A new sense of urgency in the real estate market

The sour housing market was suffocating Mitch and Brandi Carbonie.

A year ago, the couple decided they wanted to build a home more suited to their family’s needs, so they listed their Highland Lakes residence. It’s a beautiful multistory property that features a wooded lot and the distinction of being one of the first houses in the neighborhood.

And it just sat there.

In 11 months they went through several real estate agents. They were a buyer’s second choice 10 times or more. They even held off on building their dream home because they had doubts the property would sell at a competitive rate.

“When you have a similar property right down the street on a fire sale, why would you pay what we were asking?” Mitch said.

It made for a home life marred by the unknown and spent on the floor of a showroom.

“It’s horrible,” Brandi said. “We had to have the house show-ready 24/7. Someone would call every night during dinner and ask us to step outside. I hated every second of being in that limbo. I never got used to it.”

Unfortunately, it’s been a common refrain. Following the housing market crash, property values on the U.S. 280 corridor fell, and the number of available homes on the market steadily climbed. It resulted in a wash of inventory and gave buyers ultimate power at the closing table.

But this year, things have changed.

On the U.S. 280 corridor, the theme of the summer was “sense of urgency.”

According to James Harwell, an agent with RealtySouth and vice president of the Birmingham Association of Realtors (BAR), buyers are finding it more difficult to snatch up dream homes at dream rates.

“Houses aren’t returning to the market, and a lot are finally leaving,” he said. “Time is suddenly of the essence.”

Examples are everywhere. Last year, Terry Crutchfield wouldn’t even show homes sided with EIFS. Demand was so low for houses featuring expanded polystyrene foam – synthetic stucco, or Dryvit, as it’s known in the area – she didn’t bother. But in a few short months it’s become a different market.

“I remember there was one home in Highland Lakes with [Dryvit] for sale this summer,” said Crutchfield, an agent with RE/MAX Advantage South. “It wasn’t my listing, but my client put in a full-price offer on it, and we didn’t get it. Last year no one would’ve looked at it, and this summer it wasn’t even on the market for a week.”

Recent data shows the 280 corridor made strong gains in both number of home sales and average sale price in 2013. Ginny Willis, BAR president and an associate broker with RE/MAX First Choice, said home sales were up 22 percent for January through July when compared to 2012, from 1,240 to 1,514, and the average sale price jumped 9 percent, from $272,995 to $296,743.

“If this keeps up,” she said, “before the end of the year we’re going to have a strong seller’s market in the area.”

Willis’ colleagues agree.

“It does seem to be trending toward a seller’s market,” RE/MAX agent Peter Northcott said. “We’ve been through such a dry time the past four years, we really had to rethink the game. Then, all of a sudden everybody started to buy.”

A BAR August report showed markets in Jefferson, Shelby, Blount and St. Clair counties improved in every category compared to July 2012. Some agents were most thankful to see a change in inventory – the number of homes on the market. It steadily declined, down 3 percent from last year, from 8,262 to 7,979 in the four-county area.

As of mid-August on the 280 corridor, 751 homes were for sale.

“The big thing that’s going to bring us back is that the inventory has gone down,” Harwell said. “When everyone was sucking wind, we had more than 15,000 houses on the market (in the four-county area). And you can’t negotiate the price of a house when there are hundreds of others out there just like it.”

But several other factors are contributing to the shift, said Clark Edwards, an agent with RE/MAX Southern Homes 280 and a board member of the Meadow Brook Homeowners Association. Besides a decline in inventory, a rising interest rate was a major catalyst.

“We’ve been flat off the bottom for three years as people wondered where the market would go,” Edwards said. “But now, this increase is tied to both confidence and a limited supply on a national level. So many people for so long have read negative reports and have been concerned about the unknown as much as anything. But once the interest rate moved up, it had a snowballing effect on our recovery.”

According to Bankrate, Inc. (bankrate.com), an online financial monitoring organization, interest rates have increased about a full point since May. Coming into the summer, banks were offering 30-year fixed-rate mortgages at approximately 3.7 percent. In August, they reached 4.6 percent.

Experts who work on the 280 corridor said when the rates started moving, so did buyers.

“Even though we’ve had an uptick in rates, they’re still at record lows,” IBERIABANK Mortgage Branch Manager Brian Goldman said. “We’ve started seeing bidding wars because people can’t get offers in fast enough on houses to get bids accepted. The whole story is you can’t lowball somebody anymore. You have to be realistic.”

Goldman, who is mostly optimistic about the direction of the market, is taking his own advice. He said not to overlook the market’s volatility. Though it may be a good time to sell, a seller’s market isn’t a guarantee in Shelby County.

BAR’s August report indicated that 17 percent of all home sales in the four-county area were foreclosures, and that it was the lowest percentage in more than four years. However, Goldman said banks are holding onto “shadow inventory” – foreclosures that had already taken place but remained unlisted.

“There are still a lot of houses out there that are for sale,” he said.

In addition, homes haven’t appreciated back to the point they reached in 2006. Prices are rising, but they aren’t skyrocketing.

“We’re seeing values somewhere about 2005,” Edwards said. “So, values haven’t reached their peak, but they have climbed 10 percent over a 12-month period.”

As August neared its end, so did the struggle endured by the Carbonie family. Their latest agent, Crutchfield, was able to secure  a contract on their Highland Lakes home.

Regardless, while a seller may have things to mull over this fall, buyers will lose leverage as experiences like theirs become less common.