Home front: Uncertainty over foreclosures still persists

Your home's value this year depends largely on whether the company down the street decides to hire again.

The region's overall real estate prices rose slightly throughout 2010 to a median of $187,500 from $181,505 at the end of 2009. But despite that gain, which reversed two years of steep declines, economists aren't sure whether that momentum will continue this year.

Their safe prediction? Prices will remain flat.

"Why is it that at the end of 2010 we still don't feel like we're going anywhere?" said David Crowe, chief economist for the National Association of Home Builders, who last week spoke before an audience of construction professionals in North Charleston.

Crowe said that while other parts of the economy have thawed, a chill of uncertainty still hangs over the housing market. Market experts are eyeing job growth and foreclosures, saying they could either push the region's real estate sector forward or send it spiraling into a second round of recoil.

Worries over home values renewed last week when a closely watched home-price index announced ominous news: nine major cities, including Charlotte and Atlanta, just hit their lowest values since the last housing boom.

Home values this year will hinge largely on whether strapped owners turn their homes back to their mortgage lenders at a faster rate than last year, Crowe said. But he added that no one can accurately predict whether the foreclosure crisis will worsen. The outlook is clouded because the fate of any given property is determined by a combination of factors: individual court rules, loan policies and housing demand in an area.

"The foreclosure process is all localized," Crowe said. "It's all local laws ... and local market conditions."

Price check

Overall, the Charleston area's median price overall has dropped $20,000 since the last recession. The region's monthly median home price peaked at $215,000 in June 2007, and that figure remained largely above the $200,000 mark between March 2006 and July 2008.

But some neighborhoods seem to be more vulnerable than others to a possible rebound of hardship, also called a double dip.

Detailed new data from the Charleston Trident Association of Realtors show promising signs for some areas, including northern Mount Pleasant, the inner neighborhoods of West Ashley and part of Goose Creek, where median home sale prices have evened out during the past three years.

A handful of areas showed small price gains throughout 2009, while even fewer regions recorded selling prices at the same level as the housing market's recent peak.

The typical Hanahan home sold for $192,342 last year, just $2,018 less than what homes sold for during better times in 2006.

Mount Pleasant-based real estate appraiser Mark Kearns, who estimates home values across the Lowcountry, said very few properties rose in value in 2010. Instead, last year's good news was that many neighborhoods retained their values, even with foreclosures on the rise and a large number of homes for sale.

"The more moderately priced properties have stabilized substantially," said Kearns, who added that his appraisal industry colleagues no longer have to cut their final price estimate of a home to account for a dismal environment. "We're back to pretty normal market conditions."

Prices finally began to level out in the Summerville area, where half-built neighborhoods that were abandoned during the economic slowdown are slowly seeing activity again. Builders are now buying cheaply priced lots from lenders who took over the land after a previous developer's plans failed.

The rub for sellers of existing properties is that attractively priced homes that have never been lived in create tough competition, said Jana Bantz of Prudential Southern Coast Real Estate. That's pushed down Dorchester County's median price, which peaked in 2007 at $194,000, to $159,500 last year.

Neighborhoods like The Ponds, Taylor Plantation and Myers Mill have drawn buyers away from resales, Bantz said.

"They're just driven to the new construction, and you can't blame them," she said. "Those homes are coming with a lot of upgrades."

Though Summerville area prices leveled out throughout 2010, the region isn't positioned well if the real estate turns down again.

Gary McGuckin of Carolina One Real Estate said Dorchester County, once one of the country's fastest growing regions, could get hit harder by a possible rush of foreclosed properties this year.

"Wherever there was new construction will be more prone to the wave," he said, referring to the surge of seized homes that will be up for grabs.

Buyer's market

But other Charleston area neighborhoods might be better insulated if distressed properties flood the market.

A look at the West Ashley neighborhoods close to downtown Charleston shows that yearly median prices have almost always hovered around $200,000.

"West Ashley is a very healthy market just because of location and business facets here," said Angie Gainey Bailey of Agent Owned Realty.

The number of homes listed for sale remains low in Goose Creek, which has seen stable prices for three years. Jim Mills of Carolina One Real Estate said the area didn't see wild price appreciations during the boom years, which helped it retain a reputation for good value when consumers started spending less.

The largest median price drop of 29.2 percent was recorded in the part of North Charleston that includes the trendy Park Circle neighborhood, where the construction of higher priced homes eased throughout 2010. Those new homes pushed the area's median price to peak in 2008 at $155,000, but that figure fell to $85,000 last year.

Mount Pleasant neighborhoods, which the Realtors association splits into two regions based on their proximity to downtown Charleston, show that homes farther from downtown have more stable prices. That area's median price has bounced in the same range from $330,000 to $317,000 to $324,950 in the last three years, creating what economists would call a "market bottom."

Buyers are more willing now to drive the extra few miles to the northern edge of town in pursuit of better deals, said Jeff Dail of Trident Real Estate.

"They can't afford to be in close, so they're moving out," he said.

But Mount Pleasant's overall higher prices could also put it at greater risk during the housing market's tenuous recovery, especially as buyers shy away from extravagance.

Kearns, the appraiser, said homes priced above $300,000 are hardest to sell.

"People still aren't going toward the big houses," he said. "They're being a little bit more reasonable as far as what they're willing to buy."

A fear of committing to big purchases could explain why the biggest price drops were in the high-ticket island markets.

Folly Beach's median price slipped 12.7 percent to $360,000. The Isle of Palms and Sullivan's Island skidded to $675,000, roughly half of $1.3 million median price those markets enjoyed in 2007.

Jimmy Carroll of Isle of Palms-based Carroll Realty Inc. said he hopes prices will now start recovering.

"What we're seeing right now is probably the bottom of the market or as close to it as you can probably get," he said. "We're starting to see buyers out here for the first time in ... I can't tell you when."

In recent weeks, Carroll said, prospective purchasers who have been eyeing the island market throughout the downturn have finally started to get serious.

In some cases, those who waited out the tough times have managed to save hundreds of thousands of dollars, Carroll said.

"It's 100 percent a buyer market," he said. "That's just the way it is."

Reach Katy Stech at 937-5549.