Serene Savannah: A Walk Along Bluff Drive

 













 

 

Savannah is a city by the sea, but the sea is not the only source of waterfront living.  A myriad of tidal rivers and creeks separate the city from the ocean and offer the best of slow, serene living.  One of my favorite streets in all of Savannah is Bluff Drive, which runs adjacent to the Skidaway River on Isle of Hope.  Isle of Hope is not a true island, but is a bluff situated along the Intracoastal Waterway. 

Legends of pirate treasure surround the early days of Isle of Hope.  Records of residents date back to the founding of Savannah in 1733 when Noble Jones was granted a tract on the island that was eventually named Wormsloe, a plantation which is also on the National Register of Historic Places.  The Isle is also home to Bethesda, the oldest still-operating orphanage in the US.  Given its location, the area was perfectly suited to become a defensive battery protecting Savannah from the Spanish.  Another historic site is the Isle of Hope United Methodist Church, which was used as a Confederate encampment.

The history books note that Isle of Hope was established as a retreat against yellow fever outbreaks for wealthy Savannah families in the mid-1800s.  In 1871, a railroad connected Savannah with Isle of Hope and soon thereafter, many families chose to live there year-round.  Isle of Hope has also been named to the National Register, one of the many historic districts in Savannah.  The entire area is around two square miles and today its permanent residents number approximately 2500 Savannahians.  Like no other area in Savannah, Isle of Hope boasts picture perfect cottages side by side with glorious manors and mansions.  The only commercial venture around is the Isle of Hope Marina.

The scenery offers such beauty that the area has been included in several Hollywood films: Glory, Cape Fear (original), The Last of the Belles, Forrest Gump, and The Last Song.

A visit to Bluff Drive calls the visitor out of the car and onto the street for a stroll.  The best way to absorb the beauty is on foot.  Everything that is beloved about Savannah is there:  majestic oak trees covered in Spanish moss; gorgeous vistas of the river, marina, and private docks; and the most interesting collection of Greek Revival, Victorian, Neoclassic, and Craftsman Bungalow styled homes grouped in a single neighborhood.  In addition, several antebellum homes have survived there.  In a world where everyone is always in a hurry, Bluff Drive serves as a reminder to slow down and simply enjoy being alive.  It’s a place where you’ll always finding people out walking and knowing you neighbor is as easy as taking a break aside any of the picket fences.
 

                                                                   



The New Stigmatized Property: Homes in a Flood Zone

A couple of weeks ago, I had a real estate closing scheduled for a great property in a southside Savannah neighborhood.  Inspections were completed, the loan was approved, and a week before the closing, my Buyer asked me to get him out of the deal.  It was the first time that had happened in 13 years.  Why did we terminate?  Flood insurance. 

What happened?  The neighborhood is landlocked.  There are no rivers, streams, or even lagoons in sight.  However, the City has a drainage canal running through one section of the subdivision near the home.  During the “due diligence” period, the Buyer researched the canal.  We also searched available on-line resources about the flood zone.  The Seller did not have flood insurance, but we soon determined that the home did indeed have a small portion of the back yard (not the house) in a designated AE flood zone.

The flood insurance premium for homes in “high risk” zones, i.e., those designated with the letter A or V, are based on a building’s elevation above, at, or below the Base Flood Elevation (BFE) set for the zone.  Generally, the higher the building is above the BFE, the lower the premium.   To determine the exact premium (set by FEMA), a Flood Elevation Certificate, prepared by a licensed surveyor is required.  The process of finding or generating a Certificate is not difficult.  However, the rules of the flood insurance game changed with the Congressional passage of the Biggert-Waters Flood Insurance Reform Act of 2012.    

 

Although the B-W Act was passed last year, the implementation is just now rolling out.  In a nutshell, Buyers can no longer assume an existing homeowner policy or “grandfather” a policy.  In fact, the Act will eliminate the subsidy for flood insurance that has been provided by the federal government for years.  On October 1 of this year, over one million US policies will be subject to 25% PER YEAR premium increases until the premiums are increased to full risk rating.  These increases can range from a few hundred to tens of thousands of dollars per year.

In the case of the closing that was terminated, the Buyer was facing a 2013 policy premium of $800/year, with annual increases until the premium grew to $5,000/year.  In other words, his mortgage payment was destined to be $800/month but, ultimately, the flood insurance would add another $400/month, destroying the affordability of the home.  The loss of the home was tough on the Buyer, but the prospect of a potential future foreclosure due to the increasing expense of flood insurance would have been tougher.

In the Savannah area market, approximately 20% of the homes actively listed require flood insurance.  What should a Seller do?  Those who live in a flood zone may now be holding “stigmatized” property, with Buyers ruling those homes out of consideration.  Many of the desirable waterfront properties in Savannah may languish on the market indefinitely or reduce prices to achieve some measure of competitiveness.

