As milestones go, 500 home sales in a month pales in comparison to 60 home runs in a baseball season or the 4-minute mile.
Broaching the half-a-thousand mark is nonetheless significant for the local residential real estate market.
Sales of 507 single-family homes, condominiums, townhouses and modulars closed in July in Chatham, Bryan and Effingham counties. July 2007 was the last time more than 500 homes sold locally in one month.
The sales tally constituted a 14 percent increase over July 2012 and a 68 percent jump compared to July 2010 at the peak of the housing slump.
“Clearing that 500-sales barrier is a very good sign for this market,” said Donna Davis, president of the Savannah Area Board of Realtors. “And the momentum now reaches across our entire market. Whether it’s home sales or existing sales, we are seeing an influx.”
The sales activity has reduced supply, which is driving new home activity. Chatham County saw a 27-month high in new homes going under contract in July. More new homes have gone under contract in Effingham County since the new year than did all of last year.
Only Bryan County is behind the 2012 pace for new home contracts, and construction recently began on a new 260-lot development in Richmond Hill known as Creekside. Simcoe Land Development, Homes of Integrity Construction and K. Hovnanian Homes are leading that project, with the first homes scheduled for completion in December.
“We’re selling more new homes right now than we are producing lots” in the three-county area, said Mark Konter, president of the Home Builders Association of Greater Savannah. “That’s a good thing for the area as a whole because it keeps us away from any fears of a renewed bubble.”
Increased demand has yet to translate into significant price increases in both the new and existing home markets. Chatham County’s median home price continues to creep up, reaching $170,000 in July, but the average price for the three-county area last month was below what it was in July in each of the last four years.
Appraisals are keeping new home prices in check, builders say. Many home builders bought lots out of foreclosure the last two years, paying the equivalent of 40 to 50 cents on the dollar for those properties. The supply of those bargain lots has been exhausted, however, and builders are now developing lots bought at retail prices.
But many of the recently sold new homes were built on foreclosure lots. Appraisers use those sales — known as “comps” — in determining values for homes being built now on higher-priced lots.
The result is homes failing to appraise, putting deals in jeopardy. For example, a buyer puts in a contract to pay $225,000 for a house. The comps show similar houses in that development sold for $215,000 in 2012. For the deal to close, either the buyer or the builder has to cover that difference.
“I can’t tell you how many homes we’ve taken concessions on lately because of the appraisals,” said Jerry Wardlaw with Landmark 24. “Our costs have gone up, demand is up so buyers are offering more for properties, and it doesn’t appraise. I don’t know when that will correct itself.”
The correction will happen over time, said Dusty Lewis, president of the local chapter of the Appraisal Institute. Builder costs often equal value, but not always.
“It is the appraiser’s responsibility to weigh a number of factors, including costs and comparables,” Lewis said. “Once a market starts to improve and recover, appraisal values will reflect that.”
The situation squeezes builders’ profit margins but has kept existing homes competitive with new construction. And with builders now facing lot shortages and continued financing difficulties, supply is not expected to grow exponentially in the fall as sales fall off.
“Prices are holding steady and should continue to do so for the rest of the year,” the Board of Realtors’ Davis said. “That said, we do need inventory. The more quality inventory we have, the more sales.”
Local Home Sales Snapshot
The Savannah-area housing market (Chatham, Bryan and Effingham counties) eclipse the 500-sales mark in July for the first time since July 2007. 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
July 2013 3,833 677 507 257 $201,086
June 2013 3,897 710 469 298 $213,723
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 2013 3,833 677 507 257 $201,086
July 2012 3,460 610 444 278 $221,061
July 2011 4,353 635 381 250 $209,072
July 2010 5,364 717 301 187 $218,318
July 2009 5,536 831 304 241 $208,181
Source: Savannah Multi-List Corp.