Savannah-area homebuyers’ tolerance for sticker shock is growing again.
Prices rose for the fifth straight month in May, with the average sales price eclipsing $220,000 for just the second time since the housing bust. Yet sales remained brisk and the new listings pipeline robust in Chatham, Bryan and Effingham counties.
And with school out and summer’s arrival, local Realtors anticipate the market strengthening through Labor Day.
“The buyers who want to get into the market now will not be dissuaded by an inching up of prices,” said Donna Davis, president of the Savannah Area Board of Realtors. “We’re not jumping. We’re going to need to see more inventory in the long term, but we will be all right for a little longer.”
Inventory, or the number of homes listed for sale, held steady in the 3,500 home range. Inventory has hovered between 3,000 and 3,900 homes for the past year after a steady decline from better than 5,000 homes at the height of the bust.
Given the average sales pace over the last year, it would take nine months to exhaust the current inventory — enough demand to spur momentum in the market but not enough to drive price increases that proved unsustainable half a decade ago.
The Savannah area saw 447 sales in May, the same number as a month earlier but an 11 percent increase compared to May 2012. The average sales price jumped 24 percent year over year, although May 2012 marked the bottoming out of prices in the Savannah market with investors buying up distressed properties.
Owner-occupants have grabbed a larger share of the foreclosures this year. Traditional buyers are taking advantage of “first look” windows established by mortgage holders like the Federal Housing Administration and Fannie Mae and buying those properties before they are made available to investors.
Owner-occupants tend to pay more for foreclosures than investors, resulting in a higher average price. Cash purchases, utilized mainly by investors buying distressed property, are down 4 percent this year compared to 2012.
“The investors are still pretty active, jumping on the properties that do get by owner-occupants and hit the market,” said Ben Bluemle, a foreclosure sales specialist with Seaport Real Estate Group. “That’s giving the market some balance, as the (foreclosure) inventory is still flowing.”
Bluemle voiced concern over climbing mortgage rates. The 30-year fixed rate is back over 4 percent after several months in the 3.5 percent range. He anticipates a continued rise will hurt the market more than help it in the short term.
“People aren’t going to run out and get that 4 percent rate for fear of it going to 5 or 6. They’re going to wait and see if it goes back down,” Bluemle said. “There are just too many distressed properties out there right now to believe interest rates will jump up.”
LOCAL HOME SALES SNAPSHOT
Sales prices continued a steady rise in the Savannah-area housing market (Chatham, Bryan and Effingham counties) in May as demand remained strong as school year’s end approached. A look at the local market (numbers include residential real estate, including single-family homes, modulars, townhomes and condominiums):
Month Inventory New Sales Pending Price
May 2013 3,586 711 447 290 $223,917
April 2013 3,893 739 447 350 $201,881
March 2013 3,019 542 379 324 $200,578
February 2013 3,668 555 290 234 $186,014
January 2013 3,871 641 302 274 $176,276
December 2012 3,139 380 372 163 $171,651
November 2012 3,272 481 383 220 $209,104
October 2012 3,424 710 388 242 $188,796
September 2012 3,298 509 333 242 $188,600
August 2012 3,477 638 468 223 $191,063
July 2012 3,460 610 444 278 $221,061
June 2012 3,630 649 471 283 $198,998
May 2012 3,584 639 397 331 $169,125
Source: Savannah Multi-List Corp.