Sellers should immediately contact their insurance providers and get more details about how premiums for their homes will change.  Many Sellers do not have updated Elevation Certificates that meet today’s requirements for writing a new policy.    In the Savannah market, this will become a hotly negotiated term of any future transaction.

Occasionally, changes in the law and federal programs have resulted in unintended consequences.  On the heels of some measure of local Savannah area real estate market improvement, the changes associated with the National Flood Insurance Program may cause setbacks.  If you need more information on the changes, or need a referral to knowledgeable insurance providers or surveyor, contact me for assistance.

First Time Home Buyers: Managing Expectations

As rates continue to ride the roller coaster, First Time Home Buyers are challenged with having proper expectations related to the type of homes available and the value one can get for the money.  In the Savannah area market of Chatham, Bryan, and Effingham Counties, First Timers tend to shop in the “up to $150,000” price range.  Based on current mortgage rates and typical insurance and property tax expense, a home at the top of the range would translate to an $1100/month mortgage commitment.  The average price of July sales in the First Timer price range was $96,722 and is equivalent to around $800/month, far surpassing the affordability of most area apartments offering smaller spaces and fewer notable home features.

 So, what can a First Timer expect to buy?  In July 2013, there were a total of 161 sales of homes (32% of all sales) up to $150,000.  The typical home profile:

 

# Bedrooms	Three
# Baths	Two
Average Square Footage	1426
Average Sales Price	$96,772
Average Price/SF	$68.30
List Price/Sales Price	96%
Average Days on Market	84

 

As one would expect, the “under $50k” group were foreclosures needing fairly significant work.  Occasionally, a good prospect for the stalwart First Timer will arise.  Generally speaking, though, most First Time Buyers use either VA or FHA for financing.  VA does not have a repair escrow option; the FHA loan type does, but the process is often daunting for buyers who are more experienced.

The majority of the second category of “$50-75k” were fixers as well, but the upper end of the range included move-in ready homes in nice neighborhoods.  Above $75,000, the choices were abundant and included move-in ready re-sale properties as well as new construction.  A wide variety of styles were available as well.

The bottom line? Homes are still affordable in the Savannah market.  Getting a bargain does not mean that the buyer has to be a hard-line DIY-er.  However, taking advantage of the market in the entry price level does require a sense of urgency and a set of reasonable expectations.  I’d be delighted to walk you through the process. 

The Bare Bones about Bonaventure

     

Bonaventure Cemetery is one of the most tranquil tourist destinations in Savannah, GA.   Of course, that assumes you aren’t bothered by ghosts.  Bonaventure, French for “good fortune,” was originally part of John Mullryne’s Bonaventure plantation, dating to the mid-1800’s.  The cemetery was purchased by the City of Savannah in 1907 and was made public.  Located on the Wilmington River in east Savannah, Bonaventure is a must-see for anyone interested in Savannah’s past.

 The Savannah landmark is on the US  National Register of Historic Places, but did not realize fame until the 1994 novel (and later movie) of Midnight in the Garden of Good and Evil by John Berendt.  The Bird Girl monument featured on the book cover became such a draw to tourists that the statue was donated and moved to the Telfair Museum of Art to prevent its disappearance in the night. 

Bonaventure was famous to locals long before “the Book” was published.  The cemetery is home to a myriad of recognizable habitants, including politicians, actors, civil war officers, authors, and songwriters.  Perhaps the most well-known Bonaventure residents are Conrad Aiken and Johnny Mercer.  Conrad Aiken was a Pulitzer Prize and National Book Award winner.  Aiken, born in Savannah near the turn of the century, came home to live after his parents’ tragic murder-suicide.  Johnny Mercer, a Savannah native, was one of the country’s most prolific songwriters, garnering four Academy Award winning Best Songs.  One of those, “Moon River,” describes another Savannah landmark.

Even if visitors aren’t impressed with the credentials of the residents, there is no doubt they appreciate the eerie beauty of Bonaventure.  Stately oaks and scores of lovely monuments grace the cemetery.  The Bonaventure Historical Society hosts guided walking tours on every second Sunday afternoon.  The tour is a great way to stroll through history and learn about one of the iconic spots that makes Savannah a destination for anyone who loves learning about the past, honing photographic skills, or simply having a gorgeous backdrop for a little exercise.

For more information about Savannah and surrounding area, contact me at VickieLinscott@gmail.com.

