What Sold in 2013–Part 2

The comforting news in Savannah’s 2013 real estate experience was the return to sales consistently over 400 transactions per month, with several months reaching into the 500’s.  This volume of total sales per month has not been seen in years.  Obviously, the trend in sales is reflective of an overall positive trend that should make sellers feel ready to hit the market.  Buyers should look at the 2013 “sold” experience as the death of the cut-rate “deal.”

Monthly Residential Sales through  2013

Of note, the fourth quarter of 2013 was particularly strong, showing a 6.9% growth over 2012 and almost 25% over 2011 same quarter.  Typically, fourth quarter sales are seasonally lower due to the concentration of holidays.  This appears to refute the opinion of many sellers that they should wait for springtime to put a home on the market!

What was the hottest price range?  The data for 2013 showed that both the highest concentration as well as the highest year over year increase was realized in the $100,000 to 199,999 range, which had around a 13.3% increase in sales.  Based on those numbers, it is clear that Savannah’s 2013 residential homes sales remains solidly in the first time buyer and first time move up buyer market.  Higher end market sales remained relatively constant, hinting that the $300k+ price range may take longer to completely recover.

What Sold in 2013–Part 1

The Savannah area real estate market is roughly defined as Chatham, Bryan, and Effingham Counties.  Chatham County typically has the highest level of activity.  In 2013, a total of 3,749 Chatham homes were sold.  These sales reflected that the most popular areas  by total sales were West Chatham (predominantly Pooler), Southside Savannah, and Midtown (including both the Victorian District and Ardsley Park):

Area	Includes:	Total Sales	% Total
1	Historic District	179	4.8%
2	Victorian District, Eastside, Ardsley Park	738	19.7%
3	Southside, Highway 17 Corridor, Quacco Road	864	23.0%
4	Wilmington, Whitmarsh, Tybee, Isle of Hope, Dutch Island, & Burnside	686	18.3%
5	Landings	221	5.9%
6	Chatham County, Other	90	2.4%
8	West Chatham, Pooler, Southbridge, Westbrook	971	25.9%

The implication is that the opportunities available in new construction/newer homes has drawn buyers farther away from the core of Savannah.  Typically, where sales are strongest, the balance of power in negotiations tends to swing in favor of the seller.  These numbers for West Chatham, plus the low months’ supply of inventory in those areas, signals that buyers will need to work hard to get the terms they need.  It is critical that the Realtor involved in the transaction carefully develop a negotiating strategy based on market dynamics.  If you plan to buy in 2014, let me help!

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!