Business is so good at Classic Homes that Berkley White, its vice president, is about ready to declare victory over the Great Recession.
“(This year) is significantly better than 2011,” said White, who is also president of the Horry-Georgetown Homebuilders Association, “and I think 2013 will be better than 2012.”
In fact, he said if business continues to improve at that rate, home construction in just a couple of years should be at the same level as it was in 2003-04, when it was very good. He said, on average, builders are reporting a 30 percent to 40 percent increase in business from last year to this year.
Those numbers are in line with the 41.9 percent increase in residential construction nationally in October 2012 versus October 2011 recently reported by the U.S. Commerce Department. Housing starts, which rose to their highest rate in more than four years, are now about 40 percent of where they were in January 2006, shortly before the industry began its slide.
Real estate activity also showed a one-year comparative growth in October, although at rates below those reported for construction, according to the National Association of Realtors.
Existing home sales – those where closings have taken place – rose 10.9 percent in October over the previous year to a seasonally-adjusted annual rate of 4.79 million completed transactions. Distressed homes – foreclosures and short sales – accounted for 24 percent of the activity this October versus 28 percent in October 2011.
Among other things, the Realtors association attributes the increased sales to steady job creation and rising consumer confidence, two factors that were key in the decision of Lauren Clever and her husband to start construction on a new home for them and their family.
Clever said the decision was helped, at least in part, by the increase in home construction in Berkshire Forest, the community where she lives in Carolina Forest.
“It was quiet,” Clever described the lack of home building in the neighborhood until recently. “You didn’t see anything and all of a sudden all sorts of trucks were coming through (on the way to building sites).”
The Clevers left Myrtle Beach a few years ago for Charleston where they rented and continued payments on a home they had built when they first moved to the Grand Strand. Then the economy fell into a hole, and double housing payments became too burdensome, forcing them to sell their house here through a short sale. They continued to rent when they moved back to Horry County.
After paying off bills and a new job for her, Lauren Clever and her husband felt their finances were back on a solid foundation. The time was right to take advantage of record low financing rates and buy a permanent home. Lauren Clever said they at first looked at existing homes, but found that all the choices needed updating. Then they happened on a neighborhood in Carolina Forest that matched their tastes and started the process.
Lauren Clever said their new home is in the permitting process now and should be ready to move in about 16 weeks after construction starts.
“I can’t tell you how excited I am,” she said.
While White and Clever are nothing but positive about the direction of the economy, not all share the same level of enthusiasm, despite improved business for them as well.
“We’re busier than we’ve been in a long time,” said Lee Hewitt, a former chairman of the Coastal Carolinas Association of Realtors. But, he added, “There’s still a lot of uncertainty because we don’t know where we’re going to be next year.”
Hewitt said worry about the fiscal cliff and what Congress might to do to avoid it dampens his enthusiasm. He wonders if second home interest deduction will be eliminated, if flood insurance costs will increase and if middle class taxes will go up.
He said that Realtors should have a much better idea in the spring what the immediate future holds for them.
White, though, sees nothing but optimism for the future.
He said that the current surge in activity seems to be fueled by the same people who propelled the area’s homebuilding in 2003-04: retirees.
White said the stock market’s rebound to near pre-recession levels and an improved home market in the Northeast has palms itching to move South.
“They decided they’re ready to retire,” White said.
Most homes now going up are in the $300,000 to $700,000 range, White said. Most people who can afford to build a home at that price don’t really need to borrow money to do it, but at least some are because the cost of borrowing now is less than what they could make by putting the same money into investments.
White said that there are about 100 people who work on every home in the $300,000 to $500,000 range.
The National Association of Realtors reported that the median existing home price was $178,000 in October, 11.1 percent above last year, and the eighth consecutive monthly year-to-year increase.
The last time that happened?
October 2005 to May 2006.