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Sunday, Jul. 26, 2009

A new normal: Residential real estate down considerably in Houston, Bibb counties

Home sales in Bibb and Houston counties have continued to take a hit, though recent national reports suggest the real estate market overall may be improving.

Despite unusually low interest rates, 1,846 houses sold in Bibb County in 2006 compared to 1,290 in 2008, according to local listing agencies. In Houston County, 3,299 houses sold in 2006 compared to 2,173 in 2008.

This year, through the end of June, 525 houses have sold in Bibb County and 995 in Houston County.

Macon attorney Frank Horne Jr., who specializes in real estate work, said his firm first began seeing a decrease in home sales in October 2006.

“The bottom fell out in 2008 and 2009,” Horne said. “Where we were doing 100 to 150 closings a month, we’re probably doing 20 to 50 closings a month now. I’m finding that true with everybody in real estate that I’ve talked to.”

Adding to the downward trend, new and existing homes sporting a “for sale” sign are staying on the market longer, adding to a much larger inventory.

In 2006, a house in Bibb County stayed on the market an average of 134 days before it sold, compared to an average of 156 days through the end of June this year. A house for sale in Houston County stayed on the market an average of 90 days in 2006 versus an average of 109 days this year, according to Multiple Listing Service data.

While the inventory of houses on the market is way up — creating a strong buyer’s market — getting financing is challenging for some buyers. And some potential buyers are nervous about taking the plunge, as uneasiness about unemployment remains a concern.

The lending process “has tightened up,” said Elaine Lee, senior vice president of residential sales with Fickling & Co. in Warner Robins. “What used to take 30 days to close is now taking 45 to 60 days.”

But Lee is encouraged by a recent increase in sales activity.

“People are realizing that investing in a home is a good idea,” she said.

INCENTIVES AVAILABLE

Several incentives are available to help encourage buyers to buy. The federal government is offering up to a $8,000 tax credit for new home buyers purchasing before Dec. 1 this year. The state of Georgia is offering a $1,800 tax credit for anyone who buys a house June 1-Nov. 30. A program through the state Department of Community Affairs, called Georgia Dream Homeownership Program, is for people with low-to-moderate incomes and offers fixed, low-interest-rate mortgage loans.

Dale Washburn, principal broker with Washburn & Associates in Macon, said it appears the federal first-time home buyer tax credit is prompting some increase in activity. He closed two sales last month and has one under contract that will use the tax credit, he said.

“People are beginning to understand it I think.”

Most real estate experts say it’s time for a new normal in the real estate market. The days of easy money and lax lending practices that caused many of the problems in the marketplace are gone — and that’s not a bad thing, they say.

“The financing is certainly more difficult” than a few years ago,” Washburn said. “But we certainly don’t want people to think they can’t borrow money. ... Money is still very cheap. You do not have to have perfect credit. That’s a misconception. Even credit with some dings in it can get FHA financing, and we’re seeing a lot of FHA financing.”

On the other hand, Washburn acknowledges that people are nervous about the economy.

“No doubt about it, we are certainly in a recession,” he said. “There is no question that people are afraid because of their jobs. Unemployment numbers are very high.”

But some people who don’t own a home now can have a mortgage payment for probably less than their rent, he said.

Jimmy Williams of Jones County is looking to move from a rental to home ownership, mainly because his family of six has outgrown apartment life. Also, he wants to take advantage of the first-time home buyer credit, he said.

Williams found a house that was headed to a foreclosure auction. But after he learned he’d have to pay $5,000 up front, that house is no longer an option, he said.

Even though Williams is pre-approved for a loan, he’s “a little concerned” about getting through the lending process because he’s self-employed, and mortgagers require a lot more paperwork.

“It is an emotional ride,” he said.

UNEMPLOYMENT AND FORECLOSURES AFFECT MARKET

The unemployment rate for Georgia hit 10.1 percent in June, and the state lost more than 209,000 jobs between June 2008 and July 2009 — a 5 percent decrease, according to the Georgia Department of Labor.

Georgia also is among the top 10 states with the highest foreclosure rates, foreclosure listing service RealtyTrac reported this month. Across the nation, more than 1.5 million homes were affected by foreclosure in the first six months of the year.

Most people in the country say that having enough money to put down is the biggest obstacle to buying a home, according to the 2009 National Housing Pulse Survey released this month by the National Association of Realtors.

“Homeownership is an investment in your future; however, saving for a down payment and closing costs is still too great of an obstacle for 82 percent of house hunters looking to take advantage of the current market,” said Charles McMillan, president of the National Association of Realtors in a statement.

Gwen Giles, broker/owner of Golden Key Realty in Warner Robins, remains optimistic. She said her company is holding onto its market share, even though the market is lower than last year.

“The main differences we’re seeing is there are some complications with the mortgage lending requirements, and appraisals have certainly been affected, and so we are cautioning sellers to price realistically,” Giles said. “If they are not serious sellers, this is not a market they want to be a player in.”

The current situation, she said, is not a buyer’s market or a seller’s market.

“It’s a challenging market. Of course what everybody needs to keep in mind is that two years prior to this year were unbelievably good.”

Giles agrees that perhaps that good period of buying and selling was out of proportion. Buyers and sellers are more cautious during this recession, she said.

“I think that’s probably a good thing overall,” she said. “This is a good cleansing time for our nation. I think we had gotten a little too far out there. People have lived above and beyond their means, and we need to pull back. I think we are going to come out on the other side of this and be stronger and better.”

Eric Hunt, who recently moved from a house off Forest Hill Avenue in Macon to Juliette, said his situation was probably unusual for the current market.

“My house sold in two days,” said Hunt, a Macon trial lawyer. “I bought it seven years ago and I made a profit on it.”

The house sold for $114,000, which for some people could result in a mortgage payment that is about the same as monthly rent, he said.

Hunt and his wife looked for a house for a year before buying.

“I found that many of the houses on the market in our price range (when he began looking) were still on the market when we bought the house,” Hunt said.

NEW BUILDING PERMITS CONTINUE TO SLIDE

Perhaps more striking than the decrease in home sales is the decline in the number of new residential building permits that have been issued.

For example, five years ago, 918 building permits were issued in Warner Robins; 337 were issued in 2008. In Macon, 97 permits were issued in 2004, with just 27 in 2008. Through June of this year, only seven building permits had been issued in Macon and 182 in Warner Robins.

For many builders, the days of constructing a home without having a buyer have nearly stopped. Many of those homes are part of the excess inventory on the market.

But one Macon builder is bucking that trend.

Troy Moxley, co-owner of Klassix Home Designs Inc., is building seven homes in the Providence subdivision off Bass Road in north Bibb County. Five of those homes do not have buyers yet, he said.

Why is he taking the risk?

“Because nobody else is doing it,” Moxley said, adding that he wasn’t worried about selling the houses. “Nah, we’ll come out of it. We’ll be all right.” The price of his homes are $270,000 to $300,000, he said.

There is some indication in the national market that things are improving.

Pending home sales showed an upward trend, rising the past four consecutive months, according to the National Association of Realtors. The last time there were four consecutive months of gains was in October 2004.

The Realtors association also reported last week that sales of previously occupied homes rose for the third straight month. In addition, foreclosures and housing inventories both declined, according to association, suggesting the market might be turning.

Horne, the Macon attorney, said that when the housing industry levels out, it will look different than it did a few years ago.

“I don’t think we’ll see the go-go economy again in America that we saw in the past,” Horne said. “I think there is a lesson learned this time, and I think everybody is aware that they are going to change their goals and objectives going forward.”

To contact writer Linda S. Morris, call 744-4223.