Goodbye, Great Recession.
Hello, housing recovery.
After years of stagnation, Midlands builders are gearing up to finish neighborhoods that sat half-full for five years as the Great Recession and its aftereffects raged. They also are building new neighborhoods in hot spots throughout the region.
But home buyers will benefit from a super-competitive environment among builders that promises to heat up in Columbia in 2013.
Theres only one thing that matters to the new home buyer today, and thats price, said Wade McGuinn, owner of McGuinn Homes in Lexington. But once they settle on the price, they want everything. Its whoever can give it to you.
Builders are planning to give buyers whatever they want this year from central vacuums in $150,000 houses to a pick-your-own amenities list as they build on their success in 2012 and the Columbia real estate market starts to bounce back.
From small, family-owned operations like McGuinn Homes to large national companies like D.R. Horton, builders are bullish on the Midlands market this year.
They feel good about the Columbia market going forward, said Earl McLeod, executive director of the Home Builders Association of Greater Columbia. We would certainly agree. We feel better about it than we have in the past few years.
And home buyers can expect the stiff competition to make sales to bring them better deals and more extras in a market where they already are in the drivers seat.
Theyre going to shop til they drop to make sure they get the best $141,000 they can get if thats their price point, McGuinn said. A luxury buyer now wants a value, and a value buyer wants a better value.
Goal is to be ... No. 1
D.R. Horton is one of the builders expanding in the Midlands, buying hundreds of lots in the Columbia market.
From Cobblestone Park in Blythewood to Eagles Rest in Chapin, the builder is entering at least a half-dozen neighborhoods with prices ranging from $150,000 to $500,000 and above.
As we see a good value, we purchase (lots), said Doug Brown, president for the companys Charlotte-Columbia division. We think its a good market.
The national builder took out permits to build 93 homes in the Columbia market in 2012, according to a permit report from the Home Builders Association of Greater Columbia. That ranked it seventh in local market share.
Our goal is to be the No. 1 builder in the Columbia market, Brown said. We do want to be the best-value and the best-quality home builder in the Columbia market.
Horton faces stiff competition, from a range of other builders boosting their construction. Permits for new homes in the Midlands rose 25 percent last year from 2011, one of the worst years on record for real estate in Columbia.
Mungo Homes, currently the top builder in the market, took out 518 permits for new homes last year, up from 281 in 2011 an 84 percent increase.
McGuinn Homes, fifth in market share, took out 186 permits, a 75 percent increase over 2011. Wade McGuinn says he plans to grow his company by at least another 25 percent this year with development spreading from his stronghold in Lexington to Southeast Columbia, Kershaw County, Northeast Richland and the Dutch Fork area.
And Fortress Builders, started in 2010 by Bill Sinnett and Tim Kearn, took out 92 permits in 2012 a 119 percent increase over 2011.
Were getting pretty aggressive, said Sinnett, who expects to grow another 40 percent this year.
Once idle, now busy
Sinnett cited Hunters Run in Blythewood, where several companies are building homes, as an indication of the upswing in new construction.
The neighborhood where prices range from the $190,000s to the $280,000s had been sitting idle for close to seven years, he said.
We were one of the first builders in there in 2012, Sinnett said. And weve done really well.
Fortress also is building in Chapin and Lexington, and will build a new neighborhood of its own on Langford Road in Blythewood this year with more than 100 lots and prices ranging from the $170,000s to the $250,000s.
Being tenacious and coming up with innovative products are the ways to be competitive in the marketplace, Sinnett said.
All of Fortress homes come with central vacuums, a feature previously reserved for $300,000-plus homes, Sinnett said. Were putting it in a $150,000 house.
Buyers also now are getting premium features, such as hardwood floors and crown molding, in lower-priced homes, he said.
Coupled with interest rates that have been historically low for at least a year, the best time to buy a house is now because its not going to get much better, Sinnett said.
Mom and pop ... just gone
A recovery in the housing market would be a big boost to the local economy. Home building is labor intensive. But home building creates jobs in other areas as well -- from lending to attorneys fees to furniture and appliance sales.
Builders, however, will face challenges in the years ahead from tighter lending rules for lot development to the slowly growing economy that could end up narrowing options for home buyers.
We are, technically, out of lots in Columbia, McGuinn said. It creates a whole other layer of financial difficulty. There are not going to be people out there building lots for builders like there were in the boom days of the local housing market from 2004 through 2007.
The scarcity of new subdivisions means small builders many of whom already have exited the market will have to have their own funding to build lots because lenders still see real estate development as too much of a risk, McGuinn said.
The barrier to being in our business has gotten so high, he said. Every day, (it) gets higher.
Large banks, for example, will not lend less than $10 million to builders and even regional banks set the minimum at $4 million, McGuinn said. That refusal to make smaller loans will push out smaller builders, who lack their own financing, he said.
The mom-and-pop operation is just gone, he said.
Not a boom
In 2006, the Top 12 builders in the Midlands all took out more than 100 permits each. In 2012, only the Top Six builders did.
The struggling economy also will be a factor in the recovery, McLeod said.
While the jobless rate in South Carolina has been declining steadily in recent months, it still is an elevated 8.3 percent and many still are struggling to find work. Still, the rate is down significantly from its peak of 12 percent in late 2009. And as more people have found work, they have jumped on ultra-low interest rate and good deals on homes.
Sales for all homes in the Columbia area rose to 6,990 through the first 11 months of 2012, up 18 percent compared to the same period in 2011, according to the S.C. Realtors trade group.
But some are still hesitant as the national economy wobbles unsteadily.
We thought the looming fiscal cliff would be resolved, and its only, in many ways, been delayed so that still is a big question mark going forward in terms of the housing recovery, McLeod said.
While Congress and the White House reached an agreement to avoid tax increases that would have kicked in at the beginning of the year, they delayed decisions on massive spending cuts.
Put that aside and the conditions are in place for a continued recovery, not a boom-type environment but certainly a steady increase, McLeod said.