 

   

Savannah GA Homes Sales Cycles

As the saying goes, there is nothing constant but
change. Everything has a cyclical nature, whether you consider the seasons or business. Homes sales then, like other business metrics, follow a basic business or market cycle. While economists’ opinions vary regarding the theories of business cycles and what causes them, some believe that real estate follows a quite regular boom and bust cycle.
Market cycles in real estate are created by the imbalance that occurs between supply and demand, just like in any other type of market.

Within the market cycle are four components that could be in play: seasonality, secular trends, cyclical fluctuations, and irregular components. There doesn’t seem to be consensus on which of these components are the strongest drivers when it comes to the housing market. Therefore, it is often helpful to look at long-term trends to understand what has happened in the market and what may happen in the future. On the macro level, in “A Forecast for Real Estate,” Martin A. Armstrong, suggests that, after 52 years of escalating real estate trends from 1955 to 2007, there will be 26 years of contraction, with slight improvement from 2012 through 2015, and then downward trends through 2033. Citing a pending collapsing availability of 30-year money, Armstrong paints a dismal real estate future, with overleveraged debt keeping a ceiling on prices.

Fortunately, “real estate is local” is still a positive mantra for the Savannah GA market. Most Savannah area residents who have bought and sold property are familiar with local seasonal waves. Even with the housing slow-down of the most recent two years, the annual Savannah area market activity builds until it peaks in late spring, with sales tapering off during the last quarter. This seasonality holds true for most neighborhoods or properties, with the variable exceptions of Tybee Island and/or luxury homes. From the beginning of 2005 until the housing crisis of 2007, the local trends showed a very balanced market, with new inventory pacing with sales. The divergence of the trend lines began at the beginning of 2008. However, over the last twelve months, inventory has declined and the trend lines between sales and new listings are moving together. On a neighborhood level, some areas of the Savannah market are already balanced once more. Certainly, this positive trend, if sustained, bodes well for the upcoming 2012 market.

Of the remaining market cycle components, the “irregular” component may have been a historical factor. Generally, this component includes unpredictable elements such as a natural disaster or a terrorist attack. However, they also include “random shock” items. One example might be the government’s offer of first time buyer tax credits, which did push local sales higher than expected in 2009. Interestingly, a second random shock that was supposed to have a significant impact on increasing sales, i.e., an artificially sustained and historically low mortgage interest rate, may not have been as strong of a driver as intended.

Overall, regardless of economic theory held or consensus on driving factors, the Savannah real estate market is moving in the right direction in terms of improvement in supply and demand. With the coming year, and the projection of additional waves of foreclosures, the positive trend may be in jeopardy. Also, the national forecast of higher mortgage interest rates in 2012 could be a “shock” that could have an impact in terms of getting buyers off the fence and into action. Moreover, the national economic picture, and particularly the employment rates, will be a major factor. At this point in time, the Savannah market
reflects signs of strengthening, trends we hope to see continue well into next year.

Characteristics of Savannah, GA, “Quick Sales”

The average days on market (DOM) for homes in the greater Savannah, GA, real estate market is approximately 4 months. Occasionally, sellers who list their properties do not have the luxury of waiting for months. Given the current economy, it is common to have the prospect of a job relocation (or job loss) driving the selling timetable. As a result, sellers frequently ask Realtors, “What can I do to achieve a “quick sale?” From the period of August 1 – November 3, 2011, there were 1,102 residential closed sales in the Savannah market. Of those, 337 (30%) were on the market for 45 days or less. For purposes of this analysis, “quick sale” is defined as those homes selling in the 45 day or less time frame.

In response to the seller’s question, Realtors counsel sellers to consider a variety of tactics designed to facilitate a quick sale, including but not limited to:

-Make sure the home is in top condition before beginning the marketing process.

-Don’t underestimate the potential for curb appeal.

-Have the home pre-inspected. Most professionals advise against selling a
home “as is” if at all possible. http://theweeklybookscan.blogs.realtor.org/2007/04/04/book-review-home-makeovers-that-sell/

-Get an appraisal to confirm price positioning, especially for a unique property.

-Hire a professional stager to maximize design, flow, and buyer first impressions. Author Barb Schwarz reports that staged
homes tend to sell in 35 days or less. http://speakingofrealestate.blogs.realtor.org/2009/06/15/to-stage-or-not-to-stage/ In fact, statistics gathered by Stagedhomes.com shows that 94.6 percent of staged homes sell within 33 days, compared to an average
of 196 days for homes that are not staged.


Using raw data from the Savannah Multi-List Corporation (MLS), an analysis was conducted to determine if there were other characteristics or commonalities among quick sales in this market. Factors such as price, the presence and impact of foreclosures, and the geographic dispersal of quick sales were items deemed useful to assess. As part of the review, a series of assumptions were developed:

1. Distribution of properties sold in 45 days or less would be concentrated in MLS areas where the average prices have been trending lower.
2. The percentage of REOs would be high, i.e., over 50%, representing the “deals” of the market that buyers recognize and act upon with urgency.
3. Average prices of quick sales would be substantially lower than the average for the market area as a whole.

