Housing market begins slow recovery with first increase in sales since 2006
SALISBURY — After home sales increased in 2012 for the first time in six years, Rowan County real estate agents say they believe the local housing market has finally hit bottom and started a slow climb out of the Great Recession.
Although the housing market continues to face challenges, agents are encouraged by steady improvements locally and industry-wide, said Cindy Ehrman, outgoing president of the Salisbury-Rowan Association of Realtors Inc.
“I feel good about 2013 because of the trend of the last six months,” Ehrman said. “We are going to continue to grow.”
At least 405 single-family homes, condos and townhomes sold in Rowan County in 2012, including 290 in the past six months. That’s up 8 percent from the 376 homes sold in 2011, according to the Salisbury-Rowan Association of Realtors’ Multiple Listing Service.
While the increase was slight, 2012 marked the first year that home sales have risen at all since 2006, when 1,013 homes were sold.
“We’re seeing an increase in sales and it’s steady. Slow, but it’s steady,” Ehrman said.
A large portion — about 25 percent — of the homes sold in 2012 were distressed sales, including foreclosures and short sales, when the seller owes more than the house is worth.
Although Apple House Realty Inc. had its best year ever with sales up 50 percent over 2011, owner Jeff Ketner said he is not ready to celebrate. Overall, the local housing market remains very weak, he said.
“I don’t think we are out of the woods by any means,” Ketner said. “As you know, we need jobs in Rowan County.”
The unemployment rate in Rowan was 9.2 percent in November, with 6,655 people out of work.
While home sales increased in the past six months, Ketner said at least half of the homeowners he talked to during that period about selling their homes can’t because they are underwater on their mortgage and owe more than their house is worth.
“There is potential. If we get to a place where prices are starting to improve, a lot of those folks will put their homes on the market,” Ketner said. “But we are still years away from any substantial improvement.”
Homes prices appear to have stabilized after several years of decline. The average selling price in 2012 was $135,000, up slightly from $131,000 the year before. It was Rowan’s first price increase since 2007, when the average selling price was $153,000.
New home construction is showing signs of recovery.
Builders pulled 128 new home construction permits in 2012, up from 87 permits in 2011.
“That’s an increase of 47 percent in just a year,” said Pete Bogle, the county’s building codes enforcement director. “Not bad.”
Inside the city limits, Salisbury has issued seven zoning permits for new homes since August. That’s up from only one or two per year since 2008, said Preston Mitchell, the city’s planning and development services manager.
While housing construction is still very slow citywide, the Gables and Olde Salisbury have seen recent activity, Mitchell said.
Buyers are stirring, concerned that home prices and interest rates, which are at historic lows, may rise in 2013, said Tom Bost, an agent at Bost & Rufty.
“The phones are ringing a lot more in the past few months,” Bost said. “Not that it’s a great, huge jump in sales, but there is a lot of activity right now.”
Buyers continue to request short sales and foreclosures. Distressed sales are a headache for agents, with significantly more rules, regulations and paperwork.
Homes priced below $150,000 are selling the best, and first-time homeowners represent a growing segment of buyers.
More buyers expected
Century 21 had more first-time buyers than in 2011, and owner Dianne Greene said she expects the number to increase again in 2013.
“A lot of them waited to see if interest rates were going to get any lower, but interest rates are about as low as they are going to get,” Greene said. “They are pulling the trigger.”
Century 21’s sales were up 12 percent in 2012, Greene said. About 15 percent of sales were foreclosures, and about four percent were short sales.
Distressed sales will continue to make up a big percentage of the housing market in 2013, Greene said, but they can take up to one year to close. Some buyers are not willing to wait that long, even if it means paying more, she said.
Nationally, a measure of Americans who signed contracts to buy homes increased last month to its highest level in two and a half years, the latest sign of improvement in the once-battered housing market.
The National Association of Realtors said Friday that its seasonally adjusted pending home sales index rose 1.7 percent in November from October to 106.4. That’s the highest since April 2010, when a homebuyer tax credit caused a spike in sales. And after excluding those months when the tax credit was available, it’s the best reading since February 2007.
The increase followed a five percent gain in October and suggests higher sales of previously occupied homes in the coming months. There’s generally a one- to two-month lag between a signed contract and a completed sale.
In November, signed contracts to buy homes rose in the Northeast and West, and ticked up slightly in the Midwest. They were unchanged in the South.
Locally, Ketner said he’s seeing more mortgage loans falling through than ever before. And there continues to be a discrepancy between the sale price and appraised price of many houses, he said.
When a house appraises for less than the contract price, sometimes the buyer will come up with cash to cover the difference, Ketner said. But more often, the seller will take what they can get.
“It’s still as much of a buyer’s market as I’ve ever seen,” said Ketner, whose Apple House Realty was named the Small Business of the Year in 2011 by the Rowan County Chamber of Commerce.
Wallace Realty, the largest real estate agency in Rowan County, saw sales jump 25 percent in 2012, co-owner Victor Wallace said.
“But we were coming off some pretty dismal years,” Wallace said.
Homes sales in Rowan County fell by 40 percent from 2007 through 2009.
“We are starting to come back from an incredibly steep drop in overall sales,” Wallace said. “To get back where we were, we would need a number of years of 25 percent growth.”
While several large real estate agencies saw double-digit sales bumps in 2012, not everyone experienced the start of a recovery. Many real estate agents have called it quits.
Membership in the Salisbury-Rowan Association of Realtors has dropped by 20 percent, Ehrman said. The association has about 150 members, she said.
Several agents said they doubt the market will ever recover to 2007 levels.
“It was a false peak that had been created by unfettered and irresponsible lending,” Wallace said. “Money was being lent to people who couldn’t pay it back. Lenders were just shoveling it out the door.”
Lending standards now are as tough as she’s seen them in her 33-year career, Greene said. Lenders are scrutinizing buyers, who almost always have to put money down on a house.
“The days when you could get a home with no money down are gone,” she said.
Mini-cliffs on horizon
Wallace said the federal government’s fiscal cliff crisis had a smaller impact on home sales than he anticipated, but he’s concerned about three “mini-cliffs” coming up: The debt ceiling in late February-early March, an automatic form of deep spending cuts called sequestration in March and another potential government shutdown at the end of March.
The mini-cliffs, unemployment, natural disasters and more can easily influence the housing market and throw interest rates into chaos, Wallace said.
“When people buy houses, they are confident in the economy and their jobs are secure,” he said. “It’s the outside events that are really hard to predict. There is always the black swan possibility of catastrophic things happening.”
Wallace Realty’s construction company, which had not built a house since 2008, has a house under construction this year in Ashland Place off Shue Road in southern Rowan County, Wallace said. They are also considering building in Granite Commons in Granite Quarry, he said.
“We feel like we’re through the worst of it,” Wallace said. “At least, that’s what we hope.”
The Associated Press contributed to this article.
Contact reporter Emily Ford at 704-797-4264.