COLUMBIA, SC The housing market is making a comeback in Columbia as sales rise and inventories shrink. But there are some roadblocks that could keep it from rebounding quickly.
Home building permits and sales of new and used homes in the Midlands soared in October, putting the area on pace for its best year since 2008 – just before the Great Recession caused home sales to plunge, along with the broader economy.
But before the celebration begins, a couple of major hurdles – including the federal government’s looming “fiscal cliff” and lending for small builders – must be resolved, said Earl McLeod, executive director for the Home Builders Association of Greater Columbia.
“We’re ready to buy the champagne, but we’re not ready to pop the top,” he said.
Signs that the market is in full recovery mode include:
• Builders took out 234 permits for new homes in October in the Midlands. That is a 40 percent jump from last year and the most new permits through the first 10 months of the year since the same period in 2008, according to a new report from the home builders association.
• Home sales spiked 30 percent in the Columbia area as the inventory of homes on the market slipped to 11 months – nearing a more normal market after peaking in the spring of 2011 at 16.5 months, according to a report Wednesday from the S.C. Realtors trade group. That virtually ties with 2009 – when the housing market was propped up by an $8,000 federal tax credit for first-time home buyers – as the best first 10 months of the year since 2008. Statewide, sales jumped 24 percent and inventory shrank to 10 months.
• Pending sales – in which a contract has been signed but the sale has not been completed – jumped 42 percent in October in the Columbia area. That suggests those sales will close in the coming months, meaning the area should see a strong finish to the year after a dismal 2011.
Russell & Jeffcoat Real Estate – the largest real estate firm based in the Midlands, which represents a range of builders – saw its October sales jump 37 percent, said Ron Roe, the company’s chief executive officer.
“It was the best October we have had in probably seven years,” he said.
Builder incentives had a lot to do with the increase in sales, Russell & Jeffcoat broker Len Ross said. Some builders in the area are paying closing costs for buyers in the $300,000 and above range, he said. And some are touting energy efficient green construction, he said.
The competition with new construction also has caused home sellers to get real on pricing, Ross said.
“I think we’ve seen a change in sellers’ attitudes over the past six months in getting real with their prices, and so they’re getting more competitive,” he said.
That is reflected in the median price of homes sold in the area in October, which was down 6 percent to $139,500 in October. Statewide, the median price remained fairly steady at $149,900.
Homes priced in the $200,001-$300,000 price range sold best in October, according to the report, followed closely by homes in the $100,000 and under range. Homes selling for $300,000 or more performed worst.
“The trend is good,” McLeod said. But, “there are some big question marks remaining. The major question mark, not only for home building but for all businesses, is what happens with the fiscal cliff.”
In January, $1.2 trillion in automatic cuts to the federal budget – known as the fiscal cliff – will kick in if Congress and President Obama do not reach a spending compromise. Some economists predict that could plunge the country back into recession.
That could stymie the housing recovery and hurt small businesses, such as home builders, McLeod said. Smaller builders already are hurting from strict lending standards that are keeping them from building new homes, he said.
But larger regional and national builders are starting to fill out neighborhoods that were left half built during the economic downturn, he said.
And Irmo’s Mungo Homes said it plans to start building new neighborhoods in the Midlands in the coming year on land the company bought seven years ago and never developed, said Steven Mungo, chief executive officer.
“We’re spending a lot of time on planning for tracts that we’ve owned for quite a while that we’ve just had on the shelf,” he said.
It all adds up to a promising 2013, Russell & Jeffcoat’s Roe said.
“What we are seeing now is – we all predict – a real strong demand for new homes during spring and summer of 2013,” Roe said. “The future for the Columbia real estate market is really bright right now.”