Friday, October 25, 2013
Housing sales in Georgetown and Horry counties are on a steady track toward recovery.
This was the message from two real estate industry sales officials, Laura Crowther, CEO of the Coastal Carolina Association of Realtors, and Nick Kremeydas, CEO of the South Carolina Realtors Association, for the Rotary Club of Georgetown and guests at a Tuesday, Oct. 22, luncheon at Land's End Restaurant.
While the exact course of the real estate correction is unknown, these are some positive indicators:
• Lower inventory because new construction of housing is at a 50-year low.
• Sales increasing as indicated by more closings conducted.
• Prices rebounding because distressed property levels continue to decline, giving way to a modest uptrend in home values.
• Interest rates remain low by historical averages and rates are expected to tick up only slightly.
• Mortgage applications are on the rise.
Kremeydas, a resident of Florence County, said South Carolina and the entire country are at a 50-year low for new construction permits.
“Our friends in the housing industry have felt the impact of the recession and the downturn of real estate more than anybody,” he said.
“Construction seems to be starting to rebound. The medium residential price is $157,000. We've seen slow, steady and more sustainable growth over the last two years. We've had 24 straight months of improving numbers.”
Crowther, who is the wife of Georgetown Rotarian Bill Crowther, said it's better now for real estate in Horry and Georgetown counties.
“Our inventory is decreasing and the best part of that decrease is that we have fewer distressed sales — fewer distressed properties,” she said.
“We have fewer forced closings and fewer short sales. The reason that is so good for our markets is these distressed properties were bringing down the value of the non-distressed sale of property.”
“Non-distressed properties are beginning to come on the market as people are beginning to see a little light at the end of the tunnel now. For example, I think the folks in Andrews are taking advantage of that,” Crowther said.
“The closed sales are down a little but we love that the numbers of year-to-date have 18 closed sales versus 12. So in the grand scheme of things, that's not a huge shift. But the really good thing in Andrews is that the medium price is going up to $72,500.”
Crowther said listings for the year to date are down some for Georgetown compared to a year ago at this time. “Our closed sales are up 32 percent,” she said. These are the excellent numbers we're looking for, plus our medium residential prices are up 19 percent. Year to date for the Pawleys and Litchfield area is about zero, so we did not increase but we're holding steady. The closed sales are up eight percent and the medium price level is up a little over seven percent.”
Crowther said Carolina Forest real estate in Horry County is growing. “By leaps and bounds, the prices are escalating pretty heavily,” Crowther said. “Other areas like Garden City and Surfside Beach are doing well. The prices are not rebounding at that level, but we're still doing much better.”
“Although interest rates have come up a little bit, we still expect to see such rates through May at historically low levels over the next couple of years,” she said. “The factors are there for people that really want to get into the market or maybe have been sitting on the sidelines.”
“Maybe folks couldn't do this several years ago when the market was at its peak,” Crowther said. “We (now) have people making an investment here or buying second homes in Georgetown County.”
Factors that could adversely affect this steady growth:
n Possible loss of 30-year mortgages, which could be replaced by shorter term adjustable mortgages from banks.
n National Flood Insurance premium increases are coming and the impact of this is unknown, but rates probably will go up more than 20 percent.
n Mortgage interest deduction on income tax could be targeted as the U.S. Congress looks at revamping deductions and perhaps eliminating deductions for second residences.
Kremeydas said his industry is fighting to preserve two government-sponsored enterprises, Fannie Mae (Federal National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage Corporation). “Canadians have no such 30-year mortgages — they can only qualify for five and 10-year adjustable rate mortgages.”
He said South Carolina has the third highest per capita numbers of national flood insurance policies in the country — below California and Florida.
“There are over 200,000 policy holders in our state. Guess where the concentration is for these policies — the coast,” he said.
Kremeydas said the U.S. Congress last summer passed a five-year re-authorization to get the Federal Emergency Management Agency (FEMA) program back on its feet. “Sandy and Katrina hurricanes devastated the program financially putting it $40 billion in the hole,” Kremeydas said. “They came up with this legislation last summer to help eliminate the need for (Federal) subsidies.”
“Depending on your property and on what flood zone that you're in, it could be a serious time. We have seen property owners who were paying $1,400 in annual premiums with the new potential buyer being quoted a $14,000 yearly amount on the same land.”
FEMA flood hazard zones are identified as a Special Flood Hazard Area (SFHA) — the area expected to have a one percent chance to be inundated by a 100-year flood event.
Crowther said the Federal government is looking at property tax reform. “We're interested in following this to see what's on the table,” she said.
“We don't know what that's going to mean. Will mortgage interest on a second home no longer be deductible?”