After two years of steady increases, the sales market for Columbia area homes is returning to normal as power shifts back to sellers, industry professionals say.
Home sales slipped in February but prices rose in the Midlands and throughout the state, according to a report released Friday by the S.C. Realtors trade group.
“We really have kind of slipped over into a sellers’ market again. A lot of that stuff that was hanging around in the market forever has been bought up,” said John Covert, a Blythewood-based custom home builder and remodeler who is president of the Home Builders Association of Greater Columbia.
The shift comes just as the spring-selling season is set to begin. Traditionally, home sales heat up in the spring and early summer as the weather improves and many consumers look to move during the school break.
Hoping to capitalize, the builders are putting on their annual Carolina Classic Home & Garden Show this weekend at the State Fairgrounds. One indication that home-selling outlook has improved? The group nearly sold out of booths this year “for the first time in a long time,” Covert said
“The show is bigger again finally,” he said, as business blooms again for many in the business.
Home sales in the Midlands bottomed out in 2011, following the worst recession since the Great Depression. Sales have risen steadily over the past two years. But part of that increase was due to distressed sales, including foreclosures. In recent months, sales have hit a snag, declining three out of the past four months when compared to the same months the previous year.
Some of the recent decline also could be due to an unusually harsh winter that may have put some home sales on ice in the Columbia area and throughout South Carolina.
“We just got killed with two weeks of snow,” Covert said. “We can’t do anything with snow on the roofs.”
In February, sales fell 7.8 percent to 535 homes in the Midlands, compared to February 2013, according to the S.C. Realtors data. Statewide, sales dipped 2.9 percent to 3,813 with more than half of the state’s 16 regions showing declines.
On a positive note, however, home prices largely rose throughout the state.
The median price – the point at which half of the homes sold for more and half for less – rose 5.1 percent in South Carolina in February to $152,931, compared to the same month a year ago. In the Columbia area, the median price rose 3 percent to $137,026.
“The economy is still in recovery mode, and real estate is going to continue to be up and down,” S.C. Realtors chief executive Nick Kremydas said. “The fundamentals are still strong.”
A slow and steady recovery helps the market avoid big fluctuations, which can be harmful, he said.
“I think we can stop talking about a recovering housing market and start talking about a more normal market,” he said.
Other key factors suggest the home-sales market is settling down after two years of growth:
• New listings sank 10 percent to 1,243 in the Midlands in February, compared to the same month the previous year, meaning fewer homeowners were willing or forced to put their homes on the market last month, reducing the inventory available to interested home buyers.
• Pending sales – sales in which a contract has been signed but the sale has not been completed – slipped 4 percent to 691. A dip in pending sales is an indication that sales in the coming months could be slower.
• The Columbia market had about an 8.6-month supply of homes for sale in February, giving a sense of balance to what has been a buyers’ market – with more homes for sale than buyers – for the better part of a decade. The level last February was 10.5 months, and it was 13.2 months in February 2012. Typically, industry experts consider about a six-month supply of homes to be a balanced market.
• Permits issued for building new houses in Richland, Lexington and Kershaw counties also have declined.
Permits sunk about 13 percent in the first two months of the year to 446, compared to the same period in 2013. But they are still above 2011 and 2012 levels.
“It had shrunk wildly over the past five years, and all of a sudden there’s all this pent-up demand,” Covert said.
For example, housing in the $250,000-price range is “on fire,” Covert said. “They just can’t build them fast enough.”
Part of the problem, Covert said, is builders can’t get enough subcontractors to help them build new homes because many of those workers got out of the business during the Great Recession and have stayed out. In response, the Builders Association is working with high school students to get them interested in the building trade.
Realtors also are optimistic, Kremydas said, in part because of continued historically low interest rates, which stood at an average of 4.37 percent this week for a 30-year, fixed-rate loan, according to mortgage buyer Freddie Mac.
“Overall, we’re feeling pretty good about where we are,” he said.
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