Demand rebounds for some homes

The real estate market in 2009 saw problems and improvements on the local, state and national levels according to local business leaders and analysts.

In his Wilmington address Jan. 7, Richard Kaglic, economist for the Federal Reserve Bank of Richmond, said that the recession bottomed out in mid-2009. He charted single family building permits and housing starts across the past decade with a steady incline until late 2006 when the pattern dipped sharply before beginning to climb slowly in 2009.

Likewise, Dr. Woody Hall’s look at the local economy showed a slow but steady climb, coming from negative growth in 2008 to 1 percent growth in 2009. He predicts a growth rate of 4 percent in 2010.

Wilmington Board of Realtors President Mary Martin of Network Real Estate said the 2009 closing numbers in our market and elsewhere show that we’re positioned for improvement.

The year ended with 4,308 residential units sold compared to 4,694 in 2008. Still a drop, but not nearly the drop that occurred in the previous years. Our high mark was 2005 with 9,347 units sold and it has been a steady drop since then. The average sales price in 2009 also dropped to $234,406 down from $256,176 in 2008 and a high of $272,784 in 2007. The median price for 2009 was $184,649, down from $201,567 in 2008 and a high of $211,134 in 2007.

Affordable 2009 pricing is attracting buyers according to Martin and the Greater Wilmington Home Builders Association Executive Director Donna Girardot.

“We began the year with housing affordability at its highest level in at least five years,” Girardot said. “These falling home prices and very favorable mortgage rates were very good for the homebuyer.”

Martin credited the low mortgage rates and the fear that rates may climb with pushing people into the market. Despite the rates, tightening lender requirements have kept some people from being able to purchase, Martin said. For those who can meet the criteria, the $8,500 and $6,500 tax incentive programs for home purchases have also contributed to the slowly improving market.

“We are climbing out of a lot of things that happened in our market,” Martin said. “They’ve revamped the lending requirement again and it’s affecting condos, especially beach condos.” Martin said new restrictions on investment portfolios will affect individual’s ability to get financing for investment/rental properties. “I would advise any consumer now to get with their lender and see what the new criteria are on any home purchase or condo purchase because things have changed.”

Martin says the local market has had five consecutive months of strong pending sales which indicates it’s not a seasonal blip. “On the national level pending sales are up 15 percent and existing home sales for the year were up 44 percent. We’re climbing out. I’m calling 2010 our breakthrough year.”  She’s hoping to see builders respond to the appeal of affordable housing.

That niche has been successful for some of Girardot’s membership. “I think that the $250,000 and below market has now stabilized.”

Another trend is in the demand for green housing. “Our association was recognized last year by the NAHB as having more green homes on the ground than any other association in the country. That’s because when very little else was selling last year, our builders found a niche for themselves by building green or energy-efficient and environmentally-friendly homes.”

As for 2010, Girardot agrees that we’re moving upwards, but expects some changes.

“A lot of what happens next year is predicated on the unemployment rate. Unless we can put people back to work, they won’t be able to afford a house,” she said.

Reversing the mass exodus of national builders from the area, she’s seeing signs that they’re back. “We’re always glad to have them here, but at the same time, I worry about our small builders and their ability to compete with them,” she said.

She expects more small builders to use alternative types of financing and that investors will demand part ownership. “I think you’re going to see more small builders joining together and forming a corporation and hiring a management group – rather than going it alone.