2006 and stayed that way through 2007.

The number of homes sold in Columbus dropped to 2,438 last year from 3,199 in 2006, while they slipped to 1,190 homes sold in Phenix City last year from 1,380 in 2006.

It also took an additional two to three weeks to sell houses, with ‘‘average days on the market’’ in Columbus to 122 in 2007 rising from 100 in 2005. In Phenix City, days on the market climbed to 136 last year from 119 in 2005. Agents working harder, smarter

It definitely is a buyer's market, said Rodney Niles, president of the Phenix City Board of Realtors and broker/owner of ERA/Platinum Brokers. But that's not necessarily a bad thing, he said.

‘‘We've got historical (low) rates, sellers making concessions. Hey, if you're looking to buy, now's the time,’’ said Niles, who thinkbelieves the real estate sector is actually returning to normal and will require agents to work harder and smarter aslike they once did.

‘‘In essence, it's going back to the way that it should be, meaning it's no longer put a sign in the yard, get an offer and sell the home,’’ he said. ‘‘Real estate people are having to market their product and that's what we're supposed to be doing.’’

Most of the transaction volume in the Phenix City and southeastern Lee County market — which includes fast-growing Smiths Station — is in the $160,000 to $190,000 price range, Niles said.

The market has overbuilt and the current inventory of 984 new and existing single-family homes on the market is a bit high, he said. But Niles is hopeful buyers will put a major dent in that this spring and summer if they can get over anxiety generated by media coverage of the housing industry and the economy.

He agrees with Green that home prices were never overinflated like in other areas of the nation and that interest rates — a 5.5 percent, 30-year rate is now available — will draw buyers back into the market.

‘‘We're not in Sacramento where houses went from $200 a square foot to $400 and now they're back to $300 and people are crying,’’ Niles said. ‘‘We haven't really overpriced our market to go through any type of major change.’’ Builders working to slash inventory

Existing home sales weren't the only segment facing challenges in 2007. New single-family home permits in Columbus fell to 470 last year from 858 in 2005, a 45 percent drop, according to city records.

The home-building spree in 2005 was the most active in the city since 1,202 houses were constructed in 1972.

Harris County, a major bedroom community for Columbus, saw its single-family home permits fall to 430 in 2006 from 449 in 2005 before dropping dramatically to 252 last year, county records show. That's down about 44 percent.

One of the area's leading homebuilders, Dave Erickson, said the ‘‘gloom and doom’’ aura surrounding the housing industry has caused pain. But the low mortgage rates have ‘‘perked up’’ buying prospects and should help the area work off existing home inventory.

Getting loans could be a problem for some people because of tightened credit standards prompted by the subprime mortgage fallout, said Erickson, president of Grayhawk Homes Inc. Subprime loans are those made to buyers with dubious credit scores and ability to repay. Those loans have roiled the industry.

‘‘If you have very good credit, it's not that hard to get a loan,’’ he said. ‘‘But if you have anything that's a little bit marginal, if it even smells like it's got a whiff of day-old bread, they're just not going to do it.’’

Columbus real estate agent Guerry Clegg has experienced the highs and lows of the last five years. Prior to the national housing downturn, he recalls how easy it was to make a commission off a home sale.

‘‘I had buyers paying more than I was comfortable with them paying, but I knew if they didn't pay it, they wouldn't get the house,’’ said Clegg, an associate broker with Coldwell Banker/Kennon Parker Duncan & Key Realtors, which operates in Columbus and Phenix City. ‘‘What do you do? Because if they want the house bad enough, I can't show you any data that says it's worth it. But the fact that you're going to have four or five people lined up to buy it says that it is worth it.’’

However, he said tThe tables began to turn in the fourth quarter of 2006. Despite the fact that home prices were appreciating, there was a perception that they were dropping, prompting some sellers to freeze up.

Those whothat did sell had to wait longer to close a deal, while buyers became more aggressive, making low-ball offers on obviously higher-valued properties. Clegg has tried to counsel comprise between the two.

‘‘What I tell my buyers is don't expect to go out there and find a $150,000 house for $100,000 that doesn't need any work, because that's just not reality,’’ he said. ‘‘But I also tell my sellers that it's a buyer's market. So if you want to sell your house, be prepared to make some concessions.’’

Those concessions, or incentives, include paying closing costs — which can be several thousand dollars — and making home improvements if the dwelling isn't already in top shape.

A recent advertisement in the Ledger-Enquirer showed builders at The Grove at Ridgebrook subdivision south of Phenix City offering zero closing costs and no payments for six months. Or buyers can receive $13,000 in incentives, with military people getting an additional $2,000 discount. Agents hope worst is behind them

Clegg does think the worst is behind the housing market. He predicts prices will hold steady in 2008, then begin to rise. Lower interest rates and other factors, such as the return of 4,000 3rd Brigade troops from Iraq, should provide a boost. The presidential election, with its change in leadership, could help.

‘‘It's going to create a new mindset and that's really what this is all about,’’ he said. ‘‘If this is the bottom of the curve, that's not bad. I definitely feel we will end ’08 much stronger and more optimistic than we ended ’07.’’

Phenix City's Niles expects business to remain steady this year, with a short spike possible should interest rates slip even lower.

‘‘I see property values remaining consistent,’’ he said. ‘‘We've enjoyed nowhere near California or Florida (price increases), but our prices have probably been increasing 4 or 5 percent, and I think this year they're going to stay consistent with that.’’

Green, meanwhile, points to a CNNMoney.com report in November that forecast Columbus housing price growth of 2.1 percent this year and next. That's higher than the 1.7 percent projected for Atlanta, but lower than the estimated 2.7 percent price growth in Augusta, Ga., and 2.6 percent in Macon, Ga. The index forecasts home prices to rise 2.7 percent in nearby Auburn-Opelika, Ala.

Housing in Georgia traditionally appreciates at a 4 percent rate, said Green, who is convinced that ‘‘now is the time to buy.’’

‘‘There have been very few times when there were low interest rates and the tendency for people to sell at a lower sales price,’’ she said. ‘‘Those two things just never happen at the same time. So it's just a wonderful time. You can negotiate a good buy on a home that you're purchasing and take advantage of lower interest rates.’’

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