Area real estate gains continue, but no one’s looking for Bubble, the sequel

sjones@thesunnews.comJune 15, 2013 

— Single-family home sales along the Grand Strand in May clipped along at a level not seen since before the Great Recession, but area Realtors said there are enough brakes on the local market that they’re not worried about Bubble, the sequel.

A total of 473 single-family home sales closed in May, according to a monthly market report by SiteTech Systems. That was just 27 fewer homes than closed along the Grand Strand in March 2006 and just 127 fewer than in September 2005, the highest monthly closing tally for the area.

To put that in some perspective, about 300 homes closed along the Grand Strand in January, which was the highest total for a January since 2006. The May closings were 18.3 percent higher than May 2012 and 47.4 percent higher than the same month in 2011.

The area’s real estate market has seen similar January to May increases in the recent past, although not at this level. And in both 2008 and 2010 when there was a steep increase in activity in the first of the year, the climb was followed by a significant drop in July sales.

Realtors and builders have said in recent months that they don’t want to go back to the boom days of 2005 and 2006. But they don’t think that the current peak will lead to the bad ole’ days when buyers could get real estate information from grocery store bag boys, as Epp Lee of Scalise Realty put it.

“Things are better,” he said, echoing the words of Realtors throughout the area, “but by no stretch is it frenzy crazy.”

Laura Crowther, CEO of the Coastal Carolinas Association of Realtors, said she thinks that much of the current activity is driven by second-home buyers who waited impatiently through the recession and are now stepping back into the market.

Additionally, said Marvin Heyd, CEO of Prudential Myrtle Beach Real Estate, buyers feel like prices likely have gone as low as they will go in the current cycle and are listening to reports that interest rates might begin to rise. They want to buy while there are still good deals on the buying end of the spectrum.

“I think what we are seeing is we’re getting back to a normal market,” Heyd said.

Lee said that the rise in interest rates could be a bigger motivator than the increase in prices. Average fixed mortgages rates have risen for six consecutive weeks, with the rate on the 30-year loan at 3.98 percent -- the highest since April 2012.

“All of a sudden what they were going to buy, what they were going to spend [will cost them more in interest],” he said, “it has an effect.”

Lee said that higher interest rates could lead to buyers having to look for smaller, less expensive homes.

SiteTech’s May market report also showed listings of distressed homes were down 31.1 percent from last year, and median sales prices continued rising. May’s median sales price for a single-family home was $190,000, a solid $20,000 above May 2012 and about $12,500 above the average median sales price for the first five months of this year.

The drop in distressed home inventory will tend to push up prices of non-distressed homes, and as pent-up sellers are watching the price increases, more traditionally-listed homes are coming on the market.

Crowther said she expects the significant increases in activity will soften somewhat as the pool of pent-up buyers are satisfied.

Lee said that the relative lack of investors in the current market will be a brake on overheating.

“I think it’s good, legitimate buys,” he said.

He said that parts of Arizona may already be experiencing overheated markets, but he doesn’t believe it’s likely on the Grand Strand.

Heyd said there are still 12 months inventory left for short sales and foreclosures, which will hold down price pressures in the traditional market.

He said he expects a steadily improving housing market this year and next. In 2014, he sees a buyers’ market emerging from the dregs of the recession, and in 2015, he believes that activity will pick up more speed and that prices will return to what they were in 2004 to 2005.

But while he’s got an eye to the future, he’s enjoying the present.

“Right now,” he said, “all the Realtors are smiling.”

Contact STEVE JONES at 444-1765.

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