For most real estate agents in Mississippi, it is time to hunker down, trim expenses and weather the storm of the subprime mortgage failure disaster.
“We’ve had downtimes in my business, ups and down, but never a downtime that lasted this long,” said Belva Pleasants of Short Street Realty Co., Inc. Greenwood. “I thought this past fall a year ago was as bad as it gets. We said it would get better after Christmas but instead of getting better, it got worse.”
Pleasants has responded by cutting down on office expenses, such as trimming down to one phone line in the office, and reducing advertising.
“We are trying to trim edges to survive,” said Pleasants, who has been in the real estate business since the 1980s. “We’re just tightening our belts. Now people operate on a laptop and cell phone, so we can cut down on office expense.”
Pleasants sees there are good deals out there now for homes in her area. The rates are good and prices, if not down, are certainly not on the rise. But the downside is that it is so hard to get financing right now.
“In the Delta, we were so poverty stricken and depressed already, the national depression just kind of compounded that,” Pleasants said. “People with good credit have no problem getting loans still. The people it is hurting are those with marginal credit scores. The median income here is so low, and we have such a large number of people with questionable credit. People with cash or good credit are still buying. But the others are just having a tough go of it.”
Pleasants said they are continuing to sell homes. She closed on two homes one recent week.
“We’re hanging in there,” she said. “We are still writing contracts. But our volume is nothing like it was a few years back. But there are bargains to be had out there, and rates are good. I’m an eternal optimist. What we need so badly in the Delta is some good paying jobs. That is where we are falling short. School tuition and taxes are high because so many people are not paying taxes. People are moving to areas with good public schools and lower taxes.”
The Delta has some of the lowest home prices in the state. Pleasants said their average home sale price is between $60,000 and $70,000.
“The one bright spot is when home prices all over the U.S. skyrocketed, our home prices never did,” she said. “We didn’t fly that high. So we didn’t have that far to fall. We were more stable than California, Florida and some of those places. We do have more foreclosures in Leflore County than we have ever had before. The foreclosures seem to be on those subprime loans.”
Cindy Litsinger, Litsinger Realty, Madison, said that while the current market is the worst she has seen in since she started in the business 18 years ago, she agrees it isn’t as bad as being seen in many other areas of the country.
“Even with the down market we are in, we are still in an up market compared to a lot of other places. So we are thankful,” Litsinger said. “It is just we have been in an up market for as long as I have been in real estate.”
While belt tightening is in order, Litsinger said they have tried to keep their advertising as usual. They are also spending more time interacting with other realtors to make sure their listings are known by other realtors.
“We are trying to offer all of our clients and customers even better service than we have always had, and my company has been built on good service,” Litsinger said. “And we are keeping a positive attitude that things will turn around soon. We are keeping a positive attitude. Historically after an election, things change. That is what we are hoping happens.”
There is a misconception with the buying public that credit isn’t available. Litsinger thinks that and the “fear of the unknown” are what have stymied the market.
People are bargain shopping for foreclosures, but the Jackson area just doesn’t have nearly as many foreclosures as being seen in some other states. Litsinger is seeing sellers being more flexible with their pricing because of the difficult market.
Every time there is a downturn in the economy, it results in winnowing out the number of real estate agents.
“Everyone thought they were going to make a million in real estate, and got a real estate license,” Litsinger said. “But when you see a downturn, a lot of those people let a license go and move on to something else.”
Dave E. Davis, director of the Maselle Career College, Flowood, said the number of their students has dropped rather significantly—but not as bad as being seen in the states that had the worst fallout from the subprime mortgage failures.
“We dropped, but we still are doing business,” Davis said. “Some schools in other states are really hurting.”
Mark Cumbest, brokenowner Cumbest Realty Inc. of Jackson County, who just completed a term as chairman of the Mississippi Real Estate Commission, said the number of real estate licensees in the state has dropped off. In August of 2007, there were record numbers of licensed agents at 15,000.
“Now we are under that number,” Cumbest said.
Cumbest has a unique perspective on the industry having seen many ebbs and flows since he began in the business in 1975.
“If veterans like me can survive the early 1980s when there were 17, 18 and 19 percent interest rates, this is no real challenge,” Cumbest said. “The toughest time I’ve ever seen in the past 33 years is not now. It was in the 80s when interest rates were so high. People talk about insurance premiums being high today, which they are. But the high rates in the 1980s combined with an economic downturn, too, added all together to make it a tough time.”
Cumbest Realty is a full service real estate firm that does residential, commercial, land and land development. Cumbest said people interested in all four of those categories recognize now is the time to buy.
“There is a lot of property on the market, and good selection in just about every category,” he said. “In real estate investment, timing is everything. Now is a great time to invest whether in a home, commercial property or a piece of land because it is a buyer’s market.
“By and large the entire Gulf Coast is in a lot better shape than the national real estate market. In South Mississippi, we have it a little bit better because employment is still high, and we haven’t seen the subprime lending fiasco because our lenders by and large keep their mortgage paper, which makes them qualify buyers more carefully. The Gulf Coast is benefitting from prudent lending decisions made by lenders. So we don’t have the huge inventories and street after street of foreclosures like seen in other parts of the country.”
There are more than 1,000 homes for sale on the Mississippi Gulf Coast. But Cumbest predicts a major new government-private partnership called Regional Employer Assisted Collaboration for Housing (REACH) will absorb a lot of the existing residential real estate on them market.
With REACH employers offer a $5,000 to $10,000 housing benefit to their employees that is triple matched by REACH, giving qualified employees a total benefit of $20,000 to $40,000 that can be used for down payments and closing costs.
“I think the REACH program is going to be a wonderful help to our area, I really truly do,” Cumbest said.
Farther north in Meridian, one real estate agent reports having two record months this year.
“October has been a record month for me, which is probably unusual for the market,” said Boyd Williams, ownerbroker of Boyd Williams Real Estate Co., Meridian.
Prices are holding pretty steady in Meridian. In fact, Williams sees people from other areas coming to town offering sellers $20,000 to $40,000 less than the asking price.
“They simply aren’t getting homes if they are that unrealistic,” Williams said. “Sellers can’t take that kind of loss.”
Contact MBJ contributing writer Becky Gillette at email@example.com.