January 20, 2010

2009 Columbia home sales down

Despite a surge of home sales in the last few months of the year, 2009 proved to be another sour year for real estate in South Carolina.

Despite a surge of home sales in the last few months of the year, 2009 proved to be another sour year for real estate in South Carolina.

Sales tumbled 10 percent in the Columbia area last year compared with 2008, according to data released by the S.C. Realtors trade group.

Sales statewide slid 8.5 percent.

"Anytime any industry loses 10 percent of its business year-over-year, that's considered a catastrophe," longtime Columbia real estate agent Jay Graham said. "That hurts any industry."

It was the third straight year of declines in home sales statewide and in the Columbia area, including a 21 percent drop last year in the Midlands.

Home prices also suffered last year, as people bought more starter homes and fewer McMansions.

The median sale price in Columbia fell 2.4 percent to $140,000. Statewide, the median price last year dropped 8.4 percent to $141,000.

Many in the real estate community believe this year's numbers could have been much worse without an $8,000 federal tax credit for first-time home buyers that was in place most of the year.

"The federal tax credit had a huge effect," said Karen Yip, an agent with Re/Max Real Estate Services in Northeast Richland. "Over 50 percent of our business last year was in fact with first-time home buyers."

Home sales plummeted 28 percent in the first quarter of the year in Columbia and gradually improved, falling 22 percent in the second quarter and 7 percent in the third quarter.

By the fourth quarter, sales improved 7 percent.

Yip said the area had a late selling season last year as more people became aware of the tax credit and started warming up to it. Typically, sales are strongest in March through August rather than later in the year.

"We really did not get kicking until June or July last year," she said.

But sales did not show improvement in the area until September.

November - when the tax credit originally was set to come to an end - was the biggest month for home sales, with a 69 percent increase in Columbia and 63 percent statewide.

Congress voted to extend the tax credit through this spring and expand it to include a $6,500 credit for many current homeowners who buy.

Homeowners wanting to move are realizing they might not get as much for their home as they might have three years ago, but "that $6,500 tax credit is kind of making up for it," coupled with the discounted price they are likely to get on a new home, she said.

On the other hand, many homeowners are choosing to stay put and refinance their homes because interest rates hover near historic lows, said Leslie Francis, senior vice president of S.C. Bank & Trust.

"We saw more refinance activity than purchase activity," she said, which was unusual considering the low interest rates.

Her bank has seen a slight increase in home buyers looking for mortgages, she said, "but certainly not as much as what one would expect with rates as low as they are."

A recovery is going to depend on a variety of factors, not the least of which is South Carolina's unemployment rate, the third-highest in the nation at 12.3 percent in November .

Mortgage rates also are predicted to rise this year, and there is a push to increase down payment requirements and tighten lending standards for Federal Housing Administration loans, which account for most of the loans in the marketplace. The federal tax credits also will end this spring.

Yip said she is hoping next year's decline in home sales will lessen at least to single digits, but she doesn't expect to see gains again for a while.

"It's going to be a slow climb," Yip said.

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