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Mississippi homes sales good despite increasing interest rates

Karen Glass

Rob Crosby

Dorothy Thompson

By BECKY GILLETTE

Predictions that the housing market in Mississippi would be good for both buyers and sellers this year apparently have been borne out despite higher mortgage interest rates and concerns about a short supply of homes available for sale, particularly in the affordable range.

Mississippi Realtors President for 2018, Karen Glass, who is also a managing broker for Coldwell Banker Alfonso Realty, Inc., Gulfport, said this has been a good year for home sales in the state. For the majority of the year, it has been a seller’s market.

“Some areas have experienced a lack of inventory, but not in all price ranges,” Glass said. “Houses under $250,000 are in demand and sell quickly.  Houses under $150,000 are desirable to both purchasers and investors so they not only sell quickly, they often have multiple purchase offers submitted.”

Kris Davis

John Travis

Glass said that thus far, the increase in mortgage interest rates does not appear to have impacted purchasers who want to buy in her area.  Qualified buyers are still able to obtain affordable loans.

Mississippi is fortunate to have home prices that are more economical than in many other areas of the country, said John Travis, president, Homebuilders Association of Mississippi.

“The home building industry has been steady in Mississippi,” Travis said. “It is not like the Texas or Dallas market, but our building has been steady. The $200,000 homes, we can’t build enough of them if you can even build them for $200,000.”

Smaller homes are in demand. Travis said the larger the home is, the more days the house is going to sit on the market.

“The upside of this is because our pricing on houses is average, not really high like California or other areas. If there is ever a downturn in the market, Mississippi won’t feel the effect as much,” Travis said. “We do have a shortage with our starter homes. But, again, you can’t build a $200,000 home in other areas. In California, it might be twice that much for the same home. It is very expensive to live in California. New York is another place the cost of housing is high. We are fortunate to live in a state where the housing in more affordable.”

Mississippi Realtors 2018 Central District Vice-President Dorothy Thompson, who is a broker at DST Realty Inc. in Jackson, said buyers are looking for amenities and not necessarily square footage.

“Also, buyers are looking for homes in areas close to community conveniences,” she said. “Realtors encourage homebuyers to search the public websites BuyInMississippi.com and Realtor.com where the active listing information is current and accurate.”

Thompson said the higher interest rates for mortgages are having an impact, especially for first-time buyers.

“Higher rates might keep buyers from purchasing the home they really want,” Thompson said. “As interest rates go up, the buyer’s ability to borrow money goes down.”

Central Mississippi Realtors President Rod Crosby said closed sales have increased by 6.9 percent over the same time last year averaging 530 closed sales per month.

“These home sales have created jobs,” Crosby said, whose organization has 1,950 members covering ten counties. “Statistics show that for every home sold, two jobs are created.”

Crosby said sales are up and the housing market in their ten-county area is solid.

“In our primary market (Hinds, Madison and Rankin Counties) sales are up 6.5 percent over last year with a median sales price increase of 4.2 percent,” Crosby said.

There has been a decrease in the number of homes for sale over the past three years.

“This trend sometimes results in sellers receiving multiple offers on their properties that translates into higher sales prices,” Crosby said. “Low inventory is good for sellers and not so good for buyers.”

Affordable housing is always an issue. Crosby said buyer’s expectations are high and choices are limited in this market.

“Higher interest rates coupled with student loan debt-to-income ratios are impacting the ability for first time buyers to obtain loans,” he said.

The website for Central Mississippi Realtors (https://cmr.realtor/) says although residential real estate should continue along a mostly positive line for the rest of the year, rising prices and interest rates coupled with salary stagnation and a generational trend toward home purchase delay or even disinterest could create an environment of declining sales.

Mississippi Realtors Treasurer Kris Davis, who lives in Columbus, said 2018 has been a great year in their area. Within the Greater Golden Triangle MLS (which includes Starkville, Columbus, West Point, and surrounding areas), her year-to-date sales for 2018 indicate positive growth.

“We’ve seen an approximate 12 percent increase in sales volume and 144 units over 2017,” said Davis, who is a broker/owner of RE/MAX Partners in Starkville and Columbus. “Our sales volume for this year is $55 million higher than last year, $471 million versus $416 million for the same period in 2017.  We have also seen the average sales price increase from $138,400 in 2017 to $148,400 in 2018.”

There have been some declines in inventory.  Three years ago, their MLS traditionally had 850 listings at any given time.  This year they have been averaging around 675, which includes residential, commercial, land and multi-family properties.  Lower inventory has caused a decline in days on the market, where in 2016 the average was 164, the average for 2018 is 112.

Davis said starter homes in their market tend to begin around the $120,000 price range, but these are limited in availability. “This has forced some of our first-time buyers to step up to the $150,000-$200,000 price range, which can strain their budget,” she said.

While they haven’t seen higher interest rates slowing down sales, Davis said there may be an impact on the purchase price that a buyer can ultimately afford on their budget because of a higher monthly payment.

Another trend in the Golden Triangle area is a steady decline in the number of residential foreclosures in the MLS over the past three years. Davis said in 2016, our MLS had roughly 190 foreclosure listings year-to-date where in 2018 there have been only 120.

Increases in flood insurance premiums has impacted some homes in flood zones. “This has produced some challenges in selling homes in flood zones due to the increase in monthly payments and fears related to future resale ability,” Davis said.

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