Pooler GA Home Prices Not Yet Tied to Inventory

Pooler, GA, is a suburb of Savannah and has been named the fastest growing city in Georgia.    Given that Savannah has the ocean to the east and the Savannah River and South Carolina to the north, any residential growth has occurred in the south/southwest or west.  Pooler, located in West Chatham County, has been the hub of new home construction for the last few years, slowing down a bit during the "real estate bust,” but certainly strengthening now.  Commercial growth in the form of retail, restaurants, and family-oriented recreation have matched pace with the residential growth, making Pooler a highly desirable area for buyer who are searching for new homes.  All in all, home sales have been relatively strong, boosted by the new construction activity.
National real estate industry reports have touted recent price appreciation in markets across the country.  Nevertheless, all real estate is local.  In the Savannah area market, this would translate to hyper-local, with some neighborhoods maintaining price stability and others increasing.   There have always been some basic “rules” governing real estate economics:

• A balanced market is generally defined as having a 6 months’ supply of inventory, i.e., homes available for sale.  The inventory supply is calculated based on how many homes sell in a given month, compared to how many are available.
• During the last few “bust” years, inventory in Savannah area neighborhoods ranged from a low of 12 months’ supply to a high of almost three years’ supply.
• NAR studies show that the turn-around inventory is around 10 months.  In other words, when the supply gets that low, the trajectory of the trend is market recovery.  In the last year, a good number of Savanna neighborhoods hit or surpassed that marker.

Why all the focus on supply of inventory?  It’s basic economics.  When the market is balanced, neither the buyer or seller has dominance in negotiating terms of a sales transaction.  As inventory drops below that 6 month marker, the negotiating power tips to the seller side of the deal because the buyer has fewer homes from which to choose.  Basic supply and demand.  It is during this scenario that prices begin to push higher.  The increase in price and a corresponding increase in the mortgage rates are a one-two punch that affects home affordability.
The interesting thing about Pooler is that it is currently defying the economic “rules.”  And that spells opportunity for local buyers.  Let me explain.  Pooler was least hit in the local real estate “bust,” climbing to a high around 15 months’ supply of inventory.  However, since January 2012, the supply (re-sale and new construction) has continually dropped from 9 months to the most recent supply number of just under 2 months in July 2013.  So, following the basic rules, the expectation would be that the prices would already be shifting upwards.  Makes sense, right?  Well, that’s not what is happening.  Over the last 19 months, the price has either remained constant or dropped in the 1-2% range.  The shift is not being driven by the construction of smaller homes.  If anything, local builders are offering larger homes without larger prices.  The bottom line is that the savvy buyer has a short window of opportunity to take advantage of the Pooler prices.  Any buyer currently sitting on the fence watching the mortgage rates needs to shift his/her gaze to the price situation.  Carpe diem, buyers!