Using the data for August 1 – November 3, it became apparent that these assumptions did not reflect reality. Some interesting findings were noted:


1. The distribution of quick sales mirrored the distribution of sales overall for each MLS area. In only one area, Bryan County, the quick sale percentage was slightly (about 2%) higher. That means that there isn’t a particular area in the greater Savannah
real estate market that has higher than average potential for quick sales.
2. Contrary to expectations, the REO percentage of quick sales equated to half the sales in Downtown, Midtown/Eastside, and Bryan County. In other market areas, the percentage was variable and significantly lower.
3. Quick sale “discounts” in price did not exist in Midtown/Eastside or Southside. In other words, quick sale prices were about the same as the average sale prices overall. Even though the aforementioned areas had the highest percentage of REO sales, the prices did not reflect huge buyer savings. Two factors could be at work: a) the lowest priced foreclosures may have already cleared the market; or b) the banks have begun to agree to very aggressive initial pricing in order to clear their collective balance sheets of the assets. The initial assumption of a lower price or discount facilitating a quick sale appeared to hold true in The Landings,
Westside, Effingham, and Bryan, all of which had quick sale average sale prices at 9 to 13% below the area’s average. Incredibly, the quick sales in the downtown market segment were almost 48% below the average sales price for that area.

What do these findings mean for sellers?

-In most market segments, sellers have a strong likelihood that a quick sale can be achieved, even when competing against
foreclosure properties.

-A seller in the Downtown market is going to be fighting an uphill battle for a quick sale if the fight is limited to price. Downtown sellers need to consider other elements of the transaction to make their properties more competitive, i.e., pre-inspection, warranties, impeccable condition and/or staging, or closing cost contribution.

-For sellers in other Savannah area market segments, achieving a quick sale can be facilitated by setting a price up to 10% below market average to open up the highest possible buyer pool. This is especially true for market segments with historical overall higher price points.

For more information about the local real estate market, go to www.affordablesavannahhomes.com or contact me at VLinscott@comcast.net to assess your specific property need.

Savannah Housing Inventory Shows Improvement

Over the last three years, the real estate market in and around Savannah, Georgia, has mirrored the volatility of the national trends. One key statistic to measure market recovery, or lack thereof, is the "months' supply of inventory." According to the National Association of Realtors (NAR), the U.S. housing inventory stands at 8.5 months, based on its 10/20/11 press release. This means that the top twenty metro markets studied have shown considerable improvement and stand poised for recovery. In fact, NAR cites that price stabilization occurs at around 7 months' supply. Nationally, the news is promising. However, as any Realtor will comment, "all real estate is local." So, how is Savannah performing?

The last three years have been the most volatile in real estate. Looking at local statistics sourced from Savannah Multi-List Corporation data, the local Savannah real estate market areas continue to show a high degree of variability. In this recent past, both the Historic District and The Landings on Skidaway Island were hit hardest in terms of standing iinventory (and price). Significant changes in price and market timing for new listings have resulted in improvement in those sub-markets, but both areas remain at over twice the "stabilization" target. What does this mean for sellers? For the foreseeable future, there needs to be a continuing focus on pricing strategy. Only 16 to 18 homes are selling per month at The Landings and Historic District, respectively. Therefore, understanding what it takes to be in that number will be incredibly important. Certainly, that's what a good Realtor will bring to the table.

The perimeter sub-markets of Savannah (Pooler, Bryan, and Effingham) are outperforming all other market segments. All have standing inventory of less than 10 months. Certainly, Bryan County has benefitted from changes in military personnel. Pooler has experienced the benefit of having the highest concentration of new homes available. Key drivers of the reduction of inventory in Effingham County are less discernible. The major result for all areas, though, is clear. Prices will continue to stabilize as these sub-markets lead the way to an overall real estate recovery for Savannah. What does that mean for buyers? For those who want to live in the Savannah suburbs, a sense of urgency should govern home shopping. Home bidding will be more competitive and buyers will pay closer to list price for their selections.

The remaining sub-markets of Savannah, i.e., Midtown, Southside, and Islands, still have a way to go, but the statistics are promising. "Deals" remain abundant on the Southside. A good percentage of Midtown homes are being purchased with cash, a sure sign that investors recognize the overall attractiveness of the real estate market, and perhaps more importantly, realize that now is the time to buy. Islands sales are relatively strong, with more than 30 homes selling each month, but more improvement is needed. Negotiations in this sub-market remain more intensive.

For more information about the Savannah real estate market, visit www.affordablesavannahhomes.com.