By BECKY GILLETTE
Nationwide, existing home sales dropped 2.3 percent in April, according to the National Association of Realtors (NAR). That was pegged to lower availability rather than lack of demand. NAR said the total number of homes for sale has dropped 9 percent in the past year.
“Nationally, low inventory is a hot topic,” said David M. Griffith, 2017 president, Mississippi Realtors, a broker and appraiser with Griffith Real Estate Inc. in Cleveland. “As inventory declines, buyers compete for the few units available, which drives up prices. Since [fewer] homes are listed for sale, [fewer] homes are selling, and they are selling at a higher price. As NAR Chief Economist Lawrence Yun said, ‘Sellers are in the driver’s seat this spring as the intense competition for the few homes for sale is forcing many buyers to be aggressive in their offers’.”
While the South sometimes lags behind other areas of the country in economic indicators, it was the only region in the country to see an uptick in pending home sales in March, Griffith said.
“In Mississippi, our markets seem to be doing well,” he said. “I travel around the state meeting with local Realtors boards, I hear how much activity their markets are seeing. On the Gulf Coast, for instance, there were 2,057 home sales through May 2017. There 1,778 during the same time frame in 2016. Through May 2017, there were 3,529 new home listings, up about 500 from with 3,025 through May 2016. In the Jackson area, new listings are up 1.3 percent with 3,881 year-to-day. Closed sales are up 4.9 percent with 2,359 year-to-date. The median sales price is up 3.3 percent at $170,000.”
In some areas across the state, including his area, Cleveland, there are buyers, but more inventory is needed.
“One possible reason for this is the need of new construction in these areas,” Griffith said. “Another is the uncertainty factor about what’s happening nationally. Potential sellers are staying in their current homes rather than selling them and moving up to a bigger or more expensive home.”
Based on information provided by Realtor.com, prices are rising in many areas.
Home Builders Association of Mississippi Executive Vice President/Executive Officer Shannon Coker said while nationwide sales of new homes were lower in April after three consecutive monthly increases, the April reading was closely inline with 2016.
“However, in the Southern region, sales of new homes over the first four months of the year have been a bit more choppy, fluctuating between 331,000 and 347,000, with the April 2017 reading for the South region being 4.1 percent higher than its April 2016 number,” Coker said. “That being said, home sales are, to some extent, conditional on the number of homes available for sale, and the inventory of new homes remains below the six-month level, suggesting low inventory. The challenges faced by home builders are probably contributing to the low inventory and dampening the performance of new home sales.”
Nationwide, labor costs and availability, lot costs and availability, and inspection fees are key challenges faced by the industry. Coker said recent policy affecting building materials prices, as well the slowdown in growth of acquisition, development and construction debt financing, are also keeping expectations for growth lower by holding back housing starts.
Coker said Mississippi is moving closer to the 2000-2003 average annual number of housing starts. At the low of the recession era, home starts in Mississippi were 49 percent of normal.
Cynthia S. Joachim, broker associate, Caldwell Banker Alphonso Realty, Inc., Gulfport, said both in Mississippi and nationwide, real estate markets are continuing to rebound.
“The coastal market has seen dramatic increases in home sales in the past two years and what is interesting is it is working in both ends of the market, housing under $100,000 and new construction, custom-built houses and housing in the seven figure sales prices,” Joachim said. “The coastal counties have sold more homes under $100,000 in the past 18 months than in the first three years of the housing slump. Our worry about that now is that we are seeing future homeowners buying to occupy a home now having to compete with investors and second home buyers. The investors can usually pay cash and that puts a home buyer in a difficult, as well as a different, position.”
Joachim said builders are trying to meet demand for new housing in their price points and there is little inventory in upper end homes.
“Seven figure house sales no longer surprise the real estate market,” she said. “Certainly we know that after the housing slump, it’s hard to fall off the floor. So, the only place to go is up, and up it has gone.”
Mississippi does not have the economic drivers that the other “sand” states enjoy, including Florida, Alabama, Georgia, Texas and California. Joachim said many of the markets in these states are either out of inventory or in multiple-offer scenarios which drive the prices higher.
“What drives real estate growth is jobs,” she said. “If we can keep jobs and development coming, we should be able to sustain our housing markets.”
One area of the market that is still troublesome is undeveloped land and lot sales. Joachim said there are thousands of lots and land parcels for sale, many of them still on the market from Katrina. But she said more of these have been selling lately, including some on the market 10 to 12 years.
“All of this good cheer does not alter the fact that real estate is still a tough business,” Joachim said. “It’s harder to keep people in deals, financing is not easy and the Coastal counties are not without challenges. Insurance, building codes and FEMA are hurdles to overcome, but the mayors are upbeat in their interviews and reporting.”